Did you know that New York?s prestigious Park Lane area commands a rental of approximately $4.5 per sq ft, which comes out to be Rs 180-200 per sq ft? Compare this to India, where commercial property is not available for less than Rs 400 per sq ft.

With rentals in India skyrocketing and surpassing global trends, experts feel that if this upward trend goes unchecked, this could drive the BPOs out of the country, bringing the IT/ITeS and in turn, the real estate boom to an end.

Says Pranay Vakil, chairman, Knight Frank, ?with rentals doubling than that of Manhattan, we are on the verge of driving away people and business from some locations in India like Mumbai, Gurgaon, Bangalore etc.

IT/ITeS forayed into India primarily because of low costs of operations as well as cheap labour. But, if they are no longer getting the former, then the dream to come to India does not hold true for them any more?.

As per industry sources, the supply of commercial office space in India was estimated to be around 45-50 million sq ft in the year 2006-07, which is further expected to grow to 60-65 million sq ft in the year 2007-08. The IT/ITeS industry is the predominant occupier of commercial office space in the country accounting for close to 70-75% of all office space absorption currently. Therefore, the exit of the BPOs and IT companies will also affect the real estate sector adversely as a decline in demand will obviously see less commercial (and in turn, residential) projects coming into the market.

According to a recently released report on real estate by Ficci and Ernst and Young, high commercial rentals are also prompting companies to start opening up offices in tier II and III cities like Jaipur, Chandigarh, Nagpur, Kochi etc.

A shift towards these cities with a medium-term potential is perhaps primarily due to the spillover of demand for commercial space and to leverage inherent cost and labour advantages.

The only solution to this, experts feel, is to think out-of-the-box and come up with innovative ways to reduce construction as well as rental costs?

?Some builders have come up with schemes to give possession in 160-200 days and are being pro-active in terms of handing over possession or building at cheaper rates, but such examples are few and far between,? says Vakil.