ContentIndia: Economic Indicators
India Real Estate Market Overview
Bangalore
Chennai
Hyderabad
Mumbai
Outlook
Office: Location Master
Residential: Location Master
1
Executive Summary
CONNECTVESTIAN QUARTERLY NEWSLETTER Q3 2015
INVESTMENT & CONSULTANCY SERVICES
An ISO 9001:2008 Certified CompanyTo know more
scan the QR code
• India’s gross domestic product (GDP) growth slowed to 7.0% in the April-June quarter from 7.5% in the January-March quarter, setting the stage for a rate cut by the Reserve Bank of India (RBI).
• The Reserve Bank of India (RBI) lowered the benchmark repo rate by 50 basis points to 6.75% and reverse repo rate to 5.75% at the end of September 2015.This is the fourth rate cut since January 2015.
• FDI inflow in realty sector has been declining due to the subdued demand and delays in securing mandatory government approvals. The Government decision to relax FDI norms in the construction sector and recent interest rate cut by RBI are likely to boost the real estate sector.
• Mumbai Coastal Road Project, a 35 KM road from Nariman Point to Kandivali received environmental clearance from Union Environment Ministry. Proposed Information Technology Investment Region (ITIR) to be developed near Kempegowda International Airport in Bangalore was put on hold due to land acquisition issues.
• Office space supply across the four major cities of Bangalore, Mumbai, Chennai and Hyderabad was recorded at 4.62 million sqft during Q3 2015. Absorption was recorded at 5.89 million sqft, a 30% quarter on quarter increase. Bangalore registered the highest supply as well absorption among the four major cities.
• No new mall supply was recorded across Bangalore, Mumbai, Chennai and Hyderabad during the quarter in review. Leasing activities were mostly confined to the high street locations on account of limited availability in malls. Rentals mostly remained stable across both malls and high streets barring marginal fluctuations and corrections in select locations.
• Approximately 15,900 new residential units were launched in Q3 2015 across the cities of Bangalore, Chennai and Hyderabad. New launches were low in Chennai on account of subdued demand and high levels of unsold inventory. Bangalore and Hyderabad witnessed an increase in new launches. New launches were mostly in mid segment housing. Capital value remained stable in Hyderabad and Chennai however Bangalore witnessed marginal appreciation in select locations.
• Demand in the residential sector across major cities is likely to improve in Q4 2015 due to recent cut in the interest rate by RBI as well as the festive offers.
Key Rates
PLR*
Repo Rate
Reverse Repo Rate
CRR
Jul-15
14.45%
7.25%
6.25%
4.0%
Aug-15
14.45%
7.25%
6.25%
4.0%
Sep-15
14.45%
7.25%
6.25%
4.0%
2Vestian Quarterly Newsletter Q3 2015 Investment & Consultancy Services
INDIA: ECONOMIC INDICATORSGDP growth at 7.0% during April-June 2015; India’s Industrial Production rises to 3 year high of 6.4%
India recorded Gross Domestic Product (GDP) growth rate at 7.0% during April - June 2015, slowing from a 7.5% growth in the previous quarter. While services and manufacturing grew at a slower pace; mining and construction accelerated and agriculture reported expansion.
Inflation rate (Consumer Price Index (CPI)) in the beginning of Q3 2015 dropped to 3.8% as food cost rose at a slower pace. However, consumer price index increased to 4.41% in September.
Index of Industrial Production (IIP) rose to a three year high of 6.4% in August on account of robust manufacturing as well as mining activity and better offtake of capital goods.
Figure 1: GDP Growth Contributors
The Reserve Bank of India (RBI) lowered the benchmark repo rate by 50 basis points to 6.75%, while keeping Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) unchanged at 4% and 21.5%, respectively. Prime Lending Rate (PLR) reduced from 14.45% to 14.05%. Almost all the commercial banks have cut their base interest rate in the range of 20-40 bps. State Bank of India has reduced its base rate from 9.7% to 9.3%, followed by ICCIC Bank Ltd and HDFC Bank Ltd reduced at 9.35%.
Indian rupee slumped to as low as 66.48; nearly two year low against US dollar, as Asian markets reeled under fears of a China-led global economic slowdown.
Table 1: Key Policy Rates
Repo and Reverse repo rates reduced by 50 basis points; fourth policy cut in 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 being 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
1.9
4
7.2
3.2
6.9
12.8
8.9
2.7
0 5 10 15
Agriculture, Forestry& Fishing
Mining & Quarrying
Manufacturing
Electricity, Gas &Water supply
Construction
Trade, Hotels,Transport and
Communication
Financial,Insurance, Real
estate &…
PublicAdministration,
Defence & other…
April-June 2015
-4
-2
0
2
4
6
8
10
12
Apr-1
3
Jun-1
3
Aug-1
3
Oct-1
3
Dec-1
3
Feb-1
4
Apr-1
4
Jun-1
4
Aug-1
4
Oct-1
4
Dec-1
4
Feb-1
5
Apr-1
5
Jun-1
5
Aug-1
5
Perc
enta
ge (%
)
Inflation IIP
The BSE sensex registered a fifteen month low of 24,893 points in the beginning of September 2015, as foreign investors continued to liquidate their investment in the equity market. Fear of monsoon deficit and weak rupee also weighed on the market sentiment; which picked up by the end of September 2015 as RBI cut key interest rates.
BSE realty index has dropped a little over 11% in the last one year on account of higher interest rates, a slowdown in realty demand and developers' debt woes. The Reserve Bank of India's (RBI) decision to cut repo rate by 50 basis points (bps) would lead to a significant reduction in home loan rates, thereby reducing EMI of home buyers. The recent interest rate cut will boost the returns of long term bond fund, equities and debt mutual fund. Investors are likeliy to benefits thereby, reviving the real estate market in an otherwise weak period.
BSE sensex registered fifteen month low of 24,893 points in Q3 2015
The Dun & Bradstreet Composite Business Optimism Index stands at 122.0 during Q4 2015, a decrease of 4.1% as compared to Q3 2015. This is on account of the political instability witnessed in the Parliament over Land Acquisition Act and Goods and Services Tax (GST) Bill.
As per the Manpower Outlook Survey India report, Net Employment Outlook for Q4 2015 is projected at 40%; hiring prospects remain relatively stable compared to the previous quarter but decline by 2% year-on-year. Strongest hiring plan was recorded in East with Net Employment Outlook at 42%. Elsewhere, employers in the North, the South and the West expect robust workforce gains, reporting outlook of over 40%.
All the seven industry sectors reported optimistic hiring intentions compared to previous quarter’s estimates. Net Employment Outlook was the strongest in Wholesale & Retail Trade with an Outlook of 45%. Transportation & utilities and Services sector recorded an outlook of 44% and 42% respectively. Public administration and Manufacturing sector anticipated a Net Employment Outlook of 41%.
Business Optimism index remains subdued forQ4 2015
*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.
3Vestian Quarterly Newsletter Q3 2015 Investment & Consultancy Services
Figure 6: Net Employment Outlook Across Sectors
Source: Manpower India, Q3 2015
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, Q3 2015
Seasonally Adjusted Outlook Net Employment Outlook
0
5,000
1-Jul-13
1-Sep
-13
1-Nov
-13
1-Jan-1
4
1-Mar-
14
1-May
-14
1-Jul-14
1-Sep
-14
1-Nov
-14
1-Jan-1
5
1-Mar-
15
1-May
-15
1-Jul-15
1-Sep
-1510,000
15,000
20,000
25,000
30,000
35,000
Poin
ts
Sensex
Q3 2015
0
500
1,000
1,500
2,000
2,500
Poin
ts
Realty Index
1-Jul-13
1-Sep
-13
1-Nov
-13
1-Jan-1
4
1-Mar-
14
1-May
-14
1-Jul-14
1-Sep
-14
1-Nov
-14
1-Jan-1
5
1-Mar-
15
1-May
-15
1-Jul-15
1-Sep
-15
0
10
20
30
40
50
60
Q42013
Q12014
Q22014
Q32014
Q42014
Q12015
Q22015
Q32015
Q42015
Perc
enta
ge
Net Employment Outlook
44
45
37
41
42
41
36
43
42
36
41
42
39
37
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, Q3 2015
PE Firm
GIC
Warburg Pincus
StanChart PE, ADB & IFC
Goldman Sachs
Dutch pension fund APG Asset
Management NV
IndoStar Capital Finance Ltd
JP Morgan
Reliance IAF
Walton Street India Real Estate
Advisors Pvt Ltd
Developer
DLF Home Developers Ltd (DHDL)
Piramal Realty
Shapoorji Pallonji
Piramal Realty
Godrej Properties Ltd
Orris Infrastructure
Bestech Group
Unishire
Krishna Enterprises (Housing &
Infrastructures) India Pvt
Project
Residential
Entity Level
Residential
Entity Level
Residential
Residential
Residential
Residential
Residential
Location
Delhi
Mumbai
Pan India
Mumbai
Bangalore
NA
Gurgaon
Bangalore
Bangalore
300
284
200
150
138
49
22
19
15.7
Amount(in USD million)
Sour
ce: V
C Ci
rcle
World Bank has expressed interest in providing some initial funding for India’s Smart Cities Programme and the AMRUT Scheme. Following are the updates on key infrastructure initiatives taken across four major cities in this quarter:
• Maharashtra Government received the environmental clearance from the ministry of Environment and Climate Change for the 34 km long, INR 85 billion Mumbai Coastal Road Project between Nariman Point and Kandivali.
• The first stretch of Chennai Metro Rail between Koyambedu and Alandur was Commissioned in June 2015 and the trail run for second stretch between Alandur and Little Mount is all set to start soon.
• Telengana Government is planning for 21,000 Crore project in Hyderabad city to improve the infrastructure by constructing multilevel flyover at important junctions.
• Information Technology Investment Region (ITIR) proposed to be developed near Kempegowda International Airport (KIA), Bangalore was put on hold due to the delay in the process of land acquisition and lack of interest shown by major IT companies.
Infrastructure Initiatives
Overall FDI inflows exhibit positive growth, however FDI in realty sector has declinedby 37% Q-o-Q
4Vestian Quarterly Newsletter Q3 2015 Investment & Consultancy Services
Figure 7: FDI Inflows
According to the Department of Industrial Policy & Promotion,Government of India, total Foreign Direct Investment (FDI)
Inflows were recorded at USD 9,509 million between April and June 2015, a growth of 31 % when compared to the same period in 2014.Computer software and hardware attracted the highest FDI inflow in April 2015 by absorbing 39% of the total FDI inflow, followed by automobile industry and trading sector.
FDI inflow in realty sector has declined by 37% in Q2 2015 compared to previous quarter due to subdued demand, prevailing regulations and cumbersome procedures. Hence the Government has taken some initiatives to improve the FDI inflows in realty sector. The Government has relaxed FDI norms in the construction sector by removing the area restriction on floor area of 20,000 sqm and minimum capitalization of $5 million. A foreign investor will be permitted to exit and repatriate foreign investment before the completion of project under automatic route, provided that a lock-in-period of three years, calculated with reference to each tranche of foreign investment has been completed.
-
2,000
4,000
6,000
8,000
10,000
12,000
Q12013
Q22013
Q32013
Q42013
Q12014
Q22014
Q32014
Q42014
Q12015
Q22015
US $
in m
illion
Total FDI inflows FDI in Real Estate
INDIA REAL ESTATE MARKET OVERVIEW5.89 million sqft office space absorption across the four major cities
OFFICEApproximately 5.89 million sqft of office space absorption was recorded across the four major cities of Bangalore, Mumbai, Chennai and Hyderabad during Q3 2015, a 30% increase compared to previous quarter on account of sustained improvement in market sentiment. Bangalore accounted for the highest absorption at 62% followed by Hyderabad at 22%. Mumbai witnessed highest pre commitment of 2.0 million sqft of office space.
Supply was recorded at 4.62 million sqft during Q3 2015, an increase of 16% compared to previous quarter. Bangalore registered the highest supply at 2.21 million sqft followed by Chennai at 1.14 million sqft. Mumbai witnessed a decline in the rental values of CBD and Off CBD micro locations during the quarter; however, rentals in other cities remained stable.
As per VC Circle, 22 private equity (PE) deals approximating to USD 1,306.7 million were recorded in the Indian real estate sector during Q3 2015. The PE investments were primarily in the residential asset class. The deals included Goldman Sachs and Warburg Pincus investing in Piramal Realty. The PE investments were in the cities of Bangalore, Delhi, Mumbai and Pune with Mumbai accounting for the largest PE investment in real estate during the quarter in review.
USD 1,307.7 million PE investments in RealEstate in Q3 2015
5Vestian Quarterly Newsletter Q3 2015 Investment & Consultancy Services
Source: Vestian Research
Table 3: Key Office Lease Transactions, Q3 2015
Company
Accenture
Cadence
Manipal group
Happiest Minds Technologies
Building
Pritech Park
RMZ Ecoworld
Salarpuria Sattva Symphony
SJR Equinox
Location
Outer Ring Road
Outer Ring Road
Hosur Road
Electronic City
Developer
RGA
RMZ Group
Sattva Group
SJR Group
4,00,000
3,00,000
2,50,000
1,50,000
Area (in sqft)
BNY Mellon
Sulekha
Solution Star
Lyca Health
DLF IT Park
RMZ Millenia
DLF IT Park
Rajkumar Pinnacle
Manapakkam
Kandanchavadi
Manapakkam
Nungambakkam High Road
DLF
Subashri
DLF
Independent
90,000
70,000
55,000
54,000
Qualcom
Fernandez hospital
Deloitte
Raheja Mind Space
Laxmi Cyber Point
Divya Sree Omega
Hi-Tec city
Banjara Hills
Hi-Tec city
Raheja Developers
GAR Corp.
Divya Sree Builders
8,00,000
1,00,000
90,000
BANGALORE
CHENNAI
HYDERABAD
15,900 units launched in Bangalore, Chennai and Hyderabad in Q3 2015
RESIDENTIALApproximately 15,900 new units were launched in Bangalore, Chennai and Hyderabad in Q3 2015; a 14% quarter on quarter increase. Hyderabad and Bangalore witnessed significant increase in new launches at 32% and 18% respectively, while Chennai saw a 22% decline in the new launches. Bangalore continued to account for majority of the new launches at 66%.New launches among all the three cities were in the mid segment category. Capital values remained stable during Q3 2015.
No new mall supply recorded in the four major cities
RETAILBangalore, Chennai, Hyderabad and Mumbai witnessed no new mall supply during Q3 2015. Leasing activities continued mostly the high street locations in Bangalore, Chennai & Mumbai; whereas Hyderabad witnessed marginal improvement in leasing activities at mall developments.
Figure 8: Supply and Absorption of Office space in Q2 2015
Source: Vestian Research
Table 4: Key Residential Project Launches, Q3 2015
Project
Sobha Dream Acres (Phase 2)
Prestige Song Of The South (Phase 1)
Urbana Avenue
Brigade Bueno Vista
Developer
Puravankara Developers
Prestige Group
Ozone Group
Brigade Group
Location
Gunjur Road
Begur Kappa Road
Bangalore North
Budigere Cross
Type
Apartment
Apartment
Apartment
Apartment
1,300
1,200
900
760
No. of Units
Provident Kenworth
Ramky One Wave
Provident Housing
Ramky
Rajendranagar
Narsingi
Apartments
Apartments
2,300
371
Torrence
Doshi Risington phase 1
Tejomaya
Casa Grand Alandur
Landmark Constructions
Doshi Housing
Emami Realty
Casa Grand Private Limited
Perungudi
Karapakkam
Old Mahabalipuram Road
Alandur
Apartments
Apartments
Apartments
Apartments
596
496
318
305
BANGALORE
CHENNAI
HYDERABAD
6Vestian Quarterly Newsletter Q3 2015 Investment & Consultancy Services
2.21
1.14
0.470.80
3.68
0.39
1.28
0.55
0
1
1
2
2
3
3
4
4
Bangalore Chennai Hyderabad Mumbai
Area
(in m
illion
sqft)
Supply Q3 2015 Absorption Q3 2015
Apparel, Footwear and Food & Beverage retailers dominate the demand. Retailers like Zara, Cinepolis, Adidas, Bata, Woodland, Kati Zone, Dunkin’ Donuts, Pantaloons, Burger King, Spencer’s and Zodiac among others expanded their operations during this quarter. Rentals mostly remained stable across both malls and high streets barring marginal fluctuation and correction in select locations.
BANGALORE 3.7 million sqft office space absorption & 10,516 new residential unit launches
OFFICEApproximately 3.68 million sqft absorption was recorded during Q3 2015 with no pre commitments for office space. The absorption was primarily in Grade A developments and dominated by the IT/ITeS sector. Overall leasing activity registered 55% increase compared to previous quarter. Outer Ring Road micro location accounted for 55% of the absorption at 2.03 million sqft followed by PBD at 22% with 0.82 million sqft. No leasing activity registered in Bangalore North during this quarter. Absorption comprised of quite a few large size transactions in the range of 1,00,000 - 4,00,000 sqft, concentrated in the Outer Ring Road micro-location.
The third quarter of 2015 witnessed around 2.21 million square feet of new supply, a 52% quarter on quarter increase. Out of which 82% was in the Non SEZ developments. Outer Ring Road micro location accounted for major share of the new supply (70%).This quarter’s major contribution was from Global Technology Park, Manyata Embassy Business Park and Brigade Magnum. Rental values however, to remained stable across all micro-markets.
RETAILCity’s retail market registered no new mall supply during the quarter in review. Leasing was observed mostly in high street locations with retailers like Woodland, Airtel, Bata, Adidas and Kati Zone among others, opening new outlets. Burger King expanded its presence in the city with new outlets in Koramangala, Commercial Street, Jayanagar and Indira Nagar
Table 5: Bangalore Office Rental Values*, Q3 2015
Table 6: Bangalore Retail Rental Values**, Q3 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
Bangalore North
Grade A
90 - 110
80 - 85
58 - 65
32 - 35
40 - 42
Grade B
83 - 90
65 - 70
45 - 50
25 - 28
35 - 40
Micro-locationRental Value (INR/sq ft/month)
450
350
225
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
495
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
7Vestian Quarterly Newsletter Q3 2015 Investment & Consultancy Services
Source: Vestian Research
Source: Vestian Research
during this quarter. Leasing activity was dominated by apparel and food & beverage retailers. Swedish Fashion Retailer Hennes and Mauritz AB (H&M) be entering Bangalore with a 30,000 sqft outlet space in Virtuous Retail (VR) Mall, which is expected to be operational by Q1 2016.
Rentals across mall developments continued to remain stable with minor fluctuation in Mysore Road (decline by 8%). Rentals in high street locations too remained stable except at Commercial Street, which witnessed rental drops of almost 40% compared to previous quarter.
9,000 - 25,000
5,500 - 13,000
3,200 - 6,300
3,700 - 5,500
4,500 - 8,000
4,200 - 8,000
4,300 - 11,500
3,200 - 5,000
3,200 - 4,200
3,500 - 6,300
3,150 - 4,600
Micro-location Capital Value (INR/sqft)
Central
Off-Central
Bannerghatta Road
Hosur Road
Sarjapur Road
Whitefield
Bangalore North
Tumkur Road
Mysore Road
Kanakapura Road
Old Madras Road
RESIDENTIALThe city recorded approximately 10,516 new unit launches during Q3 2015, an 18% quarter on quarter increase. Apartments accounted for 97% of the total supply, of which 82 % were in the price range of INR 40 lakhs – 1.2 Crore. Almost 52% of the new launches were in the mid segment followed by affordable segment at 20% & premium and luxury segment at 13% each. Bangalore North micro-location accounted for maximum number of new launches at 41% followed by Whitefield at 29% and Bannerghatta at 14%. Micro-locations of Bangalore North (8%), Hosur Road (5%), Old Madras Road (5%) and Bannerghatta (3%) witnessed a marginal appreciation in capital value while all other micro locations continued to remain stable.
Table 7: Bangalore Residential Capital Values for Apartments, Q3 2015
8Vestian Quarterly Newsletter Q3 2015 Investment & Consultancy Services
Source: Vestian Research
9Vestian Quarterly Newsletter Q3 2015 Investment & Consultancy Services
Central
Off - Central
OMR
GST
NH - 4
11,500 - 30,000
5,500 - 12,500
5,000 - 6,500
3,500 - 5,000
2,500 - 4,500
Micro-location Capital Value (INR/sqft)
CHENNAI0.39 million sqft of office space absorption & 2,414 new residential unit launches
OFFICEChennai’s commercial office market witnessed 0.39 million sqft absorption during Q3 2015, a 72% quarter on quarter decline. Absorption during the quarter was mainly concentrated in the SBD at 59% followed by CBD at 29%. Most of the transactions were small & medium sized and in the range of 10,000 - 55,000 sqft. Supply was recorded at 1.14 million sqft during Q3 2015 compared to 0.08 million sqft in the previous quarter. This quarter’s major contribution was from Chennai One Magnum at 1 million sqft. Rental values across all micro-locations continued to remain stable.
RETAILThe city witnessed no new mall becoming operational during Q3 2015. Leasing activities remained active and was dominated by apparel and jewelry retailers.
High street witnessed retailers like Kalyan Jewellers, Lalitha Jewellers, Nalli Silks, Key Fashions, Harley Davidson, Tanishq, Star Bucks and Nilgris among others expanding their operations. Rentals across mall developments continued to remain stable except at Velachery, which witnessed a marginal appreciation of 4%. Rentals in high street locations remained mostely stable, barring Khadar Nawaz Khan Road, Pondy Bazaar and Purusuvakam High Road which showed an appreciation of 10%, 15% and 33% respectively.
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 Central micro location which witnessed an appreciation of 5%.
Table 8: Chennai Office Rental Values*, Q3 2015
Table 10: Chennai Residential Capital Values forApartments, Q3 2015
Table 9: Chennai Retail Rental Values**, Q3 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
120
Whites Rd
R K Salai
Mount Road
Nelsanmanickam Rd
Velachery
Vadapalani
270
175
175
200
260
230
High StreetRental Value*
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)
Source: Vestian Research
Source: Vestian Research
Source: Vestian Research
10Vestian Quarterly Newsletter Q3 2015 Investment & Consultancy Services
HYDERABAD1.28 million sqft office space absorption &2,970 unit launches in the residential space
OFFICEHyderabad witnessed approximately 1.28 million sqft office space absorption during Q3 2015, over three times compared to previous quarter. Absorption was primarily concentrated in the Hi Tech City at 75% of the total absorption during this quarter. Absorption comprised of quite a few large size transactions in the range of 90,000 - 8,00,000 sqft concentrated in the PBD micro-location.
Supply was recorded at 0.47million sqft and mostly concentrated in the PBD (West) micro-location. Rental values across all micro-locations continued to remain stable.
RETAILNo new malls became operational in Hyderabad during Q3 2015; however increased leasing activity was taken up in selected malls such as Forum Sujana Mall at Kukatpalli, Ramachandra CCPL Mall at Malkajgiri.
Leasing remained active across the city dominated by apparel, food & beverage retailers. The city witnessed launch of two hypermarkets from Spencer’s retail namely Spencer’s Hypermarket at LB Nagar (30,000 sqft) and Ramanthapur (35,000 sqft). Retailers like Zara and Warren Tricomi made their debut in the city during the quarter in review. Dunkin Donuts, Cinepolis and Crocodile expanded their presence in the city.
Rentals across both high streets and malls continued to remain stable.
RESIDENTIALThe city witnessed approximately 2,970 new unit launches during Q3 2015, a 32% quarter on quarter increase. One of the significant launch during this quarter was from Provident Housing with the release of Provident Kenworth (2,300 units) at Rajendra Nagar. Majority of the new launches were in mid segment apartment category. Capital price of units were in the range of INR 40 lakhs - 1 Crore. Hyderabad residential sector witnessed moderate rise in demand during this quarter. Banjara Hills, Jubilee Hills, and Hi-Tech City still continue to be prime residential areas of Hyderabad. Capital value, however continued to remain stable across all micro locations.
Table 11: Hyderabad Office Rental Values*, Q3 2015
Table 13: Hyderabad Residential Capital Values for Apartments, Q3 2015
Table 12: Hyderabad Retail Rental Values**, Q3 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.
156
125
165
150
120
175
110
150
135
NTR Gardens
Banjara Hills
Madhapur
230
270
280
High StreetRental Value*
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
45-55
45-50
22-28
Grade B
40-45
40-45
40-45
16-22
Micro-locationRental Value (INR/sqft/month)
6,500 - 14,000
5,500 - 10,000
3,500 - 6,000
3,200 - 5,000
3,500 - 5,100
3,500 - 6,000
3,400 - 5,000
Micro-location Capital Value (INR/sqft)
Banjara Hills
Jubilee Hills
Himayath Nagar
Maredpally
Begumpet, Somajiguda
Madhapur, Gachibowli
Kukatpally
Source: Vestian Research
Source: Vestian Research
Source: Vestian Research
11Vestian Quarterly Newsletter Q3 2015 Investment & Consultancy Services
MUMBAIApproximately 2.55 million sqft office space demand; active leasing in the retail market
OFFICEMumbai witnessed 0.8 million sqft office space supply during this quarter, a 57% decline from the previous quarter. The supply was on account of Godrej BKC.
Mumbai market witnessed approximately 2.55 million sqft demand for office space of which 2.0 million sqft were pre-commitments. Absorption was recorded at 0.55 million sqft during Q3 2015, registering a 19% quarter on quarter increase. TCS pre-committed 2.0 million sqft at Hiranandani Estate in Thane. Rental values underwent significant correction in CBD & Off-CBD micro-locations due to subdued demand and availability of quality space options in Eastern suburbs and Navi Mumbai at competitive rentals.
RETAILMumbai’s retail market did not witness any new mall completion during Q3 2015. Leasing however, continued in the malls as well as high streets, dominated by apparel and food & beverage retailers. High Streets witnessed retailers like Pantaloon, Olive Bistro, Pop Tates and Zodiac expanding their operations. Leasing activities remained active across the existing malls and upcoming malls in suburbs due to limited space availability within city limits.
Table 14: Mumbai Office Rental Values*, Q3 2015
Table 15: Mumbai Retail Rental Values**, Q3 2015
*Office rentals mentioned are for warm shell spaces
Source: Vestian Research
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
150 - 160
225 - 275
125 - 150
90 - 125
65 - 100
Micro-locationRental Value
Grade A (INR/sqft/month)
150 - 175
110 - 150
175 - 225
85 - 110
55 - 85
35 - 60
Rental ValueGrade B
(INR/sqft/month)
CBD
Off CBD
BKC
Western Suburbs
Eastern Suburbs
Navi Mumbai
650
850
450
400
250
200
450
-
-
350
180
180
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
12Vestian Quarterly Newsletter Q3 2015 Investment & Consultancy Services
• As per International Monetary Fund (IMF) announcement, India is expected to weather global volatility with real GDP growth projected at 7.3% this year. World Bank has forecasted the economy to grow at a faster pace of 7.5% in 2016 on account of improving economic conditions along with low oil prices and interest rate cut.
• RBI has lowered interest rates by a total of 1.25 per cent since January on account of moderating inflation and favorable global commodity and oil prices. The interest rate cut is expected to boost the economy and bring down the cost of home, consumer and industry loans.
• The growth in FDI has been significant after the launch of ‘Make in India’ initiatives since 2014; FDI inflow is expected to increase in coming quarters on account of relaxation of FDI norms in defence, railways, construction, & insurance.
• Four major cities of Bangalore, Chennai, Hyderabad and Mumbai are expected to witness an office supply of approx. 7.0 million sqft in Q4 2015, with projects such as RGA Tech Park (2.2 million sqft), Hinduja Ecopolis (0.76 million sqft) and Bagmane Constellation Virgo (0.4 million sqft) scheduled for completion. With pick-up in economic activities and strengthening of the economy, demand for office space is likely to increase in coming quarters
• In Bangalore, approximately 3.5 million sqft of office space is scheduled to be operational by Q4 2015.Outer Ring Road is expected to witness consistent demand; High rental value and over supply are likely to slow down leasing activities in Bangalore North micro market.
• In Mumbai demand for office space is likely to increase in Western Suburbs and Navi Mumbai on account of comparatively affordable rentals and availability of quality developments. Moreover, BKC micro-location, on account of its strategic location and upcoming developments is likely to witness increased demand. However rental
contraction is expected on account of sustained demand and influx of office space expected in 2016.
• In Chennai, demand is expected to remain high for CBD and SBD micro-locations. In Hyderabad, demand for office space is expected to increase in coming quarters. Hi-Tech City and Madhapur PBD (West) micro-locations are likely to witness strong demand for office space. Rental values are expected to increase marginally in coming quarters in Hi Tech City, Gachibowli and Madhapur.
• Demand in the residential sector is likely to increase due to the recent cut in interest rate by RBI and various festive offers. However high inventory overhang will keep new launches in check.
• In Bangalore, number of new launches is expected to be in the region of 8,000 - 9,000 units in coming quarter on account of high unsold inventory. More launches are expected in mid and affordable segment. Capital values are expected to remain stable in the short term.
• Chennai is expected to witness more number of new
launches on account of planned projects which are expected to be launched in the coming quarter. Capital value is likely to remain stable. Hyderabad market is expected to witness similar number of launches or more, as Hyderabad market has witnessed an increase in office leasing activities. Capital value is expected to remain stable.
• No new mall inventory is expected in the next quarter. Retail expansion is likely to be more focused on high street locations with more demand from food and beverages and jewelry and apparel retailers. Rentals in most malls and high streets will remain stable in the next quarter.
##Images used are only for representaion purpose only
Bangalore
Chennai
Hyderabad
Mumbai
CBD
SBD
ORR
PBD
Bangalore 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
13Vestian Quarterly Newsletter Q2 2015 Investment & Consultancy Services
Segments
Affordable
Mid
Premium
Luxury
Price Range
INR 25-50 lakhs
INR 50 lakhs - 75 lakhs
INR 75 lakhs -1.5 crore
INR 1.5 crore and above
Residential: Segment Classification
Bangalore
Chennai
Central
Off-central
ORR (Marathahalli-Silk
Board Jn) & Sarjapur Road
Whitefield
Old Madras Road
Bangalore North
Hosur Road
Bannerghatta Road
Mysore Road
Kanakapura Road
Tumkur Road
Central
Off-Central
OMR
GST
NH-4
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
Boat Club Road, Poes Garden, Besant Nagar, Annanagar, T. Nagar, R.A. Puram
Vadapalani, Saligramam, KK Nagar, Porur, Ambattur, Pallavaram, Medavakkam
Madhya Kailash, Perungudi, Thoraipakkam, Sholinganallur, Navalur
Tambaram, Vandalur, Potheri, Guduvancherri, Mahindra World City
Poonamallee to Sriperumbudur
City Micro-location Key Locations
Residential: Location Master
14Vestian Quarterly Newsletter Q3 2015 Investment & Consultancy Services
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.
Bangalore: Whitefield & Electronic City
Bangalore: Residential Market Report
Chennai: OMR & GST Road
Bangalore: Outer Ring Road
Bangalore: Retail Real Estate Market Report
Bangalore: Real Estate Market Report
Aerotropolis
Vestian Reports
For further information, please write to us at [email protected]
www.vestianglobal.com
Top Related