India Office Property Market Overview- July 2014

8/12/2019 India Office Property Market Overview- July 2014

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Office Property Market OverviewINDIA

July 2014


2/12

RESEARCH & FORECAST REPORTSYDNEY CENTRAL BUSINESS DISTRICT

Research & Forecast ReportIndia I Office | July 2014

2 Research & Forecast Report | July 2014 | Office | Colliers International

Jun-13 Jun-14

Repo rate 7.25% 8.00%

Reverse

Repo Rate 6.25% 7.00%

CRR 4.00% 4.00%

Inflation (WPI) 5.16% 5.43%

PLR1 9.70% - 10.25% 10.00% - 10.30%

Deposit Rate2 7.50%- 9.00% 8.00% - 9.25%

Exchange Rate

INR - USD 57.62 60.01

INR - EURO 76.87 81.25

Jun-13 Jun-14 YoY %

Change

Gold 26,717 27,598 3.30%

Silver 41,026 42,199 2.86%

Equity

(BSE Sensex)19,326 25,190 30.35%

Realty Index 1,603 2,029 26.59%

RETURN ON ALTERNATIVE INVESTMENTS

MACRO ECONOMIC OVERVIEW

Overall, market sentiment witnessed animprovement this quarter after thegeneral elections. As Prime MinisterMr. Narendra Modi took charge at theCentre with a clear mandate, investorconfidence picked up in expectation thatthe new government would revitalise theeconomy. Consequently, the CII BusinessConfidence Index for 2Q 2014 increasedto 53.7 from 49.9 in the previousquarter.

Te capital markets also performed well,with both the BSE Sensex and the BSERealty Index showing an upward swing.Te rupee strengthened and evenshowed signs of recovery during thequarter, hovering in the range of 60 to60.5 per US dollar.

Te first quarter GDP growth figuresposted a marginal decrease from 4.7% in4Q 2013 to 4.6% in 1Q 2014.

Te office property market witnessed anew wave of leasing activity in Bangaloreand Pune, while cities like Mumbai,

Chennai recorded a moderate increasein absorption QoQ. Approximately 8million sq. ft. of office space was leasedacross eight major cities in India duringthe quarter. Te I / IeS sectorsremained primary demand driver.

COLLIERS VIEW: Te office propertymarket is expected to continue tostrengthen for the remainder of 2014. Terestoration of business confidence isexpected to gain steam, on the back ofthe positive business outlook. Adequate

supply in the pipeline in all the marketswill ensure steady rentals across the citiesin the medium term, while vacancy mayfall marginally in cities like Bangaloreand Pune.

ECONOMIC BAROMETER

Source: Colliers International India Research

Note: All values in the above tables are as on 15th of June

2013 and 2014

1SBI Prime Lending Rate2SBI interest rate < INR 1 crore Term Deposits for 1 Year

INR

Crore

Jan-09

Jan-10

Jan-11

Jan-12

Jan-13

Jan-14

Apr-14

Jul-14

Apr-09

Apr-10

Apr-11

Apr-12

Apr-13

Jul-09

Jul-10

Jul-11

Jul-12

Jul-13

Oct-10

Oct-11

Oct-12

Oct-13

Oct-09

Business Confidence Index

10

20

30

40

50

60

70

80

90

0

2,000

12,000

14,000

16,000

8,000

10,000

4,000

6,000

2008-09

2012-13

2013-14

2010-11

2011-12

2009-10

2005-06

2006-07

2007-08

FDI in Real Estate

BSE Sensex Realty Index* Rebase to 100

BSE Sensex & Realty Index

90

110

70

50

170

150

130

1-Apr-

14

11-Apr-

14

21-Apr-

14

1-May-

14

11-May-

14

21-May-

14

31-May-

14

10-Jun-

14

20-Jun-

14

30-Jun-

14

InPercentage

4%

6%

8%

10%

12%

Jan-Mar09

Apr-Jun09

Jul-Sep09

Oct-Dec09

Jan-Mar10

Apr-Jun10

Jul-Sep10

Oct-Dec10

Jan-Mar12

Apr-Jun13

Jul-Sep13

Oct-Dec13

Jan-Mar14

Jan-Mar13

Oct-Dec12

Jun-Sep12

Oct-Dec11

Jul-Sep11

Apr-Jun11

Jan-Mar11

Gross Domestic Product at Factor Cost

0%

2%

Apr-Jun12


3/12

3

In 2Q 2014, demand for Grade A officespace increased moderately andabsorption levels increased by 16% QoQto 0.49 million sq. ft. compared to thelast quarters 0.42 million sq. ft. BFSIand consulting firms remain the primeoccupiers with about 30% of the total

absorption.

In a major investment transactionBlackstone acquired 247 Park, aleased commercial asset admeasuringapproximately 1 million sq. ft. located at

Vikhroli for a consideration of INR 10.5billion.

Tis quarter saw completion ofapproximately 0.50 million sq. ft. ofGrade A commercial office space.Projects completed include Sahar

Business Centre by Te ContinentalGroup at Andheri (E); KrishnaCorporate Pride at Andheri (W) andKrishna Corporate Centre at Andheri(E) both by Krishna Ventures.

Both rental and capital values remainedlargely stable across the micro-marketsowing to large vacant stock and cautiousdemand.

In a major infrastructure boost, Mumbaisfirst Metro Rail started operation

this quarter. It is connecting Versova,Andheri and Ghatkopar on an 11.4 kmstretch, providing swift connectivity.

COLLIERS VIEW: A cautious approachfrom occupiers has resulted in lowabsorption since 1Q 2014. Futureabsorption is likely to improve dueto improved business confidence.However, rents are expected to remainon the same levels, except locations likeBKC, where a marginal increase can be

witnessed in premium projects due to

limited supply.

Mumbai


Micro Market Rental

Values*% Change

QoQ YoY

CBD 226 - 260 0% 0%

Andheri East 91 - 125 0% 0%

BKC 226 - 320 0% 0%

Lower Parel 141 - 180 0% 0%

Malad 81 - 90 0% 1%

Navi Mumbai 56 - 75 0% 1%

Powai 101 - 120 0% 0%

Worli/ Prabhadevi 176 - 225 0% 0%

Goregaon/ JVLR 81 - 110 0% 1%

Kalina 175 - 211 0% 0%

Thane / LBS 51 - 100 0% 1%

2Q 2014 3Q 2014F

Vacancy

Absorption

Construction

Rental Value

Capital Value

CITY OFFICE BAROMETER

KEY UNDER CONSTRUCTION PROJECTS

BUILDING NAME DEVELOPER AREA (SQ. FT.) LOCATION POSSESSION

Newa Bhakti Knowledge City Park New Tech City Group 600,000 Airoli, Navi Mumbai 2015

Zillicon Kanakia Spaces 525,000 Kurla 2014

Chromium Tech-Pro Projects (KGA) 200,000 JVLR. Off Powai 2014

TOP 5 TRANSACTIONS OF THE QUARTER

CLIENT BUILDING NAME AREA (SQ. FT.) LOCATION LEASE/SALE

Pfizer The Capital 90,000 BKC Lease

Pearl Academy S M Centre 70,000 Andheri East Lease

ICICI Lombard Vishwaroop IT Park 55,000 Navi Mumbai Lease

HPCL Marathon Futurex 51,000 Lower Parel Sale

Halliburton Oberoi Commerz 31,000 Goregaon East Lease

Andheri East24%

Thane / LBS21%

CBD

1%

Worli /Prabhadevi

1%

Goregoan /JVLR4%Powai

4%Navi Mumbai

2%Malad6%

Lower Parel20%

BKC15%

Kalina2%

AVAILABLE SUPPLY IN PRIME AREAS

2Q2008

2Q2009

2Q2010

2Q2014

2Q2013

2Q2015F

2Q2012

2Q2011

505,000

0 0

100

10,000

150

15,000

200

20,000

250

25,000

30,000

AVERAGE RENTAL AND CAPITAL VALUE TREND

RentalValues-INR

PerSq

.ft.

PerMonth

CapitalValues-INRP

erSq.

ft.

Note:Available Supply: Total Grade A office space being mar-keted for sale or lease in surveyed quarter.

Average Rental /Capital Values: Market average of indica-tive asking price for Grade A office space.

Forecast

* Indicative Grade A rents in INR per sq. ft. per month.

0

0.4

0.8

0.6

0.2

1.2

1.0

1.6

1.4

1.8

2.0

2Q2013 3Q2013 4Q2013 1Q2014 2Q2014

QUARTER WISE ABSORPTIONMillion Sq. ft.


4/12


In 2Q 2014, overall lease volumesdecreased due to the union elections.

About 0.25 million sq. ft. of officespace was leased during the quarter,

which is approximately 20% less thanthe previous quarter. More than 70%of these deals were concluded in theOkhla micro-market where occupiers

from IeS segment took up most of thisoffice space, followed by consulting,automobiles and pharma companies inthe Jasola, Saket and Vasant Kunj micro-markets.

During the surveyed quarter, no newcommercial Grade A projects /parts ofthe project were completed and no newprojects were launched.

Approximately 2.8 million sq. ft. ofGrade A commercial office space was

available for fit-out. Most of this supplywas concentrated in Jasola and Saket.

A decline in absorption put pressure onaverage rents and resulted in a 4-10%decline in almost all micro-marketsQoQ.

Tis quarter, the local authority clearedPhase III of the Barapullah Bridge. Tis

will connect the INA market with MayurVihar. Te bridge will be constructedbetween the DND Flyway and

Nizamuddin Bridge over the YamunaRiver. Tis project, costing approximatelyINR1,200 crore, is expected to be readyby the end of 2017.

COLLIERS VIEW: Demand is expectedto improve in the coming quarter, asthe companies with an increasingexpectations of business improvementramped up their plans for growth.Rental and capital values are expectedto increase marginally due to limitedsupply of Grade A office space.

Delhi


Micro Market Rental

Values*% Change

QoQ YoY

ConnaughtPlace

150 - 450 -4% -10%

Nehru Place 150 - 225 -6% -6%Saket 140 - 175 -10% -5%

Jasola 90 - 120 -7% -7%

Netaji Subhash 65 - 75 0% 0%

2Q 2014 3Q 2014F

Vacancy

Absorption

Construction

Rental Value

Capital Value




NBCC Redevelopment NBCC Ltd. 1,300,000 Kidwai Nagar 2016

NBCC Plaza NBCC Ltd. 350,000 Okhla 2014

Parsvnath 27 Parsvnath Ltd. 150,000 K.G. Marg 2016



Moser Baer Okhla Phase 3 70,000 Okhla Lease

Snapdeal Okhla Phase 3 50000 Okhla Lease

C&B Fashion Splendour Forum 18,000 Okhla Lease

Publicis Okhla Phase 3 15,000 Jasola Lease

Hyundai Corporate One 14,800 Jasola Lease

0

0.1

0.15

0.2

0.25

0.3

0.05

0.35

2Q2013 3Q2013 4Q2013 1Q2014 2Q2014

QUARTER WISE ABSORPTION

2Q2008

2Q2009

2Q2010

2Q2014

2Q2013

2Q2015F

2Q2012

2Q2011

505,000

0 0

100

10,000

150

15,000

200

20,000

250

300

25,000

40,000

35,000

30,000


RentalValues-INR

PerSq

.ft.

PerMonth

CapitalValues-INR

PerSq.

ft.


Average Rental/Capital Values: Market average of indicativeasking price for Grade A office space.

Forecast



Jasola36%

Nehru Place4%

Saket32%

Connaught place28%

Million Sq. ft.


5/12

5

A steep decline in absorption waswitnessed during the quarter withonly 0.53 million sq. ft. of office spaceabsorbed, against last quarters 1.67million sq. ft. Te I/IeS sector,contributing only 35% of this absorption.

In this quarter, the city added about

0.6 million sq. ft. of new, Grade A officesupply. Projects contributing this supply

were Eros ower, IFFCO ower,Concept Cyber Park and ARC ower.

Projects launched during 2Q 2014,include SS Omnia by SS Group atSector 86 and Conscient One byConscient Group at Sector 109. Teseprojects together will add more than 0.4million sq. ft. of Grade A commercialoffice space by the end of 2017.

More than 17 million sq. ft. of Grade Acommercial office space was availablefor fit-out during the quarter. Of this,more than 50% of the supply wasconcentrated in the Manesar, GolfCourse Road Extension and Sohna Roadmicro-markets.

Rents in almost all micro-marketsdeclined by an average of 9% QoQ, exceptDLF Cyber City where rents increased by4% QoQ as this micro market becomesoccupiers preference due to the recent

start of operations of the Rapid Metro,which tremendously increased theconnectivity of the micro-market.

COLLIERS VIEW: Positive sentimentsare predicted to result in increasedoverall office space absorption in comingquarters. DLF Cyber City, Golf CourseRoad and its extension will remainthe preferred micro-markets. Recentinfrastructure development, such asroad widening and extension of RapidMetro lines to Golf Course ExtensionRoad, is likely to give a further boost to

these micro-markets.

Gurgaon


Micro Market Rental

Values*% Change

QoQ YoY

MG ROAD 90 - 110 -13% -17%

Golf Course Rd 85 - 125 -9% -7%

Institutional Sect.(18,32,44) 50 - 60 -4% -8%

Golf Course RdExt./Sohna Rd 45 - 65 -4% -3%

NH8 45 - 125 -3% -3%

Udyog Vihar& IndustrialSectors

35 - 50 0% -11%

Manesar 35 - 40 -9% -6%

DLF Cyber City 80 - 85 4% 8%

2Q 2014 3Q 2014F

Vacancy

Absorption

Construction

Rental Value

Capital Value




One on One Vatika Group 1,200,000 NH 8 2017

Conscient One Conscient Group 250,000 Sector 109 2017

SS Omnia SS Group 180,000 Sector 86 2017



Edifecs DLF Worldtech Park 120,000 NH 8 Lease

Ibibo Good Earth City Center 36,000 South City 2 Lease

Oxygen Plot No 94 35,000 Sector 32 Lease

Louis Berger Plot No 2 35,000 Sector 32 Lease

Sun Life Financial Unitech Cyber Park 30,000 Sector 32 Lease

0

0.4

0.2

0.6

1.0

0.8

1.4

1.2

1.8

1.6

2Q2013 3Q2013 4Q2013 1Q2014 2Q2014


2Q2008

2Q2009

2Q2010

2Q2014F

2Q2013

2Q2015F

2Q2012

2Q2011

20 2,000

0 0

40 4,000

60 6,000

100

80 8,000

120

10,000

12,000


RentalValues-INR

PerSq

.ft.

PerMonth

CapitalValues-INR

PerSq.

ft.


Average Rental / Capital Values: Market average of indica-tive asking price for Grade A office space.

Forecast



MG Road5%

Golf Course Road11%

DLF Cyber City2%

Institutional Sec-tors (Sec44, 32, 18)

5%

Manesar23%

National Highway 815%

Udyog Vihar &Industrial Sectors

11%

Golf Course Road

Ext./Sohna Road28%

Million Sq. ft.


6/12


In 2Q 2014, leasing activities remainedsluggish and only 0.12 million sq. ft.of office space was leased. Relocationremained the primary demand generator

with companies relocating to NOIDAexpressway due to better connectivityand infrastructure.

Te only project that was completed thisquarter was MMR Heights, measuring0.15 million sq. ft. and developed byMMR Group at Sector 127. Projectslaunched this quarter include, AssotechBusiness Cresterra by Assotech Realtyat Sector 135 and MMR 52 Avenue byMMR Group at Sector 52. ogether theseprojects will add about 0.8 million sq. ft.of Grade A commercial office space bythe end of 2017.

During the surveyed quarter, more than8 million sq. ft. of Grade A and Grade Bcommercial office space was availablefor fit-out.

Both rents and capital values posted anaverage decline of 9% QoQ. However,rental values in Industrial Sectorsremained stable. Weak governance andlimited Grade A commercial office spaceare the major factor for lower demand.

During 2Q 2014, I giant, Infosys, hascompleted the formalities of 1.11 lakh

sq m land acquisition in Sector 85 locatedat NOIDA Greater NOIDA Expressway.Te company plans to launch operationsfrom this site in 3 years.

COLLIERS VIEW: NOIDA is expected towitness new office space completions ofapproximately 4.5 mn sq. ft. by the endof 2014. Most of this upcoming supply isnon-I/IeS office space. Te additionof Grade A non-I/IeS office space isexpected to attract corporate occupiersto this market.

NOIDA


Micro Market Rental

Values*% Change

QoQ YoY

InstitutionalSectors (Non IT) 40 - 85 -11% -11%

InstitutionalSectors (IT) 25 - 65 -14% -14%

ComercialSectors

90 - 100 -3% -5%

IndustrialSector

18 - 48 0% 5%

2Q 2014 3Q 2014F

Vacancy

Absorption

Construction

Rental Value

Capital Value




Assotech Business Cresterra Assotech Realty 500,000 Sector 135 2017

K Rasa K8 K Rasa Group 500,000 Sector 129 2019

MMR 52 Avenue MMR Group 250,000 Sector 52 2017



News Nation Plot 13 & 14 42,000 Sector 126 Lease

Adobe GYS Universal 25,000 Sector 125 Lease

Mentor Graphics India Glycols 15,000 NOIDA Expressway Lease

Calyptu Design Seystem India Glycols 15,000 NOIDA Expressway Lease

Housing.com Technopolis 4,400 Sector 62 Lease

0

0.2

0.4

0.6

1.0

0.8

1.2

2Q2013 3Q2013 4Q2013 1Q2014 2Q2014


2Q2009

2Q2010

2Q2014

2Q2013

2Q2015F

2Q2012

2Q2011

20

102,000

0 0

40

304,000

50

6,000

70

60

8,000

80 12,000

10,000


RentalValues-INR

PerSq

.ft.

PerMonth

CapitalValues-INR

PerSq.

ft.



Forecast


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

(Grade B)15

Commercial Sectors(Sec 18) (Grade B)

1

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

84%

Million Sq. ft.



7/12

7

During 2Q 2014, Chennai witnessed amarginal 8% increase in absorption overthe previous quarter. Approximately0.61 million sq. ft. was leased duringthe surveyed period. I/IeS sector,

with about 70% of the total absorption,remained the primary occupier followed

by the BFSI, advisory, manufacturing,real estate and entertainment industries.

Projects / parts of the project completedduring the quarter include Centre Point2 by K G Builders and ICON by SriKausalya Construction Ltd, both locatedat Guindy. Tese projects togethercontributed about 0.20 million sq. ft. ofGrade A commercial office space to thecitys total inventory.

No new commercial Grade A projects

/ parts of the project were launchedduring the quarter. Mahindra life spaceacquired approximately 550 acres landparcel to develop its second integratedbusiness city.

In 2Q 2014, more than 13 million sq. ft.of Grade A office supply was availablefor fit-out. About 71% of this availablesupply was concentrated in OMR (ICorridor) and Ambattur.

Despite improved demand, rents and

capital values for Grade A office spaceremained stable across all micro-markets. Te primary reason for thisis high vacancy levels in almost all themicro markets.

COLLIERS VIEW: Tere is an increaseddemand from the I/IeS segment,

which will ensure that net absorptionlevels will remain positive. Guindy inSBD and OMR will remain the preferredlocation however, rents are likely toremain on the same levels in view of

large accumulated vacant supply.

Chennai


Micro Market Rental

Values*% Change

QoQ YoY

CBD 65 - 85 0% 0%

Guindy (SBD) 50 - 60 0% 0%

Ambattur 25 - 30 0% 0%

OMR(IT Corridor)

25 - 45 0% 8%

GST road 35 - 40 0% 0%

2Q 2014 3Q 2014F

Vacancy

Absorption

Construction

Rental Value

Capital Value




Divyashree Point Divyasree Developers 600,000 OMR 2014

Estancia B1 & B3 L&T & Arun Excello 490,000 GST Road 2014

DLF IT SEZ - Block 2 DLF Ltd. 250,000 Manapakkam 2015



KBR Prestige Polygon 92,000 Mount Road Lease

Samsung EA Chambers 60,000 Royapettah Lease

Nokia RMZ Millenia 40,140 OMR Lease

Scope Futura Tech park 38,930 OMR Lease

Aricent Technologies ASV Chandilya 25,000 OMR Lease

0

0.4

0.2

1.0

0.6

0.8

1.4

1.6

1.2

1.8

2Q2013 3Q2013 4Q2013 1Q2014 2Q2014


2Q2008

2Q2009

2Q2010

2Q2014

1Q2014

2Q2015F

2Q2012

2Q2011

101,000

2,000

3,000

5,000

4,000

6,000

8,000

7,000

0 0

20

30

40

70

60

50


RentalValues-INR

PerSq

.ft.

PerMonth

CapitalValues-INR

PerSq.

ft.


Average Rental / Capital Values: Market average of indica-tive asking price for Grade A office space.

Forecast



Guindy (SBD)8%

CBD16%

GST Rd3%

Velachery1%

Vadapalani0%

OMR (IT Corridor)47%

Ambattur24%

Million Sq. ft.


8/12


Bengaluru (Bangalore)


Micro Market Rental

Values*% Change

QoQ YoY

CBD 80 - 100 0% 0%

Hosur Rd. 20 - 40 0% 0%

EPIP Zone/Whitefield 28 - 36 0% 10%

Electronic City 24 - 32 0% 0%

Bannerghatta Rd. 50 - 60 0% 0%

Outer Ring Rd. 53 - 62 5% 5%

2Q 2014 3Q 2014F

Vacancy

Absorption

Construction

Rental Value

Capital Value




Manyata Embassy Business Park Embassy Group 777,520 Hebbal 2015

Primal Park Primal Group 600,000 Sarjapur Road 2016

MTB SEZ 3 Ascendas 600,000 Whitefield 2016



L & T RMZ Eco World 500,000 Outer Ring Road Lease (LOI signed)

24/7 Prestige Platina 450,000 Outer Ring Road Sale (LOI signed)

Oracle Prestige Tech Park 350,000 Outer Ring Road Lease (LOI signed)

ANZ RMZ Eco World 350,000 Outer Ring Road Lease

Mindtree Global Village 300,000 Mysore Road Lease

2Q2008

3Q2009

4Q2010

2Q2014

2Q2013

2Q2015F

2Q2012

1Q2011

10 1,500

0 0

20 3,000

30 4,500

40

6,000

50

60

7,500

9,000


RentalValues-INR

PerSq

.ft.

PerMonth

CapitalValues-INR

PerSq.

ft.



Forecast


Robust demand for Grade A officespace continued this quarter. Tecity witnessed 4.22 million sq. ft.(including LOI singed deals) of officelease transactions, which representsa 12% QoQ increase. More overKPMG and Honeywell pre-committed

approximately 1.6 million sq. ft. in RMZEco World at ORR.

In the surveyed quarter, the city added0.68 million sq. ft. of Grade A officesupply. Projects contributing to this newinventory were SVR Platinum by anindividual developer at Electronic City,and Bhartiya - SEZ- Block1 by BhartiyaGroup at Tanisandra Road.

Looking at the strong demand,various developers launched projectslike Prestige rinity Circle, HM

Residency Road, Sattva Magnificia &Eminence, Primal Park, MB SEZ3 and Manyata Embassy BusinessPark - G3 Block. Tese projects togetherare expected to add 2.8 million sq. ft. ofGrade A commercial office space by theend of 2016.

More than 11 million sq. ft. of Grade Acommercial office space was availablefor fit-out. Of this, about 70% of thesupply was concentrated in EPIP Zone,

Whitefield and Outer Ring Road.

Despite robust demand, rents andcapital values remained stable in almostall micro-markets, except Outer RingRoad, where rents rose by 5% QoQ.

COLLIERS VIEW: More than 50% of thetotal office space absorption in the top8 cities took place in Bengaluru. Tisstrong demand will continue for theshort to medium term as evidenced bythe large volume of enquiries and RFPsin the currently in the market.


Hosur Road3%

CBD7%

Bannerghatta Road2%

Electronic City15%

EPIP Zone/Whitefield

38%

Outer Ring Road35%

2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014


0.5

0

1.5

1.0

2.5

2.0

3.0

4.5

4.0

3.5

Million Sq. ft.


9/12

9

In 2Q 2014, approximately 0.15 millionsq. ft. of Grade A office space was leased.Tis represents a decline in absorption tothe tune of around 25% QoQ. Most of thetransactions emanated due to occupiersrelocating or expanding their real estatefootprint. Micro-markets that were most

sought after during the quarter wereSector V and New own.

Te city witnessed completion ofprojects/ parts of the project, including;Merlin Infinity by Merlin Group andMartin Burn Business Park by MartinBurn Group both of which are locatedat Sector V Salt Lake. Tese projectstogether add about 1 million sq. ft. to thecitys total Grade A inventory.

No new commercial Grade A projects/ parts of the project were launchedduring the quarter.

A decline in absorption levels impactedrental values during the surveyedquarter, resulting in a 1-3% declineon a QoQ basis in almost all micro-markets, except SBD where rents remainunchanged. However, capital valuesin all micro-markets remained stableowing to local demand.

During this quarter, Unitech CorporateParks (UCP), the London Stock

Exchange-listed firm, has sold its stake toCanadas Brookfield Asset Managementin its six Unitech Corporate Parks (UCP)I SEZ projects located in Kolkata,NOIDA and Gurgaon for a considerationof 205.9 million (INR2,050 crore).

COLLIERS VIEW: New governmentinitiatives to develop infrastructure arelikely to support demand for commercialoffice space. However, rents are likelyto remain on the same levels across allmicro-markets, due to high vacancy

levels.

Kolkata


Micro Market Rental

Values*% Change

QoQ YoY

CBD** 95 - 120 -2% -13%

East Kolkata *** 70 - 80 0% -6%

Salt Lake /Sector V

43 - 50 -3% -5%

New Town/Rajarhat

34 - 36 -1% -4%

2Q 2014 3Q 2014F

Vacancy

Absorption

Construction

Rental Value

Capital Value




Weston Sidhha Group 250,000 Bentinck Street 2017

Pressman House Pressman 140,000 New Town 2015

Arya Hub Arya Realty 85,000 Taratala 2017



HDFC BIPL 37,000 Sector V Lease

KPMG Godrej Waterside 30,000 Sector V Lease

BMA Wealth Globsyn 22,000 Sector V Sale

Lafarge Cement DLF-IT Park1 16,900 New Town Lease

OTIS BIPL 9,000 Sector V Lease

0

0.2

0.1

0.3

0.4

0.6

0.5

0.7

2Q2013 3Q2013 4Q2013 1Q2014 2Q2014


2Q2008

2Q2009

3Q2010

2Q2014

2Q2013

2Q2015F

2Q2012

2Q2011

40

20 2,000

0 0

60

4,000

80

6,000

100

8,000

120

10,000

12,000


RentalValues-INR

PerSq

.ft.

PerMonth

CapitalValues-INR

PerSq.

ft.



Forecast

* Indicative Grade A rents in INR per sq. ft. per month.** Park Street, Camac Street, Chowranghee Rd., and AJC Bose Rd.*** EM Bypass, Topsia, and Ruby

NEW SUPPLY IN PRIME AREAS

Salt Lake - Sector V91%

New Town, Rajarhat9%

Million Sq. ft.


10/12


Pune


Micro Market Rental

Values*% Change

QoQ YoY

Baner 45 - 55 0% 0%

Bund Garden 50 - 65 0% 5%

Airport Rd. /Pune station 45 - 75 5% 8%

Aundh 45 - 60 0% 0%

Senapati Bapat 55 - 85 0% 0%

Bavdhan 35 - 45 0% 0%

Kalyani Nagar 45 - 60 0% 0%

Nagar Rd. 40 - 60 0% 0%

Hinjewadi 32 - 45 0% 3%

Hadapsar/Fursungi 38 - 65 8% 13%

Kharadi 32 - 65 0% 0%

2Q 2014 3Q 2014F

Vacancy

Absorption

Construction

Rental Value

Capital Value




Convex Panchshil Realty 496,000 Kharadi 2015

Commerzone B8 K Raheja 420,000 Yerwada 2015

Inorbit IT Building K Raheja 195,500 Wadgaon Sheri 2015



Flextronics Embassy Tech Zone 125,000 Hinjewadi Lease

Spice Tailor World Trade Centre 88,000 Kharadi Lease

ADP Commerzone 52,000 Yerwada Lease

Surya Hospital Devi Yash 50,000 Wakad Lease

Capsilion India Cybercity 45,000 Hadapsar Lease

0

0.4

0.2

0.8

0.6

1.0

1.2

1.4

1.6

1.8

2Q2013 3Q2013 4Q2013 1Q2014 2Q2014

QUARTER WISE ABSORPTIONMillion Sq. ft.

2Q2008

2Q2009

2Q2010

2Q2014

2Q2013

2Q2015F

2Q2012

2Q2011

20

10 1,000

0 0

30

2,000

50

40

3,000

70

60

4,000

80

5,000

8,000

7,000

6,000


RentalValues-INR

PerS

q.

ft.

PerMonth

CapitalValues-INR

PerSq.

ft.



Forecast


Pune witnessed improved occupiersentiment this quarter. Te officeabsorption increased 34% QoQ.Occupiers from the I/IeS sector werethe primary contributor of this demandand took up more than 45% of thetotal absorption of 1.12 million sq. ft.

Approximately 20% of this absorptionwas in special economic zones (SEZ);occupiers like Flextronics, CapsilionIndia, Optara Systems and CompucomSystems leased large office spaces.

More than 0.7 million sq. ft. of GradeA office space was added to the citysinventory.

New project launches includes PushpakBusiness Hub by Pushpak Realty at

Wakad, and Commerzone Building 8at Yerwada launched by K Raheja Crop.Tese projects are expected to add morethan half a million sq. ft. to the citys totalGrade A inventory by the end of 2015.

During 2Q 2014, more than 5.2 millionsq. ft. of Grade A office space was readyfor fit-out, compared to last quarters 5.7million sq. ft. clearly indicating a drop inthe vacancy rate.

Rents and capital values remainedlargely unchanged, except in micro-markets like Airport Road, Hadapsar and

Fursungi where rents increased by anaverage of 7% QoQ.

COLLIERS VIEW: Continued demandfrom the I/IeS sector is likely incoming quarters. A tight supply anddemand situation will result in rise inrental values in select micro-markets likeHinjewadi, Hadapsar and Airport Road

where rents are likely to increase in therange of 2 - 5% due to limited supply.


Bavdhan2%

Kalyani Nagar8%

Senapati Bapat

Road5%

Aundh1%

Baner8%

Bund Garden5%

Airport road/pune station

13%

Hinjewadi19%

Nagar Road22%

Kharadi11%

Hadapsar/Fursungi6%


11/12

11

Mumbai

Te 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 I/

IES destinations, while Airoli at Navi Mumbai and Lal Bahadur

Shastri Marg are emerging as new office and I/IES submakets.

Delhi

Te 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 .

Gurgaon

Te prime business locations in Gurgaon are MG Road, GolfCourse Road, Cyber City and Udyog Vihar. Manesar on the

outskirts of Gurgaon is alsoemerging as the citys new office

destination.

NOIDA

NOIDA market is comprised of sectors broadly classified as

institutional, industrial and commercial sectors. Institutional

sectors include sec 16A, 62 and125-142, industrial sectors include

sec 1-9, 57-60 and 63- 65 while sector 18 is the most developed

commercial sector.

Chennai

Prime office properties in Chennai are located in four principal

sub-markets: the CBD, the I Corridor, the SBD and the PBD.

Te SBD comprises Guindy,Manapakkam, Velachery and other

areas. Te PBD primarily includes Ambattur and GS Road,

while the I 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.

Kolkata

Te major business locations in Kolkata are CBD (Park Street,

Camac Street, Chowranghee Rd, AJC Bose Rd), East Kolkata

(EM Bypass, opsia, Ruby), Salt Lake/ Sector V and New own /

Rajarhat. Te area around Park Street, Camac Street and AJC Bose

road houses number of high-rises commercial buildings such as

Chatterjee International Centre, ata Centre, Everest House and

Industry House among others.

Pune

Te prime office sub-markets of Pune include Deccan Gymkhana,

Bund Garden Road, Senapati Bapat Road & Camp (CBD), while

the Off CBD includes Aundh, Airport Road and Kalyani Nagar,

among other locations. Te eastern corridor, along with Nagar

Road and Kharadi, have emerged as a preferred location for

financial and I/IES companies.

Office Submarkets

CIY BAROMEERS

Increasing as compared to previous quarter

Decreasing as compared to previous quarter

Remained stable from previous quarter


12/12

12 R h & F R | J l 2014 | Offi | C lli I i l

About Colliers International

colliers.com

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6 continentsUnited States: 146Canada: 44Latin America: 25

186EMEA: 84

$2.1billion inannual revenue

1.46billion square feetunder management

15,800professionals

Primary Authors:

Surabhi Arora I Associate DirectorResearch

[email protected]+91 124 456 7500

Mumbai:George Mckay I South Asia [email protected]

Amit Oberoi I National Director

Valuation & Advisory Services & [email protected]

Sachin Sharma I Assistant [email protected]

For Office Services:

485

Delhi / NCR:Vikas Kalia | National [email protected]

Bengaluru:Goutam Chakraborty I [email protected]

Pune:Rishav Vij I Associate [email protected]

Chennai:Kaushik Reddy I [email protected]

Kolkata: Swapan Dutta I Senior Associate Director

[email protected]

Technopolis Building, 1st Floor,DLF Golf Course Road,Sector 54, Gurgaon - 122 002

TEL +91 124 456 7500

Documents

India Office Property Market Overview- July 2014