SEZs expected to propel demand in southern cities

November 10, 2006	(1 votes, average: 1 out of 5)  Loading ...
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The move to set up Special Economic Zones (SEZs) for IT and ITeS sectors is likely to propel the southern cities to the next level of IT revolution-backed by huge office space off-take.

So far, the southern cities have cornered bulk of the SEZs for the sector (IT and ITeS) and is likely to play a pivotal role in influencing companies entering India and the existing ones expanding in south.

Bulk of the SEZs approved are located in the southern cities of Chennai, Hyderabad, Bangalore, Mysore, Kochi, Thiruvananthapuram and Coimbatore.

Already in southern states, a change in the role of state industrial development corporations, municipal corporations, private developers have significantly contributed in facilitating land and improving the development process and availability of capital required.

Creation of SEZs will have an impact impact on real estate in the medium to long term, says Sanjay Dutt, executive director-transactions services at Cushman Wakefield.

According to him, unlike residential and retail real estate, office real estate segment is a matured one due to the intense competition from states, cities and increasingly developers too who have mostly been committed to the office segment.

Mushrooming of SEZs is likely to impact the office space rental values in markets like Gurgaon, Chennai, Hyderabad and Mumbai where the rentals during the past few months have firmed up the most.

Going forward, as new SEZs get the go ahead it is likely to ease the pressure on rental values. Whereas in markets like Bangalore and a few other tier II and tier III cities, there is sufficient supply of office space and SEZs are likely to keep them competitive as the rental and capital values will be under check.

Initially, some SEZs which may be the only one in the given city may have an edge over the IT parks (registered under STPI), but only in the short-term they may benefit, said Dutt.

Creation of SEZs for IT and ITES sector may be a great leveller for states competing to house IT companies.

This initiative is also likely to set uniform standards in terms of taxation, development and occupation across states.

The services sector has impacted the lifestyle of southern states and a few emerging urban Indian cites.

The development of SEZs and the need for companies to go in search of new markets to tap human resources is likely to lead them to tier II and tier III cities and they are likely to see huge change after 2007.

SEZs are expected to create more jobs and better social infrastructure and thereby accelerate the development of these cities.

According to Anshuman Magazine, managing director for south Asia at CB Richard Ellis, “Benefits available under SEZs coupled with the sunset date for the STPI policy set in 2009, there is high level of anxiety in the market with regard to setting up in SEZs.”

On the whole the SEZ initiative, which is at the Centre and State level needs a change in the policy framework and presently the debate and the churn is taking place, he added.

Source from business-standard.com

News Published Under:   Real Estate India, Special Economic Zones |

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