india residential property market overview feb 2013
DESCRIPTION
The report gives an overall macroeconomic overview followed by latest real estate updates and trends in each city through rental and capital value trends, new projects as well as market prognosis for 2013 onwards. This quarter, the premium residential markets in India have shown an upward trend, with capital values increasing in the range of 5 to 10% QoQ. The Reserve Bank of India (RBI) reduced the repo and reverse repo rates by 25 basis points from 8.00% to 7.75% in Jan 2013 to induce immediate liquidity in the market. Following suit, a few banks such as SBI and HDFC marginally reduced their home loan rates by 5 to 10 basis points. The RBI also allowed Electronic Commercial Borrowing (EC B) for low cost affordable housing projects as a permissible end-use under the approval route. Now not only, developers and builders can avail EC B for low-cost affordable housing projects, but Housing Finance Companies (HFC s) and National Housing Board (NHB) can also avail of EC B for financing prospective owners of low-cost affordable housing units. We anticipate that the mid-segment residential market will continue to remain active in markets like Bangalore, Pune, Chennai and NOIDA due to their favourable affordability quotient in the medium term. Meanwhile, markets like those in Mumbai, Delhi and Gurgaon will continue to fetch premium value in the luxury segment. For more detailed information kindly click here to download the report. I am sure you will find the report an interesting and informative read.TRANSCRIPT
Accelerating success.
INDIA
QUARTERLY UPDATE | FEBRUARY | 2013
Residential Property Market Overview
www.colliers.com
reseArch & forecAst reportSYDNEY CENTRAL BUSINESS DISTRICT
IndIA resIdentIAL mArketRESEARCh & foRECAST REpoRT
INDIA | FEB 2013 | residential
www.colliers.com
1 SBI Home Loan Rate for Loan upto INR 30 Lakhs2 SBI Fixed Deposit rate for a period of more than one year and amount below INR 1 Crore3 Realty Index is a free float weighted index, comprised of real estate development companies in the BSE-500 Index.
ECoNoMIC BARoMETER
RETURN oN ALTERNATIvE INvESTMENTS
Jan-12 Jan-13
repo rAte 8.50% 7.75%
reVerse repo rAte 7.50% 6.75%
crr 5.50% 4.00%
InfLAtIon 6.89% 6.95%
home LoAn rAte 11.00% 10.00%
Jan-12 Jan-13 YoY %
Change
GoLd 27,428 30,714 11.98%
sILVer 51,500 58,443 13.48%
fIxed deposIt 9.25% 8.50% -8.11%
eQUItY 16,189 19,818 22.42%
reALtY Index 1,574 2,245 42.63%
2
3
1
repo rate reverse repo rate cash reserve ratio Wholesale price Index
ECoNoMIC INDICAToRS
In p
erce
ntag
e
MACRo ECoNoMIC ovERvIEW
Gdp growth in the third quarter (July to september) of 2012 was 5.3%, contracted marginally •from the previous quarter’s 5.5%.
the headline inflation based on the whole sale price index edged down to 6.95% for the month •of January 2013, as compared to 7.18% in december 2012.
the reserve Bank of India reduced the repo and reverse repo rates by 25 basis points from •8.00% to 7.75% in Jan 2013 to induce immediate liquidity in the market. following suit, a few banks such as sBI and hdfc marginally reduced their home loan rates by 5 to 10 basis points.
this quarter, the reserve bank of India allowed electronic commercial Borrowing (ecB) for low-•cost affordable housing projects as a permissible end-use under the approval route. now not only, developers and builders can avail ecB for low-cost affordable housing projects, but housing finance companies (hfcs) and national housing Board (nhB) can also avail of ecB for financing prospective owners of low-cost affordable housing units.
the premium residential markets in India have shown an upward trend, with capital values •increasing in the range of 5 to 10% QoQ. notwithstanding the current economic difficulties, the mid-segment residential market will continue to remain active in markets like Bangalore, pune, chennai and noIdA due to their favourable affordability quotient. meanwhile, markets like those in mumbai, delhi and Gurgaon will continue to fetch premium value in the luxury segment.
4.0
3.0
6.0
5.0
8.0
9.0
7.0
11.0
10.0
12.0
Jan
‘09
nov
‘08
sep
‘09
Jan
‘11
Jan
‘12
Jan
‘13
nov‘
10
mar
‘09
mar
‘10
Jan‘
10
nov‘
09
mar
‘11
mar
‘12
may
’08
mar
’ 08
Jun
‘08
may
‘09
may
‘10
may
‘11
may
‘12
sep’
08
Jul‘0
8
Jul‘0
9
sep‘
10
Jul‘1
0
Jul ‘
11
Jul ‘
12
nov
‘11
nov
‘12
sep
‘11
sep
‘12
2.0
1.0
0.0
-1.0
Source: Goverment of India, Colliers International India Research
CoLLIERS INTERNATIoNAL | p. 3
mUmBAI
KeY neW PrOJeCts
proJect nAme LocAtIon deVeLoper nAme tentAtIVe possessIon* rAte (per sQ.ft.)**
elisium Wadala Lodha Group 4Q 2017 16,900
elina saki naka runwal Group 4Q 2014 9,750
proxima Andheri kurla road the dudhwala Group 4Q 2016 11,750
serenity chembur Godrej properties 4Q 2015 26,400
CITY offICE BARoMETER
INvESTMENT oppoURTUNITIES
AvERAGE CApITAL vALUE RANGE
4Q 2012 1Q 2013
capital Value
rental Value
new project
construction pace
Note: Ongoing Price (P.S.F): Indicative asking price for premium residential properties per sq.ft.
MUMBAI
In 4Q 2012, mumbai’s residential market •witnessed an increase in launches of new premium residential projects in locations like Wadala, Andheri and chembur micro-markets priced in the range of Inr 9,700 to 26,500 per sq ft.
demand for residential properties from •investors as well as end-users picked up this quarter due to the long festive season. however, construction activities remained slow resulting in no major new supply during the surveyed quarter.
capital values for prime residential properties •increased modestly across the city in the range of 1-3% QoQ. however locations such as Worli, khar, santacruz, Andheri and powai remained stable due to the large supply.
rental values of premium residential properties •remained stable in almost all of the micro-markets, except Bandra and khar, where a marginal increase was noticed in rents.
the state Government of maharashtra •approved a new policy for special township projects spread across 100 acres or more. the new policy mandates that such projects reserve 25% of the land for economic activities and 20% for economically Weaker sections (eWs). Also it has increased the ready reckoner rates by 18-20% across the city.
coLLIers VIeW:• the primary sales market in mumbai picked up during the last quarter. A significant number of this demand came from end users due to attractive price points however, investors activity was overall limited due to longer exit periods. secondary sales market remained curbed due to high price points. We anticipate, increased activity in primary sales market in the coming quarters with numerous new launches in both luxury and mid housing segment in the 2/3 Bhk typology.
10000
20000
30000
40000
60000
70000
50000
80000
Inr
per
sq.ft
.In
r pe
r sq
.ft. p
er m
onth
AvERAGE RENTAL vALUE
1Q20
08
3Q20
08
3Q20
09
1Q20
09
1Q20
10
3Q20
10
1Q20
12
3Q20
12
1Q20
13f
3Q20
13f
1Q20
11
3Q20
11
75000
45000
55000
60000
15000
25000
35000
5000
AvERAGE CApITAL vALUE TRENDS
forecast
Micro Market ongoing price (p.S.f)
thane-kalyan 4,000 - 8,000
navi mumbai 3,500 - 7,500
Virar- Boisar 3,000 - 6,000
INDIA | FEB 2013 | residential
cola
ba, c
uffe
para
de
colaba, cuffe parade
mal
abar
hill
, Alta
mou
nt
road
, car
mic
hael
roa
d
malabar hill, Altamount road, carmichael road
Wor
li
Worli
Brea
ch c
andy
, nap
eans
earo
ad, p
edda
r ro
ad
Breach candy, napeansearoad, peddar road
prab
hade
vi
prabhadevi
Band
ra
Bandra
sant
acru
z
santacruz
Andh
eri
Andheri
pow
ai
powai
khar
khar
Juhu
Juhu
200
150
100
50
0
malabar hill, Altamount road, carmichael road
powai
khar
prabhadevi
colaba, cuffe paradeBandra
Andheri
Worli
Juhu
Breach candy, napeansea road, peddar road
santacruz
Inr
per
sq.ft
.
Note:Average Capital/Rental Value Range: Indicative asking price for premium residential properties on per sq.ft. basis.
Note: * As mentioned by developer ** Base selling price as quoted by developer
p. 4 | CoLLIERS INTERNATIoNAL
INDIA | FEB 2013 | residential
deLhI
KeY OnGOinG PrOJeCts
proJect nAme LocAtIon deVeLoper nAme tentAtIVe possessIon* rAte (per sQ.ft.)**
capital Greens shivaji marg dLf Ltd. 2Q 2015 14,000
castewood okhla Indiabulls Ltd. 4Q 2013 12,800
kings court Greater kailash - II dLf Ltd. 1Q 2015 36,000
Queens court Greater kailash- II dLf Ltd. 1Q 2015 36,000
Winter hills dwaraka morh Umang realtech 4Q 2013 8,750
CITY offICE BARoMETER
AvERAGE CApITAL vALUE RANGE
4Q 2012 1Q 2013
capital Value
rental Value
new project
construction pace
DELhI
during 4Q 2012, limited supply was added to •the city’s premium residential inventory; only few small-scale redevelopment residential projects were ready for possession in locations such as Vasant Vihar, Anand niketan and shanti niketan.
In 4Q 2012, capital values for premium •residential properties remained stable in all of the micro-markets. rental values for premium residential properties appreciated by 4% QoQ in the prithviraj road, Aurangzeb road, Golf Links, Jor Bagh and sunder nagar micro-markets. however, rents in micro-markets like Anand niketan, Vasant Vihar, friends colony, maharani Bagh, panchashila, Anandlok, niti Bagh and sdA declined in the range of 2-4% QoQ.
the Urban development ministry has asked •the ddA (delhi development Authority) to increase the fAr (floor Area ratio) for the eWs projects from 200 to 400. this measure has been proposed with an aim to reduce the affordable housing shortage in the capital; especially in the eWs segment. In this quarter, the delhi state Government has also revised the minimum circle rates in category A colonies by 200%, category B by 50%, categories c, d, and e by 25%, categories f and G by 25% and category h by 15%. the increase in the circle rate will help to increase transparency in the market by reducing the gap between the circle rate and the market value.
coLLIers VIeW:• the new master plan for delhi will facilitate the creation of new sub-cities within delhi by unlocking around 60,000 hectares of land for development. the increase in fAr (floor Area ratio) will help to boost residential real estate activity primarily in the eWs and LIG sections.
25000
10000
40000
55000
85000
100000
70000
115000
Inr
per
sq.ft
.In
r pe
r sq
.ft. p
er m
onth
Inr
per
sq.ft
.
AvERAGE RENTAL vALUE
1Q20
08
3Q20
08
3Q20
09
1Q20
09
1Q20
10
3Q20
10
1Q20
12
3Q20
12
1Q20
13f
3Q20
13f
1Q20
11
3Q20
1140000
50000
60000
70000
80000
100000
90000
30000
20000
10000
0
AvERAGE CApITAL vALUE TRENDS
forecast
Anan
d ni
keta
n,
Vasa
nt V
ihar
Anand niketan, Vasant Vihar
panc
hash
ila, A
nand
lok,
niti
Bagh
, sdA
panchashila, Anandlok, niti Bagh, sdA
frie
nds
colo
ny,
mah
aran
i Ba
gh
friends colony, maharani Bagh
shan
ti ni
keta
n,
Wes
tend
shanti niketan, Westend
Grea
ter
kaila
sh
I & II
, sou
th
exte
nsio
n
Greater kailash I & II, south
extension
Golf
Link
s, J
or B
agh,
su
nder
nag
ar
Golf Links, Jor Bagh, sunder nagar
chan
akya
pur
i
chanakya puri
prith
vira
j roa
d,
Aura
ngze
b ro
ad
prithviraj road, Aurangzeb road
200
160
120
80
40
0
Golf Links, Jor Bagh, sunder nagar
shanti niketan, Westend
friends colony, maharani Baghpanchashila, Anandlok, niti Bagh, sdA
Greater kailash I & II, south extension
chanakya puri
prithviraj road, Aurangzeb road
Anand niketan, Vasant Vihar
Note:Average Capital/Rental Value Range: Indicative asking price for premium residential properties on per sq.ft. basis.
Note: * As mentioned by developer ** Base selling price as quoted by developer
CoLLIERS INTERNATIoNAL | p. 5
INDIA | FEB 2013 | residential
GUrGAon
CITY offICE BARoMETER
INvESTMENT oppoURTUNITIES
AvERAGE CApITAL vALUE RANGE
4Q 2012 1Q 2013
capital Value
rental Value
new project
construction pace
Note: Ongoing Price (P.S.F): Indicative asking price for premium residential properties per sq.ft.
GURGAoN
during 4Q 2012, a number of premium •projects/ parts of projects were launched in Gurgaon. most of these projects were launched in the price rangeof Inr 5,500 to 10,000 per sqft in 3/4 Bhk typology. dwarka expressway remained the most active market; other upcoming residential locations, like sohna and Golf course extension road, witnessed limited new launches.
healthy demand was noticed during the •surveyed quarter, and newly-launched projects witnessed high absorption despite an increased investment horizon. But most of this demand was investor driven and the end-users kept themselves at bay due to limited options in mid-segment housing and unaffordable prices.
construction activities remain healthy, •resulting in the completion of numerous residential projects like “tata raisina” by tata Group and “palm drive” by emaar mGf, both on Golf course extension road; and “La Lagoon” and “Verandas” by salcon Group both on Golf course road.
capital values in the secondary sales market •witnessed marginal appreciation in the range of 2 to 5% QoQ in locations like dLf phase I, sushant Lok, nh8, etc. emerging locations like dwarka expressway, new Gurgaon, pataudi road, Golf course extension road, etc. observed an increase in the range of 5 to 10% QoQ.
coLLIers VIeW:• the Gurgaon residential market witnessed an increase in resale inventory stock. end-users activity remained restricted, this is primarily due to an increase in prices and less options available for mid-segment housing. In the near term, micro-markets such as dwarka expressway, pataudi road, sohna road and Golf course extension road will continue to witness interest from investors; however, prices are expected to remain more or less at the same levels.
0
5000
15000
10000
20000
30000
35000
40000
Inr
per
sq.ft
.In
r pe
r sq
.ft. p
er m
onth
Inr
per
sq.ft
.
AvERAGE RENTAL vALUE
3Q20
08
4Q20
08
2Q20
09
3Q20
09
4Q20
09
1Q20
09
1Q20
10
2Q20
10
1Q20
10
3Q20
10
4Q20
10
1Q20
12
4Q20
11
3Q20
12
4Q20
12
2Q20
12
1Q20
13f
2Q20
13f
4Q20
13f
3Q20
13f
1Q20
11
3Q20
11
2Q20
11
6000
8000
10000
12000
14000
16000
18000
4000
2000
0
AvERAGE CApITAL vALUE TRENDS
forecast
Micro Market ongoing price (p.S.f)
Golf course extension road 7,500 - 8,500
sohna extension 5,000 - 6,500
pataudi road 4,500 - 5,500
new Gurgaon 3,500 - 4,500
80
60
40
20
0
Golf
cour
se r
oad
Golf course road
sohn
a ro
ad &
ext
sohna road & ext
dLf
phas
e I
dLf phase I
sush
ant L
ok
sushant Lok
nh -
8
nh - 8
nh-8
sushant Lok
dLf phase I
Golf course road
sohna road & ext
KeY neW PrOJeCts
proJect nAme LocAtIon deVeLoper nAme tentAtIVe possessIon* rAte (per sQ.ft.)**
Imperial Garden sector 102 emaar mGf 4Q 2016 6,500
kalistaa sector 84 spaze towers 4Q 2015 7,080
michael schumacher World tower sector 109 homestead 4Q 2016 12,000 - 14,000
oyster Grande sector 102 Adani Group 4Q 2016 5,500
triumph sector 104 Ats Group 4Q 2016 7,500
Woodshire sector 107 m3m Group 4Q 2016 6,250
Note:Average Capital/Rental Value Range: Indicative asking price for premium residential properties on per sq.ft. basis.
Note: * As mentioned by developer ** Base selling price as quoted by developer
p. 6 | CoLLIERS INTERNATIoNAL
CITY offICE BARoMETER
noIdA
CITY offICE BARoMETER
INvESTMENT oppoURTUNITIES
AvERAGE CApITAL vALUE RANGE
4Q 2012 1Q 2013
capital Value
rental Value
new project
construction pace
Note: Ongoing Price (P.S.F): Indicative asking price for premium residential properties per sq.ft.
NoIDA
there has been a decrease in new project •launches this quarter as compared to the previous three quarters. most of the new launches were in the form of new towers at existing projects. the prices at newly-launched projects remained resilient due to consistent demand from end-users as well as investors, despite price correction speculation. most of the new projects were launched in the price range of Inr 4,000 to 5,000 psf.
fewer projects witnessed completion during •the quarter, including “Azure tower̶34 pavilion” in sector 39 by supertech Ltd. and phase I in “Lotus Boulevard” in sector 100 by 3c Universal Ltd..
capital values in the secondary sales market •remained stable in almost all micro-markets. however, secondary sales prices in the projects, which are expected to see completion in the near future, witnessed an appreciation in the range of 5 to 10% QoQ as they are preferred by end-users due to amenities offered in the form of club houses, parking, swimming pools, Wi-fi connectivity, etc.
rental values showed marginal appreciation •in the luxury segment due to limited supply. however, those in the mid-range segment remained stable.
coLLIers VIeW:• In the medium term, the noIdA residential market will witness increased absorption due to increasing interest from end-users as well as investors. the market will remain active among end-users primarily due its affordability quotient as compared to its counter part micro-markets, such as Gurgaon, where fewer options are available to cater to increasing demand from the mid-range segment. moreover, a decrease in interest rates will boost the investment confidence of end-users. prices are expected to see moderate appreciation in view of the large unsold inventory and upcoming new project launches.
5000
2000
8000
11000
17000
14000
20000
Inr
per
sq.ft
.In
r pe
r sq
.ft. p
er m
onth
AvERAGE RENTAL vALUE
3Q20
09
4Q20
09
1Q20
10
2Q20
10
2Q20
12
4Q20
12
3Q20
12
2Q20
13f
1Q20
13f
3Q20
13f
4Q20
13f
1Q20
11
3Q20
10
4Q20
10
1Q20
12
3Q20
11
4Q20
11
2Q20
11
12000
10000
8000
6000
4000
2000
0
AvERAGE CApITAL vALUE TRENDS
forecast
Micro Market ongoing price (p.S.f)
noIdA expressway 3,800 - 5,500
sector 72 - 78 4,500 - 5,800
sector 117 - 121 4,000 - 5,000
INDIA | FEB 2013 | residential
40
30
20
10
0
sect
or 2
8, 2
9, 3
0
sector 28, 29, 30
sect
or 9
2/93
sector 92/93
sect
or 6
1, 62
., 63
sector 61, 62., 63
sect
or 5
0
sector 50
sect
or 4
4
sector 44
sector 61,62,63
sector 28,29,30
sector 44
sector 92 / 93
sector 50
KeY neW PrOJeCts
proJect nAme LocAtIon deVeLoper nAme tentAtIVe possessIon* rAte (per sQ.ft.)**
BrYs Buzz sector 150 Brys Group 4Q 2016 10,500
floraville sector 137 paramount Group 4Q 2014 5,400
ritz chateaux sector 74 supertech Ltd. 4Q 2016 14,990 - 16,990
Wave Amore sector 32 Wave Infratech 4Q 2015 6,770 - 6,860
Wave trucia sector 25A Wave Infratech 4Q 2015 6,770 - 6,860
Inr
per
sq.ft
.
Note:Average Capital/Rental Value Range: Indicative asking price for premium residential properties on per sq.ft. basis.
Note: * As mentioned by developer ** Base selling price as quoted by developer
CoLLIERS INTERNATIoNAL | p. 7
india | FEB 2013 | REsIDENTIAL
KeY neW PrOJeCts
proJect nAme LocAtIon deVeLoper nAme tentAtIVe possessIon* rAte (per sQ.ft.)**
Abov kazhipattur, omr Akshaya homes 4Q 2015 10,400
fairways kolapakkam sumanth & co 1Q 2014 5,000
shine kazhipattur, omr radiance realty 2Q 2015 3,400
VGn hazel off poonamallee VGn developers 4Q 2016 3,000
pavilion thalambur, omr casa Grande 4Q 2015 3,000
CITY offICE BARoMETER
INvESTMENT oppoURTUNITIES
AvERAGE CApITAL vALUE RANGE
chennAI
4Q 2012 1Q 2013
capital Value
rental Value
new project
construction pace
Note: Ongoing Price (P.S.F): Indicative asking price for premium residential properties per sq.ft.
ChENNAI
In 4Q 2012, numerous new projects were •launched in the city. Locations like old mahabalipuram road (omr), poonamallee, chromepet and kolapakkam reckoned maximum activities in terms of launches. most of these projects were priced in the range of Inr 2,400 to 5,000 per sqft.
during the surveyed quarter, a number of •small residential projects/ phases of projects were completed, in micro-markets like Boat club road, thiruvanmiyur, pallavaram, Ayyappanthangal, singaperumalkoil, Avadi and Velachery.
capital values in the secondary sales market •for premium residential properties appreciated in the range of 2-7% QoQ in micro-markets like Boat club, Besant nagar, Adyar and siruseri, kazipattur. this was primarily because the new projects were being launched at a higher price and there was an increase in the guideline values in these areas.
the residential leasing market gathered •momentum, however, rents remained stable across the city for premium residential properties. the landlords have started offering attractive terms on leases, as they realize that companies have become very stringent with their residential budgets.
the chennai housing and Urban development •Authority has allowed an fsI exemption for multi-level parking above ground in residential projects.
coLLIers VIeW:• the evolving corridors such as rajiv Gandhi salai and Velachery will see an increase in capital values due to demand from the mid end segment. With upcoming infrastructure development in areas such as perungudi, sholinagallur, Adyar, teynampet, Valsaravakkam will witness high demand.
Adya
r
Anna
nag
ar
nung
amba
kkam
Alw
arpe
t / r
A p
uram
Vela
cher
y
shol
inga
nallu
r
siru
seri/
ka
zipa
ttur
t na
gar
Beas
ant
naga
r
Boat
clu
b
0
6000
3000
12000
9000
18000
15000
24000
27000
21000
30000
Inr
per
sq.ft
.In
r pe
r sq
.ft. p
er m
onth
AvERAGE RENTAL vALUE
sholinganallur
Velachery
Alwarpet / r A puram
t nagar
Beasant nagar
Adyar
Anna nagar
nungambakkam
Boat club
siruseri/ kazipattur
Boat clubBeasant nagar
nugambakkamsiruseri/ kazipattur
Velachery
sholinganallur
Alwarpet / r A puram
Anna nagar
t nagarAdyar
1Q20
08
3Q20
08
3Q20
09
1Q20
09
1Q20
10
3Q20
10
1Q20
12
3Q20
12
1Q20
13f
3Q20
13f
1Q20
11
3Q20
11
25000
21000
17000
13000
9000
5000
1000
AvERAGE CApITAL vALUE TRENDS
forecast
Micro Market ongoing price (p.S.f)
Velachery 5,000 - 7,000
sholinganallur 3,500 - 4,200
siruseri/ kazipattur 2,500 - 3,900
Inr
per
sq.ft
.
75
60
45
30
15
0
Note:Average Capital/Rental Value Range: Indicative asking price for premium residential properties on per sq.ft. basis.
Note: * As mentioned by developer ** Base selling price as quoted by developer
p. 8 | CoLLIERS INTERNATIoNAL
INDIA | FEB 2013 | residential
BenGALUrU
KeY neW PrOJeCts
proJect nAme LocAtIon deVeLoper nAme tentAtIVe possessIon* rAte (per sQ.ft.)**
Bhartiya city thanisandra main road Bhartiya 4Q 2015 5,000
Brigade caladium hebbal Brigade Group 4Q 2015 7,000
Brigade Altamont off hennur road Brigade Group 4Q 2015 4,300
corinth off hennur road ezzy Group 4Q 2015 6,500
temple tree hennur road expat Group 4Q 2016 3,000
CITY offICE BARoMETER
INvESTMENT oppoURTUNITIES
AvERAGE CApITAL vALUE RANGE
4Q 2012 1Q 2013
capital Value
rental Value
new project
construction pace
Note: Ongoing Price (P.S.F): Indicative asking price for premium residential properties per sq.ft.
BENGALURU (BANGALoRE)
during 4Q 2012, developers continued to •launch premium residential projects. micro-markets like thanisandra, hebbal and hennur road were the preferred locations for new residential development. demand was driven by both investors and end-users due to high affordability and high rental yield. the prices at newly-launched projects have increased and most of the premium projects were priced in the range of Inr 4,000 to 7,000 per sq ft.
In the same quarter, the city witnessed •completion of various projects/ parts of projects including “Jains Altura” by Jain heights & structures, and “LGcL Ashlar” by LGcL, both located at sarjapur road; “Legacy caldera” by Legacy Group at cunningham road; “sobha cinnamon” by sobha developers at haralur road; “prestige oasis” by prestige Group at doddaballapur road; and “skylark Arcadia” by skylark at Whitefield.
capital values in the secondary sales markets •have witnessed an increase in the range of 5-6% QoQ in central locations cooke town and Jayanagar due to limited supply. All other micro-markets were remained stable due to large available supply in the pipeline.
rents in micro-markets such as Whitefield, •koramangala, central, cooke town and Airport road increased in the range of 2-5% QoQ. most of the demand in this segment comes from employees of the It/Ites sector.
colliers View:• the Bangalore residential market will continue to remain active due to its favourable affordability quotient and increasing investor interest. recently, Bangalore caught the interest of a number of Grade A developers which will result in more options for buyer and control over prices. We anticipate that residential prices will increase moderately in the near future inspite of the huge supply in the pipeline.
6000
2000
10000
18000
14000
22000
26000
30000
Inr
per
sq.ft
.In
r pe
r sq
.ft. p
er m
onth
AvERAGE RENTAL vALUE
25000
20000
15000
10000
5000
0
AvERAGE CApITAL vALUE TRENDS
forecast
Micro Market ongoing price (p.S.f)
Airport road 5,000 - 6,000
Bannerghatta road 4,200 - 6,000
Whitefield 4,400 - 6,700
Yelahanka 3,800 - 6,000
Yela
hank
a
Yelahanka
Whi
tefie
ld (A
ppts
)
Whitefield (Appts)
kora
man
gala
koramangala
Bann
ergh
atta
ro
ad
Bannerghatta road
Indi
rana
gar
Indiranagar
Airp
ort r
oad
Airport road
pala
ce o
rcha
rd
palace orchard
Jaya
naga
r
Jayanagar
cook
e to
wn
cooke town
cent
ral
central80
60
40
20
0
1Q20
08
2Q20
08
3Q20
08
2Q20
10
4Q20
09
1Q20
10
4Q20
08
1Q20
09
2Q20
09
3Q20
09
3Q20
10
4Q20
10
1Q20
11
2Q20
11
3Q20
12
4Q20
12
1Q20
13f
2Q20
13f
3Q20
13f
4Q20
13f
2Q20
12
1Q20
12
4Q20
11
3Q20
11
central
Yelahanka
koramangala
Indiranagar
cooke town Jayanagar
Bannerghatta road
palace orchard
Airport road
Whitefield
Inr
per
sq.ft
.
Note:Average Capital/Rental Value Range: Indicative asking price for premium residential properties on per sq.ft. basis.
Note: * As mentioned by developer ** Base selling price as quoted by developer
CoLLIERS INTERNATIoNAL | p. 9
INDIA | FEB 2013 | resiedential
koLkAtA
KeY neW PrOJeCts
proJect nAme LocAtIon deVeLoper nAme tentAtIVe possessIon* rAte (per sQ.ft.)**
Alcove regency topsia Alcove Group 4Q 2015 7,500
Altius topsiaprudent Infra realty &
space Group4Q 2015 8,200
Lavanya Bishnupur orchid Grup 4Q 2015 2,600
rajat Boulevard tangra rajat Group 4Q 2015 5,200
sampoorna new town, rajarhat Bengal dcL 4Q 2015 3,600 - 3,800
CITY offICE BARoMETER
INvESTMENT oppoURTUNITIES
AvERAGE CApITAL vALUE RANGE
Note:Average Capital/Rental Value Range: Indicative asking price for premium residential properties on per sq.ft. basis.
4Q 2012 1Q 2013
capital Value
rental Value
new project
construction pace
Note: Ongoing Price (P.S.F): Indicative asking price for premium residential properties per sq.ft.
koLkATA
In 4Q 2012, the kolkata premium residential •market saw few launches as a number of developers are awaiting approvals from the authorities for new project launches. suburban residential micro-markets like topsia, tangra, Bishnupur and new town witnessed most of these new launches. most of these projects were launched in the mid-range, priced from Inr 2,500 to 5,500 per sq ft.
during 4Q 2012, developers put their project •construction work on the fast track, resulting in the completion of various projects/ phases of the projects including “meena elegant” by Gm Group at kaikhali; “Ideal heights phase I” by Ideal Group at sealdah and “shrestha Garden phase II” by shreshta construction pvt. Ltd at kalipark.
the capital values in the premium residential •market picked up this quarter across micro-markets in the range of 2-8% QoQ. however, micro-markets like pA shah road, tollygunge, salt Lake em Bypass and VIp road remained stable due to the abundant supply.
rental values remained stable due to subdued •commercial market sentiments in the city. Locations like the pA shah road, Alipore, Loudon street, Ballygunge, em Bypass and new town-rajarhat micro-markets reflected a marginal decline due to low demand and supply availability in these locations.
coLLIers VIeW:• residential sales volume in peripheral locations is likely to increase in coming quarters due to the affordability factor, infrastructure development and a decrease in interest rates. A few high-end projects are expected to be launched during the first half of the year. capital and rental values are expected to remain stable across the city, while southern kolkata may see a marginal increase due to limited availability of properties.
3000
1000
7000
5000
11000
9000
13000
15000
17000
Inr
per
sq.ft
.
AvERAGE RENTAL vALUE
2000
4000
0
6000
8000
10000
12000
14000
16000
AvERAGE CApITAL vALUE TRENDS
forecast
Micro Market ongoing price (p.S.f)
tollygunge 3,600 - 4,800
Behela 2,900 - 3,700
salt Lake 4,000 - 5,500
em Bypass 4,000 - 7,000
new town -rajarhat 3,200 - 4,600
Bhaw
anip
ur
Bhawanipur
pA s
hah
road
pA shah road
tolly
gung
e
tollygunge
Loud
on s
tree
t
Loudon street
Behe
la
Behela
Alip
ore
Alipore
em B
ypas
s
em Bypass
Bally
gung
e
Ballygunge
salt
Lake
salt Lake
VIp
road
VIp road
new
tow
n ra
jarh
at
new town rajarhat
Bhawanipur
em BypassBallygunge Loudon road
Behela
Alipore tollygunge
p A shah roadnew town - rajarhat
VIp roadsalt Lake
1Q20
08
2Q20
08
3Q20
08
2Q20
10
4Q20
09
1Q20
10
4Q20
08
1Q20
09
2Q20
09
3Q20
09
3Q20
10
4Q20
10
1Q20
11
2Q20
11
3Q20
12
4Q20
12
1Q20
13f
2Q20
13f
3Q20
13f
4Q20
13f
2Q20
12
1Q20
12
4Q20
11
3Q20
11
Inr
per
sq.ft
.
40
30
20
10
0
Note: * As mentioned by developer ** Base selling price as quoted by developer
Inr
per
sq.ft
. per
mon
th
p. 10 | CoLLIERS INTERNATIoNAL
INDIA | FEB 2013 | resiedential
pUne
KeY neW PrOJeCts
proJect nAme LocAtIon deVeLoper nAme tentAtIVe possessIon* rAte (per sQ.ft.)**
Amanora Gateway towers 1 hadapsar city corporation 1Q 2017 8,000 -11,000
dB Golf Links kalyani nagar dB realty 4Q 2014 12,000
Gagan Unnati kondhwa road Gagan properties 4Q 2014 6,000
Gagan krishnagan kondhwa road Gagan properties 4Q 2014 5,150
nyati equatorial Bavdhan the nyati Builders pvt. Ltd 2Q 2015 5,000
park Grandeur Baner pride Group 4Q 2015 7,250
CITY offICE BARoMETER
INvESTMENT oppoURTUNITIES
AvERAGE CApITAL vALUE RANGE
Note:Average Capital/Rental Value Range: Indicative asking price for premium residential properties on per sq.ft. basis.
4Q 2012 1Q 2013
capital Value
rental Value
new project
construction pace
Note: Ongoing Price (P.S.F): Indicative asking price for premium residential properties per sq.ft.
pUNE
In 4Q 2012, numerous residential projects •were launched in locations like kalyani nagar, Baner, hadapsar, kharadi, Bavdhan, nIBm, Wakad and talegaon. new launches are priced between Inr 3,000-5,000 per sqft with the exception of high-end luxury projects located in kalyani nagar, hadapsar and Baner priced at Inr 8,000-12,000 per sq ft.
this quarter witnessed fairly high construction •activity enabling under-construction projects to welcome ready-possession units and registering a few completed projects mainly located in Baner, Bavdhan and chinchwad, priced between Inr 4,000-7,000 per sq ft.
capital prices in pune registered stable •growth with an upward trend due to numerous launches of luxury residential projects as well as rapid growth in western and southern areas. prices in areas such as Boat club road, camp, deccan, kalyani nagar, Viman nagar, kharadi, nIBm, Undri and kondhwa registered an increase of 6-7% QoQ from the previous quarter.
during 4Q 2012, rental values remained •stable in almost all of the micro-markets in pune due to stable demand, although minor fluctuations were registered in prime and developing areas.
coLLIers VIeW:• With developing infrastructure most preferred living areas in pune remain on the eastern and western sides. nevertheless, the southern and northern zones are quickly picking up as well in terms of new launches and under-construction developments, particularly in areas such as kothrud, talegaon, etc. In terms of sales activity, medium-priced projects quoting from Inr 3,000 - 5,000 per sq ft. tend to be absorbed faster due to affordability in comparison with the slow sales of high-end projects quoting above Inr 7,000 per sq ft.
1000
3000
7000
5000
9000
13000
11000
15000
Inr
per
sq.ft
.
AvERAGE RENTAL vALUE
11000
10000
8000
9000
7000
6000
5000
4000
3000
2000
AvERAGE CApITAL vALUE TRENDS
forecast
Micro Market ongoing price (p.S.f)
kalyani nagar/Viman nagar/kharadi 5,000 - 12,000
Baner/hinjewadi/Wakad/pashan 3,800 - 6,000
kothrud/Bavdhan/Wajre 3,800 - 6,000
nIBm/Undri/kondhwa 3,800 - 5,000
pimpri/chinchwad/chakan 2,500 - 4,500
kaly
ani n
agar
/Vi-
man
nag
ar/k
hara
di
Bhaw
anip
ur
kalyani nagar/Viman nagar/kharadi
Bhawanipur
decc
an/c
amp/
Boat
clu
b
deccan/camp/Boat club
Bane
r/h
inje
wad
i/W
akad
/pas
han
Baner/hinjewadi/Wakad/pashan
mag
arpa
tta/h
adap
sar
magarpatta/hadapsar
nIBm
/Und
ri/ko
ndhw
a
nIBm/Undri/kondhwa
koth
rud/
Bavd
han/
Waj
re
kothrud/ Bavdhan/ Wajre
pim
pri/c
hinc
hwad
/ch
akan
pimpri/chinchwad/chakan
30
25
20
15
10
5
0
1Q20
09
2Q20
09
3Q20
09
4Q20
09
1Q20
10
2Q20
10
3Q20
10
2Q20
11
1Q20
11
3Q20
11
4Q20
12
1Q20
12f
2Q20
12f
3Q20
12f
4Q20
12f
3Q20
12
2Q20
12
1Q20
12
4Q20
11
4Q20
10
kalyani nagar/Viman nagar/kharadi deccan/camp/Boat club/central pune
magarpatta/hadpsar Baner/hinjewadi/Wakad/pashan/Balewadi
kothrud/Bavdhan/Wajre nIBm/Undri/kondhwa
Inr
per
sq.ft
.In
r pe
r sq
.ft. p
er m
onth
Note: * As mentioned by developer ** Base selling price as quoted by developer
CoLLIERS INTERNATIoNAL | p. 11
india | FEB 2013 | REsIDENTIAL | sUBMARkETs
Mumbaithe high-end residential real estate markets in mumbai include malabar hill, Altamount road, carmichael road, napean sea road, Breach candy, colaba, cuffe parade, prabhadevi, Worli, Bandra, khar, santacruz, Juhu and powai.
delhithe prime residential areas in delhi are in the south region and comprise Vasant Vihar, Westend, shanti niketan, Anand niketan and central delhi locations. these areas enjoy proximity to embassies, the airport and central commercial areas - connaught place.
Gurgaonthe prime residential locations of Gurgaon include Golf course road, dLf phase I, sushant Lok and sohna road. the delhi- Jaipur highway (nh-8) is also emerging as a preferred residential location owing to its proximity to the national capital.
nOidanoIdA premium residential market is comprised of sectors 44, 50, 92, 61, 62, 63 , 28, 29, 30 and taj express highway.
Chennaithe prime residential areas in chennai include thiruvanmiyur, Valmiki nagar and Besant nagar, r.A puram, mylapore and Adyar in south chennai, nungambakkam, chetpet, poes Garden, egmore, Alwarpet, t. nagar in central chennai; and Anna nagar, kilpauk in north West chennai.
Bengaluru (BanGalOre)the residential market of Bengaluru comprises both apartments and independent residences. currently, high-end residential developments are mainly concentrated along the cBd, and eastern and south precincts of the city. recently, northern Bengaluru has also witnessed a spree of realty activity facilitated by the new International Airport at devanhalli.
Kolkatathe prime residential areas in kolkata include pA shah road, tollygunge and Bhawanipur in south kolkata, Alipore and Behala in south-west kolkata, Loudon street and Ballygunge in central kolkata; and salt Lake, em Bypass and VIp road in north kolkata.
Pune the prime residential areas in pune include kalyani nagar, Viman nagar, Boat club road, nIBm road, magarpatta, hadapsar, koregaon park. recently, increased activities has been witnessed in pimpri-chinchwad, Baner-pashan and kondhwa.
RESIDENTIAL SUBMARkETS
CITY BARoMETERS
Increasing as compared to previous quarter
decreasing as compared to previous quarter
remained stable from previous quarter
colliers International (India) provides property services to property Investors and occupiers. We deliver customised service solutions utilising local and global knowledge in partnership with our clients via our property Investment and occupier service lines. these service lines include - office services, facility management, project management, residential services, Investment services and Valuation & Advisory services.
www.colliers.com/india
for national residential services related queries please contact:
poonam mahtani, national director residential services & knowledge systems [email protected]: +91 22 4050 4551
Mumbai : Vaibhav kumar, office director [email protected] 31/A, 3rd floor, film center, 68, tardeo road, mumbai, India - 400 034. tel : +91 22 4050 4527, fax : +91 22 2351 4272
delhi nCr : Ajay rakheja, office director [email protected]
new delhi : statesman house, 4th floor, Barakhamba road, connaught place, new delhi, India - 110 001 tel : +91 11 3044 6423, fax : +91 11 3044 6500
Gurgaon : technopolis Building, 1st floor, dLf Golf course main road, sector 54, Gurgaon, India - 122 002 tel : +91 124 456 7500, fax : +91 124 456 7502
Bengaluru : Goutam chakraborthy, office director [email protected] prestige Garnet, Level 2, Unit no.201/202, 36 Ulsoor road, Bengaluru, India - 560 042 tel : +91 80 4079 5500, fax : +91 80 4112 3131
Pune : suresh castellino, office director [email protected] hotel Le meridian, 101, r.B.m. road, pune, India - 411 001 tel : +91 20 4120 6438, fax : +91 20 4120 6434
Chennai : kaushik reddy, office director [email protected] heavitree complex, Unit 1c, 1st floor, 23, spurtank road, chetpet, chennai, India - 600 031 tel : +91 44 2836 1064, fax : +91 44 2836 1377
Kolkata : soumya mukherjee , office director [email protected] Infinity Business centre, Infinity Benchmark, room no 13, Level 18, plot G - 1, Block ep & Gp, salt Lake sector V, kolkata - 700 091 West Bengal, India tel : +91 33 2357 6501 , fax : +91 33 2357 6502
This book is printed on 100% Recyclable paper
india | FEB 2013
Accelerating success.
aUtHOrs
amit Oberoi MriCsnational director, Valuation & Advisory; researchemail: [email protected]
surabhi arora MriCsAssociate director, researchemail: [email protected]
sachin sharmaAssistant manager, researchemail: [email protected]
Heliana ManoAssistant manager, research email: [email protected]
for general queries and feedback :[email protected] tel: +91 124 456 7580
this report and other research materials may be found on our website at www.colliers.com/India. Questions related to information herein should be directed to the research department at the number indicated above. this document has been prepared by colliers International for advertising and general information only. colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from.
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OFFICE PROPERTY MARKET OVERVIEW INDIA
QUARTERLY UPDATE | JANUARY | 2013
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Residential Property Market OverviewINDIA
QUARTERLY UPDATE | NOVEMBER | 2012
ASIA PACIFICOFFICE MARKET OVERVIEW3Q 2012
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STREET/PRECINCTRENT
(USD)**
ANNUAL CHANGE
(%)
New York – Fifth Avenue ��,��� ��.�
Hong Kong – Queen's Road Central, Central (tie)
��,��� ��.�
Hong Kong – Canton Road (tie)
��,��� ��.�
London – Old Bond St.*** ��,��� ��.�
Paris – Avenue des*** Champs-Élysées
��,��� flat
Hong Kong - Causeway Bay
��,��� ��.�
New York – Madison Avenue
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Zurich – Bahnhofstrasse ���� flat
Milan – Via Monte Napoleone
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Sydney – Pitt Street Mall ���� (��.�)
HIGHLIGHTSGLOBAL
www.colliers.com
MID-YEAR 2012 | RETAIL
ANN T. NATUNEWICZ Manager | Retail Research | USA
Colliers’ 2012 Global Retail Streets survey found that of 129 locations tracked, 51 posted higher year over year average rental rates, 49 were flat, and 24 were down (5 lacked comparable data).
Retailers entering new markets—both developed and developing—continue to hedge risk by targeting the same one or two premier locations, generating heated competition and outsized rental rate growth in a handful of space-constrained corridors.
Companies with the most ambitious long-term expansion plans remain focused on emerging markets with rapidly growing middle-class populations, but recently institutional capital has pulled back somewhat to favor core markets and investments.
While economic and political turmoil did affect rental rates in headline-generating markets (such as Cairo and Athens), high streets with strong fundamentals remained remarkably resilient, suggest-ing, at least for now, some separation between macroeconomic issues and underlying real estate fundamentals.
Since we conducted our survey, however, weakening consumer sentiment among affluent shoppers has already begun to impact retailers’ revenues and could hinder landlords’ near-term ability to raise rents, suggesting flattening growth rates for the coming year.
This spring proved to be a tricky time to conduct global benchmarking, as market sentiment has deteriorated markedly since April. During the past year, virtually every entity making a forecast—including Colliers in our 2012 U.S. Retail Outlook —included a caveat related to not-yet-quantifiable global fallout from Europe’s fiscal issues. As the past few months have illustrated, the time to face Eurozone issues has finally arrived, spawning a new wave of financial uncertainty.
More than two years post-recession, though, results from our annual survey of High Street rents illustrate that the world’s priciest retail corridors continue to attract the most sought-after tenants at lofty rental rates. Eight of Colliers’ top ten Global Retail Streets in 2011 made the list again this year. The big story, however, lies with the explosive year over year rental growth achieved in a handful of markets. Six of our Top 10 grew at double-digit levels year over year in local currency units, five of them by more than 20%.
At a regional level, streets in areas that entered 2007-08 better-positioned economically—Australia, Canada, parts of Eastern Europe—had a higher percentage of this year's flat-to-higher rents than those slower to emerge from the recession. We will be watching these areas closely. Even as they represent some of the most attractive destinations for expansion-minded companies and yield-seeking investors, they too are vulnerable to softening consumer demand and, for those with reliable data, encroachment of e-commerce.
This report contains two parts. The first summarizes the results of our annual Global Retail Streets survey, conducted in April 2012. The second incorporates content from Colliers’ brokerage and research teams worldwide who contributed market operational metrics, nuanced commentary on retail conditions, and forward-looking opinions on what the next year will hold for consumers, landlords, and investors.
Record Rents for Top Retail Corridors; Global Slowdown Impacts Momentum Elsewhere
TOP 10 GLOBAL RETAIL STREETS*(USD PER SQUARE FOOT PER YEAR)
REGIONAL RETAIL RESEARCH CONTACTS
AMERICAS > Ann T. Natunewicz [email protected]
EUROPE/MIDDLE EAST/AFRICA > Zuzanna Baranowska [email protected]
ASIA > Simon Lo [email protected]
AUSTRALIA/NEW ZEALAND > Nora Farren [email protected]
Source: Colliers International* selected cities** exchange rate as of March 31, 2012*** Zone A rents
www.colliers.com/india
Budget Highlights | Real Estate
Finance Minister Pranab Mukherjee started his budget speech 2012-13 in the backdrop of challenging macroeconomic scenario. The finance minister projects the economy to grow by 7.6% in the next fiscal up from 6.9% in 2011-12. He mentioned that due to adverse global economic sentiments there has been a slowdown in the Indian Economy but the fact is India still remains among the front runners in the economic growth in any cross country comparison. The budget aims at faster, sustainable and more inclusive growth across sectors emphasizing on five focus areas including revival of domestic consumption, rapid revival of high growth in private investment, removal of supply bottlenecks, addressing malnutrition in 200 high burden districts and expedite improvement in delivery system, governance and transparency.
From a real estate perspective, the budget remained silent on most of the major issues including status of STPIs (Software Technology Parks of India), Real Estate Regulatory Bill, Land Bill etc. however, it mentioned that efforts are on to arrive at a political consensus on the issue of allowing 51% Foreign Direct Investment (FDI) in multi-brand retail.
THE KEY HIGHLIGHTS OF THE BUDGET WHICH MAY IMPACT REAL ESTATE SECTOR ARE AS FOLLOWS:
- External Commercial Borrowings (ECB) for low cost affordable housing projects. Impact: Real estate companies developing large affordable housing projects with large fund requirements will benefit the most from the easing of external commercial borrowing (ECB) norms as interest rate charged is lower in case of external borrowings in comparison to rates charged by domestic institutions.
- Increase in provision under Rural Housing Fund to INR 4,000 crore from the existing INR 3,000 crore.Impact: It will provide housing finance to targeted groups in rural areas at competitive rates.
- Extension of the existing scheme of interest subvention of 1% on housing loans up to INR 15 lakh where the cost of the house does not exceed INR 25 lakh for another year. Impact: This will boost the affordable housing segment by providing cheaper loan to the end users.
MARKET REACTION TO BUDGET
Q1 2012 | RESEARCH
Source: www.bseindia.com | Mar 16, 2012
Company Change (%)BSE SENSEX -1.19Realty Index -1.26Anant Raj Inds -6.04D B Realty -2.02DLF 0.15Godrej Properties -2.82HDIL -5.21Hubtown Ltd. -4.13Indiabulls Real Estate -1.95Mahindra Lifespaces -0.72Orbit Corp. -3.37Parsvnath Developers -4.04Peninsula Land -3.18Phoenix Mills -2.65Sobha Developers 3.04Sunteck Realty -1.13Unitech -1.68
UNION BUDGET 2012 -13
A SNEAK PREVIEW
P. 1 | COLLIERS INTERNATIONAL
STREET/PRECINCTRENT
(USD)**
ANNUAL CHANGE
(%)
New York – Fifth Avenue ��,��� ��.�
Hong Kong – Queen's Road Central, Central (tie)
��,��� ��.�
Hong Kong – Canton Road (tie)
��,��� ��.�
London – Old Bond St.*** ��,��� ��.�
Paris – Avenue des*** Champs-Élysées
��,��� flat
Hong Kong - Causeway Bay
��,��� ��.�
New York – Madison Avenue
���� ��.�
Zurich – Bahnhofstrasse ���� flat
Milan – Via Monte Napoleone
���� (�.�)
Sydney – Pitt Street Mall ���� (��.�)
HIGHLIGHTSGLOBAL
www.colliers.com
MID-YEAR 2012 | RETAIL
ANN T. NATUNEWICZ Manager | Retail Research | USA
Colliers’ 2012 Global Retail Streets survey found that of 129 locations tracked, 51 posted higher year over year average rental rates, 49 were flat, and 24 were down (5 lacked comparable data).
Retailers entering new markets—both developed and developing—continue to hedge risk by targeting the same one or two premier locations, generating heated competition and outsized rental rate growth in a handful of space-constrained corridors.
Companies with the most ambitious long-term expansion plans remain focused on emerging markets with rapidly growing middle-class populations, but recently institutional capital has pulled back somewhat to favor core markets and investments.
While economic and political turmoil did affect rental rates in headline-generating markets (such as Cairo and Athens), high streets with strong fundamentals remained remarkably resilient, suggest-ing, at least for now, some separation between macroeconomic issues and underlying real estate fundamentals.
Since we conducted our survey, however, weakening consumer sentiment among affluent shoppers has already begun to impact retailers’ revenues and could hinder landlords’ near-term ability to raise rents, suggesting flattening growth rates for the coming year.
This spring proved to be a tricky time to conduct global benchmarking, as market sentiment has deteriorated markedly since April. During the past year, virtually every entity making a forecast—including Colliers in our 2012 U.S. Retail Outlook —included a caveat related to not-yet-quantifiable global fallout from Europe’s fiscal issues. As the past few months have illustrated, the time to face Eurozone issues has finally arrived, spawning a new wave of financial uncertainty.
More than two years post-recession, though, results from our annual survey of High Street rents illustrate that the world’s priciest retail corridors continue to attract the most sought-after tenants at lofty rental rates. Eight of Colliers’ top ten Global Retail Streets in 2011 made the list again this year. The big story, however, lies with the explosive year over year rental growth achieved in a handful of markets. Six of our Top 10 grew at double-digit levels year over year in local currency units, five of them by more than 20%.
At a regional level, streets in areas that entered 2007-08 better-positioned economically—Australia, Canada, parts of Eastern Europe—had a higher percentage of this year's flat-to-higher rents than those slower to emerge from the recession. We will be watching these areas closely. Even as they represent some of the most attractive destinations for expansion-minded companies and yield-seeking investors, they too are vulnerable to softening consumer demand and, for those with reliable data, encroachment of e-commerce.
This report contains two parts. The first summarizes the results of our annual Global Retail Streets survey, conducted in April 2012. The second incorporates content from Colliers’ brokerage and research teams worldwide who contributed market operational metrics, nuanced commentary on retail conditions, and forward-looking opinions on what the next year will hold for consumers, landlords, and investors.
Record Rents for Top Retail Corridors; Global Slowdown Impacts Momentum Elsewhere
TOP 10 GLOBAL RETAIL STREETS*(USD PER SQUARE FOOT PER YEAR)
REGIONAL RETAIL RESEARCH CONTACTS
AMERICAS > Ann T. Natunewicz [email protected]
EUROPE/MIDDLE EAST/AFRICA > Zuzanna Baranowska [email protected]
ASIA > Simon Lo [email protected]
AUSTRALIA/NEW ZEALAND > Nora Farren [email protected]
Source: Colliers International* selected cities** exchange rate as of March 31, 2012*** Zone A rents