As much as 8 million square feet of office space is under construction in Bangalore's suburban and peripheral areas. Out of this 3.5 million square feet is pre-committed. This indicates good opportunity for high net worth individuals and housing finance companies looking at investments in the city.

The existing private information technology parks have also begun to add new blocks in their campuses to cater to the rising demand of IT/IT-enabled services companies in the city.

According to Knight Frank's 'India property investment review,' IT and ITeS companies continue to dominate all major commercial space transactions.

Backed by technology sector, the demand for 20,000 to 50,000 square feet floor plate has characterised major transactions in the city. In addition to this, built-to-suit developments have also kept pace in the office space real estate market.

Although the yields in Bangalore's real estate investment market have declined in the past two years from 14 per cent to 11 per cent, the buoyancy in the market and the declining vacancy rates lend optimism to the market, says the Knight Frank report.

At present, properties are being sold on current yields basis which varies from 9-11 per cent per annum. As a result, about 20-35 per cent premium to the actual prices is being charged. This has significantly increased the risk-exposure and we caution investors to exercise discretion, the report adds.

The international airport project coming up in the north of the city has increased the demand in the adjoining locations of Yelahanka and Devanahalli. 

Some of the prominent deals in the commercial office space real estate are: Symphony - taking up 150,000 square feet built-to-suit accommodation and Manhattan Associates - taking up 80,000 square feet.

The UKN group has sold 25,000 sq feet of IT space in the Sigma Tech Park, Varthur and 75,000 square feet of IT space at Sigma Grand located on Outer Ring Road. Sigma Grand is a mixed use development unit comprising retail, commercial and IT space as well as hotel.

The approximate value of these two purchases is estimated to be Rs 27 crore ($6.2 million). In another investment deal, Wyse Technologies has invested in 24,000 square feet of warm shell space in Sigma Softtech Park, Whitefield at about Rs 43 per square feet per month, yielding a return of about 10.75 per cent per annum. 

In addition to corporates, the city has witnessed few HNI investment transactions between 2500 to 10,000 square feet and the returns are in the range of 9-12 per annum.