With the tax benefits offered by SEZs, most IT companies want to set shop there. But there’s a long waiting period in the City.
Thanks to the tax benefits there has been a growing demand for office space in the City of late. And IT companies are making a beeline for SEZ space as it helps reduce operational costs by nearly 18 to 20 per cent when compared to normal office space. Even the rents for both SEZ and non-SEZ spaces are similar, unlike most other major cities in the country.
“As STPI tax breaks have come to an end, IT companies are preferring SEZs to get tax benefits. However, there is no supply of SEZ space for the next seven to eight months in IT hubs like HiTec City and Gachibowli.
“The companies either need to wait for another eight to twelve months to occupy the space or have to choose a non-SEZ space,” said Sandip Patnaik, national director head AP, Jones Lang LaSalle.
Talking about major SEZs in the City, he said, “SEZs have large spaces, which are developed phase by phase. Some of the major SEZs are Raheja, Phoenix and DivyaSree in the HiTec City area. DLF, Tishman Speyer (US-based builder) and upcoming Lanco are located in Gachibowli. In the east, there is the NSL SEZ in Uppal, Raheja Pocharam (9 km away from Uppal) . There are a few SEZs in the South, (close to Shamshabad) but companies don’t prefer these.”
Talking about retail space absorption, he said, “There is no mall retail space available in the City. Most of the malls are available during the end of 2013 and in 2014. The scarcity of mall spaces will continue and retailers will struggle to get quality space in malls until then.
“However, on high streets, retailers prefer the ground floor. At times, they can go up to the second floor to set up shops. But they are not keen to absorb retail space beyond the second floor, as customers tend to stick to the lower floors for shopping. This is leading to lesser rents for spaces that are above the second floor. There are vacant spaces on these floors in some of the high streets,” he said.
Talking about festive season, he said, “Residential buyers consider this an auspicious time to buy new flats. However, retailers absorb space much in advance to get their shops ready for the festive season to get maximum sales.”