© 2011, CB Richard Ellis, Inc.

Mumbai

Fourth Quarter 2011 www.cbre.co.in

CBRE

City Viewpoint

Residential Office Retail

Rental Values

Capital Values

Supply

Absorption

Office Market Overview

Limited transaction activity was observed in the

Central Business District (CBD) of Nariman Point

in the fourth quarter of 2011. No fresh supply

was added, whilst absorption of approximately

10,000 sq ft was recorded in secondary space.

Transaction activity was sluggish in the Extended

Business District (EBD) of Lower Parel, with

absorption of only around 40,000 sq ft of office

space being recorded in the fourth quarter.

Occupiers adopted a cautious approach towards

expansion, which led to delays in transaction

closures and restricted absorption levels. Sluggish

market conditions led to delay in completion of

almost 1.1 million sq ft of new office supply in

one of the prominent projects to early next year.

Rental values were stable and vacancy remained

high at 41-42% during this quarter.

The micro-markets of Worli and Prabhadevi also

witnessed limited office transaction activity with

absorption recorded at a low of 10,000 sq ft.

Vacancy level and rental values remained

relatively unchanged.

The Alternate Business District (ABD) of Bandra

Kurla Complex (BKC) continued to witness an

increase in occupier interest, with absorption of

0.18 million sq ft of Grade A office space in the

fourth quarter. Sustained occupier interest and

negligible supply addition led a marginal rental

increment of 2-3% this quarter. Vacancy declined

from 11-12% in the previous quarter, to

approximately 7-8% in this quarter.

Limited leasing activity was witnessed in the

Secondary Business District (SBD) of Andheri,

Ville Parle and Jogeshwari. While there was an

absence of fresh Grade A supply in this quarter,

a few projects are lined up for completion early

next year.

• Repeated hikes in interest rates by the Reserve

Bank of India have slowed investments in the

economy and construction activity

• The Central Bank is expected to reverse the

present monetary policy, by implementing a

downward revision of interest rates in 2012

• Economic growth has been slowing due to

pressures from the EU and US debt crisis, besides

decline in export led growth. GDP growth stood

at 6.9% in the quarter ending September 2011

• The Rupee has depreciated by close to 20%

against the US Dollar in 2011. This has largely

been due to exodus of FIIs and reduction in

foreign investment in the country

• FDI in Multi Brand Retail was permitted by the

Government in early December, however, the

implementation was delayed due to political

pressures

• The modal land acquisition bill and real estate

regulator bill have been under consideration of

the cabinet committee but are facing resistance

from the state governments and political lobbies

*The arrows are trend indicators over the

specified time period and do not represent a

positive or negative value. (e.g., absorption

could be negative, but still represent a

positive trend over a specified period.)

Tenant Building Location Area

(sq ft)

UTC Boomerang Andheri

(E) 20,000

Leighton

Welspun

Equinox Kurla 25,000

India

Hotels

Indiabulls

Finance Centre

Lower

Parel 40,000

L’Oreal Peninsula

Corporate Park

Lower

Parel 80,000

Approximately 15,000 sq ft of IT space was

transacted in the Peripheral Business District

(PBD) of Powai and Vikhroli whereas about 0.45

million sq ft of IT space was transacted in Navi

Mumbai and Thane in this quarter. Negligible

supply addition led to a decline in vacancy from

13-14% in the previous quarter to 9-10% in the

present quarter.

Market Outlook

Demand for office space is likely to witness a

marginal drop in the coming few months, largely

due to delay in expansion plans amongst

occupiers and prevailing market conditions.

Significant supply is likely to be added across

various micro-markets in the city in 2012. This is

likely to escalate vacancy and exert pressures on

rental values.

Micro Market Definition

CBD Nariman Point, Fort and

Cuff Parade

SBD Andheri East and West,

Ville Parle, Jogeshwari,

EBD

Lower Parel, Worli,

Prabhadevi

ABD

Bandra Kurla Complex,

Kalina

PBD

Malad, Goregaon,

Thane, Navi Mumbai,

Powai, Vikhroli

Mumbai Supply Demand Dynamics in 2011

Top Lease Transactions

Prominent Office Developments in Q4 2011

Quick View

Focus Issues

Mumbai did not witness any large Grade A project completion in the fourth quarter of 2011.

**the above analysis includes CBD, BKC, EBD and SBD micro-

markets

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1Q 2011 2Q 2011 3Q 2011 4Q 2011

Vacancy (%

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Supply

(m

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q ft)

Supply Vacancy (%)

Negligible supply addition in

3Q & 4Q 2011

City V

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Fourth Q

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© 2011, CB Richard Ellis, Inc.

Retail Price Trends Retail Market Overview

Mumbai witnessed heightened activity in its retail market in

Q4 2011, with an increase in absorption of large format

as well as vanilla retail spaces in high street locations and

newly completed malls. Demand was strong for prime

retail space in traditional markets such as Linking Road,

Colaba Causeway, as well as new locations such as

Borivali, S.V Road (stretch from Santa Cruz West to

Andheri West) and Chembur.

Supply Demand Trends

Mumbai witnessed a steep increase in supply addition, with

almost 2.7 million sq ft of retail mall supply added in Q4

2011. This was a consequence of positive sentiments

amongst retailers on spatial expansion, even as

transaction frameworks like minimum guarantee became

more acceptable in the industry. Market City by the

Phoenix Group was the largest retail development. The

mixed use development comprises of almost 1.6 million sq

ft of retail space, occupied by tenants like Zara, Lifestyle,

PVR Cinemas, besides other asset classes like hospitality

and commercial. Demand was led by hyper market brands

like Metro Cash and Carry, Reliance Retail and Bharti

Walmart.

Occupier Activity

High street locations witnessed an increasing demand

from retailers. Celio, Presto and Mango (relocation)

opened stores in Linking Road. Other high street locations

such as Juhu Tara also witnessed space take up from

retailers such as Edible Arrangements, Flight Shop and

Yogurberry. Various brands opened their first stores in the

city, like OVS, Bebe, Queue Up and Boggi Milano at Infiniti

Mall in Malad and Timberland, Paul & Shark and

L’Occitane at High Street Phoenix.

Price Trends

Rental values were stable compared to the previous

quarter, across most micro-markets for organized retail

developments. Rents witnessed marginal appreciation in

high street destinations.

Tenant Building Location

Approx. area

(sq ft)

Canon Market City Kurla 1,460

Colo Photo Magnet Mall Bhandup 1,275

OVS Infiniti Mall Malad (W) 6,000

Bharti

Walmart Magnet Mall Bhandup (W) 32,000

Project Developer Location Area ( sq ft) Anchor Tenants

Magnet Mall Neptune Group Bhandup 1,000,000 Bharti EasyDay, Bata

R City, Phase II Runwal Builders Ghatkopar (W) 500,000 Shoppers Stop, Westside

Market City Phoenix Group Kurla (W) 1,600,000 Lifestyle, Pantaloon, Zara

Brand Category Presence

Yauatcha Food & Beverage Bandra Kurla Complex

The Irish House Food & Beverage High Street Phoenix

Reliance Mart Hyper market Santa Cruz (W)

Smoke House

Grill Food & Beverage High Street Phoenix

Top Lease Transactions

Prominent Retail Developments in Q4 2011

Key Brands Launched

Market Outlook

Prime high street locations and Grade A mall developments will

continue to witness an increase in retailer interest. New

developments such as Phase-II of R-City at Ghatkopar and

Market City at Kurla might witness leasing of large vacant space

in the coming few months. Rental values are expected to

stabilize or increase marginally, keeping in mind the prevalent

demand trends and the extent of pipeline in various micro-

markets.

Retail Category Micro Market Definition

Organized Retail Central Mumbai, Western Suburbs (Andheri, Goregaon, Malad), Eastern Suburbs (Kurla, Ghatkopar,

Bhandup)

High Street Destinations Linking Road, Colaba Causeway, kemps Corner

0

100

200

300

400

500

600

700

800

900

Linking

Road

Colaba

Causeway

Kemps

Corner

Central

Mumbai

Western

Suburbs

Eastern

Suburbs

Ren

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Va

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IN

R/sq

ft/

mo

nth

)

Q4 2011 Q3 2011 Q4 2010

City Viewpoint Mumbai

© 2012 CBRE, Inc. CBRE Group statistics contained herein may represent a different

data set than that used to generate National Vacancy and Availability Index statistics

published by CBRE’ Corporate Communications Department or CBRE’ research and

econometric forecasting unit, CBRE — Econometric Advisors. Information herein has

been obtained from sources believed reliable. While we do not doubt its accuracy, we

have not verified it and make no guarantee, warranty or representation about it. It is your

responsibility to independently confirm its accuracy and completeness. Any projections,

opinions, assumptions or estimates used are for example only and do not represent the

current or future performance of the market. This information is designed exclusively for

use by CBRE clients, and cannot be reproduced without prior written permission of CBRE.

For more information regarding the City Viewpoint,

please contact:

Mumbai

CBRE South Asia Pvt. Ltd.,

#202/203, 2nd Floor,

Naman Centre, G-Block,

Bandra-Kurla Complex,

Bandra (E)

Mumbai - 400 051

T: (91 22) 4069 0100

F: (91 22) 2652 7655

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