Office property market overview India- Q1 2016

INDIAQ1 2016

Table of Contents

INDIA Occupiers’ expansion plans point to continued momentum in the

year ahead for office market 3

MUMBAI Mumbai office absorption doubles on QOQ basis 5

DELHIDelhi office absorption picked up in Q1 2016 7

GURGAON Gurgaon witnessed increased uptake of office space in Q1 2016 9

NOIDA Market recovery continues in Q1 2016 11

BENGALURU Office sector demand up by 13% QOQ; supply witnesses a rebound 13

CHENNAI Chennai office sector absorption drops significantly on a QOQ basis 15

PUNE

Pune continued its progression towards a dominant IT-ITeS destination 17

HYDERABAD Demand revival for office sector; nearly 1.27 million sq ft absorbed in Q1 2016 19

KOLKATA No Show for Kolkata office market in Q1 2016 21

4 Research & Forecast Report | September 2014 | Colliers International

Return on Alternative Investments

Economic Barometer

Note: 1 Estimates as per International Monetary Fund 2 Wholesale Price Index (WPI), Latest estimates for Feb 2016 3 SBI interest rate < INR 1 crore Term Deposits for≤ 1 Year

Exchange Rates

INR - USD 62.36 67.60

INR - EURO 66.48 74.35

Parameters Q1 2015 Q1 2016 QOQ % Change

Gold 26,232 27,583 5.15%

Silver 36,983 35,403 -4.27%

Equity(BSE Sensex) 27,957 24,346 -12.92%

Realty Index 1,692 1,176 -30.50%

Research & Forecast Report

India | Offi ceApril 2016

Occupiers’ expansion plans point to continued momentum in the year ahead for offi ce market Q1 witnessed over 8 million sq ft of total offi ce update across 9 major cities – Bengaluru, NCR, Pune and Hyderabad emerged as key contributors

For offi ce sector, year 2016 kick started on a positive note with offi ce absorption totaling over 8.8 million sq ft across 9 major cities. This includes pre-commitments of about 0.8 million sq ft. This was about 11% up from the previous quarter. Strong positive absorption from technology fi rms helped further gains in occupancy in almost all the cities. The sector was well supported by positive economic sentiments; business confi dence index was up by 5% in Jan 2016 and the GDP was forecasted at about 7.5%. Further, infl ation measured via WPI (Wholesale Price Index) continued to remain in the negative territory at -0.91% in February 2016.

Bengaluru with 33% share remained the top contributor of the demand, followed by NCR (Delhi, Gurgaon and NOIDA), Hyderabad, Pune and Mumbai. Sector wise, tech fi rms continued to share the signifi cant part of the overall demand. Few notable transactions concluded this quarter including the 620,000 sq ft lease by “Infosys” in Pune, 500,000 sq ft lease by “HP” in Bangalore and 150,000 sq ft lease by “EXL” in NOIDA. Besides this, in a major asset acquisition this quarter, RMZ Corp has acquired Essar’s Group “Equinox Business Park” located at BKC, Mumbai for approximately INR 2,400 crores.

With its aff ordable rents, Hyderabad managed to attract major IT, digital and e-commerce companies which announced their plans for huge investments to bolster their expanding network

Indicators Q1 2015 Q1 2016Gross Domestic Product 7.80% 7.50%

Business Confi dence Index 53.70% 56.40%

Repo Rate 7.50% 6.75%

Reverse Repo Rate 6.50% 5.75%

Cash Reserve Ratio 4.00% 4.00%

Infl ation (WPI)2 -2.06% -0.91%

Prime Lending Rate 10% - 10.25% 9.70% - 10%

Deposit Rate3 8% - 8.75% 7.75% - 8%

Source: Government of India, Colliers International India Research

5 Research & Forecast Report | April 2016 | <<India>> | Colliers International

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of technology development centers and facilities in the city. Leading e-commerce player, Amazon committed huge investments to set up its largest facility outside United States and leased approximately 350,000 sq ft in Raheja Mindspace in HITEC City. Apple, Inc. is also opening its first technology development center in India and has leased 250,000 sq ft.

Grade A asking rents remained stable in both CBD and SBD areas across the cities. The largest gains from last quarter were seen in Bengaluru’s, Outer Ring Road micro market, Hadapsar/Fursungi in Pune and Golf course Road in Gurgaon, where competition for space remains fierce.

With limited new launches in the market, the office construction pipeline increased slightly from Q4. Vacancy levels reduced in almost all the cities due to limited new supply addition.

Colliers View

We anticipate positive momentum in the coming quarter as the overall office leasing pipeline seems strong and is steadily growing. Positive economic growth coupled with increasing business confidence index due to government’s proactive policy initiatives will be the few factors influencing the demand for office space in the coming quarter. The majority of markets are enjoying this growth and overall office market sentiments are optimistic.

The office market sentiments were further boosted due to some key policy announcements in this quarter. In the union budget 2016, The govt. announced removal of Dividend Distribution tax (DDT) for REITs and InvITs. Institutional investors, both domestic and overseas, are demonstrating an increased appetite and willingness to engage in the Indian real estate commercial market. With removal of DDT, we can see listing of REITs in the Indian market soon. Besides this, recently, the govt. has also allowed 100% FDI for e-commerce companies which will help to improve demand for office space in medium to long term. Looking further ahead in 2016, high-growth tech companies including e-commerce will continue to create voracious demand.

Colliers anticipates further decline in vacancy with an uptick in asking rents for the selected Grade A buildings in the next several quarters. Bengaluru will continue to lead the overall leasing volumes. However, cities such as Hyderabad, NOIDA and Pune will continue to outpace many top-tier markets due to affordable rents.



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*Indicative Grade A rents in INR per sq ft per month**Nariman Point, Ballard Estate & Fort

MICRO MARKETS RENTALVALUE*

% CHANGEQOQ YOY

CBD** 200 - 250 0% 0%

Worli/Prabhadevi 180 - 210 0% -5%

Lower Parel 145 - 190 0% 0%

BKC 225 - 320 0% 0%

Kalina 150 - 200 0% 0%

Goregaon / JVLR 100 - 110 0% 0%

Andheri East 90 - 130 0% 5%

Malad 80 – 100 0% 0%

Powai 120 - 130 0% 4%

Navi Mumbai 70 - 100 0% 6%

Thane / LBS 60 - 75 0% 0%

Rental Values

Mumbai offi ce absorption doubles on QOQ basis IT-ITeS occupiers strengthen Mumbai’s offi ce absorption

Th e year started with a good note as the offi ce absorption doubled in Mumbai, from 0.49 million sq ft in Q4 2015 to 0.93 million sq ft in Q1 2016. Th e Information Technology-Information Technology enabled Services (IT-ITeS) sector dominated the city’s offi ce absorption with over 38% (0.35 million sq ft) of the total absorption, followed by Banking, Financial Services and Insurance (BFSI) with 0.15 million sq ft (16%), Pharma with 0.14 million sq ft (15%) and Manufacturing with 0.13 million sq ft (14%). Th e maximum number of offi ce transactions were concluded in the western suburbs (0.32 million sq ft), including BKC, Andheri, Malad and Goregaon, followed by Central Mumbai (0.18 million sq ft) including Lower Parel, Worli and Elphinstone West and the Central Suburbs (0.17 million sq ft) including Vikhroli, Powai and Kanjurmarg.

A number of small and mid-sized transactions, averaging to 22,000 sq ft took place in Q1 2016. In major offi ce transactions, “NCR Corporation” took about 90,000 sq ft in Mindspace SEZ located in Navi Mumbai. Another transaction was concluded by “Quintiles Research India” and “Transunion Software”, which took more than 70,000 sq ft at G-Corp at Th ane and One IndiaBulls at Lower Parel, respectively.

During Q1 2016, no major project was added into the city inventory. However, a few new projects were launched including; “Adani Inspire (0.8 million sq ft)” by Adani Realty at BKC and “K-Raheja Platinum “(0.3 million sq ft)”

Source: Colliers International India Research


Mumbai | Offi ceApril 2016


INDICATORS Q3 2015 Q4 2015 Q1 2016 Q2 2016F

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Construction

Rental Value

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City Offi ce Barometer


Key under construction projects

Notes: 1. Offi ce Market: The major business locations in Mumbai are the CBD (Nariman Point, Fort and Ballard Estate), Central Mumbai (Worli, Lower Parel and Parel), Bandra KurlaComplex (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 offi ce and IT-ITeS submakets. 2. Rents/Capital Value: Market average of indicative asking price for Grade A offi ce space.3. Available Supply: Total Grade A offi ce space being marketed for sale or lease in surveyed quarter.4. City Barometer: Represents increase, decrease or stable scenario; as compared to previous quarter.5. All the fi gures in the report is based on market information as on 25th March 2016.

CLIENT BUILDING NAME AREA (sq ft) LOCATION LEASE / SALE

NCR Corporation Mindspace 90,000 Airoli Lease

Quintiles Research India Pvt Ltd G-Corp 74,000 Thane Lease

Transunion Software One India Bulls 70,000 Lower Parel Lease

Deloitte Lotus Corporate Park 60,000 Goregaon East Lease

Siemens Birla Aurora 50,000 Worli Lease

BUILDING NAME DEVELOPER AREA (sq ft) LOCATION POSSESSION

Seawood Grand Central Tower I & II L & T Infrastructure 1,350,000 Navi Mumbai 2016

Godrej BKC Godrej Group 1,200,000 BKC 2016

Kohinoor Square Kohinoor Group 800,000 Dadar 2016

Top 5 Transactions of Q1 2016




by K-Raheja Group at Andheri (East); these projects are expected to be complete by early 2017. Currently, about 7 million sq ft of Grade A offi ce supply is available for fi t out in Mumbai, among which majority of the supply is located in the western suburbs (56%) including BKC, Andheri (E), Malad and Goregaon / JVLR, followed by Central Mumbai (29%) and rest 15% in Navi Mumbai and CBD locations. Despite an increase in demand, the rents and capital values remained unchanged in all of the micro markets.

In a major acquisition this quarter, RMZ Corp has acquired Essar Group’s “Equinox Business Park” located at BKC for approximately INR 2,400 crores. Th e 1.25 million sq ft business park consists of four towers out of which three are already leased out to tenants including Nissan Motors, Acropolis, Crompton Greaves and Lafarge, besides the offi ces of Essar and the newly constructed fourth tower of about 50,000 sq ft is ready for fi t-outs.

Colliers View

We anticipate an increase in absorption momentum in the coming quarters, and the demand will largely be driven by sectors like IT-ITeS and BFSI. Developers will continue to focus on project completions, resulting in substantial new supply in the coming quarter in areas such as the western suburbs and Navi Mumbai. Rents for select premium projects in various micro markets will continue to demand premium in the medium term and will thus result in marginal increase in overall rental values in Central and South Mumbai locations.

Quarter Wise Absorption

Average Rental And Capital Value Trend

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Delhi offi ce absorption picked up in Q1 2016, BFSI top contributorBFSI & IT-ITeS occupiers strengthen the offi ce absorption

A confi dent approach from occupiers resulted in absorption of 0.34 million sq ft in Q1 2016, which is more than double, compared to last year’s same period of only 0.10 million sq ft. BFSI (72%) and IT-ITeS (21%) were the primary contributors of this demand, followed by Manufacturing (7%) and other sectors (1%). Connaught Place remained the most preferred micro market among occupiers; metro connectivity and proximity to government offi ces continue to trade well for this location. Besides, a few deals were concluded in emerging offi ce market Aerocity, near the airport.

In this quarter, a trend was seen, where occupiers who are looking to expand within Delhi were acquiescent on the Grade B offi ce spaces, where occupiers can avail bigger offi ce spaces at low rentals. Various small ticket size deals averaging about 9,300 sq ft, kept the overall lease market alive, of which a few notable offi ce deals were, lease of 150,000 sq ft by HDFC Bank in Ambience Corporate Tower Rohini at Rohini; 20,000 sq ft by Transaction Solution International in DLF Prime Tower located at Okhla; 19,000 sq ft lease by IDFC in Express Tower at ITO and another 16,000 sq ft lease by ICICI Lombard in Redfort Capital Towers by Parsvanath Group located at Connaught Place.


Delhi | Offi ceApril 2016


Rental Values

*Indicative Grade A rentals in INR per sq ft per month**Connaught Place***Netaji Subhash Place


% CHANGEQOQ YOY

CBD** 180 - 450 0% -1%

Nehru Place 180 - 250 0% 6%

Saket 130 - 200 -7% 0%

Jasola 90 - 130 0% -2%

NSP*** 70 - 120 0% 0%

Okhla 30 - 100 -4% 0%



Vacancy

Absorption

Construction

Rental Value

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During the quarter, no new project/ parts of the project were completed or launched. In Delhi, more than 1.3 million sq ft of vacant offi ce space was available for fi t-outs, of which 32% was located in Netaji Subhash Place; 23% in Saket; 18% in Jasola; 14% in Nehru Place and 13% in CBD. Also there are two ongoing projects by Parsvanath Developer at Tolstoy Lane and K G Marg. Th ese projects are expected to be ready by the end 2016.

Rents in Delhied remained stable in Q1 2016 across all the micro markets except, Saket and Okhla where rents decline on average by 5% QOQ. Similarly, capital values remained stable across all the micro markets.

Colliers View

We expect similar momentum to continue in coming quarters; however the city has a very limited new supply in the pipeline, which will directly pull down the vacancy levels. Occupiers looking for expansion within Delhi limits will keep eyeing for options in the peripheral areas at low rents and longer lease period. Overall rents are expected to remain on the same levels in near term; however, few micro markets like Connaught Place, Jasola and Ohkla may see marginal appreciation due to limited supply.



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HDFC Bank Ambience Corporate Tower Rohini 150,000 Rohini Lease

Transaction Solution International DLF Prime Tower 20,000 Okhla Lease

IDFC Express Tower 19,000 ITO Lease

ICICI Lombard Redfort Capital Tower 16,000 Connaught Place Lease

Bhushan Auto Finance Videocon Tower 15,310 Jhandewalan Lease


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

RPS Infi nia RPS Developer 1,200,000 Mathura Road 2016

Skipper House Govt. Trust 160,000 Barakhamba Road 2016



Notes: 1. Offi ce Market: The commercial areas in New Delhi can be broadly classifi ed into the CBD (Connaught Place), SBD Nehru Place, Bhikaji Cama Place, Netaji Subhash Place,Jasola and Saket .2. Rents/Capital Value: Market average of indicative asking price for Grade A offi ce space.3. Available Supply: Total Grade A offi ce space being marketed for sale or lease in surveyed quarter.4. City Barometer: Represents increase, decrease or stable scenario; as compared to previous quarter.5. All the fi gures in the report is based on market information as on 25th March 2016.


Gurgaon witnessed increased uptake of offi ce space in Q1 2016 Controlled supply kept rents stable in most of the markets

Gurgaon’s commercial real estate market recorded about 0.70 million sq ft of offi ce space uptake in the fi rst quarter of 2016 as compared to 0.45 million sq ft in previous quarter but about 30% less from the fi gures in Q1 2015. IT-ITeS and BFSI with 59% and 17% share, respectively, remained the prime sectors contributing to this demand. Apart from this, manufacturing and pharma sectors also leased smaller offi ce spaces during the quarter. A few notable transactions this quarter were the 140,000 sq ft offi ce lease by “Grey Orange” in Bestech Business Park located at NH8, 90,000 sq ft by “Markit” in Ambience Tower located at DLF Phase III and 60,000 sq ft by “Pernord Ricard” in DLF Building No. 8 located in DLF Cyber City.

Th is quarter saw total available vacant stock of 9.6 million sq ft ready for fi t outs. Th e areas that have majority of this vacant stock were Udyog Vihar and Industrial Sectors (33%), National Highway (NH) 8 (19%), Golf Course Road Ext / Sohna Road (15%) and Manesar (11%). Golf Course Road, MG Road, DLF Cyber City and Institutional Sectors are left with very limited supply and altogether contribute about 20% of the total vacant stock. Th e city witnessed completion of “Eros Corporate Square” (0.12 million sq ft) by Eros Group at Sector 69. New projects launched in this quarter include “DLF New Project” (0.70 million sq ft) by DLF Group at NH-8, “City Escape” (0.25 million sq ft) by Capital Group


Gurgaon | Offi ceApril 2016


Source: Colliers International India Research*Indicative Grade A rentals in INR per sq ft per month


% CHANGEQOQ YOY

MG Road 110 - 140 0% 2%

DLF Cyber City (IT) 100-110 0% 11%

Golf Course Road 100-190 4% 18%

Institutional Sectors (Sec 44, 32, 18) 60-90 0% 0%

Golf Course Road Ext./Sohna Road 60-75 0% 0%

National Highway 8 50-130 0% -10%

Udyog Vihar & Industrial Sectors 30-45 7% 0%

Manesar 38-45 0% -2%

Rental Values


Vacancy

Absorption

Construction

Rental Value

Capital Value



at Sector 66 and two small scaled projects measuring 0.10 and 0.06 million sq ft by a local developer and Landmark Group respectively, both at Udyog Vihar. Th ese projects are expected to be completed by early 2017.

Rents remained stable in Q1 2016 in most of the micro markets, except Golf Course Road and Udyog Vihar and Industrial Sectors, where rents increased at an average of 5% QOQ. Th is is primarily due to a few large transactions closed in 2015 in select commercial buildings that have started asking a premium price over others, pushing up the base rental values of these micro markets. Capital values remained stable across all the micro markets.

Colliers View

Going forward, we anticipate an increase in offi ce absorption with clients looking to consolidate their various offi ces under one roof. Also, the occupiers based in Cyber City and M G Road are evaluating to renew their existing lease or relocating to other inexpensive locations such as Sohna Road and along NH8. Micro markets like Udyog Vihar and Institutional Sectors will continue to remain the most preferred offi ce locations, due to location advantages and rents. Rents are expected to remain on the same levels due to the decent vacancy levels and robust under-construction developments in the pipeline, especially in micro markets, such as the NH-8, Southern Peripheral Road and Golf Course Extension Road.



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Notes: 1. Offi ce Market: The prime business locations in Gurgaon are MG Road, Golf Course Road, Cyber City and Udyog Vihar. Manesar on the outskirts of Gurgaon is alsoemerging as the city’s new offi ce destination.2. Rents/Capital Value: Market average of indicative asking price for Grade A offi ce space.3. Available Supply: Total Grade A offi ce space being marketed for sale or lease in surveyed quarter.4. City Barometer: Represents increase, decrease or stable scenario; as compared to previous quarter.5. All the fi gures in the report is based on market information as on 25th March 2016.


Grey Orange Bestech Business Park 140,000 NH-8 Lease

Markit Ambience Corporate Tower 90,000 DLF Phase 3 Lease

Pernord Ricard DLF Building No. 8 60,000 DLF Cybercity Lease

Paytm Plot No 109 50,000 Udyog Vihar Lease

Ibibo Group Unitech Business Zone 40,000 Golf Course Road Extension Lease




ASF Insignia Phase II ASF Infrastructure 1,400,000 Gwal Pahari 2016

Reach Commercia Reach Promoters 550,000 Sohna Road 2016

Unitech Infospace - Tower V Unitech Ltd. 500,000 NH 8 2016



Market recovery continues in Q1 2016 IT-ITeS sector contributed over 80% in the total offi ce absorption

Th e NOIDA offi ce market continued to be on its recovery trajectory on the back of IT-ITeS sector with offi ce absorption ticking over 0.38 million sq ft in 1Q 2016. However, overall transaction volumes were 17% less QoQ basis. Expansion and relocation by IT-ITeS companies were the primary demand drivers, which continued to be the dominant sector of leasing offi ce space in NOIDA during this quarter. Th ere was also some demand from publishing and manufacturing companies who leased smaller offi ce spaces in Institutional Sectors. Location wise, about 54% of transactions were concluded in sectors along NOIDA Expressway, followed by 43% in Institutional Sectors and 3% in commercial sectors. Th e most signifi cant leasing transaction for Q1 2016 took place at NOIDA Expressway - Sector 143, with “EXL” leasing 150,000 sq ft in Blackstone SEZ. Apart from this, “Oxford University Press” signed a 51,000 sq ft lease at World Trade Tower and “Tavant Technologies” took 50,000 sq ft in Okaya Blue Silicon Cyber Park in Sector 62.

Developers refrained from launching any new project, also no new project/ parts of the project were completed during the quarter. Contrasting this trend, the NOIDA authority has advanced its plan for 25 acres mixed use project in Sector 94, with an aim to transform NOIDA into the main business and entertainment hub. Th is project will house commercial spaces, entertainment zones, a habitat centre and residential high-rises.

In Q1 2016, more than 11 million sq ft of vacant offi ce


NOIDA | Offi ceApril 2016


Indicative Grade A rentals in INR per sq ft per month*Sector 18**Sector 16A, 62, 125-142***Sector 124, 57-60, 63-75


% CHANGEQOQ YOY

Commercial Sectors* 70 - 110 -5% -10%

Institutional Sectors (Non IT)** 80 - 100 0% 9%

Institutional Sectors (IT)** 45-60 0% -5%

Industrial Sector (IT)*** 35-55 0% 0%

Rental Values



Vacancy

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space was available for fi t-out, of which 84% was located in Industrial Sectors like Sector 1 to 9, 57 to 60 and 63 to 65, rest 16% was located in Institutional Sectors, including locations like Sector 16A, Sector 62 and Sectors 125 to 142. Vacancy levels posted a marginal decline as no new commercial/IT-ITeS offi ce space was added during the quarter.

In Q1 2016, rents in most of the micro markets remained stable, except Commercial Sectors where rents declined by 5% QOQ. Similarly capital values remained largely stable across the city during the quarter.

Colliers View

With number of infrastructure projects in advance stages and metro corridor work along NOIDA Expressway picking up, NOIDA will continue to attract occupiers looking for aff ordable rents. IT-ITeS sector is likely to drive the demand in the coming quarter. Mid-scale companies will continue to prefer Institutional Sectors due to aff ordable rents while large corporates and MNCs will prefer NOIDA expressway. An upward pressure on rents is expected in the Institutional Sectors due to limited supply addition. Meanwhile, other micro markets are expected to remain stable.



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Notes: 1. Offi ce Market: NOIDA market is comprised of sectors broadly classifi ed as institutional, industrial and commercial sectors. Institutional sectors include sec 16A, 62and125-142, industrial sectors include Sec 1-9, 57-60 and 63- 65 while sector 18 is the most developed commercial sector.2. Rents/Capital Value: Market average of indicative asking price for Grade A offi ce space.3. Available Supply: Total Grade A offi ce space being marketed for sale or lease in surveyed quarter.4. City Barometer: Represents increase, decrease or stable scenario; as compared to previous quarter.5. All the fi gures in the report is based on market information as on 25th March 2016.


EXL Blackstone SEZ 150,000 Sector 143 Lease

Oxford University Press World Trade Tower 51,000 Sector 16B Lease

Tavant Technologies Okaya Blue Silicon Cyber Park 50,000 Sector 62 Lease

Tolexo Okaya Blue Silicon Cyber Park 25,000 Sector 62 Lease

Radiate e Service Independent Building 19,000 Sector 58 Lease




Wave One Wave Infratech 1,000,000 Sector 18 2016

I Thum Beaver International 500,000 Sector 62 2016

Cosmic Corporate Park III Cosmic Group 500,000 Sector 154 2016


Offi ce sector demand up by 13% QOQ; supply witnesses a reboundIT-ITeS and technology companies strong demand drivers

During the fi rst quarter of 2016, Bengaluru witnessed total offi ce sector absorption of 2.65 million sq ft noting a 13% quarterly uptick over the last quarter. IT-ITeS, (also comprising of technology start-ups and e-commerce companies) continued to remain the leading sector driving offi ce sector demand with 88% share in overall absorption. Apart from this, BFSI comprised 6% share in total deal volume.

Notable transactions during this quarter were HP leasing nearly 500,000 sq ft in Maruthi Concorde Tower on Hosur Road - Electronic City and JP Morgan taking up 200,000 sq ft in Embassy Golf Links Business Park on Intermediate Ring Road. Of the total deals transacted in this quarter, nearly 62% is attributed to pure expansions, while another 35% is accounted for by relocation and consolidation activity in the market.

Due to some large sized ticket transactions, Hosur Road-Electronic City accounted for 25% of total gross absorption, followed by EPIP Zone/Whitefi eld and Outer Ring Road – Marathahalli to Sarjapur Road, each of which comprised a 14% and 13% share, respectively. Limited supply availability at Outer Ring Road resulted in demand spillover to above mentioned areas.


Bengaluru | Offi ceApril 2016



*Indicative Grade A rentals in INR per sq ft per month**Northern part of ORR - KR Puram till Hebbal


% CHANGEQOQ YOY

CBD 90 - 130 0% 0%

Outer Ring Road (Marathahalli - Sarjapur)

68 - 75 8% 21%

Outer Ring Road (North)** 60 - 70 2% 15%

Bannerghatta Road 55 - 65 0% 9%

Hosur Road 25 - 40 0% 0%

EPIP Zone/ Whitefi eld 28 - 36 0% 0%

Electronic City 28 - 36 0% 8%

Rental Values


Vacancy

Absorption

Construction

Rental Value

Capital Value



New supply more than quadrupled on a quarter on quarter basis and stood at about 1.96 million sq ft. Of the total completions, most signifi cant was the completion of RGA Tech Park admeasuring 1.0 million sq ft which became operational on Sarjapur Road. Other locations which witnessed the remainder supply included Whitefi eld, Bannerghatta Road, Electronic City, Hosur Road, Jayanagar and Kanakpura Road.

New project launches during this quarter stood at nearly 2.19 million sq ft comprising upcoming developments from Fern & Prestige, RMZ Corp and Bonsai, all of which are set for completion next year. Nearly 60% of new projects were launched on Outer Ring Road.

Rents and capital values largely remained stable across micro markets. However, offi ce rentals on Outer Ring Road (Marathahalli - Sarjapur) appreciated by 8% due to low vacancy and continually high demand. Outer Ring Road (North) offi ce rentals too, saw a 2% uptick due to demand spillover from other micro markets.

Colliers ViewGoing forward, the growth of new sectors such as e-commerce, technology giants and entrepreneurial ventures will drive strong offi ce sector demand in the city. New space take-ups, for both small and large offi ce formats will push the vacancy downwards for most micro markets, mainly EPIP Zone/Whitefi eld and Electronic City, amongst others. Rents are likely to witness an upswing in Outer Ring Road – Marathahalli- Sarjapur Road and CBD due to limited availabilities.



10,000

12,000

8,000

6,000

4,000

2,00

0

70

60

50

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10

20

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4

2

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10

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14

16

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Sq.ft

Rent

al V

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s IN

R Pe

r SF

Per

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th

Capt

ial V

alue

s IN

R Pe

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Forecast

2010 2011 2012 2013 2014 2015 2016

Q4 Q3 Q2 Q1Source: Colliers International India Research

Q1

2008

Q1

2009

Q1

2010

Q1

2011

Q1

2012

Q1

2013

Q1

2014

Q1

2015

Q1

2016

Q1

2017

F

Q1

2018

F


Notes: 1. Offi ce Market: Prime offi ce properties in Bengaluru can be divided into three principal sub-market— CBD/Off CBD (MG Road, Millers Road, Vittal Mallya Road etc.) theSBD (Banerghatta Road & Outer Ring Road (ORR) and PBD (Hosur Road, EPIP Zone, Electronic City and Whitefi eld).2. Rents/Capital Value: Market average of indicative asking price for Grade A offi ce space.3. Available Supply: Total Grade A offi ce space being marketed for sale or lease in surveyed quarter.4. City Barometer: Represents increase, decrease or stable scenario; as compared to previous quarter.5. All the fi gures in the report is based on market information as on 25th March 2016.


HP Maruthi Concorde Towwer 500,000 Electronic City Lease

JP Morgan Embassy Golf Links 220,000 Intermediate Ring Road Lease

Arris India Pvt. Ltd. Senate 187,000 Ulsoor Road Lease

GE Prestige Shantiniketan 185,000 Whitefi eld Lease

Infosys Confi dent Octans 150,200 Electronics City Lease


Embassy Tech Village - 7B Block Embassy Group 800,000 Outer Ring Road 2016

Mantri Cornerstone A&C Mantri Developer 700,000 Indiranagar 2016

Brigade Lakeshore Brigade Group 600,000 Whitefi eld 2016





Chennai offi ce sector absorption drops signifi cantly on a QOQ basisIT-ITeS continues to drive demand for expansion and new occupiers

Even though Chennai’s offi ce sector continued to witness interest from corporate occupiers for expansion and entry of new players, absorption levels dipped by nearly 34% over the previous quarter as a number of transactions are still in execution stages. Th e fi rst quarter of 2016 recorded nearly 0.77 million sq ft absorption volume, out of which 86% is attributed to the IT-ITeS sector. Other sectors such as BFSI and Consulting, too, accounted for nearly 7% and 4% share each in the total transaction volume.

Despite moderate absorption recorded in this quarter, expansions by existing corporates accounted for nearly 66% of entire leasing volume, while entry of new corporates was noted nearly at 7%. Relocations by existing corporates within diff erent micro markets accounted for the remainder of transaction volume.

Renault Nissan Technology Business Centre (RNTBCI) (180,000 sq ft), Citibank (48,000 sq ft), Lennox (38,000 sq ft) and Barry Wehmiller International (38,000 sq ft) were amongst some prominent corporate occupiers that leased spaces on GST Road, Old Mahabalipuram Road (OMR -Pre Toll) and Guindy micro markets respectively.

Approximately 33% of total absorption in this quarter was concentrated in OMR-Pre Toll corridor as this remains a preferred location for occupiers to consolidate and expand


Chennai | Offi ceApril 2016

*Indicative Grade A rentals in INR per sq ft per month **OMR I (Madhya Kailash – Perungudi- Toll gate I)***OMR II (Th oraipakkam to Sholinganallur) & OMR III (Semmencherry to Siruseri) Source: Colliers International India Research



% CHANGEQOQ YOY

CBD 65-85 3% 7%

Off CBD 50-65 5% 5%

Ambattur 30-38 0% 17%

OMR (Pre Toll)** 55-62 7% 12%

OMR (Post Toll)*** 25-40 7% 7%

Mount-Poonamallee Road 50-60 0% 0%

GST Road 35-45 0% 7%

Rental Values


Vacancy

Absorption

Construction

Rental Value

Capital Value



operations. GST Road (23%) and OMR – Post Toll (12%) too accounted for substantial share of leasing in this quarter due to availability of vacant stock comprising large fl oor plates.

Only 200,000 sq ft new supply became operational during this quarter, of which 71% came up in OMR – Pre Toll in the form of non-IT space. Off -CBD witnessed the infl ux of remainder 55,000 sq ft non-IT space on Nelson Manickam Road.

Rents across some micro markets increased slightly. OMR - Pre Toll noted a 7% quarterly uptick due to persistent high demand coupled with low supply infusion. CBD and Off CBD, too, witnessed 3-5% rental appreciation due to preference for inner city areas.

Colliers View

Expansion and consolidation plans by corporate occupiers, mainly in the IT-ITeS, BFSI and technology sectors coupled with the entry of new companies may lead to stronger offi ce sector absorption in the upcoming quarter. Paucity of new supply coupled with lower vacancy may put upward pressure on offi ce rents in micro markets such as OMR-Pre Toll, CBD and Mount Poonamallee Road. Overall vacancy in Chennai may further dip from the current 11% levels to single digit owing to steadily improving offi ce sector demand and continual supply crunch.



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3.00

4.00

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Q4 Q3 Q2 Q1



105

9,000

10,500

7,500

6,000

4,500

3,000

1,500

0

90

75

60

45

15

30

0Rent

al V

alue

s IN

R Pe

r SF

Per

Mon

th

Capt

ial V

alue

s IN

R Pe

r SF

Forecast

Q1

2008

Q1

2009

Q1

2010

Q1

2011

Q1

2012

Q1

2013

Q1

2014

Q1

2015

Q1

2016

Q1

2017

F

Q1

2018

F

Notes: 1. Offi ce Market: Prime offi ce properties in Chennai are located in seven principal sub markets: CBD, Off CBD, Ambattur, OMR I, II & III, Mount-Poonamallee Road, GST Road.2. Rents/Capital Value: Market average of indicative asking price for Grade A offi ce space.3. Available Supply: Total Grade A offi ce space being marketed for sale or lease in surveyed quarter.4. City Barometer: Represents increase, decrease or stable scenario; as compared to previous quarter.5. All the fi gures in the report is based on market information as on 25th March 2016.


RNTBCI Ascendas Cybervale 180,000 GST Road Lease

Citibank Ramanujan IT City 48,000 OMR Lease

Lennox Ascendas International Technology Park 38,000 OMR Lease

Barry Wehmiller International Tamarai Tech Park 38,000 OMR Lease

Virtusa AKDR Tech Park 34,000 OMR Lease


Chennai One SEZ – South Block IG3 infra Ltd 1,200,000 Pallavaram Thoraipakkam Road 2016

Ramanujan IT City - Cambridge Block TRIL 800,000 OMR 2016

Ramanujan IT City - Infi nity Block TRIL 450,000 Rajiv Gandhi Salai 2016





Pune continued its progression towards a dominant IT-ITeS destinationAbout 1.15 million sq ft of offi ce space leased in Q1 2016

Pune witnessed healthy demand from the IT-ITeS sector as the market experienced over 1.15 million sq ft of absorption in Q1 2016. Th e overall absorption in this quarter is 16% lower than the previous quarter. Hinjewadi and Airport Road / Pune Station continued to remain as the most preferred locations by major occupants with about 56% and 26% share respectively, in the total absorption, followed by CBD (7%), Nagar Road (5%), Hadapsar / Fursungi (4%) and Kalyani Nagar and Bavdhan (2%). Occupiers from the IT-ITeS sector were the primary contributors to this demand, sharing a whopping 94% of the total absorption. Th e average deal size was about 45,000 sq ft which is 36% more than the previous quarter. Few notable transactions concluded this quarter include the 620,000 sq ft lease by “Infosys” in Ascendas Phase II (ITTP) - Juniper building located at Hinjewadi Phase 3.In another major transaction, Northern Trust Bank has pre-committed nearly 250,000 sq ft at EON Free Zone - Phase II which is currently under construction.

Over 4 million sq ft was available for fi t outs in Pune offi ce market, of which 24% was located in Hinjewadi. Th e city witnessed new supply of about 0.64 million sq ft, in the form of few small projects, at Baner, Phugewadi, Chinchwad,


Pune | Offi ceApril 2016



*Indicative Grade A rentals in INR per sq ft per month


% CHANGEQOQ YOY

Baner 49 - 58 2% 7%

Bund Garden 52 - 65 2% 2%

Airport road/pune sta-tion 55 - 85 0% 17%

Aundh 48 - 62 5% 5%

Senapati Bapat Road 65 - 100 6% 18%

Bavdhan 38 - 48 8% 8%

Kalyani Nagar 48 - 65 6% 8%

Nagar Road 50 - 62 7% 12%

Hinjewadi 40 - 52 5% 16%

Hadapsar/Fursungi 45 - 72 9% 14%

Kharadi 45 - 85 7% 19%

Rental Values


Vacancy

Absorption

Construction

Rental Value

Capital Value



Bhosari and Bavdhan locations.

Occupier interest led various developers to launch many small and mid sized projects admeasuring over 1 million sq ft. Major projects includes, “Nandan Probiz” (0.3 million sq ft), “Prestige Point” (0.15 million sq ft) and “Gravity”. Th ese projects are currently in various phases of construction and are expected to be completed in next two years.

During the quarter, the rents for prime offi ce property increased in the range of 2 – 8% QOQ across all the micro markets, except Airport road/Pune station, where rents remain unchanged. Capital values also increased on an average by 7% QOQ across Pune.

Reportedly, Prestige Group is under talks with B U Bhandary Builders to set up an 800,000 sq ft IT park on a six acre land parcel in Pune.

Colliers View

Th e commercial supply will remain restricted in short term, thus rents may go up marginally in most of the markets. Moreover, new buildings with better amenities will continue to charge premium and push the average rents upwards. Vacancy levels are on the decreasing trend since last eight quarters and continue to remain so due to limited new completion in the coming quarters. However, the increased tenant demand will now start to trigger the new launches in the city.



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R Pe

r SFForecast

2010 2011 2012 2013 2014 2015 2016

Q4 Q3 Q2 Q1

Q1

2008

Q1

2009

Q1

2010

Q1

2011

Q1

2012

Q1

2013

Q1

2014

Q1

2015

Q1

2016

Q1

2017

F

Q1

2018

F




Notes: 1. Offi ce Market: The prime offi ce sub-markets of Pune include CBD (Deccan Gymkhana, Bund Garden Road, Senapati Bapat Road & Camp), Off CBD (Aundh, Airport Roadand Kalyani Nagar) and the eastern corridor, along with Nagar Road and Kharadi, which have emerged as a preferred location for fi nancial and IT/ITES companies.2. Rents/Capital Value: Market average of indicative asking price for Grade A offi ce space.3. Available Supply: Total Grade A offi ce space being marketed for sale or lease in surveyed quarter.4. City Barometer: Represents increase, decrease or stable scenario; as compared to previous quarter.5. All the fi gures in the report is based on market information as on 25th March 2016.


Infosys Ascendas Phase II (ITTP)- Juniper Tower 620,750 Hinjewadi Phase III Lease

Concentrix Tech Park One Tower D 60,000 Yerwada Lease

Vodafone Business @ Mantri 47,330 Nagar Road Lease

Qlogic Tech Park One Tower C 40,000 Yerwada Lease

Tata Consultancy Services Suzlon Sun Lounge 31,000 Hadapsar Lease


Acendas Phase II Acendas 615,000 Hinjewadi 2016

Nandan Probiz Nandan Buildcon 300,000 Balewadi 2017

Prestige Point Amba Group 150,000 Bajirao Road 2018




Demand revival for offi ce sector; nearly 1.27 million sq ft absorbed in Q1 2016Expansion by technology companies attracts more occupiers

Hyderabad witnessed robust demand from corporate occupiers in the fi rst quarter of 2016 as gross leasing volume of 1.27 million sq ft was noted in the city. Th ough this represents a quarterly decline of 15%, major IT, digital and e-commerce companies announced plans for huge investments to bolster their expanding network of technology development centers and facilities in Hyderabad. IT-ITeS sector accounted for 82% of cumulative deal volume.

Leading e-commerce player, Amazon committed huge investments to set up its largest facility outside United States and leased approximately 350,000 sq ft in Raheja Mindspace in HITEC City. Apple, Inc. is opening its fi rst technology development center in India and has leased 250,000 sq ft in WaveRock facility in Nanakramguda.

Despite a dip in absorption, it is evident that the state government’s measures to attract leading global players are paying off as expansions by existing tenants accounted for as much as 37% of total deal volume. New entrants to the city accounted for more than a third of the total leasing volume in this quarter.

Availability of large fl oor plates and quality offi ce spaces


Hyderabad | Offi ceApril 2016

Rental Values

*Indicative Grade A rentals in INR per sq ft per month




% CHANGEQOQ YOY

CBD 45-55 0% 0%

Off CBD 50-60 0% 0%

SBD 45-50 0% 12%

PBD 25-30 0% 0%

Rental Values


INDICATORS Q1 2016 Q2 2016F

Vacancy

Absorption

Construction

Rental Value

Capital Value



at competitive rents led to 76% gross absorption being concentrated in Suburban Business District (SBD). Nanakramguda with 40% and HITEC City with 32% share respectively, have emerged as the two most sought after locations by corporate occupiers in this micro market.

New supply infl ux of 0.93 million sq ft was noted as two blocks of an IT-Special Economic Zone (IT-SEZ), Phoenix Avance Business Hub in HITEC City were completed in this quarter. However, no new projects were launched in this quarter as developers concentrated on completing existing projects.

Rents and capital values remained stable across micro markets.

Colliers View

With a change in occupier sentiment and large scale developments coming up, transaction activity is expected to further fi rm up in the upcoming quarter. A strong demand and supply scenario is expected to prevail in the city going forward. Locations such as Gachibowli, Madhapur, IT corridor of HITEC City, Kondapur, Nanakramguda will continue to witness strong demand as the city emerges as a preferred location for technology fi rms due to comparatively cheaper rents. While rents will largely remain stable, large scale space take up in SBD may put an upward pressure on rents in the short term. Vacancy levels may increase in medium to long term due to substantial new supply infl ux.



35

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2013 2014 2015 2016

Q4 Q3 Q2 Q1

Q1

2015

Q2

2015

Q3

2015

Q4

2015

Q1

2016

Q2

2016

F

Q3

2016

F

Q4

2016

F

Q1

2017

F




1.001.50

2.002.503.00

5.00

3.504.004.50

0.500.00

Notes: 1. Offi ce Market: The prime offi ce sub markets of Hyderabad include CBD (Banjara Hills Road No. 1,2, 10 and 12), Off CBD (Begumpet, Somajiguda, Raj Bhavan Road,S.P. Road, Himayath Nagar, Off Banjara Hills and Jubilee Hills), SBD (Madhapur, Gachibowli, Manikonda, Kondapur, Nanakramguda) and PBD (Pocharam, Uppal and Shamshabad)2. Rents/Capital Value: Market average of indicative asking price for Grade A offi ce space.3. Available Supply: Total Grade A offi ce space being marketed for sale or lease in surveyed quarter.4. City Barometer: Represents increase, decrease or stable scenario; as compared to previous quarter.5. All the fi gures in the report is based on market information as on 25th March 2016.


Amazon Raheja Mind Space 350,000 HITEC City Lease

Apple WaveRock 250,000 Nanakramguda Lease

Development Bank of Singapore WaveRock 200,000 Nanakramguda Lease

Incessant Technologies Q City 60,000 Nanakramguda Lease

Deloitte DivyaSree Trinity 32,000 HITEC City Lease


Knowledge City Salarpuria Sattva 1,540,000 Raidurg 2016

Meenakshi IT Campus Meenakshi Group 1,300,000 Gachibowli 2017

Amsri Brain Storm Amsri Builders 900,000 Gachibowli 2017



45

50Forecast


No show for Kolkata offi ce market in Q1 2016Only 170,000 sq ft of Grade A offi ce space absorbed

In Q1 2016, Kolkata offi ce absorption remained weak due to gloomy response from the occupiers and only 170,000 sq ft of absorption was witnessed, which is 32% less than as compared to the previous quarter’s absorption of 250,000 sq ft. IT-ITeS occupiers topped the chart with over 37% of the total, followed by FMCG with 16% and pharmaceuticals with 14%. Major transactions during the quarter included the lease of 30,000 sq ft offi ce space by “Fosma Meritime” in Godrej Water Side and the lease of 26,000 sq ft by “ICFAI Business School” in an Individual Building. Micro market wise, Sector V / New Town remained the preferred micro market among occupiers, with 95% share in the total absorption. A few small deals were also concluded in the CBD micro markets. Developers continued to remain watchful in launching new projects because many of the large offi ce spaces are currently struggling with leases / sales due to the limited new entrants and the absence of expansion plans of existing occupiers.

Th is quarter, the city witnessed completion of “Srijan Corporate Park II” by Srijan Group admeasuring 0.92 million sq ft, located at Sector V. In Kolkata, more than 3.8 million sq ft of vacant offi ce space was available for fi t-out, of which 46% was located in PBD, which includes micro markets like New Town and Rajarhat, 45% was located in Sector V and rest 8% was located in CBD, SBD and other peripheral areas like Narendrapur, Sonarpur and Madhyamgram.

Rents across Kolkata remained stable during the quarter, except SBD which recorded a 4% quarterly decline due to


Kolkata | Offi ceApril 2016



*Indicative Grade A rentals in INR per sq ft per month**Park Street, Camac Street, Chowranghee Road, AJC Bose Road*EM Bypass, Topsia, Ruby****Rajarhat


% CHANGEQOQ YOY

CBD** 85 - 115 0% 0%

SBD*** 62 - 72 -4% -4%

Sector V 40 - 48 0% 4%

PBD **** 34 - 35 0% 0%

Rental Values


Vacancy

Absorption

Construction

Rental Value

Capital Value



limited demand. Similarly, capital values remained stable across all the micro markets.

On the investment front, Chennai-based Shriram Group is planning to invest INR 10,000 crores for developing a mixed-use project at Uttarpara, Hooghly. Th e project will consist of aff ordable housing ranging from INR 12 lakh to INR 30 lakh and IT complex, hospital and educational institutions. Th e fi rst phase of the project is likely to start in the second quarter of 2016.

Colliers View

Th e overall market sentiment remained dull in the fi rst quarter. However, developers are optimistic about the upward absorption trend in the coming quarters. Th e city is expected to witness only a few new launches, as developers are more focused on fi nishing their existing ventures. On the infrastructure front, with the current pace of construction work of Metro line 2 & 3, it is likely to be operational by end of 2018, with which the real estate activities between Howrah Maidan to Salt Lake, Sector V and Diamond Park to Mahakaran will improve further. In the mid-term, rents are expected to remain stable in across Kolkata, primarily because of existing vacancy and low absorption base.



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1.80

0.00

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Sq.ft

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R Pe

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2010 2011 2012 2013 2014 2015 2016

Q4 Q3 Q2 Q1

Q1

2008

Q1

2009

Q1

2010

Q1

2011

Q1

2012

Q1

2013

Q1

2014

Q1

2015

Q1

2016

Q1

2017

F

Q1

2018

F




Notes: 1. Offi ce Market: The major business locations in Kolkata are CBD (Park Street, Camac Street, Chowranghee Rd, AJC Bose Rd), East Kolkata (EM Bypass, Topsia, Ruby), SaltLake/ Sector V and New Town / Rajarhat.2. Rents/Capital Value: Market average of indicative asking price for Grade A offi ce space.3. Available Supply: Total Grade A offi ce space being marketed for sale or lease in surveyed quarter.4. City Barometer: Represents increase, decrease or stable scenario; as compared to previous quarter.5. All the fi gures in the report is based on market information as on 25th March 2016.


Fosma Meritime Godrej Waterside 30,350 Sector V Sale

ICFAI Business School Plot no. Y1 26,000 Sector V Lease

Nestle DLF IT Park 16,000 Rajarhat Lease

Pantaloons Megatherm 10,000 Sector V Lease

Oracle Martin Burn 9,000 Sector V Lease


Technopolis 2, Forum Projects 1,200,000 Bantala 2016

PS Srijan Tech Park II PS Group & Srijan 925,000 Sector V 2016

Primac Tower Primac Group 47,000 Sector V 2016



Forecast