In-Depth Analysis of the Office Development Activity in India - Essay Example

MICRO ECONOMIC It is well known fact that development is always related to work. When there is enough work only there is development. Necessity is the mother of invention. Considering India to investigate office development activity even the last two decades, say from 1986, development of a country will depend upon many reasons so is same for even offices. Till 1992 there was no permission for the foreign companies to establish their offices in the country. This can be considered as one of the major reasons why India did not develop. India had a very large manpower and even today has a large population of intellectual and educated employees. If we consider an office style or look during 1986 to 1996 we can find a very large great development. Offices in those days were not having air conditioners, highly glazed tiles and never use to consider to place an office in the posh localities of the city. The ideology of having an office was to a business in a marked place where potential consumers throng at a particular place. So having a shop or an office at that place was enough. So this was the primary reason why office development was not so significant during the decade. Considering an in-depth analysis as to why an office development is needed. If a business done by that office is very sophisticated, to the tune of lakhs and crores of money, or if the business demands such high class office. Only there we can say that there will be a significant development in the office layout or the structure. The above conditions were considered only during that decade 1986-1996. That was the mindset of people in those days. Considering from the year 1986 there were no business which were very sophisticated only some of the business like car dealer show rooms or a photo studios were to be very tastefully established even here also there is a reason behind the offices to be so classy. The money involved behind the car and photo studio business was very high compared to the other businesses. Even today if we see car and studio business make large business then many small business. From the above examples it is clear then office development is directly related to the money involved. Office development activity was concluded t be very show process since it would involve money and time and also down time for several business applications. Even renovations take time. But the need for office development comes with its demand for posh office. During the percent of the population residing I rented homes. Every other person use to have their own home. While setting up an office, land value was not at all a constraining factor for the businessmen. After the death of the great Indian leaders Mrs.Indira Ghandi made many restrictions put by her were removed by her son Rajiv Ghand paved a way to a new beginning to a developed living and well-being. Real estates business was almost nil in the first decade. The primary potential of business in India being agriculture, the land values were very low. The traders and dealers who were to buy crops from the farmers and small peasants and who were situated in cities were to have nicely decorated offices and large go downs. More over the advanced material required to construct posh offices were not available at that time in the Indian market. Offices those days were but and decorated with whatever material was available in local market. Behind every activity there comes the need were there was not necessity too hence state of the art offices It was only after the then Prime Minister Rajiv Ghandhi lifted the sanctions in 1988 put by Indira Ghandi . The multi national company started the operations soon after the sanctions were lifted. This slowly stated the development of particular fields like information technology and telecom etc. This was a major revolution as far as development corporate sector was considered. As I have mentioned earlier there should be a need for any activity, IT and Telecom were the key reasons behind the developmental activity which involved huge money and sophisticated equipments, high end servers, computers, hardware and many other associated peripherals, establishing such sophisticated equipments requires advanced office setup including state of the art server maintenance rooms, laying of cabling to interconnect computers and also cabling for communication purposes. Maintaining all the servers required for a huge office requires a big server room where its hourly verification of health is mandatory. Office development activity was only up to a limited prosperity till in 1992 the then Prime Minister Mr.P.V.Narsimha Rao made a major rule which has reduced the rupee value in terms of US dollars. This can be considered as one of the greatest and one of the most breaking development in the decade.This amendment really changed the fate of the entire nation and took the whole country by storm. BPO stated in the country soon after the rupee value was slashed. Since the Indian currency (rupee) was so low that the one US Dollar would cost 44 Indian rupees. This really proved advantageous to India as well to all the multinational compaies who wanted to setup their branches in India. All the US companies investing in Indian market was not only because rupee value was slashed but also India has the ability and the intellectuality to work on any complex and intricate job in any given working conditions. Every famous software giant now has an office in India and is making substantial profits better than their counterparts in other countries. Since rupee value was also a major decisive factor, which led to setup classy, advanced offices in India. Office development activity began with such a pace that all the material vendors have become corporate companies. All the construction related materials starting from a small pin are now available with the local Indian vendors, which are required for the construction purposes. Unlike earlier offices which were built without even least minimum facilities, the offices now are built keeping in mind the number of employees working, the kind of equipments those offices would be housing and the minimum facilities required for the employees to work comfortably. Establishing an office or renovating the old office involves crores of rupees i.e. millions of rupees. Software companies where the venture into the Indian country have established their base in Bangalore and Pune all the global players like, Microsoftk, Accenture, Oracle Google, Infosys, wipro,Satyam established advanced all the global players like, Microsoftk, Accenture, Oracle Google, Infosys, wipro,Satyam established advanced office at the prime places in the city. Taking an example a small company dealing with power systems, which were to make only some thousands per month, has now started making profit in lakhs per month. Unlike old offices new offices would require centralized airconditioners, high class tiled flooring, or granite flooring, wall plastered with ultra smooth plaster of paris instead of cement, concealed lighting, high class advanced and costly false ceeling and offices located away from the city in suburbs so that it want not have all the voice and air pollution which is so high in the middle of the city areas. Sprawling office campuses attracted freshers and experienced and more over the brand name behind the offices give the boost to work in such world-class office environment. All the development in the field of I.T and telecommunications led to inflation. The real estate business started booming and land values both for residential and commercial have increased very high. Taking Hyderbad as an example, the sub-urban areas have become so costly only because all the offices of MNC's are located outside the city away from heavy population. Since these MNC's offer very high price for the land which they acquire, the land value and the real estate experienced a tremendous boom around the city. With construction of Hyderabad International Airport, 20 Km away from each and every company plans to setup a office near the International Airport. All the software companies, star hotels, global convention centers, farm houses, BPO's, show rooms of all types and factories started acquiring land at the Airport and hence land values touching sky high. This is not the any care with Andhra Pradesh (Hyderaad) with other states like Maharashtra, Karnataka, TamilNadu, Delhi etc. Another important reason for inflation of land and real estate is the population inflation itself. This is the major reason for cities expanding in every direction possible. The population inflation leads to many developments in different fields. Due to this inflation human wants started growing with the growth vendors catering to the want also had a placement growth. Money started in from all directions to these vendors. Hence these vendors had beautiful offices. This population inflation also leads to inflation of rents of the properties. Rents for the offices located near the prime would be some where around 20 - 30 lakhs per a month not only for offices and commercial establishments but also for the residential accommodation. Their rents and advances are touching the sky. Due to this development and also due to the foreign investment the city has grown larger in kilometers because the percentage of constructions are also increasing by leaps and bounds With the investments of foreign companies, population, software companies and BPO's and also due to migration of people from remote villages the construction of offices Corporate office space, buildings, go downs etc has also increased to a very high extent. This inflation is not stopped, it crusaded even in the construction material like cement, iron, sand, concrete, flooring stores, bath fittings etc. With bigger for business and inflation even small offices started renovated their offices keeping pace with the Multi National Companies constructions and rents increased not only where the establishment of BPO's and software companies. But also at all the places where upper middle class and middle class population is growing due to these numbers of constructions and inflated rents have also increased. The third phenomenal reason for the office development activities and as well as inflation of the land values and the construction is the implementation of the master plan by the various Municipal Corporation of in various states. Under the master plan development of the Urban area and the main roads are the primary concerns. Real estate business is a hugely profit making business. It is one of the booming businesses that have given fruitful results to those who invested to gain profits. A real estate business can give good results if the infrastructure of concerned city, town or village is good. Basic facilities like water, electricity, food and shelter should be sufficient. Real estates prices will increase when the land is in the center of the city, or in industrial areas, or in residential areas. Infrastructure of the city or town plays an important role because those are the basic amenities that an investor would look into, before buying the land. Lack of infrastructure and basic facilities would lead to downfall in prices of the land and investors will lose faith and retract the investment. This would be huge disaster for any businessman. Therefore before putting a land to sale check the basic amenities and infrastructure and the price of the land accordingly. India has become a hotspot for real estate business domestically and internationally. The main reason for this is the presence of strong infrastructure and basic facilities like water and electricity. One of the important factors that have increased the real estate corporate is the high rate of ownership. Real estate has become an alternate investment in Italy. A general definition of valuation of property is to state the actual value of the property both according to the government and private (commercial) sector. But government will valuate only landed property and fertile land. While valuating a property government will not consider the commercial demand that property is possessed with. India has many heritage monuments. The heritage monuments may fetch income in the form of tourists visiting these monuments. Government earns income with the developing tourism. The income goes to the government treasury, which is utilized in developing the country's economy. Apart from state owned properties commercial and residential properties are in boom these days. Resident localities are fast growing and becoming some of the costliest living areas. Commercial properties that fetch income are of many kinds. Commercial show rooms and establishment of corporate offices are touching the heights of the real estate business. Commercial show room owners are ready to pay any amount of money to get a place in the most commercially viable areas. The main roads in the city where widened in the city by demolishing the roadside properties. Whatever the age old monuments and small dingy were present, all were dismantled to pave way for main roads and to accommodate the heavy traffic which was alarming the forthcoming development of the country. As a result all the properties facing the main roads were leased to the bigger commercial giants or classy show rooms. In this manner all the old and literally small establishments has come to see the lights of the day and also in a bigger acres and commercial heart of the city junction. We can say that the land values in and around the sub urban area are the office development activity and also establishment of the corporate houses. There corporate houses and the commercial establishments purchase lands even at a price higher than 20 times than the normal market price. This attitude was instrumental in the inflation of the land values. Adding to the cause the registration charges, which were hiked by the government of the lands in the year 1998, lead to impulse buying by the corporate houses not to mention but the IT revolution in the states like Andhra Pradesh, Karnataka, and Tamil Naidu of housing the major software giants like Microsoft, Oracle etc brought significant changes in the purchasing function of the properties among the competition states. The government of the state (Andhra Pradesh) voluntarily constructed sprawling office companies and leaded out the office accommodation to the software companies and BPO's to attract the foreign investment which in turn took the economy of the state to a much higher land without which could falls another second demands to reach that mile store. Nevertheless many local private business tycoons extended the real estate market primary for the office development activities. The present trend in real estate is to acquire land at any price possible and construct an office building which can house multiple brands like software companies and BPO's and lease out the accommodation to these companies to the true of lakhs. The big players who were already involved in the land business have invested thousands of cores for purchasing the lands and developing them. This business seems to be and ideal and instant moneymakers. The sub urban villagers are literally starving for food due to scarcity of water to harvest their land. Here, now becomes multi millionire, which is evident in the places like Hyderabad International Airport by selling their lands to the prospective buyers from real estate developers to corporate houses. Corporate houses that acquire the land near the Airport axe on the planes to build state of the art facilities for their employers and to attract the global clients. The then Chief Minister of Andhra Pradesh Mr.N.Chandra Babu Naidu had made immense struggle to make AP a IT hub for all global players. Since the state has the largest population of the skilled employers that to at many affordable price for the MNC clients. From the above discussion and elaborative explanation-detailing house the structure of low the office development active paved way for the multiple inflations like land values, rents, construction and office renovation. These activities, which are, now only in some select state are slowly spreading to other states because the skilled labors are increasing from every corners of the country. Even the educational pattern in many states is so designed to make a student capable to the industry standards by the moment he comes out of his academic structure. The then Chief Minister Mr.Chandra Babu Naidu has given permission to hundreds of Engineering Colleges keeping in mind the requirement of the qualified engineers for the growing needs of the software and BPO giants. Only after the foreign investments reached to a staggering rate, the constructed activities here grown to a phenomenal extent not only in the sub urban areas but also in the city. Over 70 percent of constructions started only after 2003. The quality of constructions has also developed over the decades. So, if we see and analyze the above discussion stating from the early years of the first decade and the ending of the second decade the present running year every field has grown to a phenomenal level from how the office are built to rent, to land values and constructions. Each and every aspect has an interlinking with each other. The only major reason what we can find is the office development activity and the other activities are its ancillary requirements or repercussion due to their reason. So it is very clear and evident that office development activity over the decades brought a staggering and significant change in the entire nation and also on the economy of the Indian country. Reference Evans, A. W. (1983), "The Determination of the Price of Land", Urban Studies; 20; 119-129. Read More