The commercial real estate sector has been booming in the last few years, driven by the high demand from corporates, especially IT and ITeS companies.
However, with property prices skyrocketing in tier-I and tier-II cities, these companies are now looking at tier-III cities to set up their businesses.
"Wipro [Get Quote] and Infosys [Get Quote] set the trend by setting up facilities in Mysore and Kochi. Foreign companies are now moving into these cities as well, said Akshaya Kumar, CEO, Park Lane Property Advisors.
Broadly, Nagpur, Ahmedabad, Kochi, Indore, Coimbatore, Mysore and Lucknow come under the tier-III classification. Consider these numbers: the lease rates in Mumbai, in places such as Bandra-Kurla complex is around Rs 250 per sq ft whereas in the suburbs of Andheri, it is between Rs 55 and Rs 110. Compared to this, the lease rates in Nagpur are Rs 20 to 30 per sq. ft. "And the space available is larger too," said an industry observer.
A recent report by Jones Lang Lasalle Meghraj (JLLM Asia Pacific Property Digest - Q1 2007) confirms this. A large number of IT and ITeS companies such as Dell, Infosys, TCS [Get Quote], Wipro and Persistent Systems are moving into these cities in a big way. Said a Dell spokesperson, "Dell has gone to cities such as Chandigarh and Hyderabad, apart from Delhi and Bangalore because they had a potential to support a large-scale facility in terms of public infrastructure and access to manpower."
Besides the lower property prices, these cities also provide skilled labour. Kochi and Nagpur have a number of colleges and institutions imparting professional education. The literacy rates in these cities are as high as 94 per cent and 88 per cent respectively.
As a result, big builders are aggressively getting into these areas. Added Kumar, "DLF, Rahejas and Unitech are scouting for opportunities in these cities because the local builders may not be able to handle large scale projects." For instance, Parsvanath Developers are presently developing a residential project called Prideasia (in association with Chandigarh Housing Board), as an integral part of Rajiv Gandhi Chandigarh Technology Park worth $1 billion (Rs 4100 crore). It will have premium accommodation ranging from one to five bedroom air-conditioned apartments priced between Rs 52 lakh and Rs 3.8 crore.
Sources said Mantri Builders, which is present in Bangalore, Pune, Kolhapur and Sholapur, are planning a 40 lakh sq ft IT park-cum-residential complex in Nagpur. The project is going to be announced in the next two months. The company could not be contacted.
As Abhishek Gupta, Senior Research Manager, JLLM explained, "These cities are entailing business capacities ranging from 200 to 3000 seats, underlying the strategic role that these locations have come to play in the off-shoring of business processes." And that augurs well for the overall economy.
Monday, 17 September 2007
Now, book tickets, hotels on EMIs
Online travel agency, Cleartrip, has joined hands with the Kishore Biyani promoted Future Money, a non-banking finance company, to provide finance on an equated monthly instalment (EMIs) basis to people wanting to buy its travel products.
The facility will be available at four of Future Group's Big Bazaar outlets in Mumbai. Cleartrip will soon extend this tie-up to other Big Bazaar outlets in the city as well as other metros.
According to the portal, this facility can be used to pay for all Cleartrip's offerings, such as air tickets, hotel bookings and tour packages.
"With this move, we plan to make travel products affordable to the masses. People who otherwise could not think of going on a holiday, can now do so. The idea is to bring down a Rs 8,000 holiday to Rs 200 a month for travellers," said Sandeep Murthy, CEO, Cleartrip.
Representatives of Cleartrip are already present at four Big Bazaar outlets in Mumbai, following a tie-up with the Future Group in July. They will now be assisted by Future Money sales executives.
These executives will guide the customers with the paperwork for the EMIs. Finance will be provided to the customers as soon as the required verifications are complete. The tickets will be handed over to the customers immediately.
According to Murthy, the facility will be available for a transaction above Rs 6,000. The upper limit would exceed the Rs 50,000 mark. The credit risk will be borne entirely by Future Money. However, the revenue sharing agreement between the two companies has not been revealed.
The travel portal is also considering liasing with Pantaloons, the other retail arm of the Future Group.
Murthy said, "By joining hands with the Future Group, we have access to its country-wide network of 57 Big Bazaar outlets, seven malls and 31 Pantaloon [Get Quote] Stores. This improves our visibility and makes much more business sense than investing in real estate and setting up offices all around the country."
The travel industry in India is pegged at $20 billion, while online travel is a $2 billion industry. Travel portals, which currently have a seven per cent share of the total travel bookings market, are expected to raise it to 28 per cent in a year, according to Murthy.
The facility will be available at four of Future Group's Big Bazaar outlets in Mumbai. Cleartrip will soon extend this tie-up to other Big Bazaar outlets in the city as well as other metros.
According to the portal, this facility can be used to pay for all Cleartrip's offerings, such as air tickets, hotel bookings and tour packages.
"With this move, we plan to make travel products affordable to the masses. People who otherwise could not think of going on a holiday, can now do so. The idea is to bring down a Rs 8,000 holiday to Rs 200 a month for travellers," said Sandeep Murthy, CEO, Cleartrip.
Representatives of Cleartrip are already present at four Big Bazaar outlets in Mumbai, following a tie-up with the Future Group in July. They will now be assisted by Future Money sales executives.
These executives will guide the customers with the paperwork for the EMIs. Finance will be provided to the customers as soon as the required verifications are complete. The tickets will be handed over to the customers immediately.
According to Murthy, the facility will be available for a transaction above Rs 6,000. The upper limit would exceed the Rs 50,000 mark. The credit risk will be borne entirely by Future Money. However, the revenue sharing agreement between the two companies has not been revealed.
The travel portal is also considering liasing with Pantaloons, the other retail arm of the Future Group.
Murthy said, "By joining hands with the Future Group, we have access to its country-wide network of 57 Big Bazaar outlets, seven malls and 31 Pantaloon [Get Quote] Stores. This improves our visibility and makes much more business sense than investing in real estate and setting up offices all around the country."
The travel industry in India is pegged at $20 billion, while online travel is a $2 billion industry. Travel portals, which currently have a seven per cent share of the total travel bookings market, are expected to raise it to 28 per cent in a year, according to Murthy.
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