The Knowledge Report India Office Property Market Overview 2Q 2012

Office PrOPerty Market Overview iNDia

QUarterLy UPDate | JULy | 2012

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MACRO ECONOMIC OVERVIEW

GDP growth rate saw a sharp reduction to •5.3% during 1Q 2012. The most impacted sector included agriculture, mining & quarrying, manufacturing and construction. Prime reasons attributed to this were uncertainties in domestic policy, cumulative impact of monetary tightening and slackening of external demand.

Inflation as measured by the wholesale price •index (WPI), was 7.55%, 7.23% & 7.69% in May, April & March 2012, respectively. There was upward pressure on the WPI, due to steep price increase of vegetable, milk, pulses & protein based items. While inflation remain a concern, the WPI stands 200 basis lower in 2Q 2012 as compared to the same period last year.

Early in this quarter, RBI cut the repo and •reverse repo rates by 50 basis points each to boost the economy. However, the increased inflation rate has left a limited scope for further reduction in repo rates.

The rupee remained under pressure and •depreciated further against both the EURO and the US Dollar as foreign investors were worried about persisting inflation, and the high fiscal and current account deficit. The Rupee closed at INR 55.68 to 1 USD and INR 70.04 to 1 Euro as on 15th June 2012.

The Department of Industrial Policy and •Promotion (DIPP) recorded a total FDI inflow for April 2012 in at $ 1.85 billion which is 41% lower as compared to $ 3.12 billion in April 2011. The housing and construction sectors contributed only 2.96% to the total FDI received.

ECONOMIC BAROMETER

RETuRN ON AlTERNATIVE INVEsTMENTs

RESEARcH & FOREcAST REPORTsYDNEY CENTRAl BusINEss DIsTRICT

INDIA OFFIcE MARkETREsEARCh & fORECAsT REpORT

Jun-11 Jun-12

REPO RATE 7.50% 8.00%

REVERSE REPO RATE

6.50% 7.00%

cRR 6.00% 4.75%

INFLATION 9.51% 7.55%

PRIME LENDING RATE

9.25% - 10.00% 10.00% - 10.50%

DEPOSIT RATE (<1 YEAR)

7.75% - 9.50% 8.00% - 9.25%

FOREIGN Ex-cHANGE

INR - USD45.18 55.68

INR- EURO 63.25 70.04

Jun-11 Jun-12 YoY %

Change

GOLD 22,114 30,097 36.10%

SILVER 52,590 54,494 3.62%

EQUITY (BSE

SENSEx) 18,132 16,949 -6.52%

REALTY INDEx 2,123 1,623 -23.55%

Source: Colliers International India Research

ECONOMIC INDICATORs

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

INR

cror

e

2005

- 0

6

2006

- 0

7

2007

- 0

8

2008

- 0

9

2009

- 1

0

2010

- 1

1

2011

-12

April

12

Jan

- M

ar 0

9

Apr

- Ju

n 09

Jul -

Sep

09

Oct

- D

ec 0

9

Jan

- M

ar 1

0

Apr

- Ju

n 10

Jul -

Sep

10

Oct

- D

ec 1

0

Jan

- M

ar 1

2

Oct

- D

ec 1

1

Jul -

Sep

11

Apr

- Ju

n 11

Jan

- M

ar 1

1

Gross Domestic product at factor cost

fDI in Real Estate

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

0.0%

1.0%

2.0%

3.0%

USD Euro

2Q 2012 | OFFICE

80

85

90

100

95

120

115

110

105

13-J

un-1

2

8-M

ay-1

2

2-Ap

r-12

22-J

un-1

2

17-M

ay-1

2

1-Ju

l-12

26-M

ay-1

2

11-A

pr-1

2

20-A

pr-1

2

29-A

pr-1

2

4-Ju

n-12

BsE sensex & Realty Index

Exchange Rates

BSE Sensex Realty Index* Rebase to 100

* Rebase to 100

80

85

90

100

95

110

105

115

120

21-J

un-1

2

12-J

un-1

2

7-M

ay-1

2

1-Ap

r-12

30-J

un-1

2

16-M

ay-1

2

10-A

pr-1

2

19-A

pr-1

2

28-A

pr-1

2

25-M

ay-1

2

3-Ju

n-12

Note : As on 15th June 2012

2Q 2012 GRADE ‘A’ AND GRADE ’B’ RENTAl VAluEs

pRIME OffICE spACE RENTAl TREND

cBD

Andh

eri E

ast

Bkc

Low

er P

arel

Mal

ad

Navi

Mum

bai

Pow

ai

Wor

li/Pr

abhd

evi

Gore

gaon

/ J

VLR

kalin

a

Than

e /

LBS

Andh

eri E

ast (

IT)

Low

er P

arel

(IT)

Mal

ad (I

T)

Navi

Mum

bai (

IT)

Pow

ai (I

T)

Gore

gaon

/ J

VLR

(IT)

Than

e /

LBS

(IT)IN

R Pe

r Sq

ft P

er M

onth

0

50

100

150

200

250

300

2Q20

08

1Q20

08INR

per

Sq ft

per

Mon

th

INR

per

Sq ft

per

Mon

th

3Q20

08

4Q20

08

1Q20

09

2Q20

09

3Q20

09

4Q20

09

1Q20

10

2Q20

10

4Q20

10

2Q20

12

1Q20

12

4Q20

11

3Q20

11

2Q20

11

1Q20

11

3Q20

10

70

20

120

170

220

270

320

370

420

cBD

Lower Parel Navi Mumbai

kalinaGoregaon/ JVLR

Andheri East Malad

Powai

Bkc

Worli /Prabhadevi

Thane / LBS

2Q20

08

3Q20

08

4Q20

08

1Q20

09

2Q20

09

3Q20

09

4Q20

10

1Q20

11

2Q20

11

3Q20

11

4Q20

11

2Q20

12

4Q20

12F

2Q20

13F

1Q20

13F

3Q20

12F

1Q20

12

4Q20

09

1Q20

08

1Q20

10

2Q20

10

3Q20

10

Grade A Grade B

COllIERs INTERNATIONAl | p. 3

MARKET TRANsACTIONscLIENT BUILDING NAME AREA

(SQ. FT.)LOcATION TRANSAcTION

TYPE

Devon Supreme Business Park 56,000 Powai Lease

Famy care Peninsula corporate Park 15,000 Lower Parel Lease

Lodha I Think 40,000 Thane Lease

Reliance Digital Times Square 26,000 Andheri Lease

Tata Tesco kohinoor Business Park 50,000 Vidyavihar Lease

Vships Lotus Midtown 27,000 kalina Lease

MuMBAI

During 2Q 2012, approximately 9.4 million •sq.ft. of grade ’A’ office space was available for lease and sale, primarily concentrated in Andheri East, Lower Parel and Thane/ LBS Marg.

The city’s grade ‘A’ inventory was added by •0.2 million sq.ft. of new supply in SBD this quarter by “Star Hub” project of Star Developers at Andheri East.

During the surveyed quarter, construction •activities remained moderate. Due to a slowdown in the economy, developers remained cautious and hesitant in undertaking further construction activities, thus, no new projects were launched in the market.

Rental levels of grade ‘A’ office space remained •stable across all the micro markets except Bkc (Bandra-kurla-complex) where rents increased by 3% q-o-q due to limited supply and demand from corporates.

Going forward, the rental values for grade ‘A’ •office space are expected to remain stable in almost all micro markets.

In this quarter, the state revenue department •revised the Land Lease Policy and imposed a 7.5% premium on the market value of the land/plots leased for redevelopment of residential, educational and religious activities, whereas 10% for other activities.

During the same period, Peninsula Land sold •off its office building located at Lower Parel to various financial services firms namely Tata capital, National Realty, India Nivesh Insurance Brokers and Tata AIG Life Insurance.

AVAIlABlE supplY IN pRIME AREAs

Andheri East 24%

cBD 1%

Thane / LBS 22%

Worli / Prabhadevi 1%

Goregoan / JVLR 8%

Powai 4%

Malad 5%

Navi Mumbai 6%

Lower Parel 19%

Bkc 9%

CITY OffICE BAROMETER

1Q 2012 2Q 2012

VACANCY

ABsORpTION

CONsTRuCTION

RENTAl VAluE

iNDia | 2Q 2012 | OFFICE

GRADE ‘A’ AVERAGE RENTAl VAluE

MUMBAI

0

35

70

140

105

210

245

175


kalina 1%

Forecast

Grade A Grade B

Nehru Place Saket

Netaji Subhash

Jasola cannaughtplace

p. 4 | COllIERs INTERNATIONAl




DElhI

Approximately 1.0 million sq.ft. of grade ‘A’ •office space was ready for lease / sale in 2Q 2012 located mainly in Saket and Jasola neighborhoods of Delhi.

Fast paced construction activities were •observed in a newly developed area near Delhi Airport namely Aerocity. Two projects located at Aerocity such as “Aria Signature Office” and “IBIS commercial Tower” developed by JW Marriot and IBIS Hotel respectively, added approximately 0.2 million sq.ft. of commercial grade ’A’ office during this quarter.

A new commercial project “caddie commercial •Tower”, was launched by caddle Hotel with an area of 0.1 million sq.ft. in Aerocity. The project is expected to be complete by end of 2013.

Overall absorption was restrained in 2Q •2012 in comparisons to last quarter as both investors and end-users were following wait and watch policy due to prevailing economic uncertainties.

In 2Q 2012, rental values for grade ‘A’ •properties increased in the range of 2 to 7% on q-o-q in locations such as connaught Place and Nehru Place, however negative corrections in the range of 4 to 10% were registered in Jasola and Saket.

Office rent prognosis reveal further stability •for grade ‘A’ office space in the market on account of economy slowdown and limited supply.


connaught Place 2%

Nehru Place 10%

Saket 29%

Jasola 59%


1Q 2012 2Q 2012

VACANCY

ABsORpTION

CONsTRuCTION

RENTAl VAluE



2Q20

08

3Q20

08

0

50

100

150

200

250

300

350

400

conn

augh

t Pl

ace

Nehr

u Pl

ace

Jaso

la

INR

per

Sq F

t per

Mon

th

Sake

t

Neta

ji Su

bhas

h

0

50

100

150

200

250

300

350

400

450

1Q20

10

INR

per

Sq ft

per

Mon

th

0

35

70

105

140

175

210

245

280

INR

per

Sq ft

per

Mon

th

DELHI

2Q20

08

3Q20

08

4Q20

08

1Q20

09

2Q20

09

3Q20

09

4Q20

10

1Q20

11

2Q20

11

3Q20

11

4Q20

11

3Q20

12F

4Q20

12F

2Q20

13F

1Q20

13F

2Q20

12

1Q20

12

4Q20

09

1Q20

10

2Q20

10

3Q20

10 1Q20

08

4Q20

08

2Q20

09

3Q20

09

2Q20

10

1Q20

09

4Q20

09

3Q20

10

4Q20

11

1Q20

12

2Q20

12

3Q20

11

2Q20

11

4Q20

10

Forecast



TYPE

Barista Independent Building 10,000 Okhla Phase I Lease

cPM c-126 12,000 Okhla Phase I Lease

Hitachi konnectus 25,000 Minto Road, c.P Lease

Marico DLF Towers 4,300 Jasola Lease


MG

Road

Golf

cour

se R

oad

/Ext

/So

hna

Road

NH8/

Udy

og V

ihar

Man

esar

Inst

itutio

nal S

ecto

rs /

Sush

ant L

ok

Golf

cour

se

Road

/Ext

/So

hna

Road

DLF

cybe

r ci

ty(IT

)

NH8/

Udy

og V

ihar

(IT)

Man

esar

(IT)

0

20

40

60

80

100

120

140

Grade A Grade B

MG RoadGolf course Road/Ext /Sohna Road

NH8/Udyog Vihar (IT)Institutional Sectors /Sushant Lok

NH8/Udyog Vihar

DLF cyber city (IT)Golf course Road/Ext /Sohna Road (IT)Manesar

Manesar (IT)

4Q20

11

1Q20

12



GuRGAON

Nearly 13.8 million sq.ft. of grade ‘A’ office •space was available for fit-out in 2Q 2012. Most of this available supply was concentrated in Golf course Road and its extension, Udyog Vihar and NH8 up to Manesar.

Projects/parts of the projects completed •this quarter includes: “Ascendas Onehub” developed by Ascendas; “JMD Megapolis” by JMD Group and “Park View Business Park” by Bestech Group, located on Sohna Road; and “Universal Business Park” by Universal Group on Golf course Road Extension. All of these projects together contributed approximately 2.8 million sq.ft. of grade ‘A’ office space to the city’s total office inventory.

During this quarter no new grade ‘A’ •commercial project was launched in Gurgaon.

Demand for grade ‘A’ office space remained •stable and only few large floor plate leases were signed during the quarter.

On the rental side, grade ‘A’ office space •values observed a negative correction in the range of 2 to 4% on quarter on quarter across all micro-markets, except for Manesar where rentals remained stable.

Looking forward, Demand for office space in •Gurgaon is likely to witness moderate growth and rents are expected to remain stable in the near future.


Institutional Sectors /Sushant Lok

8%

DLF cyber city 4%

MG Road 2%

Manesar 18%

Golf course Road/Ext /Sohna Road 47%

NH8/ UdyogVihar 21%


1Q 2012 2Q 2012

VACANCY

ABsORpTION

CONsTRuCTION

RENTAl VAluE


GRADE ‘A’ AVERAGE RENTAl VAluE pRIME OffICE spACE RENTAl TREND

INR

per

sq ft

per

mon

thIN

R pe

r sq

ft p

er m

onth

180

20

40

60

80

100

120

140

160

2Q20

08

3Q20

08

4Q20

08

1Q20

09

2Q20

09

3Q20

09

4Q20

09

1Q20

10

2Q20

10

3Q20

10

4Q20

10

1Q20

11

2Q20

11

3Q20

11

4Q20

11

1Q20

12

2Q20

12

3Q20

12F

4Q20

12F

2Q20

13F

1Q20

13F

0

15

30

45

90

105

60

75

120

GURGAON

4Q20

08

1Q20

09

2Q20

09

3Q20

09

4Q20

09

1Q20

10

2Q20

10

4Q20

10

1Q20

11

2Q20

11

3Q20

11

2Q20

12

3Q20

10

2Q20

08

3Q20

08

Forecast

INR

per

Sq ft

per

Mon

th



TYPE

capgemini Spaze iTech Park 80,000 Sohna Road Lease

childrens Place cyber Terraces 12,000 DLF cyber city Lease

E&Y DLF cyber Greens 100,000 DLF cyber city Lease

Hitachi Time Tower 3,000 M.G. Road Lease

Pepsi Pioneer Park 269,000 Golf course Road Extn. Lease

Stel Independent Building 4,000 Sector 29 Lease

Grade A Grade B




NOIDA

In 2Q 2012, about 6 million sq.ft. of grade •‘A’ and grade ’B’ office space was available for sale or lease. 88% of this available office space was dedicated to IT/ITeS located in sectors 16 A, 62 and 125 to 143 along the NOIDA expressway.

New grade ‘A’ office supply of more than •1.5 million sq.ft. was added to NOIDA’s total office inventory. contributors to the new supply were, “SDS tower” by SDS Infratech Private Limited, “Plot No. 8” by 3c Universal Pvt. Ltd., “Ansal corporate Park” by Ansal API and “Plot No. 6, 12 & 21” at Sector 125 by few local developers.

Nearly 1 million sq.ft of grade ‘A’ office space •were launched during this quarter including “Logix Riviera” at sector 105 by Logix Group, “Jaypee commercial Space” at sector 128 by Jaypee Group and “Assotech Business cresterra” at Sector 135 by Assotech.

Overall demand for grade ‘A’ office space •remained subdued and only few transactions were observed during the quarter. Leasing in special economic zone remained active, and vacancy has significantly dropped over the quarter.

In 2Q 2012, rental values declined in almost all •the micro markets in the range of 2 to 5% due to cautious investor sentiments and downward pressure of office demand. However in the Industrial Sector rentals appreciated by 4% on quarter on quarter basis.

Going forward rental values for grade ‘A’ •office space are expected to remain stable on account of limited supply in the near future. Most of the under construction projects are scheduled to complete by the end of the year 2013.


commercial Sectors (Sec 18) 2%

Institutional Sectors (Sec.16A, 62, 125-142)

88%

Industrial Sectors (Sec. 1-9, 57-60, 63-65)

(Grade B) 10%


1Q 2011 2Q 2012

VACANCY

ABsORpTION

CONsTRuCTION

RENTAl VAluE

1Q20

09

INR

Per

SqFt

Per

Mon

th

0

20

40

60

80

100

120

140

0

10

20

30

40

60

70

50

80

100

90

2Q20

09

3Q20

09

4Q20

09

1Q20

10

Inst

itutio

nal S

ecto

rs(S

ec 1

6A,6

2 ,12

5-14

2) (I

T)

Indu

stria

l Sec

tors

(S

ec 1-

9,57

-60

,63

-65

)

com

mer

cial

Sec

tors

(Sec

18)

INR

Per

SqFt

Per

Mon

th

Inst

itutio

nal

Sect

ors

(Sec

.16A,

62,

125-

142

)

2Q20

10

1Q20

11

2Q20

11

3Q20

11

4Q20

11

2Q20

12

1Q20

12

4Q20

10

3Q20

10

Institutional Sectors (IT)

Institutional Sectors (Non IT)commercial Sectors

Industrial Sector


1Q20

09

2Q20

09

3Q20

09

4Q20

09

1Q20

10

2Q20

10

1Q20

11

2Q20

11

3Q20

11

4Q20

11

3Q20

12F

4Q20

12F

1Q20

12

2Q20

12

4Q20

10

3Q20

10

INR

per

Sq ft

per

Mon

th

0

10

20

40

30

50

80

60

70

NOIDA


2Q20

13F

1Q20

13F

Forecast




TYPE

I Yogi Oxygen SEZ 50,000 Sector 144 Lease

Mercerr Unitech SEZ 120,000 Sector 135 Lease

United Health Group Oxygen SEZ 60,000 Sector 144 Lease

2Q 2012 GRADE ‘A’ IT AND NON IT RENTAl VAluEs

cBD

INR

per

sq ft

per

mon

th

Guin

dy (

SBD)

Amba

ttur

OM

R (IT

cor

ridor

)

GST

road

0

10

20

30

40

50

60

70

80

IT NON IT


ChENNAI

Over 13 million sq.ft. grade ‘A’ office space •was available for lease/sale in 2Q 2012. Nearly 75% of this stock was dedicated to IT/ITeS office space mainly located at OMR (IT corridor) and Ambattur.

commercial projects launched in chennai in •2Q 2012 includes “Gupta Towers” in Guindy by Gupta Builders admeasuring 0.2 million sq.ft. The project’s completion is foreseen by 1Q 2013.

No new grade ‘A’ office space was completed •during this quarter in chennai. The majority of the projects that were expected to be ready for fit out during 2Q 2012 were deferred until the next quarter.

In 2Q 2012, the commercial lease market •remained active and a number of mid-sized companies were considering consolidation and looking for more cost effective real estate solutions.

Rental values remained stable in almost all •the micro markets. Going forward, rentals are likely to remain stable on account of the limited supply scheduled for completion by end of this year.

In this quarter, NHAI (National Highways •Authority of India) has finalised the six lane chennai-Bangalore highway with a total cost estimation of around INR 5,000 crore, which is anticipated to boost the real estate activities in the region.


cBD 14%

Guindy (SBD) 5%

Velachery 1%Vadapalini 1%

GST Rd 3%

OMR (IT corridor) 51%

Ambattur 24%


1Q 2011 2Q 2012

VACANCY

ABsORpTION

CONsTRuCTION

RENTAl VAluE



4Q20

08

1Q20

09

2Q20

09

3Q20

09

4Q20

09

1Q20

10

2Q20

10

2Q20

12

1Q20

12

4Q20

11

3Q20

11

2Q20

11

1Q20

11

4Q20

10

3Q20

10

2Q20

08

1Q20

08

INR

per

sq ft

per

mon

th

90

20

30

40

50

60

70

80

3Q20

08

Ambattur GST road

OMR (IT corridor)

Guindy (SBD)cBD


2Q20

08

1Q20

08

3Q20

08

4Q20

08

1Q20

09

2Q20

09

3Q20

09

4Q20

09

1Q20

10

2Q20

10

1Q20

11

2Q20

11

3Q20

11

4Q20

11

2Q20

13F

1Q20

13F

4Q20

12F

3Q20

12F

2Q20

12

1Q20

12

4Q20

10

3Q20

10

INR

per

Sq ft

per

Mon

th

0

10

20

30

40

60

50

cHENNAI


Forecast



TYPE

Agility Logistics Temple Steps 19,500 Guindy Lease

Beroe Systems ASV chandilya 50,000 IT corridor Lease

Emirates Prestige Palladium Bayan 8,000 Greams Road Lease

GE converteam Ramaniyam 40,000 Guindy Lease

kavian Systems khivaraj complex 11,000 Nandanam Lease

Lafarge RR1 Towers 10,000 Guindy Sale


1Q 2012 2Q 2012

VACANCY

ABsORpTION

CONsTRuCTION

RENTAl VAluE



BENGAluRu (BANGAlORE)

About 8.6 million sq.ft. of commercial grade •’A’ office space was available for fit-outs in 2Q 2012. More than 60% of this total available space is concentrated in EPIP Zone and Whitefield.

New supply in Bengaluru’s grade ’A‘ office •space for 2Q 2012 accounted for more than 0.8 million sq.ft. Projects/ parts of the projects contributing to this new supply were “confident Electra” and “confident Aquila” developed by confident Group, “Embassy Vogue” by Embassy Group and “Neo Town” by Patel Realty.

During 2Q 2012, RMA corp launched two •new towers in “RMZ EcO WORLD” with a development potential of about 1.7 million sq.ft. Additionally, Bagmane Group launched a commercial project “Bagmane constellation – Pheonix” with a lettable area of about 0.4 million sq.ft. Both these projects were located along Outer Ring Road and expected to be ready for clients by end of 2014.

The leasing market remained active with •a number of medium size deals in the a range of 10,000 to 50,000 sq. ft. Most of the transaction took place in Whitefield and Electronic city micro markets.

Average rentals for grade ’A’ office premises •remained stable in almost all the micro markets except for cBD where an increase of 6% was observed on quarter on quarter. This increase could be attributed to the persistent demand and limited supply in this region.

For the next quarter, absorption levels are •expected to remain fairly high. Despite the elevated demand, rental values will remain stable as significant supply is expected to enter the market in the near future complimenting this way the expected demand.


cBD 7%

Outer Ring Road 13%

Bannerghatta Road 3%

Electronic city 10%

EPIP Zone/ Whitefield 64% Hosur Rd 4%



1Q20

08

2Q20

08INR

Per

SqFt

Per

Mon

th

0

10

20

30

40

50

60

70

80

90

100

3Q20

08

4Q20

08

1Q20

09

3Q20

09

1Q20

10

2Q20

09

4Q20

09

2Q20

10

3Q20

10

1Q20

11

2Q20

11

2Q20

12

1Q20

12

4Q20

11

3Q20

11

4Q20

10

0

10

20

30

40

50

60

70

80

90

Out

er R

ing

Road

Grade A Grade B

Elec

troni

c ci

ty(IT

)

Bann

ergh

atta

Roa

d

EPIP

Zon

e/

Whi

tefie

ld

Hos

ur R

oad

INR

Per

SqFt

Per

Mon

th

cBD

cBD

Electronic city

Outer Ring RoadEPIP Zone / Whitefield

Hosur Road

Bannerghatta Road


INR

per

Sq ft

per

Mon

th

15

20

25

30

50

40

45

35

BENGALURU

2Q20

08

1Q20

08

3Q20

08

4Q20

08

1Q20

09

2Q20

09

3Q20

09

4Q20

09

1Q20

10

2Q20

10

1Q20

11

2Q20

11

3Q20

11

4Q20

11

3Q20

12F

2Q20

13F

1Q20

13F

4Q20

12F

2Q20

12

1Q20

12

4Q20

10

3Q20

10


Forecast



TYPE

Axis Aerospace Vaswani centerpolis 21,650 Langford Road Lease

Ellusion Prestige Zeenath 31,820 Rajaram Mohan Roy Road Lease

Tyco Prestige Shantiniketan 25,000 Whitefield Lease

VM Ware Forutna1 28,000 JP Nagar Lease

xentrix Studios Private Limited Pritech - SEZ 21,125 Outer Ring Road Lease

Yokogawa IA Technologies Umiya Business Bay 30,000 Outer Ring Road Lease



cBD

(Par

k St

, cam

ac

St,A

Jc B

ose

Rd)INR

per

sq ft

per

mon

th

Sect

or-5

(IT

)

Sect

or-5

PBD

(New

To

wn,

Raj

arha

t

Bally

gung

e -c

ircul

ar R

D

PBD

New

Tow

n,

Raja

rhat

(IT)

East

kol

kata

0

20

40

60

80

100

120

140

Grade A Grade B

1Q20

12


KOlKATA

In 2Q 2012, 0.5 million sq. ft. was added to •the grade ’A’ office stock in kolkata. Projects/parts of the projects contributing this supply were “New Town Square” by PS Group, “DLF Galleria” by DLF Ltd. both of these projects were located at New Town. Another project “Merlin Legend” by Merlin Group located at Bhowanipore.

“Bio Wonder” project was launched in 2Q •2012 with an area of 0.4 million sq.ft. of office space located at EM Bypass. Another project by Zion Realty at Park circus connector was launched with an area of 0.1 million sq.ft. both expected to be completed by end of 2015.

Rentals in 2Q 2012 remained stable in almost •all the micro markets except in cBD where an appreciation of 4% was marked on q-o-q. The overall market sentiments remained stagnant during the quarter; while many companies are following the wait and watch strategy until uncertainties related to policies will be cleared by the state government.

Expectations for the next quarter reveal stable •rentals in cBD while peripheral areas could witness a downward pressure on rental levels due to massive upcoming supply in pipeline.

Major land transactions in 2Q 2012 include, a •2 acre plot on EM Bypass was sold to AHW Steels for INR 115 crore by kolkata Municipal corporation and 10 acre land parcel was sold to State Bank of India for INR 58 crore for establishing a their training institute at Rajarhat.

NEW supplY IN pRIME AREAs

PBD (New Town, Rajarhat)

95%

cBD (Park St,camac St,AJc Bose Road) 5%


1Q 2012 2Q 2012

VACANCY

ABsORpTION

CONsTRuCTION

RENTAl VAluE


1Q20

08

1Q20

09

2Q20

08

2Q20

09

3Q20

08

3Q20

09

4Q20

08

4Q20

09

1Q20

10

2Q20

10

4Q20

10

3Q20

11

2Q20

12

4Q20

11

2Q20

11

1Q20

11

3Q20

10

INR

per

sq ft

per

mon

th

20

40

60

80

100

120

140

160

Sector 5

East kolkatta

Ballygunge circular Rd

PBD (New Town, Rajarhat

cBD (Park St,camac St,AJc Bose Rd)


INR

per

Sq ft

per

Mon

th

40

50

70

90

60

80

0

10

20

30

kOLkATA

1Q20

08

2Q20

08

3Q20

08

4Q20

08

1Q20

09

2Q20

09

3Q20

09

4Q20

09

2Q20

10

1Q20

10

1Q20

11

2Q20

11

3Q20

11

4Q20

11

1Q20

12

2Q20

12

3Q20

12F

4Q20

12F

2Q20

13F

1Q20

13F

4Q20

10

3Q20

10


Forecast



TYPE

Aditya Birla Nova Haut Street 4,000 Topsia Lease

Bajaj Finance Technopolis 10,000 Sector 5, Salt Lake Lease

EBMIRON Building No.139 4,000 SP Mukherjee Road Lease

HDFc Eco Space 125,000 New Town, Rajarhat Lease

Learning Mate Eco Space 30,000 New Town, Rajarhat Lease

TcS Eco Space 33,000 New Town, Rajarhat Lease


2Q 2012 GRADE ‘A’ IT AND NON IT RENTAl VAluEs

puNE

About 6.0 million sq.ft. of grade ‘A’ office •space was available for fit out in Pune during 2Q 2012. Nearly 76% of this supply was evenly distributed in micro markets of kharadi, Hinjewadi, Hadapsar/Fursungi, Nagar Road and Airport Road.

No new supply was added to city’s grade ‘A’ •office space during the surveyed period.

Panchshil Realty launched “convex” •admeasuring 0.4 million sq.ft. in kharadi. The project is expected to be completed by 4Q 2015.

Pune continued to experience high absorption •levels. Most of the small floor plate layout office leases were observed in Viman Nagar, Aundh, Wakdewadi and Hadapsar.

In this quarter rental values of grade ‘A’ office •space registered an increase in the range of 5 to 6% on q-o-q in Baner and kalyani Nagar locations primarily due to limited availability of supply in cBD. However, rents in all other micro markets remained stable.

Going forward, rentals are expected to remain •stable in most of the micro markets barring special economic zones, where marginal appreciation can be seen due to limited supply.

During this quarter, work commenced for •operating the bus rapid transit system (BRTS) on 11-km stretch of the Pune-Mumbai highway in Pimpri- chinchwad commenced and is expected to be completed by end of 2012. This will further interest in the real estate along the Pune-Mumbai highway.

supplY IN pRIME AREAs

kalyani Nagar 5%Nagar Road 11%

Aundh 3%

Bund Garden 2%

Airport road/pune station 7%

Bavdhan 4%

Baner 5%

kharadi 21 %

Hinjewadi 26%

Hadapsar/Fursungi 11%

Senapati Bapat Road 4%


1Q 2012 2Q 2012

VACANCY

ABsORpTION

CONsTRuCTION

RENTAl VAluE


1Q20

08

2Q20

08

INR

Per

SqFt

Per

Mon

th

20

30

40

50

60

70

80

90

100

110

120

130

3Q20

08

4Q20

08

1Q20

09

3Q20

09

1Q20

10

2Q20

09

4Q20

09

2Q20

10

4Q20

10

2Q20

11

2Q20

12

1Q20

12

4Q20

11

3Q20

11

1Q20

11

3Q20

10


0

10

20

30

40

50

60

70

90

80

khar

adi

kaly

ani N

agar

Naga

r Ro

ad

Bavd

han

Had

apsa

r/Fu

rsun

gi

Hin

jew

adi

Sena

pati

Bapa

t Roa

d

Aund

h

Airp

ort r

oad/

pune

sta

tion

Bund

Gar

denIN

R Pe

r Sq

Ft P

er M

onth

Bane

r

Bavdhan Airport road/pune station

Baner

khardiNagar Road

Hinjewadi / Hadapsar/Fursungikalyani Nagar

Bund Garden

Aundh

Senapati Bapat Rd


INR

per

Sq ft

per

Mon

th

0

10

30

20

40

70

60

50

PUNE

2Q20

08

1Q20

08

3Q20

08

4Q20

08

1Q20

09

2Q20

09

3Q20

09

4Q20

09

1Q20

10

2Q20

10

1Q20

11

2Q20

11

3Q20

11

4Q20

11

1Q20

12

3Q20

12F

2Q20

12

4Q20

12F

2Q20

13F

1Q20

13F

4Q20

10

3Q20

10

IT Non IT


Forecast



TYPE

Ascent Group Sakar 10 7,900 Bund Garden Road Lease

cox & kings Mansoor Ali Tower 2,400 Dhole Patil Road Lease

DHL R B Business centre 4,000 Aundh Lease

HUAWEI Gera Emporia 8,000 Vimannagar Lease

kLINGELNBERG No.12 3,250 koregaon Park Lease

kONEcRANES Magarpatta 22,000 Hadapsar Whitefield

MumbaiThe major business locations in Mumbai are the cBD (Nariman Point, Fort and Ballard Estate), central Mumbai (Worli, Lower Parel and Parel), Bandra kurla complex (Bkc) and Andheri kurla stretch. Powai, Malad and Vashi are the preferred IT/ITES destinations, while Airoli at Navi Mumbai and Lal Bahadur Shastri Marg are emerging as new office and IT/ITES submarkets.

DelhiThe commercial areas in New Delhi metropolitan area can be broadly classified into the cBD (connaught Place), SBD Nehru Place, Bhikaji cama Place, Netaji Subhash Place, Jasola and Saket .

GurgaonThe prime business locations in Gurgaon are MG Road, Golf course Road, cyber city and Udyog Vihar. Manesar on the outskirts of Gurgaon is also emerging as the city’s new office destination.

NOIDANOIDA market is comprised of sectors broadly classified as institutional, industrial and commercial sectors. Institutional sectors include sec 16A, 62 and 125-142, industrial sectors include sec 1-9, 57-60 and 63- 65 while sector 18 is the most developed commercial sector.

ChennaiPrime office properties in chennai are located in four principal sub-markets: the cBD, the IT corridor, the SBD and the PBD. The SBD comprises Guindy, Manapakkam, Velachery and other areas. The PBD primarily includes Ambattur and GST Road, while the IT corridor is the Old Mahaballipuram Road (OMR) in south chennai.

Bengaluru (Bangalore)Prime office properties in Bengaluru can be divided into three principal sub-market— cBD, the SBD consisting of Banerghatta Road & Outer Ring Road (ORR) and PBD including Hosur Road, EPIP Zone, Electronic city and Whilefield.

PuneThe prime office sub-markets of Pune include Deccan Gymkhana, Senapati Bapat Road & camp (SBD), while the PBD includes Aundh, Bund Garden, Airport Road and kalyani Nagar, among other locations. The eastern corridor, along with Nagar Road and kharadi, have emerged as a preferred location for financial and IT/ITES companies.

KolkataThe major business locations in kolkata are cBD (Park Street, camac Street, chowranghee Rd), SBD (AJc Bose Rd, Ballygunge circular Rd, East kolkata), East kolkata and PBD (New Town & Rajarhat). The area around Park Street, camac Street and AJc Bose road houses number of high-rises commercial buildings such as chatterjee International centre, Tata centre, Everest House and Industry House among others.

OffICE suBMARKETs



CITY BAROMETER

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 offices services related queries please contact:

George Mckay, South Asia Director Vikas kalia, National DirectorOffice & Integrated Services Office [email protected] [email protected]: +91 22 4050 4553 Tel: +91 124 456 7531

GLOBAL RETAIL INDIA RESIDENTIAL APAc INDUSTRIAL GLOBAL INDUSTRIAL GLOBAL OFFIcE INDIA BUDGET

Mumbai : Prabhu Raghavendra, Office Director [email protected] 31/A, 3rd floor, Film center, 68, Tardeo Road, Mumbai, India - 400 034. Tel : +91 22 4050 4500, 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 - 110001 Tel : +91 11 4360 7500, fax : +91 11 2335 6624

Gurgaon : Technopolis Building, 1st floor, DLF Golf course Main Road, Sector 54, Gurgaon, India - 122002 Tel : +91 124 437 5807, fax : +91 124 437 5806

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

Recent Reports :

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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,Valuation & Advisory 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.

© copyright 2012 - 2013 All Rights Reserved.

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Residential Property Market OverviewINDIA

QUARTERLY UPDATE | MAY | 2012

ASIA PACIFICOFFICE MARKET OVERVIEW1Q 2012


HIGHLIGHTSGLOBAL INDUSTRIAL

WWW.COLLIERS.COM

SECOND HALF 2011 | INDUSTRIAL

JAMES COOK Director of Research | USA

Global Industrial Trend ForecastGrowing global trade will steady demand for quality warehouse space in many regions.Industrial vacancy rates will further drop in most markets. Some markets, U.S. and Australia among them, will experience a lack of new supply in the face of growing demand.Prime warehouse rents will climb in most Asia Pacific markets, remain stable in EMEA and LATAM, and continue to strengthen in North American markets.

Citing deteriorating financial conditions and dimming growth prospect, the International Monetary Fund’s (IMF) revised its September 2011 World Economic Outlook growth projections downward in January 2012. However, the IMF still forecasts that global trade volume will rise by 3.8 percent in 2012 and 5.4 percent in 2013; as global trade rises, so too will demand for warehouse space.

While warehouse rents have stabilized in most EMEA and Latin American markets, prime warehouse rents quoted in local currencies increased in the majority of Asia Pacific and North American markets in 2011 over the previous year. We expect this trend to continue, with prime warehouse rents climbing in most Asia Pacific and North American markets in the next year.

Latin American Rents Poised to Stabilize In Latin America, prime warehouse rental rates took a fall. In 71.4 percent of the markets we track, year-end rents decreased in 2011 from a year earlier. However, we expect warehouse rents in Latin America to stabilize in the coming year.

São Paulo saw a 12.4 percent drop in warehouse rents in local currency, due to increased supply. However, with absorption set to outpace supply,

we expect overall warehouse rents in the São Paulo region to rise by as much as four percent in the coming year.

Mexico City saw a three percent decrease in its industrial vacancy rate in the second half of 2011, down to 4.8 percent. Mexico was more negatively affected by the recession than most countries in North America, and its economic future is largely tied to that of its key trading partner, the United States. But with U.S. growth on the upswing, Mexico too is poised to grow at a modest rate and we expect that vacancies could make further drops in the country.

Steady Demand in North America Since peaking in 2010, growth in the manufacturing and distribution industry has kept the U.S. vacancy rate dropping in a mostly regular fashion. Vacancy dropped to 9.72 percent in Q4 2011. With construction proceeding at low levels, we expect vacancies to continue to drop at a measured rate into 2013.

Toronto, Canada’s biggest industrial market, saw 13.7 million square feet of industrial space absorbed in 2011, and the city’s prime warehouse rents grew by 7.1 percent in the second half of 2011.

Dropping Vacancies in Most Asian MarketsAsia Pacific saw dropping vacancies in nearly every market. Prime warehouse rents grew in more than half of the markets, and observers in more than half of those markets expect that warehouse rents will continue to climb over the next six months.

Australian industrial has been especially strong in most major markets. Retail purchases, made more attractive by the relatively strong Australian dollar, have pushed up demand for large warehouse space in several port markets. While there is growing demand for large modern warehouse

Global Warehouse Demand Shows Consistent Growth

GLOBAL INDUSTRIAL CAPITALIZATION RATES (Prime Yield/Percent)

MARKET (Select Markets) REGION

DEC 2011

DEC 2010

Hong Kong Asia Pacific �.�� .�� Singapore Asia Pacific �.�� .�� London (Heathrow) EMEA �.�� .�� Tokyo Asia Pacific �.�� .�� Los Angeles – Inland Empire, CA NA �.�� .��

Chicago, IL NA �.�� .�� Paris EMEA �.�� .�� Munich EMEA �.�� .�� Vancouver, BC NA �.�� .�� Marseilles EMEA �.�� .�� New Jersey – Northern NA �.�� .�� Dallas-Ft. Worth, TX NA �.�� .�� Shanghai Asia Pacific �.�� .�� Seoul Asia Pacific �.�� .�� Madrid EMEA �.�� .�� Sydney Asia Pacific �.�� .�� Mexico City LATAM �.�� .�� Prague EMEA �.�� .�� Athens EMEA �.�� .�� Bucharest EMEA ��.�� .��

GLOBAL TOP TEN INDUSTRIAL WAREHOUSE RENTS

MARKET REGION

RENT (USD/

PSF/Year)6-MONTH CHANGE*

Tokyo Asia Pacific ��.�� -�.�%London (Heathrow) EMEA ��.�� .�%Hong Kong Asia Pacific ��.�� .�%Singapore Asia Pacific ��.�� .�%Zurich EMEA ��.�� .�%Oslo EMEA ��.�� .�%Moscow EMEA ��.�� .�%Geneva EMEA ��.�� -�.�%São Paulo LATAM ��.�� -��.�%Helsinki EMEA ��.�� .�%Marseilles EMEA ��.�� .�%Paris EMEA ��.�� .�%

*Local currency

Continued on page 8

HIGHLIGHTSGLOBAL OFFICE

WWW.COLLIERS.COM

SECOND HALF 2011 | OFFICE

JAMES COOK Director of Research | USA

Global Office Trend ForecastGlobal office vacancies will continue their decline, due to steady demand and low levels of new construction in North America and Europe. The “flight to quality” trend will continue in many major markets, with occupiers trading up to higher-quality space or a better location as their leases expire.The European sovereign debt crisis will likely push the Eurozone into a mild recession in early 2012. This contraction will be felt most profoundly in a handful of commercial property markets within the most troubled nations.

Economic prospects in the Eurozone have slightly reduced overall positive global expectations for market performance in 2012. We expect continuing modest demand for office space, with most cities seeing a drop in vacancy rates. But global averages do not speak to the nuances of individual markets, and—while we expect positive absorption due to business growth and expansion in the United States, China and Australia—some Eurozone countries may see negative absorption and increased vacancy as the region enters a mild recession.

Global Office Demand Growth Slow and Steady

GLOBAL CAPITALIZATION RATES /PRIME YIELDS: 10 LOWEST CITIES

MARKET (Ranked byDec 2011)

DEC 2011

JUNE 2011

DEC 2010

Taipei �.�� .�� .�� Hong Kong �.�� .�� .�� Vienna �.�� .�� .�� London – West End �.�� .�� .�� Zurich �.�� .�� .�� Singapore �.�� .�� .�� Geneva �.�� .�� .�� Beijing �.�� .�� .��Paris �.�� .�� .��Munich �.�� .�� .��Tokyo �.�� .�� .��

GLOBAL OFFICE OCCUPANCY COSTS:TOP 10 CITIES

MARKET (Ranked byDec 2011)

DEC 2011

JUNE 2011

DEC 2010

Hong Kong ��.�� .�� .�� London – West End ��.�� .�� .�� Paris ��.�� .�� .�� Rio de Janeiro ��.�� .�� .�� Moscow ��.�� .�� .�� London – City ��.�� .�� .�� Perth ��.�� .�� .�� Singapore ��.�� .�� .�� Geneva ��.�� .�� .�� São Paulo ��.�� .�� .��

CBD CAP RATE (%)

Latin America Boasts the Tightest Office MarketsSome of the world’s lowest office vacancy rates are found in Latin American cities. Santiago, Chile; Rio de Janeiro, Brazil; São Paulo, Brazil; and Lima, Peru all have vacancy rates below three percent, resulting in a market that strongly favors landlords, prompts new construction and might squeeze some tenants that desire to expand. For the most part, we expect the strength of these markets to persist. While decreases in European demand for its commodities will likely hurt Latin America, this will be tempered by continued demand from China. In São Paolo, heightened demand has spurred the highest rates of new development in the region, which will eventually put downward pressure on asking rents.

Select Asia Pacific Markets See Big Vacancy DropsThe global trend in dropping vacancy rates should be evi-dent in Asia and continue through 2012. Markets that saw a drop in vacancy in the second half of 2011 outnumbered by a two-to-one margin those where vacancy increased.

Of the world’s most populous markets, those with the most significant declines in six-month vacancy rates were nearly all in the Asia Pacific region. Chengdu, propelled by its strong manufacturing sector, saw its vacancy rate drop by 7.8 percent in the period, and Shanghai saw a 3.2 percent drop in vacancy.

Two other large Asian markets saw vacancy rates drop by 1.5 percent or more: Jakarta, which has also seen sustained growth in CBD rental rates and renewed global investor interest; and Singapore, where occupancies are expected to stabilize.

Marquee Markets See Rent DeclineWhile Hong Kong, London’s West End and Paris command the top three highest asking rents for Class A office space,

each has shown apparent decline in rents between June and December of 2011, when quoted in U.S. dollars. Substantial declines, in fact: led by a $10.87 USD drop in Parisian Class A rents.

But how significant are these figures? The change in London and Paris rents is due to the strengthening dollar relative to the euro and pound sterling. In local currency, prime rents in these markets are holding ground. Although smaller, the decline in Hong Kong of $7.56 USD ($5.10 HKD) per square foot may be a more important indicator of things to come, as demand from the banking and financial sector continue to weaken.

EMEA and Asia Pacific Lead Global ConstructionA significant percentage of the office space under construction is in Europe, the Middle East and Africa (EMEA), and much of that is occurring in Moscow and Dubai. While both of these markets should expect strong economic growth in 2012, the fact that Dubai—with a vacancy rate of 50 percent—is constructing at such a pace leads us to expect that supply will continue to outpace demand in that market.

The other two top markets for office construction are in the Asia Pacific region. Guangzhou—China’s leading commercial port city—and Tokyo have 19.6 and 15.6 million square feet under construction respectively. Asian economic growth rates will remain strong in the coming months, with China and India leading the pack. Rents are on the rise in most cities in the region. However, dropping rents in Seoul and Hong Kong are a potential indicator of global economic uncertainty. In Tokyo, where new supply has been increasing for the past three years, we expect construction to peak and begin to decline in the coming year.

CLASS A / NET RENT (USD/SQ FT)

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. [email protected]

EUROPE/MIDDLE EAST/AFRICA> Zuzanna [email protected]

ASIA> Simon [email protected]

AUSTRALIA/NEW ZEALAND> Nora [email protected]

Source: Colliers International* selected cities** exchange rate as of March 31, 2012*** Zone A rents