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ContentIndia: Economic Indicators

India Real Estate Market Overview

Bengaluru

Chennai

Hyderabad

Mumbai

Outlook

Office: Location Master

Residential: Location Master

1

Executive Summary

CONNECTVESTIAN QUARTERLY NEWSLETTER Q4 2015

INVESTMENT & CONSULTANCY SERVICES

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• India recorded Gross Domestic Product (GDP) growth rate of 7.4% during July- September 2015, an increase from 7.1% in Q2 2015 due to expansion in financial, real estate, insurance and manufacturing activities

• Index of Industrial production (IIP) fell to 3.2 % Y-o-Y in November 2015 on account of production loss during Chennai floods.

• Government of India has given an approval for the (~INR 12,000 Cr) Peripheral Ring Road in Bengaluru while the Union Ministry announced two express highways for Hyderabad as part of INR 40,800 Cr highway development project.

• FDI flow in real estate sector remained weak with an investment of USD 132 million between January and September 2015.

• 2015 saw total PE deals worth USD 2.88 billion in real estate sector, a seven year high due to bigger ticket transactions.

• Office space supply across the four major cities of Bengaluru, Mumbai, Chennai and Hyderabad was recorded at 18.63 million sqft during 2015. Absorption was recorded at 21.12 million sqft with marginal Y-o-Y growth. Bengaluru registered the highest supply as well as absorption among the four major cities. Rentals remained stable in Hyderabad and Chennai throughout the year; however, Bengaluru & Mumbai witnessed marginal fluctuations.

• VR Mall (0.6 million sqft) Bangalore was the only mall to commence operations in 2015 across four major cities. Leasing activities were mostly confined to the high streets. Rentals remained stable across both malls and high streets, barring marginal fluctuations and corrections in select locations.

• Approximately 62,738 new residential units were launched in 2015 across the cities of Bengaluru, Chennai and Hyderabad, a 3% Y-o-Y decline. New launches were low in Chennai during Q4 2015 on account of heavy rains. Hyderabad witnessed a hike in new launches due to an increase in the net absorption of office spaces and political stability. Bengaluru and Hyderabad witnessed marginal appreciation in capital values at select locations, while capital values in Chennai remained stable.

• The outlook for real estate sector for 2016 remains positive on account of strong economic growth, optimistic employment outlook, rise of e-commerce and Government’s initiative for “Make in India”.

Key Rates

PLR*

Repo Rate

Reverse Repo Rate

CRR

Oct-15

14.05%

6.75%

5.75%

4.0%

Nov-15

14.05%

6.75%

5.75%

4.0%

Dec-15

14.05%

6.75%

5.75%

4.0%

2Vestian Quarterly Newsletter Q4 2015 Investment & Consultancy Services

INDIA: ECONOMIC INDICATORSGDP growth at 7.4% during July-September 2015; Index of Industrial Production contracts by 3.2 % in November 2015

India recorded Gross Domestic Product (GDP) growth rate of 7.4% during July-September 2015, an increase compared to 7.1% in Q2 2015. The expansion was boosted by financial, real estate, insurance and manufacturing activities.

Inflation rate (Consumer Price Index) rose to 5.61% in December 2015 - the highest inflation rate since September 2014, due to a surge in food cost. Index of Industrial Production (IIP) fell to 3.2% Y-o-Y in November 2015. The output of the manufacturing sector declined to 4.4% due to the production loss on account of floods in Chennai.

Figure 1: GDP Growth Contributors

In view of inflationary pressure and to spur the economic growth, Reserve Bank of India (RBI) slashed the repo rate four times in 2015 by 125 basis points to 6.75 percent, a four year low. Irrespective of the decline in repo and reverse repo rates, banks maintained the Cash Reserve Ratio (CRR) at 4%. Prime Lending Rate (PLR) reduced from 14.75% to 14.05% in 2015. Moreover, almost all commercial banks have reduced their home loan interest rate; State Bank of India has reduced its base rate from 9.7% to 9.3%, followed by ICICI Bank Ltd and HDFC Bank Ltd at 9.35%.

Rupee depreciated against US dollar during Q4 2015 closing at INR 66.34 by the end of December 2015. This depreciation was primarily due to the China led economic slowdown.

Table 1: Key Policy Rates

RBI cut repo and reverse repo rates four times during 2015

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

*Note: New rates are effective from October 2015 onwards

Source: Central Statistical Organisation, Govenment of India

GDP is based on value-added concept, GVA at Basic Price [at Constant(2011- 2012)

prices], Central Statistical Organization, Government of India

Figure 2: Inflation & Index of Industrial Production

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

2.2

3.2

9.3

6.7

2.6

10.6

9.7

4.7

0 5 10 15

Agriculture, forestry &fishing

Mining & quarrying

Manufacturing

Electricity, gas & watersupply

Construction

Trade, hotels, transportand communication

Financial, insurance, realestate & professional

services

Public administration,defence & other services

July-Sept 2015

-4

-2

0

2

4

6

8

10

12

Jul-1

3

Sep-1

3

Nov-1

3

Jan-1

4

Mar-1

4

May-1

4

Jul-1

4

Sep-1

4

Nov-1

4

Jan-1

5

Mar-1

5

May-1

5

Jul-1

5

Sep-1

5

Nov-1

5

Perc

enta

ge (%

)

Inflation IIP

BSE Sensex fell from 27,499 on 31 December 2014 to 26,117 on 31 December 2015 on account of the Chinese economy setback, waning crude oil prices and concerns over US Fed rate hikes. On the domestic front, doubts over the passage of Land and GST bills affected the market.

BSE realty index has dropped by 14 % from 1,555 in December 2014 to 1,344 in 2015 on account of low investment demand due to high capital values along with high interest rates and low rental yields. 2015 observed key policy decisions in the realty sector like the cabinet’s approval of the Real Estate bill, relaxation in FDI norms, rationalization of tax structure for REIT and RBI interest rate cuts. These are likely to boost the real estate market in 2016.

BSE Sensex and Realty Sensex fell during2015

The Dun & Bradstreet Composite Business Optimism Index stands at 85.9 for Q1 2016, registering a rise of 2.5% as compared to Q1 2015.This is on account of GDP growth, easing FDI norms and RBI rate cuts

As per the Manpower Outlook Survey India report, Net Employment Outlook for Q1 2016 is projected at 42%. Hiring intentions remain relatively stable both Q-o-Q and Y-o-Y. Strongest hiring plan was recorded in North with a Net Employment Outlook of 55% followed by West at 42%. Net Employment Outlook for the southern region was recorded at 37% while eastern region recorded an outlook of 36%.

Hiring intentions remain optimistic for the upcoming quarter across all sectors and regions. Net Employment Outlook was strongest in Transportation & Utilities with an Outlook of 48%.

Business Optimism rises for Q1 2016

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

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

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

employment at their locations in the next quarter.


Figure 6: Net Employment Outlook Across Sectors

Source: Manpower India, Q1 2016

Figure 4: Performance of BSE Realty Index

Source:www.bseindia.com

Figure 3: Performance of BSE Sensex

Source:www.bseindia.com

Figure 5: Net Employment Outlook*

Source: Manpower India, Q1 2016

Seasonally Adjusted Outlook Net Employment Outlook

0

500

1,000

1,500

2,000

2,500

Poin

ts

Realty Index

1-Oct-

13

1-Dec

-13

1-Feb

-14

1-Apr

-14

1-Jun-1

4

1-Aug

-14

1-Oct-

14

1-Dec

-14

1-Feb

-15

1-Apr

-15

1-Jun-1

5

1-Aug

-15

1-Oct-

15

1-Dec

-150

5,000

10,000

15,000

20,000

25,000

30,000

35,000

1-Oct-

131-N

ov-13

1-Dec

-131-Ja

n-14

1-Feb

-141-M

ar-14

1-Apr

-141-M

ay-14

1-Jun-1

41-Ju

l-141-A

ug-14

1-Sep

-141-O

ct-14

1-Nov

-141-D

ec-14

1-Jan-1

51-F

eb-15

1-Mar-

151-A

pr-15

1-May

-151-Ju

n-15

1-Jul-15

1-Aug

-151-S

ep-15

1-Oct-

151-N

ov-15

1-Dec

-15

Poin

ts

Sensex

Q4 2015

0

10

20

30

40

50

60

Q12014

Q22014

Q32014

Q42014

Q12015

Q22015

Q32015

Q42015

Q12016

Perc

enta

ge

Net Employment Outlook

43

43

36

45

41

35

43

48

45

41

45

43

40

45

0 20 40 60

Transportation &Utilities

Wholesale &Retail Trade

Mining &Construction

Public Administration &Education

Services

Manufacturing

Finance, Insuranceand Real Estate

Percentage (%)

Table 2: Key PE Investments in Real Estate Sector, Q4 2015

PE Firm

Warburg Pincus

Ask Property Investment Advisors

Ask Group

JP Morgan Asset Management

Essel Finance

Developer

Embassy Group

Rajesh Lifespaces

ATS Group

Kolte-Patil Developers Ltd

Rashmi

Project

Industrial park and warehouses

Residential

Residential

Residential

Residential

Location

Across India

Mumbai

Noida

Mumbai

Mumbai

250

54.4

19

18

5.5

Amount(in USD million)

Sour

ce: V

C Ci

rcle

Union Government is evaluating the proposal draft submitted by 97 smart cities and the list of first 20 smart cities is likely to be announced soon.Following are the updates on key infrastructure initiatives taken across four major cities in this quarter:

• Government of India has given approval for the (~INR 12,000 Cr) Peripheral Ring Road that will connect Tumkur Road to Hosur Road via Doddaballapur and Old Madras Road.

• Government of India gave an in-principle approval for financial bids or request for proposals (RPF) for the much-delayed INR 15,000 Cr Navi Mumbai International Airport.

• Two express highways from Hyderabad city, one to Amaravati/Vijayawada and another to Bengaluru, are part of the INR 40,800 Cr highway development project announced for Telangana by the Union Ministry.

Infrastructure Initiatives

Overall FDI inflows exhibit positive growth, however FDI in realty sector has declined by 86% Y-o-Y


Figure 7: FDI Inflows

According to the Department of Industrial Policy & Promotion, Government of India, total Foreign Direct Investment (FDI) Inflow was recorded at USD 26,519 million between January

and September 2015, an increase of 18% compared to previous year. Computer software & hardware attracted the highest FDI inflow between April and September 2015 by absorbing 30% of the total FDI inflow, followed by trading sector, services sector and automobile industry. FDI inflow is expected to improve in 2016 on account of relaxation of FDI norms in different sectors like defence, banking, construction, single brand retail, broadcasting and civil aviation. It also depends on the performance of ‘Make in India’ Programme.

FDI inflows in real estate sector remained weak with just USD 132 million worth of investments coming between January and September 2015. FDI in realty sector is anticipated to pick up in 2016 with the expected improvement in demand in the real estate sector as well as FDI reforms in the construction sector.

167

518

229

352

281 287

13951

32 490

100

200

300

400

500

600

-

2,000

4,000

6,000

8,000

10,000

12,000

Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015

US $

in m

illion

US $

in m

illion

Total FDI inflows FDI in Real Estate

INDIA REAL ESTATE MARKET OVERVIEW21.12 million sqft office space absorption across the four major cities

OFFICEApproximately 5.36 million sqft office space absorption was recorded across the four major cities of Bengaluru, Mumbai, Chennai and Hyderabad during Q4 2015 taking the year’s total to 21.12 million sqft. Y-o-Y growth was stable, Bengaluru accounted for the highest absorption at 58% followed by Hyderabad and Chennai at 18% and 15% respectively.

Supply was recorded at 7.02 million sqft during Q4 2015, totaling to 18.63 million sqft in 2015. Bengaluru registered the highest supply at 10.39 million sqft followed by Mumbai at 3.80 million sqft. Rentals remained stable in Hyderabad and Chennai throughout the year; however, Bengaluru& Mumbai witnessed marginal fluctuations. Western Suburbs and Navi Mumbai in Mumbai have witnessed an increase in the rental values. ORR and Bengaluru North observed an increase in the rental values.

As per VC Circle, 9 private equity (PE) deals approximating to USD 376 million were recorded in the Indian real estate sector during Q4 2015. The top deal sealed during the quarter was Warburg Pincus entering into a joint venture with Embassy Group to build industrial parks and warehouses across the country. Even though total number of PE deals dropped compared to previous year, bigger ticket transactions boosted total capital inflow to USD 2.88 billion, a seven year high. Top deals signed during 2015 include GIC investing USD 300 million across two projects of DLF Ltd, Goldman Sachs forming a USD 250 million JV with Nitesh Estates in commercial realty and Warburg Pincus and Goldman Sachs investing USD 284 million and USD 150 million respectively in Piramal Realty.

Bigger ticket transactions pushed PE fundin realty sector to a seven year high


Source: Vestian Research

Table 3: Key Office Lease Transactions, Q4 2015

Company

IBM

JP Morgan Chase

ABB

Adobe

Building

Bharatiya City

Prestige Tech Park

Brigade Magnum

Prestige Trinity Center

Location

Thanisandra

Outer Ring Road

Bellary Road

Outer Ring Road

Developer

Bharatiya City

Prestige Group

Brigade Group

Prestige Group

4,50,000

2,00,000

1,50,000

1,50,000

Area (in sqft)

Sutherland Global

Viasat

Tata Communications

BI Worldwide

The Gateway

SP Infocity

Jayanth Tech Park

ESPEE IT Park

Manapakkam

OMR

Manapakkam

Ramaniyam

Shriram Properties

Shapoorji Pallonji

Vishranthi Property

Guindy Group

1,00,000

30,000

26,000

23,000

IBM

Deloitte

JP Morgan Chase

DivyaSree Orion

DivyaSree Trinity

DivyaSree Trinity

Raidurgam

Hi-Tec City

Hi-Tec City

DivyaSree Builders

DivyaSree Builders

DivyaSree Builders

2,40,000

2,00,000

1,30,000

BENGALURU

CHENNAI

HYDERABAD

62,738 units launched in Bengaluru, Chennai and Hyderabad in 2015

RESIDENTIALApproximately 14,248 new units were launched in Bengaluru, Chennai and Hyderabad in Q4 2015 totaling to 62,738 units; a decline of 3% when compared to the previous year. Bengaluru accounted for 64% of the new launches followed by Hyderabad and Chennai at 19% and 17% respectively. Hyderabad witnessed an increase in new launches by 142 % compared to previous year on account of an increase in net absorption of office spaces. Bengaluru and Chennai witnessed a decline in the new launches by 9% and 32% respectively. Chennai witnessed very few unit launches during Q4 2015 due to the floods. New launches among all the three cities were dominated by mid segment category. Capital values remain stable during Q4 2015 with marginal fluctuations at select locations.

High Streets dominate the leasing trend

RETAILVR Mall was the only mall to commence operations in 2015 across four major cities. Leasing activities continued across high street locations and in malls in Bengaluru, Chennai, Mumbai and Hyderabad. Apparel, footwear and food & beverage retailers dominated during 2015. Rentals mostly remained stable across both malls and high streets barring marginal fluctuations and corrections in select locations. 2016 is expected to witness entry of new malls namely GT Mall

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


Table 4: Key Residential Project Launches, Q4 2015

Project

Provident Rising City

Park West Phase 2

VBHC Palmhaven

Raintree Boulevard

Developer

Provident Housing

Shapoorji Pallonji

VBHC

L & T

Location

Chandapur

Jagajeevanram Nagar

Kengeri

Bellary Road

Type

Apartment

Apartment

Apartment

Apartment

970

632

480

400

No. of Units

Incor One City

Aparna Serene Park

Galaxy Apartments

Incor Infrastructure

Aparna Constructions

Praneeth Group

Kukatpally

Kondapur

Kondapur

Apartment

Apartment

Apartment

1,250

480

468

Crystal Springs Phase 2

Casa Grande Manapakam

Four Season

Raj Paris Civil Construction

Casa Grand Private Limited

Alliance Group

Sithapakkam

Manapakkam

Thiruvallur

Apartments

Apartments

Row House

380

288

230

BENGALURU

CHENNAI

HYDERABAD


(0.3 million sqft), RMZ Galleria (0.5 million sqft) and Brigade Orion II (0.4 million sqft) in Bengaluru; Grand Marina (0.65 million sqft) in Chennai and Preston Prime Mall (0.3 million sqft) in Hyderabad. 10.39

2.651.78

3.81

12.68

3.123.78

1.70

0

2

4

6

8

10

12

14

Bengaluru Chennai Hyderabad Mumbai

Area

(in m

illion

sqft)

Supply 2015 Absorption 2015


BENGALURUApproximately 12.68 million sqft office space absorptions & 38,665 new residential unit launches in 2015

OFFICEApproximately 5.43 million sqft of office space became operational during Q4 2015, taking the cumulative total to 10.34 million for the year. PBD micro locations accounted for a major share of the new supply (53%).This quarter’s major contribution was from RGA Tech Park (1 million sqft), Bagmane Constellation Virgo Block (0.9 million sqft) and Neo Town City (0.8 million sqft).

Absorption was recorded at 3.22 million sqft during Q4 2015 totaling to 12.30 million sqft for 2015.Overall leasing activity registered a marginal appreciation compared to previous year. With a pre-commitment of 3.6 million sqft total demand for office space during 2015 was 17.01 million sqft. Some of the significant pre-commitments reported from corporate occupiers during 2015 were Flipkart (Embassy Tech Village), Amazon and Accenture (Bagmane Constellation Business Park). Absorption was mainly concentrated in ORR at 60% followed by SBD and PBD at 17% and 11% respectively.

Q4 2015 witnessed couple of large size transactions in the range of 1,50,000-5,00,000 in Bengaluru North. Rental values however, remained stable across all micro-markets except Bengaluru North and ORR that witnessed an appreciation of 25% and 12% respectively.

RETAILVR Mall at ITPL Road (0.6 million sqft)was the only mall to commence operations in 2015, taking the total mall supply in Bangalore to 8.6 million sqft. Bengaluru retail market is expecting the launch of GT Mall (0.3 million sqft), RMZ Galleria (0.5 million sqft) and Brigade Orion II (0.4 million sqft) during 2016.

Leasing activities were observed both on high streets and in mall developments. Retailers like Park Avenue, Color Plus, Peter England, AND, Burger King and Dunkin Donuts among others, opened their outlets. During Q4 2015, key developments in the retail sector include Maserati's advent in the southern market through a dealership in Bengaluru and PVR Cinemas announcing the launch of a 9-screen multiplex at VR mall.

Table 5: Bengaluru Office Rental Values*, Q4 2015

Table 6: Bengaluru Retail Rental Values**, Q4 2015

*(INR/sqft/month)

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

CBD

SBD

ORR

PBD

Bengaluru North

Grade A

90 - 110

85 - 90

65 - 72

32 - 42

50 - 60

Grade B

60 - 65

55 - 60

55 - 60

25 - 30

45 - 50

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

450

260

200

240

250

300

125

150

180

100

95

110

Magrath Road

Cunningham Road

Vittal Mallya Road

Koramangala

Whitefield

Bannerghatta Road

Mysore Road

Rajarajeshwari Nagar

Rajaji Nagar

Malleswaram

350

185

450

500

180

200

110

145

340

250

High StreetRental Value*

Rental Value*

Mall Spaces

Brigade Road

Commercial Street

Church Street

MG Road

Indiranagar 100 ft Road

Jayanagar 11th Main Road

Sampige Road, Malleswaram

New BEL Road

Kamanahalli Main Road

ORR (Marathahalli - Sarjapur junction)

Bannerghatta Road

Yelahanka Main Road



Bengaluru North is anticipated to gain momentum in terms of office space transactions in the near future. Ascendas is in the preliminary stage of acquiring two million sqft office space near Hebbal.

-

-

4,500 - 5,000

4,500 - 5,200

4,600 - 5,650

4,800 - 5,400

4,000 - 5,700

3,450 - 4,650

3,800 - 4,900

4,350 - 5,400

4,490 - 5,600

Micro-location Mid Segment

10,500 - 14,000

6,800 - 12,000

6,000 - 8,500

5,800 - 6,500

5,950 - 7,250

5,900 - 6,800

6,350 - 8,100

-

6,000

6,100 - 8,300

5,890 - 6,500

Premium Segment

Central

Off-Central

Bannerghatta Road

Hosur Road

Sarjapur Road

Whitefield

Bengaluru North

Tumkur Road

Mysore Road

Kanakapura Road

Old Madras Road

18,000 - 36,000

16,000 - 22,000

-

-

8,000 - 10,500

8,500 - 12,000

8,500 - 13,100

-

-

-

-

Luxury Segment*

RESIDENTIALWith approximately 8,693 units launched during Q4 2015, the total for 2015 closed at 40,752 units, a 9% Y-o-Y decline. Meanwhile the annual absorption was 32,338 units. The new launches were primarily in the apartment category across all price segments with 43% in the mid segment, followed by budget and premium segments at 33% and 20% respectively. New launches were spread across various micro-locations like Bangalore North (29%), Whitefield (17%), Kanakapura Road (13%) and Sarjapur Road (10%). Capital values across all micro-locations continued to be stable barring a marginal increase in Mysore Road, Whitefield and Sarjapur Road with a Y-o-Y appreciation of 8%, 5% and 5% respectively.

Table 7: Bengaluru Residential Capital Values for Grade A Projects, Q4 2015


*Note: luxury segment includes villas in Sarjapur Road, Whitefield and Bangalore North


Rentalsvalues across malls continued to remain stable. Rentals on high street locations too remain stable barring minor fluctuations at Church Street (-11%) and Commercial Street (+4%) when compared to the previous quarter.

(INR/sqft)


Central

Off - Central

OMR

GST

NH - 4

Oragadam

-

-

3,900 - 5,300

3,000 - 4,700

-

3,200 - 4,600

10,000 - 15,000

6,000 - 10,500

6,400 - 7,000

5,000 - 6,000

7,000 - 9,000

-

18,000 - 25,000

12,000 - 15,000

-

-

9,500-11,000

-

Micro-location Mid Segment PremiumSegment

LuxurySegment

CHENNAI3.13 million sqft of office space absorption & 10,387 new residential unit launches in 2015

OFFICEChennai’s commercial office market witnessed 0.33 million sqft absorption during Q4 2015, taking the year’s total to 3.13 million sqft. Absorption during the quarter was mainly concentrated in the PBD at 54% followed by SBD at 26% and CBD at 20%. The largest office space leasing transaction of 1,00,000 sqft was by Sutherland Global at Shriram-The Gateway. Most of the other transactions were in the range of 10,000-30,000 sqft during the same period.

Supply was recorded at 1.36 million sqft during Q4 2015 totaling to 2.65 million sqft during 2015; a 31% Y-O-Y increase. One Magnum (Phase 2), Thoraipakkam was the largest contributor, adding 1.2 million sqft to this quarter’s supply.

RETAILNo new mall came into operation during the quarter in review. Grand Marina (0.65 million sqft) at OMR is expected to be operational during 2016. Rental values of most malls remained stable in the absence of new mall supply and low vacancy rates.Leasing was observed mostly on high street locations with retailers like Raymond’s, Tanishq, Indian Terrain, Airtel, Royal Enfield, Soch and Hot Chips opening their outlets in the city. Quite a few large format stores like Kalyan Jewellers (15,000 sqft),Lalitha Jewellery (12,000 sqft) and Unlimited (12,000

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

Table 8: Chennai Office Rental Values*, Q4 2015

Table 10: Chennai Residential Capital Values forApartments, Q4 2015

Table 9: Chennai Retail Rental Values**, Q4 2015

*(INR/sqft/month)

*Office rentals mentioned are for Warm Shell spaces

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

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

220

145

130

125

130

220

150

150

100

130

Whites Rd

R K Salai

Mount Road

Nelsanmanickam Rd

Velachery

Vadapalani

270

175

175

200

260

230


Rental Value*

Mall Spaces

Khadar Nawaz Khan Road

Nungambakkam High Road

R K Salai

Usman Road – South

Usman Road – North

Pondy Bazaar

Adyar Main Road

Annanagar Second Avenue

Velachery

Purusuvakam High Road

CBD

Off CBD

SBD

OMR

GSTPBD

Grade A

80

70

40

28 - 40

25 - 35

Grade B

60

45

30

20 - 35

-

Micro-locationRental Value (INR/sqft/month)




sqft) were operational during Q4 2015. Rentals in high street locations too remained stable; except at Purusuvakam High Road, which witnessed an appreciation of 8%. Leasing activity remained strong and was dominated by apparel & jewellery retailers.


HYDERABAD3.78 million sqft office space absorption & 11,593 unit launches in the residential space

OFFICEHyderabad witnessed approximately 1.54 million sqft office space absorption during Q4 2015, totaling to 3.78 million sqft for 2015. The political stability coupled with new government polices on economic growth & stability has increased business optimism. Hence the city witnessed an increase in office space absorption by 60% compared to previous year. PBD (West) micro-locations accounted for 87% of total absorption during the quarter in review. Quite a few large size transactions in the range of 1,00,000-2,40,000 sqft were concentrated across the PBD (West) micro-locations.Supply was recorded at 0.23 million sqft during the quarter and was entirely concentrated in Banjara Hills. City witnessed a total office supply of 1.65 million sqft during 2015. Rental values across all micro-locations continued to remain stable except the SBD which witnessed an appreciation of 11%.

RETAILThere was no new mall supply in Hyderabad during 2015. The city’s retail market is expecting the entry of Preston Prime Mall in 2016. Retailer interest in the city revived with most enquiries observed for high street properties as well as select malls.Leasing remained active across the city and was mostly dominated by apparel, food & beverage retailers. During the quarter, Burger King entered Hyderabad with its maiden outlet in Sujana Forum Mall while Easy Buy launched two new outlets in the city. Additionally, retailers like Soch, Centro, TVS, etc also expanded their operations with newer outlets in the city. Rentals across both high streets and malls, however, continued to remain stable.

RESIDENTIALThe city witnessed approximately 3,547 new unit launches during Q4 2015, a 20% quarter-on-quarter increase. New unit launches have improved significantly taking the city’s total supply during 2015 to 11,593 units. Owing to an increase in the net absorption in office space, new launches rose by 142% as compared to the previous year. Some of the significant launches during the quarter were Incor One City (1,250 units) and Aparna Serene Park (480 units). Nearly 59% of the new launches were in mid segment apartment category followed by premium segment at 37%. Capital price of units were primarily in the range of INR 50 lakhs - 70 Lakhs. Demand strengthened in and around the IT/ITeS corridors of Kukatpally, Gachibowli and Kondapur. Capital values, however, continued to remain stable across all micro locations except Jubilee Hills, Banjara Hills and Begumpet, which registered an increase of 15%, 11% and 10% respectively.

Table 11: Hyderabad Office Rental Values*, Q4 2015

Table 13: Hyderabad Residential Capital Values for Apartments, Q4 2015

Table 12: Hyderabad Retail Rental Values**, Q4 2015

*(INR/sqft/month)

*Office rentals mentioned are for warm shell spaces

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

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

135

125

120

170

135

130

110

150

135

NTR Gardens

Banjara Hills

Madhapur

230

270

280


Rental Value*

Mall Spaces

M.G. Road

Begumpet

Banjara Hills Rd. 1

Banjara Hills Rd. 2

Panjagutta

Jubilee Hills Rd. 36

AS Rao Nagar

Madhapur

Kukatpally

CBD

SBD

PBD (West)

PBD

Grade A

45-55

50-55

45-50

22-25

Grade B

40-45

45-50

40-45

16-22

Micro-locationRental Value (INR/sqft/month)

-

-

4,500 - 6,000

3,200 - 5,500

3,500 - 5,000

3,700 - 4,750

3,300 - 4,000

7,500 - 10,000

6,500 - 10,000

-

-

5,500 - 6,700

5,000 - 6,000

4,500 - 6,000

11,000 - 13,500

-

-

-

-

-

-

Micro-location Mid Segment PremiumSegment

LuxurySegment

Banjara Hills

Jubilee Hills

Himayath Nagar

Maredpally

Begumpet, Somajiguda

Madhapur, Gachibowli

Kukatpally




(INR/sqft)


MUMBAIApproximately 3.9 million sqft of office space absorption in 2015; no new mall supply

OFFICEAbsorption was recorded at approximately 0.28 million sqft in Q4 2015 summing to 3.90 million sqft for the year 2015; a 37% Y-o-Y increase. Last year’s absorption included a pre-commitment of 2 million sqft from TCS. The absorption during this quarter was mostly recorded across micro-locations of BKC, Western Suburbs and Navi Mumbai.Rental across most micro locations remain stable except at Western Suburbs and Navi Mumbai witnessed an appreciation of 8% and 10% respectively. There was no new office space supply during the quarter in review. The city’s total office supply during 2015 was 3.8 million sqft.

RETAILNo new mall came into operation during 2015. The city’s retail market is likely to witness entry of malls namely Viva Swastik Mall (0.3 million sqft) at Vasai and L&T Grand Central (1.5 million sqft) at Navi Mumbai during 2016. High Streets witnessed retailers like Pepe Jeans, Chaayos, Starbucks, Burger King and Fusion. Leasing however, continued in the malls as well as high streets and was dominated by apparel and food & beverage retailers.

Table 14: Mumbai Office Rental Values*, Q4 2015

Table 15: Mumbai Retail Rental Values**, Q4 2015

*Office rentals mentioned are for warm shell spaces


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

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

175 - 200

180 - 225

225 - 320

125 - 150

85 - 115

75 - 90

Micro-locationRental Value

Grade A (INR/sqft/month)

130 - 165

100 - 115

175 - 225

65 - 110

55 - 75

45 - 70

Rental ValueGrade B

(INR/sqft/month)

CBD

Off CBD

BKC

Western Suburbs

Eastern Suburbs

Navi Mumbai

650

850

350 - 450

300 - 400

250 - 275

200 - 250

350 - 450

-

-

200 - 300

150 - 200

150 - 200

Micro-locationHigh Street

Rental Value(INR/sqft/month)

Mall Rental Value

(INR/sqft/month)

South Mumbai

Linking Road, Juhu

BKC

Western Suburbs

Eastern Suburbs

Navi Mumbai

OUTLOOK


• As per International Monetary Fund (IMF) forecast, India’s GDP is expected to grow at 7.3% in FY 16 and 7.5% in FY 17 on account of economic reforms, pick up in investment and low commodity prices. The World Bank too forecasts India’s GDP to grow by 7.8% in 2016-17.

• Private Equity (PE) investments in Indian real estate are expected to improve in 2016 as economy shows signs of revival on account of various policy decisions taken by the Government.

• The following measures taken in 2015 are likely to boost real estate sector in 2016:- Relaxation in foreign direct investment regulations- Rate cuts by RBI - Release of seventh pay commission panel recommendations

• Demand for office space across major cities is likely to strengthen on account of strong economic growth, optimistic employment growth outlook, rise in e-commerce and Government’s initiative for “Make in India”.

• Outlook for Bengaluru office market looks positive for 2016 due to several large pre-lease deals that are likely to be finalized. Bengaluru North is likely to emerge as an important corridor for office spaces in 2016. Outer Ring Road will continue to witness high absorption as developers will focus on completing the spaces where pre-lease deals have already been signed. Rental values are likely to witness an upward trend in both ORR and Bengaluru North.

• The Mumbai office market has started showing strong demand with the announcement of major infrastructure projects in the city. Western suburbs and Navi Mumbai are likely to witness more absorption due to comparatively affordable rentals and availability of quality office spaces. Rental contraction is expected on account of sustained demand and influx of office space expected in 2016.

• Hyderabad Office Market is expected to gain more traction in 2016. Political stability and the state’s newly

formed policies for economic growth & stability have

been growth drivers for commercial office spaces. Rental values are expected to increase in coming quarters across Hi-Tec City, Gachibowli and Madhapur.

• Demand for commercial spaces will be low in Chennai for the next few quarters. Rental values are expected to remain stable.

• Reduced interest rates, hike in office space absorption, and optimistic employment outlook are expected to positively impact the residential absorption in Bengaluru. 13,000-15,000 units are in advanced stages of planning and will likely to be launched in H1 2016. Focus will continue to be on mid segment housing and on compact units. Meanwhile the completion of Metro Rail Phase I and announcement of Peripheral Ring Road will positively impact the real estate sector. Key micro-markets to watch for are Gunjur, Thanisandra and Bellary Road. Property prices are expected to increase by 8%-10% in H1 2016.

• Hyderabad has witnessed resurgence in demand on account of net office space absorption and political stability and this momentum is expected to continue over the next few years across residential sector. There has been an increase in supply to keep up with this demand. Property prices are expected to appreciate in select locations of Gachibowli, Jubilee Hills, Kondapur and Madhapur. Due to heavy floods in Chennai, the residential/ real estate market is expected to witness subdued interest in the coming quarters. Prominent developers from Chennai will focus on Tier 2 cities or search for opportunities to expand in Bengaluru and Hyderabad. Capital values are expected to drop in low lying areas such as T Nagar, Velachery, Guindy, Egmore and Madipakkam.

• 2016 is expected to witness entry of 4.0 million sqft of retail mall space across Bengaluru, Mumbai, Hyderabad and Chennai. Retail expansion will be seen both in malls and high street locations. Food & Beverage and Jewellery & Apparel retailers are likely to be the key demand generators. Rental values will be under pressure due to high anticipated supply.

##Images used are only for representaion purpose only

Bengaluru

Chennai

Hyderabad

Mumbai

CBD

SBD

ORR

PBD

Bengaluru North

CBD

Off CBD

SBD

CBD

SBD

PBD (West)

PBD

CBD

Off-CBD

BKC

Western Suburbs

Eastern Suburbs

Navi Mumbai

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

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

Stretch from Hebbal to Silk Board junction

Whitefield, Electronics City, Mysore Road, Sarjapur Road

Bellary Road (Hebbal to BIAL)

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

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

OMR (Tharamani to Perungudi Toll)

Ambattur

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

Shriram, L&T Estancia, Mahindra World City

Begumpet, Somajiguda, Raj Bhavan Road & SP Road

Banjara Hills, Jubilee Hills

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

Pocharam, Uppal, Shamshabad

Fort, Church Gate, Cuffe Parade, Colaba

Worli, Lower Parel, Prabhadevi

Bandra Kurla Complex

Andheri, Goregaon, Malad

Vikhroli, Powai, Mulund, Thane

Vashi, Belapur

OMR

GSTPBD

City Micro-location Key Locations

Office: Location Master


Segments

Affordable

Mid

Premium

Luxury

Price Range

INR 25-50 lakhs

INR 50 lakhs - 1 crore

INR 1 crore - 3 crore

INR 3 crore and above

Residential: Segment Classification

Bengaluru

Chennai

Central

Off-central

ORR (Marathahalli-Silk

Board Jn) & Sarjapur Road

Whitefield

Old Madras Road

Bengaluru North

Hosur Road

Bannerghatta Road

Mysore Road

Kanakapura Road

Tumkur Road

Central

Off-Central

East Coast Road

OMR

GST

Vandalur- Kelambakkam Road

Oragadam

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

Frazer Town, Cox Town and Hannes Road

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

Sanjay Nagar, RT Nagar, Yeshwathpur, Rajajinagar

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

Kasavanahalli Main Road

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

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

Devanahalli-Hoskote Road

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

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

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

Bannerghatta Road, Begur, BTM Extention

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

Kanakapura Main Road, Banashankari Extension and Uttarahalli

Tumkur Road, Hessarghatta, Jalahalli, HMT Township

Adyar, T Nagar, Nungambakkam, Kodambakkam, Teynampet,West Mambalam

Manapakkam,Anna Nagar, Koyambedu,KK Nagar

Thiruvanmiyur, Nellikaranai, Uthandi

Perungudi,Velacherry,Sholinganallur, Kelambakkam

Guindy, Thambaram, Vandalur, Singaperumal Koil

Vandalur- Kelambakkam Road

Oragadam

City Micro-location Key Locations

Residential: Location Master


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

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

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

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

India, China, Sri Lanka and the Middle East.

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

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

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

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

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

providing solutions in keeping with global delivery standards.

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

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

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

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

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

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

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

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

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

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

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

business objectives of our clients.

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

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

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

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

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

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

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

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

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

well as project closure.

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

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

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

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

industrial real estate.

Bengaluru: Whitefield & Electronic City

Bengaluru: Residential Market Report

Chennai: OMR & GST Road

Bengaluru: Outer Ring Road

Bengaluru: Retail Real Estate Market Report

Bengaluru: Real Estate Market Report

Aerotropolis

Vestian Reports

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

www.vestianglobal.com

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