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India Real Estate Market Overview

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Outlook

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1

Executive Summary

CONNECTVESTIAN QUARTERLY NEWSLETTER Q3 2015

INVESTMENT & CONSULTANCY SERVICES

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• India’s gross domestic product (GDP) growth slowed to 7.0% in the April-June quarter from 7.5% in the January-March quarter, setting the stage for a rate cut by the Reserve Bank of India (RBI).

• The Reserve Bank of India (RBI) lowered the benchmark repo rate by 50 basis points to 6.75% and reverse repo rate to 5.75% at the end of September 2015.This is the fourth rate cut since January 2015.

• FDI inflow in realty sector has been declining due to the subdued demand and delays in securing mandatory government approvals. The Government decision to relax FDI norms in the construction sector and recent interest rate cut by RBI are likely to boost the real estate sector.

• Mumbai Coastal Road Project, a 35 KM road from Nariman Point to Kandivali received environmental clearance from Union Environment Ministry. Proposed Information Technology Investment Region (ITIR) to be developed near Kempegowda International Airport in Bangalore was put on hold due to land acquisition issues.

• Office space supply across the four major cities of Bangalore, Mumbai, Chennai and Hyderabad was recorded at 4.62 million sqft during Q3 2015. Absorption was recorded at 5.89 million sqft, a 30% quarter on quarter increase. Bangalore registered the highest supply as well absorption among the four major cities.

• No new mall supply was recorded across Bangalore, Mumbai, Chennai and Hyderabad during the quarter in review. Leasing activities were mostly confined to the high street locations on account of limited availability in malls. Rentals mostly remained stable across both malls and high streets barring marginal fluctuations and corrections in select locations.

• Approximately 15,900 new residential units were launched in Q3 2015 across the cities of Bangalore, Chennai and Hyderabad. New launches were low in Chennai on account of subdued demand and high levels of unsold inventory. Bangalore and Hyderabad witnessed an increase in new launches. New launches were mostly in mid segment housing. Capital value remained stable in Hyderabad and Chennai however Bangalore witnessed marginal appreciation in select locations.

• Demand in the residential sector across major cities is likely to improve in Q4 2015 due to recent cut in the interest rate by RBI as well as the festive offers.

Key Rates

PLR*

Repo Rate

Reverse Repo Rate

CRR

Jul-15

14.45%

7.25%

6.25%

4.0%

Aug-15

14.45%

7.25%

6.25%

4.0%

Sep-15

14.45%

7.25%

6.25%

4.0%

2Vestian Quarterly Newsletter Q3 2015 Investment & Consultancy Services

INDIA: ECONOMIC INDICATORSGDP growth at 7.0% during April-June 2015; India’s Industrial Production rises to 3 year high of 6.4%

India recorded Gross Domestic Product (GDP) growth rate at 7.0% during April - June 2015, slowing from a 7.5% growth in the previous quarter. While services and manufacturing grew at a slower pace; mining and construction accelerated and agriculture reported expansion.

Inflation rate (Consumer Price Index (CPI)) in the beginning of Q3 2015 dropped to 3.8% as food cost rose at a slower pace. However, consumer price index increased to 4.41% in September.

Index of Industrial Production (IIP) rose to a three year high of 6.4% in August on account of robust manufacturing as well as mining activity and better offtake of capital goods.

Figure 1: GDP Growth Contributors

The Reserve Bank of India (RBI) lowered the benchmark repo rate by 50 basis points to 6.75%, while keeping Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) unchanged at 4% and 21.5%, respectively. Prime Lending Rate (PLR) reduced from 14.45% to 14.05%. Almost all the commercial banks have cut their base interest rate in the range of 20-40 bps. State Bank of India has reduced its base rate from 9.7% to 9.3%, followed by ICCIC Bank Ltd and HDFC Bank Ltd reduced at 9.35%.

Indian rupee slumped to as low as 66.48; nearly two year low against US dollar, as Asian markets reeled under fears of a China-led global economic slowdown.

Table 1: Key Policy Rates

Repo and Reverse repo rates reduced by 50 basis points; fourth policy cut in 2015

Source: www.rbi.org.in, *Source: www.sbi.co.in

*Note: New rates are effective from October 2015 onwards

Source: Central Statistical Organisation, Govenment of India

GDP is being based on value-added concept, GVA at Basic Price [at Constant(2011-

2012) prices], Central Statistical Organization, Government of India

Figure 2: Inflation & Index of Industrial Production

Source: www.tradingeconomics.com, www.economictimes.com

1.9

4

7.2

3.2

6.9

12.8

8.9

2.7

0 5 10 15

Agriculture, Forestry& Fishing

Mining & Quarrying

Manufacturing

Electricity, Gas &Water supply

Construction

Trade, Hotels,Transport and

Communication

Financial,Insurance, Real

estate &…

PublicAdministration,

Defence & other…

April-June 2015

-4

-2

0

2

4

6

8

10

12

Apr-1

3

Jun-1

3

Aug-1

3

Oct-1

3

Dec-1

3

Feb-1

4

Apr-1

4

Jun-1

4

Aug-1

4

Oct-1

4

Dec-1

4

Feb-1

5

Apr-1

5

Jun-1

5

Aug-1

5

Perc

enta

ge (%

)

Inflation IIP

The BSE sensex registered a fifteen month low of 24,893 points in the beginning of September 2015, as foreign investors continued to liquidate their investment in the equity market. Fear of monsoon deficit and weak rupee also weighed on the market sentiment; which picked up by the end of September 2015 as RBI cut key interest rates.

BSE realty index has dropped a little over 11% in the last one year on account of higher interest rates, a slowdown in realty demand and developers' debt woes. The Reserve Bank of India's (RBI) decision to cut repo rate by 50 basis points (bps) would lead to a significant reduction in home loan rates, thereby reducing EMI of home buyers. The recent interest rate cut will boost the returns of long term bond fund, equities and debt mutual fund. Investors are likeliy to benefits thereby, reviving the real estate market in an otherwise weak period.

BSE sensex registered fifteen month low of 24,893 points in Q3 2015

The Dun & Bradstreet Composite Business Optimism Index stands at 122.0 during Q4 2015, a decrease of 4.1% as compared to Q3 2015. This is on account of the political instability witnessed in the Parliament over Land Acquisition Act and Goods and Services Tax (GST) Bill.

As per the Manpower Outlook Survey India report, Net Employment Outlook for Q4 2015 is projected at 40%; hiring prospects remain relatively stable compared to the previous quarter but decline by 2% year-on-year. Strongest hiring plan was recorded in East with Net Employment Outlook at 42%. Elsewhere, employers in the North, the South and the West expect robust workforce gains, reporting outlook of over 40%.

All the seven industry sectors reported optimistic hiring intentions compared to previous quarter’s estimates. Net Employment Outlook was the strongest in Wholesale & Retail Trade with an Outlook of 45%. Transportation & utilities and Services sector recorded an outlook of 44% and 42% respectively. Public administration and Manufacturing sector anticipated a Net Employment Outlook of 41%.

Business Optimism index remains subdued forQ4 2015

*According to Manpower Employment Outlook Survey “Net Employment Outlook”

figure is derived by taking the percentage of employers anticipating total employment

to increase and subtracting from this the percentage expecting to see a decrease in

employment at their locations in the next quarter.


Figure 6: Net Employment Outlook Across Sectors

Source: Manpower India, Q3 2015

Figure 4: Performance of BSE Realty Index

Source:www.bseindia.com

Figure 3: Performance of BSE Sensex

Source:www.bseindia.com

Figure 5: Net Employment Outlook*

Source: Manpower India, Q3 2015

Seasonally Adjusted Outlook Net Employment Outlook

0

5,000

1-Jul-13

1-Sep

-13

1-Nov

-13

1-Jan-1

4

1-Mar-

14

1-May

-14

1-Jul-14

1-Sep

-14

1-Nov

-14

1-Jan-1

5

1-Mar-

15

1-May

-15

1-Jul-15

1-Sep

-1510,000

15,000

20,000

25,000

30,000

35,000

Poin

ts

Sensex

Q3 2015

0

500

1,000

1,500

2,000

2,500

Poin

ts

Realty Index

1-Jul-13

1-Sep

-13

1-Nov

-13

1-Jan-1

4

1-Mar-

14

1-May

-14

1-Jul-14

1-Sep

-14

1-Nov

-14

1-Jan-1

5

1-Mar-

15

1-May

-15

1-Jul-15

1-Sep

-15

0

10

20

30

40

50

60

Q42013

Q12014

Q22014

Q32014

Q42014

Q12015

Q22015

Q32015

Q42015

Perc

enta

ge

Net Employment Outlook

44

45

37

41

42

41

36

43

42

36

41

42

39

37

0 20 40 60

Transportation &Utilities

Wholesale &Retail Trade

Mining &Construction

Public Administration& Education

Services

Manufacturing

Finance, Insuranceand Real Estate

Percentage (%)

Table 2: Key PE Investments in Real Estate Sector, Q3 2015

PE Firm

GIC

Warburg Pincus

StanChart PE, ADB & IFC

Goldman Sachs

Dutch pension fund APG Asset

Management NV

IndoStar Capital Finance Ltd

JP Morgan

Reliance IAF

Walton Street India Real Estate

Advisors Pvt Ltd

Developer

DLF Home Developers Ltd (DHDL)

Piramal Realty

Shapoorji Pallonji

Piramal Realty

Godrej Properties Ltd

Orris Infrastructure

Bestech Group

Unishire

Krishna Enterprises (Housing &

Infrastructures) India Pvt

Project

Residential

Entity Level

Residential

Entity Level

Residential

Residential

Residential

Residential

Residential

Location

Delhi

Mumbai

Pan India

Mumbai

Bangalore

NA

Gurgaon

Bangalore

Bangalore

300

284

200

150

138

49

22

19

15.7

Amount(in USD million)

Sour

ce: V

C Ci

rcle

World Bank has expressed interest in providing some initial funding for India’s Smart Cities Programme and the AMRUT Scheme. Following are the updates on key infrastructure initiatives taken across four major cities in this quarter:

• Maharashtra Government received the environmental clearance from the ministry of Environment and Climate Change for the 34 km long, INR 85 billion Mumbai Coastal Road Project between Nariman Point and Kandivali.

• The first stretch of Chennai Metro Rail between Koyambedu and Alandur was Commissioned in June 2015 and the trail run for second stretch between Alandur and Little Mount is all set to start soon.

• Telengana Government is planning for 21,000 Crore project in Hyderabad city to improve the infrastructure by constructing multilevel flyover at important junctions.

• Information Technology Investment Region (ITIR) proposed to be developed near Kempegowda International Airport (KIA), Bangalore was put on hold due to the delay in the process of land acquisition and lack of interest shown by major IT companies.

Infrastructure Initiatives

Overall FDI inflows exhibit positive growth, however FDI in realty sector has declinedby 37% Q-o-Q


Figure 7: FDI Inflows

According to the Department of Industrial Policy & Promotion,Government of India, total Foreign Direct Investment (FDI)

Inflows were recorded at USD 9,509 million between April and June 2015, a growth of 31 % when compared to the same period in 2014.Computer software and hardware attracted the highest FDI inflow in April 2015 by absorbing 39% of the total FDI inflow, followed by automobile industry and trading sector.

FDI inflow in realty sector has declined by 37% in Q2 2015 compared to previous quarter due to subdued demand, prevailing regulations and cumbersome procedures. Hence the Government has taken some initiatives to improve the FDI inflows in realty sector. The Government has relaxed FDI norms in the construction sector by removing the area restriction on floor area of 20,000 sqm and minimum capitalization of $5 million. A foreign investor will be permitted to exit and repatriate foreign investment before the completion of project under automatic route, provided that a lock-in-period of three years, calculated with reference to each tranche of foreign investment has been completed.

-

2,000

4,000

6,000

8,000

10,000

12,000

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

Q12015

Q22015

US $

in m

illion

Total FDI inflows FDI in Real Estate

INDIA REAL ESTATE MARKET OVERVIEW5.89 million sqft office space absorption across the four major cities

OFFICEApproximately 5.89 million sqft of office space absorption was recorded across the four major cities of Bangalore, Mumbai, Chennai and Hyderabad during Q3 2015, a 30% increase compared to previous quarter on account of sustained improvement in market sentiment. Bangalore accounted for the highest absorption at 62% followed by Hyderabad at 22%. Mumbai witnessed highest pre commitment of 2.0 million sqft of office space.

Supply was recorded at 4.62 million sqft during Q3 2015, an increase of 16% compared to previous quarter. Bangalore registered the highest supply at 2.21 million sqft followed by Chennai at 1.14 million sqft. Mumbai witnessed a decline in the rental values of CBD and Off CBD micro locations during the quarter; however, rentals in other cities remained stable.

As per VC Circle, 22 private equity (PE) deals approximating to USD 1,306.7 million were recorded in the Indian real estate sector during Q3 2015. The PE investments were primarily in the residential asset class. The deals included Goldman Sachs and Warburg Pincus investing in Piramal Realty. The PE investments were in the cities of Bangalore, Delhi, Mumbai and Pune with Mumbai accounting for the largest PE investment in real estate during the quarter in review.

USD 1,307.7 million PE investments in RealEstate in Q3 2015


Source: Vestian Research

Table 3: Key Office Lease Transactions, Q3 2015

Company

Accenture

Cadence

Manipal group

Happiest Minds Technologies

Building

Pritech Park

RMZ Ecoworld

Salarpuria Sattva Symphony

SJR Equinox

Location

Outer Ring Road

Outer Ring Road

Hosur Road

Electronic City

Developer

RGA

RMZ Group

Sattva Group

SJR Group

4,00,000

3,00,000

2,50,000

1,50,000

Area (in sqft)

BNY Mellon

Sulekha

Solution Star

Lyca Health

DLF IT Park

RMZ Millenia

DLF IT Park

Rajkumar Pinnacle

Manapakkam

Kandanchavadi

Manapakkam

Nungambakkam High Road

DLF

Subashri

DLF

Independent

90,000

70,000

55,000

54,000

Qualcom

Fernandez hospital

Deloitte

Raheja Mind Space

Laxmi Cyber Point

Divya Sree Omega

Hi-Tec city

Banjara Hills

Hi-Tec city

Raheja Developers

GAR Corp.

Divya Sree Builders

8,00,000

1,00,000

90,000

BANGALORE

CHENNAI

HYDERABAD

15,900 units launched in Bangalore, Chennai and Hyderabad in Q3 2015

RESIDENTIALApproximately 15,900 new units were launched in Bangalore, Chennai and Hyderabad in Q3 2015; a 14% quarter on quarter increase. Hyderabad and Bangalore witnessed significant increase in new launches at 32% and 18% respectively, while Chennai saw a 22% decline in the new launches. Bangalore continued to account for majority of the new launches at 66%.New launches among all the three cities were in the mid segment category. Capital values remained stable during Q3 2015.

No new mall supply recorded in the four major cities

RETAILBangalore, Chennai, Hyderabad and Mumbai witnessed no new mall supply during Q3 2015. Leasing activities continued mostly the high street locations in Bangalore, Chennai & Mumbai; whereas Hyderabad witnessed marginal improvement in leasing activities at mall developments.

Figure 8: Supply and Absorption of Office space in Q2 2015


Table 4: Key Residential Project Launches, Q3 2015

Project

Sobha Dream Acres (Phase 2)

Prestige Song Of The South (Phase 1)

Urbana Avenue

Brigade Bueno Vista

Developer

Puravankara Developers

Prestige Group

Ozone Group

Brigade Group

Location

Gunjur Road

Begur Kappa Road

Bangalore North

Budigere Cross

Type

Apartment

Apartment

Apartment

Apartment

1,300

1,200

900

760

No. of Units

Provident Kenworth

Ramky One Wave

Provident Housing

Ramky

Rajendranagar

Narsingi

Apartments

Apartments

2,300

371

Torrence

Doshi Risington phase 1

Tejomaya

Casa Grand Alandur

Landmark Constructions

Doshi Housing

Emami Realty

Casa Grand Private Limited

Perungudi

Karapakkam

Old Mahabalipuram Road

Alandur

Apartments

Apartments

Apartments

Apartments

596

496

318

305

BANGALORE

CHENNAI

HYDERABAD


2.21

1.14

0.470.80

3.68

0.39

1.28

0.55

0

1

1

2

2

3

3

4

4

Bangalore Chennai Hyderabad Mumbai

Area

(in m

illion

sqft)

Supply Q3 2015 Absorption Q3 2015

Apparel, Footwear and Food & Beverage retailers dominate the demand. Retailers like Zara, Cinepolis, Adidas, Bata, Woodland, Kati Zone, Dunkin’ Donuts, Pantaloons, Burger King, Spencer’s and Zodiac among others expanded their operations during this quarter. Rentals mostly remained stable across both malls and high streets barring marginal fluctuation and correction in select locations.

BANGALORE 3.7 million sqft office space absorption & 10,516 new residential unit launches

OFFICEApproximately 3.68 million sqft absorption was recorded during Q3 2015 with no pre commitments for office space. The absorption was primarily in Grade A developments and dominated by the IT/ITeS sector. Overall leasing activity registered 55% increase compared to previous quarter. Outer Ring Road micro location accounted for 55% of the absorption at 2.03 million sqft followed by PBD at 22% with 0.82 million sqft. No leasing activity registered in Bangalore North during this quarter. Absorption comprised of quite a few large size transactions in the range of 1,00,000 - 4,00,000 sqft, concentrated in the Outer Ring Road micro-location.

The third quarter of 2015 witnessed around 2.21 million square feet of new supply, a 52% quarter on quarter increase. Out of which 82% was in the Non SEZ developments. Outer Ring Road micro location accounted for major share of the new supply (70%).This quarter’s major contribution was from Global Technology Park, Manyata Embassy Business Park and Brigade Magnum. Rental values however, to remained stable across all micro-markets.

RETAILCity’s retail market registered no new mall supply during the quarter in review. Leasing was observed mostly in high street locations with retailers like Woodland, Airtel, Bata, Adidas and Kati Zone among others, opening new outlets. Burger King expanded its presence in the city with new outlets in Koramangala, Commercial Street, Jayanagar and Indira Nagar

Table 5: Bangalore Office Rental Values*, Q3 2015

Table 6: Bangalore Retail Rental Values**, Q3 2015

*(INR/sqft/month)

*Office rentals mentioned are for warm shell spaces

**Retail rental values mentioned are for Ground floor store of 1,000 sqft on carpet with an efficiency of 80% for high streets and 65% for malls.

CBD

SBD

ORR

PBD

Bangalore North

Grade A

90 - 110

80 - 85

58 - 65

32 - 35

40 - 42

Grade B

83 - 90

65 - 70

45 - 50

25 - 28

35 - 40

Micro-locationRental Value (INR/sq ft/month)

450

350

225

240

250

300

125

150

180

100

95

110

Magrath Road

Cunningham Road

Vittal Mallya Road

Koramangala

Whitefield

Bannerghatta Road

Mysore Road

Rajarajeshwari Nagar

Rajaji Nagar

Malleswaram

350

185

450

495

180

200

110

145

340

250

High StreetRental Value*

Rental Value*

Mall Spaces

Brigade Road

Commercial Street

Church Street

MG Road

Indiranagar 100 ft Road

Jayanagar 11th Main Road

Sampige Road, Malleswaram

New BEL Road

Kamanahalli Main Road

ORR (Marathahalli - Sarjapur junction)

Bannerghatta Road

Yelahanka Main Road




during this quarter. Leasing activity was dominated by apparel and food & beverage retailers. Swedish Fashion Retailer Hennes and Mauritz AB (H&M) be entering Bangalore with a 30,000 sqft outlet space in Virtuous Retail (VR) Mall, which is expected to be operational by Q1 2016.

Rentals across mall developments continued to remain stable with minor fluctuation in Mysore Road (decline by 8%). Rentals in high street locations too remained stable except at Commercial Street, which witnessed rental drops of almost 40% compared to previous quarter.

9,000 - 25,000

5,500 - 13,000

3,200 - 6,300

3,700 - 5,500

4,500 - 8,000

4,200 - 8,000

4,300 - 11,500

3,200 - 5,000

3,200 - 4,200

3,500 - 6,300

3,150 - 4,600

Micro-location Capital Value (INR/sqft)

Central

Off-Central

Bannerghatta Road

Hosur Road

Sarjapur Road

Whitefield

Bangalore North

Tumkur Road

Mysore Road

Kanakapura Road

Old Madras Road

RESIDENTIALThe city recorded approximately 10,516 new unit launches during Q3 2015, an 18% quarter on quarter increase. Apartments accounted for 97% of the total supply, of which 82 % were in the price range of INR 40 lakhs – 1.2 Crore. Almost 52% of the new launches were in the mid segment followed by affordable segment at 20% & premium and luxury segment at 13% each. Bangalore North micro-location accounted for maximum number of new launches at 41% followed by Whitefield at 29% and Bannerghatta at 14%. Micro-locations of Bangalore North (8%), Hosur Road (5%), Old Madras Road (5%) and Bannerghatta (3%) witnessed a marginal appreciation in capital value while all other micro locations continued to remain stable.

Table 7: Bangalore Residential Capital Values for Apartments, Q3 2015




Central

Off - Central

OMR

GST

NH - 4

11,500 - 30,000

5,500 - 12,500

5,000 - 6,500

3,500 - 5,000

2,500 - 4,500


CHENNAI0.39 million sqft of office space absorption & 2,414 new residential unit launches

OFFICEChennai’s commercial office market witnessed 0.39 million sqft absorption during Q3 2015, a 72% quarter on quarter decline. Absorption during the quarter was mainly concentrated in the SBD at 59% followed by CBD at 29%. Most of the transactions were small & medium sized and in the range of 10,000 - 55,000 sqft. Supply was recorded at 1.14 million sqft during Q3 2015 compared to 0.08 million sqft in the previous quarter. This quarter’s major contribution was from Chennai One Magnum at 1 million sqft. Rental values across all micro-locations continued to remain stable.

RETAILThe city witnessed no new mall becoming operational during Q3 2015. Leasing activities remained active and was dominated by apparel and jewelry retailers.

High street witnessed retailers like Kalyan Jewellers, Lalitha Jewellers, Nalli Silks, Key Fashions, Harley Davidson, Tanishq, Star Bucks and Nilgris among others expanding their operations. Rentals across mall developments continued to remain stable except at Velachery, which witnessed a marginal appreciation of 4%. Rentals in high street locations remained mostely stable, barring Khadar Nawaz Khan Road, Pondy Bazaar and Purusuvakam High Road which showed an appreciation of 10%, 15% and 33% respectively.

RESIDENTIALThe city’s residential market witnessed approximately 2,414 new unit launches during Q3 2015, a 22% quarter on quarter decline. New developments were mostly in the apartment category. Old Mahabalipuram Road accounted for maximum number of new launches at 80%. Almost 47% of the new launches were in the Mid segment followed by premium segment at 35% and affordable segment at 14%. Capital values across all micro locations continued to remain stable except Central micro location which witnessed an appreciation of 5%.

Table 8: Chennai Office Rental Values*, Q3 2015

Table 10: Chennai Residential Capital Values forApartments, Q3 2015

Table 9: Chennai Retail Rental Values**, Q3 2015

*(INR/sqft/month)

*Office rentals mentioned are for Warm Shell spaces

**Retail rental values mentioned are for Ground floor store of 1,000 sqft on carpet with

an efficiency of 80% for high streets and 65% for malls

220

145

130

125

130

220

150

150

100

120

Whites Rd

R K Salai

Mount Road

Nelsanmanickam Rd

Velachery

Vadapalani

270

175

175

200

260

230


Rental Value*

Mall Spaces

Khadar Nawaz Khan Road

Nungambakkam High Road

R K Salai

Usman Road – South

Usman Road – North

Pondy Bazaar

Adyar Main Road

Annanagar Second Avenue

Velachery

Purusuvakam High Road

CBD

Off CBD

SBD

OMR

GSTPBD

Grade A

80

70

40

28 - 40

25 - 35

Grade B

60

45

30

20 - 35

-

Micro-locationRental Value (INR/sqft/month)





HYDERABAD1.28 million sqft office space absorption &2,970 unit launches in the residential space

OFFICEHyderabad witnessed approximately 1.28 million sqft office space absorption during Q3 2015, over three times compared to previous quarter. Absorption was primarily concentrated in the Hi Tech City at 75% of the total absorption during this quarter. Absorption comprised of quite a few large size transactions in the range of 90,000 - 8,00,000 sqft concentrated in the PBD micro-location.

Supply was recorded at 0.47million sqft and mostly concentrated in the PBD (West) micro-location. Rental values across all micro-locations continued to remain stable.

RETAILNo new malls became operational in Hyderabad during Q3 2015; however increased leasing activity was taken up in selected malls such as Forum Sujana Mall at Kukatpalli, Ramachandra CCPL Mall at Malkajgiri.

Leasing remained active across the city dominated by apparel, food & beverage retailers. The city witnessed launch of two hypermarkets from Spencer’s retail namely Spencer’s Hypermarket at LB Nagar (30,000 sqft) and Ramanthapur (35,000 sqft). Retailers like Zara and Warren Tricomi made their debut in the city during the quarter in review. Dunkin Donuts, Cinepolis and Crocodile expanded their presence in the city.

Rentals across both high streets and malls continued to remain stable.

RESIDENTIALThe city witnessed approximately 2,970 new unit launches during Q3 2015, a 32% quarter on quarter increase. One of the significant launch during this quarter was from Provident Housing with the release of Provident Kenworth (2,300 units) at Rajendra Nagar. Majority of the new launches were in mid segment apartment category. Capital price of units were in the range of INR 40 lakhs - 1 Crore. Hyderabad residential sector witnessed moderate rise in demand during this quarter. Banjara Hills, Jubilee Hills, and Hi-Tech City still continue to be prime residential areas of Hyderabad. Capital value, however continued to remain stable across all micro locations.

Table 11: Hyderabad Office Rental Values*, Q3 2015

Table 13: Hyderabad Residential Capital Values for Apartments, Q3 2015

Table 12: Hyderabad Retail Rental Values**, Q3 2015

*(INR/sqft/month)


**Retail rental values mentioned are for ground floor store of 1,000 sqft on carpet with

an efficiency of 80% for high streets and 65% for malls.

156

125

165

150

120

175

110

150

135

NTR Gardens

Banjara Hills

Madhapur

230

270

280


Rental Value*

Mall Spaces

M.G. Road

Begumpet

Banjara Hills Rd. 1

Banjara Hills Rd. 2

Panjagutta

Jubilee Hills Rd. 36

AS Rao Nagar

Madhapur

Kukatpally

CBD

SBD

PBD (West)

PBD

Grade A

45-55

45-55

45-50

22-28

Grade B

40-45

40-45

40-45

16-22

Micro-locationRental Value (INR/sqft/month)

6,500 - 14,000

5,500 - 10,000

3,500 - 6,000

3,200 - 5,000

3,500 - 5,100

3,500 - 6,000

3,400 - 5,000


Banjara Hills

Jubilee Hills

Himayath Nagar

Maredpally

Begumpet, Somajiguda

Madhapur, Gachibowli

Kukatpally





MUMBAIApproximately 2.55 million sqft office space demand; active leasing in the retail market

OFFICEMumbai witnessed 0.8 million sqft office space supply during this quarter, a 57% decline from the previous quarter. The supply was on account of Godrej BKC.

Mumbai market witnessed approximately 2.55 million sqft demand for office space of which 2.0 million sqft were pre-commitments. Absorption was recorded at 0.55 million sqft during Q3 2015, registering a 19% quarter on quarter increase. TCS pre-committed 2.0 million sqft at Hiranandani Estate in Thane. Rental values underwent significant correction in CBD & Off-CBD micro-locations due to subdued demand and availability of quality space options in Eastern suburbs and Navi Mumbai at competitive rentals.

RETAILMumbai’s retail market did not witness any new mall completion during Q3 2015. Leasing however, continued in the malls as well as high streets, dominated by apparel and food & beverage retailers. High Streets witnessed retailers like Pantaloon, Olive Bistro, Pop Tates and Zodiac expanding their operations. Leasing activities remained active across the existing malls and upcoming malls in suburbs due to limited space availability within city limits.

Table 14: Mumbai Office Rental Values*, Q3 2015

Table 15: Mumbai Retail Rental Values**, Q3 2015




**Retail rental values mentioned are for Ground floor store of 1,000 sqft on carpet with

an efficiency of 80% for high streets and 65% for malls.

175 - 200

150 - 160

225 - 275

125 - 150

90 - 125

65 - 100

Micro-locationRental Value

Grade A (INR/sqft/month)

150 - 175

110 - 150

175 - 225

85 - 110

55 - 85

35 - 60

Rental ValueGrade B

(INR/sqft/month)

CBD

Off CBD

BKC

Western Suburbs

Eastern Suburbs

Navi Mumbai

650

850

450

400

250

200

450

-

-

350

180

180

Micro-locationHigh Street

Rental Value(INR/sqft/month)

Mall Rental Value

(INR/sqft/month)

South Mumbai

Linking Road, Juhu

BKC

Western Suburbs

Eastern Suburbs

Navi Mumbai

OUTLOOK


• As per International Monetary Fund (IMF) announcement, India is expected to weather global volatility with real GDP growth projected at 7.3% this year. World Bank has forecasted the economy to grow at a faster pace of 7.5% in 2016 on account of improving economic conditions along with low oil prices and interest rate cut.

• RBI has lowered interest rates by a total of 1.25 per cent since January on account of moderating inflation and favorable global commodity and oil prices. The interest rate cut is expected to boost the economy and bring down the cost of home, consumer and industry loans.

• The growth in FDI has been significant after the launch of ‘Make in India’ initiatives since 2014; FDI inflow is expected to increase in coming quarters on account of relaxation of FDI norms in defence, railways, construction, & insurance.

• Four major cities of Bangalore, Chennai, Hyderabad and Mumbai are expected to witness an office supply of approx. 7.0 million sqft in Q4 2015, with projects such as RGA Tech Park (2.2 million sqft), Hinduja Ecopolis (0.76 million sqft) and Bagmane Constellation Virgo (0.4 million sqft) scheduled for completion. With pick-up in economic activities and strengthening of the economy, demand for office space is likely to increase in coming quarters

• In Bangalore, approximately 3.5 million sqft of office space is scheduled to be operational by Q4 2015.Outer Ring Road is expected to witness consistent demand; High rental value and over supply are likely to slow down leasing activities in Bangalore North micro market.

• In Mumbai demand for office space is likely to increase in Western Suburbs and Navi Mumbai on account of comparatively affordable rentals and availability of quality developments. Moreover, BKC micro-location, on account of its strategic location and upcoming developments is likely to witness increased demand. However rental

contraction is expected on account of sustained demand and influx of office space expected in 2016.

• In Chennai, demand is expected to remain high for CBD and SBD micro-locations. In Hyderabad, demand for office space is expected to increase in coming quarters. Hi-Tech City and Madhapur PBD (West) micro-locations are likely to witness strong demand for office space. Rental values are expected to increase marginally in coming quarters in Hi Tech City, Gachibowli and Madhapur.

• Demand in the residential sector is likely to increase due to the recent cut in interest rate by RBI and various festive offers. However high inventory overhang will keep new launches in check.

• In Bangalore, number of new launches is expected to be in the region of 8,000 - 9,000 units in coming quarter on account of high unsold inventory. More launches are expected in mid and affordable segment. Capital values are expected to remain stable in the short term.

• Chennai is expected to witness more number of new

launches on account of planned projects which are expected to be launched in the coming quarter. Capital value is likely to remain stable. Hyderabad market is expected to witness similar number of launches or more, as Hyderabad market has witnessed an increase in office leasing activities. Capital value is expected to remain stable.

• No new mall inventory is expected in the next quarter. Retail expansion is likely to be more focused on high street locations with more demand from food and beverages and jewelry and apparel retailers. Rentals in most malls and high streets will remain stable in the next quarter.

##Images used are only for representaion purpose only

Bangalore

Chennai

Hyderabad

Mumbai

CBD

SBD

ORR

PBD

Bangalore North

CBD

Off CBD

SBD

CBD

SBD

PBD (West)

PBD

CBD

Off-CBD

BKC

Western Suburbs

Eastern Suburbs

Navi Mumbai

M.G. Road, Kasturba Road, Lavelle Road, V.M. Road, Ulsoor Road, Infantry Road

Indiranagar, Koramangala, Inner Ring Road, Old Airport Road, Bannerghatta Road

Stretch from Hebbal to Silk Board junction

Whitefield, Electronics City, Mysore Road, Sarjapur Road

Bellary Road (Hebbal to BIAL)

Anna Salai, Cathedral Road, Dr. R. K. Salai, Nungambakkam, T. Nagar, Alwarpet & Egmore

Velachery, Guindy, Mt. Poonamallee Road, OMR (Madhya Kailash to Tharamani),

OMR (Tharamani to Perungudi Toll)

Ambattur

OMR (Perungudi Toll, Thoraipakkam, Shollinganallur, Siruseri, Padur)

Shriram, L&T Estancia, Mahindra World City

Begumpet, Somajiguda, Raj Bhavan Road & SP Road

Banjara Hills, Jubilee Hills

Madhapur, Gachibowli, Raidurgam, Manikonda, Hi-Tech City

Pocharam, Uppal, Shamshabad

Fort, Church Gate, Cuffe Parade, Colaba

Worli, Lower Parel, Prabhadevi

Bandra Kurla Complex

Andheri, Goregaon, Malad

Vikhroli, Powai, Mulund, Thane

Vashi, Belapur

OMR

GSTPBD

City Micro-location Key Locations

Office: Location Master


Segments

Affordable

Mid

Premium

Luxury

Price Range

INR 25-50 lakhs

INR 50 lakhs - 75 lakhs

INR 75 lakhs -1.5 crore

INR 1.5 crore and above

Residential: Segment Classification

Bangalore

Chennai

Central

Off-central

ORR (Marathahalli-Silk

Board Jn) & Sarjapur Road

Whitefield

Old Madras Road

Bangalore North

Hosur Road

Bannerghatta Road

Mysore Road

Kanakapura Road

Tumkur Road

Central

Off-Central

OMR

GST

NH-4

MG Road, Kasturba Road, Brunton Road, Lavelle Road, Richmond Road, Residency Road,

Frazer Town, Cox Town and Hannes Road

Indiranagar, Koramangala, Jayanagar, JP Nagar, Malleswaram, RMV Extension,

Sanjay Nagar, RT Nagar, Yeshwathpur, Rajajinagar

HSR Layout, ORR (Marathahalli-Silk Board Junction), Sarjapur Road, Haralur Main Road,

Kasavanahalli Main Road

Whitefield, Brookefield, Mahadevpura, ORR (K.R.Puram to Marathahalli), Varthur Road

K.R. Puram, Ramamurthy Nagar, Battarahalli, Sonnenahalli, Hirandahalli, Budigere,

Devanahalli-Hoskote Road

Banaswadi, HRBR Layout, Hennur Road, Thanisandra Main Road, Bellary Road, Yelahanka,

Kogilu, Chokkanahalli, Bagalur Road, Doddaballapur Road, New Town Yelahanka, Jakkur

Hosur Main Road, Electronics City, Neeladri, Chandapura, Anekal

Bannerghatta Road, Begur, BTM Extention

Mysore Road, Kengeri Satellite Town, Vijayanagar, Magadi Road, RR Nagar

Kanakapura Main Road, Banashankari Extension and Uttarahalli

Tumkur Road, Hessarghatta, Jalahalli, HMT Township

Boat Club Road, Poes Garden, Besant Nagar, Annanagar, T. Nagar, R.A. Puram

Vadapalani, Saligramam, KK Nagar, Porur, Ambattur, Pallavaram, Medavakkam

Madhya Kailash, Perungudi, Thoraipakkam, Sholinganallur, Navalur

Tambaram, Vandalur, Potheri, Guduvancherri, Mahindra World City

Poonamallee to Sriperumbudur

City Micro-location Key Locations

Residential: Location Master


About VestianVestian is a contemporary workplace solutions firm that specializes in providing occupier focused solutions for

commercial, residential, industrial, retail and hospitality sectors. Vestian’s service portfolio includes Investment &

Consultancy Services, Retail Business Solutions, Transaction Advisory Services, Project Services and Integrated

Facilities Management Services. Headquartered in Chicago, USA; Vestian has offices across major cities in the US,

India, China, Sri Lanka and the Middle East.

We measure key deliverables of our business and align it to the clients’ strategic business goals. Our commitment to

achieve excellence and consistency in our service delivery models has helped us attain high standards of quality and

raised the bar for the industry. Our experienced team has the required expertise and exposure in different sectors.

Combining global best practices and local knowledge, the team provides an integrated solution for all real estate

requirements. Moreover, the belief in our corporate philosophy - Delivering Measurable Results - helps us in

providing solutions in keeping with global delivery standards.

Vestian is a member of the Indian Green Building Council and an ISO 9001:2008 certified workplace solutions firm

that is ISO certified across all service lines in the real estate space.

Investment & Consultancy ServicesThe Investment & Consultancy Services group is the research arm of Vestian. They align business strategies of

corporate clients with their real estate portfolio strategy. Property market intelligence, economic, urban & space

planning principles and analytical methods all come together to provide strategic insights to real estate occupiers.

This approach guarantees recommendations that are thorough and meets not only the needs of today, but of the future

as well. We primarily cater to Developers, Builders, Investors and Occupiers.

Our studies span a spectrum of sectors such as commercial, residential, industrial, educational & hospitality.

Transaction Advisory ServicesVestian’s competent Transaction team provides an array of services focused on optimizing workplace solutions that

enhance the client’s real estate portfolio. We handle varied workplace related transactions such as purchase, lease,

disposal, lease management, lease renegotiations and restructuring. We provide solutions that are aligned to the

business objectives of our clients.

Retail Business Solutions ServicesThe Retail Business Solutions is the full-service retail arm of Vestian. We work with each client to understand their

objectives and associated risks, establish achievable goals, develop and implement effective solutions. Vestian Retail

Business Solutions provides end-to-end services, which include Retailer Expansion Strategy, Real Estate Services,

Occupier Representation, Retail Concept Development & Consulting, and Retail Project Management.

Project ServicesThe Vestian Project Services team is a one-stop solution for clients opting for project management solutions. We

operate on 3 different models-Project Consulting, Integrated Service Delivery & Workplace Strategy to deliver

functional facilities that meet the clients’ space requirements. We deliver consistent, reliable and viable solutions for

local and international markets. Our delivery process involves preparation of design documents, co-ordination with

architects & consultants for design, finalization of vendor, supervision of the project, change & move management as

well as project closure.

Integrated Facilities Management ServicesIntergrated Facilties Management Services team helps clients focus on their core business activities. We act on behalf

of the client to preserve and prolong the life cycle of the asset, while generating income. We effectively oversee

property performance and maintenance following international best practices using high end technology and

precision processes. We manage the administration of residential, commercial, retail, healthcare, hospitaility and/or

industrial real estate.

Bangalore: Whitefield & Electronic City

Bangalore: Residential Market Report

Chennai: OMR & GST Road

Bangalore: Outer Ring Road

Bangalore: Retail Real Estate Market Report

Bangalore: Real Estate Market Report

Aerotropolis

Vestian Reports

For further information, please write to us at [email protected]

www.vestianglobal.com

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