The Hindu : Andhra Pradesh / Hyderabad News : IT SEZs face problem of plenty

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Saturday, Aug 09, 2008
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Andhra Pradesh

Andhra Pradesh - Hyderabad

IT SEZs face problem of plenty

A. Saye Sekhar

At least two million sq. ft surplus space in Hyderabad by year-end

— Photo: G. Krishnaswamy

Space aplenty: The DLF building in Hyderabad.

HYDERABAD: Commercial office space in the IT special economic zones (SEZs) in the city will face a problem of plenty with at least two million sq. ft remaining unabsorbed by this year-end.

This is 20 per cent of the 10 million sq. ft of the total space, either occupied by the IT companies or that is available. The IT business in Andhra Pradesh accounts for an annual turnover of over Rs. 26,000 crore.

No enquiries

The State Government has notified 25 IT SEZs, most of which are located on the peripheries of the capital such as Gachibowli, Pocharam and Gundla Pochampalli, for they require sprawling areas for building ‘grade-A’ facilities, as they call them. Currently, more than 10 IT SEZs are under construction.

According to George Johnson, Regional Director, Jones Lang LaSalle Meghraj (JLL), a real estate management company, fresh enquiries are not forthcoming for SEZs owing to the general economic slowdown, surging inflation and growing oil prices.

He, however, felt that the situation might improve next year.

“If the US slowdown doesn’t turn out to be recession, some IT companies may consider outsourcing large volumes of their work. In such case, there may not be much difficulty in the absorption of the space,” he observed.

While the L&T Phoenix Info Park and DLF block-I have already become operational, the second phase of DLF would be ready in a couple of months.

The third phase would be ready by next year. DLF alone would supply 2.7 million sq. ft of space in all its three phases. An interesting phenomenon was that space was leased in most IT SEZs before construction.

Decline in demand?

Thanks to concessions in the SEZs, the rush for space in IT Parks around the HI-TEC City in Madhapur has declined marginally, according to JLL. It felt that more commercial office space in the IT SEZs was taken due to the benefits offered by the Government, besides the built-to-suit properties becoming attractive.

Mr. Johnson said the demand for space was decided by the company based on the projections given by NASSCOM. As the second quarter of the financial year was progressing, the demand for office space was not going in line with last year’s trends.

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