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U.S. slowdown may affect developers targeting IT sector
By siliconindia
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Saturday, 16 February 2008, 03:05 IST
Banglore:Next thing to come under the sickle compass of the U.S. recession is the market for information technology-related real estate. Real estate analysts predicts that locations in IT parks could see a sharp price correction at least for the next two years since the U.S. is the largest market for Indian IT companies.
"We could see as much as 15 to 40 percent of IT parks' prices being shaved off in destinations where supplies are coming up at higher prices, such as Chennai and Bangalore in south and Pune in west," said Chanakya Chakravarti, Managing Director of real estate at Actis Advisers, a private equity firm.
Actis Advisers is in the process of raising its first India real estate fund of $300 million (Rs1,191 crore) for the purpose of investing in non-IT commercial real estate. It has already received commitments for $100 million.
By 2010, around 150 million sqare feet of space dedicated to IT and IT-enabled services such as back-office operations is expected to come up across India, says to real estate advisory Jones Lang Lasalle Meghraj.
However an expert said that the timing could be a problem. "It always takes a couple of years for developers to put up a new facility; for supply to catch up with demand," said Ambar Maheshwari, Director of investments at DTZ Holding, a real estate consulting firm.
The country's IT sector may not get slowed down, according to the National Association of Software and Services Companies that forecasted a growth from $40 billion this fiscal to $60 billion in 2009-10 in software and services exports. Total revenue is expected at $73-75 billion.
"There will be some correction and we will see IT firms moving some of their newer campuses to cities like Nagpur and Indore in order to cut costs," said Kumar Gera, chairman, Confederation Real Estate Developers Association of India, a real estate developers lobby.
Meanwhie, a late 2007 report from Jones Lang Lasalle Meghraj said cities such as Guwahati, Chandigarh, Nashik and Indore would be the new destinations for IT companies in 2008.
