RESEARCH
INDIA REAL ESTATE
RESIDENTIAL AND OFFICE JANUARY - JUNE 2018
AHMEDABAD | BENGALURU | CHENNAI | HYDERABAD | KOLKATA | MUMBAI | NCR | PUNE INDIA REAL ESTATE
TABLE OF CONTENTS
Bengaluru... 34-51
Ahmedabad... 16-33
Chennai... 52-67 Connecting People All India... 04-15 & Property, Perfectly.
Hyderabad... 68-85
Mumbai... 96-113
NCR... 114-131
Kolkata... 86-95
Pune... 132-149
3 RESEARCH INDIA REAL ESTATE
INDIA MARKET SNAPSHOT
PARAMETER H1 2018 CHANGE YOY
Launches (housing units) 91,739 46%
Sales (housing units) 124,288 3%
Unsold inventory (housing units) 497,289 -17%
Quarters to sell (QTS) 11.2 -
Note- 1 square meter (sq m) = 10.764 square feet (sq ft) Source: Knight Frank Research
3% INDIA YoY increase in sales during H1 2018
• The Indian residential market lower prices and holding off new volumes have been spiralling down launches to alleviate mounting financial and breaching new lows in terms of stress. There has also been a more supply and sales for practically every concerted effort by this community to successive year in this decade. An decrease ticket sizes by constricting Both sales and investor frenzy in the early part of this unit sizes and reducing prices in launches have grown decade inspired a prolonged focus response to the market’s demands. of developers in launching lifestyle • This redirected focus of developers on projects targeted at the premium over the past 18 increasingly launching and re-pricing segment at progressively higher prices. projects at lower ticket-sizes, that cater These prices eventually reached months and are at their to the needs of the bulk of the home- unsustainable levels causing end-user buyers, has been paying dividends. highest level since demand to crack and price growth to RESIDENTIAL MARKET taper down and head into negative the demonetisation territory as end-users and investors period at approximately alike stayed away from the market over 46% the past 3 years. 124,000 and 92,000 • Developers, in cognizance of this YoY increase in units weakening demand scenario and launched during H1 2018 units respectively. mounting unsold inventories, have been concentrating on freeing up capital locked in inventory, at increasingly
4 5 RESEARCH INDIA REAL ESTATE
• The government has aggressively growth number that looks inordinately pushed a culture of transparency large due to the low base of H1 2017. through measures such as INDIA MARKET ACTIVITY • While the Mumbai residential market Demonetisation, Goods and Services also experienced the largest sales Tax (GST) and the Real Estate volume among all the cities, the most (Regulation and Development) 160000 Launches Sales YoY growth was experienced by Act, 2016 (RERA) that have helped Bengaluru at 22%. The home-buyer in shore up home-buyer confidence. this city has been especially receptive The government’s ‘Housing for All to the relaxations in the qualification scheme by 2022 and the granting of criteria for projects under the PMAY, infrastructure status to the affordable such as interest subsidies and increase housing sector have also been aimed 140000 of the extent of carpet area to 160 at boosting housing supply for the square metres for MIG – I and 200 low and mid-income segments, and square metres for MIG – II. % improving affordability of the home- 17 buyer. • The current QTS level stands YoY drop in unsold inventory levels marginally lower at 11.3 quarters at the • While these measures have helped end of H1 2018, ame as the previous 1 0000 home-buyer sentiment, they have year; however one must also consider irrevocably changed the business the entire time taken by a developer of real estate for the developer. The from launch to the complete sale of developers’ community is coming to a project that is considered the life terms with these unprecedented events cycle of a project from the developer’s and just beginning to stabilise and find perspective. The project life cycle for 100000 its footing. the 8 cities under review has increased • This period of stabilisation, right-sizing from 24.4 to 27.4 quarters which shows and right-pricing of new residential that in H1 2018, it takes more time for a
product and improving home- developer to exit a project compared to of Units No. buyer sentiment due to increased a year ago. All cities show a worsening transparency have culminated in a trend based on this parameter, with the 0000 45% YoY growth in units launched exception of Hyderabad and Chennai Growing at 128% YoY, during H1 2018 and a more modest 3% where the market downturn seems to YoY growth during the same period be easing off. the Mumbai residential for sales. The YoY growth in supply is especially exceptional considering that market accounted for a the preceding 3 periods have averaged 60000 an equally steep 43% YoY drop in massive 40% of the total supply volumes due to the reasons detailed above. units launched in the 8 • Both sales and launches have grown cities under coverage over the past 18 months and are at their 40000 highest level since the demonetisation during H1 2018. This period at approximately 124,000 and 92,000 units respectively. surge is primarily due • Growing at 128% YoY, the Mumbai to the temporary lifting residential market accounted for a massive 40% of the total units 0000 of the ban on new launched in the 8 cities under coverage compared to 25% in the previous constructions since period. This surge in launches is primarily due to the temporary lifting March 2018 in the of the ban on new constructions since Mumbai municipal area March 2018 in the Mumbai municipal 0 area. Notably, Pune and Hyderabad H1 01 H 01 H1 016 H 016 H1 017 H 017 H1 01 also saw the number of units launched Source: Knight Frank Research grow by 78% and 44% respectively, a
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• Weighted average prices have fallen an average of 3% across cities with PROJECT LIFE CYCLE RESIDENTIAL Mumbai seeing the most decline at 9% YoY. Hyderabad saw prices move 40 up 8% due to record sales during this LAUNCHES AND SALES 38 period, most of which took place in the 36 higher priced, ready to move in stock. 34 Launches (housing units) Sales (housing units) % Change (YOY) This effectively also caused unsold inventory levels in Hyderabad to fall 32 44% YoY, the highest among all cities 30 under coverage. 28 26 • During the last four years, the growth in residential prices in most of the top 24 eight cities of India has been below 22 9,123 90% retail inflation growth and the gap has 20 H1 2018 progressively increased since H1 2016, 18 18,047 with exception of Hyderabad. The long- 16 5% awaited drop in prices is a healthy step 14 NCR toward market recovery as this along 12 with other measures such as reduction 10 in unit sizes across cities will boost 8 home-buyer affordability and eventually MUMBAI PUNE BENGALURU NCR CHENNAI 6 get buyers back to the market. The HYDERABAD KOLKATA AHMEDABAD INDIA pace at which developers continue to 4 align themselves to the new regulatory 2 6,393 -35% norms and launch new products in 0 1,323 -21% H1 2018 H1 01 H 01 H1 016 H 016 H1 017 H 017 H1 01 the right ticket sizes that appeal to the H1 2018 6,591 homebuyer’s interests, will determine -19% Source: Knight Frank Research 8,087 the trajectory of the market going 3% forward. KOLKATA AHMEDABAD CONSUMER PRICE INFLATION ABOVE REAL ESTATE PRICE GROWTH FOR MOST MARKETS 35,974 128% 14,100 H1 2018 78% 135 32,412 H1 2018 3,706 1.0% 16,451 44% -6% H1 2018 130 MUMBAI CPI 8,313 5% PUNE 125 HYDERABAD HYDERABAD
120 15,556 BENGALURU 11% H1 2018 6,523 NCR 8% 115 25,802 H1 2018 22% MUMBAI 8,585 -3% 110 CHENNAI BENGALURU PUNE CHENNAI 105 KOLKATA 100 AHMEDABAD 8% 95
Hyderabad the only city showing Q1-2013 Q2-2013 Q3-2013 Q4-2013 Q1-2014 Q2-2014 Q3-2014 Q4-2014 Q1-2015 Q2-2015 Q3-2015 Q4-2015 Q1-2016 Q2-2016 Q3-2016 Q4-2016 Q1-2017 Q2-2017 Q3-2017 Q4-2017 Q1-2018 Q2-2018 significant price growth in India Source: Knight Frank Research
8 All maps are for representational purpose not to scale 9 RESEARCH INDIA REAL ESTATE
RESIDENTIAL RESIDENTIAL PRICING UNSOLD INVENTORY H1 2018 H1 2018
Unsold inventory (YoY growth) QTS (in quarters) Age of inventory (in quarters) Price range in H1 2018 in `/sq m Price range in H1 2018 in (`/sq ft)
12 month change (YOY) 6 month change (YOY)
157,907 17.4 (-12%) 45,908 21 (4,265) [0%] [2%]
NCR NCR
39,054 12.2 7.1 (-0.2%) 20,119 12.6 35,446 (-37%) 30,354 (3,293) 10.1 (2,820) [-8%] [-3%] [2%] [0%] KOLKATA KOLKATA AHMEDABAD AHMEDABAD
27,448 3.3 8 119,526 (-32%) 78,933 (-14%) 12.3 (7,333) 48,007 15.4 [-9%] [-5%] (4,660) [-5%] [-1%] 43,185 (4,012) MUMBAI MUMBAI [8%] [5%]
PUNE 12,749 3.4 PUNE (-44%) HYDERABAD 18.4 HYDERABAD
50,881 (4,727) [-2%] [3%] 10.7 48,567 98,866 (4,512) (-13%) 5.7 [-4%] [0%] 12.6 BENGALURU 22,579 BENGALURU (-20%) 14.5 CHENNAI CHENNAI
All maps are for representational purpose not to scale All maps are for representational purpose not to scale
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INDIA OFFICE MARKET ACTIVITY SECTOR-WISE SPLIT OF TRANSACTIONS
. New Completions Transactions OFFICE MARKET .0
H1 2017 1.
1.0 mn sq m
0.
0.0 5% H1 01 H 01 H1 016 H 016 H1 017 H 017 H1 01 H1 2018 Note- 1 square meter (sq m) = 10.764 square feet (sq ft) YoY Growth in rental levels during Source: Knight Frank Research H1 2018
INDIA OFFICE MARKET VACANCY
INDIA MARKET SNAPSHOT 0 H1 H1 PARAMETER H1 2018 CHANGE YOY 1 Industry
17% 2017 2018 16 16% New completions mn sq m (mn sq ft) 1.7 (18.2) -10% 15% 14 BFSI 20% 18% 13% 12% 1 12% Transactions mn sq m (mn sq ft) 2.0 (21.5) 12% 12% IT/ITES 33% 28% 10 Weighted average rental in 779 (72) 5% Manufacturing 18% 14% `/sq m/month (`/sq ft/month) 6 4 Other Services 29% 40% Stock mn sq m (mn sq ft) 60.4 (650) - Note: BFSI includes BFSI support services Vacancy (%) 12.1% - 0 H1 01 H 01 H1 016 H 016 H1 017 H 017 H1 01
Note- 1 square meter (sq m) = 10.764 square feet (sq ft) Source: Knight Frank Research Source: Knight Frank Research • The Indian office space market saw 2.0 the lowest vacancy levels among all 28% of the transacted volume during The Indian office space mn sq m (21.7 mn sq ft) of transactions markets, the Bengaluru office market H1 2018 compared to the 33% in the market saw 2.0 mn sq • Supply of quality office space has been the bane of the Indian office space market registering a healthy 13% growth YoY saw rentals vault by a remarkable 17% previous period. hile 1.7 mn sq m (18.2) mn sq ft) of thanks largely to corporates taking up in recent years as occupiers have been hard pressed to find viable options across • The share of the Other Services office space came online during the space in the higher priced CBD and m (21.7 mn sq ft) of markets. A steady demand scenario in the face of consistently low supply volumes has sector has been consistently growing same period. The highest spurt in Off-CBD business districts. Companies pushed down vacancy levels from 19.4% in H1 2013 to 12.1% in H1 2018. and has eclipsed that of the IT/ITeS transactions was experienced by the have also been entering en masse transactions registering a sector during H1 2018 by taking up • Consistently falling since H1 2013, the vacancy level is close to its decadal low. The Pune office market that grew at 118% into pre-commitments to lock in prime 40% of the in the recently concluded healthy 13% growth YoY lack of fresh office space is most visible in the IT/ITeS sector dominated markets of YoY, primarily due to a 0.1 mn sq m (1.1 office space in this extremely supply period on the back of increased take- Bengaluru, Pune and Hyderabad that currently have single digit vacancy levels at 3.5%, mn sq ft) lease inked by a BFSI sector constrained market. up by ecommerce and co-working while 1.7 mn sq m (18.2 5.7% and 6.8% respectively while Chennai stands precariously poised at 11%. major during H1 2018. • The IT/ITeS sector share in transactions companies. • Office space development has traditionally lost out to residential development due • Strong transactions growth also has increasingly been showing signs mn sq ft) of office space • The co-working sector took up 0.3 mn to the much longer gestation period that an office property requires to stabilize spurred rentals during the period that of weakening in recent periods due sq m (2.8 mn sq ft), which translates came online during the and achieve its full market valuation. Comparatively, a residential developer can grew at a robust 5% YoY during H1 to macro headwinds in the form of a to a significant 32% of the space look forward to exit from his investment over a much shorter time horizon. Even 2018. Led by the Bengaluru office slowdown in spending as well as an transacted by the other services sector same period. private equity investors have been more inclined to acquire stabilized assets as an market, all markets with the exception inclination to insource by the USA and or 13% of the total space transacted overwhelming 89% of their investments have been routed toward the acquisition of of Mumbai experienced healthy growth several European countries. Losing during H1 2018. already matured assets. in rentals during the period. With ground since H2 2016, it accounted for
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OFFICE OFFICE RENTAL TRANSACTIONS H1 2018 H1 2018
Rental value range in H1 2018 in `/sq m/month (`/sq ft/month) 12 month change 6 month change Completions mn sq m (mn sq ft) Transactions mn sq m (mn sq ft) YoY change
0.3 (3.6) 0.3 (3.4) 840 4% (78) 102% 6% 0%
NCR NCR
(0.4) 0.08 (0.9) 0.04 452 6% (42) -59% -59% 3%
AHMEDABAD AHMEDABAD
0.41 (4.4) 0.27 (2.9) 0.25 (2.7) 0.36 (3.9) 1,169 -8% 710 8% (109) -42% -7% 54% 118% (66) -5% 4.8%
MUMBAI MUMBAI 0.16 (1.7) 0.25 (2.7) PUNE PUNE 570 8% HYDERABAD HYDERABAD (53) -14% 15% 3.9% 0.34 (3.7) 0.6 (6.5)
0% 13%
0.11 (1.2) 0.16 (1.8) 754 17% 619 4% BENGALURU (70) BENGALURU CHENNAI 10% -9% 11% CHENNAI (57) 0.9%
All maps are for representational purpose not to scale All maps are for representational purpose not to scale
14 15 RESEARCH INDIA REAL ESTATE
AHMEDABAD MARKET SNAPSHOT
PARAMETER H1 2018 CHANGE YOY
Launches (housing units) 1,323 -29%
Sales (housing units) 8,087 2%
Price (weighted average) `30,354 sq m (`2,820/sq ft) 2%
Unsold inventory (housing units) 20,119 -37%
Quarters to sell 7.1
Age of unsold inventory (in quarters) 10.1
Note- 1 square meter (sq m) = 10.764 square feet (sq ft) Source: Knight Frank Research
52% AHMEDABAD Drop in sales in H1 2018, from the peak levels during H1 2011.
• “This time around there have been very both by Ahmedabad Municipal few new launches. Advertisements Corporation (AMC) and Ahmedabad of new projects that used to be in Urban Development Authority (AUDA), your face, in the past, is missing this has been made available online. This time around,” stated one of the major initiative is facing teething problems. players in the city’s real estate market. One, the major stakeholders in the city The spark is missing with regards new went to the extent of stating that ever launched units in the city in H1 2018. since passing of plans has been made online, no developer has been able to The drop in new • New launches in H1 2018 were a mere get the necessary approvals. These 2 1,323 units, which is 29% less than issues we believe is a passing phase launches has more the number of units in H1 2017. The and things should get sorted out soon. to do with the market numbers do paint a sorry figure but the drop in new launches has more • The western part of the city continued RESIDENTIAL MARKET trying to adjust to the to do with the market trying to adjust to remain the hotbed for new launches to the new policies rather than any in the city. Of the total launches, in new policies rather than fundamental flaw in the market. H1 2018, close to 60% happened in West Ahmedabad. During H1 2018 % • There are a couple of reasons that 95 any fundamental flaw in locationsalong Sindhu Bhavan Road, could be attributed to the drop in Bopal Ambli Road saw action. Further Drop in new launches in H1 2018, from the new launches in the city. First, under peak levels during H1 2018 the market. South Bopal and Sela remained RERA the time taken to launch a one of the preferred locations in project has increased considerably. West Ahmedabad. North and East Further, passing of project plans,
16 17 RESEARCH INDIA REAL ESTATE
Ahmedabad, which are comparatively also be utilised for affordable housing 7.1 in H1 2018. At present, the city has affordable markets in the city, are schemes. more than 20,000 unsold units, which the other areas that witnessed new are in various stages of construction. AHMEDABAD MARKET ACTIVITY • While there is not much to cheer about launches in H1 2018. new launches, sales remained steady • East Ahmedabad is one of the better • A major chunk of the new units in H1 2018 compared to H1 2017. In performing markets in the city, which 10000 Launches Sales Wt. Avg. Price (RHS) 0000 launched in H1 2018 have been in the fact, sales in H1 2018 increased by 2% attests the homebuyers’ affinity affordable housing segment. 71% of over H1 2017. Prospective homebuyers towards affordable houses. This micro 29,816 29,816 29,816 the units launched in the city were who were in a wait-and-watch mode market has a low QTS of 6.5 and its 29,816 priced below `5 mn. Further, close to have moved in and this, to a great age of inventory is 9.6. Affordable 40% of the new launches in the city extent, had managed to push up sales pricing coupled with easy access to 000 29,684 were priced below `2.5 mn. The major marginally in H1 2018. major employment hubs and integrated reason for the bulk of new launches, development has helped this micro • Due to subdued market conditions, in the affordable housing segment, in market in attracting homebuyers. homebuyers were expecting a the city, is the government’s initiative reduction in prices. This however, has • In H1 2018, North Ahmedabad has the to make the land available for such not happened. In fact, prices have highest level of inventory. This however, 000 00 projects. 29,386 largely remained stable in H1 2018, and should not be much of a concern • The government’s initiative is apparent compared to H1 2018 have moved up because its QTS is only 7.5 and the in the General Development Control marginally. Most importantly, the dust age of inventory is only 9.0. This micro Regulations, 2021, which came out around policy initiatives like the Real market along with East Ahmedabad 7000 in late 2014. In order to enhance the Estate (Development and Regulation) has emerged as a major hub for supply of affordable housing, a new Act, 2016 (RERA) and the Goods and affordable housing projects and as residential zone for affordable houses Services Tax (GST) has settled, which already indicated earlier is a favourite (Residential Affordable Housing Zone) has emboldened homebuyers to go among homebuyers. was identified within a one-km-wide head and arrive at the “BUY” decision. • Like North Ahmedabad, the western 6000 000 stretch on the outer side of SP Ring • The affinity of homebuyers towards part of the city too has a high level of Road covering 76 sq km of area. affordable housing projects is very unsold inventory but in the recent past This overlay zone shall be applicable evident in Ahmedabad. Markets of this micro market has witnessed a lot only for development of affordable East and North Ahmedabad, which are of traction. It is a preferred location for housing with unit sizes up to 80 sq m. 000 largely considered hubs for affordable people working in GIDC Sanand and of Units No.
Apart from this, the area cleared by ` / sq m housing projects, witnessed close to companies located along SG Highway. 38 mill closures in Ahmedabad will 56% of the sales in H1 2018.
• Due to its proximity to business districts along SG Highway and 4000 00 Close to 40% of the new Sanand, West Ahmedabad in recent years has been a favourite among launches in the city were homebuyers, especially from those 28,376 with white-collar jobs. Of the total priced below ` 2.5 mn. sales in the city, the share of West 000 Ahmedabad in H1 2018 was 28%, The major reason for the which is the same as in H1 2017. bulk of new launches, in • “This is one of the best times for anyone who wants to buy a house in 000 000 the affordable housing the city,” stated one of the developers. The reasoning is simple, capital values segment, in the city, of housing units has not witnessed any is the government’s change compared to H1 2017, there are various options that one can choose 1000 initiative to make the from and most importantly, the interest rate on home loans are still low.
land available for such • The low level of new launches and projects. steady sales has had a bearing on the 0 7 00 quarters to sell (QTS) and the existing 29% H1 01 H 01 H1 016 H 016 H1 017 H 017 H1 01 unsold inventory. In H1 2017, the QTS Source: Knight Frank Research stood at 7.7 and this has come down to Drop in new launches in H1 2018 compared to H1 2017
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RESEARCH H AR INDIA REAL ESTATE H A R
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SA A A S HA E RA CHA HE A RESIDENTIAL A HA A AS E A A AR AR R RA R RA A R A RA ASA LAUNCHES AND SALES SA E A
HA A 250 E ASA Launches (housing units) Sales (housing units) % Change (YOY) A A A -74% C AR A H1 2018
2,304 E A AR CHA A -9% SA AR A HA S AS A
AHE A A NORTH 278 -63% A A AR CHA A A R H1 2018
RA CHAR A A A AR A2,217 S A A E 13% CHE H A
E HA ARA RA EAST A AR A A E A AR R SH A A AR
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A H A A 795 Markets of East and 870% A RA R H1 2018 0 North Ahmedabad, which 2,231 -100% 3% A R A E H1 2018 A A A AR are largely considered SHAH R 478 -17% A HA H A WEST HA H A hubs for affordable S R A C ES A E CENTRAL S R A HA S R A E HA housing projects, HA A AREA A A AR witnessed close to 56% % SHER A A HA A ARA 02 of the sales in H1 2018. Increase in sales in H1 2018, com- SHE A pared to H1 2017 A E A AS A E A R A RA A
AHA E
A ARA A HA RA A AR 0 -100%
H1 2018 RA SAR HE A 857 SA R E A R SA A 24%
CHA A HA A C A R R S AR A A A SOUTH ERA A AR SA A HA A A
A MICRO-MARKET LOCATIONS
AR A A CENTRAL Paldi, Vasna, Navrangpura, Maninagar, Dudheshwar, Ambawadi
RE EAST Naroda, HA A A A Vastral, Nikol, Kathwada Road, Odhav A AR
NORTH A CH Gota, New Ranip, Tragad, Chandkheda, Motera A A R HA H A SOUTH Narol, Vatva, Vinzol, Hathijan
Source: Knight Frank Research SA R A RA
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RESEARCH H AR INDIA REAL ESTATE H A R
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SA A A S HA E RA CHA HE A RESIDENTIAL A HA A AS E A A AR AR R RA R RA A R A RA ASA UNSOLD INVENTORY H1 2018 SA E A
HA A E ASA Unsold inventory (YoY growth) QTS (in quarters) Age of inventory (in quarters) A A A 5,834 6.7 C AR A (-41%) 9.0 E A AR CHA A SA AR A HA S AS A
AHE A A NORTH A A AR 6.5 CHA A A R 4,828 (-39%) RA CHAR A A A AR A 9.6 S A A E CHE H A
E HA ARA RA EAST A AR A A E A AR R SH A A AR
HA E ESH AR
A H A A 5,030 7.6 A RA R (-47%) 11.6 1,408 7.5 A E A R (-37%) A A A AR SHAH R 7.6 A HA H A WEST HA H A S R A C ES A E CENTRAL S R A HA S R A E HA HA A AREA A A AR 37% Drop in unsold inventory in H1 2018 SHER A A HA A ARA compared to H1 2017
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3,018 7.9 RA SAR HE A (35%) SA R11.5 E A R SA A
CHA A HA A C A R R The western part of the S AR A A A SOUTH ERA A AR SA A HA A A city too has a high level A of unsold inventory
AR A A but in the recent past RE HA A A A A AR this micro market
A CH has witnessed a lot of A A R HA H A traction.
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RESEARCH H AR INDIA REAL ESTATE H A R
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H A A A MOTERA RA A 36,598-38,697 A A A A R (3,400-3,595) [0%] [0%] SA A A S HA E RA CHA HE A RESIDENTIAL PRICING A HA A AS E A A AR AR R RA R RA A R A RA ASA H1 2018 SA E A CHANDKEDA HA A 28,525-30,247 E ASA (2,650-2,810) Price range in H1 2018 in /sq m Price range in H1 2018 in ( /sq ft) A A A C AR A ` ` [1%] [0%]
E A AR 12 month change (YOY) 6 month change (YOY) CHA A SA AR A HA S AS A
AHE A A NORTH A A AR NIKOL CHA A A R 21,528-23,304 RA CHAR A A A AR A (2,000-2,165) S A A E CHE H A [0%] [0%]
E HA ARA RA EAST NAVRANGPURA A AR A A E A AR 57,049-59,923 R SH A A AR (5300-5567) HA E [0%] [0%] ESH AR
A H A A BOPAL A RA R 34,445-36,544 (3,200-3,395) AMBAVADI A R A E [1%] 1%] VASTRAL A 61,355-61,969 A A AR SHAH R 21,528-22,981 (5700-5850) (2,000-2,135) A HA H A WEST [1%] [0%] [1%] HA [0%] H A S R A PRAHLAD NAGAR C ES A E CENTRAL S R A HA S R A E 58,987-60,171 HA HA A AREA (5,480-5,590) A A AR [1%] [1%]
SHER A A HA A ARA
SHE A A E A AS A E A R A RA A
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A ARA A HA RA A AR ASLALI CIRCLE 13,778-14,574 (1,280-1,354) RA SAR HE A [0%] [0%] SA R E A R SA A
CHA A HA A C A R R S AR A A A SOUTH ERA A AR SA A HA A A Due to subdued market VATVA A 15,608-17,018 (1,450-1,581) conditions, homebuyers AR A A [1%] [2%] RE were expecting a HA A A A A AR reduction in prices. A CH A A R HA H A This has however, not happened.
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A A RA HA RESEARCH INDIA REAL ESTATE
AHMEDABAD OFFICE MARKET ACTIVITY
4.0 New Completions Transactions OFFICE MARKET .
.0
.
.0 mn sq m 1.
1.0
0.
0.0 59% H1 01 H 01 H1 016 H 016 H1 017 H 017 H1 01 59% Note- 1 square meter (sq m) = 10.764 square feet (sq ft) Drop in transactions in H1 2018 Source: Knight Frank Research Drop in new completions in H1 compared to H1 2017 2018 compared to H1 2017
AHMEDABAD OFFICE MARKET VACANCY
0
AHMEDABAD MARKET SNAPSHOT 24.6% 23.7% 22.1%
0 20.1% 19.6% PARAMETER H1 2018 CHANGE YOY 1 New completions mn sq m (mn sq ft) 0.08(0.9) -59% 10 The Ahmedabad office Transactions mn sq m (mn sq ft) 0.04(0.4) -59% market witnessed office Weighted average rental in 452 (42) 6% /sq m/month ( /sq ft/month) ` ` 0 space transaction of H1 016 H 016 H1 017 H 017 H1 01 Major part of the new Stock mn sq m (mn sq ft) 1.8 (19.4) 9% 0.04 mn sq m (0.47 mn Source: Knight Frank Research supply that got added to sq ft) in H1 2018, which Vacancy (%) 24.63 • The steep fall in the amount of office compared to 0.2 mn sq m (2.2 mn sq ft) the stock came in CBD space transacted in H1 2018 can in H1 2017. During H1 2018, new office Note- 1 square meter (sq m) = 10.764 square feet (sq ft) be attributed to the fact, that there completions were completed in only 12 is 59% lower than the Source: Knight Frank Research West along SG Highway, were no large transactions. The projects, largely in the central business space transacted in H1 • The Ahmedabad office market witnessed office space transaction of 0.04 mn sq m largest transaction was that of Claris district (CBD) and CBD West. Corporate Road, off CG (0.47 mn sq ft) in H1 2018, which is 59% lower than the space transacted in H1 2017. Lifesciences, which took up 0.01 mn • Major part of the new supply that got 2017. While it is indeed While it is indeed a substantial fall in office space transaction, it needs to be looked at sq m (0.1 mn sq ft) of office space. Road, Drive In Road and added to the stock came in CBD West with a pinch of salt. The next largest transaction to happen along SG Highway, Corporate Road, off a substantial fall in office in H1 2018 was that of Home Credit, Science City Road. Close • H1 2017 witnessed a new record, in the amount of office space transacted in CG Road, Drive In Road and Science which took up 0.006 mn sq m (0.065 Ahmedabad. For the first time office space transaction, in the city, touched 0.11 mn sq City Road. Close to 86% of the new space transaction, it needs mn sq ft) of space. to 86% of the new supply m (1.14 mn sq ft). When compared to H1 2016, the fall in transacted office space in H1 supply came up along these locations. to be looked at with 2018 is 37%. • New completions on the other hand The balance 14% came up at Ellis came up along these witnessed a dip of 59% in H1 2018 Bridge. • This is a worrying factor because office space transaction in the second half of the year a pinch of salt. compared to H1 2017. During H1 locations. typically falls compared to the first half. This has been the trend since 2016. If this same 2018, only 0.08 mn sq m (0.9 mn sq trend continues in 2018, then it certainly is a cause of worry. ft) of office space entered the market
26 27 RESEARCH INDIA REAL ESTATE
• The office market in Ahmedabad is in H1 2018 compared to H1 2017 has still in its infancy, compared to urban resulted in the drop in transacted office SECTOR-WISE SPLIT OF TRANSACTIONS centres like Mumbai, Bengaluru space. and Delhi NCR. The necessary • CBD West garnered the largest amount infrastructure is in place, and of late, of office space within the city. Of the developers have moved in to meet total transacted office space in the the requirements of companies either city, CBD West accounted for 97%, moving into the city or expanding their thereby making it one of the most presence in the city. In the present day, preferred business districts in the this has led to a situation where the H city. Further within CBD West, SG supply outstrips demand. This explains Highway accounted for 32% of the the double digit vacancy rates in the total transacted office space. This city, which has increased slightly since further attests the growing fondness H1 2016. In H1 2018, the vacancy rate of occupiers towards this part of in the city is 24.63%, up from 22.16% in Ahmedabad. The other micro market H1 2017. that could be a star of the future is • Unlike other real estate markets, like Sindhu Bhavan Road. Even though % Bengaluru and Hyderabad, the office this micro market witnessed only 9 market in Ahmedabad is not driven one large transaction, its share in the H Increase in office stock in H1 2018 by the IT/ITeS sector. The Banking, total transacted space stood at 22%. compared to H1 2017 Financial services and Insurance (BFSI) This area is fast becoming one of the sector had been the major driver for most preferred locations for occupiers office space in the city till H2 2017. This and residential developments, which has however, changed in H1 2018. The certainly augurs well for this micro major driver for office space in the city market. in H1 2018 is the Other Services sector. • Even though the office market in Its share in the total transacted office H1 H1 Ahmedabad is in its infancy, among Industry space, in the city, has increased from 2017 2018 the early signs of this market steadily 19% in H1 2017 to 43% in H1 2018. growing is that rentals are firming up The interesting part is that co-working BFSI 48% 24% both in CBD West and the peripheral space, which is making its presence business district (PBD). Lack of quality IT/ITES 15% 10% felt in more mature markets, also made office space is creating an upward its entry in Ahmedabad, in H1 2018. pressure on rentals in the city. Manufacturing 18% 23% Unlike other real estate While there is only one transaction for co-working space in the city, the • Though the office market in the city is Other Services 19% 43% markets, like Bengaluru important point is that a beginning has considered to be in its nascent stage, been made. there are a couple of transactions Note: BFSI includes BFSI support services where rents have been above ` 538/ and Hyderabad, the office • The share of the manufacturing sector sq m/month (`50 per sq ft per month). has improved from 18% in H1 2017 to market in Ahmedabad To give an example, there were a AVERAGE DEAL SIZE 23% in H1 2018. couple of transactions on SG Highway AND NUMBER OF DEALS is not driven by the IT/ • The share of BFSI has fallen to 24% in where the rents were above ` 646/sq H1 2018. In H1 2017, the BFSI sector m/month (`60 per sq ft per month). ITeS sector. The Banking, accounted for 48% of the transacted There was also a transaction on SG 1,990 (21,417) Average Deal Size in sq m (sq ft) space in the city. The share of IT/ Highway which was done at ` 700/ Financial services and BUSINESS DISTRICT CLASSIFICATION ITeS sector has also fallen in H1 2018 sq m/month (`65 per sq ft per month). H1 2017 Insurance (BFSI) sector had compared to H1 2017. Its share fell from Elsewhere, on Corporate Road there 15% in H1 2017 to 10% in H1 2017. were transactions done at ` 624/sq m/ BUSINESS DISTRICT MICROMARKETS 54 Number of Deals month (`58 per sq ft per month). been the major driver for • The average deal size in H1 2018 is Bodakdev, Keshav Baug, Prahladnagar, Satellite, CBD West office space in the city till reported to be 1,064 sq m (11,457 sq SG Highway, Thaltej ft), which is 47% lower than the average 1064 (11,457) H2 2017. This has however, deal size in H1 2017. The number of PBD Gandhinagar, GIFT City Average Deal Size in sq m (sq ft) deals done in H1 2018 also fell to 42 H1 2018 CBD Ashram Road, Ellis Bridge, Paldi changed in H1 2018. from 54 in H1 2017. 42 • The drastic dip in the average deal size Number of Deals coupled with lesser number of deals Source: Knight Frank Research
28 29 A H A A A RA A A RA
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H RA A A R A A A A
RESEARCH H AR INDIA REAL ESTATE H A R
HA RA A ARA
H A A A 0.0007 (0.01) RA A A A -96% A A R
SA A A S HA E RA CHA HE A OFFICE A HA A AS E A A AR PBD AR R RA R RA A R A RA ASA TRANSACTIONS H1 2018 SA E A
HA A E ASA Transactions mn sq m (mn sq ft) YoY change A A A C AR A
E A AR CHA A SA AR A HA S AS A
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0.00039 A H A A 0.04 (0.46) (0.0042) A RA R 100% -57% A R A E % A A A AR 32 SHAH R A HA Within CBD West, the share of office H A CBD WEST HA H A CBD S R A space transacted along SG Highway C ES A E S R A HA S R A E HA HA A AREA A A AR
SHER A A HA A ARA
SHE A A E A AS A E A R A RA A
AHA E
A ARA A HA RA A AR CBD West garnered the
RA SAR HE A largest amount of office SA R E A R SA A space within the city. CHA A HA A C A R R S AR A A A ERA A AR Of the total transacted SA A HA A A
A office space in the city,
AR A A CBD West accounted for
RE HA A A A 97%, thereby making it A AR
A CH one of the most preferred A A R HA H A business districts in the city.
SA R A RA
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AS A CHA A AR 30 31 A
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A R E
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RAS A ASAR CH SAR
SAR AS RA ARE A
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RESEARCH H AR INDIA REAL ESTATE H A R
HA RA A ARA
H A A A
RA A 431-484 5% A A A A R (40–45)
SA A A 0% S HA E RA CHA HE A OFFICE RENTAL A HA A AS E A A AR PBD AR R RA R RA A R A RA ASA H1 2018 SA E A
HA A E ASA Rental value range in H1 2018 in `/sq m/month (`/sq ft/month) 12 month change 6 month change A A A C AR A
E A AR CHA A SA AR A HA S AS A
AHE A A A A AR CHA A A R
RA CHAR A A A AR A S A A E CHE H A
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A H A A A RA R 431-538 5% 377-484 0% (40–50) (35–45) 3% 0% % A R A E 06 A A A AR SHAH R Increase rentals in H1 2018 A HA compared to H1 2017 H A CBD WEST HA H A CBD S R A C ES A E S R A HA S R A E HA HA A AREA A A AR
SHER A A HA A ARA
SHE A A E A AS A E A R A RA A
AHA E
A ARA A HA RA A AR
RA SAR HE A SA R E A R Even though the office SA A
CHA A market HA A in Ahmedabad is C A R R S AR A A A ERA A AR in its infancy, among the SA A HA A A
A early signs of this market
AR A A steadily growing is that RE HA A A A A AR rentals are firming up
A CH both in CBD West and the A A R HA H A peripheral business district (PBD). SA R A RA
RA A H RA R
AS A CHA A AR 32 33 A
A E
A R E
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RAS A ASAR CH SAR
SAR AS RA ARE A
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A A RA HA RESEARCH INDIA REAL ESTATE
BENGALURU MARKET SNAPSHOT
PARAMETER H1 2018 CHANGE YOY
Launches (housing units) 15,556 11%
Sales (housing units) 25,802 22%
Price (weighted average) `50,880/sq m (`4,727/sq ft) -2%
Unsold inventory (housing units) 98,866 -13%
Quarters to sell 10.7 -
Age of unsold inventory (in quarters) 12.6 -
Note- 1 square meter (sq m) = 10.764 square feet (sq ft)
Source: Knight Frank Research
07% BENGALURU Drop in Sales in H1 2018, from the levels during H2 2015
• With residential launches and sales recover from its previous low but also Post the implementation both having bottomed out in H2 witnessed a 22% year-on-year (YoY) 2017, Bengaluru’s residential market growth with nearly 25,802 units sold. of the Karnataka Real witnessed a remarkable comeback in Comparing the healthy sales volume Estate (Regulation and H1 2018 on both parameters. Post the in H1 2018 with the same in H1 2016, implementation of the Karnataka Real presents a 2% sales drop. Though Development) Rules, 2017 Estate (Regulation and Development) not a positive trend, during this period in July 2017, the operating Rules, 2017 in July 2017, the operating Bengaluru’s residential segment model of residential real estate traversed through sequential periods model of residential development is fast undergoing a of declining sales volume in the light of real estate development transformation with visible signs of market slowdown followed by policy consolidation amongst developers changes intermittently and can be seen is fast undergoing a and development management recovering in 2018. transformation with visible gaining popularity. Due to the Real RESIDENTIAL MARKET Estate (Regulation and Development) signs of consolidation Act, 2016 (RERA) enactment, the amongst developers and opportunities available for dispute resolution has brought the fence sitters 13% development management back who are once again instilling trust in Grade A developers. Year-on-Year drop in unsold gaining popularity. inventory in H1 2018 • H1 2018 can aptly be regarded as the period of sales rebound, as not only did the residential market
34 35 RESEARCH INDIA REAL ESTATE
• Pent-up demand from end-users for • During H1 2018, a marketing blitzkrieg Road, Sarjapur Road and Attibele. quality projects has translated into has been unleashed on Bengaluru’s • The implementation of the nationwide heightened sales volume in selected residential segment with developers BENGALURU MARKET ACTIVITY scheme of PMAY and according projects on Sarjapur Road, Kanakpura competing aggressively to highlight infrastructure status to the affordable Road, Thanisandra, Kannur and RERA compliancy, availability of sector has attracted a lot of private Devanahalli. With the right mix of occupation certificate (OC), PMAY 0,000 Launches Sales Wt. Avg. Price (RHS) , 00 equity (PE) funding for this sector, developer credibility and affordability, eligibility and ready-to-move-in which is expected to continue growing.
units in these locations have witnessed projects to gain a larger market share, 2 20 Of the total new launches in Bengaluru better sales traction in H1 2018. Of the especially of the ` 40–75 lakhs pricing in H1 2018, 60% catered to the ` 25–50 total sales volume in H1 2018, South segment. lakh bracket. 2 000 Bengaluru accounted for 48% of the 7,000 • Many have upped the ante by throwing whole pie, followed by North Bengaluru • Developers are in no hurry to reduce ,000 in waiver of parking charges, clubhouse at 20%. the base selling prices, as affordable fees, infrastructure charges and and RERA registered projects are 1 721 • The demand-side intervention GST. Free wardrobes, kitchen, vanity, yielding good end-user response. facilitated by the government’s multiple zero maintenance costs, assured Aggressive marketing strategies and 4,000 relaxations for projects under Pradhan rentals and No Pre-EMI schemes are
residential projects nearing completion 1 1 Mantri Awas Yojana (PMAY), such as in vogue and are being used to lure are helping the developers win the 1, 00 interest rate subsidies and second homebuyers. Innovative marketing confidence of end-users. In the light time increase of the extent of carpet strategies such as home exchange of improving market health, weighted area to 160 square metres for MIG – I plans, homefests showcasing OC 1,000 average residential prices remained and 200 square metres for MIG – II, received projects and price discovery stagnant with only 2% YoY marginal dip has enabled more MIG end-users methods, which were earlier unheard coming to fore in H1 2018. to qualify for interest rate subsidy of, have been successful in winning the 0 881 1,000 benefits. Simultaneously, the dust buyers’ trust in a recovering market. • Though sales have picked up has settled on the aftermath of RERA momentum and new project launches 1 ,000 • The buoyancy in sales volume coupled implementation giving a fillip to sales have also commenced, a growing with RERA compliance processes of RERA registered projects, as all concern amongst Non-Banking largely being streamlined at the micro markets reported sales growth Financial Companies (NBFCs) cannot developers’ end has encouraged many solidifying in H1 2018. As a result, the be ignored as several developers’ developers to foray afresh in the market 1 ,000 0, 00 unsold inventory reduced by 13% YoY loans are in distress and possibility of Units No. and bring to life plans of launching to 98,866 units during this period. of defaults and pile up of incremental projects, which were forever simmering costs for refinancing can mar the on the backburner. For the first time prospects for many residential players.
in the past 18 months, new residential ` / sq m The sector is not out of the woods yet launches strengthened as 15,556 1 ,000 The implementation of as the financial health of developers is units were launched in H1 2018. This 0,000 vital for execution and delivery. the nationwide scheme represents a 11% YoY growth. 0 0 2 of PMAY and according • Despite healthy sales volume and infrastructure status to reduction in unsold inventory, the ,000 quarters to sell (QTS) increased from the affordable sector has 10.0 in H1 2017 to 10.7 in H1 2018. 4 , 00 attracted a lot of private Though projects nearing completion and under RERA continue to lure equity (PE) funding for buyers, it is the under-construction 6,000
this sector, which is projects that are struggling to attract buyers impacting the overall city’s QTS expected to continue leading it to rise continuously. 4 ,000 • The western micro market, which has growing. Of the total new ,000 launches in Bengaluru in historically witnessed fewer launches, emerged a surprise frontrunner noting H1 2018, 60% catered a 142% YoY growth in launches as to the ` 25–50 lakh few projects with large number of units were launched. New launches 0 4 , 00 bracket also increased by 30% YoY in South 36% H1 01 H 01 H1 016 H 016 H1 017 H 017 H1 01 Bengaluru with many new projects Drop in launches in H1 2018 from Source: Knight Frank Research being concentrated on Kanakpura the levels during H1 2016
36 37 S CA S
RE A ASA RA
E AHA A
RESEARCH E A INDIA REAL ESTATE
R HE E 1,858 A AR -53% H1 2018 SAHA ARA 5,238 A AR 27% RESIDENTIAL A AHA NORTH
ASH A H A AR LAUNCHES AND SALES
HE A Launches (housing units) Sales (housing units) % Change (YOY)
ESH A H R A A A AR A ARAHA A HA A AR
SH A A AR
RA A E RA A AS A A AR
A ES ARA
4,762 142% AHA E A RA ASA ESH ARA RA A A AR H1 2018 A AR Of the total sales 2,890 C RA A 58% A AR volume in H1 2018, 0 H E E 0% 891 WEST -54% South Bengaluru H1 2018 A A A AR E H1 2018 77 H ASA RA 60% 5,135 accounted for 48% of 1% the whole pie, followed AR H R CENTRAL EAST ARA HAHA CHA RA E A E by North Bengaluru at 30% YoY increase in launches in South 20%. in H1 2018
A A ASHA AR A EESA AHA
RA A A A
E ER SA E E A A A AR A A A
A AR HSR A
ARAS A MICRO-MARKET LOCATIONS A
E ER CENTRAL A A E MG Road, Lavelle Road, Langford Town, Vittal Mallya Road, Richmond Road 8,045 H ASA RA 30% H1 2018 EAST Whitefield, Old Airport Road, Old Madras Road, KR Puram, Marathahalli 12,462 23% WEST Malleswaram, Rajajinagar, Yeshwantpur, Tumkur Road, Vijayanagar
SOUTH NORTH Hebbal, Bellary Road, Hennur, Jakkur, Yelahanka, Banaswadi ARAS A A Koramangala, Sarjapur Road, Jayanagar, JP Nagar, HSR Layout, Kanakpura Road, Bannerghatta SOUTH Road
Source: Knight Frank Research
All maps are for representational purpose not to scale
38 39 S CA S
RE A ASA RA
E AHA A
RESEARCH E A INDIA REAL ESTATE
R HE E A AR 21,420 11.6 (-16%) SAHA ARA A AR 13.5 RESIDENTIAL A AHA NORTH
ASH A H A AR UNSOLD INVENTORY H1 2018
HE A Unsold inventory (YoY growth) QTS (in quarters) Age of inventory (in quarters)
ESH A H R A A A AR A ARAHA A HA A AR
SH A A AR
RA A E RA A AS A A AR
A ES ARA
AHA E A RA 9,806 12.4 ASA ESH ARA RA A A AR A AR (-2%) C RA A 11.0 A AR
H E E WEST 8.6 300 21,231 8.7 A A A AR E % H ASA RA (23%) (-12%) 15 14.4 12.9 Annual decline in unsold units in AR H R South Bengaluru during H1 2018 CENTRAL EAST ARA HAHA CHA RA E A E
A A ASHA AR A EESA AHA
RA A A A
E ER SA E E A A A AR Though projects nearing A A A completion and under
A AR HSR A RERA continue to lure
ARAS A A buyers, it is the under- E ER A A E construction projects that 11.1 H ASA RA 46,109 are struggling to attract (-15%) 12.4 buyers impacting the
SOUTH overall city’s QTS leading ARAS A A it to rise continuously.
All maps are for representational purpose not to scale
40 41 S CA S
RE A ASA RA
E AHA A
YELAHANKA 43,000–70,000 RESEARCH (4,000–6,500) E A INDIA REAL ESTATE [-13%] [-9%]
R HE E A AR
TUMKUR ROAD SAHA ARA 32,300–64,600 A AR THANISANDRA (3,000–6,000) 32,300–86,100 [-1%] [-5%] (3,000–8,000) [-5%] [0%] RESIDENTIAL PRICING A AHA NORTH
ASH A H HEBBAL A AR H1 2018 53,800–107,600 HENNUR YESHWANTPUR (5,000–10,000) 37,700–80,700 62,400–113,000 [1%] [3%]HE A (3,500–7,500)) Price range in H1 2018 in `/sq m Price range in H1 2018 in (`/sq ft) (5,800–10,500) [-8%] [-3%] [-6%] [-1%] ESH A H R A A 12 month change (YOY) 6 month change (YOY) MALLESWARAM A AR A ARAHA 86,100–150,700 A HA A AR (8,000–14,000) K.R. PURAM SH A A AR [-1%] [-2%] 43,000–70,000 WEST (4,000–6,500) RA A E RA A AS A [-2%] [0%] A AR WHITEFIELD 43,000–75,300 A ES ARA (4,000–7,000) RAJAJI NGAR [-15%] [-8%] 75,300–161,500 (7,000–15,000) AHA E A RA ASA ESH ARA[-2%] [-3%]RA A A AR A AR LAVELLE ROAD LANGFORD TOWN C RA A 226,000–322,900 A AR 161,500–226,000 (21,000–30,000) (15,000–21,000) H E E [-2%] [-2%] [0%] [0%] A A A AR E H ASA RA MARATHAHALLI
43,000–75,300 AR H R (4,000–7,000) CENTRAL [-5%] [-8%] ARA HAHA % CHA RA E A E 15 YoY decline in prices in Whitefield and Bannerghatta Road EAST
A A ASHA AR A EESA AHA
RA A A A
E ER SA E E A A A AR A A SARJAPUR ROAD A 43,000–80,700 (4,000–7,500) [-4%] [-4%] A AR HSR A Aggressive marketing ARAS A A strategies and E ER A A E
H ASA RA residential projects nearing completion are helping the developers SOUTH ARAS A A win the confidence of end-users.
All maps are for representational purpose not to scale KANAKPURA ROAD BANNERGHATTA ROAD ELECTRONICS CITY 43,000–75,300 32,300–75,300 37,700–59,200 (4,000–7,000) (3,000–7,000) (3,500–5,500) 42 43 [7%] [9%] [-15%] [-13%] [-14%] [-10%] RESEARCH INDIA REAL ESTATE
BENGALURU OFFICE MARKET ACTIVITY
0.7 New Completions Transactions OFFICE MARKET 0.6
0.
0.4
0. mn sq m
0.
0.1
0.0 33% BENGALURU MARKET SNAPSHOT H1 01 H 01 H1 016 H 016 H1 017 H 017 H1 01 Bengaluru’s share in H1 2018 Note- 1 square meter (sq m) = 10.764 square feet (sq ft) leasing across top seven cities PARAMETER H1 2018 CHANGE YOY Source: Knight Frank Research
New completions mn sq m (mn sq ft) 0.34 (3.7) 0% • The central business district and Off has dropped to 38% of the total central locations (CBD and Off CBD,) leasing volume in H1 2018. While the Transactions mn sq m (mn sq ft) 0.61 (6.5) 13% garnered the second highest share challenges posed by the global political in Bengaluru’s leasing with a 16% environment still loom large for Indian Weighted average rental in 754.55 (70.1) 17% share, with co-working operators IT companies, new technological Co-working operators `/sq m/month (`/sq ft/month) and IT/ITeS comprising majority of innovations in the form of big data demand. The presence of many co- analytics and machine learning will Stock mn sq m (mn sq ft) 13.37 (144.5) 6% (classified as a sub-sector working operators is also giving a chic open new doors for job seekers. With makeover to the old CBD buildings and Bengaluru retaining its spot as the in Other Services Sector) Vacancy (%) 3.5 - attracting new age tenants, a trend we top tech job market in the country,
Source: Knight Frank Research expect to continue. continuous evolution of companies in accounted for 0.11 mn sq IT/ITeS should help this sector gain • Unlike H2 2017, when the average deal ground in the long term. m (1.27 mn sq ft) leasing size in Bengaluru had shrunk by 37% • In the first half of 2018, Bengaluru retained its top position amongst India’s top 8 cities YoY, H1 2018 noted a relatively lesser • Co-working operators (classified as a with its total leasing volume accounting for 33% share. Healthy pre-commitments, in H1 2018 garnering a 12% YoY decline in average deal size. sub-sector in Other Services Sector) entry of new foreign and domestic occupiers and expansion of real estate footprint by Whilst it is premature to say that large- accounted for 0.11 mn sq m (1.27 mn 19% share of the total emerging sectors largely contributed to the strong office space demand for Bengaluru, sized deals are back in vogue, the sq ft) leasing in H1 2018 garnering a a city which has inherently remained tenant-favourable due to its intrinsic location current trend is indicative of occupiers 19% share of the total pie. This is a pie. This is a phenomenal attractiveness. in some sectors no longer shying away phenomenal 199% annual upswing in 199% annual upswing in In the first six months of • In H1 2018, Bengaluru noted 0.34 mn sq mt (3.7 mn sq ft) of new supply infusion which from committing to large-sized office leasing by this category of occupiers 2018, strong occupier is at par with H1 2017. ORR and PBD East witnessed a large chunk of this total supply spaces and scaling up hiring plans. over H1 2017 as activity-based working leasing by this category of with 38% and 25% respectively. Though the new supply remains in line with H1 2017, Against the backdrop of rising concern and community spaces become the demand translated into the infusion of many projects which deferred completions in 2017 will ease the supply about automation, this is good news. norm for modern day office occupiers occupiers over H1 2017 as pressure in some micro-markets, such as ORR where vacancy continues to remain With India on the brink of emerging seeking a collaborative eco-system. minimal. as the fastest growing economy in 0.61 mn sq m (6.5 mn • In only a year’s time, intense expansion activity-based working and the world, a positive impact can be • In the first six months of 2018, strong occupier demand translated into 0.61 mn sq by existing co-working operators and sq ft) overall leasing for expected on the real estate footprint of community spaces become m (6.5 mn sq ft) overall leasing for Bengaluru, registering a 13% year-on-year (YoY) entry of new co-working operators the ever-growing occupier segment in growth. Strong occupier demand and pre-commitments catalysed office space such as WeWork, Kafnu, Indiqube Bengaluru, registering a Bengaluru. the norm for modern day consumption in the city in H1 2018, amongst other factors. and Workshaala has changed the • For the past year and a half, the share landscape of flexible office space 13% year-on-year (YoY) • Buoyed by demand from IT/ITeS and co-working operators, Outer Ring Road office occupiers seeking a of the IT/ITeS sector in Bengaluru’s formats in the city. In H1 2018, ORR (ORR) as a micro market continued to outperform the others accounting for 43% of leasing volume has constantly been and CBD & Off CBD micro markets growth. Bengaluru’s total leasing volume. It is interesting to note that the average deal size for collaborative eco-system. weakening. From a 57% share in H1 remained popular for co-working all transactions concluded in ORR alone admeasures nearly 8,732 sq m (94,000 sq ft), 2017 leasing, the share of this sector operators who leased 45% and 28% indicative of large office formats dominating occupier interest in this belt.
44 45 RESEARCH INDIA REAL ESTATE
BENGALURU OFFICE MARKET VACANCY SECTOR-WISE SPLIT OF TRANSACTIONS
10 8% 8% 7%
6 6% H
4 4% 3.5% 3%
0 H1 01 H 01 H1 016 H 016 H1 017 H 017 H1 01 3.5% Source: Knight Frank Research H Vacancy in H1 2018 of the total leasing volume of the co- • Infusion of limited supply in the past working category respectively during 12 months has fostered rental growth this period. across many micro markets leading to a 17% YoY upswing in weighted • In the backdrop of transformation of average rentals at the city level in H1 India’s Banking, Financial services and 2018. Acute shortage of quality spaces Insurance (BFSI) sector, its share in in CBD & Off CBD and ORR led to a H1 H1 Bengaluru office space consumption Industry Unlike H2 2017, when 17% and 15% YoY rental growth in both 2017 2018 jumped from 9% of total leasing in H1 these micro markets, respectively. the average deal size in 2017 to 13% in H1 2018. As technology BFSI 9% 13% penetration in the BFSI sector is • A robust pre-commitments pipeline, Bengaluru had shrunk by increasing, newer companies and job strong foothold of IT/ITeS giants, IT/ITES 57% 38% roles are being created to prepare new emerging sectors’ rapid office 37% YoY, H1 2018 noted a the sector for a technological shift in space consumption, heightened Manufacturing 8% 8% the coming years, which has started interest in the city’s CBD will keep the BUSINESS DISTRICT CLASSIFICATION relatively lesser 12% YoY reflecting in the BFSI sector’s office occupier demand strongly glued to Other Services 26% 41% space leasing in Bengaluru already. Bengaluru. Developers should focus decline in average deal Note: BFSI includes BFSI support services on constructing large tracts of new BUSINESS DISTRICT MICROMARKETS • Led by e-commerce occupiers’ office stock and timely completion of size. Whilst it is premature expansion, primarily in the suburban AVERAGE DEAL SIZE under-construction projects to fulfil Central business district (CBD) and MG Road, Residency Road, Cunningham Road, business district (SBD) locations, the AND NUMBER OF DEALS the demand wave that is largely a mix off CBD Lavelle Road, Richmond Road, Infantry Road to say that large-sized share of this category accounted for of both traditional and new emerging 12% of the total leasing volume in H1 Indiranagar, Koramangala, Airport Road, Old deals are back in vogue, sectors. Suburban business district (SBD) 4,925 (53,014) 2018. Madras Road Average Deal Size in sq m (sq ft) • On the office development front, the current trend is • As strong occupier demand has recent market interactions indicate that Peripheral business district (PBD) H1 2017 continually outpaced new supply, the Whitefield few leading commercial developers East indicative of occupiers vacancy in the city’s office market are reinventing themselves and 131 has been on a decline. From 4% in Number of Deals in some sectors no apportioning nearly 60–70% of their Peripheral business district (PBD) H1 2017, it continues to remain low at Electronics City, Bannerghatta Road future development potential on South 3.5%. Addition of huge quantum of new longer shying away from creating co-working environments and supply in subsequent quarters is the 4,312 (46,420) millennial-friendly workspaces. Going Peripheral business district (PBD) Average Deal Size in sq m (sq ft) need of the hour as the tech capital of Thanisandra, Yelahanka, Devanahalli committing to large-sized forward, co-working as a sub-sector North the country is expected to attract large H1 2018 will attract a major chunk of upcoming office spaces and scaling volume of deals. In H1 2018, an 8% Hebbal ORR, Marathahalli ORR, Sarjapur Road supply over traditional office formats. Outer Ring Road (ORR) 141 YoY growth in total deal volume was ORR Number of Deals up hiring plans. noted, a trend likely to strengthen in the second half of 2018. Source: Knight Frank Research Source: Knight Frank Research
46 47 S CA S
RE A ASA RA
E AHA A
RESEARCH E A INDIA REAL ESTATE
R HE E 0.04 (0.40) A AR
73% SAHA ARA A AR OFFICE PBD NORTH A AHA
ASH A H A AR TRANSACTIONS H1 2018
HE A Transactions mn sq m (mn sq ft) YoY change
ESH A H R A A A AR A ARAHA A HA A AR
SH A A AR
RA A E RA A AS A A AR
0.09 A ES ARA (0.89) 0.07 (0.65) -32% 4%
AHA E A RA ASA ESH ARA RA A A AR A AR PBD EAST SBD C RA A A AR
0.09 (1.07) H E E
A A A AR E 77% H ASA RA
AR H R CBD AND OFF-CBD ARA HAHA CHA RA E A E 0.27 (2.73) 10% Buoyed by demand from A A ASHA AR A EESA AHA IT/ITeS and co-working operators, Outer Ring Road ORR RA A A A (ORR) as a micro market E ER SA E E A A A AR A A continued to outperform the A others accounting for 43%
A AR HSR of Bengaluru’s total leasing A
ARAS A volume. It is interesting to A
E ER A A E note that the average deal
H ASA RA size for all transactions concluded in ORR alone admeasures nearly 8,732 sq m (94,000 sq ft), indicative ARAS A 0.06 (0.63) A of large office formats 68% dominating occupier interest in this belt.
PBD SOUTH All maps are for representational purpose not to scale
48 49 S CA S
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R HE E A AR
SAHA ARA A AR OFFICE RENTAL A AHA
ASH A H A AR H1 2018
HE A Rental value range in H1 2018 in `/sq m/month (`/sq ft/month) 12 month change 6 month change
ESH A H R A A A AR A ARAHA A HA A AR
SH A A AR
RA A E RA A AS A A AR
A ES ARA 430-590 17% 650-1,020 3% (40–55) (60–95) 7% 0%
AHA E A RA ASA ESH ARA RA A A AR A AR PBD EAST SBD C RA A A AR
H E E 800-1,560 17% 17% (75–145) A A A AR E 7% H ASA RA YoY increase in weighted average rentals across the city.
AR H R CBD AND OFF-CBD ARA HAHA CHA RA E A E
700-970 15% (65–90) A A ASHA AR 0% Infusion of limited supply A EESA AHA in the past 12 months has
ORR RA A A A fostered rental growth
E ER SA E E across many micro A A A AR A A A markets leading to a 17% YoY upswing in weighted A AR HSR A average rentals at the city ARAS A A level in H1 2018. Acute E ER A A E shortage of quality spaces H ASA RA in CBD & Off CBD and ORR led to a 17% and 15% YoY rental growth in
ARAS A both these micro markets, A 380-490 0% respectively. (35–45) 0%
PBD SOUTH All maps are for representational purpose not to scale
50 51 RESEARCH INDIA REAL ESTATE
CHENNAI MARKET SNAPSHOT
PARAMETER H1 2018 CHANGE YOY
Launches (housing units) 6,520 8%
Sales (housing units) 8,580 -3%
Price (weighted average) `48,500/ sq m (`4,510/ sq ft) -4%
Unsold inventory (housing units) 22,579 -20%
Quarters to sell 5.7 -
Age of unsold inventory (in quarters) 14.5 -
Note- 1 square meter (sq m) = 10.764 square feet (sq ft) Source: Knight Frank Research
CHENNAI
• 2017 was a volatile year for the Chennai • The implementation of RERA and real estate market with the first half the launch of buyer-friendly schemes showing some promise of a recovery such as the Pradhan Mantri Awas while the second half broke new lows Yojana in 2017 have not yet boosted, in terms of sales and supply numbers. significantly. Factors such as the falling The current year has begun on a prices and the current bleak investment similar note with H1 2018 seeing the outlook for real estate, due to prevailing highest number of units launched in a high prices and ticket sizes, have had single period during the past 3 years a much greater impact on demand. and the persistent drop in sales was The unstable employment scenario, largely muted as well, compared to the especially in the IT sector, has also preceding period. hurt sentiments and encouraged the deferment of the homebuyer’s The 6,520 units launched • This significant ramp up in supply and purchase decision. RESIDENTIAL MARKET in H1 2018 were the shoring up of demand is heartening for the Chennai real estate market that highest number of has been bogged down by the ongoing % slowdown in the country. Additionally, 28 launches in the past 3 its own issues ranging from political decline in launches from H1 2011 uncertainty, building collapses (due to years flouting development norms) and the near catastrophic floods have beaten down the market over the past 3 years.
52 53 RESEARCH INDIA REAL ESTATE
• The developer community that had priced between `2.5 mn to `4 mn gone into a virtual stasis during the in locations such as Kolapakkam, preceding period due to the above Madhuravoyal, Kelambakkam and CHENNAI MARKET ACTIVITY factors made a comeback of sorts Siruseri toward the western and during H1 2018 and launched 6,520 southern periphery of the Chennai units during the period, a modest residential market. The South and West 10000 Launches Sales Wt. Avg. Price (RHS) 1000 8% growth year-on-year (YoY) but a Chennai micro markets accounted for massive 104% more units launched 88% of the total units absorbed during over the preceding period that was a H1 2018. new low for the market. • The Chennai residential market now 0 1 000 • The larger supply at lower prices also effectively holds approximately 6 saw buyer interest increase during the quarters of inventory compared to 0 00 period and stemmed the fall in sales the 7 quarters held previously, which from 14% YoY during H2 2017 to just is indicative of an improving state of 3% YoY during the current period. the market. The age of this unsold 000 0 17 inventory has also held steady over • While both supply and sales for the same period at approximately 14 the Chennai residential market saw quarters as the older inventory that increased activity, they still represent a 0 21 is closer to possession finds many 77% and 44% drop, respectively, from 0000 more buyers compared to the recently 7000 peak levels during H1 2011. launched units. • While the number of units launched • Massive structural changes ranging increased, developers continued to from the demonetisation drive to the focus on offloading existing inventories GST Act and RERA have irrevocably 6000 during H1 2018 by re-launching old 70 altered the fabric of the market. products at lower prices and smaller 4 00 Homebuyer interest has been observed configurations, wherever possible, to to rise with falling prices and lower entice the buyer by bringing down the ticket sizes. The pace at which ticket size. This has resulted in a 4% developers align themselves to the 000 YoY reduction in the average asking of Units No. new regulatory norms and launch new ` / sq m prices in the Chennai residential real products in the right ticket sizes that estate market and a further 10–15% appeal to the homebuyer’s interests, reduction on the negotiating table for 4 000 will determine the trajectory of the the aggressive buyer. market going forward. 4000 • Casagrand was the most active developer by far and accounted for nearly a third of the units launched and nearly all the 363 units launched in the 8 782 Central Chennai micro market, during 000 8 70 4 00 H1 2018. The larger supply 8 7 • Further to the elevated sales and at lower prices also supply numbers during the period, many developers reported a 000 stemmed the fall in progressive increase in enquiries during the second quarter of the sales from 14% YoY year. Home loan approvals as well, 4 000 during H2 2017 to just have been steady if not increasing, according to major retail banks in the 1000 3% YoY during the city, signifying a latent interest from the homebuyer who has not yet committed current period. to purchase.
• Buying interest was more inclined 0 47 00 toward properties that are closer to H1 01 H 01 H1 016 H 016 H1 017 H 017 H1 01 completion and significantly more so in Source: Knight Frank Research the more affordably-priced properties
54 55 A AH A E
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A A
S A S A R RESIDENTIAL SH C 812 488% LAUNCHES AND SALES H1 2018 C 492 29% S Launches (housing units) Sales (housing units) % Change (YOY) C NORTH CHENNAI A
SH A R R
SH S H R A R 363 177% 1,979 H1 2018 13% H1 2018A A 578 -26% 1,990 A 10% The South and West H CENTRAL CHENNAI S S WEST CHENNAI Chennai micro markets E accounted for 88% of S the total units absorbed
A during H1 2018. % S 10 YoY rise in sales during H1 2018 SR ER R S S H S A S
S A A S 3,369 -16% H1 2018 A S 5,525 E -6% S S A CH RA MICRO-MARKET CLASSIFICATION SOUTH CHENNAI
H S E MICRO MARKET LOCATIONS
A A Central Chennai T. Nagar, Alandur, Nungambakkam, Kodambakkam, Kilpauk A H S West Chennai Porur, Ambattur, Mogappair, Iyyappanthangal, Sriperumbudur C A A South Chennai Perumbakkam, Chrompet, Sholinganallur, Guduvancheri, Kelambakkam
H North Chennai Tondiarpet, Kolathur, Madhavaram, Perambur A S E Source: Knight Frank Research A CHE A A S All maps are for representational purpose not to scale
56 57 A AHA A RA
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A A
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8.6 1,279 UNSOLD INVENTORY H1 2018 C (-6%) 6.8 S Unsold inventory (YoY growth) QTS (in quarters) Age of inventory (in quarters) C NORTH CHENNAI A
SH A R R
SH S H R A R 3.4 1,201 6.3 (-21%) 6,614 A A 13.8 (-22%) A 15.4 H CENTRAL CHENNAI S S WEST CHENNAI Unsold inventory E level continues to S drop despite growth
A in launches as sales % S 20 outstrip supply during YoY drop in unsold inventory level SR ER R S during H1 2018 S H S H1 2018 A S
S A A S 13,485 5.6 A (-20%) S 14.9 E S S A CH RA SOUTH CHENNAI
H S E
A A A H S C A A
H A S E A CHE A A S All maps are for representational purpose not to scale
58 59 A AHA A RA
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A A
S A S A R RESIDENTIAL PRICING SH C
H1 2018 C KOLATHUR 44,000–58,100 S Price range in H1 2018 in `/sq m Price range in H1 2018 in (`/sq ft) 12 month change (YOY) 6 month change (YOY) (4,100–5,400) [-3%] [-2%] C NORTH CHENNAI A
SH A PERAMBUR R R 61,400–70,000 (5,700–6,500) SH [-4%] [-3%] S H R A R ANNA NAGAR 110,800–125,000 KILPAUK (10,200–11,600) PORURA A 151,000–167,000 [-3%] [-2%] 54,900–61,400 (14,000–15,500) A (5,100–5,700) [-2%] [-1%] H [-4%] [-2%] CENTRAL CHENNAI S S WEST CHENNAI E MOGAPPAIR Buying interest was 64,600–72,100 S (6,000–6,700) [-4%] [-1%] more inclined toward
A properties that are S
closer to completion and SR ER R S S H S significantly more so A S in the more affordably- PERUMBAKKAM 43,000–48,400 % S 4 priced properties priced A A (4,000–4,500) S YoY decline in prices [-5%] [-2%] during H1 2018 between `2.5 mn
A S to `4 mn E S S A CH RA SOUTH CHENNAI
H S E KELAMBAKKAM 34,400–42,000 A A (3,200–3,900) [-4%] [-2%] A H S C A A
H A S E A CHE A A S All maps are for representational purpose not to scale
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CHENNAI OFFICE MARKET VACANCY SECTOR-WISE SPLIT OF TRANSACTIONS
OFFICE MARKET 22.5% 0 19.3% 16.7% 1 12.4% CHENNAI MARKET SNAPSHOT H 11.0% 11.0%
10 10.1% PARAMETER H1 2018 CHANGE YOY
New completions mn sq m (mn sq ft) 0.11 (1.2) 10%
Transactions mn sq m (mn sq ft) 0.17 (1.8) -8% 0 H1 01 H 01 H1 016 H 016 H1 017 H 017 H1 01 Weighted average rental in 619 (57.5) 4.5% Source: Knight Frank Research `/sq m/month (`/sq ft/month) 11% • The IT/ITeS sector that has been the to more than half of the 0.04 mn sq m Stock mn sq m (mn sq ft) 6.61 (71.1) - largest consumer of office space in (0.39 mn sq ft) space transacted by this H Vacancy levels remain steady in H1 the city, is currently undergoing a sector. 2018 compared to H1 2017 Vacancy (%) 11% - slowdown in growth and the effects are • The 2 suburban business districts apparent in its consistently reducing (SBDs) accounted for 63% of the Note- 1 square meter (sq m) = 10.764 square feet (sq ft) share of the total transactions pie. Source: Knight Frank Research transaction activity during H1 2018 • H1 2018 saw the IT/ITeS sector take as most of the stock that has come • The Chennai office space market that has been reeling under an acute supply crunch up only 0.04 mn sq m (0.47 mn sq ft), online since H2 2017 has been in these H1 H1 over the past 3 years finally saw some respite with 0.11 mn sq m (1.2 mn sq ft) coming which translates to 27% of the total business districts. This firmly reiterates Industry online during H1 2018. space transacted during H1 2018, a the case for the SBDs being the most 2017 2018 significant and steady drop from the sought after office locations despite • The fact that the city saw just 0.42 mn sq m (4.5 mn sq ft) of supply since H1 2015, BFSI 16% 23% 43% during H2 2016. their comparatively higher priced compared to the 1.4 mn sq m (14.6 mn sq ft) of transaction volume, had pushed down supply. vacancy levels from 22.5% in H1 2015 to 10.2% H2 2017. The 0.11 mn sq m (1.2 mn • However, the BFSI and Other Services IT/ITES 37% 27% sq ft) delivered during H1 2018 are the highest in any half-year period since 2015 and Sector have consistently taken up an • The peripheral business district (PBD) edged the vacancy curve up marginally to 11%. increasing amount of space over the OMR and Grand Southern Trunk Road Manufacturing 23% 17% past 18 months and vastly increased (GST) business district that cornered • The transaction volumes during H1 2018 were subdued during the period and fell their share in total transactions during the largest share of the transacted Other Services 24% 34% almost 9% year-on-year (YoY) compared to the healthy 10% growth in supply. an analysis period, filling up the volume till H1 2017 by virtue of having Note: BFSI includes BFSI support services vacuum left by the IT/ITeS sector, to an a substantially larger and lower priced CHENNAI OFFICE MARKET ACTIVITY extent. stock of vacant office space, only attracted 24% of the transacted volume H1 2018 saw the IT/ • The Other Services Sector accounted AVERAGE DEAL SIZE 0.40 during H1 2018. New Completions Transactions for almost 0.06 mn sq m (0.6 mn sq AND NUMBER OF DEALS ITeS sector take up only ft) of the total office space transacted • The sustained decline in vacancy levels 0. during H1 2018, thanks largely to the along with a steady interest by lessors 2,044 (22,004) 0.04 mn sq m (0.47 mn consulting major Accenture’s massive looking to consolidate or expand their 0. 0 Average Deal Size in sq m (sq ft) sq ft), which translates lease of 0.02 mn sq m (0.18 mn sq real estate footprint within the city, 0. ft) lease in Gateway office parks at has kept rental growth strong at 4.5% H1 2017 to 27% of the total space Perungulathur, which was also the YoY in H1 2018. Rental growth was 87 0. 0 largest lease signed during the period. healthy across micro markets, and Number of Deals SBD locations such as Perungudi, transacted during H1 0.1 • Notwithstanding the comparative mn sq m Guindy and Taramani continue to scarcity of large format office spaces witness above-average rental growth, 2018, a significant and 0.10 required by the back offices of 1,891 (20,355) particularly as vacancy levels are still Average Deal Size in sq m (sq ft) BFSI sector companies, the current steady drop from the 0.0 as low as 6% in the SBD and 11% analysis period saw its share increase H1 2018 in the SBD OMR. Weighted average substantially due to three large leases 43% during H2 2016 0.00 rentals now stand at `619/sq m/month H1 01 H 01 H1 016 H 016 H1 017 H 017 H1 01 being taken up by D&B TransUnion, 86 (`57.5/sq ft/month) for the Chennai Number of Deals Note- 1 square meter (sq m) = 10.764 square feet (sq ft) Barclays Bank and Citibank amounting Source: Knight Frank Research office space market.
62 63 A AH A E
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A A
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TRANSACTIONS H1 2018 C S Transactions mn sq m (mn sq ft) YoY change C A
SH A R R
SH S H 0.002 (0.02) R A R 0.02 (0.22) -83% -26% A A A The Chennai office space PBD – AMBATTUR H CBD AND OFF-CBD S S market that has been
E 0.06 (0.67) reeling under an acute S 61% supply crunch over the
A past 3 years finally saw S SBD some respite with 0.11 SR ER R S (0.42) % S 0.04 mn sq m (1.2 mn sq ft) H 10 S A YoY growth in office space S -6% coming online during H1 supply during H1 2018 2018 S A A S SBD - OMR
A S E S S A CH RA
H S E 0.04 (0.42)
-33% A A A H S C PBD-OMR & GST A A
H A S E A CHE A A S All maps are for representational purpose not to scale
64 65 A AHA A RA
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A A
S A S A R OFFICE RENTAL SH C
Rental value range in H1 2018 in `/sq m/month (`/sq ft/month) 12 month change 6 month change C S
C A
SH A R R
SH S H R A R The sustained decline 3% 301–377 (28–35) 4% 700–1,023 in vacancy levels along 1% (65–95) A A 1% A with a steady interest PBD – AMBATTUR H CBD AND OFF-CBD by lessors looking to S S
E consolidate or expand 5% 538–818 S their real estate (50–76) 3% % footprint within the city, 4.5 A YoY increase in rental growth S SBD has kept rental growth
SR ER R S strong S H S 6% A 560–969 S (52–90) 4%
S A A S SBD - OMR
A S E S S A CH RA
H S E 280–430 5%
(26–40) A A 3% A H S C PBD-OMR & GST A A
H A S E A CHE A A S
66 67 A AHA A RA
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HYDERABAD MARKET SNAPSHOT
PARAMETER H1 2018 CHANGE YOY
Launches (housing units) 3,706 44%
Sales (housing units) 8,313 5%
Price (weighted average) `43,185/ sq m (`4,012/sq ft) 8%
Unsold inventory (housing units) 12,749.00 -44%
Quarters to sell 3.4
Age of unsold inventory (in quarters) 18.4
Note- 1 square meter (sq m) = 10.764 square feet (sq ft) Source: Knight Frank Research
17% HYDERABAD Drop in sales in H1 2018, from the peak levels in H1 2017
• The worst seems to be behind Tribunal and its Authority. Hyderabad, especially with regards • What it did for the developers however, new launches, of residential units, is that it did give them a window to in the city. The inability of the state start work on the projects, which administration to ensure a smooth had all the necessary approvals, implementation of its RERA rules put except the RERA registration. “We the brakes on new launches in the have gone ahead and started work city. It is worth noting that H1 2017 on the projects, for which we had witnessed the second lowest number the necessary approvals. We have While the state had of units launched in the city since 2010. submitted the necessary documents notified its RERA rules in • H1 2018, on the other hand, started on at the office of the Appellate Authority a bright note for the real estate sector for the said project. We will however, the fag end of July 2017, in the state. While the state had notified start marketing the project once we RESIDENTIAL MARKET its RERA rules in the fag end of July get the RERA registration for the same, the necessary body to 2017, the necessary body to implement which we hope, will happen very soon,” implement those rules those rules was not appointed till stated a developer. The RERA website % the end of 2017. The absence of the for Telangana is expected to be up and 69 was not appointed till the necessary body to implement RERA running from 1 August 2018. rules in the state put the brakes on new Drop in new launches in • As a result, new launches in H1 2018 H1 2018, from the peak levels launches in the city, almost bringing it end of 2017. witnessed a major spike compared during H1 2011 to a halt. In January 2018, however, the to the same period last year. New state appointed the RERA Appellate launches in H1 2018 were 44% higher
68 69 RESEARCH INDIA REAL ESTATE
than in H1 2017. West Hyderabad • Sales in H1 2018 were 5% up reduced in H1 2018 compared to continued to be in the thick of action compared to H1 2017. During our H1 2017. In H1 2017, the QTS was during H1 2018. Of the total launches, field surveys, it was apparent that 6 quarters and now it stands at 3.4 HYDERABAD MARKET ACTIVITY in H1 2018, 71% happened in West there was a clear preference, among quarters. Hyderabad. Some of the micro markets homebuyers, for ready-to-move-in • The markets of the north and south are which were in the thick of action, during units or those housing units where 000 Launches Sales Wt. Avg. Price (RHS) 44000 however, under pressure as their QTS H1 2018, are Nallagandla, Narsingi, the possession was within the next and age of inventory is very high. The Kokapet and Serilingampally. Ameerpet 6 months. Further, housing units by age of inventory of the west is also high in Central Hyderabad also witnessed a reputed developers too were being 18 but it has a healthy sales velocity. The couple of launches. preferred by the homebuyers. high sales velocity could be attributed • While new launches in H1 2018, is • Despite the setback to new launches to the fact that it is the preferred market 000 4 7 a major improvement over H1 2017, in 2017, sales have largely been steady in the city. A high sales velocity in the the number of units launched is still in Hyderabad. Post bifurcation of the east could be an indication of a certain below 4,000 units. It is worth noting state, sales in Hyderabad, have for section of homebuyers looking for that Hyderabad, post bifurcation of the first time crossed 8,000 units. H1 more affordable options. the state, used to consistently witness 2018 witnessed sales of 8,313 units, • Due to a clear mismatch between 7000 launch of more than 5,000 units every 6 which is 5% more than H1 2017. The demand and supply of housing units, 417 0 months. steady sales of residential units, is a in the city, prices have started to firm direct result of the good performance • A noticeable trend with regards new up. In H1 2018, prices moved up by of the commercial space in the city. “It launches is the fact that of the total 8% compared to H1 2017. Ready-to- normally takes about 2 years for the launches close to 47% of the units move in homes continue to command a 6000 results of the good performance of launched were in the price bracket of premium and so do housing units at a the commercial space to show in the `7.5–10 mn. Further, during H1 2018 good location from reputed developers. 1 12 406 residential property market,” opined a none of the housing units launched
developer during one of the meetings. • The mismatch created in demand and were priced below `2.5 mn. A few units
supply, because of new launches, is catering largely to the luxury segment • The western part of the city continued further expected to push up prices in 000 were also launched in the western part to hold sway even with regards sales Hyderabad in the coming days. of the city. 3% of the units launched of housing units in the city. Of the total were priced between `20–40 mn. sales in H1 2018, 69% happened in 00 No. of Units No. western Hyderabad. West Hyderabad’s 8
proximity to office locations like 8 8 8 Financial District, Madhapur, 4000 Gachibowli and Kondapur coupled ` / sq m with good infrastructure have been the A noticeable trend with major pull factors for homebuyers. 7 • The share of sales of East and North 000 7 7 7 regards new launches is Hyderabad, which are the more affordable markets, has remained the fact that of the total steady in H1 2018 compared to H1 2017. The share of South Hyderabad 7 0 launches close to 47% has however marginally increased to 8% due to the availability of housing 000 of the units launched units at attractive price points.
were in the price bracket • The quarters to sell (QTS) of unsold inventory is the number of quarters of ` 7.5–10 mn. Further, required to exhaust the existing 61 unsold inventory in the market. The 1000 none of the housing existing unsold inventory is divided units launched were by the average sales velocity of the 8 preceding quarters in order to arrive priced below ` 2.5 mn. at the QTS number for that particular quarter. A lower QTS indicates a 0 000 healthier market. 44% H1 01 H 01 H1 016 H 016 H1 017 H 017 H1 01 • With drastic reduction in launches Increase in new launches in H1 Source: Knight Frank Research and steady sales, the QTS has further 2018 compared to H1 2017
70 71 RESEARCH INDIA REAL ESTATE
110 -61% H1 2018 827 RESIDENTIAL 5% LAUNCHES AND SALES HMR NORTH
Launches (housing units) Sales (housing units) % Change (YOY)
S 2,628 27% H1 2018 397 5,766 540% H1 2018 6% 629 2% H C HMR WEST HMR CENTRAL West Hyderabad’s
A proximity to office locations
H 150 138% like Financial District, H1 2018
466 Madhapur, Gachibowli and H -5% Kondapur coupled with HMR EAST good infrastructure have been the major pull factors 69% Share of West Hyderbad in the for homebuyers. overall sales, in H1 2018
421 325% H1 2018 625 11%
HMR SOUTH R MICRO-MARKET LOCATIONS
HMR – CENTRAL Begumpet, Banjara Hills, Jubilee Hills, Panjagutta, Somajiguda
HMR – WEST Kukatpally, Madhapur, Kondapur, Gachibowli, Raidurgam, Kokapet
HMR – EAST Uppal, Malkajgiri, LB Nagar
HMR – NORTH Kompally, Medchal, Alwal, Quthbullanpur
S HMR-SOUTH Rajendra Nagar, Shamshabad
Source: Knight Frank Research
All maps are for representational purpose not to scale
72 73 RESEARCH INDIA REAL ESTATE
2,099 5.1 (-48%) 22.1 RESIDENTIAL UNSOLD INVENTORY H1 2018 HMR NORTH
Unsold inventory (YoY growth) QTS (in quarters) Age of inventory (in quarters)
S 7,397 2.9 (-44%) 2.8 16.9 788 The markets of the (-44%) 14.9 north and south are HMR WEST H C under pressure as HMR CENTRAL their QTS and age of
A inventory is very high. H 3.1 762 (-36%) The age of inventory of 20.9 H the west is also high
HMR EAST but it has a healthy sales velocity.
1,704 6.8 (-43%) 21.2
HMR SOUTH R
S 44% Drop in unsold inventory in H1 All maps are for representational purpose not to scale 2018 compared to H1 2017
74 75 RESEARCH INDIA REAL ESTATE
KOMPALLY 31,216-32,744 (2,900-3,042) [4%] [3%] SAINIKPURI 29,063-30,828 (2,700-2,864) [3%] [3%] RESIDENTIAL PRICING H1 2018 HMR NORTH
Price range in H1 2018 in `/sq m Price range in H1 2018 in (`/sq ft)
12 month change (YOY) 6 month change (YOY)
S
JUBILEE HILLS 118189-118770 (10,980-11,034) [1%] [0%] H C HMR WEST HMR CENTRAL
MANIKONDA A 46,285-48,266 (4,300-4,484) BANJARAH HILLS NACHARAM [10%] [5%] 108,716-11,2807 37,136-40204 (10,100-10,480) (3,450-3,735) [2%] [0%] H [8%] [6%] Due to a clear HMR EAST KOKAPET mismatch between 44,132-49,977 (4,100-4,643) [11%] [4%] demand and supply of L.B.NAGAR housing units, in the 39,105-39,934 (3540-3710) [5%] [3%] city, prices have started to firm up.
HMR SOUTH R
RAJENDRA NAGAR 51,667-53,820 (4,800-5,000) SHAMSHABAD [3%] [3%] 29,063-29623 (2,700-2,752) [1%] [3%]
S 08% Increase in prices in H1 2018
All maps are for representational purpose not to scale compared to H1 2017
76 77 RESEARCH INDIA REAL ESTATE
HYDERABAD OFFICE MARKET ACTIVITY
4.0 New Completions Transactions OFFICE MARKET .
.0
.
.0 mn sq m 1.
1.0
0.
0.0 14% H1 01 H 01 H1 016 H 016 H1 017 H 017 H1 01 15% Drop in new completions in H1 Note- 1 square meter (sq m) = 10.764 square feet (sq ft) Increase in transacted space in H1 2018 compared to H1 2017 Source: Knight Frank Research 2017 compared to H1 2018
HYDERABAD MARKET SNAPSHOT 14% less than the office space that was at 23%. Even within this particular added to the stock, in H1 2017. category, 25% space was taken up by companies in the co-working space. PARAMETER H1 2018 CHANGE YOY • There has been a marginal increase in vacancy, in H1 2018 compared to • After the Other Services sector, the New completions mn sq m (mn sq ft) 0.16 (1.7) -14% H1 2017 but it still remains in the low manufacturing sector has been the single digits. Vacancy levels in the city other major gainer in H1 2018. Its share Transactions mn sq m (mn sq ft) 0.25 (2.7) 15% have moved up marginally from 5.16% in the total transacted office space, in in H1 2017 to 6.76% in the H1 2018. In the city, stood at 15%, compared to 5% Weighted average rental in 570 (53) 8% fact low vacancy is one of the biggest in H1 2017. `/sq m/month (`/sq ft/month) challenges for Hyderabad as occupier • The share of Banking, Financial interest continues to be on the rise and Stock mn sq m (mn sq ft) 5.78 (62.26) 5% services and Insurance (BFSI) there is not enough supply to meet the companies has fallen in H1 2018 to 7% The fact that the city same. Vacancy levels in markets like Vacancy (%) 6.76 compared to 21% in H1 2017. has witnessed healthy Madhapur, HITECH City, Gachibowli and Nanakramguda area as low as • The average deal size in H1 2018 was Note- 1 square meter (sq m) = 10.764 square feet (sq ft) Companies in the other transaction of office space Source: Knight Frank Research 2–4%. reported to be 2,079 sq m (22,377 sq ft), which is 20% higher than in H1 • The Hyderabad office market witnessed a 15% uptick in office transaction in H1 2018 • Another visible trend in Hyderabad is service sector picked up 2017. in the first half of the year, compared to the same period in H1 2017. The city, in H1 2018, witnessed office space that companies have now started to 43% of the office space chances are very high that transaction of 0.25 mn sq m (2.69 mn sq ft) compared to H1 2017 when 0.22 mn sq m develop their own campus. • H1 2018 witnessed 120 deals, which is (2.33 mn sq ft) of office space was transacted in Hyderabad. marginally lower than H1 2017, which • The IT/ITeS sector has traditionally had recorded 126 deals. The marginal transacted in H1 2018, 2018 may turn out to be • The amount of office space transacted in H1 2018 is only 2% less compared to the dominated the office transaction pie fall in the number of deals and the rise record office space transaction witnessed in the city in the first half of the year. in Hyderabad. However, in H1 2018, which is significantly higher in average deal size can be attributed another good year for the Hyderabad witnessed the highest office space transaction in the first half of the year in the share of the IT/ITeS sector has to companies like Amazon, S&P Global 2016 when 0.26 mn sq m (2.75 mn sq ft) of office space was transacted in the city. The fallen to 36%. This is largely due to than their share in H1 office market, as office and ShoreIT taking up large amount of fact that the city has witnessed healthy transaction of office space in the first half of the unavailability of good quality office space in the city. 2017. Within this particular space transactions typically the year, chances are very high that 2018 may turn out to be another good year for the space with large floorplates, which are office market, as office space transactions typically gather further steam in the second preferred by the companies in the IT/ • Even though the share of the suburban category 25% space was gather further steam in the half of the year. Considering that Hyderabad is slowly turning out to be one of the ITeS sector. In H1 2018, the largest business district (SBD), in the total preferred cities, in the country, by occupiers, the same trend in all likelihood is expected amount of space was taken up by office space transacted, in the city, has taken by companies in the second half of the year. to be maintained in the second half of 2018. companies from the Other Services fallen by 19% compared to H1 2017, it sector. Companies in this sector picked continues to garner the largest share • As has been the case in the city, in the last couple of years, even in H1 2018 new co-working space. up 43% of the office space transacted of office space in the city, even though completions were unable to keep pace with the demand for office space. During H1 in H1 2018, which is significantly higher by a whisker. In H1 2018, SBD just 2018, 0.16 mn sq m (1.73 mn sq ft) of office supply made its way into the market. This is than in H1 2017, when their share stood about managed to beat the peripheral
78 79 RESEARCH INDIA REAL ESTATE
HYDERABAD OFFICE MARKET VACANCY SECTOR-WISE SPLIT OF TRANSACTIONS
10
8.2% 7.6% 6.8% 6.5% 6 5.9% H 5.2% 5.1% 4
0 H1 01 H 01 H1 016 H 016 H1 017 H 017 H1 01
Source: Knight Frank Research 43% H Share of PBD West in the total business district (PBD) West as the • PBD East, which typically accounts transacted office space in H1 2018 most preferred business district in for a miniscule share of the transacted Hyderabad. SBD accounted for 43.36% office space, in the city, did not see of the transacted office space in the any transactions in H1 2018. In H1 city while PBD’s share was 42.71%. 2017, it accounted for only 3% of the transacted space of the city and did • It must be noted that till the very recent not see transactions in H2 2017. It is past SBD used to account for the lion’s another indication that the western part H1 H1 share of transacted office space in the Industry of the city continues to be the preferred 2017 2018 city. For example, in the H1 2017, the location for occupiers. share of SBD was 62% and in H2 2017 BFSI 21% 7% the figure stood at 71%. The share of • Lack of vacant office stock coupled PDB West on the other remained in with steady demand has pushed IT/ITES 51% 36% the mid-20s. In H1 2017, the share of the weighted average rentals in the PBD West was 23% and in H2 2017, Hyderabad office market to `570/sq m/ Manufacturing 5% 15% its share stood at 24%. As mentioned month ( `53 per sq ft per month) at the earlier, in H1 2018, its share increased end of H1 2018, a growth of 4% year- Other Services 23% 43% astronomically to 42.71%. The share on-year (YoY). Note: BFSI includes BFSI support services of PBD West increasing by leaps and • H1 2018 witnessed rentals move up bounds can be attributed to availability across micro markets compared to H1 of quality office space at a competitive The share of PBD West 2017. The upward movement in rentals AVERAGE DEAL SIZE cost. This trend is also an indication can be gauged from the fact that BUSINESS DISTRICT CLASSIFICATION AND NUMBER OF DEALS of drying up of quality office space in increasing by leaps rentals in Madhapur in SBD witnessed SBD. few transactions at `700/sq m/month BUSINESS DISTRICT MICROMARKETS 1,720 (18,516) and bounds can be • Within PBD West, Gachibowli emerged (`65 per sq ft per month). Rentals in Average Deal Size in sq m (sq ft) attributed to availability as the most preferred micro market Gachibowli, in PBD West, too reached Banjara Hills, Jubilee Hills, Begumpet, Ameerpet, accounting for 60% of the transacted `700/sq m/month (`65 per sq ft per CBD & off CBD Somajiguda, Himayat Nagar, Raj Bhavan Road, H1 2017 of quality office space at space in the business district. month). Elsewhere, in Nanakramguda Punjagutta 126 there was a transaction at `700/sq m/ • Going forward it is expected that office Number of Deals month (`65 per sq ft per month). Madhapur, Manikonda, Kukatpally, Raidurg, a competitive cost. This space will further expand in the west, SBD Kothaguda trend is also an indication thereby increasing the attractiveness of micro markets like Kokapet, Narsingi 2,079 (22,377) Gachibowli, Kokapet, Nanakramguda, Average Deal Size in sq m (sq ft) and Puppalguda. In fact, companies PBD West of drying up of quality Nanakramguda, Serilingampally, have already started moving their H1 2018 office space in SBD. offices to Kokapet. Of the total PBD East Uppal, Pocharam transacted office space in H1 2018, in 120 Number of Deals PBD West, 29% happened in Kokapet. Source: Knight Frank Research
80 81 RESEARCH INDIA REAL ESTATE
OFFICE TRANSACTIONS H1 2018
Transactions mn sq m (mn sq ft) YoY change 0.10 (1.2)
19%
S
SBD - (-) 0.10 (1.1) 100%
H C 115% PBD EAST 0.03 (0.37) PBD WEST A 29% H
H CBD AND OFF-CBD % 60 Share of Gachibowli in the total transacted office space in PBD West, in H1 2018
R Within PBD West, Gachibowli emerged as the most preferred micro market accounting for the lions share of transacted
S space in the business district.
All maps are for representational purpose not to scale
82 83 RESEARCH INDIA REAL ESTATE
OFFICE RENTAL H1 2018
Rental value range in H1 2018 in `/sq m/month (`/sq ft/month) 12 month change 6 month change
9% 560-667 (52-62) 3%
S
SBD
3% 269-323 8% (25–30) 517-570 0% (48–53) H C 4% PBD EAST 7% PBD WEST A 431-506 (40–47) H 4%
% H CBD AND OFF-CBD 08 Increase in rentals in H1 2018 compared to H1 2017
H1 2018 witnessed rentals move up across micro markets compared to H1 2017. The upward
R movement in rentals can be gauged from the fact that rentals in Madhapur in SBD witnessed few transactions at ` 700/sq S m/month (` 65 per sq ft per month).
All maps are for representational purpose not to scale
84 85 RESEARCH INDIA REAL ESTATE
KOLKATA MARKET SNAPSHOT
PARAMETER H1 2018 CHANGE YOY
Launches (housing units) 6,393 -35%
Sales (housing units) 6,591 -19%
Price (weighted average) `35,446/sq m (`3,293/sq ft) -8%
Unsold inventory (housing units) 39,054 0%
Quarters to sell 12.2 -
Age of unsold inventory (in quarters) 12.6 -
Note- 1 square meter (sq m) = 10.764 square feet (sq ft) Source: Knight Frank Research
42% KOLKATA Decline in sales in H1 2018 over levels during H1 2015
• Kolkata’s office leasing segment • In the absence of a well developed has remained subdued with the city services sector which attracts garnering less than 0.09 mn sq m (1 mn occupiers to core and non-core micro- sq ft) average transactions annually. markets, there are no drivers to push Even after one year Despite Kolkata Metropolitan Region residential sector’s growth and give of the Goods and being India’s third most populous impetus to sales and launches. metropolitan area after Delhi and • Even after one year of the Goods and Mumbai, the occupier interest in Services Tax (GST) Services Tax (GST) implementation, Kolkata has not witnessed any spike Kolkata’s residential market has not or revival in recent years. Kolkata implementation, Kolkata’s resurrected as end-user sentiment Metropolitan Region’s population towards residential property purchase residential market has is 14.7 million, which is nearly 69% is at an all-time low. Due to buyers’ more than Hyderabad Metropolitan uncertainty about the extent of input not resurrected as end- Area. Despite a huge population pool, tax credit, which will eventually be the office market in the city lags far RESIDENTIAL MARKET passed on to them, residential sales user sentiment towards behind Hyderabad where average have remained subdued. residential property absorption trends between 2014-2017 % indicate 0.48 mn sq m (5.19 mn sq • During H1 2018, residential sales noted 47 ft) leasing volume annually. Even for a 19% year-on-year (YoY) decline and purchase is at an all-time Decline in launches in H1 2018 Pune Metropolitan Region, with half stood at 6,591 units. Homebuyers from levels during H1 2015 low. the population of Kolkata, the average have largely stayed away from annual leasing recorded during this under-construction properties in the period is 0.43 mn sq m (4.57 mn sq ft). expectation of a price correction in the
86 87 RESEARCH INDIA REAL ESTATE
coming months. From its peak in H1 Kolkata. In H1 2018, unsold inventory nowhere close to the levels witnessed 2015, sales have plummeted by 42% remained stagnant over H1 2017. The in H1 2015. due to market slowdown aggravated in fact that unsold inventory levels have KOLKATA MARKET ACTIVITY • During H1 2018, South Kolkata the wake of multiple regulatory reforms not shrunk even marginally in the past accounted for 27% share in new starting from demonetisation. year signal the stress in the market and launches. Though South Kolkata have only led to an increase in the age 14,000 Launches Sales Wt. Avg. Price (RHS) ,000 • Of the total sales volume, South accounted for 32% share of new of inventory to 12.6 quarters at the end Kolkata accounted for 33% share as launches in H1 2017, the number of H1 2018. far off peripherals such as Baruipur, of units launched in H1 2018 have Sonarpur, Garia and Narendrapur have • The unsold stock lying in the market declined by 45% YoY. Joka in South witnessed good sales traction due to has also impacted the quarters to sell Kolkata has particularly emerged as 1 ,600 8 81 the affordable price tag of the projects. (QTS), which has inched up from 10.6 the flavour of the season for developers 8 , 00 Affordable housing in these belts has quarters in H1 2017 to 12.2 quarters in who are exploring future development witnessed a shot in the arm with the H1 2018. The current age of inventory possibilities in this locality due to 8 27 nationwide implementation of Pradhan and QTS present an alarming picture, the upcoming metro connectivity via Mantri Awas Yojana (PMAY). as the prolonged project lifecycle now Joka-Esplanade link. Many leading 11, 00 stands at more than 6 years. Not a developers are aggressively expanding
• Bucking the trend in H1 2017, when 8 0 0 healthy scenario, as other cities have footprint in this location to take Rajarhat accounted for 32% of total ,000 started showing signs of revival in the advantage of low real estate prices sales volume, the share of this micro wake of a structural shift brought about before the Metro arrives. market reduced to 23% of total sales in by the implementation of the Real , 00 H1 2018. Rajarhat has lost its top slot • Compared to H1 2017, Rajarhat Estate (Regulation and Development) in Kolkata’s residential sales volume witnessed a humungous 93% annual Act, 2016 (RERA). for the second time in the past 15 drop in new launches in H1 2018, which months with a substantial 38% drop in • South Kolkata accounted for the can be attributed to availability of large 7, 00 7 20 the past one year itself. Despite being maximum share of unsold inventory unsold inventory and slow progress ,400 the most sought after micro market in with 36% unsold units. Due to infusion on metro construction for the Airport- Kolkata and a planned township, the of many large-sized township projects, Garia link that passes through Rajarhat. overall slump in the market is creeping the unsold units in this micro market • In June 2018, the West Bengal state into Rajarhat with sales slowing down surpass many others. With a 25% share government announced the enactment despite strong fundamentals. in unsold units, Rajarhat still presents 7,000 7,000 of the Housing Industry Regulatory of Units No. a better picture as sales momentum • Low sales volume has only worsened Authority in the state. However, has slowed down but the micro market the unsold inventory situation in the establishment of the regulatory remains attractive due to its physical
authority, appointment of personnel ` / sq m and social infrastructure and planned and physical kick-start of operations development. ,600 of the newly created body are yet to 6, 00 • Low sales velocity and piling unsold take place. The definition of ‘’force During H1 2018, inventory has forced developers to majeure’’ and ‘’garage’’ under HIRA residential sales noted a correct prices to bring the buyers back have irked many consumer groups to the table. The weighted average who view HIRA, even though it has 4, 00 19% year-on-year (YoY) residential prices have undergone a not been implemented in totality, as correction of 8% YoY, as discounts on a major departure from the Central 6,000 decline and stood at box prices are prevalent in the market. RERA. Clarity on HIRA implementation Most developers are passing on a price is eagerly awaited. If expedited, it can 6,591 units. Homebuyers benefit of 7–8% on base selling prices act as a catalyst to revitalise Kolkata’s , 00 and have made their products cheaper residential market and bring the
have largely stayed for customers. homebuyers back.
away from under- • Downturn in the residential sales , 00 cycle has forced many developers 1,400 construction properties to curtail new launches. In H1 2018, 6,393 units were launched in Kolkata, in the expectation of a which is a significant 35% YoY drop price correction in the over H1 2017. The impending Housing Industry Regulatory Authority’s (HIRA) 0 ,000 coming months. implementation announcement H1 01 H 01 H1 016 H 016 H1 017 H 017 H1 01 momentarily improved new launches Source: Knight Frank Research in Q2 2018 over Q1 2018, but they are
88 89
RESEARCH INDIA REAL ESTATE
S RESIDENTIAL 895 -63% 2,557 H1 2018 LAUNCHES AND SALES - 1,186 H1 2018 -25% R 659 Launches (housing units) Sales (housing units) % Change (YOY) 32% NORTH
WEST
256 -93% H1 2018 0 1,516 0% -38% Bucking the trend in H1 H1 2018 66 2017, when Rajarhat -29% S RAJARHAT accounted for 32% of total CENTRAL sales volume, the share of this micro market reduced 35% to 23% of total sales in H1 YoY decline in launches in H1 2018 in Kolkata 2018.
959 40% H1 2018 1,726 989 -45% -3% H1 2018 2,175 EAST -12%
MICRO-MARKET LOCATIONS SOUTH
CENTRAL Park Street, Rawdon Street, AJC Bose Road, Minto Park, Elgin Road EAST Kankurgachi, Beliaghata, Salt Lake, Narkeldanga, Keshtopur, EM Bypass (eastern parts)
NORTH Baguiati, Uttadanga, Jessore Road, Shyambazar, Lake Town, BT Road, VIP Road
RAJARHAT Rajarhat New Town Ballygunge, Alipore, Tollygunge, Narendrapur, Behala, Garia, Maheshtala, SOUTH EM Bypass (southern parts)
WEST Howrah, BBD Bagh
All maps are for representational purpose not to scale Source: Knight Frank Research
R 90 91 S
RESEARCH INDIA REAL ESTATE
S RESIDENTIAL 7,030 10.8 UNSOLD INVENTORY H1 2018 (-38%) 3,515 17.8 13.6 (-) R 9.6 Unsold inventory (YoY growth) QTS (in quarters) Age of inventory (in quarters) NORTH
WEST
9,764 10.9
(33%) 11.3 391 8.7 12.6 (4%) Age of Inventory in Kolkata in 12.0 H1 2018 S RAJARHAT
CENTRAL
The current age of inventory and QTS present an alarming picture, as the prolonged 9.2 4,296 project lifecycle now stands 14,060 15.0 (-28%) 11.4 (0%) 14.1 at more than 6 years. Not a
EAST healthy scenario, as other SOUTH cities have started showing
signs of revival in the wake of a structural shift brought
about by the implementation
of the Real Estate (Regulation and Development) Act, 2016
(RERA).
All maps are for representational purpose not to scale
R 92 93 S
JESSORE ROAD 37,700-57,000 RESEARCH (3,500–5,300) INDIA REAL ESTATE [-11%] [-9%]
MADHYAMGRAM 26,900-35,000 (2,500–3,250) B.T.ROAD [-2%] [3%] 32,300-43,000 S (3,000–4,000) RESIDENTIAL PRICING [-9%] [-7%] H1 2018
R Price range in H1 2018 in `/sq m Price range in H1 2018 in (`/sq ft) NORTH 12 month change (YOY) 6 month change (YOY) WEST
NEW TOWN 43,000-74,300 RAWDON STREET (4,000-6,900) 107,600- 209,900 [-4%] [9%] (10,000–19,500) [0%] [0%] The weighted average
RAJARHAT residential prices have
PARK STREET undergone a correction of 129,200–215,300 (12,000–20,000) 8% YoY, as discounts on [-6%] [-6%]
S box prices are prevalent
CENTRAL in the market. Most KANKURGACHI developers are passing on 56,000-91,500 SALT LAKE BEHALA (5,200–8,500) 53,800-81,800 BALLYGUNE [-10%] [0%] a price benefit of 7–8% 34,400-49,500 91,500-204,500 (5,000–7,600) (3,200–4,600) (8,500–19,000) [-3%] [1%] on base selling prices and [-4%] [0%] [4%] [4%]
TOLLYGUNGE have made their products 59,200-150,700 (5,500–14,000) cheaper for customers. [-15%] [3%]
NARENDRAPUR EAST SOUTH 27,400-48,400 (2,550–4,500) [1%] [4%]
8% YoY decline in weighted average residential prices
All maps are for representational purpose not to scale
R 94 95 S RESEARCH INDIA REAL ESTATE
MMR MARKET SNAPSHOT
PARAMETER H1 2018 CHANGE YOY
Launches (housing units) 35,974 128%
Sales (housing units) 32,412 1%
Price (weighted average) `78,933/sq m (`7,333/sq ft) -9%
Unsold inventory (housing units) 119,526 -14%
Quarters to sell 8 -
Age of unsold inventory (in quarters) 15.4 -
Note- 1 square meter (sq m) = 10.764 square feet (sq ft) Source: Knight Frank Research
• Mumbai saw a significant jump in new a significant rise in the overall launches the RERA registration window to get launches, at 35,974 units, recording for Mumbai in Q2 2018 and in H1 their projects registered. As a result, a growth of 128% year-on-year (YoY). 2018 overall. A similar momentum of the market took a downturn again The following reasons can be attributed launches can be expected in H2 2018 and new launches took a hit resulting to this significant rise: temporary and H1 2019, as many developers in poor launch numbers for H1 2017 lifting of the construction ban in are expediting the process of taking overall. Comparing those numbers to Brihanmumbai Municipal Corporation approvals of new project launches the H1 2018 launches has resulted in a (BMC) region, low base effect created and preparing a launch pipeline for whopping 128% (YoY) growth. by the disturbances of demonetisation, the next 6–12 months. The developers • Mumbai real estate is widely known Real Estate (Regulation and fear that when this window of reprieve for its sky-high prices, also the Development) Act, 2016 (RERA), Goods shuts down, it is likely that the ban disconnect for the purchasing power MUMBAI and Services Tax (GST), developers would be enforced again. Considering of the homebuyers and the house launching smaller units with lower ticket the past track record of the action value. A significant portion of the size to cater to market demand and on the dumping ground issue and populace is salaried and for most of large-scale affordable housing projects unavailability of a land parcel within them owning a house remains a distant being undertaken in the peripheral city limits, the issue is likely to persist dream. In response to this disconnect, suburbs. over a longer period. This in effect will developers are now launching smaller- impact approvals for new launches. • The Bombay High Court had ordered a size units to be able to bring down the stay on construction of new buildings • Low base effect during H1 2017, ticket size. This way, houses become in the BMC region (Mumbai city) in created by disturbances of affordable for the populace and March 2016 owing to the growing demonetisation, RERA and GST, was developers benefit from the increased The launches in H1 2018 unscrupulous dumping hazard. The the other major reason for the jump in number of transactions. Launch of ban was imposed to address the over- new project launches during H1 2018. the Housing for All by 2022 scheme were higher on account saturation of the city’s landfills due H1 2017 witnessed a major lull as far has given a further boost to projects to construction debris. This verdict as launches are concerned. Q1 2017 with smaller ticket sizes, as the eligible of: the temporary lifting of affected all new launches in the BMC was reeling under the effects of the consumers can now avail the various region resulting in a significant slump in high value currency demonetisation incentives offered under this scheme. construction ban in BMC limits, the overall launch numbers for Mumbai policy of November 2016 and this is RESIDENTIAL MARKET • The Pradhan Mantri Awas Yojana during the ensuing period. In March reflected in the very poor number of low base of H1 2017 and large (PMAY) has brought the affordable 2018, the country’s Supreme Court launches in that period. In Q2 2017, housing product on most developers’ lifted the ban for a period of 6 months, as the market was recovering slowly, scale project launches in the agenda. Consequently, many projects giving a breather to the developer come mid-April RERA fears gripped the have been launched with smaller community. Consequently, to maximise market. Developers were not allowed affordable segments in the ticket sizes and at lower prices in the the benefit of this temporary relief, to sell flats in their under-construction suburbs so that the buyers purchasing peripheral markets. developers have been launching projects without RERA registration. a flat in that project are eligible for projects rampantly. This has resulted in Most developers waited till the end of the benefits under the PMAY scheme.
96 97 RESEARCH INDIA REAL ESTATE
Some of these projects had more construction projects sans RERA • As the market is reeling under than 1,000 units and therefore, have registration. As a result, like launches, pressure, there has been a constant significantly contributed to the surge even the sales numbers for H1 2017 focus by developers to make the MMR MARKET ACTIVITY in overall Mumbai launches. Some were lower compared to H1 2016. process of purchase less strenuous of the noteworthy launches include Despite a stable period, devoid of any on buyers. Developers are offering a Neptune group’s project Ramrajya in such disturbances, H1 2018 sales grew host of discounts such as – developer 40,000 Launches Sales Wt. Avg. Price (RHS) 0,000 Kalyan, Wadhwa’s Wise City in Panvel, by a meagre 1% YoY. There was a slew subvention schemes, bank subvention new launches by Lodha in Thane and of price benefit led project marketing schemes, flexi-payment options (5:95, Ruparel Realty’s Optima in Kandivali. activities along with reduction in base 20:40:40, 20:80 payment schemes), prices, which together cemented the smaller-sized apartments to reduce
• Flexi-payment options and bank 87 0 sales numbers of H1 2018. Else, the the overall ticket size, free appliances, 87 11 loan schemes are riding high on numbers could have been worse. gifts, other indirect discounts like ,000
the affordable housing wave. Home 8 88
absorbing – GST, clubhouse charges, 8 0 7 loan schemes like 5:95 require • A major contributor to this marginal 1% maintenance charges, floor rise 8 0 7 that customers pay only 5% while YoY growth in sales is the increased premium and stamp duty charges. booking a house and the remaining number of new launches, especially in Such discounts are the order of the day 95% at the time of possession. In the the affordable housing segment. Many and is found in almost every project interim period, the bank would make new launches offered lower prices in the MMR region. There are few 0,000 ,000 construction-linked payments to the compared to the prevailing prices in instances where reputed developers developer and the developer would the catchment even as they lure end- are offering flexi-payment options service the interest on the home loan. users with a plethora of amenities. To even for OC-ready projects, which was 8 071 This way the consumer can buy a fit into the consumer’s budget, lower unimaginable a few years ago. house at a small token amount, avoid apartment sizes, resulting in smaller the EMI-burden and continue to stay ticket size, became a mainstay. Such • Earlier, the discounts were offered only ,000 on rent. The banks will have more apartments witnessed significant to buyers who could negotiate very loans on their books and the developer interest from buyers. Additionally, well, but now these discounts have will receive construction finance at a government incentives under PMAY, become the order of the day. Most of cheaper rate than usual – a win-win subvention schemes and flexi-payment the discounts are indirect discounts,
situation for all. Such schemes are options have made home-buying as developers refrain from reducing of Units No. well-suited for salaried employees who attractive for lower ticket size projects. the quoted prices and do not want to 0,000 0,000
wish to purchase a lower ticket size admit that they have reduced prices. 78 • More than 70% of the total sales product in the peripheral markets. As However, there are also instances volume came from the low to mid- customers are responding to lower where the quoted prices have also segment markets like Peripheral ticket size projects in the peripheral been reduced. The weighted average Central Suburbs, Peripheral Western markets, they have fuelled the need of prices for the city is down by 9% YoY. Suburbs, Thane and Navi Mumbai. The such projects. highest sales were observed in the • The unsold inventory count for MMR 1 ,000 ` / sq m • Unlike launches, the sales numbers Peripheral Central Suburbs with sales stands at 119,526 units as of H1 2018. of the Mumbai residential market still of 9,200 units out of the total 35,974 In H1 2018, quarters-to-sell (QTS) for depict the lull of H1 2017. While sales units sold in H1 2018 in MMR. the Mumbai market was 8 quarters have gone up compared to last year, (or 2 years) and the age of inventory • As per our field visits and interaction the growth is negligible at 1% YoY. was 15.4 quarters or close to 4 years. with stakeholders, in the premium The sales in H1 2018 are lower than This implies that the unsold inventory 10,000 7 ,000 markets, buyers are opting to make the sales in H1 2016, a period when has been in the market for 4 years the purchase only in Occupation the real estate market of MMR was and will take another 2 years to sell. Certificate (OC) received projects. showing very early signs of revival. This While the QTS has declined over the This helps them avoid the 12% GST, marginal growth cannot be interpreted past few years, this decline has not which adds up to a significant amount as the market is out of the doldrums. come on back of rising sales, but due for luxury and premium residences. to significant decline in launches, ,000 • Like launches, when we compare As a result, it makes sense for the which indicates that the market health the sales of H1 2018 with the sales buyers to postpone their purchase has been weak. The launches have numbers of H1 2017, we should till the project is complete, as GST is constantly lagged the sales since H2 consider the disruptions due to not applicable on OC-ready projects. 2014 and as the periods progressed, demonetisation and RERA. The sales This trend is also common for mid- the gap between launches and sales in the first 2 months of H1 2017 were segment apartments, as the buyers are kept on increasing till H2 2017. This led 0 70,000 affected due to the demonetisation looking to avoid the 12% GST burden, to the decline in QTS. H1 01 H 01 H1 016 H 016 H1 017 H 017 H1 01 hangover and towards mid-April till invariably forcing the developers end of H1 2017, developers were to offer a lower price on under- Source: Knight Frank Research not allowed to market flats in under- construction units.
98 99 KAMAN ROAD
5,750 RESEARCH -7% INDIA REAL ESTATE H1 2018 BHAYANDAR 6,921 20%
KHARBAO PERIPHERAL WESTERN SUBURBS
MIRA ROAD
BHIWANDI AMBIVALI RESIDENTIAL ROAD
DAHISAR RAILWAY LAUNCHES AND SALES
SHAHAD
KALYAN JN Launches (housing units) Sales (housing units) % Change (YOY) 5,640 BORIVALI RAILWAY 315% THAKURLI R S
H1 2018 PUNE LIN K DOMBIVLI ULHASNAGAR 3,185 KOPAR 14% KOPAR ROAD R S
KANDIVALI
THANEKALWA R S
4,469 MUMBRA DATIWLI R S MALAD R S THANE 55% DIVA H1 2018 A strong momentum in launches 8,200 4,686 2633% MULUND R S 72% H1 2018 can also be expected in H2 2018 GOREGAON 9,200 WESTERN SUBURBS AIROLI R S -37% and H1 2019 as a large number NAHUR of developers are expediting the BHANDUP R S PERIPHERAL CENTRAL SUBURBS RABALE JOGESHWARI R S process of taking approvals of new KANJURMARG R S project launches and are preparing ANDHERI GHANSOLI R S 5,900 VIKROLI R S a launch pipeline for the next 6-12 64% H1 2018 VILE PARLE R S months. The developers fear that I R 2,600 T S A H -3% S R U BAHAD when this window of reprieve comes LAL SANTA CRUZ VIDYAVIHAR TALOJE PANCHNAND R S MUMBAI CENTRAL SUBURBS TURBHE R S to an end, it is likely that
LOKMANYA KHAR TILAK SANPADA ROAD R S KURLA R S JUNCTION BANDRA TILAK NAGAR CHEMBUR the construction ban would be TERMINUS VASHI RAILWAY 4,555 GOVANDI JUINAGAR R S BANDRA 249% CHUNNABHATTI NAVADE ROAD R S enforced again. H1 2018 MANKHURD SION R S MAHIM JUNCTION NAVI NAVIMUMBAI MUMBAI 5,060 71% GURU TEGH KALAMBOLI R S BAHADUR NAGAR R S NERUL R S MATUNGA ROAD R S 1,170 MATUNGA R S SEAWOODS 964% - DARAVE KHARGHAR R S DADAR MICRO-MARKET LOCATIONS H1 2018DADAR BELAPUR CBD 565 MANSAROVAR PAREL CENTRAL MUMBAI Dadar, Lower Parel, Mahalaxmi, Worli, PrabhadevI 6% ELPHINSTONE ROAD R S KHANDESHWAR
MUMBAI LOWER PAREL R S REAY ROAD CENTRAL SUBURBS Sion, Chembur, Wadala, Kurla, Ghatkopar, Vikhroli, Bhandup, Mulund CURREY CENTRAL MUMBAIROAD R S PANVEL
CHINCHPOKLI R S NAVI MUMBAI Vashi, Nerul, Belapur, Kharghar, Airoli, Panvel, Ulwe, Sanpada MUMBAI MAHALAKSHMI MUMBAI 290 REAY ROAD MUMBAIBYCULLA PERIPHERAL CENTRAL SUBURBS Kalyan, Kalwa, Dombivli, Ambernath, Bhiwandi, Mumbra, Karjat CENTRAL290% LOCAL CHIKHALE R S H1 2018 DOCKYARD ROAD GRANT ROAD BY SANDHURST PERIPHERAL WESTERN SUBURBS Vasai, Virar, Boisar, Palghar, Bhayandar, Nalasopara 195 ROAD 261% MASJID CHARNI BUNDER R S SOMATANE ROAD SOUTH MUMBAI Malabar, Hill, Napean Sea Road, Walkeshwar, Altamount Road, Colaba M A H SOUTHA MUMBAICHHATRAPATI R SHIVAJI TERMINUS S
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THANE Naupada, Ghodbunder Road, Pokhran Road, Majiwada, Khopat, Panchpakhadi CHURCHGATE JASAI R S WESTERN SUBURBS Bandra, Andheri, Goregaon, Kandivali, Borivali, Santacruz, Vile Parle
All maps are for representational purpose not to scale Source: Knight Frank Research
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KHARBAO PERIPHERAL WESTERN SUBURBS
MIRA ROAD
BHIWANDI AMBIVALI RESIDENTIAL ROAD
DAHISAR RAILWAY UNSOLD INVENTORY H1 2018
SHAHAD
KALYAN JN Unsold inventory (YoY growth) QTS (in quarters) Age of inventory (in quarters)
BORIVALI RAILWAY THAKURLI R S 9.7 14,152 PUNE LIN K DOMBIVLI (7%) ULHASNAGAR 12.3 KOPAR KOPAR ROAD R S
KANDIVALI
THANEKALWA R S
MUMBRA DATIWLI R S MALAD R S THANE DIVA 19,112 11.6 The QTS and age of inventory (-13%) 16.0 for Central Mumbai is MULUND R S 22,912 4.4 GOREGAON (-28%) 14.0 20.4 quarters and 20.3 WESTERN SUBURBS AIROLI R S NAHUR quarters respectively. The BHANDUP R S PERIPHERAL CENTRAL SUBURBS RABALE JOGESHWARI R S existing unsold inventory in KANJURMARG R S Central Mumbai has been
ANDHERI GHANSOLI R S VIKROLI R S languishing for over 5 years 21,679 15.5 and it will take another 5 VILE PARLE R S I (11%) R T S A 14.5 H S years to sell this inventory R U BAHAD LAL SANTA CRUZ VIDYAVIHAR TALOJE PANCHNAND R S assuming no new stock is MUMBAI CENTRAL SUBURBS TURBHE R S
LOKMANYA KHAR TILAK SANPADA ROAD R S KURLA R S launched in that period. JUNCTION BANDRA TILAK NAGAR CHEMBUR TERMINUS VASHI RAILWAY GOVANDI BANDRA JUINAGAR R S CHUNNABHATTI NAVADE ROAD R S
MANKHURD SION R S MAHIM JUNCTION NAVI MUMBAI
GURU TEGH KALAMBOLI R S BAHADUR NAGAR R S NERUL R S 21,337 11.3 MATUNGA ROAD R S NAVI MUMBAI MATUNGA R S (-13%) SEAWOODS - DARAVE KHARGHAR R S 16.5 4,780 DADAR 20.4 DADAR BELAPUR CBD (12%) MANSAROVAR
PAREL20.3 ELPHINSTONE ROAD R S KHANDESHWAR
MUMBAI LOWER PAREL R S REAY ROAD CURREY CENTRAL MUMBAIROAD R S PANVEL
CHINCHPOKLI R S MUMBAI MAHALAKSHMI MUMBAI REAY ROAD MUMBAIBYCULLA 1,024CENTRAL LOCAL 13.7 CHIKHALE R S DOCKYARD ROAD GRANT ROAD(-13%) BY SANDHURST ROAD19.7
MASJID CHARNI BUNDER R S SOMATANE ROAD M A H SOUTHA MUMBAICHHATRAPATI R SHIVAJI TERMINUS S
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CHURCHGATE % JASAI R S -14 YoY change in unsold inventory All maps are for representational purpose not to scale in MMR
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APTA R S VIRAR KAMAN ROAD 47,362-59,202 (4,500–5,500) RESEARCH [-6%] [-4%] INDIA REAL ESTATE
MIRA ROAD BHAYANDAR 59,202-78,577 (5,500–7,300)
[-8%] [-5%] KHARBAO PERIPHERAL WESTERN SUBURBS
MIRA ROADDAHISAR 96,876-118,404 GHODBUNDER ROAD (9,000–11,000) 64,584-107,640 BHIWANDI AMBIVALI RESIDENTIAL PRICING [-4%] [-2%] (6,000–10,000) ROAD [-7%] [-3%]
DAHISAR RAILWAY H1 2018
SHAHAD
BORIVALI KALYAN JN Price range in H1 2018 in `/sq m Price range in H1 2018 in (`/sq ft) NAUPADA 118,404-161,460BORIVALI DOMBIVALI RAILWAY THAKURLI R S 150,696-193,752 (11,000–15,000) 48,438-64,584 LIN K PUNE 12 month change (YOY) 6 month change (YOY) [-4%] [-2%] (14,000–18,000) (4,500–6,000)DOMBIVLI ULHASNAGAR [-3%] [-3%] [-7%]KOPAR [-6%] KOPAR ROAD R S
GOREGAONKANDIVALI 139,932-161,460 THANE (13,000–15,000) KALWA R S
[-6%] [-3%] MULUND MUMBRA DATIWLI R S MALAD R S THANE 115,174-150,696 DIVA ANDHERI POWAI (10,700–14,000) 161,460-236,808 156,078-215,280 [-8%] [-5%] Earlier, the discounts were (15,000–22,000) MULUND R S (14,500–20,000) GOREGAON[-2%] [-1%] [0%] [0%] offered only for buyers WESTERN SUBURBS AIROLI R S NAHUR who could negotiate BHANDUP R S PERIPHERAL CENTRAL SUBURBS RABALE JOGESHWARI R S BADLAPUR very well, but now these 29,063-37,674 KANJURMARG R S (2,700–3,500) discounts have become [-10%] [-10%] ANDHERI GHANSOLI R S GHATKOPARVIKROLI R S the order of the day. 129,168-236,808 (12,000–22,000) Most of the discounts are VILE PARLE R S [0%]I [0%] R T S A H S indirect discounts, R U BAHAD BANDRA WEST LAL SANTA CRUZ VASHI 430,560-645,840 VIDYAVIHAR TALOJE as developers refrain WORLI PANCHNAND R S MUMBAI CENTRAL SUBURBS 107,640-161,460 TURBHE R S 3,33,684-5,92,020 (40,000–60,000) LOKMANYA (10,000–15,000) KHAR [0%] [0%] TILAK SANPADA (31,000–55,000) ROAD R S KURLA R S from reducing the quoted JUNCTION [-1%] [-1%] [-1%] [-1%] BANDRA TILAK NAGAR CHEMBUR TERMINUS VASHI KHARGHAR RAILWAY GOVANDI 72,119-96,876 BANDRA JUINAGAR R S prices. CHUNNABHATTI (6,700–9,000) NAVADE ROAD R S MANKHURD SION R S [-4%] [-3%] MAHIM JUNCTION NAVI MUMBAI
GURU TEGH KALAMBOLI R S BAHADUR NAGAR R S NERUL R S MATUNGA ROAD R S NAVI MUMBAI MATUNGA R S SEAWOODS - DARAVE KHARGHAR R S DADAR DADAR BELAPUR CBD MANSAROVAR
PAREL ELPHINSTONE ROAD R S KHANDESHWAR
MUMBAI LOWER PAREL R S REAY ROAD PANVEL CURREY CENTRAL MUMBAIROAD R S 40,903-69,966 PANVEL
CHINCHPOKLI R S (4,000–6,500) MUMBAI LOWER PAREL MAHALAKSHMI [-10%] [-8%] 269,100-387,504MUMBAI REAY ROAD MUMBAIBYCULLA (25,000–36,000) TARDEO CENTRAL LOCAL [-1%] [-1%] CHIKHALE R S 430,560-645,840 DOCKYARD ROAD GRANT ROAD (40,000–60,000) BY SANDHURST [0%] [0%] ROAD MASJID CHARNI BUNDER R S SOMATANE ROAD M A H SOUTHA MUMBAICHHATRAPATI R SHIVAJI TERMINUS S
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CHURCHGATE % JASAI R S -9 YoY change in weighted average All maps are for representational purpose not to scale prices across Mumbai
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MUMBAI OFFICE MARKET ACTIVITY
0.7 New Completions Transactions OFFICE MARKET 0.6
0.
0.4
0. mn sq m -7% YoY change in transactions 0. in H1 2018
0.1
0.0 -42% H1 01 H 01 H1 016 H 016 H1 017 H 017 H1 01 YoY change in new completions in Note- 1 square meter (sq m) = 10.764 square feet (sq ft) H1 2018 Source: Knight Frank Research MUMBAI MARKET SNAPSHOT
PARAMETER H1 2018 CHANGE YOY
New completions mn sq m (mn sq ft) 0.41 mn sq m (4.4 mn sq ft) -42% • Office space occupancy in Mumbai, • While the average size of deals newer business districts of Central Transactions mn sq m (mn sq ft) 0.27 mn sq m (2.9 mn sq ft) -7% unlike some of the other metros increased from 2,217 sq m (23,866 sq Mumbai and Bandra Kurla Complex of India, is not driven by IT/ITeS ft) in H1 2017 to 2,548 sq m (27,429 (BKC). The vacancy levels in CBD and Weighted average rental in 1,169 (109) -8% occupiers; hence, it is relatively sq ft), the number of deals declined off-CBD areas was around 12% and `/sq m/month (`/sq ft/month) unaffected by the slowdown happening from 130 in H1 2017 to 105 in H1 its share of the overall transactions in the IT sector. While the Banking, 2018. The fall in deal volumes is just decreased from 9% in H1 2017 to 3% Stock mn sq m (mn sq ft) 12.8 mn sq m (138 mn sq ft) - Financial services and Insurance (BFSI) the reiteration of the fall in the area in H1 2018. sector’s share in the total transactions transacted. Vacancy (%) 21.5% - • The weighted average transacted was steady around 20%, there was • In H1 2018, the supply was higher rentals were lower by 8% YoY in H1 a significant rise in the share of the Note- 1 square meter (sq m) = 10.764 square feet (sq ft) than the transactions, which resulted 2018. This was primarily due to the fact Source: Knight Frank Research Other Services sector. The share of in increase in vacancy levels. PBD that majority (81%) of the transactions other services sector increased from had the highest vacancy of over 30% of H1 2018 happened in the relatively • Office space supply hits the market in lots and the completion numbers are highly 42% of the transactions in H1 2017 to followed by SBD West at 25.4%. The inexpensive markets of PBD, SBD West volatile. In H1 2018, the new completions were lower by 42% year-on-year (YoY) at 0.49 53% of the transactions in H1 2018. pressure of high vacancy levels was and SBD Central. million square metres (4.4 million square feet). 60% of that supply was delivered in the This rise was driven by the increasing visible on rental growth. Even though Mumbai peripheral business district (PBD) where the vacancy levels are already high. demand from co-working players • The rental growth across micro • In H1 2018, transactions were lower by 7% YoY. Even though Mumbai had vacancy who constituted to around 30% of the had vacancy levels of markets increased at a lower rate, as levels of 21.5%, the shortage of good quality office space supply was one of the transactions by other services sector in the demand from occupiers in this half 21.5%, the shortage of primary reasons for lower transaction volumes in H1 2018. H12018. of the year was not as strong as what • Over the past 12 months, intense • Occupiers are going slow on their consolidation and relocation plans, as they are not had been witnessed in H2 2017, leading good quality office space expansion by co-working operators able to find office space in good quality buildings that matches their requirements. But to high vacancy levels. Amongst such as WeWork, Regus, Coworks, supply was one of the this latent demand would reflect in the transaction volumes of the next 12–18 months. all micro markets, Central Mumbai Spaces and many more has changed recorded the highest rental growth • The markets of the suburban business district SBD West, PBD and SBD Central the landscape of flexible office space primary reasons for lower of 5% YoY. The erstwhile CBDs and garnered 81% share of the transactions in H1 2018 and their shares were 33%, 30% formats in the city. The presence of off-CBD areas like Nariman Point, Fort, and 19%, respectively. many co-working operators is also transaction volumes in H1 Ballard Estate, etc. witnessed negative giving a chic makeover to office growth in rentals as these business buildings and attracting new-age 2018. districts have lost their appeal to the tenants, a trend we expect to continue.
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SECTOR-WISE SPLIT OF TRANSACTIONS
H
21.5% H Vacancy in MMR office market
H1 H1 Industry 2017 2018
BFSI 17% 19%
IT/ITES 9% 7%
Manufacturing 32% 21%
Occupiers are going slow Other Services 42% 53% Note: BFSI includes BFSI support services on their consolidation and BUSINESS DISTRICT CLASSIFICATION
expansion plans, as they BUSINESS DISTRICT MICROMARKETS AVERAGE DEAL SIZE MUMBAI OFFICE MARKET VACANCY AND NUMBER OF DEALS are not able to find office Nariman Point, Cuffe Parade, Ballard Estate, Fort, CBD & Off CBD Mahalaxmi, Worli space in good quality 0 2,217 (23,866) Bandra Kurla Complex & Average Deal Size in sq m (sq ft) buildings which matches Off-Bandra Kurla Complex BKC, Bandra (E), Kalina and Kalanagar H1 2017 (BKC & Off-BKC) 21.6% 21.9% 21.9% 21.6%
their requirements. But 21.5%
0 20.2%
19.6% 130 this latent demand would Central Mumbai Parel, Lower Parel, Dadar, Prabhadevi Number of Deals 1 reflect in the transaction SBD West Andheri, Jogeshwari, Goregoan, Malad 10 2,548 (27,429) Kurla, Ghatkopar, Vikhroli, Kanjurmarg, Powai , Average Deal Size in sq m (sq ft) volumes of the next 12-18 SBD Central Bhandup, Chembur H1 2018 months. 0 PBD Thane, Airoli, Vashi, Ghansoli, Rabale, Belapur 105 H1 01 H 01 H1 016 H 016 H1 017 H 017 H1 01 Number of Deals Source: Knight Frank Research Source: Knight Frank Research
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BHAYANDAR
KHARBAO
MIRA ROAD
BHIWANDI AMBIVALI OFFICE ROAD
DAHISAR RAILWAY TRANSACTIONS H1 2018
SHAHAD
KALYAN JN Transactions mn sq m (mn sq ft) YoY change
BORIVALI RAILWAY THAKURLI R S
PUNE LIN K DOMBIVLI ULHASNAGAR KOPAR KOPAR ROAD R S
KANDIVALI
KALWA R S
MUMBRA DATIWLI R S MALAD R S THANE 0.09 (0.94) DIVA
-2% MULUND R S GOREGAON
AIROLI R S 0.05NAHUR (0.55) SBD WEST BHANDUP R S 57% RABALE JOGESHWARI R S 0.08 (0.86)
KANJURMARG R S -1%
ANDHERI SBD CENTRAL GHANSOLI R S VIKROLI R S
VILE PARLE R S I R PBD T S (0.27) A 0.03 H S R U BAHAD LAL SANTA CRUZ -11% VIDYAVIHAR TALOJE PANCHNAND R S MUMBAI TURBHE R S
LOKMANYA KHAR TILAK SANPADA ROAD R S KURLA R S JUNCTION BANDRA TILAK NAGAR CHEMBUR TERMINUS VASHI BKC& OFF-BKC RAILWAY GOVANDI The share of other services BANDRA JUINAGAR R S CHUNNABHATTI NAVADE ROAD R S
MANKHURD SION R S sector increased from MAHIM JUNCTION0.02 (0.18) NAVI MUMBAI GURU TEGH KALAMBOLI R S BAHADUR NAGAR R S NERUL R S 42% of the transactions MATUNGA ROAD R S MATUNGA R S -45% SEAWOODS - DARAVE KHARGHAR R S in H1 2017 to 53% of the DADAR DADAR BELAPUR CBD MANSAROVAR transactions in H1 2018. PAREL ELPHINSTONE CENTRALROAD R S MUMBAI KHANDESHWAR MUMBAI This rise was driven by LOWER PAREL R S REAY ROAD CURREY ROAD R S PANVEL the increasing demand CHINCHPOKLI R S MUMBAI MAHALAKSHMI MUMBAI REAY ROAD from co-working players MUMBAIBYCULLA CENTRAL LOCAL CHIKHALE R S DOCKYARD ROAD GRANT ROAD 0.007 (0.08) who constituted to around BY SANDHURST ROAD
-73%MASJID CHARNI BUNDER R S SOMATANE 30% of the transactions by ROAD M A H A CHHATRAPATI R SHIVAJI TERMINUS S
H other services sector in H1
I
CHURCHGATECBD & OFF-CBD JASAI R S 2018.
All maps are for representational purpose not to scale
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BHAYANDAR
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BHIWANDI AMBIVALI OFFICE RENTAL ROAD
DAHISAR RAILWAY H1 2018
SHAHAD Rental value range in H1 2018 in /sq m/month ( /sq ft/month) 12 month change KALYAN JN ` ` 6 month change
BORIVALI RAILWAY THAKURLI R S
PUNE LIN K DOMBIVLI ULHASNAGAR KOPAR KOPAR ROAD R S
KANDIVALI
KALWA R S
MUMBRA DATIWLI R S MALAD R S THANE DIVA
861–1,507 4% (80–140) MULUND R S GOREGAON 2%
AIROLI R S NAHUR SBD WEST 861–1,615 2% BHANDUP(80–150) R S RABALE JOGESHWARI R S 2% 538–969 1% (50–90) KANJURMARG R S 0%
ANDHERI SBD CENTRAL GHANSOLI R S VIKROLI R S % PBD -5 VILE PARLE R S YoY change in rents in CBD & I R T S A Off-CBD H S R 2% U 2,368–3,552 BAHAD LAL SANTA CRUZ (220–330) VIDYAVIHAR TALOJE PANCHNAND R S MUMBAI 0% TURBHE R S
LOKMANYA KHAR TILAK SANPADA ROAD R S KURLA R S JUNCTION BANDRA TILAK NAGAR CHEMBUR TERMINUS VASHI BKC& OFF-BKC RAILWAY GOVANDI BANDRA JUINAGAR R S CHUNNABHATTI NAVADE ROAD R S
MANKHURD SION R S MAHIM JUNCTION NAVI MUMBAI
GURU TEGH KALAMBOLI R S BAHADUR NAGAR R S NERUL R S 1,830–2,153MATUNGA 5% ROAD R S MATUNGA R S (170 –200) SEAWOODS - DARAVE KHARGHAR R S DADAR 3% DADAR BELAPUR CBD MANSAROVAR
PAREL ELPHINSTONE CENTRALROAD R S MUMBAI KHANDESHWAR
MUMBAI LOWER PAREL R S REAY ROAD CURREY ROAD R S PANVEL
CHINCHPOKLI R S MUMBAI MAHALAKSHMI MUMBAI REAY ROAD MUMBAIBYCULLA CENTRAL LOCAL CHIKHALE R S DOCKYARD ROAD GRANT ROAD % BY SANDHURST-5% 1,722–2,691 ROAD 5 (160–250) YoY rental growth in Central MASJID CHARNI BUNDER R S SOMATANE ROAD -2% M Mumbai A H A CHHATRAPATI R SHIVAJI TERMINUS S
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CHURCHGATE CBD & OFF-CBD JASAI R S
All maps are for representational purpose not to scale
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NCR MARKET SNAPSHOT
PARAMETER H1 2018 CHANGE YOY
Launches (housing units) 9,123 90%
Sales (housing units) 18,047 5%
Price (weighted average) `4,265 0%
Unsold inventory (housing units) 157,907 -12%
Quarters to sell 17 0%
Age of unsold inventory (in quarters) 21 25%
Note- 1 square meter (sq m) = 10.764 square feet (sq ft) Source: Knight Frank Research
NCR With the attraction 90% towards ready to move Increase in new supply from the in projects and the bottomed out first half of 2017. structural change in the Indian Real Estate • The first half of 2018 has started on a demonization, implementation of Real positive note for the NCR residential Estate (Regulation and Development) market becoming a market. New launches that were on a Act, 2016, and the Goods and Services downward spiral since 2010 reached tax (GST) have adversely affected the reality, developers are their nadir in 2017. In the first half of new project launches in NCR. 2018, the market seems to be coming cautious in launching out of the woods. New launches in H1 RESIDENTIAL MARKET 2018 have gone up by 90% compared new projects and to the same period last year.
are concentrating on • On an average, NCR’s six- monthly new 5% launches have been between 40,000– completing their existing 50,000 units but this average started Increase in sales compared to decline down since 2015. Factors to H1 2017 portfolios. such as slow sales velocity, piling up unsold inventory, litigations coupled with the policy initiatives such as
114 115 RESEARCH INDIA REAL ESTATE
• Gurugram contributed significantly to for the delivery of the project. This • Slow sales coupled by lean new the new launches in NCR in H1 2018, proposition is made more lucrative with launches has consequently brought yet again taking up 47% of the overall the implementation of GST, which is down the unsold inventory by 12% in NCR MARKET ACTIVITY pie. Notable developers were seen to applicable only on under-construction H1 2018 compared to the same period launch projects in Sector 33, 106, 65 projects. in 2017. The unsold inventory stands at and 77 in Gurugram. The first half of approximately 157,907 units as of June 40,000 Launches Sales Wt. Avg. Price (RHS) 0,000 • Demand in Greater Noida has always 2018 also saw new launches in Noida 2018. Greater Noida and Gurugram been on the back of an affordable and Greater Noida, along the Noida account for approximately 63% of the option within the price bracket of `
Greater Expressway and in Greater unsold inventory in NCR followed by 281 2.5–5 mn. More than half of the total Noida West, which saw negligible Ghaziabad and Noida. inventory in Greater Noida falls within launches in the same period in 2017. this price bracket. Sales in Gurugram, • Gurugram saw a significant ,000 4 ,000 • Demand for newly launched projects on the other hand, have been on the improvement in its quarters to sell in in NCR has been moving at a snail’s back of availability of quality ready- H1 2018. The QTS of Gurugram has pace and is almost in the same range to-move-in properties and also the gradually come down from 19 quarters as in H1 2017. The first half of 2018 push to the affordable housing sector. in 2017 to 13 quarters in the first half of saw 18,050 units being sold compared Our market survey suggests that 2018. The dominance of Gurugram as a to 17,188 units in H1 2017, registering micro markets such as New Gurgaon, corporate hub, continued improvement 8 0,000 4 ,000 a YoY increase of 5%. The slow sales Golf Course Extension and Southern in infrastructure and the availability of velocity suggests that the buyers are Peripheral Road, which were once seen ready-to-move-in residential options still wary of the market dynamics and as uninhabitable due to lack of social are all contributing towards improving even the stagnant prices have failed to and physical infrastructure, have slowly the sentiments for Gurugram. The bring them back. Factors such as the started taking shape, thus attracting sustained office demand in the micro sluggishness in the implementation the buyers especially the fence-sitting markets of NH-8, DLF CyberCity, and ,000 777 47,000 of RERA in states of Haryana and end users. However, the micro market the upcoming IT SEZs on Golf Course Uttar Pradesh for redressal unlike is still way below its sales volumes of Extension have also contributed to the Maharashtra and continued delays in 2010–2011. facelift of Gurugram. delivery of major infrastructure projects • Demand in Noida remains dull in H1 • There has been no change in the such as the Dwarka Expressway in 2018 and registers a YoY de-growth of weighted average prices in the NCR 08 Gurugram have led to the buyers 7 7
25%. In spite of a spurt in infrastructure residential market in H1 2018. The 0,000 7 7 46,000 holding on to their sentiments. of Units No. development, such as the metro prices that had seen a correction for • Our market survey with various connectivity, expressways and the second time in 2017 have remained
stakeholders suggest that only ready- entertainment options, residential sales muted, signaling the price resistance in ` / sq m to-move-in projects are garnering in Noida have failed to inspire. This the market.
interest from buyers, as they safeguard stagnation in sales comes on the back 8 2 the buyer and gives him confidence of an inventory pile up and a correction 1 ,000 4 ,000 in the secondary market.
• The quarters to sell (QTS) of unsold Gurugram contributed inventory is the number of quarters required to exhaust the existing unsold significantly to the new inventory in the market. The existing 10,000 44,000 unsold inventory is divided by the launches in NCR in H1 average sales velocity of the preceding 8 quarters in order to arrive at the QTS 2018, yet again taking number for that particular quarter. The up 47% of the overall QTS of NCR has moved within close ranges in the past 7 quarters and has ,000 4 ,000 pie. Notable developers remained at 17 quarters at the end of June 2018. Cautious new launches were seen to launch and a dull sales velocity has kept the quarters to sell at a constant since projects in Sector 33, 2015.
106, 65 and 77 • This means that with the current sales 0 4 ,000 velocity, the market will take close to 5 12% H1 01 H 01 H1 016 H 016 H1 017 H 017 H1 01 years to offload the current inventory, Drop in unsold inventory from Source: Knight Frank Research which is extremely high. H1 2017.
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HAR H A
NARELA
AUCHANDI RESIDENTIAL LAUNCHES AND SALES
Launches (housing units) Sales (housing units) % Change (YOY)
ROHINI
A ADPUR 1,070 100% H1 2018 AHA R ARH ASHOK VIHAR SHAHDARA 3,245 0 -12% 0% H1 2018 SAHIBABAD GHA IABADGHAZIABAD CHANDNI 26 CHO K -77%
CONNAUGHT PLACE DELHI
JANAKPURI INDIA NAJAFGARH GATE MAYUR VIHAR
DELHI CANTONMENT
D ARKA 928 A 178% OKHLA H1 2018 Our market survey with 2,468 DHANSA GREATER -25% various stakeholders suggest HAU KHAS KAILASH
NOIDANOIDA that only ready-to-move-
KAPASHERA 2,837 420% in projects are garnering H1 2018 7,269 interest from buyers, as they 4,288 -2% 9% safeguard the buyer and H1 2018 GREATER NOIDA 4,795 GREATER NOIDA gives him confidence for 94%
PARI CHO K the delivery of the project.
AR H GURUGRAMGURGAON A AR RAJIV CHO K This proposition is made 0 0% H1 2018 more lucrative with the 245 20% implementation of GST, which
FARIDABADFARIDABAD is applicable only on under- construction projects.
A ESAR
All maps are for representational purpose not to scale
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HAR H A
NARELA
AUCHANDI RESIDENTIAL UNSOLD INVENTORY H1 2018
Unsold inventory (YoY growth) QTS (in quarters) Age of inventory (in quarters)
ROHINI
A ADPUR
AHA R ARH ASHOK VIHAR SHAHDARA
30,104 19 1,560 42 SAHIBABAD GHAZIABAD (1%) (1%) GHA IABAD 21 CHANDNI 17 CHO K
CONNAUGHT PLACE DELHI Slow sales coupled by
JANAKPURI lean new launches has INDIA NAJAFGARH GATE MAYUR VIHAR consequently brought DELHI CANTONMENT
D ARKA down the unsold
A inventory by 12% in H1 OKHLA 2018 compared to the DHANSA GREATER HAU KHAS KAILASH same period in 2017. 23,431 17 NOIDANOIDA (-13%) KAPASHERA 21 68,506 20 (-1%) 22 31,396 13 (-34%) 18 GREATERGREATER NOIDANOIDA
PARI CHO K
AR H GURUGRAMGURGAON A AR RAJIV CHO K
2,912 26 (-49%) 19
FARIDABADFARIDABAD % A ESAR 34 Drop in unsold inventory levels in All maps are for representational purpose not to scale Gurugram.
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HAR H A
NARELA
AUCHANDI RESIDENTIAL PRICING H1 2018
Price range in H1 2018 in `/sq m Price range in H1 2018 in (`/sq ft) 12 month change (YOY) 6 month change (YOY)
ROHINI
RAJ NAGAR EXTENSION 26,910 - 30,139 (2,500–2,800) A ADPUR [0%] [0%] NH 24 BYPASS 30,591 -32,292
AHA R ARH ASHOK VIHAR SHAHDARA (2,842–3,000) [3%] [1%]
SAHIBABAD GHA IABADGHAZIABAD CHANDNI CHO K
CONNAUGHT PLACE DELHI
JANAKPURI DWARKA INDIA NAJAFGARH 69,966 -96,876 GATE MAYUR VIHAR (6,500–9,000) DELHI SECTOR 78 CANTONMENT [-2%] [0%] 48,438 - 60,278 D ARKA (4,500–5,600) [0%] [-2%]
A GREATER KAILASH II 236,808 - 389,657OKHLA (22,000–36,200) DHANSA [-2%] [0%] GREATER HAU KHAS KAILASH SECTOR 4 NOIDANOIDA SECTOR 143 32,292 - 37,674 41,656 - 53,820 (3,000–3,500) KAPASHERA (3,870–5,000) [-3%] [0%] [-2%] [0%] SECTOR 92 39,826 - 48,438 (3,700–4,500) [-5%] [0%] Having seen a price GREATERGREATER NOIDANOIDA correction in 2017, PARI CHO K
AR H GURUGRAMGURGAON the weighted average A AR RAJIV CHO K SECTOR CHI V 36,598 - 37,674 SECTOR 88 (3,400–3,500) prices remain muted 32,292 - 35,521 [-2%] [0%] (3,000–3,300) in H1 2018 signaling a [-3%] [0%] SECTOR 83 45,209 – 64,548 price resistance in the (4,200–6,000) FARIDABADFARIDABAD [2%] [0%] market.
A ESAR SECTOR 75 All maps are for representational purpose not to scale 23,608 -32,292 (2,200–3,000) A A R 122 [-5%] [0%] 123 BALLABHGARH RESEARCH INDIA REAL ESTATE
NCR OFFICE MARKET ACTIVITY
0.7 New Completions Transactions OFFICE MARKET 0.6
0.
0.4
0. mn sq m
0.
0.1
0.0 102% H1 01 H 01 H1 016 H 016 H1 017 H 017 H1 01 Increase in new supply compared Note- 1 square meter (sq m) = 10.764 square feet (sq ft) to H1 2017 Source: Knight Frank Research
NCR MARKET SNAPSHOT NCR OFFICE MARKET VACANCY
PARAMETER H1 2018 CHANGE YOY 20.7% New completions mn sq m (mn sq ft) 0.33 (3.6) 102% 21.5% 20.6% 18.9%
0 17.7%
Transactions mn sq m (mn sq ft) 0.32 (3.4) 7% 16.8% 16.5% 1 Weighted average rental in 840 (78) 4% `/sq m/month (`/sq ft/month) 10 Locations such as Golf Stock mn sq m (mn sq ft) 13.9 (149.9) Course Road and Golf Vacancy (%) 16.5% Course Extension Road Note- 1 square meter (sq m) = 10.764 square feet (sq ft) 0 Source: Knight Frank Research H1 01 H 01 H1 016 H 016 H1 017 H 017 H1 01 in Gurugram saw major
Source: Knight Frank Research The first half of 2018 fared • The first half of 2018 fared well for the NCR office market with closing of some large leasing activity by deals. The region clocked 0.31 mn sq m (3.4 mn sq ft) in H1 2018 registering a single well for the NCR office digit growth of 4% from the same period in 2017. • Steady leasing has nudged the overall • Locations such as Golf Course Road occupiers such as Sun vacancy levels down to 16.5% in H1 and Golf Course Extension Road in • Supply on the other hand outshone the transaction activity and approximately 0.33 mn market with closing of 2018 compared to 17.7% in H1 2017. Gurugram saw major leasing activity by Life Financials , WeWork, sq m (3.6 mn sq ft) of new office supply entered the market in H1 2018 as opposed to However, vacancies in the micro occupiers such as Sun Life Financials some large deals. New 0.17 mn sq m (1.8 mn sq ft) in the same period in 2017. New completions in NCR were markets of Gurugram, such as DLF , WeWork, MobiKwik and ReNew MobiKwik and ReNew on a downward spiral since 2015 due to the overall slump in the real estate market, CyberCity and Golf Course Road, Power. Approximately 27% of the total supply outshone demand however the first half of 2018 has brought the much-needed fresh supply in key Power. Approximately 27% remain in single digit, which has put an transacted space of 0.21 mn sq m (2.3 locations of Gurugram. with approximately 0.33 upward pressure on rentals. mn sq ft) was in these locations. Golf of the total transacted • The pressure on quality office space can be gauged from the fact that the market has Course Extension Road (GCER) that • Gurugram outperformed the other mn sq m (3.6 mn sq ft) seen an increase in the pre-commitment transactions in recent times, especially in is a natural extension of Golf Course markets yet again and took up a space of 0.21 mn sq m the micro market of Gurugram. We expect considerable pent up supply of commercial Road has lately garnered interest considerable percentage (66%) of the entering the market in H1 office space and Special Economic Zones (SEZs) to enter the micro markets of from occupiers looking to save on the (2.3 mn sq ft) was in these total transaction pie in H1 2018. With Gurugram and Noida in the coming 2 years. escalating rentals in key locations. this, Gurugram registers a year-on-year 2018. Where rentals on Golf Course Road locations. (YoY) growth of 28% from the same and DLF CyberCity range between ` period in 2017. 1,076–2,152 per sq m (100–200 per sq
124 125 RESEARCH INDIA REAL ESTATE
ft), rentals on GCER are in the range of Spacesworks and AltF in Gurugram. ` 484–807 per sq m (45–75 per sq ft) Co-working spaces or flexible work SECTOR-WISE SPLIT OF TRANSACTIONS for a good quality office space, thus spaces have contributed significantly to enticing the occupiers. NCR’s office space demand since 2017. The popularity of this office segment is • Office leasing in Noida registered a such that co-working space demand in YoY 5% growth in H1 2018 compared the first half of 2018 has surpassed the to the same period in H1 2017. annual tally of 2017. Our interactions Large occupiers, such as Genpact, with various stakeholders suggest that Landis+Gyr, Conduent, were seen H “CoWorking” as a trend will only gain to prefer the Noida–Greater Noida momentum in the coming times due to Expressway and Sector 62 for setting pressure on demand and the lack of up operations. Noida has always quality office supply. been a preferred office market for IT companies looking for cost effective • The average transacted space in H1 rents, large campuses and good 2018 has increased to 3,023 sq m connectivity for their workforce and (32,538 sq ft) compared to 2,536 sq the city is faring well on all these m (27,301 sq ft) in the same period in % parameters. Latterly, the Noida– 2017. The market in the first half of the 4 Greater Noida belt has also been year was characterised by 105 deals, H Increase in YoY weighted average chosen by industrial investors and of which 24 were above 4,645 sq m rents in H1 2018. corporate giants, like Samsung, to (50,000 sq ft). Some of the large deals expand their business footprints. in H1 2018 include WeWork, SpiceJet, Ericsson and Sun Life Financials. • Placing Noida on the world map, Samsung Electronics has set up • The rental values have inched up in the the world’s largest mobile factory in locations of Gurugram and Noida in H1 Noida with an investment of USD 727 2018 while being stable for the other H1 H1 million. The 35-acre facility at Sector micro markets. The weighted average Industry 2017 2018 81 in Noida, Uttar Pradesh will help rental has increased from ` 807/sq m/ the South Korean tech giant to make month (75/sq ft/month) in H1 2017 to BFSI 3% 6% mobile phones at a lower cost due ` 840/sq m/month (78/sq ft/month) in to the scale. The new plant will help H1 2018. Though quality office space IT/ITES 21% 22% Samsung double its manufacturing in the micro markets of DLF CyberCity output from the current 68 million and Golf Course Road in Gurugram Manufacturing 34% 18% Co-working dominated smartphones annually to 120 million witnessed a pressure on rentals units a year. The company intends to due to limited supply and saw rental Other Services 42% 54% leasing activity in NCR in adopt the “Make in India” campaign appreciation to the tune of 4–5%. BUSINESS DISTRICT CLASSIFICATION Note: BFSI includes BFSI support services and export the smartphones globally. H1 2018 with occupiers This development is expected to BUSINESS DISTRICT MICROMARKETS create a ripple effect and create such as WeWork, CoWrks, AVERAGE DEAL SIZE approximately 15,000 local jobs. Connaught Place, Barakhamba Road, Kasturba Gandhi Marg CBD Delhi AND NUMBER OF DEALS Spacesworks and AltF • Demand from large IT/ITeS occupiers and Minto Road pushed the percentage share of IT/ITeS taking up significant space. Nehru Place, Saket, Jasola, Bhikaji Cama Place, Mohan 2,536 (27,301) in H1 2018 to 22%, from 21% in H1 SBD Delhi Cooperative and Aerocity Average Deal Size in sq m (sq ft) The popularity of this office 2017, of the overall pie. This demand was largely concentrated in Noida with H1 2017 MG Road, NH-8, Golf Course Road and Golf Course Extension occupiers such as Genpact, Syscom Gurugram Zone A segment is such that co- Road Solutions and Conduent taking up large 105 Number of Deals spaces. working space demand in Gurugram Zone B DLF CyberCity, Sohna Road, Udyog Vihar and Gwal Pahari the first half of 2018 has • Gaining on the back of the IT/ITeS sector, the Other Services sector Gurugram Zone C Manesar 3,023 (32,538) surpassed the annual tally yet again takes up a lion’s share of Average Deal Size in sq m (sq ft) 54% from the overall transaction pie. Noida Sectors 16, 18, 62, 63 and Noida–Greater Noida Expressway H1 2018 of 2017. Some of the major transactions in this sector in H1 2018 are from co-working Faridabad Sector Alpha, Beta, Gamma and Tech Zone 105 occupiers such as WeWork, CoWrks, Number of Deals Source: Knight Frank Research
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HAR H A
NARELA
AUCHANDI OFFICE TRANSACTIONS H1 2018
Transactions mn sq m (mn sq ft) YoY change
ROHINI
A ADPUR
AHA R ARH ASHOK VIHAR 0.009 (0.09) SHAHDARA -100% SAHIBABAD GHA IABAD CHANDNI CHO K
CONNAUGHTCBD PLACE
JANAKPURI % INDIA 25 NAJAFGARH GATE MAYUR VIHAR Increase in YoY transacted space DELHI 0.01 (0.10) CANTONMENT in Gurugram in H1 2018.
D ARKA -78% 0.09 (0.97) A OKHLA SBD DELHI 5% DHANSA GREATER HAU KHAS KAILASH
NOIDANOIDA
KAPASHERA Gurugram outperformed 0.21 (2.2) the other markets yet 25% again and took up a GREATER NOIDA considerable percentage PARI CHO K
AR H GURUGRAMGURGAON (66%) of the total A AR RAJIV CHO K transaction pie in H1 2018. While Noida registered a 5% uptick in leased space FARIDABAD compared to the same
A ESAR period in 2017.
All maps are for representational purpose not to scale
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HAR H A
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AUCHANDI OFFICE RENTAL H1 2018
Rental value range in H1 2018 in `/sq m/month (`/sq ft/month) 12 month change 6 month change
ROHINI
A ADPUR
AHA R ARH ASHOK VIHAR SHAHDARA
2,303 - 3,767 0% (214–350) 0% SAHIBABAD GHA IABAD CHANDNI CHO K
CONNAUGHTCBD PLACE
JANAKPURI INDIA NAJAFGARH GATE MAYUR VIHAR
DELHI CANTONMENT1,001 - 1,755 0%
D ARKA (93–163) 0% The rental values have 775 - 1,442 4% A (72–134) inched up in the locations OKHLA 0% SBD DELHI DHANSA of Gurugram and Noida HAU KHAS GREATER KAILASH in H1 2018 while being GURUGRAM ZONE-B 474 - 753 4% NOIDANOIDA (40–70) KAPASHERA 0% stable for the other micro markets. Quality office space in the micro markets 1,184 - 1,776 6% 269 - 377 0% (110–165) (25–35) 0% 0% GREATER NOIDA of DLF CyberCity and Golf
PARI Course Road in Gurugram CHO K
AR H GURUGRAMGURGAON ZONE-A GURUGRAM ZONE-C A AR RAJIV CHO K witnessed a pressure 484 - 592 0% on rentals due to limited (40–55) 0% supply and saw rental appreciation to the tune of FARIDABADFARIDABAD 4–5%.
A ESAR
All maps are for representational purpose not to scale
A A R 130 131 BALLABHGARH RESEARCH INDIA REAL ESTATE
PUNE MARKET SNAPSHOT
PARAMETER H1 2018 CHANGE YOY
Launches (housing units) 14,100 78%
Sales (housing units) 16,451 -6%
Price (weighted average) `48,007/sq m (`4,460/sq ft) -5%
Unsold inventory (housing units) 27,448 -32%
Quarters to sell 3.3 -
Age of unsold inventory (in quarters) 12.3 -
Note- 1 square meter (sq m) = 10.764 square feet (sq ft) Source: Knight Frank Research
-6% YoY change is sales in H1 2018 PUNE • The Pune residential market witnessed • Affordability of apartments has been a a strong growth in launches during problem across the major cities of India H1 2018 after many years of subdued and Pune was no different. As a result, launches. The launches grew 78% these new launches have come at a year-on-year (YoY). lower price per square metre (or price per square feet) and as the unit size of • However, a point of caution, the strong the apartments were smaller, it led to Pune market witnessed number of launches is that this growth a lower ticket size. As the residential comes on the back of a low base of H1 market performance has been weak strong growth in launches 2017. The first half of 2017 witnessed over the past few years, there has been a major lull, as far as launches are during H1 2018 after an increasing focus by developers to concerned, as Q1 2017 was reeling make the process of purchase less under the effects of the demonetisation many years of subdued strenuous on buyers. Since the unit policy of November 2016 and this size of ongoing and ready-to-move-in launches. However, a point reflected in the very poor number of apartments cannot be changed, new launches. In Q2 2017, as the market launches are the only way to fulfil the of caution on the strong was recovering slowly, the Real Estate objective. Developers are hoping to (Regulation and Development) Act, RESIDENTIAL MARKET benefit out of interest subsidy offered launches number is that 2016 (RERA) fears gripped the market under the PMAY scheme for affordable around mid-April. As a result, post housing units to drive sales. Moreover, this number looks large as May, the market took a downturn again affordable housing projects attract a 78% and launches took a hit. As a result, it comes on the back of a lower GST rate of 8% against 12%, this H1 2017 overall witnessed poor launch YoY growth in launches is another incentive which developers in H1 2018 numbers. Comparing those launch low base of H1 2017. have taken cognisance of. numbers to the existing ones presents a very high 78% YoY growth.
132 133 RESEARCH INDIA REAL ESTATE
• During H1 2018, sales in Pune were under-construction buildings in the construction or ready projects. lower by 6% YoY at 16,451 units. complex, the buyer is not even ready to • Unsold inventory levels have come Pune market has been witnessing a have a look at the under-construction PUNE MARKET ACTIVITY down as new launches have lagged slowdown in sales, as the buyers are property. sales by a significant margin from finding the existing prices to be high. • On the pricing front, several developers H2 2014 to H2 2017. H1 2018 was no The decline in sales is also attributable 0,000 Launches Sales Wt. Avg. Price (RHS) ,000 have reduced the quoted prices for different, the new launches lagged the to negative sentiment in the IT sector their properties. The weighted average sales. The quarters-to-sell (QTS) for due lower salary increments and poor
prices for Pune is down by 5% YoY. the Pune market was 3.3 in H1 2018. 2 18 job prospects. 2 18 However, a QTS of 3.3 should not , 00 • In addition to the discount on quoted • For under-construction properties, be interpreted as a sign of a healthy prices, many developers have upped 2 0 buyers are reluctant to pay the 12% market. The Pune residential market the ante by throwing in waivers 1 871 Goods and Services Tax (GST). As a has arrived at this QTS number on ,000 like – block prices for the entire consequence, a significant proportion account of significant contraction in flat irrespective of floor, which also ,000 of the sales is happening in Occupation launches over the past few years. The includes maintenance and clubhouse Certificate (OC) ready projects, leading launches have constantly lagged the charges, various subvention plans, free 1, 00 to the sales velocity in the under- sales since H2 2014 till H1 2018. This appliances, GST waivers and a host construction properties significantly led to decline in QTS. If we look at of other indirect discounts. Pre-EMI slowing down. Almost the entire the QTS in conjunction with the age schemes are in vogue and are being 1,000 demand is driven by end-users. Real of inventory of 12.3 quarters, then the
used to lure homebuyers to make a site 0 estate investors are shying away from sum of the age of inventory and QTS visit. The actual discount offered in the investing in residential properties, as results in 15.6 quarters or 3.5 years. market would be higher, as when the 0,000 0, 00 they are not expecting any appreciation This implies that the existing unsold buyer sits at the table for negotiation, in prices. inventory has been languishing in the the developer is more than happy to market for more than 3 years and it will • During the field visits and interactions negotiate on the pricing to ensure that take almost another six months to sell. 0,000 with the stake holders, we observed the deal is closed. that – in some of the projects where • The cheer in new launches does not • Floor rise and preferential location there is a combination of OC ready and translate into a similar story for sales charges have become a thing of the of Units No. 4 , 00 yet. Several sales support measures past in the Pune market. Floor rise, if during the period limited the decline 1 ,000 charged, is charged as a part of the in sales. Clearly, the sector is not out block deal. For example, floors 5–10 of the woods yet. Smaller developers 4 ,000 will have the same price irrespective
are having a tough time managing 8 2 For under-construction of the floor on which the purchase is their cash flows post implementation made. Flats on floors 11–15 will have ` / sq m properties, buyers are of RERA and are either selling their 4 , 00 a slightly higher price than the flats
projects or entering into a joint venture 8 007 from floors 5 to 10, but the flat on the reluctant to pay the 12% (JV) with larger developers to complete 15th and 11th floor would be priced the project. 10,000 4 ,000 Goods and Services Tax the same. Even the developers concur with the view that without reduction in (GST). As a consequence, prices even the current level of sales would have been difficult to achieve. 47, 00 a significant proportion of • The western residential markets of Pune are gaining traction due to new the sales is happening in 47,000 office space supply and occupiers Occupation Certificate (OC) taking up space in those regions. The ,000 rise in number of office occupiers is ready projects, leading driving up demand for residential real 46, 00 estate in that area as employees prefer to the sales velocity in to purchase homes closer to office. the under-construction In the other markets of Pune, if the 46,000 apartment is available at the right price properties significantly and at a good location, it sells. This has forced developers to introduce 0 4 , 00 slowing down. their new launches at lower prices and H1 01 H 01 H1 016 H 016 H1 017 H 017 H1 01 smaller sizes at good locations, as it is Source: Knight Frank Research difficult to modify the existing under-
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1,995 32% C H1 2018 3,451 -3%
NORTHS C RESIDENTIAL LAUNCHES AND SALES
Launches (housing units) Sales (housing units) % Change (YOY) H H R
4,612 2,738 138% 11% H1 2018 H1 2018 3,886 4,759 -4% 1%
EAST
WEST
Sales contracted in almost all micro-markets 424 428% except for West, where H1 2018 S 313 the sales growth was R -12% S
marginal at 1%. The C A S CENTRAL R % C quantum of supply was -16 S YoY change in sales the highest in the east in the South
and south. C
H C C
S
MICRO-MARKET LOCATIONS
4,331 CENTRAL Koregaon Park, Boat Club Road, Erandwane, Deccan, Kothrud, Model Colony 127% H1 2018 EAST Viman Nagar, Kharadi, Wagholi, Hadapsar, Dhanori, 4,042 -16% WEST Aundh, Baner, Wakad, Hinjewadi, Bavdhan, Pashan SOUTH NORTH Pimpri, Chinchwad, Moshi, Chikhali, Chakan, Talegaon
A H SOUTH Kondhwa, Ambegaon, Undri, Dhayari, Warje, Sinhgad Road
All maps are for representational purpose not to scale Source: Knight Frank Research
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4.1 C 7,485 (-32%) 12.5
NORTHS C RESIDENTIAL UNSOLD INVENTORY H1 2018
Unsold inventory (YoY growth) QTS (in quarters) Age of inventory (in quarters) H H R
7,940 3.9 3.0 6,715 (-25%) (-37%) 13.6 11.0
EAST
WEST
866 5.7 S (-22%)
R 14.5 S
C A S CENTRAL R C S
C
H C C
S The unsold inventory levels have dropped
across all micro-markets as the launches have been lagging sales. 4,441 2.2 The launches have (-35%) 12.4 constantly lagged the sales since H2 2014 till SOUTH A H H1 2018.
All maps are for representational purpose not to scale
138 139
CHAKAN 32,292–36,598 RESEARCH (3,000–3,400) INDIA REAL ESTATE CHIKHALI [-3%] [-2%] 37,674–44,132 MOSHI (3,500–4,100) 39,827–46,285 [-2%] [-1%] (3,700–4,300) C [-5%] [-4%]
NORTHS C RESIDENTIAL PRICING H1 2018
Price range in H1 2018 in `/sq m Price range in H1 2018 in (`/sq ft) H H R 12 month change (YOY) 6 month change (YOY) WAGHOLI DHANORI 37,674–49,514 (3,500–4,600) 41,980–51,667 WAKAD (3,900–4,800) [-9%] [-1%] 58,126–66,737 [-10%] [-3%] (5,400–6,200) [-7%] [-3%]
EAST
WEST In addition to the KHARADI HINJEWADI 57,049–67,813 reduction in quoted prices 51,667–63,508 BANER ERANDWANE (5,300–6,300) 60,278–86,112 AUNDH (4,800–5,900) 145,314–193,752 83,959–102,258 [-9%] [-1%] developers are offering a [-10%] [-5%] (5,600–8,000) (13,500–18,000) (7,800–9,500) [-9%] [-4%] BOAT CLUB ROAD [-1%] [-1%] [-6%] [-1%] 156,078–209,898 host of indirect discounts (14,500–19,500) KOREGAON PARK [-1%] [-1%] 139,932–182,988 in the form of GST waivers, S (13,000–17,000) R S [-1%] [-1%] no-floor rise charges,
C A S CENTRAL subvention plans, free club R C KOTHRUD S house memberships, free 80,730–139,932 HADAPSAR (7,500–13,000) 49,514–64,584 appliances, gifts, etc. [0%] [0%] (4,600–6,000) [-10%] [-2%] C
H C C
S
KONDHWA 49,514–61,355 (4,600–5,700) [-4%] [-3%]
UNDRI 41,980–51,667
(3,900–4,800) [-3%] [-2%] SOUTH A H -5% AMBEGAON YoY change in quoted 47,362–59,202 All maps are for representational purpose not to scale prices in Pune (4,400–5,500) [-5%] [-4%] 140 141 RESEARCH INDIA REAL ESTATE
PUNE OFFICE MARKET ACTIVITY
0.40 New Completions Transactions OFFICE MARKET 0.
0. 0
0.
0. 0
mn sq m 0.1
0.10
0.0
0.00 5.7% H1 01 H 01 H1 016 H 016 H1 017 H 017 H1 01 118% Vacancy levels in Pune office YoY growth in transactions Note- 1 square meter (sq m) = 10.764 square feet (sq ft) market Source: Knight Frank Research (includes pre-commitments)
PUNE OFFICE MARKET VACANCY
0 PUNE MARKET SNAPSHOT PARAMETER H1 2018 CHANGE YOY The Banking, Financial 0
New completions mn sq m (mn sq ft) 0.25 (2.7) 54% 15.0% services and Insurance 1 11.0%
Transactions mn sq m (mn sq ft) 0.36 (3.9) 118% 9.3% (BFSI) sector has
10 8.2% 7.9% 5.7% Weighted average rental in 707 (66) 8% 5.8% consistently taken up an The Pune office space `/sq m/month (`/sq ft/month) increasing amount of space Stock mn sq m (mn sq ft) 6.0 (64.7) - 0 market has been reeling H1 01 H 01 H1 016 H 016 H1 017 H 017 H1 01 over the past 18 months under an acute supply Vacancy (%) 5.7% - Source: Knight Frank Research and vastly increased its crunch over the past 3 Note- 1 square meter (sq m) = 10.764 square feet (sq ft) Source: Knight Frank Research • The IT/ITeS sector has been the largest the IT/ITeS sector, to an extent. The share in total transactions years with supply not • The Pune office space market has been reeling under an acute supply crunch over consumer of office space in the city. BFSI sector also dominated the pre- during the analysis period, the past 3 years with supply not keeping up with the demand. H1 2018 witnessed the H1 2018 saw the IT/ITeS sector take up commitment transactions space. addition of 0.25 mn sq m (2.7 mn sq ft) of supply, but this was inadequate compared to only 0.11 mn sq m (1.1 mn sq ft), which keeping up with the • The CBD & off-CBD, PBD East and filling up the vacuum the transaction volumes in H1 2018. translates to 30% of the total space PBD West markets witnessed the demand. This demand- transacted during H1 2018, a significant • The fact is that the city saw just 0.92 mn sq m (9.9 mn sq ft) of supply since H1 2015, largest growth in transaction volumes. left by the IT/ITeS sector, and steady drop from the 60% during compared to the 1.64 mn sq m (17.7 mn sq ft) of transaction volume. This demand- supply gap had pushed H1 2017. • The BFSI sector accounted for almost to an extent. The BFSI supply gap had pushed down vacancy levels from 15% in H1 2015 to around 5.7% in H1 0.14 mn sq m (1.5 mn sq ft) of the 2018. The 0.25 mn sq m (2.7 mn sq ft) delivered during H1 2018 was the highest in any • The Banking, Financial services down vacancy levels from total office space transacted during sector also dominated half-year period, but it could not mitigate the pressure on vacancy levels. and Insurance (BFSI) sector has H1 2018. The volumes were high on consistently taken up an increasing 15% in H1 2015 to around • The transaction volumes during H1 2018 outstripped the supply and rose by 118% account of a major pre-commitment the precommitment amount of space over the past 18 year-on-year (YoY) to 0.36 mn sq m (3.9 mn sq ft) compared to the healthy 54% growth deal by BFSI occupiers. 5.7% in H12018. months and vastly increased its share in supply. The growth in transaction volumes was high as the volumes also included transactions space. in total transactions during the analysis • The two peripheral business districts pre-commitment (pre-lease) deals. The presence of large pre-commitments reflects the period, filling up the vacuum left by accounted for 67% of the transaction impact of supply shortage in the Pune office market.
142 143 RESEARCH INDIA REAL ESTATE
SECTOR-WISE SPLIT OF TRANSACTIONS
H
54% H YoY growth in new completions
H1 H1 Industry 2017 2018
BFSI 12% 40%
IT/ITES 60% 30%
The sustained decline in Manufacturing 6% 11% vacancy levels coupled Other Services 22% 19% with a steady interest Note: BFSI includes BFSI support services by occupiers looking to AVERAGE DEAL SIZE activity during H1 2018, which included more than doubled in H1 2018 when AND NUMBER OF DEALS consolidate or expand their BUSINESS DISTRICT CLASSIFICATION the pre-commitment deals as well. The compared to H1 2017. This growth in real estate footprint within transaction volumes in these business number of deals reflects the strong 4,442 (47,816) districts was higher on account of demand for office space in the Pune BUSINESS DISTRICT MICROMARKETS Average Deal Size in sq m (sq ft) the city, has kept rental available supply and lower rentals. market. Bund Garden Road, S B Road, Camp, Deccan, University H1 2017 CBD and off-CBD growth strong at 8% YoY in • The sustained decline in vacancy Road, Shankar Sheth Road levels coupled with a steady interest 37 H1 2018. Weighted average by occupiers looking to consolidate SBD East Kalyani Nagar, Yerwada, Nagar Road, Hadapsar Number of Deals or expand their real estate footprint rentals now stand at within the city, has kept rental growth PBD East Kharadi, Phursungi, Wanowrie strong at 8% YoY in H1 2018. Weighted 4,166 (44,844) Average Deal Size in sq m (sq ft) `707/sq m/month (`66/ average rentals now stand at `707/sq SBD West Wakdewadi, Aundh, Baner, Kothrud, Balewadi sq ft/month) for the Pune m/month (`66/sq ft/month) for the Pune H1 2018 office market. PBD West Hinjewadi, Bavdhan, Wakad 86 office market • Even though the average size per Number of Deals deal declined, the number of deals Source: Knight Frank Research
144 145
RESEARCH INDIA REAL ESTATE
C
S 0.07 (0.73) C OFFICE 370% TRANSACTIONS H1 2018 0.17 (1.85)
Transactions mn sq m (mn sq ft) YoY change H PBD WEST H R 187%
PBD EAST 0.068 (0.73)
9%
SBD EAST 0.022 (0.24) 11%
SBD WEST 0.029 (0.31) S 270% R S
C A S R CBD AND OFF-CBD C S
C
H C C
S
The two peripheral business districts witnessed strong growth in transactions on account of available supply and A H lower rentals.
All maps are for representational purpose not to scale
146 147
RESEARCH INDIA REAL ESTATE
C
S C OFFICE RENTAL 431– 538 4% (40–50) 2% H1 2018
7% Rental value range in H1 2018 in `/sq m/month (`/sq ft/month) 12 month change 6 month change 484 – 861 H PBD WEST H (45–80) R 4%
PBD EAST
538 – 1,023 9% (50–95) 6%
SBD EAST
538–861 7% (50–80)
6%
SBD WEST 807 - 1,184 6% S % (75-100) 7 R 4% S YoY rental growth in PBD East and SBD West C A S R CBD AND OFF-CBD C S
C
H C C
S
A H 9% YoY rental growth in SBD EAST
All maps are for representational purpose not to scale
148 149 RESEARCH INDIA REAL ESTATE
ABOUT KNIGHT FRANK INDUSTRIAL AND ASSET RETAIL RESIDENTIAL SERVICES
Our industrial team helps our clients With a thorough knowledge of Our residential team specialises LOCALLY EXPERT. with location analysis, site selection, current market rentals and leasing in new homes, resale, leasing securing an industrial plot and trends, our team works with clients and international properties. GLOBALLY CONNECTED. working with government agencies to build an entry strategy based on Working with corporates, MNCs for approvals and documentation. the brand’s requirements, conducts and high-net-worth individuals, Knight Frank LLP is the leading independent global property consultancy. Headquartered in London, Knight location analysis and negotiates we offer comprehensive services We offer the following services to the best deal. From national chains to the buyers, sellers, tenants and Frank has more than 15,000 people operating from 418 offices across 60 markets. The Group advises clients industrial parks, investors, to institutions and retailers of landlords. ranging from individual owners and buyers to major developers, investors and corporate tenants. 3 PL companies, landlords and international luxury goods, our corporates: We offer the following services to In India, Knight Frank is headquartered in Mumbai and has more than 1,000 experts across Bengaluru, Delhi, clients receive the widest range of corporates, investors and individual transactional services for acquisition Pune, Hyderabad, Chennai, Kolkata and Ahmedabad. Backed by strong research and analytics, our experts buyers. or disposition of property. offer a comprehensive range of real estate services across advisory, valuation and consulting, transactions Industrial land acquisition (residential, commercial, retail, hospitality, land & capital), facilities management and project management. We offer the following services to Warehousing retailers, high streets, developers Primary Sale For more information, visit www.knightfrank.co.in Industrial asset disposal and schools: Resale Industrial investment Leasing opportunities Advisory International Property Built-to-suit facilities Business Development ADVISORY CAPITAL MARKETS OFFICE Second Homes Landlord Representation for Mall Owners Supported by research and Our experts evaluate and structure Our team assists and advises information experts, our consultants investments on behalf of high- tenants and landlords / property work with government authorities, net-worth individuals, leading owners on leasing, acquisition infrastructure companies, institutions, developers and private or disposition of property. We developers, landlords, investors and equity funds. We provide acquisition assist corporates on location occupiers to help them make the and divestment services for all selection, sourcing, financial best use of their property. asset classes such as commercial, analysis, structuring transactions, FACILITIES & ASSET MANAGEMENT PROJECT MANAGEMENT residential, hospitality, retail, and due diligence and negotiations. We offer the following services industrial entities. For landlords, we source tenants, to developers, government market the project, structure the We understand the complex requirements of facilities Our team of qualified architects, engineers and projects, PE funds and industrial We offer the following services transaction and manage all the management and offer customised solutions backed construction professionals help clients with technical development corporations: to fund houses, developers, documentation. with international best practices to help our clients due diligence, audit management, programme corporates and developers: maximise operational efficiencies at optimum costs. We management and construction management We offer the following services to lay strong emphasis on sustainability measures while services. Our Engineering, Procurement & Valuation corporate, landlords and investors: ensuring superior service delivery, quality and safe Construction (EPC) model provides a one-stop shop Fundraising Development consultancy working environments. for all services from start to close-out. Land transactions Strategic consultancy Space Acquisition / Disposal We offer the following services to corporates, We offer the following services to corporates, Core Asset Sale developers, commercial property owners, residential developers, commercial property owners, residential Government and infrastructure Workspace Consulting and retail properties: developments and retail enterprises: Lease Administration
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150 151 RESEARCH INDIA REAL ESTATE
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ADVISORY, RETAIL & HOSPITALITY OFFICE AGENCY & LRG AHMEDABAD Gulam Zia Viral Desai Balbir Singh Khalsa Executive Director National Director Branch Director [email protected] [email protected] [email protected]
Saurabh Mehrotra BENGALURU National Director - Advisory PROJECT MANAGEMENT Shantanu Mazumder [email protected] Deben Moza Senior Branch Director Executive Director [email protected] [email protected] CAPITAL MARKETS CHENNAI Rajeev Bairathi Kanchana Krishnan Executive Director - Corporate Finance RESEARCH Branch Director [email protected] Dr. Samantak Das [email protected] Chief Economist and National Director Tushar Rane [email protected] HYDERABAD Executive Director - Core Assets Samson Arthur [email protected] Branch Director [email protected] FACILITY MANAGEMENT Ram Devagiri KOLKATA Executive Director & Head Swapan Dutta [email protected] Branch Director [email protected] INDUSTRIAL & ASSET SERVICES Balbir Singh Khalsa NCR National Director Mudassir Zaidi [email protected] Executive Director - North [email protected]
PUNE Paramvir Singh Paul Branch Director [email protected]
REPORT AUTHORS
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Knight Frank India Research provides development and strategic advisory to a wide range of clients worldwide. We regularly produce detailed and informative research reports which provide valuable insights on the real estate market. Our strength lies in analysing existing trends and predicting future trends in the real estate sector from the data collected through market surveys and interactions with real estate agents, developers, funds and other stakeholders. RE ENT AR ET LEADIN RESEAR LI ATI NS Knight Frank In ia P t. Lt . This report is published for general information only and not to be relied upon in anyway. Although high standards have been used in the preparation of the information analysis, views and projections presented in the report, no responsibility or liability whatsoever can be accepted by Knight Frank for any loss or damage resultant from any use of, reliance on or reference to the contents of this document. As a general report this material does not necessarily represent the view of Knight Frank in relation to particular properties or projects. Reproduction of this report in whole or in part is not allowed without prior written approval of Knight Frank to the form and content within which it appears. REALTY ASSET Co-working THE WEALTH INDIA REAL ESTATE MONETISATION 2018 The Office of future REPORT 2018 JUL - DEC 2017 CIN N U7 1 0 H1 PTC0 17
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