Service apartments are a cost-effective alternative
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Prominent hospitality brands are yet to enter this sector in Bangalore. The advent of international brands will lead to an increase in competition.
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This is a real estate market study of Bangalore office and residential market by Cushman & Wakefield, international real estate consultants delivering integrated solutions by advising, implementing and managing on behalf of landlords, tenants, and investors through every stage of the real estate process.
Residential sector
With the rise in Indian and international business traffic to Bangalore, the demand within the hospitality industry has skyrocketed. The new genre of service apartments has hence emerged as a cost-effective alternative for business travellers and tourists. These apartments are largely operated by apartment owners or builders and usually offer entire apartments (1, 2 or 3 bedroom) or studio units or shared apartments.
Largely catering to corporates, business travellers, tourists, expatriates and families, the tariffs range between Rs. 1,500 per day for a one-bedroom/studio to Rs. 6,000 plus per day for a three-bedroom apartment. These apartments allow the flexibility associated with short-term accommodation, avoiding long-term commitments.
Bangalore currently has approximately 15 professionally managed service apartments including Homestead, Chalet, Sterling Suits and Halcyon, which are spread across high interest residential areas such as Lavelle Road, Langford Town, Brunton Road, Vittal Mallya Road, Airport Road and Indiranagar.
Most professionally-run centres are not class-comparables to five-star hotels though some of them offer facilities such as guest lounge, swimming pool, spa, restaurant, housekeeping, business centre and other clubhouse facilities. Occupancy levels in these are usually around 90 per cent, indicating the tremendous latent demand in the market.
Apart from these, there is also a large unorganised market in the city, which is driven by "mom and pop" establishments. These, however, do not provide the facilities offered by the professionally-run centres and their rates vary depending on the duration of stay, location, services provided, ambience.
Unlike Mumbai, prominent hospitality brands have not yet entered the service apartment sector in Bangalore. The advent of international brands such as Oakwood and Ascott would lead to an increase in healthy competition and thereby improved services and products.
Several more centres are likely to come up in the peripheral areas such as Whitefield, Bellary Road and Hebbal.
Serviced office space/Incubation centres
Bangalore, with a projected supply of 13 million sq. ft of office space for the year, has not quite been able to satiate the immediate demand. The shortage of ready supply as well as heavy pre-leasing by corporates has increased the need for interim office space. Business centres, though functioning in the city for some time now, have witnessed a revolutionary growth only recently with more focus on quality and international service standards.
High interest areas such as CBD and off CBD especially face this space crunch; and have the majority of operational Business Centres such as DBS, Pan Asia, Golden Square, New Bridge as well as Regus in RMZ Millenia and Raheja Towers. Most of these offer corporates the advantage of an attractive location.
Outer Ring Road faces a situation wherein the projects that are nearing completion have already been committed to by corporates, thereby creating a further dearth of supply. Yet, there are no business centres in the area that can cater to the current requirement although certain clients are provided incubation space by developers.
Indiranagar and Inner Ring Road boast of centres such as Stylus and New Bridge. North Bangalore, which is most likely to be the next preferred commercial location, is soon to have a centre built by Stylus. Whitefield, though facing surplus stock from the previous year, has also witnessed large pre-lease commitments.
The average cost per seat in Grade-A business centres ranges from Rs. 18,000 to Rs. 30,000 per month in Bangalore, depending on the location and requirement. Add-ons like telephone, fax, photocopying, internet, etc., come at an additional cost.
Hotels in the city also offer part of their business centres as temporary office solutions. Taj, Park, Leela, Windsor Manor, Le Meridien offer conference rooms on a day-to-day basis at rates ranging from Rs. 10,000 to Rs. 18,000 per day for an 8 to 16 seater.
Business centre occupancy levels in Bangalore will remain in excess of 75 per cent through 2007. The charges/rentals will remain stable over the next six months owing to sustained demand and new business centres being available.
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