IT, ITeS turn to SEZ space

The special economic zones (SEZs) are emerging as alternative office space options for IT/ITeS companies in Bangalore. This has led to the city seeing about 2.4 million square feet of planned SEZ office space.

According to the present estimates, most of the notified SEZs are in the IT/ITeS segments, which are typically small land parcels. The projected supply in 2007 is expected to be around 9.8 million sft and another 5.4 million sft is planned for 2008.

SEZs developed by private builders presently command rentals of Rs 42-46 per square feet per month, which is 10 per cent more than the standalone office premises.

"Limited supply has resulted in SEZ units commanding a premium. The rentals are expected to stabilise with the increase in the number of notified SEZs and fresh SEZ supply coming into the market," said Anurag Mathur, deputy managing director "� India, Cushman & Wakefield.

"Either ways, companies, which benefit from the SEZ incentives certainly consider SEZ spaces as a good option. IT/ITeS SEZs are expected to be the most prominent aspect of office space development in the coming years," he added.

According to Ankur Srivastava, managing director, DTZ India, office space rentals quoted by SEZ developers are higher than non-SEZ commercial office space rentals. "Some 20.2 million sft of area has been notified for IT/ITeS SEZs in Bangalore in addition to 18.3 million sft of area, which has been formally approved for IT/ITeS SEZs in the region," he said.

The existing Software Technology Parks of India (STPI) companies can migrate to SEZ only in a phased manner (20 per cent migration per annum). "A number of established corporates with vast operations in India have chosen to expand their business within the SEZ units. Most of the new entrants to the country and corporates considering their first round of expansion have also opted for SEZs," said Anurag Mathur.

As far as the SEZ office space demand is concerned, there is about 2.8 million sft, majority of which is pre-lease commitments due to be delivered over the next few quarters. Most SEZ construction are driven by developers like Embassy, Prestige, Adarsh developers and Divyasree.

Among the non-developer-driven SEZs, Vrindavan TechVillage, a 106-acre notified IT / ITeS SEZ on the Outer Ring Road, which took-off first, has begun to market its space.

"At Vrindavan TechVillage, we have already leased out 1.3 million sft of the total nine million sft. The facility is to be ready by January 2008. Outsource Partners International (OPI) has taken 2.8 lakh sft of space on lease," said Michael Holland-chief executive officer, Assetz Property Services.

The list of SEZs in Karnataka notified after the SEZ Act came into force includes: Wipro for IT (at two places on Sarjapur Road 6.48 hectares, and Electronic City 5.17 hectares), Biocon in biotech (Anekal taluk 35.55 hectares), Adarsh Prime Projects IT/ITeS (Doddakanahalli 27.91 hectares), Tangline Development IT/ITeS (Pattangere 26.673 hectares), KIADB Textile (Hassan taluk 233.307 hectares), Shyamaraju & Company IT/ITeS (KR Puram 21.76 hectares), Cessna Garden IT/ITeS (Vartur hobli 19.33 hectares), Manyata Promoters IT/ITeS (Nagavara Village 22.34 hectares).