Bangalore: Those who grumble about Bangalore being too expensive should take a look at the bigger metros. Mumbai and Delhi are the world's 10 most expensive office locations in the Asia Pacific region, according to a study by global property adviser DTZ Debenham Tie Leung.

While London, Washington DC and Honk Kong are the three most expensive cities when it comes to commercial property, Mumbai and Delhi have risen in the ranks to become more expensive, the study reveals. The expanding real estate market and the booming information technology (IT) and information technology-enabled services (ITES) sectors have apparently contributed to it. Bangalore ranks 103rd in the list and Chennai is 110th.

The situation has been different in the Bangalore market. Through most of 2004 and 2005, a short supply situation prevailed, easing only by the last quarter of 2005.

Observers and international property management consultants, Cushman and Wakefield, affirm that the market here is now witnessing a demand-supply equilibrium.

Prices may not fall but may not increase either as more new commercial property come to the market.

The capital values, which prevailed during the second half of 2005 in Bangalore, showed an increase in some locations such as the Mahatma Gandhi Road-Central Business District and the Outer Ring Road.

There has been a clear occupier preference for property developed along the Outer Ring Road, which points to concerns of accessibility and road infrastructure.

The road is relatively wider and better engineered and travel time is reduced. Locations in and around Whitefield are expected to dominate the supply scenario this year.

In the Mahatma Gandhi Road-Central Business District location, the commercial property prices towards the end of the year were around Rs. 4,500 per sq ft and along the Outer Ring Road, Rs. 2,700 per sq ft.

High value

The ITPL area in the periphery saw high capital values of Rs. 4,200 ($ 96.50) per sq ft as the year ended. Suburban locations such as Koramangala-Bannerghatta Road attract prices of Rs. 3,500 per sq ft and are both less expensive than the Central Business District and more easily accessible.

Developers and market watchers say the activity seen during the last quarter of 2005 indicates a revival of interest by potential investors.

Going by the current latent demand in the market, it is likely that the first half of 2006 may see more leasing of property, probably in excess of 2 million sq ft.

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