RESEARCH
INDIA REAL ESTATE
INDIA REAL ESTATE RESIDENTIAL AND OFFICE - JANUARY - JUNE 2017
AHMEDABAD | BENGALURU | CHENNAI | HYDERABAD | KOLKATA | MUMBAI | NCR | PUNE 1 RESEARCH INDIA REAL ESTATE
TABLE OF CONTENTS
Connecting ALL INDIA 18 AHMEDABAD 28 People BENGALURU 38 CHENNAI 52 & Property, HYDERABAD 68 KOLKATA 80 Perfectly. MUMBAI 94 NCR 110 PUNE 128 2 3 RESEARCH INDIA REAL ESTATE
FOREWORD
CHURNING POINT it would trigger some momentary sector is an undeniable reality. Indian Rupee has been a top performing disturbances but augur well for the industry currency among its market peers over the There is ample heartburn across the in the long term. Among the various The regulation is set to bring a sea change past couple of years. industry in the wake of the new regulatory economic policies of the Narendra Modi- in the realty landscape of the country by environment. Widespread anxiety whipped led government, this will be one of the most attracting new investors and customers. The strong fundamentals, robust economic up by the implementation of the Real important milestones. growth, political stability, controlled Estate (Regulations and Development) Act, It will give long pending protection to inflation and the lower interest rate regime 2016 and the recently rolled out Goods GST would be extremely beneficial for the interests of the end-consumers and have improved India’s chances of a and Services Act (GST) reflects in the the logistics sector. With a wave of new give a substantial fillip to the confidence sovereign ratings upgrade within the next 2 transaction books. infrastructure taking shape in the forms of of various stakeholders including fund years. Albeit, the recent loan wave-offs can ports, roads and rail networks, the new tax providers such as banks, other financial be a cause of concern. SHISHIR BAIJAL New launches have dried up, home sales regime would draw massive investments institutions and private equity funds. CHAIRMAN AND MANAGING DIRECTOR have slipped and piles of unsold stock are which would potentially transform the look Considering the benign inflation numbers The sector would also transform into a evident. But at the same time there have and feel of the warehousing industry. we hope that the Reserve Bank of India been some positive takeaways which will more organised and transparent place (RBI) to adopt a growth-inducing dovish augur well for the sector in the long-term. The impact of GST on real estate would under this regime. We have seen in the monetary policy. There is an indisputable switch towards be primarily tax neutral but loaded with past that regulators have brought in more building affordable homes. Co-working gains for the affordable housing sector. The efficiency and transparency in telecom, A growing economy would signal healthy n overhaul entrenched deep space providers are emerging as the new finance ministry has made it very clear that insurance and financial sectors. The consumption across all genres of the beneath the usual look and feel of big ticket players in the occupier market. there should be no additional tax burden information pertaining to the real estate Indian real estate. With tamed inflation, imagination is taking shape in the A And, the logistic sector is attracting million- on consumers. It would also add another sector will be available in a systematic uptick in industry sentiments and a good Indian real estate sector. dollar investments. strategic push to affordable housing manner leading to easy accessibility and monsoon forecast the need of the hour is transparency. to embrace a monetary policy that propels Metro cities are bustling with massive which in turn will drive the recovery of the In a nutshell, the Indian real estate growth. beehive-like infrastructure work, affordable residential sector. sector is probably grappling with the The government’s push towards affordable homes shaping a new skyline, investments fear of the unknown. We experienced a The intention of GST is to bring in housing, banks cutting down home worth millions of dollars pouring in similar dilemma in the recent past when efficiency in the entire tax system, the loan interest rates and uptick in buyers’ from sovereign funds and a significant demonetisation crippled growth. But implementation of which will see lot of sentiments would collectively revive the section of fringe players are on the edge six months on, the sector is looking up teething issues. But eventually it will pave much-ailing sector. engulfed by a new order of reforms driving towards a bright future. the way for an extremely efficient tax consolidation in the industry. system for the country. Meanwhile the initial concerns from GOING FORWARD Secondly, the RERA Act has drummed geopolitical uncertainties such as the US TRUMP CARDS up buyers’ confidence back in the sector. India is perhaps the only bright spots polls, BREXIT and other crucial elections in We have already seen the spontaneous among emerging markets in the world Europe have also faded away. First, the much awaited roll out of the action by the Maharashtra regulator or the Goods and Services Tax (GST) would today. The International Monetary Fund’s MahaRERA. Even as other states struggle With all economic indicators in the pink of be the single largest tax reform post- recent World Economic Outlook has to bring out their respective versions of the health the need of the hour is to embrace a independence. Much like the initial predicted an envious growth rate of more central act the new order in the housing monetary policy that propels growth. heartburns caused by demonetisation than 7% for the country. In addition the 4 5 RESEARCH INDIA REAL ESTATE
assets like bonds, commercial assets of the currency has appreciated against the investors to invest in this sector. private developers and REITs in emerging U.S. dollar; which further substantiates markets. The increase in interest rates in the the strong macros. In addition to the developed markets has also caused their improving macros, a slew of policy reforms ARE INVESTORS RESPONDING? domestic currency to strengthen and assets taking place in the country have wooed The government’s emphasis on housing in emerging markets have started becoming foreign investors back to its shores. The and its efforts to mitigate the risks in cheaper from the investment perspective. new government has implemented several the real estate sector by introduction As these emerging markets develop and reforms to streamline and formalise the of RERA has not gone unnoticed by grow, over a period of 10-15 years their economy across all sectors. The recent foreign institutional investors and also currency would strengthen against the roll out of the Goods and Services Tax the sovereign and pension funds. A large currencies of developed markets and hence (GST) Act could be the corner stone in this number of these investors and funds have at the time of exit, the long term investors endeavour. made changes to the portfolio allocation would not only gain from appreciation in strategy allowing investment exposure to assets but also gain from movement in Indian real estate. The pension and private exchange rate. The strong fundamentals, robust economic equity funds are investing in commercial growth, political stability, controlled inflation assets (office spaces and malls) and also in and the lower interest rate regime have under-construction residential properties. INDIA: RESURGENCE OF THE GEM OF improved India’s chances of a sovereign Players such as Qatar Holdings, CPPIB, EMERGING MARKETS ratings upgrade within the next 2 years Blackstone, Ivanhoe Cambridge, APG and However, the recent loan wave-offs can be Post the financial crisis in 2008 developing Xander are readying blueprints for long- major cause of concern for deferring the countries like Brazil, Russia, India, China term investments in the realty segment. Not upgrade. and South Africa (BRICS) among others just foreign investors even the domestic played a crucial role in driving the global investors are raising funds to invest in this economy forward. But over the period of sector. INDIAN REAL ESTATE: INDIAN REALTY: time unaddressed structural problems A NEW PARADIGM ON ANVIL coupled with high currency volatility in AN UNDERRATED these markets forced investors to move Real estate has been a key driver for the their money back to developed markets. economy. However, poor transparency While Brazil, Russia and South Africa were in the sector and dwindling consumer GOLDMINE. seriously affected by collapse in commodity confidence had put the industry under strain prices and political instability, weak in the past 3 to 4 years. government, policy paralysis and worsening The recent introduction of the Real Estate fiscal metrics crippled India’s growth story. (Regulation and Development) Act, 2016 As these emerging - BY NIBODH SHETTY has pumped in a new lease of life into markets develop and the sector. The is expected to weed out FLASHBACK The unemployment rate in major But the tables have turned. With a stable unorganised players from the industry grow, over a period of economies, particularly the US, has come government having comfortable majority in After nearly a decade-long era crippled and whip up buyers’ confidence bringing 10-15 years their below to its pre-recession levels and wage parliament, the confidence has returned. with economic and political uncertainty the buoyancy back into the sector. currency would growth has finally started picking up. The India has now become one of the fastest global economy has stabilised and showing improving job prospects accompanied growing economies in the world and would strengthen against the healthy signs of recuperation. A reflection with higher wage growth poses a threat of retain that status for the foreseeable future. currencies of developed of the resurrected economic environment The subsequent stride in re-engineering inflation rising rapidly. Since the nominal Although China was the only performing markets and hence at the came across in the International Monetary momentum back into the sector was the domestic returns on savings instruments emerging market until recently, today Fund’s latest World Economic Outlook governments push towards ‘affordable time of exit, the long term in these economies are low, the inflation it faces imminent threat from high debt (WEO). housing’. By giving it infrastructure status investors would not only adjusted real returns would be lower and and excess capacities. It has also been the government would attract private gain from appreciation in in many cases negligible possibly even downgraded by Moody’s. developers towards these projects. At the sub-zero. This is making their pension assets but also gain from The projections indicate that the global same time home loan sops and interest and sovereign funds as well as domestic movement in exchange GDP would grow above 3.5% per annum subsidies under the Pradhan Mantri investors look for assets abroad which India on the other hand is projected to grow rate. over the next 5 years. In the wake of the Awas Yojna would fire up the demand for can deliver higher inflation adjusted real at the rate of more than 7% according changing scenario the era of low interest these homes. The expected increase in returns. A large number of such investors to the IMF’s world economic outlook rates and loose monetary policies in transparency due to implementation of have modified their portfolio allocation forecast. Its economic robustness is also developed economies is fading away with RERA and formalisation of sector with the strategies to allow increase in exposures substantiated by the performance of its Central Banks increasing interest rates in implementation of GST, the sector would to emerging markets which give potential currency. The Indian Rupee has been a top anticipation of higher inflation in developed aid the sector in getting access to variety of for higher returns despite subjecting the performing currency amongst its emerging countries such as U.S and Canada. formal sources of finance.These reforms will portfolio to higher risk. The pension funds market peers over the past 2 years. The go a long way in enticing the institutional prefer to invest in regular income generating volatility in the currency has reduced and 6 7 RESEARCH INDIA REAL ESTATE
SUMMARY OF RECENT SELECT INVESTMENTS BY GLOBAL INVESTORS INTO INDIA REAL ESTATE SOME OF THE RECENT FUND RAISES/INVESTMENTS INCLUDE-
DATE INVESTOR INVESTMENT FUND/ DEAL DETAILS DATE INVESTOR INVESTMENT FUND/ DEAL DETAILS COMPANY (TARGET) COMPANY (TARGET)
June 2017 KKR Lodha Group $100 million equity investment 2017 Piramal Finance Ltd. Piramal Enterprise Piramal Finance plans to invest $171 million into real estate develop- er Embassy Group’s projects June 2017 Qatar Holding Affordable Housing Fund Invested $250 million in Arthveda Fund Management
Pvt. Ltd’s new Affordable Housing Fund 2017 Kotak Realty Fund Kotak Mahindra Bank Raising $250 million ($100 million in latest tranche and $150 million in earlier tranche) to invest in affordable housing projects across the May 2017 Xander and APG IT SEZ in Chennai Bought an information technology (IT) special country economic zone (SEZ) in south Chennai for
around $350 million 2016 Motilal Oswal Real Motilal Oswal Group ` 800 crore in tranche III Estate ` 500 crore in tranche II May 2017 GIC DLF Cyber City Developers Ltd (DCCDL) 40% stake in DLF Cyber City Developers Ltd (DCCDL) Plans to invest in projects of reputed developers across major metros the commercial arm of DLF for `12,000 crore
2016 Indiabulls Real Estate Indiabulls Asset Manage- Raised `1,400 crore in its third commercial real estate private equity Apr 2017 Canada Pension Plan Phoenix Mills subsidiary $250 million in multiple tranches into the Island Star Fund ment Company fund Investment Board Mall a subsidiary of Phoenix Mills
2016 Milestone Capital Advi- Milestone Capital Advisors Plans to raise INR 1,400 crore in its third commercial real estate Feb 2017 Dalian Wanda Industrial park in Haryana Plans to invest $12 billion to develop an industrial sors Ltd Ltd private equity fund township project in Haryana
2016 IDFC Alternatives IDFC Ltd Plans to raise $300 million to invest in Indian real estate sector Feb 2017 Ivanhoe Cambridge Private equity fund jointly floated by $250 million fund to invest in metro cities- metro cities them and Piramal Enterprises Ltd - Mumbai Metropolitan Region, Delhi-National Capital Source: http://economictimes.indiatimes.com/industry/banking/finance/idfc-alternatives-to-raise-rs-2000-crore-real-estate-fund/articleshow/52825410.cms http://www.dnaindia.com/business/report-ivca-successfully-hosted-its-second-real-estate-and-infrastructure-2477120 Region, Bangalore, Pune, and Chennai. http://economictimes.indiatimes.com/industry/banking/finance/idfc-alternatives-to-raise-rs-2000-crore-real-estate-fund/articleshow/52825410.cms
Nov 2016 APG Asset Management Joint venture formed $450 million to buy retail real estate in India GREEN SHOOTS OF RECOVERY next wave of growth. Right from buying of generally the leading indicator of how the and Virtuous Retail (VR) land, funding of projects to delivery of the sector is going to perform in the near future. The past 3-4 years have been an extremely final product to the buyer, the entire process The reality index has outperformed the stressful period for the Indian real estate Jan 2017 Abu Dhabi Investment Lake Shore India Tie up with Lake Shore India to pump capital into their is going to witness a drastic change. market over the past year. The government with markets being subdued in terms of Authority (ADIA) retail properties has realized the potential of this sector to launches and sales across major metros. Despite subdued financial performance create jobs and also drive the GDP growth However, this year is expected to be the of the realty companies over the past few May 2016 GIC Viviana Mall Bought 50% stake in Viviana Mall in Thane, on the of the country. Hence it has been trying its year of inflection with new regulations years, the share price of the companies and outskirts of Mumbai, for over `1,000 crore best to revive the sector. It would be just coming into place. These regulations and also the BSE Realty index has outperformed a matter of time before this sector realizes Source: http://www.business-standard.com/article/specials/global-pension-funds-chase-indian-infra-for-better-returns-117040600014_1.html reforms would herald the industry into its the market. The share performance is and starts delivering on its full potential. http://www.thehindubusinessline.com/news/real-estate/sovereign-pension-funds-look-to-build-on-indian-realty/article9567895.ece
TABLE: PERFORMANCE OF BSE REALITY INDEX BSE SENSEX
180 155.1 152.7 160 127 122 126.8
140 123.1 122.3 122.3 119.5 112.8 113.5 100.7 105.1 105.2 100 120 123.2 118.4 118.4 112.5 114.7 111.8 111.4 110.3 110.8 107.4 105.7 104.2
100 100.6 100.2 100 80
60
40 SENSEX REALITY INDEX 20 Source: Knight Frank Research Source: 0 01/04/2016 01/05/2016 01/06/2016 01/07/2016 01/08/2016 01/09/2016 01/10/2016 01/11/2016 01/12/2016 01/01/2017 01/02/2017 01/03/2017 01/04/2017 01/05/2017 01/06/2017 8 9 RESEARCH INDIA REAL ESTATE
According to estimates, the shortage in urban housing is around 1.9 crore (19 million) units and 95% of this shortage is in the affordable PUSH TO housing segment. In a bid to bridge this huge AFFORDABLE gap between demand and supply of housing, the Government of India HOUSING launched the “Housing for All by 2022” initiative in June 2015. - BY PANKAJ ANUP TOPPO
ince the turn of this century, the country has been through a couple housing projects. To make these projects cities while for the rest of the country, of cycles of bust and boom in the real estate sector. During these 1 attractive 100% deduction for profits was including the peripheral areas of metros, allowed. These projects needed to be 60 square metres will apply. Under the cycles there have been many who have been able to realise their CREATING A CONDUCIVE S approved between June 2016 and March revised guidelines, the project needs to dream of having a roof over their head but still there is a huge section ENVIRONMENT. 2019 and had to be completed within three be completed within a period of five years of the population who is not that fortunate. According to estimates, the The “Housing for All by 2022” initiative years of approval. Minimum Alternate Tax from the date of getting the approval. The by the Government of India has been one will be applicable on such projects. In period of getting the approval however, shortage in urban housing is around 1.9 crore (19 million) units and 95% of its major focus areas. The first major the Union Budget 2017–18 proposals, the stands unchanged, i.e. approvals need to of this shortage is in the affordable housing segment. In a bid to bridge push by the government to the affordable guidelines for affordable housing projects be received between June 2016 and March this huge gap between demand and supply of housing, the Government of housing sector came in the Union Budget were further sharpened and were made 2019. The most important boost that the 2016–17 proposals, where it laid down the more practical. The dimensions of the Union Budget 2017–18 proposals gave to India launched the “Housing for All by 2022” initiative in June 2015. Among guidelines that housing projects need to housing units were changed. Instead of a the affordable housing segment was that it other objectives to fulfil this initiative was to provide affordable housing qualify to be categorised as an affordable built-up area of 30 and 60 square metres, granted it an infrastructure status. This had in partnership with public and private developers. Since the launch of housing project. As per the budget the carpet area of 30 and 60 square metres been one of the long-standing demands proposals, housing projects in which flats will be considered for a housing project to of the sector. This initiative would give the housing for all initiative, the government has come up with various % 95 with built-up area of up to 30 square metres qualify as an affordable housing project. banks more elbow room to provide loans Also, the 30 square meters will apply only for houses in this segment at a much more policies that would help to create a conducive environment so that private Shortage is in the affordable in the four metro cities and 60 sq metres developers can make their foray in this field. housing segment. in other cities will qualify as affordable in case of municipal limits of the four metro competitive rate. 10 11 RESEARCH INDIA REAL ESTATE
In affordable housing projects two The Goods and Services Tax (GST), which parameters play a very important role in came into effect from 1 July 2017 has also the success of a project—the pricing of the been giving nightmares to the players from project and second its timely completion. the supply side as well as to homebuyers. At present even in affordable housing The general perception was that under projects there have been instances of GST, the tax would go up from 5.50% projects not being completed on time. To (service tax plus VAT) up to 12%. To dispel ensure that this anomaly (of delay in timely such fears, the government has made it completion) in the real estate sector is clear that the tax incidence is likely to go removed, the government implemented the down rather than up under GST and that Response from the Real Estate (Regulation and Development) the developer should pass on the benefits developers. During our Act (RERA), 2016 in full letter and spirit to the consumer. This in turn means that field surveys in the Mumbai from 1 May 2017. Among other things, prices could further decrease under GST, Metropolitan Region as per the provisions of this Act, players or in other words affordable housing could (MMR), Delhi NCR and from the supply side will have to complete become just more affordable. Bengaluru, it was observed their projects within the time they specify, to the relevant Authority, when applying that the affordable housing for registration of their housing project. scheme has received a Since housing projects where more than very good response. In the eight apartments are developed, for the 2 MMR, affordable housing purposes of selling, will be covered under RESPONSE FROM THE BANKING projects have already RERA, affordable housing projects will SECTOR. started taking shape. automatically come under the purview of the new legislation as they are typically In a move that will give further fillip to the XRBIA Chembur Central large-scale projects. This will further affordable housing segment, banks and by XRBIA and Crystal ensure that the players operating in the financial institutions have started to cut Group, in Mumbai, is one the interest rate on home loans. The public affordable housing space complete their such example. Ruparel sector giant, State Bank of India, cut the projects within the stipulated time. To Realty’s affordable housing ensure that developers can do this in an interest rate on its home loan by 25 basis project in Kandivali West is efficient manner, the government needs to points for loans up to `30 lakh for new further make sure that there are processes homebuyers. As a result of this rate cut, the another example. in place that will provide approvals in an applicable rate for new home borrowers for a loan up to `30 lakh is 8.35%. Following efficient manner. like the ones mentioned above, are yet to a structural shift from the supply side. We the rate cut by the State Bank of India, be visible on the ground in markets like can expect affordable housing projects to other leading players in the home loan 3 Delhi NCR and Bengaluru but during our come up within metro cities and in urban The Pradhan Mantri Awas Yojyna (PMAY) space like ICICI Bank and HDFC too RESPONSE FROM THE field visits, it was noted that a number of agglomerations like Thane in the MMR introduced in June 2015 is another initiative followed suit. ICICI Bank reduced its home DEVELOPERS. leading developers have plans to realign and in Gurugam and Noida in Delhi NCR. by the government that will give a boost to loan rates by 30 basis points for loans During our field surveys in the Mumbai their business objectives and build more However, an affordable housing project is affordable housing. It is an interest subsidy up to `30 lakh. After this rate reduction, Metropolitan Region (MMR), Delhi NCR modest, affordable apartments. The plans a volume game, the major challenge for scheme called Credit Linked Subsidy the effective rate for a salaried woman and Bengaluru, it was observed that the are still in the initial stages and a few the Government of India will be to facilitate Scheme (CLSS) for purchase/construction/ is 8.30% and 8.40% for others. Housing affordable housing scheme has received affordable housing projects are expected in providing suitable land parcels and that extension/improvement of house catering Finance major, HDFC, too reduced its We can expect affordable a very good response. In the MMR, to be launched in the forthcoming months. too at a competitive price for the project to to the economically weaker sections, interest rates on home loans up to housing projcts to come affordable housing projects have already be financially viable. It also goes without lower income groups and the middle `30 lakh to 8.35% for women and 8.40% up within metro cities and started taking shape. XRBIA Chembur saying, the importance of having systems income group. Under this scheme housing for others. With banking giving the urban agglomerations like Central by XRBIA and Crystal Group, in in place that will help in getting approvals loans of up to Rs 9 lakh and Rs 12 lakh necessary push to the affordable housing 4 Thane in the MMR and in Mumbai, is one such example. Ruparel in an efficient manner. will now get interest subvention of 4% and segment, others players in this space CONCLUSION. Realty’s affordable housing project 3%. This scheme should give a boost to should take a cue and reduce their rates Gurugram and Noida in in Kandivali West is another example. As result of the above mentioned push housing projects in the peripheral as well. Delhi NCR. Instances of affordable housing schemes, towards affordable housing, we will witness areas of metros. 12 13 RESEARCH INDIA REAL ESTATE
CO-WORKING SPACES IN INDIA – THE DAWN OF A NEW ERA
- BY SANGEETA SHARMA DUTTA
India is at the cusp of a co-working revolution employee, most of which pointed towards a address in a commercial district located of start-ups and SMEs, buoyed by with several large players spread across better work environment to achieve greater 15–20 km away. Like most commodities the government’s concerted efforts to heights. The past few decades, therefore, in present times, workplaces, too, have create a sustainable eco-system for the country. Some of the major co-working were devoted to an evolution in the come to be redefined as space that could entrepreneurs in the country. On their part, spaces are run by firms like WeWork, workplace, observing significant structural be accessed anytime and from anywhere, the entrepreneurs—a large number of them Office Pass, Awfis, myHQ, Altf Coworking, change in office space, right from space providing Just-In-Time services with the being millennials—believe in harbouring utilisation to placement of equipment help of technology. While this forms just global aspirations and the mantra adopted CoWrks, Bangalore Alpha Lab, Garge, BHIVE and automation. With newer business one aspect of co-working, the concept of by their start-ups reflect their staggeringly Workspace, Bombay Connect, Co Life, avenues opening up, office space design co-working spaces essentially involves ambitious mindset that was not prevalent 91 Springboard, Investopad and Innov8, continued to evolve at an incessant pace, groups of start-ups, creative consultants, till a few years back. This provides a covering not only its structural facet but freelancers and small and medium perfect platform for co-working business amongst others. also involving aspects such as recreation enterprises (SMEs) who share workspace centres to cater to the office space needs facilities and digitalisation of the office. and breakthrough ideas, enhance of these growth-seeking start-ups. Thus, their business horizon and gain a fresh with the increasing number of start-ups In the age of millennials where disruption is the order of standpoint on their own businesses by the and freelance professionals in the country, the day, office space has come a long way since it was It comes as no surprise that with the dint of sharing workspaces. there is a palpable demand for co-working conceptualised as a place of work, with ungainly desks quantum of ground covered in office space spaces in metro cities that had hitherto and chairs comprising the set up. Over the years, various design and development, a workplace been lying untapped. researches endeavoured to map the productivity of an today has ceased to be a single, fixed India, today, is witnessing a proliferation 14 15 RESEARCH INDIA REAL ESTATE
lease out their entire area, or a large part of it, to companies that can act somewhat as ‘anchor tenants’, thereby helping them get a fixed-income stream. START-UPS AND SMES STAND TO SAVE
Going forward, with the advent of major co- % working players in India and an increasing 15-20 number of such facilities coming up across by working in a co-working space, cities to cater to the demand of start- while enjoying the benefits of a fully ups and SMEs, the co-working sector is functional, plug-and-play modern expected to thrive and could prove to be a workplace. significant disruptor on India’s commercial real estate market. Currently, NCR and Mumbai figure prominently on the seat availability front, followed by cities such as Bangalore and Kolkata. Mumbai accounts for a substantial amount of trasactions as well. However, at present, the segment is at a nascent stage and not all the co-working operators are likely to be able to hold their of seats, based on business needs. Awfis is the first company in this space to seat per month in a co-working centre own in the long run, owing to their inability Companies can also base their key project have introduced a mobile app that enables in a region like NCR is in the range of Besides companies, people such as to mitigate the risks in their business teams out of co-working places in order to users to find and book office and meeting `10,000–15,000 in central business district business nomads, expats or those models or have enough stronghold in let them be located close to their clients. spaces on a real time basis in its centres (CBD) Delhi and `12,500–15,000 in CBD travelling to the country for a limited period non-prime markets. This would expectedly While co-working business centres provide across the country. Besides its own Gurugram. With prime rentals in Gurugram are amongst those preferring to work out result in consolidation among co-working a viable model for corporates looking for managed co-working spaces, Awfis also averaging `250 per sq ft per month, an of co-working spaces. Till a few years ago, operators and the market would be divided flexibility in work locations, companies offers a large repository of listed third-party office space of 700 sq ft, housing 10 they would have opted to work from coffee amongst a handful of large players. are slowly realising that collaborative work meeting rooms in hotels in various cities. employees, would amount to a whopping shops. spaces where conversation and ideas can Another co-working player, myHQ, offers a `75,000 per month. In contrast, 10 seats in flow freely and encourage an environment mobile app that lets one book a corner in a co-working centre would cost `150,000 of gainful ideas can improve employee cafes, restaurants and hotels. As opposed per month. Besides, the ‘tenant’ opting There are several benefits to be had productivity as well. to a conventional co-working model, myHQ for co-working space does not have to from working in co-working set-ups. converts unused spaces into work areas. worry about heavy overhead expenditures For one, start-ups get flexible working India is at the cusp of a co-working Additionally, one could even avail discounts or comply towards formalities such as Recently, Sequoia India options at affordable rents, as they offer revolution with several large players spread on food and beverages at the pub or café providing security deposits, payment of Of late, several developers, invested ` 130 crore seats at cheaper rentals in an office- across the country. Some of the major chosen. Meanwhile, WeWork plans to brokerage and even furnishing the office. in co-working space like environment. The companies are co-working spaces are run by firms like too, are planning on expand through an ‘operating agreement’ Thus, ease of working in such pocket- offered an organised and synergised WeWork, Office Pass, Awfis, myHQ, Altf starting their own co- start-up, Awfis, while with Embassy Group, who will be providing friendly and hassle-free set-ups has working environment along with business Coworking, CoWrks, Bangalore Alpha working offices to provide WeWork, the US-based the capital and will handle the real estate increased the popularity of co-working networking opportunities with the other Lab, Garge, BHIVE Workspace, Bombay shared office space and construction aspects of the American space amongst start-ups and small incubation spaces, or members. Start-ups and SMEs stand to Connect, Co Life, 91 Springboard, company. Approximately 6 mn sq ft is businesses. divide large floor plates leader, entered India save as much as 15–20% by working in Investopad and Innov8, amongst others. planned to be built over the next five years for smaller occupants. On last year and signed a co-working space, while enjoying the Despite the demand for co-working space, in Bangalore, Mumbai and the National an agreement with benefits of a fully functional, plug-and- there are several challenges that have to an average, the cost per Capital Region (NCR). the Embassy Group play modern workplace. Moreover, the Recently, Sequoia India invested ` 130 be tackled; for instance – changing the seat per month in a region to develop a facility co-working business model also provides crore in co-working space start-up, Awfis, conventional mindset of a client who would like NCR is in the range of access to a number of shared amenities while WeWork, the US-based shared office want to book a meeting room based on in Bengaluru at an Of late, several developers, too, are `10,000–15,000 in central and services such as conference rooms, space leader, entered India last year and the touch and feel factor rather than an planning on starting their own co-working business district (CBD) estimated investment of Wi-Fi connection, refreshments and signed an agreement with the Embassy app. Further, owing to the inherent risks offices to provide incubation spaces, Delhi and 12,500–15,000 $100 million. recreational space, as well as the flexibility Group to develop a facility in Bengaluru at involved in the sector, a few operators ` or divide large floor plates for smaller to scale up or decrease the number an estimated investment of $100 million. strive to mitigate the risk by preferring to in CBD Gurugram. occupants. On an average, the cost per 16 17 RESEARCH INDIA REAL ESTATE
I RE HALF-YEARLY LAUNCHES IN THE TOP EIGHT CITIES
H1 2016 H2 2016 H1 2017
30000
25000
20000
15000 Number of units
10000
5000 After the initial dilemma regarding 0 the implementation MUMBAI NCR BENGALURU PUNE CHENNAI HYDERABAD KOLKATA AHMEDABAD of the RERA, largely Source R all stakeholders have reconciled to the fact that I RE HALF-YEARLY SALES IN THE TOP EIGHT CITIES RERA will be a reality
H1 2016 H2 2016 H1 2017 sooner than later. With ALL INDIA developers re-directing 40000 I RE efforts from launches to HALF-YEARLY LAUNCHES AND SALES TREND IN THE TOP EIGHT CITIES 35000 RERA compliance, pace of LAUNCHES SALES RESIDENTIAL 30000 launches was lower in 180,000 H1 2017 25000
160,000 20000 Number of units
140,000 15000 • After the tumultuous H2 2016 when all stakeholders have reconciled to 10000 the demonetisation needle punctured the fact that RERA will be a reality 120,000
the market pulling down residential sooner than later. With developers 5000 sales and launches by 46% and 23% re-directing efforts from launches to 100,000 respectively, H1 2017 has ushered as RERA compliance, pace of launches Number of units 0 MUMBAI NCR BENGALURU PUNE CHENNAI HYDERABAD KOLKATA AHMEDABAD an eventful period. was lower in H1 2017. 80,000 Source R • The first two months of H1 2017 • In the backdrop of these landmark saw consumers and the industry as events this performance has also 60,000 a whole grapple with the aftermath been dictated by the developers particularly the residential market latest set of numbers indicate that the country declined by 41% to 62,738 of demonetisation. While activity baggage of unsold inventory, which 40,000 has come with government’s focused share of less than `2.5 mn ticket size units in H1 2017 compared to 1,07,120 encouragingly picked up in March and until a year ago was mainly in the under attention to the affordable housing housing that had risen from 17% in H1 units in H1 2016. The decline was 9% April, May 1 earmarked the dawn of construction category. However, now 20,000 segment. Over the last year the 2016 to 20% in H2 2016, has further compared to the demonetisation period the single largest change in history of ‘ready for possession’ apartments government has announced a series of jumped in the latest H1 2017 period of H2 2016 when 68,702 units were Indian real estate industry – through are also available across markets. 0 measures to revive a fresh lease of life to 36%. The category of housing launched. Ahmedabad and NCR wore the implementation of the Real Estate With ready projects kept outside the into this segment of market. valued at less than INR 5 mn is now as the worst hit with launches falling by
H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 much as 71% across the top 8 cities, 79% and 73% respectively. (Regulation and Development) Act ambit of RERA, developers have been • We believe that the focus on affordable substantially higher than the 52% share 2016. focusing heavily on sales of their ready Source R housing is a structural change and • With consumers opening up to the possession stock. in H1 2016. • After the initial dilemma regarding the Note: The top eight cities are Mumbai, NCR, the supply side response to this focus confidence infused by RERA and implementation of the RERA, largely • The impetus to the realty market Bengaluru, Pune, Chennai, Hyderabad, area implies that it is going to be a • With this backdrop, residential a slew of government measures Kolkata and Ahmedabad sustainable theme going forward. The launches in the top eight cities of the towards affordable housing, sales 18 19 RESEARCH INDIA REAL ESTATE
decline was not as severe as noticed to its peak of in H2 2014. However, the TICKET-SIZE SPLIT OF LAUNCHED in launches. Sales during H1 2017 numbers are lower mainly on account of UNITS IN THE TOP EIGHT CITIES OFFICE MARKET declined by 11% to 1,20,756 units in the shrinking market size. H1 2017 compared to 1,35,016 units H1 2016 H2 2016 H1 2017 • With the baggage of unsold inventory • Office market fundamentals across the in H1 2016. Sequentially, however, the I RE and the state of the residential property <2.5 mn 17% 20% 36% country remain tight with vacancy levels sales are 11% better compared to the OFFICE SPACE STOCK AND OCCUPIED market, weighted average property STOCK AS OF JUNE 2017 demonetisation period of H2 2016 when 2.5-5 mn 35% 39% 35% hitting new lows for the 11th straight price has stagnated. Developers in 1,09,159 units were sold. period as the supply crunch shows little STOCK OCCUPIED STOCK most markets have been forthcoming in 5-7.5 mn 22% 20% 15% sign of abating with any meaningful 160 • Unsold inventory levels at 5,96,044 offering freebies and discount for sales 7.5-10 mn 10% 11% 6% impact. units in H1 2017 are 10% lower than closure. 10-20 mn 10% 6% 8% 6,60,239 units in H1 2016 and are • The supply crunch that has hamstrung 140 consistently trending lower compared >20 mn 5% 4% 1% the market and macro headwinds in the form of the slowdown in the IT/ 120 I RE I RE ITeS spending by Europe and USA has COMPARISON OF CITY-WISE PRICE LEVELS TICKET-SIZE SPLIT OF LAUNCHED UNITS IN H1 2017 (WT. AVG. PRICE TREND) weighed down office space demand and caused a 10% decline YoY in 100 <`2.5mn `2.5-5mn `5-7.5mn `7.5-10mn `10-20mn >`20 10000 transaction levels during H1 2017 com- The abject lack of fresh mn sq ft 100% pared to a 13% growth in the previous 80 office space is most reference period. 90% visible in the IT/ITeS sector 9000 80% • The 10% decline in transaction levels 60 dominated markets of translates to 18.1 mn sq ft of office 70% Bengaluru, Pune and space being taken up across the six 40 60% office space markets during H1 2017. Hyderabad that currently 8000 A similar 5% decline in supply saw 50% have single digit vacancy
Number of units 17.9 mn sq ft come online in the same 20 40% levels at 4%, 8% and 9% period.
7000 30% respectively. 0
20% NCR PUNE MUMBAI 10% I RE CHENNAI HYDERABAD HALF-YEARLY NEW COMPLETION, TRANSACTIONS BENGALURU 6000 0% AND VACANCY LEVEL (TOP SIX CITIES) Source R MUMBAI NCR BENGALURU PUNE CHENNAI HYDERABAD KOLKATA AHMEDABAD NEW COMPLETION TRANSACTIONS I RE
per sq ft VACANCY (RHS)
` Source R CITY-WISE NEW COMPLETION, TRANSACTIONS AND VACANCY LEVEL DURING H1 2017 5000 25 20% NEW COMPLETION TRANSACTIONS VACANCY (RHS) I RE 10 25% CITY-WISE QTS VS AGE OF UNSOLD INVENTORY ANALYSIS 18.5% 22% 4000 20 9 AI N R EN AL R NE ENNAI DERA AD L ATA A EDA AD 18% 17.5% 20 8 20% 18% 16.7% 15 7
3000 mn sq ft TERS
15.6% 16% 6 15% mn sq ft 15 IN A R 15.1%
R 5
10 11% 2000
4 9% 10% 8% 14% 13.3% 10 5 3 1000 4% 2 5% 12.4% A E NS LD IN ENT 1 0 12%
0 5 5 10 15 20 0 0% H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H1 2017 H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 H2 2016 TS NCR AI N R EN AL R NE Source R PUNE MUMBAI
Source R CHENNAI ENNAI DERA AD HYDERABAD BENGALURU Source R Note: The size of the bubble indicates the quantum of unsold inventory. QTS is the quarter to Note: The top six cities are Mumbai, NCR, Source R sell unsold inventory Bengaluru, Pune, Chennai and Hyderabad 20 21 RESEARCH INDIA REAL ESTATE
I RE SECTOR-WISE TRANSACTION SECTOR-WISE TRANSACTION SPLIT DURING H1 2017 SPLIT (TOP SIX CITIES)
IT/ITeS BFSI (Including support service) MANUFACTURING OTHER SERVICES H1 H2 H1 INDUSTRY 100% 2016 2016 2017
90% BFSI 12% 13% 12% 80% IT/ITeS 43% 49% 39% 70% Manufacturing 16% 17% 18% 60% Other Services 30% 21% 31% 50%
40%
30%
20%
10%
0% MUMBAI NCR BENGALURU PUNE CHENNAI HYDERABAD
Source R
• Consistently falling since H1 2012, the 0.5 mn sq ft of office space during H1 A WAVE OF INSTITUTIONAL vacancy level now stands at 12% that 2017. is the lowest level in recent recorded • In terms of deal size, Pune recorded history. The abject lack of fresh office the largest deals, marginally edging out FUNDS EYE INDIAN SHORES space is most visible in the IT/ITeS Bengaluru, with the average deal size in sector dominated markets of Bengaluru, the city amounting to nearly 48,000 sq Pune and Hyderabad that currently have - BY YASHWIN BANGERA I RE ft in H1 2017. Chennai and Hyderabad DEAL SIZE ANALYSIS single digit vacancy levels at 4%, 8% witnessed the smallest average deal and 9% respectively. H1 2016 H1 2017 sizes at 23,000 sq ft and 18,500 sq ft, • The IT/ITeS sector share in transactions respectively. 60000 eveloped markets in the West have and productive economies. Asia has thus trade and commerce. Similarly, RERA will has been showing signs of weakening • Average rental values across these been progressively becoming been attracting increasing capital from help investors and end users navigate the in recent periods but it continues to six cities grew at 7% YOY during H2 Dde-globalised as they experienced investment banks, private equity funds and traditionally dark annals of the real estate be the largest driver of office space 2016. While Mumbai saw flat YoY rental increasing competition from the developing other financial institutions. Recognising industry. in India, accounting for nearly 40% of growth, Hyderabad and Bengaluru world. This is a clearly observable the structural shift in India’s economic and the transactions during H1 2017. This experienced the strongest rental growth phenomenon as the world watches political landscape, foreign capital has was followed by Other Services sector, Great being taken out of Britain and the been vying to find avenues to invest in this Massive infrastructure projects such as the 40000 at 14% and 8% YoY respectively. which includes sectors such as consult- ‘hawkish’ Trump regime policy on work country’s potential growth. Dedicated Freight Corridor (DFC) and the ing, media, telecom and infrastructure, visas for immigrants.. The protectionist Delhi-Mumbai Industrial Corridor (DMIC)
sq ft at 28%. measures are purely symptomatic of hold the promise of seamlessly connecting Sweeping structural reforms such as the the thus far remote corners of the country • Co-working spaces as a trend is emerg- a much broader economic malaise introduction of the Goods and Services to its existing and future manufacturing and ing as we see firms taking up space in characterised by the fact that products Tax (GST) Act 2017 and the implementation distribution hubs, much like the coast-to- Bengaluru, Pune and NCR. The concept and services from developed economies 20000 of the Real Estate (Regulation and coast highways and inter-city railroads of co-working spaces essentially are continuously losing ground to those Development) Act, 2016 (RERA) showcase on which America built the foundation involves groups of start-ups, creative originating in competitive Asian economies. the political will of the current regime to of its economy. The DFC and DMIC will consultants, freelancers and Small and promote the ease of doing business and involve the construction of almost 9,500 Medium Enterprises (SMEs) who share As developed economies struggle to hold increase transparency in the massive km of railroads crisscrossing the length workspace and break through ideas, their ground in this post-Global Financial Indian real estate sector. The erstwhile and breadth of the country and the expand their business horizon and gain Crisis (GFC) structural shift, their Asian cumbersome tax web that the GST creation of eight investment regions that 0 a fresh standpoint on their own busi- counterparts have been flourishing as would replace, created huge compliance will easily prove to be among the largest NCR
PUNE nesses by dint of sharing workspaces.
MUMBAI economic realities slowly and surely direct complications and proved to be needless infrastructure initiatives in the world today. CHENNAI Across the top 6 cities, such co-working HYDERABAD BENGALURU global capital toward the more efficient hindrances to the smooth functioning of Their creation would spawn the need for space providers have taken up around Source R 22 23 RESEARCH INDIA REAL ESTATE
$ 3.41bn In The first quarter of 2017 saw a massive USD3.41 bn enter the market.
massive real estate development as Residential and commercial office spaces factories, office spaces, residential A few notable mentions of have been the staple for institutional units, malls and warehouses will need recently concluded deals and equity entering the real estate market and to come up to house the working investment pledges made in recent forays into alternative real estate populations of these cities. These the Indian real estate space property types, such as warehousing, by infrastructure projects along with the players such as Embassy, CPPIB and DP include: Massive infrastructure Make in India and the Invest in India World showcase the increasing appetite projects such as the initiatives of the government will set the of institutional investors. The Indian real Dedicated Freight Indian economy on course to become a estate sector attracted $5.7 bn of global Corridor (DFC) and manufacturing powerhouse and enable $1bn capital flows in 2016 and just the first it to attract global investments to fast- the Delhi-Mumbai 1 bn investment by KKR Asset Finance quarter of 2017 saw a massive $3.41 bn track its economic evolution. enter the market. Such aggressive capital Industrial Corridor Pvt. Ltd in residential projects in Investment banks and Bengaluru, Gurugram and Chennai commitments and the propagation of (DMIC) hold the investment structures Such aggressive private equity funds Investment banks and private equity promise of seamlessly DP World’s $1 bn pledge to tap into capital commitments and the propagation such as Blackstone, funds such as Blackstone, KKR, JP connecting the thus opportunities arising in the Indian of investment structures such as REITs KKR, JP Morgan Morgan and Morgan Stanley, pension far remote corners logistics infrastructure space and InvITs in tandem with the relaxation of and Morgan Stanley, funds such as the Canada Pension of the country to its the FDI policy, will greatly increase market pension funds such as Plan Investment Board and logistics depth and attract further investments in the existing and future bn the Canada Pension moguls such as DP World, have already $0.75 Indian economy in times to come. manufacturing and forayed into the commercial, residential $0.75 bn Infrastructure Investment Trust Plan Investment Board distribution hubs, and warehousing space in India. (InvIT) public issue by IRB Infrastructure and logistics moguls much like the coast- The opportunity and need for further such as DP World, development is immense, as just the to-coast highways $2bn have already forayed city of New York has more office space and inter-city railroads GIC’s nearly $2 bn acquisition of DLF’s into the commercial, than the whole of India and according 40% stake in DLF Cybercity Developers on which America residential and to various estimates, we currently face Ltd., which owns and operates its built the foundation of a shortfall of 18 mn to 23 mn housing leased commercial office spaces warehousing space in its economy. units. India. 24 25 RESEARCH INDIA REAL ESTATE
A LOOK AT THE PAST. COMING TO THE PRESENT DAY.
Despite the staid nature of the city, it has Moving further west, on the SG Highway been gradually expanding over the years. is ISCON Crossroad, which presently As regards the modern beginnings of the is considered to be the city centre of city, Ahmedabad got its first textile mill in Ahmedabad. To further add value to 1859 courtesy Shri Ranchhodlal Chhotalal. this landmark in Ahmedabad, the top Since then, many textile mills have sprung residential locations of Bodakdev, up in Ahmedabad and the city was often Vastrapur, Prahlad Nagar and Thaltej being referred to as the ‘Manchester of the are close by. The capital values in these East’. Giants like Reliance industries and regions hover around `5000–6,000 per Arvind Limited too established their bases sq ft. Most of the micro markets are on in Ahmedabad. Most of these mills came either side of the SG Highway. While up in the eastern part of the city. Even micro markets along the SG highway have today there are mills belonging to Arvind become prime area for offices, residential that are functional in Ahmedabad. This to developments are mostly coming up in a great extent defines the character of the the area between the SG Highway and residential development in this part of the Outer Ring Road. In some cases, like in city. Even today, this part of the city caters the case of Bopal developments have also largely to the affordable segment where spilled beyond the Outer Ring Road on the SHIFTING POWER capital values hover around `1,800–`2,200 western side of Ahmedabad. per sq ft. Most of these affordable housing units are coming up in the micro markets CENTRES IN of Ramol, Vastral, Narol, Vatva, Nikol and THE OUTLOOK. along the Naroda Dehgam Road. While micro markets in the north such AHMEDABAD’S REAL as the Airport Road, Anand Nagar, Chanakyapuri, Chand Kheda, Chandlodia, The western part of the city however, Gota, Hansol, Vaishnodevi Circle too will catered to a very different class of gentry. ESTATE MARKET continue to grow courtesy their locations The city originally came up around the sandwiched between Ahmedabad and banks of the Sabarmati River and around Gandhinagar the city growth on the - BY PANKAJ ANUP TOPPO Kalupur, which also houses the city’s main western will remain unabated for a while. railway station. The main business centres The prime reason for this is that the “The real estate market in Ahmedabad before demonetisation, new launches in the in this part of the town came up around Sanand GIDC has been promoted by the is very boring,” quipped one of the past six months have nose-dived. “Due to Ashram Road and CG Road, which later State Government of Gujarat for a while stakeholders of the Ahmedabad real estate lack of clarity on policies like RERA, new started moving towards the 132-ft Ring and has received good response from the market. Another prominent developer launches have considerably slowed down While micro markets Road. As Ahmedabad began to grow, the corporate sector. Most experts to whom explained this very point further. “Unlike since January,” opined one developer. At a along the SG highway Indian Space and Research Organisation we spoke were of the view that Sanand will bigger real estate markets like Delhi macro level however, the real estate market (ISRO) set up its Space Applications Centre have become prime area continue to be the pull factor for the city. NCR and Mumbai, the Ahmedabad real in Ahmedabad has been slowly spreading in the city, in 1972. A road was made for offices, residential The areas to look for going forward are estate market is very stable. There are its wings across the city, more so towards which even in the present day is called developments are the micro markets between SG Highway not too many ups and downs,” stated its western side. Satellite Road that provided connectivity and Outer Highway and micro markets like the developer. The real estate market in mostly coming up in the to the 132-ft Ring Road. People employed Bopal beyond Outer Ring Road. The capital Ahmedabad maybe dull and boring but area between the SG at the Space Applications Centre and values in Bopal are still around `2,800– it too was exposed to the vagaries of Highway and Outer Ring especially those who were not from 3,000 per sq ft. policy interventions. Like other real estate Road. In some cases, Ahmedabad started residing along the markets of the country, the impact of like in the case of Bopal ISRO establishment. Thus, this area demonetisation was visible even in the real inherited a cosmopolitan character. developments have also estate market of Ahmedabad but things Named Satellite this neihourhood was the have started to return to the days before spilled beyond the Outer first development to have come up outside demonetisation happened in India. While Ring Road on the western the 132-ft Ring Road. sales have certainly moved to the levels side of Ahmedabad. 26 27 RESEARCH INDIA REAL ESTATE
launched has been the lowest I RE in Ahmedabad developers have MICRO-MARKET SPLIT OF LAUNCHED UNITS responded in a strong manner to the government’s initiative towards H1 2016 H2 2016 H1 2017 affordable housing. Of the total units
launched in H1 2017, 57% were 60% launched in the sub ` 2.5 mn price 55% category. If the price bar is raised
51% 8,809 5,200 1,874 to sub ` 5 mn, then of the total units 50%
launched, 75% were launched in this 46% 45% UNITS UNITS UNITS price category. 40% 40% H1 2016 H2 2016 H1 2017 • After hitting a low of 7,400 units in the demonetisation-induced H2 2016 sales 35%
picked up in H1 2017. This was possible 30% 30%
because of availability of ready to move 27% 25% in homes as developers were in a rush 23%
to complete their under construction 20% 18% 17% projects before RERA came into force 17% 15% from May 1. Sales went up by 7% in 10% H1 2017 compared to H2 2016 but it is 10% 10% still lower by 7% than the same period 5% 4% 2% last year. 2% 2% 0%
CENTRAL EAST NORTH SOUTH WEST
2. MARKET SPLIT OF Source R AHMEDABAD RESIDENTIAL LAUNCHES • The lack of available spaces in south and high capital values In central • The lion’s share of new launches in Ahmedabad did not infuse much the last six months happened in North confidence in developers to come up RESIDENTIAL Ahmedabad which has locations with new projects in these two micro such as Chandkheda, Gota, Motera markets. 1. AHMEDABAD RESIDENTIAL I RE and Ognaj. With prices in west and MARKET LAUNCHES, SALES AHMEDABAD MARKET TRENDS - HALF-YEARLY central Ahmedabad breaching the AND PRICE TRENDS LAUNCHES SALES WT. AVG. PRICE (RHS) homebuyers’ affordability level, north TICKET-SIZE SPLIT ANALYSIS Ahmedabad has emerged as the most 12000 3000 OF LAUNCHED UNITS • New launches in Ahmedabad hit a preferred destination for mid-segment new low in H1 2017. Between January 11000 housing. During H1 2017, more than H1 2016 H2 2016 H1 2017 and June 2017 only 1,874 new 10000 70% of the new launches in this market 2770 2770 <2.5 mn 28.94% 29.78% 56.51% housing units were launched. Lack of 2758 2800 2730 were below the ticket size of `5 mn. With prices in west and clarity, especially on The Real Estate 9000 2.5-5 mn 41.73% 42.72% 22.15% 2645 (Regulation & Development) Act, 2016 2635 • After north, east Ahmedabad central Ahmedabad 8000 5-7.5 mn 15.32% 18.50% 15.26% witnessed the maximum launches. At
(RERA) was the single most important 2551 2600 breaching the homebuyers’ 7000 factor which held back developers from least 41% of the new launches that 7.5-10 mn 5.45% 6.32% 3.68% happened in the last six months were affordability level, north launching new projects. 6000 10-20 mn 7.54% 2.41% 2.40% Number of units ` \sq ft in east Ahmedabad. Most of these Ahmedabad has emerged 5000 • Compared to H1 2016, new launches 2400 launches happened in Naroda and >20 mn 1.02% 0.28% were down by 79% in H1 2017. When as the most preferred 4000 along the Naroda-Dehgam Road. compared to H2 2016 new launches Source: Knight Frank Research destination for mid- were down by 64% between January 3000 • Of the total units launched between 2200 January and June 2017 the percentage • Developers have responded positively segment housing. During and June 2017. Going forward, once 2000 there is clarity on RERA and systems share of units launched in south, west to the government’s focus on H1 2017, more than 70% 1000 are put in place for its efficient and central Ahmedabad came down to affordable housing in Ahmedabad. of the new launches in this single digits. While west is a promising implementation launches should pick 0 2000 • Between January and June 2017, market, the prevaing lull in this part of market were below the up. The interim head for the RERA in Ahmedabad had largely been
H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 the market is transient in nature. ticket size of `5 mn. Gujarat was appointed on 1 June 2017. an affordable market, especially • Even though the number of units Source R with regards to new launches that 28 29 RESEARCH INDIA REAL ESTATE
happened in the city. Of the total units I RE MICRO-MARKET LOCATIONS that were launched in Ahmedabad MICRO-MARKET SPLIT OF SALES between January and June 2017, close Central Paldi, Vasna, Navrangpura, Maninagar, Dudheshwar, Ambawadi to 79% happened in the sub ` 5 mn H1 2016 H2 2016 H1 2017 ticket size. East Naroda, Vastral, Nikol, Kathwada Road, Odhav
• What sets H1 2017 apart from the 35% North Gota, New Ranip, Tragad, Chandkheda, Motera
previous six months is the fact that 32% 32% South Narol, Vatva, Vinzol, Hathijan housing units launched in the sub ` 30% 30% 30%
28% West S. G. Highway, Prahlad Nagar, Bopal, Thaltej, Science City Road 2.5 mn almost doubled. Also, in H1 27% 2017 the lion’s share of new launches 25% 25% happened in the sub ` 2.5 mn price AHMEDABAD MICRO-MARKET MAP S A bracket. 22% Ganpatpura Dabhoda Jamiatpura B A R 20% Shantigram M Pore Raysan AT 17% C I R Adalaj IV E Vadodara Karoli Jaspur R 3. MICRO-MARKET WISE 15% Vadsar Pirojpur
RESIDENTIAL SALES 13% Khoraj Ambapur 12% Dantali Nar Valad Khodiyar mada M 10% 9% From the new launches • From the new launches between Jan- 9% Thol Lilapur ain C 8% Khatraj Zundal Karai
7% anal between January and June uary and June 2017 the definite move Thol Lapkaman anal Tragad towards affordable housing is crystal 5% Limbadia 2017 the definite move Amiyapur clear but the same is not apparent in Sanawad anch C Sughad a Br Medra towards affordable housing sales during the same period. The silver CHANDKHEDA 0% Adhana Nasmed Dholk Nigam Nagar Kotarpur Raipur lining however, is that the homebuyers Rakanpur Ognaj is crystal clear but the same CENTRAL EAST NORTH SOUTH WEST Ranasan too have started showing their affinity Santeja Y S C C A W GO Bhat Enasan is not apparent in sales towards affordable housing projects. H TA Source R Vayana IG Gidc Naroda H Motera Stadium during the same period. The micro markets of east and north LEGEND R A Noble Nagar D G CHANDLODIA Major Landmark A Sabarmati A which are largely affordable compared O Hansol Bilasiya R N Sabarmati The silver lining however, Hospital I Unali G Vahelal N to other parts of the city contributed to I Sardar Vallabhbhai Patel NDH Hotel R Vijay Nagar
ACHANAKYAPURI is that the homebuyers too S L C InternationalAirport a little over 50% of the total sales. E RanchardaCinema T Nava Naroda A J - G P Sola Village Sabarmati RS Chekhla Educational Institute E have started showing their R S A C Meghani • Sales activity continued to remain Airport D Naranpura S R ARKH Nagar A S S Palodia A Krishnanagar affinity towards affordable Bus Stand S Memnagar robust in west Ahmedabad. This micro D A
A
Railway Station Thaltej G O Dubeshwar N R market’s proximity to GIDC Sanand has I R housing projects. Thaltej Gam M Kathwada City Boundary T A Nikol F Navrangpur R S increased its attractiveness. Its share in 2 H Expressway 3 S 1 A the total sales, increased from 22% in 8,556 7,400 7,941 Highway Bodakdev Shahpur Manipur Bopal Ashram Bapunagar Ring Road Road Shahpur H2 2016 to 27% in H1 2017. Compared Ghuma Kubadthal Major Road Odhav Bhuvaldi to H1 2016 the share of west Ahmed- UNITS UNITS UNITS S S Gidc Godhavi Dhol Rail Line Spring Valley Odhav Industrial Niyojan Nagar Madalpur Khadia Industrial abad increased to 27% in H1 2017 from Metro/Station S Estate H2 2016 H1 2017 ka Br S Area 17%. H1 2016 BRTS Phase 1 (West) Sherkotda Kanbha anch C Bagodara Rabari BShelaRTS Phase 1 (East) Paldi Colony Kaneti Vastral Kujad anal BRTS Phase 2 Vejalpur-2 Vasna Anjall Amraiwadi Vastral Gam River Vasna Mahadev Lakes/Ponds Makaraba Juhapura APMC Nagar Vegetation Ramol C AD Sarkhej Gam Isanpur RO Memadpur Sanand DA H ARO Chaloda L - N Bhavda Singarva NARO Gidc Bakrol Burni Geratnagar Sanathal Vatva Vatva Piplaj AHMED Kolat Narolgam ABAD - Vinzol Undrel D VADODhamD atvana R
Vanzar A E
R O V G AR I IN Vanch A EXP Pipan L R R Laxmipur E Hathijan Y Dholk T R PA O ARDA W S S
E M a Br Visalpur Badodra Moraiya Hirapur anch C Aslali Changadar Gamdi
anal ER Nandej IV Tajpur R Devdi TI A Jinjar Modasar M Chosar Raska R A B
30 Sari Kasindra Barejadi 31 A
S Jetalpur Matoda Giramtha RESEARCH INDIA REAL ESTATE
4. AHMEDABAD MARKET 5. PRICE MOVEMENT HEALTH IN H1 2017 The market has just about started to pick up easy access to the major employment • The market has just about started to • The quarters to sell (QTS) unsold I RE after demonetisation. QUARTERS TO SELL (QTS) UNSOLD hubs and integrated development have pick after demonetisation had pulled inventory is the number of quarters INVENTORY ANALYSIS helped these markets in attracting things back. At the macro level prices At the macro level required to exhaust the existing unsold AHMEDABAD remained at the same level as it was inventory in the market. The existing 20 homebuyers over the last few years. prices remained at the 19 in H2 2016. Capital values of both unsold inventory is divided by the • Even though West Ahmedabad has 18 premium and budget projects saw a same level as it was in average sales velocity of the preceding the highest QTS and age of inventory 17 tepid growth of only 2%. Once clarity H2 2017. Capital values eight quarters in order to arrive at the 16 among micro markets, off late it has comes on issues like RERA and GST QTS number for that particular quarter. 15 witnessed a lot of traction. The city of both premium and the market should pick in Ahmedabad A lower QTS indicates a healthier 14 too is expanding towards the west, budget projects 13 which should give some fillip to prices market. which augurs well for this micro market. 12 as well. saw a tepid growth of • The new low in number of new The growing importance of Sanand 11 only 2%. launches and a healthy growth rate 10 GIDC should work in favour of West
in sales have had a bearing on the NO OF QUARTERS 9 Ahmedabad. quarters to sell (QTS) the existing 8 7 unsold inventory. As a result the QTS 6 has come down from 8.6 in H2 2016 to 5 PRICE MOVEMENT IN SELECT LOCATIONS 7.7 in H1 2017. At present the city has 4 more than 32,000 units in various stages 3 of construction that remain unsold. The 2 unsold inventory in Ahmedabad is less 1 than two years old which just about 0 LOCATION MICRO-MARKET PRICE RANGE IN H1 2017 12-MONTH 6-MONTH manages to catch up with the average (`/SQ FT) CHANGE CHANGE Jun-14 Jun-15 Jun-16 Jun-17 Mar-15 Mar-16 Mar-17 Sep-14 Dec-14 Sep-15 Dec-15 construction time. Sep-16 Dec-16 Source R Ambawadi Central 5,500 - 7,500 0% 0% • Central Ahmedabad is the best Navrangpura Central 5,500 - 7,500 0% 0% performing market. It has the lowest QTS and the age of inventory. East Mani Nagar Central 3,500 - 6,000 3% 0% Ahmedabad remains a consistent Paldi Central 4,500 - 6,200 3% 0% performing market in the city with the lowest level of quarters to sell of unsold Naroda East 2,000 - 3,000 0% 0% inventory and this is closely followed by Vastral East 1,900 - 2,500 1% 0% north Ahmedabad. Affordable pricing, Nikol East 1,850 - 2,500 1% 2%
I RE Prahlad Nagar West 5,000 - 6,500 0% 0% MICRO-MARKET-WISE QTS VS AGE OF INVENTORY Satellite West 5,500 - 7,200 0% 0%
ENTRAL S T EAST EST N RT Thaltej West 5,000 - 6,000 0% 0% 14 Vastrapur West 5,000 - 6,200 0% 0%
Bopal West 3,500 - 4,800 0% 0%
11 Chandkheda North 2,500 - 3,200 1% 0%
Motera North 2,800 - 3,600 0% 0% UNSOLD MICRO-MARKET INVENTORY Gota North 2,800 - 3,600 0% 0% 8 Central 2,380 Source: Knight Frank Research East 8,275
5 North 10,158
A E NS LD IN ENT R IN ARTERS A E NS LD IN ENT R South 2,366
2 West 9,756 5 8 11 14 17 20 TS Ahmedabad 32,934 Source R Note: The size of the bubble indicates the quantum of unsold inventory Source: Knight Frank Research 32 33 RESEARCH INDIA REAL ESTATE
this year the much awaited north-south Ring Road (ORR) Metro and is proposed BANGALORE METRO – corridor was rolled out. It would now be to have 13 stations encompassing major possible to traverse a distance of 24 km stations such as Silk Board, HSR Layout, from the north-west part of the city to the Bellandur, Kadubeesanahalli, Marathahalli, This concluding AN INFRASTRUCTURE southern region in 45 minutes, a boon for Mahadevapura and K.R. Puram. As per the section of Phase 1 both regions as the roadways between timeline set by BMRCL, the second phase added 12 km to the them are riddled with severe traffic shall be completed by December 2020. operational network bottlenecks. The line towards the southern It is estimated that after its completion, BEHEMOTH IN THE WAITING with the new line part of the city passes through some of Bangalore Metro would transport an the preferred residential neighbourhoods average of 10 lakh commuters per day. now connecting the - BY SANGEETA SHARMA DUTTA of Bengaluru housing large population and southern part of the would expectedly account for a higher city with seamless ridership. As per Bangalore Metro Rail The impact of an infrastructure project access to Chickpet, Corporation’s (BMRCL) estimates, the such as the metro rail is enormously KR Market, National daily ridership is expected to reach 5 lakhs powerful and comprehensive, affecting not College, Lalbagh, from the current 1.8 lakhs along the entire only a city’s real estate and commercial stretch of Bangalore Metro Phase 1. proposition but also its population density South End Circle, and employment generation. Accessibility Jayanagar, RV Road, through the metro leads to creating Banashankari, With the first phase of the metro office hubs and producing jobs, which JP Nagar and completed, the second phase has become in turn aids in improving the demand for Yelachenahalli the cynosure of all eyes today. Phase 2 residential property of select residential (erstwhile Puttenahalli). spans a length of 72 km and is expected neighbourhoods, while providing a boost to add 61 stations to the network. It to the commercial sector of the region includes the extension of the four Phase simultaneously. Also, reduced commuting 1 corridors, as well as the construction time owing to the metro has been observed of two new lines. Further, a new 18-km- to enhance the potential of a micro market long line connecting Silk Board with K.R. exponentially. As a result, micro markets Puram has been included, categorised as along the metro line witness steep rise in Phase 2A. The line will be called the Outer real estate values, coupled with hectic new
t was on June 17, 2017 that a long South End Circle, Jayanagar, RV Road, awaited milestone was achieved in Banashankari, JP Nagar and Yelachenahalli IBengaluru’s timeline. The city witnessed (erstwhile Puttenahalli). the completion of the 42.3-km-long first phase of the Bangalore Metro, as the last leg of its Green Line was flagged off As an overview, Bangalore Metro Phase 1 by the President of India, thus closing a stretches from Mysore Road in the west to km chapter that was scheduled to have been Baiyappanahalli in the east – a distance of 42.3 completed six years ago in 2011. This 18.2 km and from Nagasandra on Tumkur concluding section of Phase 1 added 12 Road in the north-west to Yelachenahalli on Completion of the first phase of the km to the operational network with the new Kanakapura Road in the south, a 24-km- Lakh Bangalore Metro 10 line now connecting the southern part of long stretch While last year witnessed the the city with seamless access to Chickpet, launch of the east-west corridor, garnering After its completion, Bangalore KR Market, National College, Lalbagh, much recognition in the western suburbs, Metro would transport an average of 10 lakh commuters per day. 34 35 RESEARCH INDIA REAL ESTATE
developments in the adjacent vacant land in residential real estate. Already these parcels, as developers strive to capitalise TO DODDABALLAPUR micro-markets have been witnessing a on the profit implications of large-scale proliferation of mid-end and affordable developments resulting from additional TO NELAMANGALA TO TUMKUR housing projects, adding to the residential TO CHIKKABALLAPUR FSI, if applicable. For investors, the return stock on a yearly basis. It is expected that BANGALORE INTERNATIONAL METRO PHASE I on investment is sizeable, given that EXHIBITION CENTRE metro connectivity would aid in easing homebuyers are willing to pay a premium METRO PHASE II the unsold inventory situation in such KEMPEGOWDA for residential properties located close to INTERNATIONAL AIRPORT locations, particularly in South Bengaluru, NAGASANDRA NICE ROAD public transit systems like the metro. which had witnessed a glut in supply in the OUTER RING ROAD recent years but was facing a low sales
NAGWARA SOUTHERN RAILWAY LINE traction owing to lack of infrastructure. For many, Bangalore Metro is the beacon On the other hand, Phase 2A is expected of hope. It is envisaged as a key player to smoothen out the traffic issues faced that would inter-connect different parts by office occupiers along the ORR. At of the city seamlessly and decongest the present, work along the Bangalore Metro city’s choked road network. While Phase Phase 2 has been going on unobstructed; 1 of the metro largely covers the city WHITEFIELD the extensions of Phase 1 observing more centre and the suburban neighbourhoods, traction. While there is still a long way BAIYAPPANAHALLI the four extension lines under Phase 2 to go, an infrastructure behemoth such TO BANGARPET are expected to optimise the operations as the Bangalore Metro, which harbours of Phase 1. Work from Mysore Road to NICE ROAD enormous advantages, the wait for its Kengeri and Yelachenahalli to Anjanapura completion is expected to be worth the Township up to the NICE Road Crossing is pain. going on at a rapid pace and BMRCL plans CITY RLY STATION to open these two sections by the end of OUTER RING ROAD 2018. The line between Baiyappanahalli and Whitefield, eagerly awaited by the IT community, is expected to be ready for operations by the end of 2020. Further, the two new lines under Phase 2 (north- south corridor of Nagwara–Gottigere and southern line of RV Road–Bommasandra) traverse through some of the densest and traffic-congested areas of the city, housing key IT hubs, and will seek to unclog the bottlenecks in order to support the growth MYSORE ROAD of the IT sector.
With Phase 2 of the Bangalore Metro Going forward, peripheral micro markets covering fast-growing micro markets PUTTENAHALLI like Bommasandra and Electronics City such as Chandapura, KENGERI in the south and Nagawara towards the Hosa Road and Hulimavu north, there is immense scope to unlock TO MYSORE in the south, Kengeri the potential of these locations as well and Nayandahalli in the as other neighbouring ones. Going forward, peripheral micro markets such west, and Thanisandra as Chandapura, Hosa Road and Hulimavu in the north are likely in the south, Kengeri and Nayandahalli in GOTTIGERE to witness substantial ANJANAPURA the west, and Thanisandra in the north NICE ROAD growth in residential real BOMMASANDRA TO ANEKAL are likely to witness substantial growth estate. 36 37 RESEARCH INDIA REAL ESTATE
sales. H1 2017 witnessed an increase I RE of 5% in new launches and 4% in sales MICRO-MARKET SPLIT OF LAUNCHED UNITS over the figures in H2 2016. H1 2016 H2 2016 H1 2017 • On a Year-Over-Year (YOY) basis, the 60% city is still far behind the numbers observed in H1 2016. The number of 55%
new launches in H1 2017 lagged behind 50% those of H1 2016 by a significant 42%, 47% 24,281 13,395 14,026
45% 44%
while for sales it was 19%, during the 42% same period. 40% UNITS UNITS UNITS • While the tightening of new launches 35% H1 2016 H2 2016 H1 2017 is partly attributable to the quantum of 31%
30% 28% unsold inventory build-up in the market, 27% 25%
factors such as insecurity regarding 22%
the RERA policy implementation and 20% 18% demonetisation, to some extent, played 14% 15% 14% major roles in the slowdown.
10% 9% • On the other hand, the city’s sales volume continues to be in a relatively 5% 4%
better position although it has failed 0% 0% 0% 0%
to recover the momentum it had CENTRAL EAST NORTH SOUTH WEST achieved in H1 2016. Buyers’ interest has been gradually picking up post- Source R demonetisation and while the actual purchase rate has been low, enquiries BENGALURU have risen positively. 2. MARKET SPLIT OF • In a bid to offload their unsold inventory RESIDENTIAL LAUNCHES and cash in on GST that permits credit for taxes paid on input costs such as • As in the previous periods, the RESIDENTIAL MARKET cement and steel, which would bring southern zone of the city accounted down prices, city developers have 1. BENGALURU RESIDENTIAL I RE for the largest share in the total launched several schemes to attract Bengaluru till recently was MARKET LAUNCHES, SALES BENGALURU MARKET TRENDS - HALF-YEARLY number of new launches in H1 2017, maximum buyers. While some of recognized as one of the AND PRICE TRENDS primarily in peripheral locations such LAUNCHES SALES WT. AVG. PRICE (RHS) them have reduced the prices of their as Electronics City, Chandapura and most resilient residential 40000 4900 projects, others are offering freebies
• The residential market of Bengaluru 4850 Sarjapur. The region continues to be markets in the country. 4831 such as free modular kitchens and
4805 favoured by both the local populace has seen a drastic change in its electrical fittings worth lakhs. Today, the market is
35000 4780 dynamics in the past two and half 4800 as well as the expatriate population years. Until recently recognized as • Meanwhile, weighted average prices employed with the IT sector. reeling under pressure one of the most resilient residential 30000 remained by and large stagnant, and is striving to keep 4700 • North Bengaluru, which in recent years markets in the country, today, the 4650 witnessing a mere increase of 1% in H1 has been characterised by factors afloat amidst constricting 25000 2017 compared to H1 2016. market is reeling under pressure 4585 such as high land cost, low social and is striving to keep afloat amidst 4600 conditions. However, • The inclusion of Bengaluru in the infrastructure and relatively expensive constricting conditions. 20000 Smart City list is expected to have a things have started looking
Number of units property prices, strove to bounce back ` \sq ft 4473 • The second half of last year 2016 (H2 4500 far reaching impact on the residential on the developers’ radar with a number up slightly in 2017 and 15000 2016) was a particularly trying period market in the forthcoming years, of office projects becoming operational although the figures are as that would lead to improved in the region. It saw the share of new for the city’s residential market with the 4400 still restrained, marginal announcement of the demonetisation 10000 infrastructure in the city. This would, in launches increase to 28% in H1 2017 measure that brought real estate turn, add to the overall attractiveness from 22% in H1 2016, although, as improvements were 4300 activities almost to a halt. 5000 and brand image of Bengaluru as a compared to H2 2016, the share of new observed in the number of residential market. launches was less. • However, things have started looking new launches and sales in 0 4200 up slightly for Bengaluru this year and • From accounting for a substantial share H1 2017. although the figures are still restrained, of 27% in H1 2016, East Bengaluru’s H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 H1 2014 marginal improvements were observed share in the total number of new in the number of new launches and Source R launches almost halved to 14% in H1 38 39 RESEARCH INDIA REAL ESTATE
observed a significant chunk of new I RE BENGALURU MICRO-MARKET MAP The southern zone of the launches taking place in the bracket MICRO-MARKET SPLIT OF SALES
Lingarajapura Byappanahalli Bilijaji Sathnur ` 2.5-5 Mn, a trend that was noted in Madhugirihalli Dasanayakanahalli BSF CAMPUS Dwarka Nagar Chagaletty city accounted for the Vasudevapura Handarahalli Mavallipura Srinivasa Kodagi Baba Chagalahatti H2 2016 as well. Till H1 2016, majority Vinayak Nagar Vabasandra H1 2016 H2 2016 H1 2017 Thirumalapura Thammarasanahalli Ramagondanahalli Nagar Marenahalli Challamakunte Nagar
Silvepura largest share in the total of the new launches were in the higher 60% Jarakbandekaval Gurunath Puttanahalli Venkatala Chokkanahalli Lake Layout Dodda Byalakere Attur TORENAGASANDRA Lake Yelahanka Maruthi ticket size bracket of 5-7.5 Mn. Kere Nagar ` Puttanahalli number of new launches Kasghattapura Kempanahalli Mitganahalli Mittaganahalli 55% Byalakere YELAHANKA Srinivaspur Shringaripura Veersandra in H1 2017, primarily • Notably, most of the new launches in Kumbharhalli Kalatammanahalli Nagenahalli Shamarajpura Bellahalli Kattugollahalli Jyothipura Shnakanipura 50% Bellahalli 48% Prakruthi Markandhaiha Kadusonnappanahalli H1 2017 are in peripheral locations of Alur Medi Nagar Nagar 47% Gandhi Chikkasandra Lake Kempapura Agrahara Doddenahalli in peripheral locations Nagar Chikka Voderahalli Amanikere the city with promise of infrastructure 45% Guniagrahara Hancharahalli Aditya Nagar Nehru Thirumenahalli such as Electronics City, Soma Allalasandra Nagar Kannuru Sasiveghatta Nagar Lake SDS Prakruthi development in the near future. Gunduru Raghuvanahalli 40% Marthi Lake Kodigehalli Nagar Ganigarahalli Lakshmipura Vinayak 40% Nagar Vidyaranyapura Jakkur Chokkanahalli Chandapura and Sarjapur. Lake Gundur BEML LAYOUT Upparahalli Allalasandra • This development comes as a Chikkabanavara Alur Soladevanahalli Vignana Lake Hazrath Kendra Kammasandra 35% Abbigere Sha Colony Sampigehalli Chikkagubbi Kada Lake Jakkuru Agrahara The region continues to welcome trend, given the recent slew Chikkabanavara NTI Layout Yashoda Kuduregere Abbigere Nagar Jakkur of government’s initiatives to boost 30% 29% Singapura Air eld be favoured by both the Thammenahalli RK HEGDE Shirdi Sai Bommanahalli KVP Nagar Bendiganahalli
27% Dodda Maruthi Nagar NAGAR Gubbi Hoskote Lake Nagar Sivagiri the affordable housing sector, such as Myadarahalli Jalahalli Kodigehalli Shabhari 24% Settihallikere Nagar Township Soundarya East Rajiv Gandhi Phase 1 25% Athmavidya local populace as well as Kuduregere Layout Nagar Srirampura Colony Amrutahalli Nagar
22% Lovedale according infrastructure status to this Chikkasandra Sneha Doddabommasandra Nagar Kothnur Chamundeswari Lake Narayanapura SAHAKARA Narayanapura Bidrahalli Jalahalli Layout 19% West Virupakshapura 20% Visveshwaraiah Layout NAGAR Amrutahalli Mesthri Huskur the expatriate population sector in the Union Budget with a host 18% Vaderahalli Lake Palya Kyalasanahalli Bileshivale Rachenahalli Lake Aduru Anchepalya Thanisandra Ravetha BEL of tax incentives, provisioning buyer- Lake Kothanur employed with the IT Nagar Tatanagar Rampura Koti 15% Sanjeevini Mariyannapalya Defence Ravindra Hosahalli Sanchar Khata Nagar Katamnallur Colony Nagar JALAHALLI Saraipalya Nagar Nagar HMT Fortune friendly clauses like on-time-delivery Valley Kattanallur Estate Anchepalya Santosh Geddalahalli Lake Hebbal KR Defense Madavara Maheswari Nagar Bharath Maragondanahalli sector. 9% Kempapura Harichitta Colony Nagar 9% Maruti Nagar Lake 10% Rukmini Prashanth ASHWATH Kalkere Donna in the RERA Act, lower home loan 8% Layout Hirandahalli Nagar Hebbal Lake Nagar Jalahalli Amani Goravigrere Amanikere Lottegollahalli Lake Nagavara NAGARByrathikhane Village Bahubali Lake Manayata Virgonagar Vidya Nagar Bhoopasandra Tech Park Nagasandra rates, as well as commissioning the Shakti Nagar Sundara Margondanahalli Farm Gokula Nagar Horamavu 5% Dasarahalli Extension Veerannapalya Agara K Channasandra Tank Guddadahalli Shivaganga Kithaganur Layout nationwide scheme of Pradhan Mantri Chokkasandra M S R HEBBAL Sizzle Sai Nagar Lake Habitat Laxmi Pura Doddabidarakull Wipro Brindavan Sanjaynagar Hormavu 0% 0% 0% Kanaka Lake Nagar Layout Govindapura HBR Agara Lake Nagar 0% Vivekananda Layout Hennur Doddabidrakallu Nagar Muniswara Kanaka Hallehalli Awas Yojana (PMAY). Nagar Nagar Bande Bidare Agraha K G Gopal Chola Lakshmipura Srikantapura Chamundi Nagar Geddalahalli Kundamalli Nagar Padmeshwari Nagar Hormavu Kalkere Rashad Jinkethimmanahalli Nagar Shivapura Nagar Central East North South West Narayanapura PeenyaYESHWANTHPUR Shampura Ganganagar Dinnur KALYAN Pampanagar Nanjappa Ranka Kannamangala Reddy BATTARAHALLI Doddabanahalli Devasandra Nagar NAGAR Varanasi Colony Anandapura JAYBHAMNAGAR Tippenahalli Yele Mallappa Hediyat Raghavendra Chikkabana Source R Shakthi Akshya Shetty Lake Nagar Jal Vayu Nagar Halli Nagar Nagar 2017. Locations such as Whitefield and Ganapathy Vihar Sena Nagar Subedarpalya Ganga Nagar RT Jenakal Ashok Vihar 3. MICRO-MARKET WISE Ashwath Extension Nagar Kallumantapa Thambu SHIVA NAGAR Siddeswara Dr. Ambedkar Hosabasavanapura Kaveri Nagar Muneshwara K R Puram Chetty Palya Nagar Nagar Nagar Munisvara Nagar Hoysalanagar Nagar Lake Gunjur witnessed a number of new Kanteerava Mahalakshmi Nagar Dodda Dr. Ambedkar Kacharakanahalli Tigalarapalya Chamundi Nagar Shankar Layout Banaswadi Nagar RESIDENTIAL SALES Nagar Nagar Indira Venkateshpuram Sonnenahalli Nandini Kodandarampura Puram Basavanapura launches. Layout Kalika Nagar Devara Sreenivas Sadashiva BANASWADI RAGAVENDRA Rajarajeswari Jeevanahalli Lingarajapuram Nagar Nagar Munireddypalya Kariyana Palya Subbannaiah Bhuvanagiri NAGAR Nagar Milk Sankey Govindpura Dooravani ITI Dommasandra Colony Tank Palya Colony Andrahalli Jai Maruthi Sagayapura Jai Jawan Nagar Nagar Gurijiya Chaitanya Nagar Bovipalya Belathur Ananya • In contrast, West Bengaluru saw • Similar to new launches scenario, South Gutta Kasturi Nagar Lava Kusha Sriram Benson Town Duravani JC Nagar Vivekananda Vijinapura Krishnarajapura Nagar Nagar Bangalore Nagar Sanjeevini Guttahalli Nagar Roshan Nagapura MALLESWARAM Palace Lake Ayyappa Bengaluru continued to dominate on Nagar Nagar Kumbena its share of new launches increase Nagar Nagaravale Agrahara Kachohalli Shri Jyothi Puram Nagar Mahatma Jayamahal Singayyanapalya Gajanana Chowdesh Rampura Nagayana Kaveri Nagar Gandhi KB Nagar Pulkeshi Palya Benniganahalli Nagara Jeevanhalli Nagar significantly from a mere 4% in H2 the sales front as well. The region saw Nagar Nagar Lake KHB Badavala Manjunatha Mariappanapalya Cox Sadanandanagar Prem Colony A Narayanapura Nagar Hoodi Venkateswara Nagar Nagar Town Maheswari Nagar Lakshminarayanapuram Nagar its share increase from 40% in H1 Shivanagar 2016 to 14% in H1 2017. The region’s BEML Sunkadakatte Sulthangunta VS Reddy Byadarahalli Vrishabha Layout Colony Nagar Doddigunta MAHADEVAPURA Herohalli RAJAJINAGAR Nagavarapalya Lake BASAVESHWARA 2016 to a substantial 48% of the total Garudachar share of new launches in H1 2017 was Mahaganapathi Swamy Kallahalli Vishwa Vihar Hoodi Jai Bheema Bharati Palya Seetharampalya 26,220 20,309 21,210 Hanumatha NAGAR Nagar Madhava Shivanandapuram Lake Kottigepalya Nagar Nagar Sarvagnanagar Nagar Nagar Okalipuram Bedarahalli Anjana Lakshmanpuri CV RAMAN also an improvement over the share in sales in H1 2017. While the region has Ulsoor Ulsoor Nagar Lake Suddaguntapalya Kaveri Cauvery Agrahara Michael NAGAR Nagar Pura Prashant Jedara er Kaggadasapura Dasarahalli iv Palaya Bhuvaneswari Vignana Doddanakundi Nagar Halli i R Lake UNITS UNITS UNITS ath Gandhi Laksmipuram Nagar Kaggadasapura Nagar Happy Valley Chansandra always attracted buyers, courtesy its Gidada aw H1 2016 and majority of the launches b Nagar Pattegarhpalya a Bharat Konnenahalli h Krishnappa is Kartik Nagar r WHITEFIELD Nagar V Garden Malagala Malleshpalya Prithvi Layout Kodigehalli Amarajyothi Doddanekundi Nagar Lake took place in micro-markets such as healthy congregation of large IT hubs, Yadava Jogupalya GM Palya Doddanekundi Vijay Nagar H2 2016 H1 2017 Annapurneshwari Upanagara H1 2016 Cholur Chinnapanahalli Nagar Srigandada Palya Nagondanahalli Kaval VIJAYANAGAR Kempapura Nagamma NEW Jagadish Gandhipuram Kundalahalli the launch of a number of affordable Agrahara Nagar Manivartapete Doopanahalli Rajarajeshwari Nagar and Kengeri. Nagar Lake Adarsh Gowthamapuram THIPPASANDRA Nelluru Vibhutipura Madava Binny Pete Vishveshwaraya Nagar Hosahalli Puram Lake Nagar Anubhav Upanagara Extension Dodpete Malathalli Nagar Padarayanapura Palm Meadows Hagadur projects in its peripheral markets has Lake Cottonpete Kengunte Kodihalli Ananda Elagondanpalya Vinayaka Bhyraveshwara Vinayaka Puram Aswath Nagar Nagar Nagar Tipu Nagar Ullal Shamana VARTHUR KODI Mallathahalli Nagar Nagar Annasandrapalya increased the demand over the recent Ullal Lake Ajjagondahalli Kala Uppanagar Attiguppe Ramesh Grama Nagarbhavi Thubarahalli Kilkodungalur Guddadahalli Nagar Lake Ullalu Kalasipalayam Muniswamy Krishna Jyothi Nagar Bapuji Garden Reddy Layout Nagar Murugeshpalya MARATHAHALLI TICKET-SIZE SPLIT ANALYSIS past. For instance, micro-markets such Viveka Ramagondanahalli Khanekandaya Valepura Vijay Adarsha HAL Bangalore HAL Manganahalli Nagar Srinagar Nagar CHAMRAJPET Nagar Vinayaka Airport VILLAGE Shankarapura Nagar Vinayaka Nagar Army Neelasandra Area OF LAUNCHED UNITS as Electronics City and Bommasandra Ahmed Sir M. Rajendra Muneshwara Nagar Kempambudhi Munnekollal Vishveshwaraiah Gajendra Nagar Nagar Kere Layout Avalahalli Lalbagh Nagar Varthur Lake Kere Kannikanagar Gandhi Bazaar are scheduled to be connected to the Vinayaka Ambedkar Extension Dasarhalli Gavipura Lakkasandra Challaghatta Nagar Yemalur Bellandur Kempapura Amanikere Gnana Hanumantha Ejipura Janatha H1 2016 H2 2016 H1 2017 other parts of the city through the metro Someshwara Belur Devasthanagalu Colony Jagajyothi Bharathi Nagar Nagasandra Layout Nayanda Jaya Nagar ADUGODI Dodda BANASHANKARI Laljinagar CV Raman Nayandanahalli Halli Sriranganagar Nagar Basti Nagar Prakash Madhura Kere Girinagar East Sonnenahalli Mutharayana KADUBEESANAHALLI Balagere Layout Nagar rail in the next three years, thereby Nagar Veerabhadra Hombegowda Nagar <`2.5 mn 8% 2% 3% Ramasandra Upadhya Srinivasa Nagar Layout Nagar Bellandur Lake Yediyur RBI creating a favourable impact on the Komghatta SMV Lake JCR Chinkkanekkundi Lake Extension Layout Jawaban Doddi Layout Thyagaraja Sadduguntepalya Gullakaipura Yediyur Byrasandra Dubasipalya Kenchenhalli Kathreguppe Nagar Lake `2.`5-5 mn 29% 64% 59% Subash Kere KORAMANGALA Hoskere Nagar Balaji potential buyers’ mind. Dubasi Lake Dattatreya Nagar Gnanabharathi Palya Jakkasandra Iblur Hosakerehalli Nagar Banagiri Maruthi Extension Village Duvasapalya Lake Nagar Nagar KENGERI Bangarappanagar Madivala 5- 7.5 mn 41% 18% 22% Kommaghatta SATELLITE TOWN BHEL Layout Krishnappa Bhoganhalli ` ` JAYANAGARGarden • On the other hand, most other regions Gandhi Rajeev Madiwala Agara Nagar Nagar Lake ITTAMADU Gunjur Gunjur Gattigere Venkatapura Kengeri Hosakerehalli DK Naik BTM LAYOUT Palya Lake Nagar Saul Kere of the city saw a decline in their share Gunjur Mailasandra Kadarenahalli `7.5-`10 mn 11% 6% 5% RT Lake BSM Vijayashree Vanganahalli Nagar Extension Suncity Sri Krishna Sachidananda Kathirguppe Layout Garden Layout Nagar Srinivasa Sarakki Kaikondrahalli of sales in H1 2017. Although West Govinakanahalli MCHS Nagar Nagar Lake Colony Thippasandra Roopena Nerige Kodipur Chikkalasandra GangadharJ.P NAGAR Agrahara `10-`20 mn 8% 6% 10% Gowdanapalya Nagar Rajiv Gandhi HSR Nagar Bengaluru witnessed a consistent Fort Kengeri Concord Vaddara LAYOUT Kasavanahalli iver Garden City Madivala R Palya Ilyas
Sunkalpalya Uttarahalli Lake i
h Nagar Virat t
a Dorai KUMARASWAMY Amalodbhavi Nagar
w Nagar
demand, the north and the east regions a Kere JP Nagar Mangammanapalya >`20 mn 3% 4% 1% b Kanakanagar
a LAYOUT Phase 5 Kaveri h
i s Chandra Nagar r V Nagar Kashi Sarakki Bilekahalli Junnasandra Halanayakanahalli saw their shares reduce noticeably in Subramanyapura Nagar Lake Lake KENGERI Prasanti Jarganahalli Harlur DODDAKANNELLI Kodipalya Somasundarapalya Ganakal Nagar Muneshwara Subramanya Panduranga Kere Kodichikkanahalli Nagar Hegondanahalli Puttenahalli Nagar H1 2017 as compared to H1 2016. Vasanthapura Source: Knight Frank Research Konasandra Yadalam Sharadhanagar HONGASANDRA Lake Nagar Bikasipura Hosapalya Garebhavipalya Jettigana Halli Sundar Ram Chamundeshwari Mico Kuvempu Santrupthi Layout Hemmigepura Shetty Nagar Nagar Chambenahalli Volagerekallahalli Doddabele Gubbalala Nagar Nagar Parappana Hosa Lake Agrahara Konanakunte • On the ticket size front, H1 2017 Kudlu 40 41 RESEARCH INDIA REAL ESTATE
new launches that take place annually • On the other hand, West Bengaluru still 5. PRICE MOVEMENT MICRO-MARKET LOCATIONS in the region. With the sales velocity does not have a sufficient inventory and IN H1 2017 of the region improving in the past sales volume compared to the other Central M.G. Road, Lavelle Road, Langford Town, Vittal Mallya Road, Richmond Road few quarters and with infrastructure zones of the city. It has the highest QTS • Price appreciation across most East Whitefield, Old Airport Road, Old Madras Road, K.R. Puram, Marathahalli development in the offing, the situation and the second highest age of inventory locations in Bengaluru has remained is expected to amend further in the as North Bengaluru. Despite its smaller stagnant during the last 12 months. West Malleswaram, Rajajinagar, Yeshwanthpur, Tumkur Road, Vijayanagar forthcoming periods. size at present, the region holds The range of price appreciation during North Hebbal, Bellary Road, Hennur, Jakkur, Yelahanka, Banaswadi promise and the metro rail connectivity the period has been a mere 1-2% in • Meanwhile, North Bengaluru accounted is expected to be one of the prime select markets. Koramangala, Sarjapur Road, Jayanagar, J.P. Nagar, HSR Layout, Kanakapura Road, for QTS higher than East and South South factors for this potential. Bannerghatta Road Bengaluru, and a high age of inventory • There has been no noticeable growth as well. The unsold inventory in the • The premium residential market of observed in the city’s residential market region can be attributed primarily to Central Bengaluru, catering to a niche in the last six months, primarily due to relatively higher property prices and the clientele, does not have a sufficient part the sluggish movement in sales as well 4. MARKET HEALTH I RE dearth of adequate social infrastructure to play in the city’s residential market as owing to the huge unsold inventory QUARTERS TO SELL (QTS) UNSOLD in place, amongst other factors. We dynamics owing to its minimal unsold present in the market. INVENTORY ANALYSIS expect this market to gain momentum inventory size. • The quarters to sell unsold inventory • East Bengaluru is currently the best BENGALURU 12 (QTS) is the number of quarters required performing market of the city, with once the office sector gains prominence in the near future. to exhaust the existing unsold inventory the lowest QTS and a low age of 11 in the market. The existing unsold inventory. While traction has been 10 inventory is divided by the average sales slightly weakening in the past one PRICE MOVEMENT IN SELECT LOCATIONS velocity of the preceding eight quarters year, the presence of several large 9 in order to arrive at the QTS number employment hubs, good social 8 for that particular quarter. A lower QTS infrastructure, substantial availability indicates a healthier market. Also, size of housing in various budget sizes and 7 LOCATION MICRO-MARKET PRICE RANGE IN H1 2017 12-MONTH 6-MONTH
of the bubble indicates relative size of metro connectivity with the central and 6 (`/SQ FT) CHANGE CHANGE
unsold inventory in terms of number of western parts of the city are some of the NO OF QUARTERS units. prime factors that has led the eastern 5 Langford Town Central 15,000–21,000 0% 0% region to perform well on an eight- • The QTS for Bengaluru has been 4 Lavelle Road Central 22,000–30,000 0% 0% quarter sales basis. increasing gradually since September 3 K.R. Puram East 4,000–6,750 0% 0% 2013, and currently stands at 10 • South Bengaluru follows East Bengaluru 2 Whitefield East 4,500–8,500 1% 0% quarters. The unsold inventory of the as the second best performing market,
city is recorded at around 114,064 owing to low QTS and the lowest age 1 Marathahalli East 4,500–7,100 0% 0% units in various stages of construction, of inventory. However, the southern part 0 Indiranagar East 9,000–12,500 0% 0% leading to a matter of concern. of the city is faced with a glut of unsold inventory, based on the number of Yeshwanthpur West 6,500–10,800 0% 0% Jun-14 Jun-15 Jun-16 Jun-17 Mar-15 Mar-16 Mar-17 Sep-14 Dec-14 Sep-15 Dec-15 Sep-16 Dec-16 Malleshwaram West 9,000–13,300 0% 0% Source R I RE MICRO-MARKET-WISE QTS VS AGE Rajajinagar West 8,500–14,000 0% 0% OF INVENTORY Tumkur Road West 4,000–5,100 2% 0% ENTRAL EAST N RT S T EST
15 Yelahanka North 4,500–7,500 2% 1% Hebbal North 5,000–9,800 0% 0%
TERS 14 Hennur North 4,500–7,500 1% 0% 13
IN A R Thanisandra North 4,100–7,500 0% 0% R UNSOLD MICRO-MARKET 12 INVENTORY Sarjapur Road South 4,500–7,500 0% 1%
11 Central 243 Electronics City South 4,000–6,500 2% 1%
East 24,096 Kanakapura Road South 4,300–6,000 0% 0% 10 North 25,596 Bannerghatta Road South 4,200–7,500 0% 0% 9 A E NS LD IN ENT South 54,075 Source: Knight Frank Research 8 6 7 8 9 10 11 12 13 14 West 10,054
TS Source R BENGALURU CITY 114,064 Note: The size of the bubble indicates the quantum of unsold inventory Source: Knight Frank Research 42 43 RESEARCH INDIA REAL ESTATE
preferred destination for people related to the sector to reside in the region.
Prospective buyers The period 2011–13 was marked by hectic seeking ready-to- construction activity and it observed the move-in properties launch of approximately 13,210 units on a stretch of 16.5 km – starting from the stand to gain as well Sarjapur ORR junction till Sarjapur village. as speedy progress The region soon became a cornucopia of in construction has residential real estate, offering different brought in confidence types of projects that ranged from among buyers who apartments to villa projects and plotted were indecisive developments, catering mostly to mid-end and premium segment housing budgets. in booking under- Significantly, the residential projects here construction projects are relatively smaller in scale to the ones primarily due to timely observed in the adjacent neighbourhood of delivery issue. Haralur Road.
a number of older projects were still under construction at a slow pace. However, Until recently, Sarjapur Road was things have changed in the recent few characterised by rows of under- quarters. Today, the first 7 km on Sarjapur construction projects, barring the initial Road from the ORR junction till the new FIGURE -1 2 km from the ORR junction. The slew Wipro SEZ is choc-a-bloc with newly SARJAPUR ROAD – RESIDENTIAL LAUNCHES ON of project launches observed in the past operational residential projects, undergoing SARJAPUR ROAD (2011–16) years had led to a glut in supply and not possession. Where until only a year back surprisingly, a general slowdown in the A CORNUCOPIA OF 6000 there were grey concrete blocks with market was observed. Chart 1 depicts the cranes overhead, today there stand brightly number of new launches in the region on a 5411 coloured residential towers with imposing Year-Over-Year (YOY) basis. SOCIAL LIVING gateways. Most of the residential projects 5000 - BY SANGEETA SHARMA DUTTA are undergoing a handover process, while Although the number of new launches have a few of them are putting on the finishing 4229 reduced in the past few years, the region touches to their second phases. While 4000 is still witnessing project launches in the this fast-paced completion of projects by very city has its own dynamics, One of the main regions that emerged as a 3570 latter part of the stretch leading to Sarjapur developers are seen by most as efforts
and there is always a catalyst that favoured residential market was Sarjapur 3300 village, albeit with small project sizes to comply with the ‘timely completion’ transforms the city’s character. In Road towards the south-eastern part of E 3000 clause of the Real Estate (Regulation and and mostly by local developers. The area
the case of Bengaluru, the advent of the IT the city. Once a distant, dusty, jagged road 2675 around Sarjapur village is primarily marked Development) Act, 2016 (RERA), it has industry was one such phenomenon that that lead to Sarjapur village garnered much by villa projects and plotted developments. come as a boon for home owners who turned the staid, pensioners’ paradise into significance with the development of the are looking for early completion of their
Number of Units At present, the average price for a a bustling cosmopolitan city, stirring up its Outer Ring Road (ORR) as a key office hub 2000 1885 1800 residential apartment in the region ranges projects. Prospective buyers seeking real estate composition. Within the realm of of the city housing large multi-tenanted between ` 4,200–7,000/sq ft. ready-to-move-in properties stand to a decade and a half, Bengaluru developed office projects, the major occupiers being gain as speedy progress in construction into one of the major office destinations the IT/ITeS companies. Besides ORR, 1000 has brought in confidence among buyers of the country. Soon, newer residential Sarjapur Road’s proximity to other major Despite the slowdown in number of who were indecisive in booking under- neighbourhoods emerged and there were IT hubs and business centres in South and launches, the Sarjapur residential market construction projects primarily due to more options to look forward to for the East Bengaluru such as Electronics City, timely delivery issue. 0 is by no means inactive. Till early last year, discerning homebuyer. Whitefield and Koramangala, made it a 2010 2011 2012 2013 2014 2015 2016 44 45 RESEARCH INDIA REAL ESTATE
OFFICE MARKET
1. BENGALURU OFFICE I RE MARKET STOCK, NEW OFFICE SPACE STOCK AND VACANCY LEVELS – COMPLETIONS, TRANSACTION HALF-YEARLY TREND AND VACANCY TRENDS STOCK OCCUPIED STOCK VACANCY (RHS)
160 12% • Bengaluru, known for its buoyant • Vacancy rates, which had been 11% office market led by IT/ITeS demand, declining steadily over the years 140 10% observed a somewhat moderate owing to consistent transactions and 10% activity in office space traction in the restrained new completions, continued 120
units 8% 5411 first half of 2017 (H1 2017) as compared on its downward movement and are 8% to the same period in the recent past. presently at 4%. 8%
Highest number of new launches on 100 7% Sarjapur Road in 2013 • The transaction quantum of • Going forward, the inclusion of 5.8 mn sq ft in H1 2017 reflected a 6% Bengaluru in the Smart City list bodes 80 6% decline of 5% over the transactions well, as that would lead to improved in H1 2016. While this decline could
infrastructure in the city and attract 4% 60 mainly be attributed to dearth of ready more investors and office occupiers. 4% office spaces that forestalled potential Smart solutions will be taken up to 40 occupiers looking to expand, stiff bridge service delivery gaps, thereby competition from other cities, primarily enabling the use of technology in these 2% Over the years, social infrastructure has availability of more options in that range. Hyderabad, could also be a key factor sectors. 20 improved substantially and has become Further, the planned Peripheral Ring Road behind the growth constraint. a major driver for growth in the region, once operational will give an alternative 0 0% • Another reason that explains the rather I RE besides the IT corporate offices. Proximity route to commuters to reach north of the NEW COMPLETIONS AND TRANSACTIONS – to a host of reputed educational institutes city from Electronics City, Sarjapur Road restrained behavior of the office market HALF-YEARLY TREND H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 of the city is the tepid growth the IT/ and hospitals has lent to its overall via Bellary Road and KR Puram, thereby NEW COMPLETIONS TRANSACTIONS Source R attractiveness. In addition, Sarjapur Road improving the region’s connectivity issues ITeS sector - the key demand driver of 8 also benefitted from widening of roads and further and would serve to decongest the the office market in Bengaluru. Having the announcement of the ORR Metro has traffic bottlenecks. Besides, with more matured over the years the sector lured residents to region. Today, with most people moving into their ready apartments, stands on a bigger base today thereby 7 projects being handed over on time, the it would aid in creating a cosmopolitan limiting the scope for remarkable expansion that was witnessed earlier. region is well up the social attractiveness environment and a self-sustainable eco- 6 Bengaluru, known for its ladder. It is expected that by the year end, system. Thus, Sarjapur Road is set to see • On the new completions front, the city buoyant office market led by majority of the newly completed projects better days ahead, taking the social living witnessed the infusion of 3.7 mn sq 5 IT/ITeS demand, observed a Techies from the would see occupancy with families moving factor notches higher. ft of office space in H1 2017, which in and creating a more sociable setting in is slightly better than the quantum of somewhat moderate activity neighbouring mn sq ft the region. new completions in H2 2016. However, 4 Whitefield and in office space traction in the this new office space infusion is Electronic City, who first half of 2017 (H1 2017), considerably less in proportion to 3 generally opt for Sarjapur Road will continue to be one of the demand observed in the recent as compared to the same the preferred residential destinations in housing options within periods. period in the recent past. It Bengaluru, primarily owing to its location 2 the range of advantage of being situated in proximity • The inadequacy of ready to occupy clocked 5.8 mn sq ft in total ` 50–75 lakh, are likely space has resulted in lending a to the key IT hubs of the city. Techies from 1 transactions in H1 2017 - a to choose Sarjapur the neighbouring Whitefield and Electronic downward pressure on vacancies while decline of 5% over H1 2016, Road due to the City, who generally opt for housing options creating an upward pressure on office 0 availability of more within the range of ` 50–75 lakh, are rents in key office markets of the city in which can be primarily H1 2017. The increase in rental values options in that range. likely to choose Sarjapur Road due to the attributed to the dearth of observed on a Year-Over-Year (YOY) H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 Source R basis was recorded at 9% during the ready office spaces that period. deterred the expansion plans of potential occupiers. 46 47 RESEARCH INDIA REAL ESTATE
2. SECTOR ANALYSIS sector in H1 2017. The sector an increase over its share of 4% in H1 accounted for a share of 8% of the total 2016. Notable transactions in the sector SELECT TRANSACTIONS • Bengaluru continued to attract office space transactions, showing a during H1 2017 include deals inked by substantial occupier interest from nominal increase over its share of 7% in companies such as State Street Global the IT/ITeS sector in H1 2017. The H1 2016 and a tad better than its share Services, Morgan Stanley, Western sector accounted for 57% of the total of 4% in H2 2016. Union and Oben Insurance. OCCUPIER BUILDING LOCATION APPROX AREA (SQ FT) transactions in H1 2017, albeit with • The BFSI sector remained consistent in a drop in share as compared to H1 Deloitte Prestige Trade Towers Golf Road 159,000 its share of transactions and accounted 2016. The share of the sector was a 3. DEAL SIZE ANALYSIS for a 9% share of the transactions in Microsoft Prestige Ferns Galaxy Sarjapur Outer Ring Road 588,784 staggering 62% in the second half of H2 2016 as well as H1 2017, reflecting 2016. Of late, the IT/ITeS share has • The average deal size in H1 2017 was Lowes Manyata Embassy Business Park (Block L 2) Hebbal Outer Ring Road 450,000 recorded at 46,728 sq ft, which is lower been gradually witnessing a decline TCS Brigade Bhuwalka Icon Whitefield 375,000 than the average deal size observed in courtesy the emergence of newer I RE State Street Global Services RMZ Ecoworld (Block 6B) Sarjpur Outer Ring Road 225,000 service sectors in the city. SECTOR-WISE SPLIT OF TRANSACTIONS H1 2016 at 53,515 sq ft. This is primarily due to the non-availability of substantial Rambus IBC Knowledge Park (Tower D) Bannerghatta Road 75,000 • The share of the Other Services Sector H1 2016 H2 2016 H1 2017 large sized office space in the city as which includes businesses such as 70% Mitel Communications Madhuvan North Avenue (Block M2) Hebbal Outer Ring Road 48,650 well as the preference of smaller office e-commerce has slightly decreased spaces by medium-sized IT companies Source: Knight Frank Research from 30% in H1 2016 to 26% in H1 62% and other service sector companies.
2017. While the build-up over the 60% 58% e-commerce sector’s large scale 57% • The number of deals, however, 4. BUSINESS DISTRICT ANALYSIS transactions in the past seems to have improved by 9% in H1 2017 as cooled down presently, other services compared to the corresponding period 50% • The Outer Ring Road (ORR) office sector companies like consulting firms, in the previous year. I RE market, which has been struggling telecommunications and media houses BUSINESS DISTRICT-WISE TRANSACTION SPLIT in the past few quarters on account I RE accounted for considerable office space 40% AVERAGE DEAL SIZE AND NUMBER OF DEALS of dearth of ready to occupy space, H1 2016 H1 2017 offtake during H1 2017. A prominent saw its share increase in H1 2017 50% development observed during this AVERAGE DEAL SIZE (SQ FT) compared to H1 2016. Its share in the period is the quantum of office 30% 30% 45% 44% NUMBER OF DEALS (RHS) total transactions in H1 2017 improved
space taken up by co-working space 26% 25% to 44%, as opposed to 33% in H1 operators, such as Awfis, Indiqube 80000 140 2016, owing to a slew of big ticket 40% and 91 Springboard. Altogether, these 20% transactions led by companies such as companies accounted for an offtake of 6.1 5.8 70000 Microsoft, Lowes and Sandisk. Majority 35%
120 33% around 213,000 sq ft of office space in of the transactions took place along the mn sq ft mn sq ft
H1 2017. 10% 9% 9% 30% 8% 60000 Sarjapur ORR. The region still accounts 7% • Meanwhile, a few major transactions 100 for a large quantum of pre-committed H1 2016 H1 2017 4% 4%
25% 24% were recorded in the manufacturing 50000 space, which is scheduled to become 23% 0% Number 80 operational in the forthcoming months.
sq ft 20% 18% BFSI VICES
IT/ITEs 40000
R • On the other hand, the other prominent 16% Bengaluru continued to attract SECTOR
ACTURING 15%
F 60 employment hubs of the city - PBD 12% substantial occupier interest Source R 30000 East, comprising Whitefield, and 11% OTHER SE MANU PBD South office markets observed 10%
from the IT/ITeS sector in H1 7% 40 7% Note: BFSI includes BFSI support services 20000 their shares in the total number of 2017. However, of late, the IT/ 5% 4% transactions to decrease significantly 1% 1%
ITeS share has seen a gradual 20 in H1 2017 compared to their shares in 0% 10000 0% H1 2016. Factors such as fewer grade
drop in its share courtesy SBD PBD PBD PBD PBD ORR EAST WEST CBD & SOUTH A office projects becoming operational NORTH the advent of newer service 0 0 OFF CBD and infrastructure bottlenecks have led sectors in the city. A prominent their shares to drop in H1 2017. Source R H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 development observed during • Meanwhile, the share of the CBD/ Source R this period is the quantum 6.1 5.3 5.8 off-CBD markets and SBD markets of office space taken up co- increased substantially in H1 2017 over mn sq ft mn sq ft mn sq ft the share in H1 2016, largely owing working office space operators. to companies looking for smaller and H1 2016 H2 2016 H1 2017 medium sized office spaces in centrally connected areas with good social infrastructure. 48 49 RESEARCH INDIA REAL ESTATE
BENGALURU BUSINESS DISTRICT MAP BUSINESS DISTRICT MICRO MARKETS
Lingarajapura Byappanahalli Sathnur Bilijaji Dasanayakanahalli Madhugirihalli S A S Chagaletty Dwarka Nagar Central business district Vasudevapura Handarahalli Mavallipura Srinivasa Kodagi Baba Chagalahatti M. G. Road, Residency Road, Cunningham Road, Lavelle Road, Richmond Road, Infantry Road Vinayak Nagar Vabasandra Thirumalapura Thammarasanahalli Ramagondanahalli Nagar Marenahalli Challamakunte Nagar (CBD) and off-CBD Silvepura Jarakbandekaval
Gurunath Puttanahalli Venkatala Chokkanahalli Lake Layout Dodda Attur T RENA ASANDRA Byalakere Maruthi Suburban business district Lake Yelahanka Kere Nagar Puttanahalli Kasghattapura Mitganahalli Indiranagar, Koramangala, Airport Road, Old Madras Road Kempanahalli Mittaganahalli Byalakere ELA AN A Srinivaspur (SBD) Shringaripura Veersandra Kumbharhalli Kalatammanahalli Nagenahalli Shamarajpura Bellahalli Kattugollahalli Jyothipura Shnakanipura Bellahalli Peripheral business district Prakruthi Markandhaiha Kadusonnappanahalli Alur Medi Nagar Nagar Gandhi Chikkasandra Whitefield Lake Kempapura Agrahara Doddenahalli Nagar Chikka(PBD) East Voderahalli Amanikere Guniagrahara Hancharahalli Aditya Nagar Nehru Thirumenahalli Soma Allalasandra Nagar Kannuru Sasiveghatta Nagar Lake SDS Prakruthi Gunduru Raghuvanahalli Peripheral business district Marthi Lake Kodigehalli Nagar Ganigarahalli Lakshmipura Vinayak Nagar Vidyaranyapura Jakkur Electronics City, Bannerghatta Road Lake Chokkanahalli Gundur Upparahalli E L LA T (PBD) South Allalasandra Alur Soladevanahalli Chikkabanavara Vignana Lake Hazrath Kendra Kammasandra Sha Colony Abbigere Jakkuru Sampigehalli Chikkagubbi Kada Lake Agrahara Chikkabanavara NTI Peripheral business district Layout Yashoda Kuduregere Abbigere Thanisandra, Yelahanka, Devanahalli Nagar Jakkur Air eld Singapura (PBD) North Thammenahalli R E DE Shirdi Sai Bommanahalli Nagar KVP NA AR Dodda Bendiganahalli Maruthi Nagar Gubbi Hoskote Lake Nagar Sivagiri Myadarahalli Jalahalli Kodigehalli Shabhari Settihallikere Nagar Township Soundarya East Rajiv Gandhi Phase 1 Athmavidya Outer Ring Road (ORR) Hebbal ORR, Marathahalli ORR, Sarjapur Road ORR Kuduregere Layout Nagar Srirampura Nagar Colony Amrutahalli Lovedale Chikkasandra Sneha Doddabommasandra Nagar Kothnur Chamundeswari Lake SA A ARA Narayanapura Narayanapura Bidrahalli Jalahalli Layout West Virupakshapura NA AR Visveshwaraiah Layout Amrutahalli Mesthri Huskur Vaderahalli Lake Palya Kyalasanahalli Bileshivale Rachenahalli Lake Aduru Anchepalya Thanisandra Ravetha BEL Lake Kothanur Nagar Tatanagar Rampura Koti Sanjeevini Mariyannapalya Defence Ravindra Hosahalli Sanchar Khata Nagar 5. RENTAL TREND Katamnallur Colony Nagar ALA ALLI Saraipalya Nagar Nagar HMT Fortune I RE Kattanallur Estate Valley Anchepalya Santosh Geddalahalli Lake Hebbal KR Defense Madavara Maheswari Nagar Bharath Maragondanahalli WEIGHTED AVERAGE RENTAL MOVEMENT The Outer Ring Road (ORR) Kempapura Nagar Harichitta Colony Maruti Nagar Lake Rukmini Prashanth AS AT Kalkere Donna Layout Nagar Hebbal Lake Hirandahalli Nagar Jalahalli NA AR Amani Goravigrere Amanikere Lottegollahalli Lake Nagavara Byrathikhane Village Bahubali Lake Manayata Virgonagar • Rental values have been on a steady Vidya Nagar Bhoopasandra Tech Park Nagasandra Nagar Sundara office market, which has Shakti Margondanahalli Farm Gokula Nagar Horamavu Dasarahalli Extension Veerannapalya Agara K Channasandra Tank Guddadahalli Shivaganga Kithaganur rise as demand continues to surpass 70 Layout Chokkasandra M S R E AL Sizzle Sai Nagar Lake Habitat been struggling in the past Laxmi Pura Doddabidarakull Brindavan Wipro Sanjaynagar Hormavu Kanaka Lake Nagar new completions. Currently, the weight- Layout Govindapura HBR Agara Lake Nagar Vivekananda Layout Hennur Doddabidrakallu Nagar Muniswara Kanaka Hallehalli Bande Bidare Agraha K G Gopal Nagar Chola Nagar Lakshmipura Srikantapura Chamundi Nagar Geddalahalli Kundamalli Nagar Padmeshwari Nagar Hormavu Kalkere ed average rent in Bengaluru is around few quarters on account of Rashad Jinkethimmanahalli Nagar Shivapura ES ANT R Nagar Narayanapura Peenya Shampura Ganganagar Dinnur AL AN Pampanagar Nanjappa Ranka NA AR ATTARA ALLI Kannamangala Reddy Doddabanahalli `60 per sq ft per month – 9% higher 60 Devasandra Nagar Varanasi Colony Anandapura A A NA AR Tippenahalli dearth of ready to occupy Yele Mallappa Hediyat Raghavendra Chikkabana Shakthi Akshya Shetty Lake Nagar Jal Vayu Nagar Halli Nagar Nagar Ganapathy Vihar than in H1 2016. Sena Nagar Subedarpalya Ganga Nagar RT Jenakal Ashok Vihar Ashwath Extension Nagar Kallumantapa Thambu S I A NA AR Siddeswara Dr. Ambedkar Nagar Hosabasavanapura space, saw its share increase Kaveri Nagar Muneshwara K R Puram Chetty Palya Nagar Nagar Munisvara Hoysalanagar Lake Nagar Mahalakshmi Dodda Nagar Dr. Ambedkar Kanteerava Nagar Kacharakanahalli Tigalarapalya Chamundi Nagar Shankar Layout Banaswadi Nagar • The CBD and ORR office markets Nagar Nagar Indira Venkateshpuram Sonnenahalli Nandini Kodandarampura Puram Basavanapura 50 in H1 2017 compared to Layout Kalika Nagar Devara RA A ENDRA Sreenivas Sadashiva ANAS ADI Rajarajeswari Jeevanahalli Lingarajapuram witnessed the maximum rise in rentals Nagar Nagar Munireddypalya Kariyana Palya Subbannaiah Bhuvanagiri NA AR Nagar Milk Sankey Govindpura Dooravani ITI Dommasandra Colony Tank Palya Colony Andrahalli Jai Maruthi Sagayapura Jai Jawan Nagar Nagar Gurijiya Chaitanya Nagar Belathur Ananya H1 2016, owing to a slew Bovipalya Gutta Kasturi in H1 2017, primarily due to the strong Nagar Lava Kusha Sriram Benson Town Duravani JC Nagar Vivekananda Vijinapura Krishnarajapura Nagar Nagar Bangalore Nagar Sanjeevini Guttahalli Nagar Roshan Nagapura ALLES ARA Palace Lake Ayyappa Nagar Nagar Kumbena corporate demand for office space in Nagar of big ticket transactions Nagaravale Agrahara 40 Kachohalli Shri Jyothi Puram Nagar Mahatma Jayamahal Singayyanapalya Gajanana Chowdesh Rampura Nagayana Kaveri Nagar Gandhi KB Nagar Pulkeshi Palya Benniganahalli Nagara Jeevanhalli Nagar Nagar Nagar Lake these regions, coupled with declining KHB Badavala (INR/sq.ft./month) Prem Manjunatha Mariappanapalya Cox Colony Sadanandanagar led by companies such A Narayanapura Nagar Hoodi Venkateswara Nagar Nagar Town Maheswari Nagar Lakshminarayanapuram Nagar new completions and vacancies in key Shivanagar CBD/off-CBD BEML Sunkadakatte Sulthangunta VS Reddy Byadarahalli Vrishabha Layout Colony Nagar Doddigunta A ADE A RA Herohalli ASA ES ARA RA A INA AR Nagavarapalya as Microsoft, Lowes and Lake office markets of the city. Garudachar NA AR Mahaganapathi Kallahalli Hoodi Jai Bheema Swamy Bharati Vishwa Vihar Seetharampalya 30 Hanumatha Nagar Madhava Palya Lake Kottigepalya Nagar Shivanandapuram Nagar Sarvagnanagar Nagar Nagar Okalipuram Bedarahalli Anjana Lakshmanpuri RA AN Ulsoor Ulsoor PBD EAST Sandisk. Majority of the Nagar Lake Suddaguntapalya Kaveri SBD NA AR Cauvery Agrahara Michael Nagar Pura Prashant Jedara er Kaggadasapura Dasarahalli iv Palaya Bhuvaneswari Vignana Doddanakundi Nagar Halli i R Lake ath Gandhi Laksmipuram Nagar Kaggadasapura Nagar Happy Valley Chansandra Gidada aw Pattegarhpalya ab Nagar Bharat Konnenahalli h Krishnappa is Kartik Nagar r ITE IELD transactions took place Nagar V Garden Malagala Malleshpalya Prithvi Layout Kodigehalli Amarajyothi Doddanekundi Nagar Lake Yadava Jogupalya GM Palya 20 Doddanekundi Vijay Nagar Annapurneshwari Upanagara Chinnapanahalli Nagar Srigandada Cholur I A ANA AR Palya NE Nagondanahalli along the Sarjapur ORR. Kaval Kempapura Nagamma Jagadish Gandhipuram Agrahara Nagar Doopanahalli T I ASANDRA Kundalahalli Manivartapete Nagar Lake Adarsh Gowthamapuram Nelluru Vibhutipura Madava Binny Pete Vishveshwaraya Nagar Hosahalli Puram Lake Nagar Anubhav Upanagara Extension Dodpete Malathalli Nagar Padarayanapura Palm Meadows Hagadur Lake Cottonpete Kengunte Kodihalli Ananda Elagondanpalya Vinayaka Bhyraveshwara Vinayaka Puram Aswath Nagar Nagar Nagar Tipu Nagar Ullal Shamana ART R DI Mallathahalli Nagar Nagar Annasandrapalya 10 Ullal Lake ORR Ajjagondahalli Kala Uppanagar Attiguppe Ramesh Grama Nagarbhavi Thubarahalli Kilkodungalur Guddadahalli Nagar Lake Ullalu Kalasipalayam Muniswamy Krishna Jyothi Nagar Bapuji Garden Reddy Layout Nagar Murugeshpalya MARATHAHALLI Viveka HAL Bangalore Ramagondanahalli Khanekandaya Valepura Vijay Adarsha HAL VILLAGE Manganahalli Nagar Srinagar Nagar A RA ET Nagar Vinayaka Airport Shankarapura Army Nagar Vinayaka Nagar H12014 H22014 H12015 H22015 H12016 H22016 H12017 Neelasandra Area Ahmed Sir M. Rajendra Muneshwara Nagar Kempambudhi Munnekollal Vishveshwaraiah Gajendra Nagar Nagar Kere Layout Avalahalli Lalbagh Nagar Varthur Lake Kere Kannikanagar Gandhi Bazaar Source R Vinayaka Ambedkar Extension Dasarhalli Gavipura Lakkasandra Challaghatta Nagar Yemalur Bellandur Kempapura Amanikere Gnana Hanumantha Ejipura Janatha Someshwara Belur Devasthanagalu Colony Jagajyothi Bharathi Nagar AD DI Nagasandra Layout Nayanda Jaya Nagar Dodda ANAS AN ARI Laljinagar CV Raman Nayandanahalli Halli Sriranganagar Nagar Basti Nagar Prakash Madhura Kere Girinagar East Sonnenahalli Mutharayana AD EESANA ALLI Balagere Layout Nagar Nagar Veerabhadra Hombegowda Nagar Ramasandra Upadhya Srinivasa Nagar Layout Nagar Bellandur Lake BUSINESS DISTRICT-WISE RENTAL MOVEMENT SBD Yediyur RBI Komghatta SMV Lake JCR Chinkkanekkundi Lake Extension Layout Jawaban Doddi Layout Thyagaraja Sadduguntepalya Gullakaipura Yediyur Byrasandra Dubasipalya Kenchenhalli Kathreguppe Nagar Lake Subash Kere RA AN ALA Hoskere Nagar Balaji Dubasi Lake Dattatreya Nagar Gnanabharathi Palya Jakkasandra Iblur Hosakerehalli Nagar Banagiri Maruthi Extension Village Duvasapalya Lake Nagar Nagar EN ERI Bangarappanagar Madivala Kommaghatta SATELLITE T N BHEL Layout Krishnappa Bhoganhalli A ANA AR Garden Gandhi Rajeev Madiwala Agara Nagar Nagar Lake ITTA AD Gunjur Gunjur Gattigere Venkatapura Kengeri Hosakerehalli DK Naik T Palya Lake Nagar Saul LA T Kere BUSINESS DISTRICT RENTAL VALUE RANGE IN H1 2017 (`/SQ FT/MONTH) 12-MONTH CHANGE 6-MONTH CHANGE Mailasandra Kadarenahalli Gunjur RT Lake BSM Vijayashree Vanganahalli Nagar Extension Suncity Sri Krishna Sachidananda Kathirguppe Layout Garden Layout Nagar Srinivasa Sarakki Kaikondrahalli Govinakanahalli MCHS Nagar Nagar Lake Colony Thippasandra Roopena Nerige Kodipur Chikkalasandra Gangadhar Agrahara CBD & Off-CBD 78-110 9% 5% Gowdanapalya Nagar NA AR Rajiv Gandhi SR Nagar Fort LA T Kengeri Concord Vaddara Kasavanahalli iver Garden City Madivala R Palya Ilyas
Sunkalpalya Uttarahalli Lake i
h Nagar Virat t a Dorai ARAS A Amalodbhavi Nagar w Nagar SBD 55 – 95 5% 3% a Kere JP Nagar Mangammanapalya b LA T Kanakanagar
a Phase 5 Kaveri h i s Chandra Nagar r V Nagar Kashi PBD SOUTH Halanayakanahalli Sarakki Bilekahalli Junnasandra Subramanyapura Nagar Lake Lake EN ERI Prasanti Jarganahalli Harlur D DDA ANNELLI Kodipalya Somasundarapalya PBD East 33 – 48 3% 2% Ganakal Nagar Muneshwara Subramanya Panduranga Kere Kodichikkanahalli Nagar Hegondanahalli Puttenahalli Nagar Vasanthapura Konasandra Yadalam Sharadhanagar N ASANDRA Lake Nagar Bikasipura Hosapalya Garebhavipalya PBD South 32 – 48 2% 1% Jettigana Halli Sundar Ram Chamundeshwari Mico Kuvempu Santrupthi Layout Hemmigepura Shetty Nagar Nagar Chambenahalli Volagerekallahalli Doddabele Gubbalala Nagar Nagar Parappana Hosa Lake Agrahara Konanakunte Kudlu ORR 50 – 85 9% 5% Source: Knight Frank Research 50 51 RESEARCH INDIA REAL ESTATE
and a consequent requirement of new housing units for the growing workforce. This bodes well for the city, as it does seem like Chennai’s ailing residential market is due for a healthy boost in volumes, as the The positive vibe we office space demand has been consistently picked up from our robust and has hit a four year high at 5.3 interactions with market mn sq ft in 2016. These reasons made a stakeholders regarding compelling case for us to investigate the an uptick in demand, reality by interviewing leading developers robust office space and financial institutions and visiting major residential projects on the ground. market fundamentals and the concerted effort by developers to make their A discussion with a leading financial product more affordable institution in the Chennai home loan provide strong tailwinds market was encouraging, as they have for an improvement in seen a sharp uptick in activity with average monthly applications exceeding 600 the Chennai residential in 2017 from approximately 450 in the market. preceding two years. Developers too have IS THERE A experienced a similar trend with purchase enquiries increasing significantly over last year. A deeper probe with two developers in the lower ticket sizes. Increasing office RECOVERY ON with the largest stock of unsold inventory space development on the GST Road, also revealed that a large chunk of this Mount Poonamalle High Road and Guindy interest was being seen in the ` 40 lakh has also increased its attractiveness as a THE CARDS? and under budget category. The developer residential location. Two developers with fraternity has been proactively moving the largest stock of toward accommodating this need by unsold inventory also reducing unit sizes and offering discounts Recent legislations like the Real Estate - BY YASHWIN BANGERA as high as 20% in some projects in an (Regulation and Development) Act, 2016 revealed that a large effort to boost demand. (RERA) and policy initiatives such as chunk of this interest the Pradhan Mantri Awas Yojna (PMAY) was being seen in the were quite conspicuous in terms of their aught in the ongoing lull in the increasing supply forced developers to ` 40 lakh and under Prices continue to stagnate on the OMR lack of impact on the market. While the Indian real estate industry, Chennai compromise on price growth to entice wary budget category. The (Old Mahabalipuram Road) as it has to RERA has just been notified in Tamil has probably been among the buyers back into the market. contend with a comparatively much bigger C developer fraternity Nadu, there is very little awareness of the worst hit residential markets in India. stock of unsold inventory and increasing PMAY among residential buyers in spite has been proactively The existent slowdown has only been competition from locations such as of leading developers making attempts to exacerbated by a series of events ranging However, early indications show that the moving toward Tambaram, Vandalur and Medavakkam that educate their target buyers on the same. from political uncertainty due to changes damage caused by the demonetisation accommodating this are located along the length of the GST The positive vibe we picked up from our in leadership, extreme weather conditions drive has been repaired to a large extent need by reducing unit Road and the Velachery-Tambaram road interactions with market stakeholders and to the recent demonetisation drive that in early 2017 as developers across the sizes and offering that extends and connects the GST road to regarding an uptick in demand, robust didn’t allow market volumes to recover. country have been seeing increased the OMR. Locations along the GST Road discounts as high as office space market fundamentals and the In fact, H2 2016 saw residential market interest from buyers. Increasing are experiencing a lot of buyers’ interest concerted effort by developers to make 20% in some projects volumes fall below those of Hyderabad. commercial office space demand is a good as prices here are at a 10-20% discount their product more affordable provide Even the strength shown by the premium indicator for employment growth in any in an effort to boost from comparable locations on the OMR strong tailwinds for an improvement in the segment till a year back has waned as region and points at increasing incomes demand. and are seeing increasing development Chennai residential market. 52 53 RESEARCH INDIA REAL ESTATE
of the demonetisation drive, while a I RE more modest 5% YoY growth could MICRO-MARKET SPLIT OF LAUNCHED UNITS finally point at the beginning of a more sustained revival in demand. The H1 2016 H2 2016 H1 2017 increase in sales can also be attributed 70% 67% to a sustained effort on part of the 65% developers’ fraternity to bring more 60% affordable product into the market and 55% 5,815 4,800 6,035
to negotiate hard to push sales. 52%
50% 49% • Similarly, the number of units launched UNITS UNITS UNITS also saw a healthy 4% growth YoY and 45% H1 2016 H2 2016 H1 2017 a much more pronounced 26% growth 40% 36% over the preceding period in H1 2017, 35% as developers who had held off project 29%
30% 28% launches during the demonetisation 25% drive brought their product to the market during the current period. 20%
15% 12% • H1 2017 clocked 8,850 and 6,035 units 12% 10% in terms of sales and unit launches, 10% respectively, re-attaining the levels 5% 2% 2% 2% seen in mid-2015. 0%
CENTRAL NORTH SOUTH WEST
2. MARKET SPLIT OF Source R CHENNAI RESIDENTIAL LAUNCHES • The share of projects launched with • The comparatively affordable locations average ticket sizes under `5 mn has of South Chennai saw the most ballooned from 39% in H1 2016 to 69% development activity by far, as two in H1 2017, while the share of those RESIDENTIAL MARKET third of the unit launches during H1 projects with average ticket sizes under 2017 took place in locations such as `7.5 mn has grown from 52% to 89% 1. CHENNAI RESIDENTIAL during the same period. I RE Pallavaram, Mahindra World City, A 14% growth in MARKET LAUNCHES, SALES CHENNAI MARKET TRENDS - HALF-YEARLY SIPCOT – OMR Road, Thalambur and AND PRICE TRENDS • Appaswamy Real Estates, Brigade sales during H1 2017 Shollinganallur. Group, Jones Foundations and Casa LAUNCHES SALES WT. AVG. PRICE (RHS) Grande featured prominently among compared to the 12000 4750 • These southern locations along with • At long last, the Chennai residential the developers that launched projects preceding period
4700 their western counterparts accounted market has had some respite as 2017 11000 4700 during H1 2017. 4665 for a massive 96% of the residential clearly indicates the began on a positive note with sales as 4662 10000 products coming online during H1 2017. well as unit launches seeing a healthy 4650 transient impact of the
bounce back. 9000 4596 • Bulk of the residential development has TICKET-SIZE SPLIT ANALYSIS demonetisation drive, 4600 clearly taken place in relatively cheaper • Bogged down by the ongoing 8000 OF LAUNCHED UNITS while a more modest 5%
4532 micro markets as developers have 4528
slowdown in the country in addition to 4550 ` \sq ft 7000 consciously taken steps to cater to the H1 2016 H2 2016 H1 2017 YoY growth could finally its own issues ranging from political cost-conscious consumer looking to uncertainty, building collapses (due 6000 4500 point at the beginning of Number of units <2.5 mn 18% 22% 23% stay closer to the large office space to flouting development norms), to 5000 a more sustained revival 4407 4450 concentrations along the OMR and 2.5-5 mn 21% 36% 46% the near catastrophic floods, the 4000 GST roads. in demand. Chennai residential market had been 4400 5-7.5 mn 13% 28% 20% in a downward spiral, finally finding a 3000 • A deeper analysis of the ticket size split 7.5-10 mn 21% 8% 5% 4350 bottom in H2 2016 that saw its half- 2000 of units launched since H1 2016 clearly yearly sales’ numbers fall below those depicts a strong supply-side response 10-20 mn 13% 3% 6% 4300 1000 of the Hyderabad residential market. to the changing tastes of consumers >20 mn 16% 2% 1% 0 as developers have progressively • A 14% growth in sales during H1 2017 4250 increased launches in lower ticket sizes compared to the preceding period Source: Knight Frank Research
H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 over the past three periods. clearly indicates the transient impact Source R 54 55 VITTAIAH PALEM
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A A • Western locations such as Thiruverkadu I RE MICRO-MARKET SPLIT OF SALES that had been experiencing increasing The share of projects 3. MICRO-MARKET-WISE RESIDENTIAL SALES A R buyer interest in recent periods saw launched with average A R H1 2016 H2 2016 H1 2017 some of that interest dwindle as prices BUSINESS DISTRICT S MICROMARKETS A ticket sizes under `5 70% have fast approached those of locations Tiru A R pa S t 66% hi R in the south that have comparatively A Central Chennai oad T. Nagar, Alandur, Nungambakkam, Kodambakkam, Kilpauk 65% mn has ballooned from S H C 61% better residential dynamics and will be 39% in H1 2016 to 69% West Chennai Porur, Ambattur, Mogappair, Iyyappanthangal, Sriperumbudur 60% 58% naturally preferred by buyers with com- 55% in H1 2017, while the South Chennai Perumbakkam, Chrompet, Sholinganallur, Guduvancheri, Kelambakkam parable budgets. C 50% share of those projects North Chennai Tondiarpet, Kolathur, Madhavaram, Perambur S 45% with average ticket sizes
40% 5. MARKET HEALTH under `7.5 mn has grown CHENNAI MICRO-MARKET MAP R C 35% from 52% to 89% during A • The quarters to sell unsold inventory
30% 28% SH (QTS) is the number of quarters required the same period.
25% A 25% to exhaust the existing unsold inventory R R
20% 20% in the market. The existing unsold in- R ventory is divided by the average sales S H 15% velocity of the preceding eight quarters 11% 9% 9% 10% in order to arrive at the QTS number 5% 5% 4% 4% for that particular quarter. A lower QTS S H indicates a healthier market. TIRUVALLUR 0% CENTRAL NORTH SOUTH WEST • The Chennai residential market currently MADHAVARAM Source R has a QTS of 6.5, with an average age of inventory of 13.8 quarters. AVADI The concerted focus of developers to A TONDIARPET reduce the unsold inventory load before H ramping up supply along with the recent S EGMORE S growth in demand in H1 2017 has paid GREAMS RD E MT. POONAMALLEE RD ANNA SALAI dividends, as the QTS of the Chennai NUNGAMBAKKAM T NAGAR residential market is now at 2014 levels. S NANDANAM • While the city’s residential market has fi- I RE 8,450 7,737 8,850 nally hit bottom after nearly four years, it QUARTERS TO SELL (QTS) UNSOLD INVENTORY ANALYSIS GUINDY C remains to be seen if the current bounce C A CHENNAI A S UNITS UNITS UNITS is just a speed bump on the way down 8.0 S A or the beginning of a more sustained PERUNGUDI H1 2016 H2 2016 H1 2017 7.8 GST ROAD recovery. SRIPERUMBUDUR S C A 7.6 S H • A concerted effort by developers over S A the past three years to lighten unsold S 7.4 inventory loads by constricting new • Demand has been largely consistent OMR supply has paid off. Unsold inventory 7.2 with the upcoming supply as the south levels have plummeted nearly 30% over S and west micro markets that contain A A the last two years to the current 28,110 7.0 S the relatively cheaper inventory have units. NO OF QUARTERS dominated the demand pie consistently 6.8 over the three analysis periods since H1 • Restricted supply and falling unsold A S 2016. inventory has also pulled down the 6.6 E inventory load on the market from eight S • Locations along the OMR and GST 6.4 quarters to a little over six quarters. S roads in the southern micro markets KANCHIPURAM far outstrip their peers in other parts of • The south and west micro markets hold 6.2 H the city in terms of buyer preference as the highest amount of unsold inventory S E 6.0 they offer the most appropriate mix of and will take under two years to get relatively affordable housing, connec- absorbed at the current rate. The north Jun-14 Jun-15 Jun-16 Jun-17 Mar-15 Mar-16 Mar-17 Sep-14 Dec-14 Sep-15 Dec-15 Sep-16 Dec-16 A A R tivity to workplaces and a reasonably micro market holds over two years’ well-developed social infrastructure. worth of inventory but the ongoing dras- Source R A H S C 56 57 A S A
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tic reduction in supply by developers in 5. PRICE MOVEMENT IN H1 2017 that zone will ensure that it will maintain While the city’s residential equilibrium in the short term and see an • Residential price growth has been • Stagnating prices have not helped the market has finally hit the improvement if demand continues to weakening in the Chennai residential investor’s cause but have played their bottom after nearly four sustain and grow from current levels. market and H1 2017 prices were in line role in keeping the Chennai house with this trend, growing by a modest prices within the affordability range of years, it remains to be seen • The recent 33% reduction in guideline 1% YoY. the homebuyer. if the current bounce is just values across the state by the Tamil Nadu government along with an in- a speed bump on the way crease in the registration fee from1% to down or the beginning of a 4% does increase the effective acquisi- more sustained recovery. tion cost marginally for the home buyer. However, game-changing measures, such as the application of the Real Estate (Regulation and Development) Act, 2016 (RERA) and the PMAY, will PRICE MOVEMENT IN SELECT LOCATIONS go a long way in increasing consumer confidence by effectively regulating developers and increasing transparency in the real estate industry. This regulato- LOCATION MICRO-MARKET PRICE RANGE IN H1 2017 12-MONTH 6-MONTH ry focus of the government will prove to (`/SQ FT) CHANGE CHANGE be a strong buffer for market sentiment in the year ahead and should aid a more Anna Nagar Central Chennai 10,700–11,900 2% 1% sustained recovery in Chennai’s real Kilpauk Central Chennai 14,800–16,000 2% 0% estate market fundamentals. T. Nagar Central Chennai 18,250–19,450 2% 1%
Alandur Central Chennai 7,000–7,500 2% 2%
Porur West Chennai 5,200–5,500 2% 2%
Ambattur West Chennai 4,150–4,600 2% 1%
Mogappair West Chennai 6,200–6,700 2% 2%
Iyyappanthangal West Chennai 4,000–4,500 2% 2%
Sriperumbudur West Chennai 2,700–3,200 2% 1%
Perumbakkam South Chennai 4,100–4,500 1% 0%
Chrompet South Chennai 4,200–4,700 1% 0%
I RE Sholinganallur South Chennai 4,500–5,500 2% 1% MICRO-MARKET-WISE QTS VS AGE OF INVENTORY Guduvancheri South Chennai 3,200–3,700 1% 0% ENTRAL N RT S T EST Kelambakkam South Chennai 3,500–3,900 0% 0% 17 Tondiarpet North Chennai 4,500–4,800 1% 0% 16 15 Kolathur North Chennai 4,800–5,500 2% 1% 14 13 Madhavaram North Chennai 4,500–5,000 2% 0% UNSOLD MICRO-MARKET 12 Perambur North Chennai 6,200–6,500 2% 1% INVENTORY 11 10 Central 1,505 Source: Knight Frank Research 9 North 1,319 8 7 South 16,642 6 5 West 8,644 IN ARTERS A E NS LD IN ENT R 4 CHENNAI 28,110 3 3 5 7 9 11 13
TS S R Source: Knight Frank Research Note: The size of the bubble indicates the quantum of unsold inventory 58 59 RESEARCH INDIA REAL ESTATE
OFFICE MARKET
1. CHENNAI OFFICE MARKET 2. SECTOR ANALYSIS I RE I RE STOCK, NEW COMPLETIONS, SECTOR-WISE SPLIT OF TRANSACTIONS The total office space OFFICE SPACE STOCK AND VACANCY LEVELS – H1 2017 saw the BFSI TRANSACTIONS AND HALF-YEARLY TREND transaction volume in VACANCY TRENDS sector’s share of STOCK OCCUPIED STOCK VACANCY (RHS) • The Chennai office market has tradition- 50% H1 2017 was 1.9 mn sq • The Chennai office space market ally been anchored by the IT/ITeS sector transactions increase ft, while only 1.1 mn sq could not maintain the momentum in 80 30% and recent periods—especially the last substantially due to two 43% ft of new office space transactions that it had gained over 18 months—have seen it give way to 42% large leases by Wells
the last three analysis periods that 70 25.4% the the Other Services and the BFSI 40% 24.4%
came online. culminated with H2 2016 experiencing sectors. 37% Fargo and HDFC Bank 24% the highest transaction volumes in 22.5% 60 • The BFSI sector has been the smallest amounting to over half history.
19.3% consumer of office space in the Chennai of the space transacted • To a large extent this can be attributed 50 office space market. Notwithstanding 30% 16.8% 18% by the sector
to the abject lack of viable office space the lack of large format office spaces 26% 24% mn sq ft supply that continues to hamstring the 40 required by the back offices of BFSI 24% 24% 23%
market. 12.2% sector companies, the current analysis
10.8% 12% 30 period saw its share increase substan- 20%
• Paucity of quality office space caused 18% tially due to two large leases being tak- the current period to witness a drop 16% en up by Wells Fargo and HDFC Bank in transaction activity with H1 2017 20
amounting to over half of the 0.31 mn 12% recording 1.9 mn sq ft of transactions, 6% 11% sq ft space transacted by this sector. 10% 4% lower than the 2 mn sq ft 10 transacted in H1 2016 and the lowest in • The IT/ITeS sector continues to be the
I RE the last three years. 0 0% largest consumer in the Chennai office NEW COMPLETIONS AND TRANSACTIONS – space market and accounted for 0.7 mn HALF-YEARLY TREND • The fact that the city saw just 3.7 mn sq 0%
H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 sq ft of office space transactions in H1 NEW COMPLETIONS TRANSACTIONS ft of supply since H1 2015, compared 2017. Automotive technology provider BFSI to the 12.2 mn sq ft of transaction Source R IT/ITeS 3.5 Valeo, Zifo Technologies and Paragon volume, has pushed down vacancy H1 2016 Digital were among the most active IT/ H2 2016 levels from 22.5% in H1 2015 to 10.8%
H1 2017 OTHER SERVICES ITeS companies during this period. MANUFACTURING 3.0 H1 2017. Source R • The share of the manufacturing sector • The total office space transaction has been on the rise, as the bulk of the Note: BFSI includes BFSI support services volume in H1 2017 was 1.9 mn sq ft, 2.5 quality office spaces available in recent while only 1.1 mn sq ft of new office times, particularly in the SBD, con- space came online. formed to their requirements compared 2.0 to those of IT/ITeS companies and BFSI mn sq ft back office operations. This sector along with the Other Services sector 1.5 took up close to 24% or 0.45 mn sq ft during H1 2017.
1.0
0.5 2.0 3.1 1.9
mn sq ft mn sq ft mn sq ft 0.0 H1 2016 H2 2016 H1 2017 H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017
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C 3. DEAL SIZE ANALYSIS CHENNAI BUSINESS DISTRICT MAP I RE AVERAGE DEAL SIZE AND NUMBER OF DEALS S
AVERAGE DEAL SIZE (SQ FT) R • The dearth of fresh office supply cur- C A tailed the ability of potential occupiers NUMBER OF DEALS (RHS) to occupy large format office spaces SH 40000A 120 and this is depicted clearly in the aver- R R age deal size during H1 2017 that is one R S H of the lowest in the past seven reference 100 periods. 30000 S H 80 TIRUVALLUR sq ft
SELECT TRANSACTIONS Number MADHAVARAM 20000 60 AVADI A TONDIARPET PBD AMBATTUR OCCUPIER BUILDING LOCATION APPROX AREA 40 CBD & OFF-CBD H (SQ FT) S EGMORE S 10000 GREAMS RD E MT. POONAMALLEE RD ANNA SALAI Valeo CeeDeeYes Navallur 155,000 20 NUNGAMBAKKAM SBD T NAGAR Wells Fargo Chennai One Thoraipakkam 119,000 S NANDANAM Renault Nissan Ascendas Mahindra 112,000 0 0
Technology Cybervale World City C GUINDY C A A S
H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 SBD OMR FCI ETA Technopark Navallur 70,000 S Source R A Kone Indiabulls Ambattur 50,000 PERUNGUDI GST ROAD SRIPERUMBUDUR S C HDFC Bank Krishna Tech Tower NM Road 49,500 A S H S A PBD GST Paragon Digital CeeDeeYes Perungudi 49,000 S PBD OMR TVS Wabco RMZ Infinity Manapakkam 42,000 OMR
Shell RMZ Millenia Kandanchavadi 42,000 S A A S Source: Knight Frank Research
A S E 4. BUSINESS DISTRICT ANALYSIS S S KANCHIPURAM BUSINESS DISTRICT MICROMARKETS H Central business district S E Anna Salai, RK Salai, Nungambakkam, Greams Road, Egmore, T. Nagar (CBD and off-CBD)
Suburban business district (SBD) Mount–Poonamallee Road, Porur, Guindy,A Nandanam A R SBD – Old Mahabalipuram A Perungudi, Taramani H S Road (OMR) C A S Peripheral business district A (PBD) – OMR and Grand Southern OMR beyond Perungudi Toll Plaza, GST Road Trunk Road (GST) C H A PBD – Ambattur Ambattur S E A CHENGALPATTU S
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almost halve in H1 2017. Occupiers, I RE I RE BUSINESS DISTRICT-WISE TRANSACTION SPLIT especially from the IT/ITeS industry took WEIGHTED AVERAGE RENTAL MOVEMENT up space in Navallur, Thoraipakkam H1 2017 H1 2016 and Mahindra World City in projects 60 50% such as CeeDeeYes, Chennai One and Ascendas Cybervale.
44% 50 • Over half of the space taken up by the BFSI sector comprised Chennai One 40% in Thoraipakkam and Krishna Tower in 40 Mylapore. 32%
30% 30 5. RENTAL TREND ( ` /sq.ft./month) 23% 22% 22% • Rental values have seen a sustained 20 20% 19% rise since 2012 on the back of steady
15% demand coupled with drastic reduction
14% 10 in office space inventory during successive years. 10% 7% • The lack of vacant office stock, coupled 0 with steady demand, has pushed 2% weighted average rentals in the Chennai H12014 H22014 H12015 H22015 H12016 H22016 H12017 0% office space market to` 55 per sq ft Source R per month at the end of H1 2017 – a SBD CBD significant 5.6% growth YOY. SBD OMR
PBD Ambattur • Rental growth was healthy across Source R PBD OMR & GST micro-markets and SBD locations such HYDERABAD METRO: as Perungudi, Guindy and Taramani. These areascontinued to witness above- average rental growth, particularly as BRINGING GACHIBOWLI vacancy levels drop to as low as 6% in the SBD and 11% on the SBD OMR. CLOSER TO CHARMINAR
- BY PANKAJ ANUP TOPPO
2.0 1.9 ith a stable state government THE IMPACT OF THE METRO: western corridors of the city more livable mn sq ft mn sq ft in place and uncertainties of and could also add to the capital values of At a macro level, it will make movement the past laid to rest, it looks housing units in these areas. Even offices BUSINESS DISTRICT-WISE RENTAL MOVEMENT W within the city hassle free and that too at a H1 2016 H1 2017 like the Hyderabad real estate market is around the metro corridors could put a quicker pace. The most important impact finally making its presence felt both at premium on their rentals. however, will be to further embellish the the national level and at the Asia Pacific growing brand of Hyderabad as an IT city. BUSINESS DISTRICT RENTAL VALUE RANGE IN H1 12-MONTH 6-MONTH region. To further add to the growing The metro will have a positive impact on attractiveness of Hyderabad, the ci.bilee The major impact of this infrastructure • The OMR attracted over 55% of the 2017 (`/SQ FT/MONTH) CHANGE CHANGE the city at different levels. push will however, be felt in the demand during H1 2017 as occupiers Bus Stand. The metro was expected to established, residential colonies of the city took up space in the relatively lower CBD & off-CBD 60–95 4% 2% be functional by this year end. As per our survey, the metro will start services on such as Ameerpet and Srinagar Colony. priced SBD OMR,the PBD OMR and PBD OMR & GST Road 26–37 8% 4% At a granular level, it will further add to the SR Nagar and Miyapur stretch by the These micro markets are thickly populated, GST business districts. the growing attractiveness of the north- SBD OMR 45–80 6% 3% end of the year. It would be operational in residential colonies with an established western parts of the city, which typically • The PBD OMR and GST business phases. Work is going on at a break-neck social infrastructure. The best part is that PBD Ambattur 28–35 3% 1% represent the new, changing face of the districts that had vacancy levels as high speed on the green line and red line. these micro markets are in the heart of city of Nawabs. It will make these north- as 50% at the end of 2015, has seen SBD 50–65 5% 2% the city. Infact, Ameerpet is one of the this number steadily come down and Source: Knight Frank Research 64 65 RESEARCH INDIA REAL ESTATE
major junctions and has the potential BOLARAM MANOHARBAD ALWAL to become what Rajiv Chowk has in the MIYAPUR Delhi Metro Rail network. This will have a JNTU CAVALRY BARRACKS positive impact on the rentals in locations
H.B.COLONY like Ameerpet and Srinagar Colony. Once AMMUGUDA the metro becomes operational in these LINGAMPALLI KAKATPALLY locations, rentals here could move up by BALANAGAR 10–15%. % HI-TEC CITY 10-15 MOOSAPET Once the metro becomes operational in these The biggest benefit of the metro for RAMAKRISHNAPURAM locations, rentals here could move up by BORABANDA Hyderabad however, will be that it will 10–15%. FATEH NAGAR SAFILGUDA SHILPARAMAM ERRAGADDA infuse new life into the old city, especially
ESI NATUNE JUBLIEE BUS the Charminar. The metro will bring the HI-TEC CITY CUNE HOSPITAL DAYANANDNAGAR S.R.NAGAR RASOOLPURA PARADE GROUND areas around Charminar closer to residents PRAKASH NAGAR PARADISE MALKA MOULA ALI COD MADHAPUR of the city who in the present day do no MADHURA NARAG BEGUMPET SANJEEVAIAH PARK METTUGUDA YUSUFGUDA SECUNDERABAD visit these parts of the city. During our PEDDAMMA AMEERPET JAMES STRET LALAGUDA survey, many respondents spoke in unison TEMPLE PANJAGUTTA SITAPHALMANDI JUBLI HILLS TARNKA about the lack of easy access being the JUBLI HILLS ROAD GANDHI HOSPITAL CHECKPOST HUSSAIN SAGAR prime reason for not visiting parts of the ERRAMANZIL HABSHIGUDA ARTS COLLEGE old city. To give an example, in the present RAMNAGAR KHAIRTABAD day, depending on traffic conditions, it will NGRE JAMIA OSMANIA take anywhere around one and a half hours LAKDIKAPUL RTC CROSS ROAD LAKDIKAPUL to two hours to reach Charminar from ASSEMBLY CHIKKADPALLY VIDYANAGAR Ameerpet, and when the metro begins its HYDERABAD METRO UPPAL NAMPALLY operations, it should not take more than NAMPALLY NARAYANAGUDA 40–45 minutes to cover the same distance. KACHIGUDA NAGOLE MUSI RIVER The ease of access will give new life to GANDHI BHAVAN SULTAN OSMANIA BAZAR these parts of the city. MEDICAL COLLEGE M.G.BUS STATION MALAKPET NEW MARKET
SALAR JUNG MOOSARAMBAGH DILSUKHNAGAR MUSEUM CHAITANYAPURI On the whole, the metro will make the city DABIRPURA more livable but from a real estate point of CHARMINAR YAKUTPURA view it could push up rentals and capital values along its corridors. From a branding SHALIBANDA perspective however, it will be another L.B.NAGAR feather in the cap of Hyderabad. Unlike The biggest benefit SHAMSHERGANJ other cities, where the metro was required of the metro for to help the movement of traffic, which had JANGAMETTA Hyderabad however, come to a standstill as its roads had got FALAKNUMA FALAKNUMA will be that it will choked, Hyderabad should get its metro infuse new life NPA SHIRAMPALLY when the traffic on its roads is still moving. into the old city, Metro services are expected to start between BEDVEL especially the Miyapur and SR Nagar by the end of this year UMDANAGAR Charminar. 66 67 RESEARCH INDIA REAL ESTATE
The increased pace of construction I RE in ongoing projects gave homebuyers MICRO-MARKET SPLIT OF LAUNCHED UNITS the confidence to go ahead and buy a house. This increased confidence H1 2016 H2 2016 H1 2017 among homebuyers is largely 100% responsible for a marginal uptick in
sales in H1 2017 compared to H2 2016 90% 87% 87% and H1 2016. 80% 80% 5,700 5,790 2,571 • Compared to other markets, sales figures for H2 2016 in Hyderabad 70% UNITS UNITS UNITS did not reflect the true impact of 60% H2 2016 H1 2017 demonetisation. Sales in Hyderabad H1 2016
remained steady in H2 2016, despite 50% demonetisation bringing sales to a halt in other major markets. This can be 40% attributed to the fact that sales in first • The minor loss of share in new launches three months of H2 2016 were robust 30% for West Hyderabad has been the gain and it saved the day for Hyderabad. 20% of North Hyderabad. The marginal • While launches have nose-dived, sales 11% switch could be attributed to developers 10% 6% are still steady. Meanwhile, prices have 6% taking interest in affordable housing 4% 3% 3% 2% remained muted and are expected to 2% 2% 2% 2% 2% 0% projects. move in the same manner, in the near CENTRAL EAST NORTH SOUTH WEST • While capital values of new launches in future. West Hyderabad typically ranges from R ` 3,500-6,500, those in North Hyder- HYDERABAD abad are in the range of ` 2,000-3,000 2. MICRO-MARKET SPLIT OF units. RESIDENTIAL LAUNCHES
• Of the total launches that happened in TICKET-SIZE SPLIT ANALYSIS RESIDENTIAL MARKET H1 2017, over 80% per cent happened OF LAUNCHED UNITS in West Hyderabad. Micro-markets that H1 2016 H2 2016 H1 2017 1. HYDERABAD RESIDENTIAL I RE witnessed new launches in West Hyder- HYDERABAD MARKET TRENDS - HALF-YEARLY MARKET LAUNCHES, SALES abad include Nallagandla, Chandanagar, Sales in Hyderabad <2.5 mn 0.70% 8% 1% AND PRICE TRENDS Serilingampally, Kukatpally, Narsingi, LAUNCHES SALES WT. AVG. PRICE (RHS) 2.5-5 mn 28.25% 15% 19% Hayathnagar, Narsingi and Kokapet. remained steady in 9000 3800 H2 2016, despite 5-7.5 mn 32.15% 27% 28% • Historically Hyderabad has seen new • West Hyderabad attracts most of the 7.5-10 mn 19.89% 27% 19%
launches of more than 5,000 units 3710 8000 3710 development interest in the city courte- demonetisation bringing but in H1 2017 it hit an all-time low of 3700 sy its upscale residential pockets and sales to a halt in other 10-20 mn 4.81% 14% 29% just over 2500 units. Compared to H1 7000 proximity to the IT/ITeS and BFSI sector 3620 major markets. This can >20 mn 14.21% 9% 4% 2016 new launches were down 55% 3610 hubs. Neighbourhoods such as such
and compared to H2 2016 it shrunk by 6000 3600 as HITEC City and Gachibowli continue be attributed to the fact 56%. to attract young IT employees that form that sales in first quarter
3509 Source: Knight Frank Research 3502 5000 ` \sq ft the bulk of the city’s workforce. • Lack of clarity on the implementation of H2 2016 were robust 3500 • The shift towards affordable housing of the Real Estate (Regulation & Number of units • The much awaited Hyderabad met- 4000 and it saved the day for Development) Act (RERA), 2016 has ro too will make its debut in the city is not apparent in Hyderabad as the 3390 emerged as major factor dampening between Miyapur and SR Nagar in West Hyderabad. bulk of the launches in Hyderabad are 3000 3400 new launches in Hyderabad. In Hyderabad, by the end of this year. This concentrated in relatively higher priced comparison, RERA is already in force markets in the western side of the city. 2000 also reflects the government’s focus in in the neighbouring state of Andhra As a result the below ` 5 mn ticket size 3300 improving infrastructure in the western Pradesh. There is still time before contributes around 20% of the new 1000 part of the city. RERA comes into force in Telangana. launches. In fact one-third of the new • While West Hyderabad continues to launches are in the price category of • On the other hand developers were in 0 3200 maintain its dominance in the share of more than 10 mn. a rush to complete ongoing projects new launches in H1 2017, its share has before RERA came into force, the H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 gone down from H1 2O16 and H2 2016 R deadline for which was 1 May 2017. 68 69 RESEARCH INDIA REAL ESTATE
• The quarters to sell unsold inventory I RE 4. HYDERABAD MARKET (QTS) is the number of quarters required MICRO-MARKET WISE RESIDENTIAL SALES MICRO-MARKET SPLIT OF SALES HEALTH to exhaust the existing unsold inventory
H1 2016 H2 2016 H1 2017 I RE in the market. The existing unsold in- MICRO-MARKET LOCATIONS QUARTERS TO SELL (QTS) UNSOLD ventory is divided by the average sales 80% INVENTORY ANALYSIS velocity of the eight preceding quarters 75% HYDERABAD HMR-Central Begumpet, Banjara Hills, Jubilee Hills, Panjagutta, Somajiguda 12 in order to arrive at the QTS number 70% 69%
HMR-West Kukatpally, Madhapur, Kondapur, Gachibowli, Raidurgam 65% 11 for that particular quarter. A lower QTS
65% 63% indicates a healthier market. HMR-East Uppal, Malkajgiri, L.B. Nagar 60% 10 55% • With drastic reduction in launches and HMR-North Kompally, Medchal., Alwal, Quthbullanpur 9 50% steady sales QTS H1 2017 fell down 8 compared to H2 2016. In H2 2016 QTS HMR-South Rajendra Nagar, Shamshabad 45% was 8 quarters and now it stands at A B C D Gosaiguda Shamirpet Hoshyarpalle 40% 7 Lake Ponnal Alinagar Army Residential 5.9 quarters. Kodakanchi Colony Nalthuru Gaddapotharam Yakhatpura Munirabad Bommarasipet 35% Mantrikunta Kishtayapally Madhu 6 Babu Colony Sambhupur Thumkunta
Kistaipally Keshavapuram 30% NO OF QUARTERS • The markets of north and south are TRR Nagar Saregudem Madaram 5 Mandalpalle however, under pressure as their QTS Serijankampet 25% Devaryamjal Upperpally Ramlingam Thumkunta Palle Vijay Nagar Village Colony Indiramma Kazipally Colony Chouderpally and age of inventory is extremely high. Praneeth Yadgarpalle Gandigudem SAI Nagar Natures west Rangapuram 20% 4 Cheruvu Bounty Yamjal Pothaipally Bowrampet Bahadurpally Wadakpally Bhadurpalle 1 The age of inventory of west and east KBR Colony Cheruvu Rameshwaram Maisamma Banda Venkat Gudem Thumukunta Anthaipally Dharmavaram Yadgarpalle 15% Citizens Church Reddy Nagar East 1 13% Colony Wadakpally Sultanpur Hakimpet Air 3 Colony Force Station 11% New Town Sundar are also high but they have a healthy
Colony Mallampet Rao Nagar 10% Bachupally 9% 9% 9% Devender KVR Paradise Lakshmi Sai Nagar 10% 8% 8% Patelguda SJB Hills Colony Colony Khallsi Guda
Nagar Colony Thimmaipall Pedda 7% 7% 7% BSR Colony Ilapur Suraram Parvathapuram Hakimpet 6% sales velocity. The high sales velocity Suraram Jaibery Colony 2 Village CRPF Krishna Kowkoor 5% Alwin Colony Shanthi Sree Sri Ganesh Reddy Pet KBR Colony Whisper Saibaba Nagar Bharat Nagar Navyanagar Nagar Colony Valley Gajularamaram Nagar Badshahpet could be attributed to the fact that it Ambedkar Keesaragutta Colony Ram Reddy Satyam Venkusa Enclave Silver House Hill County Nagar Golf Club Estates Keesara APSL AnandNagar Mayuri Nagar Devender Brundavan Ratna 1 Nagar Colony Colony 0% Colony Colony MLA Colony Rajiv Swagruha Haridas Pally Ameenpur Srivani Nagar is the preferred market in the city for Mahadevpur IDA Lake Krishnaja Hills Fox Sagar Abhimaan Prashanthi Colony Jeedimetla Chetana Project Lake Golf Enclave Reddy Colony Hills Housing Vishwa Karma Indira Nagar Shapur Dandamudi Rajiv Gruha Ameenpur Nagar Enclave Colony Colony Kalpa Colony CENTRAL EAST NORTH SOUTH WEST Manjeera Bison Suvarna Mayuri Nagar Environmental Jawahar 0 homebuyers looking for affordable Nagar Ambar Kudlapur Valley Miyapur Balaji Hills Park Nagar Venkat Cheruvu Meenakshi Colony Estate Shivaji Nagar Patighanpur Bombay Ramana Dynamics Shirdi Enclave Anjanadri Colony Colony Widea Colony Nagadoni Bhanu Enclave Nagar Tulasi Nagar Konda Badhra Godavari Extension Bandam PJR Layout Indira Hills Sai Nagar Devi Kalyan options. Prasanth Nagar HMT Colony Homes Overseas BDL Colony Kommu Estate Gardens Nadigada Jai Jawahar R Pragathi Indhra Santosh Friends Tanda M.E.S.Colony Nagar Allareddyguda Jun-17 Jun-14 Jun-15 Jun-16
Enclave Mar-15 Mar-16 Mar-17
SinghNagar Nagar Colony Godumakunta Badishaguda Sep-14 Dec-14 Sep-15 Dec-15 Sep-16 Dec-16 Colony Housing Board Vijaya Nagar Dwaraka Gayatri Nagar JNTU Ammuguda Kundanpally College Colony Colony Laxmi Puri Colony Colony Miyapur Quthbullapur Nagar Kapra Green Park Jangampalli Bapu Nagar Nirmal Nagar Lake Enclave Patha SC Pati Salivahana Dhruva Kapra Ghanpur Madinaguda Sri Sai Ram Enclave Colony Source: R RTC Colony Colony Colony Vidhura Kukatpally Green Field Ramdas Vihar Colony Nagar Colony Dharat Nagar Sai Sanjeeva Rayaraopet Lambada GopalNagar NTR Nagar Rapti Nagar Kukatpally Gurumurthy Ashok Nagar Sapthagiri Colony Nagar Cheruvu Thanda Society Colony Annarayan Nagaram Gandhi Cheruvu Serilingampally IDPL Colony Gandhi Lake Vivek Nagar Balnagar Rajiv Gandhi Nagar Radhakrishna Garden Hig Phase Spring Valley Indiragandhi Nemuragomla Colony Fortune Nagar R K Puram Nagar Bhagawan Fields Nagar Padamatisaiguda Marthanda Habeeb Moosapet JPR Enclave Bowenpally Colony BJR Ambedkar Gulmohar Nagar Maruthi Nagar Park Colony Nagar Kukatpally RTC Laxmi Garden Colony Velimela Industrial CRF Colony Rama Krishna MINT TWP Ravi Colony Bon Colony Puram Cheruvu Huda Layout Estate Cheruvu Raja Sikandarabad Rajeshwara Moosapet Bharatnagar Manovikas Surya Cherlapalli Kdndakal Nagar Kaithalapur Nagar Kondapur I RE Kondapur IDA Nagar Shankaraiah Colony Rail Vihar Night Safari Siddhi Vinayak Safdar Nagar Colony Park Nagar Napier MICRO-MARKET-WISE QTS VS AGE 2 Erragadda Road Lines Mudfort Upparguda APHB Colony Balaji Nagar Sri Kotla Sanjeevaiah Mahendra Kanchi Vijaybhaskar OF INVENTORY Reddy Botanical Shilparamam Nagar Hills CUC Garden HCL Colony Yamnampet 2 SRT Nagar Begumpet Airport Hitec City ESI Hospital Hitech City Jubilee Bus Stand Asiagsb SPR Hills Begumpet Shanthi Campus Prakash Nagar Parade Sri Saipuri Nagar Ankushapur Rasoolpura Paradise Ground Colony Madhapur Begumpet Shakthi Chengiccherla Vasantagiri Ghanapur R ENTRAL R EAST R N RT R S T R EST Durga Madhapur PS Secunderabad Sai Nagar Pocharam Cheruvu Gachibowli Venkatagiri Madhura Chandupatlaguda Gopanapally Nagar Durga Nagar Bokkonigusa Thanda Nacharam Pocharam Yousufguda Bala Chitea Journalists Mettuguda Hanuman Nagar Telecom Silpa Gram Ameerpet IDA Mallapur Colony Phase 3 Peddamma Temple Jubilee Nagar Ghanpur Nagar Craft Village Hills Road L N Colony Narapally Rajiv 29 Emaar MGF Silent Ameerpet IRISET Boulder Hills Extension Punjagutta Secunderabad Swagruha Gowlidoddy Valley hills Lalaguda Sri Sai Nagar Indra Reddy Jubilee Hills Cruiser on Hire At Mandadi Nagar Hussain Sagar Gandhi Hospital Checkpost Hema Nagar Surender 7,700 7,800 7,901 Colony BL Nagar Reddy Nagar Kasu Brahmananda Swarnagiri Jubliee HillsReddy National Park Erra Manzil Indira Nagar Musheerabad Professors Tarnaka RTC Colony Colony Quarters North Srivnivasa Pilligundla Kalyanpuri Nagar Edulabad Dontanpally Nanakramguda Ambedkar Habsiguda Bheem Lake Swaroop Reddy Nagar Vaishanavi Venkatapur Muppas Nagar Ram Nagar Colony Financial Maqtha Nagar Kousarali Panchvati Khairatabad Vidya Nagar District Colony Deen Dayal 24 Mizaguda Nagar R.T.C. X Road Jawahar NGRI Maharajpet Banjara UNITS UNITS UNITS Vinobha Lakdikapul Nagar Sai Nagar Khanapur ManikondaShirdi Sai Survey of India Nagar Nagar Chikkadpally Rahat Nagar Colony Divya Nagar Gopularam Janwada Surya Hills Musi R Assembly ive Quli Qutub Aziz Bagh Uppal r Gungurthy Nagar Parvathapur Shah Layout Dollar Hills Sathya Nagar Narayanaguda Nehru Nagar Lake View Srinivasa HUDA Nampally Uppal Colony Gulam Kokapet Lingampally Hills Colony Aliguda Ramanthapur Gaddi Nagole Gayatri Nagar Chinnamangalaram Narsingi Neknampur Mehdipatnam Gandhi Bhavan Sultan Bazar Annaram Bala Ji H2 2016 H1 2017 Kendriya Township Pratap H1 2016 19 Vihar Jaiswal Garden Surya Nagar Baghdad Musi Rive Singaram Nagar OMC Kamakshlpuram r Mahalneknapur Vishwas Nagar MGBS Mothkupally Colony Narender Lalabagh Nagar Sai Ram Nagar Colony Weaker Gandipet Guffa Nagar Section Goshamahal Dhobi Galli Alkapuri Colony Ibrahim Bagh Thimmaiguda Osman Sagar M Saleh r Jayapuri Colony M Manchirevula u M ive usi si Nagar usi R Reddipally Riv R Ramdev er iv Chandanagar Vill er Guda Malakpet Keshava Nagar Qutubullapur Dalra Medipally Salar Jung Chaitanyapuri Sogbowli Nalanda Museum New Market Annaram Thatti Khana 14 Attapur Moosarambagh Saru Nagar Chandanagar Madhavi Nagar Dilsukhnagar Gandhamguda Nagar Dilsukhnagar Upparpally Maruthi Nagar Saddupally Padmasri Charminar Victoria Memorial Akbarja Hanuman Estates Sharada Nagar Peeranchuruvu New Friends HUDA Complex Nagolu Rock Hills Laxmi Pasumamula Nagar Mrugavani National Radha Nagar Colony Aman Nagar Saidabad Park i Enclave Colony Ganapathi Lake s Snehita Hills u Shalibanda Colony M Saroornagar Kuntloor Pedda 3 Durga Devi Lake Yelkaguda Chilkur Colony Nehru Gowlipura Cheruvu Velly View Zoological L.B.Nagar Aziz Nagar Enclave Sukender Park Sri Ramagiri 9 SVBS Nagar ReddyColony Gutta Himayat Nagar Colony Mir Alam L B Nagar 3 Suleman Tank Shamsherganj Champapet Nagar Bushrath • West Hyderabad remains the preferred Bhagavatguda Nagar Pidugu NTR Nagar Ramulu Saibaba Nagar Jahanuma Rakshapuram Colony HUDA Layout Jangammet Balijaguda Pedda Gunta Shivam Hills Baba Colony Virat Nagar Budvel DRDO TWP New Gayatri market, largely because buyers have a IN ARTERS A E NS LD IN ENT R B Kavadipally Falaknuma a Kings d Nagar a n Colony g i p Devakammathota Mus e Medbowli Agricultural t Dhatu 4 Dwarkamai HayathNagar Research R Sakal Basti Nagar o Nagar OMER Colony a Hanuman preference for ready to move in prop- Institute d Bharadwaj Nagar Tarapuri SBI Colony Chinnashapur Quarters Vattepally Meerpet 0 5 10 15 20 Colony Himayat Adarsh Colony Sagar Lake Nagar Ha z Baba Vaidehi Nagar Appa Reddy Rajiv Gandhi Nagar Maruthinagar Nagar Sirla Hills Guda Udamgadda Janpriya Nagar erties closer to the office hubs. Nearly TS Barkas Sai Nagar Hari Hara Durga Vignanapuri Puram Bangaliguda Nagar Yelmati Nagar Visaka Nagar Teachers Colony Murtuzaguda Kothapet Jatoth Nagar R Nazeebnagar Badnaipet Sripuram Thqrpur Village 69% of the home sales took place in Kanakamidi Mahmood Madhura Rajendra Nagar Colony Inamguda Nagar Panchayath Neeladri Nagireddy Padmashalipuram Badangpet Raj Colony Guda Nagar Sri Chaithanya Note: The size of the bubble indicates the Umda Nagar Hanuman Maytri Jefferguda Colony Sri Laxmi Cheruvu this zone. Sajanpally Hayat Nagar Nagar Sree Nagar Venkatapuram Ayodhya Nagar UNSOLD Surangal Mustafa Hills Nagar RGK Swami Uppacuda Sri Ram Roma Vivekananad Surmayaguda Colony AS Nagar Hariguda Enclave 3 Colony Gandicheruvu MICRO-MARKET Mallapur quantum of unsold inventory Bakaram Umda Kothwalguda Jalapalli Sagar Injapur Indira Nagar INVENTORY Lake Papayakumandan Baba • While the relative shares of other Nagar Ialbazar Bala Ji Nagar Source: Knight Frank Research Amdapur High Court Kavaguda Sathamrai Madanna YSR Nagar Colony Yethbarpalle Gudem Nadargul Colony HUDA Colony Village Mayur residential zones have gone down in Rural Sitharampuram Anajpur HMR - Central 1,390 MB Nagar Mazidpur Kethireddypally Ambedkar Umer Rajiv Gandhi Nagar Khanguda Sultanpalle Nagar AV Nagar Brahmana Sri Rama Pally Nagar H1 2017 compared to H2 2016, West Kolbowidoddi HMR - East 1,185 Ragannaguda Narkhoda Devatabowli Lake Hyderabad recorded an uptick in sales Kamuni Indira Mamidipally Kurmaguda Sagar Nakkalapalle Venkatapuram Shamshabad 4 Kavellguda HMR - North 3,985 Kacharam M.M.Kunta 4 • North Hyderabad has the potential to Ramdas Pally Posettyguda Rajiv Gandhi International Airport (HYD) Naganpalle HMR - South 2,993 Sollpet Gollapalle Khurd grow in the future albeit with dedicated Ramanjapur Botiguda Nanajipur Grapes Garden Sayyed Guda Almasguda Polkampally Ghasmiyaguda Manyaguda support from the government . Suramma Sardar Nagar HMR - West 13,105 Cheruvu Pedda Shapur Basaguda Thanda Yengalaguda Jukal Patel Guda Raviryal Muchintal Chinna Gollapalle Pilloniguda Golcoonda Kalan HYDERABAD 22,658 Shankarapuram Maddur Guduru Burujuguda Bahadurguda Peddaved Manorabad Vastungar Tattikhana Lokya Tanda Palmakole Mankhal Kongara Kalan A B C D 70 71 RESEARCH INDIA REAL ESTATE
PRICE MOVEMENT IN H1 2017 OFFICE MARKET • With lack of clarity on policy issues, With drastic reduction capital values remained muted in Hyder- in launches and steady abad. While prices in the city remained muted, premium markets witnessed a sales QTS in in H1 2017 1. HYDERABAD OFFICE I RE MARKET STOCK, NEW OFFICE SPACE STOCK AND VACANCY LEVELS – marginal uptick of 1% in the past six compared to H2 2016. HALF-YEARLY TREND months. COMPLETIONS, TRANSACTION In H2 2016 QTS was AND VACANCY TRENDS STOCK OCCUPIED STOCK VACANCY (RHS) • On a Y-O-Y comparison prices in premi- 8 quarters and now it um markets have moved up at a health- stands at 5.9 quarters. 70 12% ier rate than the overall price movement • The Hyderabad office market of the city. witnessed transaction of 2.33 mn sq ft 10.56% 60 10.0% in H1 2017. This is approximately 26% 10% lower than the office space transacted 9.0% 8.41% PRICE MOVEMENT IN SELECT LOCATIONS in H2 2016. But the dip in transacted 50 8.22% 7.59% office space should not be looked in 8% isolation. The preceding six months 40 6.46% set a new high in the amount of office mn sq ft LOCATION MICRO-MARKET PRICE RANGE IN H1 2017 12-MONTH 6-MONTH space transacted in Hyderabad. When 6% (`/SQ FT) CHANGE CHANGE compared to H1 2016, office space 30 transaction fell by 15%. Begumpet Central 4,500–6,000 2% 1% 4% • The fall in office space transaction 20 Banjara Hills Central 7,000–10,000 1% 0% is a result of paucity in supply of 2% Jubilee Hills Central 8,000–9,500 2% 0% quality spaces coming into the market. 10 Approximately 2 mn sq ft of office Madhapur Central 5,800–7,800 3% 1% space was delivered during H1 2017. Uppal East 2,600–2,800 2% 0% New completions in H1 2017 were 45% 0 0% lower than H1 2016 and 17% lower than L. B. Nagar East 2,500–2,900 1% 2% H2 2016. The dip in new completions is H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 Nacharam East 2,200–2,800 1% 0% a result of many projects being in the Source R I RE pipeline. Kompally North 2,200–3,100 2% 1% NEW COMPLETIONS AND TRANSACTIONS – HALF-YEARLY TREND Quthbullapur North 2,100–2,600 1% 0% • Shrinking new completions has not NEW COMPLETIONS TRANSACTIONS been able to keep pace with the Shamirpet North 2,000–2,400 1% 0% 4.0 demand for quality office space. This Shamshabad South 2,300–3,000 0% 0% has pushed vacancy levels to a new low. Vacancy level in Hyderabad is Bandlaguda South 2,200–3,100 0% 0% 3.5 around 9% which is lower than the level Rajendranagar South 2,100–3,100 2% 0% witnessed in H2 2016. 3.0 Kondapur West 4,000–4,800 2% 1% • Low vacancy is one of the biggest The dip in transacted Gachibowli West 3,800–5,250 3% 1% challenges for the Hyderabad market office space should 2.5 as occupier interest continues and Manikonda West 3,400–4,500 3% 1% not be looked in quality office space is not available. It mn sq ft Kukatpally West 2,800–4,000 3% 1% 2.0 also includes office stock in locations isolation. The that are not much preferred by Madinaguda West 2,600–3,350 2% 1% preceding six months occupiers. Moreover, vacancy levels 1.5 set a new high in Source: Knight Frank Research in the most sought after locations such as Madhapur, HITECH City, the amount of office 1.0 Gachibowli and Nanakramguda are as space transacted in low as 2–4%. Hyderabad. When 0.5 compared to H1 2016, office space 0.0 transaction fell
H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 by 15%. Source R 72 73 RESEARCH INDIA REAL ESTATE
2. SECTOR ANALYSIS I RE 3. DEAL SIZE ANALYSIS SECTOR-WISE SPLIT OF TRANSACTIONS SELECT TRANSACTIONS • Although the IT/ITeS sector has tradi- • The average deal size in H1 2017 was tionally dominated the transaction pie in reported to be 18,516 sq ft, which is 100% the Hyderabad office space market its 54% lower than H2 2016 and 28% less share dipped to 51% in H1 2017. The than H1 2016. The shrinking deal size OCCUPIER BUILDING LOCATION APPROX AREA (SQ FT) 90% fall in share of IT/ITeS sector is a result 86.6% is a direct result of the fall in the share State Street Corporation Knowledge City Madhapur 230,000 of lack of availability of quality IT spaces of IT/ITeS sector within the transacted 80% in the city. office space in the city. ServiceNow Knowledge City Madhapur 150,000 Karvy APFSC Gachibowli 100,000 • The share of BFSI increased from 7.2% 70% • H1 2017 however, witnessed the highest in H2 2016 to 21.2% in H1 2017. State number of deals ever in the city. The E&Y TSI Waverock Gachibowli 82,000
Street Corporation, HDFC and Intellect 60.6% substantial increase in the number of 60% Teradata Ascendas Madhapur 75,000 Design were some of the major occupi- deals indicates greater confidence
ers from the BFSI sector in H1 2017. 50.8% among occupiers to take up office HDFC Meghana Tower Saifabad 73,000 50% space in the market. • The share of the Other Services sector Sears IT Avance SEZ Madhapur 53,050 also moved up in H1 2017 compared to 40% Verity Knowledge Solutions Divyasree Orion Raidurgam 48,000 H2 2016. In fact it is marginally higher I RE AVERAGE DEAL SIZE AND NUMBER OF DEALS than in H1 2016. 30% OMICS Divyasree Orion Raidurg 45,000 22.5% 21.2%
20.4% AVERAGE DEAL SIZE (SQ FT) Primera Medical Technologies My Home Hub - P2 Gachibowli 43,000 20% NUMBER OF DEALS (RHS) Media Mint Kala Jyothi Gachibowli 38,000 9.9% 10% 9.1% 7.2% 5.5% 5.2% 60000 140 Intellect Design Arena Reliance Building Madhapur 38,000 0.9% 0%
eS Ryan India Tax Services Ascendas Madhapur 36,346
BFSI 120 VICES
IT/I T 50000 R
H1 2016 ACTURING Commvault Systems Ascendas Madhapur 36,346 H2 2016 100
H1 2017 OTHER SE MANU F 40000 AT&T Ascendas Madhapur 36,346 Source R Number 80 Deloitte KRC Building 9 Madhapur 35,000 sq ft Note: BFSI includes BFSI support services 30000 Source: Knight Frank Research 60
20000 40 Although the IT/ITeS 10000 sector has traditionally 20 4. BUSINESS DISTRICT ANALYSIS dominated the • The business district that experienced accounted for 83% of the transactions.. 0 0 transaction pie in the the maximum increase in market share • Second only to the SBD in terms of Hyderabad office space during H1 2017 was SBD, courtesy H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 quality of office development for the availability of good quality office market its share dipped IT/ITeS sector PBD West contributed Source R spaces in locations such as Madhapur, nearly 23% of the transacted space to 51% H1 2017. The fall Raidurgam and Kothaguda. Nearly 62% during H1 2017. in share of IT/ITeS sector of the office space transaction took is a result of lack of place in SBD. • The spill-over demand from the SBD’s IT/ITeS hotspots such as Madhapur and • Madhapur, in SBD, took the lion’s share availability of quality IT Kondapur, which have almost no viable of transacted office space within the 2.8 3.2 2.3 large-format office spaces left, pushed spaces in the city. city in H1 2017. Of the total office space occupiers to take up spaces in PBD transaction, in H1 2017, 51% happened mn sq ft mn sq ft mn sq ft West. in Madhapur. Within SBD this location H1 2016 H2 2016 H1 2017 74 75 RESEARCH INDIA REAL ESTATE
BUSINESS DISTRICT MICROMARKETS I RE BUSINESS DISTRICT-WISE TRANSACTION SPLIT Madhapur in SBD Banjara Hills, Jubilee Hills, Begumpet, Ameerpet, Somajiguda, Himayat Nagar, took the lion’s share of CBD and off-CBD H1 2016 H1 2017 Raj Bhavan Road, Punjagutta Gosaiguda Shamirpet Hoshyarpalle transacted office space Lake 70% Ponnal Alinagar Army Residential KodakanchiSBD Nalthuru Madhapur, Manikonda, Kukatpally, Raidurg Colony Gaddapotharam Munirabad Yakhatpura Bommarasipet 64.8% within the city. Of the Mantrikunta Kishtayapally Madhu
Babu Colony 61.6% PBD West SambhupurGachibowli, Kokapet, Madinaguda, Nanakramguda, Serilingampally Thumkunta Kistaipally Keshavapuram office space transaction TRR Nagar Saregudem 60% 57.7% Madaram PBD East Uppal, Pocharam Mandalpalle Serijankampet in H1 2017, 51% Devaryamjal Upperpally Ramlingam Thumkunta Palle Vijay Nagar Village Colony Indiramma Kazipally Chouderpally Praneeth Colony Yadgarpalle Gandigudem SAI Nagar Natures west Rangapuram happened in Madhapur. Cheruvu Bounty Yamjal Pothaipally 2.8 2.3 Bowrampet Bahadurpally 50% Wadakpally Bhadurpalle
KBR Colony Cheruvu Rameshwaram Maisamma Banda Venkat Gudem Thumukunta Anthaipally Dharmavaram Yadgarpalle Within SBD this location Citizens Church Reddy Nagar East Colony Wadakpally Sultanpur Hakimpet Air Colony Force Station New Town HYDERABAD BUSINESS DISTRICT MAP Sundar mn sq ft mn sq ft Colony Mallampet Rao Nagar Bachupally Devender KVR Paradise Lakshmi Sai Nagar accounted for 83% of Patelguda Colony SJB Hills Colony Nagar Colony Khallsi Guda Thimmaipall Pedda BSR Colony Ilapur Suraram 40% Hakimpet Parvathapuram Suraram Jaibery Colony Village H1 2017 CRPF H1 2016 Krishna Kowkoor the transactions. Alwin Colony Shanthi Sree Sri Ganesh Reddy Pet KBR Colony Whisper Saibaba Nagar Bharat Nagar Navyanagar Nagar Colony Valley Gajularamaram Nagar Badshahpet Ambedkar Keesaragutta Colony Ram Reddy Satyam Venkusa Enclave Silver House Hill County Nagar Golf Club Estates Keesara APSL AnandNagar Mayuri Nagar Devender Brundavan Ratna Colony Colony Nagar Colony Colony Ameenpur MLA Colony Rajiv Swagruha Haridas Pally Srivani Nagar Mahadevpur IDA 30% Lake Krishnaja Hills Fox Sagar Abhimaan Prashanthi Colony Jeedimetla Chetana Project Lake Golf Enclave Reddy Colony Hills Housing Vishwa Karma Indira Nagar Shapur Dandamudi Rajiv Gruha Ameenpur Nagar Enclave Colony Colony Kalpa Colony Manjeera Bison Suvarna Mayuri Nagar Environmental Jawahar Nagar Valley Miyapur Balaji Hills Ambar Kudlapur Nagar Cheruvu Meenakshi Park
Venkat 22.9% Colony Estate Shivaji Nagar Patighanpur Bombay Ramana Dynamics Shirdi Enclave Anjanadri Colony Colony Widea Colony Nagadoni Bhanu Enclave Nagar Tulasi Nagar Konda Badhra Godavari Extension Bandam PJR Layout Indira Hills Sai Nagar Devi Kalyan Prasanth Nagar HMT Colony Homes Overseas BDL Colony Kommu Estate Gardens Nadigada Jai Jawahar 20% I RE Pragathi Indhra Santosh Friends Tanda Nagar Allareddyguda Enclave SinghNagar M.E.S.Colony Nagar Colony Godumakunta Badishaguda Colony Housing Board Vijaya Nagar Dwaraka Gayatri Nagar JNTU Ammuguda Kundanpally WEIGHTED AVERAGE RENTAL MOVEMENT College Colony Colony Laxmi Puri Colony Colony Miyapur Quthbullapur Nagar Kapra Green Park Jangampalli Bapu Nagar Nirmal Nagar Lake Enclave Patha SC Pati Madinaguda Salivahana Dhruva Kapra Ghanpur Sri Sai Ram Enclave Colony RTC Colony Colony Colony Vidhura Kukatpally Green Field Ramdas 12.3% Vihar Colony Nagar Colony Dharat Nagar Sai Sanjeeva Rayaraopet Lambada GopalNagar NTR Nagar Rapti Nagar Kukatpally Gurumurthy Ashok Nagar Sapthagiri Colony Nagar Cheruvu Thanda Society Colony Annarayan 5. RENTAL TREND Cheruvu Nagaram Serilingampally Gandhi Gandhi Lake Vivek Nagar IDPL Colony Nagar 10% 60 Hig Phase Balnagar Indiragandhi Rajiv Gandhi Radhakrishna Garden Nemuragomla Spring Valley Fortune Nagar R K Puram Nagar Colony Bhagawan 6.7% Fields Nagar Padamatisaiguda Marthanda Habeeb Moosapet JPR Enclave Bowenpally Colony BJR Ambedkar Gulmohar Nagar Maruthi Nagar Park Colony Nagar Kukatpally RTC Laxmi Garden Colony Velimela Industrial CRF Colony Rama Krishna MINT TWP Ravi Colony Bon Colony Puram Cheruvu Huda Layout SBD Estate Cheruvu 2.9% 3.2% Raja Sikandarabad • Lack of vacant office stock, coupled Rajeshwara Moosapet Bharatnagar Manovikas Surya Cherlapalli Kdndakal Kondapur Nagar Kaithalapur Nagar Kondapur IDA Nagar Shankaraiah Colony Rail Vihar with steady demand, has pushed Night Safari Siddhi Vinayak Safdar Nagar Colony 0% Park Nagar Napier 50 Erragadda Road Lines CBD & Off CBD SBD PBD West PBD East Mudfort Upparguda APHB Colony Balaji Nagar Sri Kotla Sanjeevaiah Mahendra the weighted average rentals in the KanchiPBD WEST Vijaybhaskar Reddy Botanical Shilparamam Nagar Hills CUC Garden HCL Colony Yamnampet SRT Nagar Begumpet Airport Hitec City ESI Hospital Hitech City Jubilee Bus Stand Asiagsb SPR Hills Begumpet Shanthi Campus Hyderabad office space market to just Prakash Nagar Parade Sri Saipuri Nagar Ankushapur Rasoolpura Paradise Ground Colony Madhapur Begumpet Shakthi Chengiccherla Vasantagiri GhanapurSource R Durga Madhapur PS Secunderabad Sai Nagar Pocharam Cheruvu over `49 per sq ft per month at the end Gachibowli Venkatagiri Madhura Chandupatlaguda Gopanapally Nagar Durga Nagar Bokkonigusa 40 Thanda Nacharam Pocharam Yousufguda Bala Chitea Journalists Mettuguda Hanuman Nagar of H1 2017, a 14% growth YoY. Telecom Silpa Gram Ameerpet CBD & Off-CBD IDA Mallapur Colony Phase 3 Peddamma Temple Jubilee Nagar PBD EAST Ghanpur Nagar Craft Village Hills Road L N Colony Narapally Rajiv Emaar MGF Silent Ameerpet IRISET Boulder Hills Extension Punjagutta Secunderabad Swagruha Gowlidoddy Valley hills Lalaguda Sri Sai Nagar Indra Reddy Jubilee Hills Cruiser on Hire At Mandadi Nagar Hussain Sagar Gandhi Hospital Checkpost Hema Nagar Surender Colony BL Nagar Reddy Nagar Jubliee Hills Kasu Brahmananda Swarnagiri • H1 2017 saw rental levels grow across Reddy National Park Erra Manzil Indira Nagar Musheerabad Professors Tarnaka RTC Colony Colony Quarters North Srivnivasa Pilligundla Kalyanpuri Nagar Edulabad Dontanpally Nanakramguda Ambedkar Habsiguda Bheem Lake 30 Swaroop Reddy Nagar Vaishanavi Venkatapur locations, compared to the same period Muppas Nagar Ram Nagar Colony Financial Maqtha Nagar Kousarali Panchvati Khairatabad Vidya Nagar District Colony Deen Dayal Mizaguda Nagar R.T.C. X Road (INR/sq.ft./month) Jawahar NGRI Maharajpet Banjara in the previous year. The upward Manikonda Vinobha Lakdikapul Nagar Sai Nagar Khanapur Shirdi Sai Survey of India Nagar Nagar Hills Chikkadpally Rahat Nagar Colony Divya Nagar Gopularam Janwada Surya Musi R Assembly ive Quli Qutub Aziz Bagh Uppal r Gungurthy Nagar Parvathapur movement of rentals can be gauged Shah Layout Dollar Hills Sathya Nagar Narayanaguda Nehru Nagar Lake View Srinivasa HUDA Nampally Uppal Colony Gulam 20 Kokapet Lingampally Hills Colony Aliguda Ramanthapur Gaddi Nagole Gayatri Nagar from the fact that rentals in Somajiguda, Chinnamangalaram Narsingi Neknampur Mehdipatnam Gandhi Bhavan Sultan Bazar Annaram Bala Ji Kendriya Township Pratap Vihar Jaiswal Garden Surya Nagar Baghdad Musi Rive Singaram Nagar OMC Kamakshlpuram r Mahalneknapur Vishwas Nagar MGBS Mothkupally Colony Narender Lalabagh Nagar Sai Ram in CBD and off-CBD, reached ` 70 per Nagar Colony Weaker Gandipet Guffa Nagar Section Goshamahal Dhobi Galli Alkapuri Colony Ibrahim Bagh Thimmaiguda Osman Sagar M Saleh r Jayapuri Colony M Manchirevula u M ive sq ft. While Gachibowli in PDB West usi si Nagar usi R Reddipally Riv R Ramdev er iv Chandanagar Vill er Guda Malakpet Keshava Nagar Qutubullapur Dalra 10 Medipally Salar Jung Chaitanyapuri Sogbowli Nalanda Museum New Market Annaram Thatti Khana witnessed office space transaction at Attapur Moosarambagh Saru Nagar Chandanagar Madhavi Nagar Dilsukhnagar Gandhamguda Nagar Dilsukhnagar Upparpally Maruthi Nagar Saddupally Padmasri Charminar Victoria Memorial Akbarja Hanuman ` 68 per sq ft, Madhapur in SBD also Estates Sharada Nagar Peeranchuruvu New Friends HUDA Complex Nagolu Rock Hills Laxmi Pasumamula Nagar Mrugavani National Radha Nagar Colony Aman Nagar Saidabad Park i Enclave Colony Ganapathi Lake s Snehita Hills u Shalibanda Colony M Saroornagar Kuntloor Pedda witnessed a couple of office space Durga Devi Lake Yelkaguda Chilkur Colony Nehru Gowlipura Cheruvu Velly View Zoological L.B.Nagar 0 Aziz Nagar Enclave Sukender Park Sri Ramagiri SVBS Nagar ReddyColony Gutta Himayat Nagar Colony Mir Alam L B Nagar transactions at ` 58 per sq ft. Suleman Tank Shamsherganj Champapet Nagar Bushrath Bhagavatguda Nagar Pidugu NTR Nagar Ramulu Saibaba Nagar Jahanuma Rakshapuram Colony HUDA Layout Jangammet Balijaguda Pedda Gunta Shivam Hills Baba Colony Virat Nagar H12014 H22014 H12015 H22015 H12016 H22016 H12017 Budvel DRDO TWP New Gayatri B Kavadipally Falaknuma a Kings d Nagar a n Colony g i p Devakammathota Mus e Medbowli Agricultural Dwarkamai t Dhatu R HayathNagar Research Sakal Basti o Nagar Nagar a Institute OMER Colony d Hanuman Source R Bharadwaj Nagar Tarapuri SBI Colony Chinnashapur Quarters Vattepally Meerpet Colony Himayat Adarsh Colony Sagar Lake Nagar Ha z Baba Vaidehi Nagar Appa Reddy Rajiv Gandhi Nagar Maruthinagar Nagar Sirla Hills Guda Udamgadda Janpriya Nagar Barkas Sai Nagar Hari Hara Durga Vignanapuri Puram Bangaliguda Nagar Yelmati Nagar Visaka Nagar Teachers Colony Murtuzaguda Kothapet Jatoth Nagar Nazeebnagar Badnaipet Sripuram Thqrpur Village Kanakamidi Mahmood Madhura BUSINESS DISTRICT-WISE RENTAL MOVEMENT Rajendra Nagar Colony Inamguda Nagar Panchayath Neeladri Nagireddy Padmashalipuram Badangpet Raj Colony Guda Nagar Umda Nagar Sri Chaithanya Jefferguda Colony Hanuman Maytri Sajanpally Hayat Nagar Nagar Sri Laxmi Sree Nagar Cheruvu Venkatapuram Ayodhya Nagar Surangal Mustafa Hills Nagar RGK Swami Uppacuda Sri Ram Roma Vivekananad Surmayaguda Colony AS Nagar Hariguda Enclave 3 Colony Gandicheruvu Mallapur Bakaram Umda Kothwalguda Jalapalli Sagar Injapur Indira Nagar Lake Papayakumandan Baba Nagar Ialbazar Bala Ji Nagar Amdapur High Court Kavaguda Sathamrai Madanna YSR Nagar Colony BUSINESS DISTRICT RENTAL VALUE RANGE IN 12-MONTH CHANGE 6-MONTH CHANGE Yethbarpalle HUDA Colony Village Gudem Nadargul Colony Mayur Rural Sitharampuram Anajpur MB Nagar Mazidpur Kethireddypally Ambedkar Umer Rajiv Gandhi Nagar Khanguda Sultanpalle Nagar AV Nagar Brahmana H1 2017 ( /SQ FT/MONTH) Sri Rama Pally ` Nagar Kolbowidoddi Ragannaguda Narkhoda Devatabowli Lake Kamuni Indira CBD and off-CBD 45-50 19% 6% Mamidipally Kurmaguda Sagar Nakkalapalle Venkatapuram Shamshabad Kavellguda
Kacharam M.M.Kunta SBD 45-55 15% 2% Ramdas Pally Posettyguda Rajiv Gandhi International Airport (HYD) Naganpalle Sollpet Gollapalle Khurd PBD West 45-50 16% 0% Ramanjapur Botiguda Nanajipur Grapes Garden Sayyed Guda Almasguda Polkampally Ghasmiyaguda PBD EastManyaguda 45-50 9% 2% Suramma Sardar Nagar Cheruvu Pedda Shapur Basaguda Thanda Yengalaguda Jukal Patel Guda Raviryal Muchintal Chinna Gollapalle Source: Knight Frank Research Pilloniguda Golcoonda Kalan Shankarapuram Maddur Guduru Burujuguda Bahadurguda Peddaved Manorabad Vastungar Tattikhana Lokya Tanda Palmakole Mankhal Kongara Kalan 76 77 RESEARCH INDIA REAL ESTATE
developer profile as well. In addition to their growth potential for residential Budget 2017–18 as well as the nation- national level developers such as Godrej development and within the span of a short wide scheme of Pradhan Mantri Awas Properties and Tata Value Homes, other period, these locations became a hot hub Yojana, locations such as BT Road, reputed developers also have large-scale for mid-end and budget housing. Sodepur and Barrackpore in the north, residential projects in the region, offering and Baruipur, Garia and Sonarpur Road in compact apartments at affordable rates. the south are expected to gain importance Although the region has managed to gain Of late, the attention of developers and owing to their immense potential for the buyer interest from all across the city, homebuyers has been drawn further affordable housing sector to thrive. With an majority of the homebuyers still belong to down south towards Baruipur, the new adequate infrastructure push, these distant the trading community that have resided administrative headquarters of 24 South neighbourhoods have the propensity to in North Kolkata since generations. The Parganas. The stretch of EM Bypass fulfil their potential. average price range here varies from between Garia and Baruipur, hitherto ` 2,600–4,400/sq ft. considered as the city’s hinterlands, has a number of large residential projects, launched by reputed developers such The peripheral micro markets in the as Siddha Group and joint ventures by north have a number of advantages in PS Group and Srijan. These projects their support. The upcoming metro rail have observed substantial demand from extension from Baranagar to Barrackpore, neighbouring locations, consisting of KOLKATA NORTH AND scheduled to be completed in 2019, will residents who had spent most of their lives aid in faster commute. Till then, the Kalyani in congested southern localities and now Expressway will offer ease of access to aspired to live in well-maintained, gated SOUTH – THE RISE OF THE other parts of North Kolkata. In any case, communities with first-class amenities. the northern peripheral micro markets are While this stretch of EM Bypass adjacent relatively closer to the international airport to Baruipur runs along a canal and seems PERIPHERAL MARKETS than the southern parts of the city. On like a distant proposition without much the social infrastructure front, there are social infrastructure, a number of factors The stretch of EM - BY SANGEETA SHARMA DUTTA several good educational institutes in the prove to be advantageous. There is good Bypass between Garia region, such as St. Xaviers Institution and connectivity to Baruipur through the and Baruipur, hitherto Adamas International, although it suffers suburban railway and more than 75 pairs considered as the city’s he burgeoning city of Kolkata has been a bastion of the trading community, like Madhyamgram, VIP Road and Jessore from a dearth of organised retail and of local trains ply through it on a daily hinterlands, has a number entertainment avenues. basis. Besides, with Baruipur having been grown by leaps and bounds on largely occupied by the Punjabis and Road received considerable interest owing of large residential Tthe organised real estate front in Sindhis. It gained prominence in recent to their proximity to Rajarhat. Significantly, designated as the new headquarters of 24 projects launched by the past one and a half decade. Several years, owing to the existing and upcoming despite its industrial tag, most of the South Parganas, it is expected to become micro-markets, which hitherto had been phases of the metro rail, impending residential neighbourhoods in North Meanwhile, South Kolkata has been a key employment hub of the region with reputed developers. These sleepy neighbourhoods, have come to the infrastructure in and around VIP Road and Kolkata are thickly populated and harbour a conventionally-preferred residential several offices opening up, thereby boding projects have observed fore, attracting not only the local populace Jessore Road, and its proximity to Rajarhat good residential demand. destination of the city, accounting for well for residential demand. Presently, the substantial demand from but also investors from beyond the state. as well as the international airport. around 36% of the residential development average price of an apartment here ranges neighbouring locations, underway. The region has a large between ` 2,500–4000/sq ft. While Rajarhat became the star attraction consisting of residents amongst the new residential markets In 2010, Godrej Properties launched its concentration of housing stock, catering who had spent most of that emerged as a result of the new real Till a decade back, no national level first residential project in Kolkata – Godrej to all budgets, and has typically been a estate order set up in the city, of late, the developer had ventured into the region, Prakriti, on BT Road, at a distance of 21 bastion of the serviced class. While the Going forward, these northern and their lives in congested peripheral locations towards the north and although most city developers had a km from the city centre. Spread over 22 south-central areas such as Bhowanipur southern peripheral locations of Kolkata southern localities and the south have begun shining forth as well. number of projects there in order to acres and housing over 2,400 apartments, and Ballygunge are largely occupied by are expected to perform better in the now aspired to live in cater to the demand of the population the project was the largest, residential- the gentry, the south-east and south- forthcoming periods, primarily due to the well-maintained, gated residing in the northern part of the city. gated community that the region had west neighbourhoods are home to the abundance of mid-end and affordable communities with first- North Kolkata, recognised primarily as The distant peripheral neighbourhoods of seen. Today, BT Road and the residential mid-income populace. In recent years, a housing here. Also, given the present an industrial area till recently, has today North Kolkata, encompassing locations neighbourhoods along it have numerous number of southern peripheral locations conditions, where the government has class amenities. emerged as a preferred residential location such as BT Road, Sodepur, Panihati and mid-end and affordable projects underway, such as Behala, Narendrapur, Sonarpur placed significant importance to the among the city’s dwellers, almost relieved Barrackpore were largely unexplored by witnessing favourable buyer response. Road and Diamond Harbour Road came promotion of the affordable housing of its industrial tag. The region has typically reputed developers, though other locations The market boasts of a diversified up on the developers’ radar owing to segment, reflected both in the Union 78 79 RESEARCH INDIA REAL ESTATE
barring the anomalistic period of H2 I RE 2016 that was instrumental in bringing MICRO-MARKET SPLIT OF LAUNCHED UNITS down the sales volume drastically. H1
2017 saw an increase of 11% in sales in H1 2016 H2 2016 H1 2017 over the sales figure in H2 2016. 60%
• However, more importantly, on a Year- 55% Over-Year (YOY) comparison between 50% H1 2016 and H1 2017, the city’s 11,891 9,093 9,764 46% residential market is still much behind 45% UNITS UNITS UNITS
the numbers observed in H1 2016 and 40% 40% the decline noted was to the tune of 36% H2 2016 H1 2017
34% H1 2016 22% in H1 2017. 35% 32% • The weighted average price remained 30% 27%
stagnant in H1 2016, depicting the fact 25% 25% that the market is almost at a standstill, owing to the decrease in new launches 20% 17%
and sales, waiting for clarity on factors 15% 15% such as RERA compliance and GST 10% amongst other factors. 10% 9% 7% 5% 1% 1% 0% 2. MARKET SPLIT OF 0% CENTRAL EAST NORTH RAJARHAT SOUTH RESIDENTIAL LAUNCHES S R • Over the last few years, Rajarhat has KOLKATA been accounting for the largest share these pockets have good potential for in the total number of new launches residential development, particularly in the city owing to persistent interest for budget housing. from the developer community. It accounted for 36% share of the total • North Kolkata which had seen a RESIDENTIAL MARKET number of new launches in H1 2017, gradual decline in new launches in emerging once again as the region with 1. KOLKATA RESIDENTIAL the recent past saw resurgence in H1 I RE the highest number of residential units The Kolkata residential MARKET LAUNCHES, SALES 2017. While its share was 17% in H1 KOLKATA MARKET TRENDS - HALF-YEARLY launched in Kolkata. However, there AND PRICE TRENDS 2016, dipping further in H2 2016, the market that has been was a decrease in the share compared first half of this year witnessed the LAUNCHES SALES WT. AVG. PRICE (RHS) witnessing a tightening of to H1 2016 and H2 2016. Rajarhat is share increase to 25%. The surge is 18000 3640 • The Kolkata residential market has expected to maintain its momentum in attributed to a number of launches new launches in recent
recently been witnessed tightening of 3614 3620 the forthcoming years considering the in locations such as BT Road and years saw the numbers new launches, after hitting its peak 16000 quantum of office-sector development Barrackpore. The region holds dip substantially by 18% in 2014. While the first half of 2016 (H1 3600 and infrastructure underway in the potential in the near future owing to 14000 3575
2016) had seen the launch of almost 3572 in H1 2017, compared 3570 3580 region. The road infrastructure is well- the existing and upcoming phases of 11,900 units, the numbers dipped planned in the region with upcoming 12000 the metro rail as well as impending on an annual basis, substantially by 18% in H1 2017. 3560 metro rail connectivity that will provide infrastructure around VIP Road and
` \sq ft although it was a slight 3535 a further boost to the region. Jessore Road. Its proximity to Rajarhat • However, the new launches figure in 10000 3540 improvement over H2
3514 and the international airport is an H1 2017 saw a slight improvement of • South Kolkata followed Rajarhat with Number of units 8000 3520 added advantage. 2016. Sales volumes also 7% over the figure six months prior the second highest share of new in H2 2016, when the government’s 3495 3500 launches. It accounted for 32% of • The East zone comprising locations observed an increase 6000 demonetisation initiative had rendered the total new launches in H1 2017, as such as Salt Lake and Kankurgachi, 3480 in H1 2017 over H2 most real estate activities to come compared to 27% in H1 2016. The and the central region of the city to a pause, leading developers and 4000 2016, but recorded a 3460 region has been a conventionally- observed a limited number of new buyers alike to refrain from making any preferred residential destination of substantial 22% decline 2000 launches due to land constraints. While 3440 property related decisions. the city and in recent years a number East Kolkata’s share reduced to 7% in as compared to H1 2016 • In the past few years, end-user driven 0 3420 of southern peripheral locations such H1 2017 from 9% in H1 2016, Central sentiments of the city had led the sales as Narendrapur, Sonarpur Road Kolkata did not have sufficient number
volumes to remain mostly steady, H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 and Baruipur have come up on the of launches. S R developers’ radar. Going forward, 80 81 RESEARCH INDIA REAL ESTATE
the infrastructure status accorded to I RE MICRO-MARKET LOCATIONS Rajarhat accounted for this sector in the Union Budget with a MICRO-MARKET SPLIT OF SALES host of tax incentives, buyer-friendly 36% share of the total Central Park Street, Rawdon Street, A.J.C. Bose Road, Minto Park, Elgin Road regulations such as the RERA, lower H1 2016 H2 2016 H1 2017 number of new launches home loan rates and the nationwide 60% East Kankurgachi, Beliaghata, Salt Lake, Narkeldanga, Keshtopur, E.M. Bypass (eastern parts) in H1 2017, emerging as scheme of Pradhan Mantri Awas Yojana 55% North Baguiati, Ultadanga, Jessore Road, Shyambazar, Lake Town, B.T. Road, VIP Road the region with the highest (PMAY) were some of the measures announced. 50% Rajarhat Rajarhat New Town number of residential Ballygunge, Alipore, Tollygunge, Narendrapur, Behala, Garia, Maheshtala, 45% South units launched in Kolkata 42% E.M. Bypass (southern parts) 3. MICRO-MARKET WISE 40% during the period, followed Dankuni Agarpara
RESIDENTIAL SALES 35%
35% 34% KOLKATA MICRO-MARKET MAP by South Kolkata. North 33% Uttarpara Michael Nagar 32% Kolkata saw resurgence in • South Kolkata witnessed the largest 30% Belangara Nimta
share of sales volume in H1 2017 25% Dakshineshwar 25% 21% its new launches share in 24% accounting for 33% of the total sales NH Baluhati 2 North H1 2017, with a number of volume when it edged past Rajarhat for 20% Belgharia 18% PWD Rd Dumdum Jagadishpur Dunlop Babughat the first time in the recent past. This was Mini Bus Terminus Netaji Subhas projects launched in the 15% Bally Chandra Bose Bonhoogly International a significant improvement compared to 13% Rajbari Airport
11% unk Rd unk
r jee Rd T r peripheral markets. uk h e its previous share of 25% in H1 2016. 10% Debirpara Baranagar A K M
8%
and NH
r G 34
K Subhas Nagar . The increase in sales is attributable Belur Math ashipur Rd Belur Math e 5% Bus Terminus v
to the host of affordable and mid-end 2% Belur Sinthi 1% 1% Motijheel slam A 0% housing projects that has come up in ul I V ar Kashipur um Rd anasi Rd Dum D Nazr the southern peripheral locations such CENTRAL EAST NORTH RAJARHAT SOUTH . Rajarhat Salap Liluah e Rd Gopalpur Chitpur as Baruipur, Narendrapur and Garia. S R Jessor Baguiati Belgachia Mak Lake arda Rd • On the other hand, Rajarhat, which . Town has been accountable for the largest Bankra Bagbazar Belgachia TICKET-SIZE SPLIT ANALYSIS ve. Jagachha slam A share of sales in the past few years, Ultadanga ul I OF LAUNCHED UNITS Belilios Rd Nazr Santragachhi . Salt Lake City was relegated to the second place E a N s RS eta t NH ji e S r Central Park 117 ub Bantra Maniktala n after South Kolkata. The region saw its hash Jorasanko H1 2016 H2 2016 H1 2017 Rd M M e Thak t share reduce considerably from 42% r o dari Rd . p e MG Rd <`2.5 mn 60% 70% 67% GPO v o l i . t in H1 2016 to 32% share in H1 2017. Baksara a unk Rd n Salt Lake r anjan A 10,339 7,308 8,109 Naora T Bus Terminus `2.5-`5 mn 17% 19% 20% While the decrease has been substan- and Panchpara r Dalhousie Square C hit ar Grand G Bus Terminus Beliaghata tial during this period, it remains to be Trunk Rd Shibpur Nabanna `5-`7.5 mn 9% 7% 8% UNITS UNITS UNITS Bus Terminus Esplanade seen whether it conforms to becoming a Shalimar Bus Terminus `7.5-`10 mn 5% 3% 3% trend in the forthcoming months. H1 2016 H2 2016 H1 2017 NH 9% 1% 2% 117 Tangra >`10 mn • North Kolkata, too, saw its share reduce Race Course Beniapukur
to 21% in H1 2017, from 24% in H1 Park Circus Karl Marx Sarani Source: Knight Frank Research 2016. Although its share is less, we Garden Reach Dhapa Khidirpur expect this region to perform better Bhawanipur LEGEND Bantala Rd • A whopping 87% of the new launches in the forthcoming periods due to the Major Landmark Ballygunje Tiljala Hospital Jud announced in H1 2017 were in the be- Alipore ge's Court Hazra Rd abundance of mid-end and affordable Hotel Kasba Chetla housing here. Cinema low ` 5 mn ticket size bracket. The trend New Kalighat Educational Institute Alipore Dhakuria Southern Market was observed even in H2 2016 when Airport • East Kolkata accounted for 13% of the Goalbati unk RdBus StandTaratala the share was higher at 89%. Orissa Tr total number of sales in H1 2017, an Railway Station Charu Market Santoshpur • Most of the new launches in the recent improvement from H1 2016 when it had City Boundary National Highway secured a mere 8% share. The eastern Tallygunge months have been taking place in Major Road Behala Tollygunge CTC Mukundapur peripheral locations of the city with region is a much preferred domicile, es- Rail LineBi Bus Terminus Jadavpur ren Ra Kheyadah Metro y Rd W promise of infrastructure development pecially of the affluent class. It boasts of est Bagha Jatin Rd Village Metro Elevated iamond Harbour Rd D Sodepur Baghajatin in the near future, thereby explaining the key commercial areas such as Salt Lake Metro Underground Paschim lower price bracket. Sector V and the road infrastructure is River Putiary Naktala Lakes/Ponds NH well-planned. Various flyovers provide Vegetation 117 • This development comes as a welcome easy connectivity with the CBD, thereby trend given the recent slew of govern- Thakurpukur Garia making it a sought-after residential Srikhanda ment’s initiatives to boost the destination. affordable housing sector. For instance, Joka Mandirtala Rajpur Sonarpur Ghasiara
82 Sankharipota 83
Daulatpur Copyright © 2015 RESEARCH INDIA REAL ESTATE
• The QTS for Kolkata currently stands 4. MARKET HEALTH I RE 5. PRICE MOVEMENT IN H1 2017 QUARTERS TO SELL (QTS) UNSOLD at 10.6 quarters. The unsold inventory • The quarters to sell unsold inventory INVENTORY ANALYSIS of the city is recorded at around 39,114 • Price appreciation across most locations in Kolkata has KOLKATA (QTS) is the number of quarters required 13 units in various stages of construction, remained stagnant during the last 12 months. to exhaust the existing unsold inventory which is a matter of concern. 12 • There has been no noticeable growth observed in the city’s in the market. The existing unsold in- • Among the various zones, we infer residential market in the last six months, primarily due to ventory is divided by the average sales 11 South Kolkata as the best performing the sluggish movement in sales velocity of the preceding eight quarters 10 market in H1 2017, as it has the lowest in order to arrive at the QTS number 9 QTS amongst all the micro-markets for that particular quarter. A lower QTS in the city. This is on account of the PRICE MOVEMENT IN SELECT LOCATIONS indicates a healthier market. Also, size 8 steady rate of sales in the past quarters. of the bubble indicates relative size of 7 However, the region still accounts for a unsold inventory in terms of number of
NO OF QUARTERS 6 high age of inventory and a large unsold units. LOCATION MICRO-MARKET PRICE RANGE IN H1 2017 12-MONTH 6-MONTH 5 inventory, having evolved much earlier as a residential destination in the city. (`/SQ FT) CHANGE CHANGE 4 South Kolkata emerged • Rajarhat is the second best perform- 3 Park Street Central 12,000–20,000 0% 0% as the best performing ing market in the city, based on its 2 low QTS, after South Kolkata. Factors Rowdon Street Central 10,000–19,500 0% 0% market in H1 2017, as 1 such as presence of office projects, Ballygunge South 8,500–18,000 0% 0% it has the lowest QTS well-planned existing and upcoming 0 Tollygunge South 6,500–16,500 0% 0% amongst all the micro- road networks, the proposed metro connectivity within Rajarhat and with Behala South 3,300–4,800 0% 0% Jun-14 Jun-15 Jun-16 Jun-17 Mar-15 Mar-16 Mar-17 markets in the city. Sep-14 Dec-14 Sep-15 Dec-15 Sep-16 Dec-16 other locations of the city, and proximity Source R Narendrapur South 2,600–4,350 1% 0% This is on account of to the international airport have helped the steady rate of sales this micro-market perform well in recent Kankurgachi East 6,000–9,150 0% 0% months. in the past quarters. Salt Lake East 5,000–8,000 0% 0% • North Kolkata has the highest QTS in New Town Rajarhat Rajarhat 4,300–7,000 0% 0% the city. This is on account of the large Madhyamgram North 2,550–3,300 0% 0% number of launches that the region has witnessed since 2014. However, with BT Road North 3,200–4,500 0% 0% better sales momentum expected in Jessore Road North 4,320–5,600 0% 0% the affordable housing sector, coupled with infrastructure push, North Kolkata Source: Knight Frank Research is projected to perform better in the forthcoming periods.
I RE • East Kolkata emerged as the region with MICRO-MARKET-WISE QTS VS AGE a QTS lower that the northern region but OF INVENTORY with a higher age of inventory. ENTRAL EAST N RT S T RA AR AT
15
14
TERS 13
12
IN A R UNSOLD
R MICRO-MARKET 11 INVENTORY
10 Central 377 9 East 5939 8 North 11333 7
A E NS LD IN ENT South 7350 6 6 7 8 9 10 11 12 Rajarhat 14116 S R TS KOLKATA CITY 39114 Note: The size of the bubble indicates the quantum of unsold inventory Source: Knight Frank Research 84 85 RESEARCH INDIA REAL ESTATE
INFRASTRUCTURE - TRANSFORMING MUMBAI REALTY
THE DYNAMICS OF CITY’S The offices are mainly concentrated in REVERED PROPERTY MARKET Mumbai whereas the population resides - BY NIBODH SHETTY in neighboring MMR where housing The residential prices in the city vary prices are more affordable. Since a major across a steep gradient while one moves chunk of the population travels from the from Mumbai city to MMR regions. The place of residence to work, it makes the prices vary from `1,00,000 per sq ft. to role of infrastructure in particular the `3,000 per sq ft. Such huge price gradient THE MUMBAI LANDSCAPE transport infrastructure very crucial. The arises because of multiple factors – POPULATION SURGE: 2001-2011 transportation needs of the population The Mumbai Metropolitan Region (MMR) is spread over an area of 4,355 sq. km, which commuting time to employment hubs and have been identified by the Government includes 458 sq. km of the Mumbai City district and the rest comprising regions in the other places of importance such as access and it came up with a nodal agency to Thane, Palghar and Raigad districts. The city boasts the headquarters of all the major to education, healthcare, entertainment % plan and coordinate the implementation 3.9 companies in the country across sectors with a huge mixture of BFSI, media, marketing avenues, location profile and gentry, etc. of transportation projects in Mumbai- FOR MUMBAI CITY and other services providing companies. These factors vary across localities and so The Mumbai Metropolitan Regional does the property price. The city is divided The population of Mumbai increased from 11.9 mn in 2001 to 12.4 mn in 2011 - a decadal Development Authority (MMRDA). along 3 major railways line- western, growth rate of 3.9% while the MMR’s population growth was much higher, at 17.8%, central and harbor. MMRDA has been very instrumental taking its population from 19.3 mn to 22.8 mn during the same period. % in implementing some of the major 17.8 FOR MMR 86 87 A B C
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I (Versova-Andheri-Ghatkopar), Eastern Kalyan Jn provide additional capacity in local trains U r l e ha iv s R R As a part of the MRTS project, the MMRDA
s iv a e r Sanjay Gandhi lh Freeway, Mumbai Monorail, Santacruz Borivali U to cater to the growing population. As a National Park Railway Thakurli R S has started implementing the 33.5 km all Chembur Link Road (SCLR), flyovers and Pune Link Road result there are a huge number of traffic
Dombivli underground metro route of the Metro Line many more. Ulhasnagar snarls along the western express highway Kopar
Kopar III connecting Colaba to SEEPZ via Bandra. U l h Road R S a during peak hours. In order to decongest s
R i v e The projected is slated to be completed in Kandivali r the highway the Government has planned
iver 2021. The residential price gradient along Ulhas R INFRASTRUCTURE AS A CATALYST Kalwa R S the 35.6 km long Coastal Road Project.
Tulsi Lake the metro line varies from over `75,000 Mumbra Malad R S Datiwli R S The bidding process is expected to start Thane The Mumbai Metro I has changed the face Diva per sq ft. at Colaba to `17,000 per sq ft. in mid of 2017, the project is estimated of east-west connectivity forever. Earlier WESTERN EXPRESS HIGHWAY at SEEPZ. The average office rental varies D esa i K hadi to be completed by 2020. Running along people commuting from locations along Mulund R S from approximately the city’s coastline, this road will be the the western line to central line using the Goregaon `220 per sq ft. per month at Nariman
k e first of its kind, which will provide high- re 2 C 2 local railways had to go Dadar (a central d Airoli R S la Point to `250 per sq ft. per month at BKC; a M Vihar Lake Nahur speed connectivity between the western point) to change trains inorder to reach however, it reduces to `110 per sq ft. CENTRAL RAILWAY LINE suburbs and south Mumbai. The coastal their destination; despite going to Dadar Bhandup R S per month towards Andheri-SEEPZ belt. roads would have exit ramps which would Rabale having them take a long detour. This detour Jogeshwari R S The MIDC-SEEPZ area in Andheri East provide seamless connectivity to Marine VERSOVA-GHATKOPAR Versova was reduced significantly after the Metro Kanjurmarg R S currently has connectivity to other areas of METRO RAILWAY LINE D.N. Nagar Powai Lake Azad Nagar Lines, Princess Street, Tardeo, Mahalaxmi, I became operational. Majority of the Andheri Mumbai only via roads and lacks access EASTERN EXPRESS HIGHWAY Andheri Worli, Girgaon, Kalbhadevi, Tulsi Wadi commuters now get off at Andheri railway Western Express Ghansoli R S Highway to other modes of mass transportation. Vikroli R S Airport and Peddar Road. The business districts Chakala Road on western line and take the metro to reach (J B Nagar) Asalpha The railways stations on Central line and WESTERN RAILWAY LINE in these areas would benefit immensely Sakinaka Ghatkopar railway station on the central Chhatrapati Shivaji Western line are a significant distance away Vile International Airport Parle R S (Mumbai Airport) from this much needed connectivity, line. Not only is the detour avoided, but the Asalpha from SEEPZ. Once the Colaba-Bandra- Thane Creek whereas the residential areas of North g ar M travel time is reduced significantly from tri Shas SEEPZ metro line becomes operational this ahadur Lal B Mumbai may witness reduction in price 90 mins to 44 mins. Earlier the average Santa Cruz Taloje belt would witness increase in demand for Vidyavihar MUMBAI Panchnand R S gradient compared to South Mumbai. road travel time from Andheri to Ghatkopar Turbhe R S residential and commercial projects as it Lokmanya The residential price in the belt varies Khar Sanpada Tilak was over 150 mins during peak hours, Road R S Kurla R S would get connectivity to the major office Junction Tilak Nagar Chembur Bandra from `75,000 per sq ft. at Napean Sea post metro the vehicular traffic on this Terminus Vashi Chembur Railway and residential districts of Mumbai and Monorail Station Central Govandi Road in South Mumbai to `13,000 per route reduced significantly bringing down Bandra Juinagar R S Park BANDRA- WORLI SEALINK Chunnabhatti Navade Road R S also the Versova-Andheri-Ghatkopar metro VNP And RC Marg sq ft. at Charkop and `15,500 per sq Mankhurd the road travel time to less than 90 mins. Sion R S line via this metro. Currently there are a Fertilizer Mahim Township ft. In Goregaon West in North Mumbai. Junction NAVI MUMBAI Over 3.5 lakh commuters use the metro Wadala Depot Sector 11 large number of old industrial sheds and 3 Bharat 3 Guru Tegh GTB Nagar Petroleum Kalamboli R S The primary reason for the huge price every day, the metro has also led to rapid Bahadur Nagar R S Nerul R S warehouses located in this area most of k Matunga e Antop Hill re Road R S Bhakti Park C Science Park je difference is to proximity to employment Matunga R S CHEMBUR TO WADALA lo Ta development of office and residential Mysore Seawoods Colony MONORAIL LINE Sector 7 Kharghar R S which are non-operational; these may give Acharya - Darave DADAR Atre Nagar hubs apart from those markets in South spaces in between Andheri to Ghatkopar Dadar way to another business district emerging Belapur CBD Over 3.5 lakh Mansarovarcommuters Mumbai having premium characteristics. with the rates increasing significantly since in the area like we witnessed in case of Parel In comparison to the most expensive Elphinstone useek the metro everyday; l Cre Khandeshwar the announcement of the project. The Road R S nve Lower Parel. Arabian Sea Pa Mumbai Thane Creek micro-market of Napean Sea Road on this Reay Road the metro has also led to residential rates went up from `2800 per sq Lower Parel R S Currey corridor, Goregaon West and the Charkop Road R S ft. from 2004 when the State Government rapid development of office Panvel residential markets trade at a discount Chinchpokli R S approved the metro plan to `15,500 per sq Mumbai In addition to the metro lines the Mahalakshmi and residential spaces of 79% and 83%, respectively. With the Mumbai ft. in 2014 when it became operational. Reay Road Government has also planned 2 major road Byculla Mumbai in between Andheri to upcoming Coastal Road, the commute time Central Local infrastructureChikhale R S projects – The Coastal road Dockyard Road Ghatkopar with the rates will shrink significantly along the route and Grant Road and Mumbai Trans-harbour Link (MTHL). By Sandhurst UPCOMING INFRASTRUCTURE Road increasing significantly price gaps will narrow down. We foresee Masjid Somatane Charni Bunder R S markets such as Charkop and Goregaon PROJECTS Road since the announcement of M a h a r s h West to be the major beneficiaries of this i Chhatrapati
K a Shivaji Terminus B. THE COASTAL ROAD r v
e the project. The residential
Additional metro lines have been planned R o
a project, and expect a price upside for d across the city and three are being Churchgate rates increased from `2,800 Every day there are a significant number of Jasai R S these markets. implemented currently- The Mumbai per sq ft in 2004, when the private vehicles using the western express Metro Line II (Dahisar West–DN Nagar), state government approved highway to go from the densely populated Mumbai Metro Line III (Colaba-Bandra- the metro plan, to `15,500 north Mumbai where majority of residences C. MUMBAI TRANS-HARBOUR LINK Airport-SEEPZ) and Mumbai Metro Line VII4 are located to southern4 part of Mumbai, per sq ft in 2014, when it (MTHL)
(Andheri East–Dahisar East). Ransai where offices are located. Every year the Reservoir became operational. Rasayani The existing Mumbai airport has a capacity Karnala Bird Sanctuary number of vehicles keep going up due to A. COLABA-BANDRA-AIRPORT-SEEPZ Karnala Fort Trek of handling 45 million passengers annually
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i Creek Vasa r e iv R Kharbao a
s
t
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l Road U U lh a s and it has almost reached its saturation. demand in search of relatively cheaper R THE REVISEDi DRAFT v er
r The city is in dire need of another airport to Dahisar housing locations towards north Mumbai DEVELOPMENT PLANive 2034 s R Railway V ha a Ul s a i
C r support the proliferating air traffic growth. e - western and central suburbs. As a result, e (RDDP2034)Shahad IMPETUS k The Government has identified a site in new business districts have emerged in
U Kalyan Jn r lh Mumbai city is about to witness e a iv s R Ri Navi Mumbai for the city’s new airport. BKC, Lower Parel, Andheri,s Goregaonve and a r Sanjay Gandhi lh Borivali U National Park investments upwards of `60,000 crore over Earlier Navi Mumbai was envisaged as a Railway Powai. With the horizontal expansionThakurli R S city, Puthene Link Ro adnext 5 years in the above mentioned satellite town in MMR to decongest the saturation of the transport Dombivliinfrastructure Ulhasnagar Kopar infrastructure projects. Once complete, ` Kopar Mumbai city. However, over the years U and rapid increase in population, l h Road R S a s
R these projects would transform the way MUMBAI METRO II i v e it grew as an additional city with huge DAHISAR TO DN NAGAR commutingr from different regions of Kandivali of transport in Mumbai. Travelling across iver number of vehicles going to and fro during MumbaiUlhas R to South Mumbai has become Kalwa R S the city would become easier and we peak hours. With the new airport coming Tulsi Lake increasingly difficult and time consuming. Mumbra Malad R S Datiwli R S Thane would witness emergence of new hotspots up, the traffic woes are going to increase Diva 60,000 The state government has taken initiatives with real estate development potential CRORE further. To ease the burden of traffic and D esa to improvei K hadi connectivity and reduce in the areas surrounding these projects. provide access to the new airport, the Mulund R S travelling time from the western and Brihanmumbai Municipal Corporation is Government planned the 22.5 km 6-lane Goregaon MUMBAI METRO VII Mumbai city is about to witness investments DAHISAR TO ANDHERI EAST k e central suburbs to south Mumbai through also drafting its new master development re upwards of `60,000 crore over the next five C 2 d Airoli R S 2 sea bridge– the Mumbai trans-harbor link la a M Vihar Lake Nahur implementation of three important plan - the Revised Draft Development Plan years in the above mentioned infrastructure (MTHL) connecting Sewri in South Mumbai infrastructure projects; namely, the Coastal 2034 (RDDP2034) which identifies this projects. to Nhava Sheva near the new airport. The Bhandup R S Road, the Colaba-Bandra-SEEPZ metro potential. It has provisions to develop new Rabale project is in its final stage of bidding with Jogeshwari R S line and the Mumbai Trans-Harbour Link. central business districts or CBDs around Versova 29 bidders being shortlisted. The work on Kanjurmarg R S D.N. Nagar Powai Lake These infrastructure initiatives would areas having access to various modes the project is expected to begin later this Azad Nagar Andheri not just reduce travelling time to South Andheri of transportation by providing additional year and is expected to be completed by Western Express Ghansoli R S Highway Vikroli R S Airport Mumbai, but also have the potential to FSI for the development of the plot. An end of 2019. Nhava Sheva was earlier a Chakala Road (J B Nagar) Marol Naka breed a new lease of life into the business FSI of five has been proposed for the new remote area in Navi Mumbai having limited Sakinaka Vile Parle R S districts of south Mumbai. Currently, it CBDs. This move is expected to encourage access with very little real estate potential. Chhatrapati Shivaji Asalpha International Airport (Mumbai Airport) Once the Colaba– Thane Creek takes around 2.5 hours to 3 hours during commercial development within the city, g ar There were no organized players willing to i M tr dur Shas MUMBAI METRO III Baha Lal peak hours to travel from the western COASTAL ROAD SEEPZ TO COLABA to a great extent particularly in and around Bandra–SEEPZ metro line go and construct in this area due to very Santa Cruz Taloje Vidyavihar suburbs to south Mumbai. ThisPanchnand is expected R S the areas where the new and existing mass MUMBAI becomes operational, this low rates. The average rate in Sewri is Turbhe R S to come down to an hour once the coastal transport projects would intersect or cross Lokmanya Khar Sanpada belt would witness an 30,000 per sq ft. and in Nhava Sheva the Tilak ` Road R S Kurla R S Junction road is operational. The Colaba-Bandra- Tilak Nagar Chembur over each other. Not just these areas, but Bandra comparable development from organized Terminus Vashi increase in demand for Chembur Railway Monorail Station SEEPZ metro wouldCentral provide improved the areas around the Octroi Naka would Govandi developers is virtually non-existent, the Bandra Juinagar R S Park residential and commercial Chunnabhatti Navade Road R S VNP And RC access from the north eastern regions of also benefit from RDDP2034. With the Marg prices at Drongari 10 km from Nhava Sheva Mankhurd Sion R S projects, as it would get Fertilizer the city to south Mumbai. The Mumbai Goods and Services Tax (GST) becoming Mahim Township is around `3,000 per sq ft. Once the MTHL Junction NAVI MUMBAI Wadala Depot Sector 11 3 Bharat Trans-Harbour Link would not only reduce effective from July 1, 2017,3 the Octroi connectivity to the major Guru Tegh GTB Nagar Petroleum Kalamboli R S is constructed, the increased proximity Bahadur Nagar R S Nerul R S Matunga k travelling time from Navi Mumbaie to south e would be subsumed in GST and the Octroi Antop Hill r Road R S Bhakti Park C office and residential
Science Park je and access to Sewri and other areas in Matunga R S lo Ta Mysore Seawoods Colony Sector 7 Kharghar R S Acharya - DaraveMumbai but would also provide access to Nakas in Mumbai would be redundant. South Mumbai due reduction in travel DADAR Atre Nagar districts of Mumbai and Dadar the newBelapur International CBD Airport. In order to make use of this huge chunk time would drive real estate prices in this Mansarovar also the Versova–Andheri– MONORAIL II of land approximately 49 hectares in the Parel WADALA TO JACOB CIRCLE Elphinstone The Eastern Freeway which was area and make it a hot spot for real estate ek l Cre Khandeshwar Ghatkopar metro line via Road R S nve Arabian Sea Pa periphery of Mumbai, the RDDP2034 has development. Mumbai Thane Creek constructed a few years back significantly Reay Road MUMBAI TRANS HARBOR LINK this metro. Currently, there Lower Parel R S made provisions for the land to be used for Currey Road R S reduced the commuting time and improved Panvel parking hubs, commercial space and office are a large number of connectivity of central suburbs to south Chinchpokli R S Mumbai Mahalakshmi space development. CAN INFRASTRUCTURE ALSO Mumbai. Once these under construction old industrial sheds and Mumbai Reay Road Byculla Mumbai warehouses located in this CATALYZE THE DEMAND Central Local infrastructure projects become operational With theChikhale implementation R S of RDDP2034,
Dockyard FOR ERSTWHILE BUSINESS Road by 2021-22, the business districts of south we expect locations like Andheri, Dadar, area most of which are Grant Road By Sandhurst DISTRICTS? Road Mumbai would get improved connectivity Dahisar, Govandi-Mankhurd, Mulund and non-operational. These
Masjid to all areas of Mumbai — the western Somatane Charni Bunder R S Ghatkopar to become the hotspots for Road may give way to another Until a decade back Nariman Point, Fort M a h a r s suburbs, central suburbs, central Mumbai, h RDDP 2034 CBDs real estate development with focus on the i Chhatrapati
K a Shivaji Terminus and other business districts of South r v business district emerging
e
R
o Navi Mumbai and it would become the only
a development of new commercial hubs Mumbai which were once the most d Churchgate in these areas like we Jasai R Sbusiness district within Mumbai region locations. sought after office destinations of the IMPACT LOCATIONS closest to the new International Airport. witnessed in the case of country witnessed a significant fall in Due to all these initiatives we may witness Lower Parel. preference amongst occupiers. One of a sudden revival in preference for office the major reasons for this fall was the shift4 4 space in these business districts. in residential demand of the population
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constructions would remain until the city’s and central, accounted for 51% and 23%, solid waste treatment capacity is enhanced respectively, of the new office space from 3,000 tonnes a day to 11,000 tonnes completions from 2013–2016. a day. Central Suburbs and The Maharashtra Chamber of Housing Western Suburbs The Court order is not very clear on IT Industry (MCHI) had also filed a review parks. It appears prima facie that IT parks petition challenging the ban on new accounted for 51% and may be outside the purview of this stay constructions in the city, including 42%, respectively, of the order as IT parks come under the purview buildings meant for residential and residential launches from of the industrial vertical. commercial purposes, which was 2014–2016. The suburban dismissed by the Bombay High Court in business districts, May 2017. Our assessment is - the order would Western and Central, adversely affect residential constructions accounted for 51% and mostly in western suburbs and central The Brihanmumbai Municipal Corporation 23%, respectively, of suburbs and office constructions in the could take certain cues from its the new office space suburban business districts (central and neighbouring municipal corporation – the completions from western), as these areas had seen the Kalyan-Dombivali Municipal Corporation 2013–2016. maximum real estate launches/office (KDMC). A similar ruling was passed by the space completions over the past few years. Bombay High Court in April 2015 staying all DUMPING GROUND central suburbs and western suburbs new constructions in the KDMC area due accounted for 51% and 42%, respectively, to inadequate facilities for safe disposal of the residential launches from 2014–2016. of waste. Over 150 building projects that GROUNDS REAL The suburban business districts, western had applied for permissions were stuck. Reports indicated that projects worth ESTATE IN MUMBAI over `500 crore had failed to take off as a result of the ban, which had also affected THE STAY, HOWEVER, DOESN’T KDMC’s coffers. APPLY TO;
- BY NIBODH SHETTY umbai generates around 9,000 ground, which is supposed to be the only • Construction of hospitals, However, in April 2016, the Bombay High tonnes of solid waste per day dumping ground in the city where waste is educational institutions and Court lifted the ban on new construction Mout of which approximately disposed off scientifically. redevelopment projects covered projects in the twin townships of Kalyan 3,000 tonnes is treated and disposed by clauses (5), (6), (7), (8), (9) and and Dombivli following a plan of action scientifically; the rest of the untreated (10) of DCR No. 33 submitted by KDMC to initiate measures waste is dumped illegally. This Due to repeated fires deteriorating the for a garbage disposal management • Projects which had received indiscriminate dumping has led to severe air quality in the city and the inability of system. KDMC had submitted a plan to the IOD before the judgment was environmental problems. There were many the Government of Maharashtra and Court that included setting up two waste passed. For those projects the fires at the dumping ground in 2016 and Brihanmumbai Municipal Corporation processing plants to dispose of garbage construction would continue. some of the major fires had caused the air (BMC) to comply with the Municipal scientifically. It said that it had identified However, for new projects the quality in the city to deteriorate severely Solid Waste (Management and Handling) land at Barave and Umberde and was in civic body can only accept causing the particulate matter (PM) levels rules-2000 at the Deonar and Mulund the process of issuing tenders. We hope proposals for but not issue IOD to increase many times beyond permissible dumping grounds, the Bombay High Court that akin to the KDMC move, BMC also and CC certificates. levels. Since it took several days for the came down heavily on BMC by putting comes up with its own waste disposal tonnes 9000 firemen to douse the fire at the landfill a stay on all development permissions/ • Consideration of the proposals plan at the earliest, as this will ensure that GARBAGE GENERATED DAILY in Deonar the entire city for weeks was Intimation of Disapproval (IOD) on the for repairs/reconstruction of the construction in the Mumbai realty market is buried in smog arising from the fires at the applications/proposals submitted from 1st existing buildings, which do not back on track. dumping ground. Since 2005, around 16 March 2016 onwards for construction of involve use of any additional FSI tonnes petitions have been filed against various new buildings for residential or commercial in addition to the FSI already 3000 dumping grounds in Mumbai, the maximum use including malls, hotels and restaurants. consumed. GARBAGE DISPOSAL CAPACITY being against the Kanjurmarg dumping The Court ruled that the stay on 92 93 RESEARCH INDIA REAL ESTATE
and the Real Estate (Regulation and I RE Development) Act, 2016 (RERA). Earlier, MICRO-MARKET SPLIT OF LAUNCHED UNITS Mumbai had unsold inventory in the H1 2016 H2 2016 H1 2017 under-construction category, however, it has started witnessing build-up 50%
in the unsold inventory even in the 45%
ready-possession category. This has 41% 40% 39% deterred developers from launching new projects before their pile of unsold 35%
inventory is cleared. 30% 25%
• In the latter part of H1 2017, a large 25% 23% 21% 19% number of developers had stopped 19% 20% 18% all marketing activities and were not 17%
15% 13% ready to provide any details of their 9% 9% 9% 9% 8%
10% 7% projects on paper or e-mail before 7% they became RERA complaint. Despite 5% 3% 2% 2% 1%
that, the sales increased by 26% 0% 0% 0% 0% sequentially, but were down 8% YoY. CENTRAL CENTRAL NAVI PERIPHERAL PERIPHERAL SOUTH THANE WESTERN Any buyer/consumer would not have MUMBAI SUBURBS MUMBAI CENTRAL WESTERN MUMBAI SUBURBS SUBURBS SUBURBS confidence to buy a property, if the Source R developer is not ready to provide any details of the project on paper, hence apartments a perception of being RERA compliance deterred builders affordable. Such apartments had a from marketing their projects, thereby higher sales velocity and witnessed impacting residential sales. a higher buyer demand than for the older ones. MUMBAI • Apart from the primary issues of unsold inventory and RERA, there were two other lingering issues, which 24,450 9,740 15,763 also affected new launches in Mumbai 2. MICRO-MARKET SPLIT OF UNITS UNITS UNITS – the dumping ground issue and RESIDENTIAL LAUNCHES RESIDENTIAL MARKET announcement of the Revised Draft H1 2016 H2 2016 H1 2017 I RE Development Plan 2034 (DP2034). Few 1. MMR RESIDENTIAL MMR MARKET TRENDS - HALF-YEARLY developers were awaiting clarity on • During H1 2017, a large number of MARKET LAUNCHES, SALES those issues before they could start developers deferred their plans to AND PRICE TRENDS LAUNCHES SALES WT. AVG. PRICE (RHS) construction. launch residential units due to RERA. • For unsold inventory in buildings which Most of them were either focussing • In H1 2016, the Mumbai Metropolitan 40000 8500 Region (MMR) residential market has completed construction where the on completing existing projects or unit size could not be changed, there transforming their businesses to be An interesting trend was witnessed its best growth momentum 35000 after the 2008 global financial crisis. was a marginal reduction in prices RERA complaint. As a result, the emerging in the Mumbai 8120 The signals were optimistic even for 8093 on account of promotional schemes launches were lower by 36% YoY but
30000 8044 residential market for new adopted to push sales. Hence, the higher by 61.8% than H2 2016, the 7994 the remaining part of the year, thereby 7994 launches. For a large number raising hopes that the MMR residential 8000 weighted average prices for residential H2 2016 numbers were abysmally low 25000 property in MMR reduced by 0.6% YoY due to demonetisation. of new launches, the residential
market which has been on a downward 7796 and 1% sequentially. spiral since 2010 would see a growth in • Across Mumbai there is a huge stock prices per sq ft was not 20000
sales in 2016. However, in H2 2016, the Number of units ` \sqft • However, an interesting trend was of under-construction inventory, reduced, but developers market suffered a big blow with both emerging in the Mumbai residential particularly in the peripheral central 15000 launches and sales plummeting due to suburbs, Navi Mumbai and westerns had reduced the size of the 7382 7500 market for new launches. For a demonetisation. large number of new launches, the suburbs. Hence, the developers apartments significantly, 10000 • H1 2017 was better than H2 2016 w.r.t. residential prices per sq ft was not have slowed down on new launches. thereby reducing the overall launches and sales, but in terms of reduced, but developers had reduced The peripheral central suburbs had 5000 price that the buyer would have overall launches, it was lower than the the size of the apartments significantly, the highest proportion of under- comparable periods of the previous thereby reducing the overall price that construction units; therefore, the to pay, i.e. the ticket size of the 0 years. There are two primary reasons 7000 the buyer would have to pay, i.e. the launches have been drastically apartments would be lower. for lower launches– huge stock of ticket size of the apartments would be lower in this area in H1 2017. In the H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 lower. The lower ticket size gave the peripheral western suburbs, there unsold under-construction inventory Source R 94 95 RESEARCH INDIA REAL ESTATE
was a launch of a large number of units the interest subsidy on loans given MUMBAI METROPOLITAN REGION MAP in a single project in Palghar. The same to this segment. The seeds to push A C
R
S
was the case in the central suburbs. affordable housing were sown in the
S
S
S
In central suburbs there was a project Union Budget 2015-16 proposals,
C
R
A launched in the affordable housing but the real impetus came in the S
C A BHYANDAR S segment – The Crystal Xrbia. This Prime Minister’s announcement on 31 C S A S S R
project came up in Chembur with over December 2016 and the Union Budget R A C 2000 units in a single project having 2016-17 proposals. Post the budget R E S C MIRA ROAD C R R C smaller unit size of apartments. This led proposals, developers had started H R C S S C R S R R
to significant increase in the share of skewing constructions in this favour and C
A BHIWANDI R C C R units launched in central suburbs. began launching units in the affordable The Crystal Xrbia project in S C R DAHISAR segment. The overall ratio of the units R C C C E Chembur which launched E S launched in the price range of below S A KALYAN S H R R S TICKET-SIZE SPLIT ANALYSIS `75 lakh has increased significantly in S A A over 2000 units in a single S R E BORIVALI R E S OF LAUNCHED UNITS a short span of time from 56% during S A DOMBAVILI project with smaller unit S E S A
H1 2016 to 84% in H1 2017. The units S GHODBUNDER ROAD S A S E C A R sizes of apartments, this KANDIVALI S H1 2016 H2 2016 H1 2017 H A costing less than 25 lakh formed the ` R C R C highest percentage of launches i.e. 36% led to significant increase S NAUPADA <2.5 mn 13% 11% 36% KALWA H A S A MALAD in H1 2017 much higher than 13% in H1 H in the share of launched in R THANEC 2.5-5 mn 20% 52% 32% 2016 and 11% in H2 2016. E Central Suburbs. C GOREGAONC H 5-7.5 mn 23% 13% 16% C A C C AIROLI E S A 7.5-10 mn 6% 9% 3% C A H BHANDUP R A H S A 10-20 mn 22% 7% 12% S S A S JOGESHWARI C >20 mn 16% 9% 1% A R S A GHANSOLI A S ANDHERI E H VIKHROLI H A C R S A H S Source: Knight Frank Research S VILE PARLES A S A S A C C S E A R A A • There has been an unprecedented GHATKOPAR C C SANTACRUZ S MUMBAI S response from the developers in A C A KURLA R C Mumbai to the Government of India’s H S CHEMBUR S A S SANPADA C VASHI S S focus on affordable housing and its BANDRA S C C E A RC S efforts to push through this initiative SION H
C HARA NAVI MUMBAI S by granting it infrastructure status for A S S WADALA S H NERUL S affordable housing projects along with A H H C S S C S A KHARGHAR A R C H A AR A S DADAR A BELAPUR S A A A C A A LOWER C PAREL A S C E MICRO-MARKET WISE RESIDENTIAL SALES PRABHADEVI WORLI C PANVEL
H MAHALAKSHMI S ULWE MICRO-MARKET LOCATIONS C NEPEAN SEA ROAD S S S Central Mumbai Dadar, Lower Parel, Mahalaxmi, Worli, Prabhadevi S MALBAR HILL A
A
R
Central Suburbs Sion, Chembur, Wadala, Kurla, Ghatkopar, Vikhroli, Bhandup, Mulund
C
S S
Navi Mumbai Vashi, Nerul, Belapur, Kharghar, Airoli, Panvel, Ulwe, Sanpada
Peripheral Central Suburbs Kalyan, Kalwa, Dombivli, Ambernath, Bhiwandi, Mumbra, Karjat S S S S S R Peripheral Western Suburbs Vasai, Virar, Boisar, Palghar, Bhayandar, Nalasopara COLABA R H R S R S South Mumbai Malabar Hill, Napean Sea Road, Walkeshwar, Altamount Road, Colaba A
Thane Naupada, Ghodbunder Road, Pokhran Road, Majiwada, Khopat, Panchpakhadi A S C C
C Western Suburbs Bandra, Andheri, Goregaon, Kandivali, Borivali, Santacruz, Vile Parle C A A S C 96 97 RESEARCH INDIA REAL ESTATE
I RE 4. MARKET HEALTH MICRO-MARKET SPLIT OF SALES I RE QUARTERS TO SELL (QTS) UNSOLD INVENTORY ANALYSIS The Peripheral Central H1 2016 H2 2016 H1 2017 • The quarters to sell unsold inventory (QTS) is the number of quarters required MMR 50% 12.5 Suburbs is the largest
45% to exhaust the existing unsold inventory 45% market in the MMR in in the market. The existing unsold in- 12.0 40% ventory is divided by the average sales terms of the quantum of
35% 33% velocity of the preceding eight quarters 11.5 under-construction housing in order to arrive at the QTS number 30% units. This lead has been 27% for that particular quarter. A lower QTS 11.0 25% indicates a healthier market. maintained for a long period 20% 19%
20% 18% 10.5 of time. 17%
16% • The unsold inventory level has come 15% 14% 12%
down steadily from a peak of 213,742 NO OF QUARTERS
11% 10.0 10% 10% 9% 9% 9% units in H1 2014 to 138,653 units in H1 8% 10% 8% 2017. Consequently, the QTS for MMR 5% 9.5 2% 1% 1% 1% has also come down from 12.1 quarters 0% 0% 0% to 8.8 quarters. However, this is not a CENTRAL CENTRAL NAVI PERIPHERAL PERIPHERAL SOUTH THANE WESTERN 9.0 MUMBAI SUBURBS MUMBAI CENTRAL WESTERN MUMBAI SUBURBS desirable phenomenon considering that SUBURBS SUBURBS the decline came on account of a sharp 8.5 Source R reduction of launches as the market continues to shrink. 8.0
• Even while the premium markets of Jun-14 Jun-15 Jun-16 Jun-17 Mar-15 Mar-16 Mar-17 Sep-14 Dec-14 Sep-15 Dec-15 Sep-16 Dec-16 South Mumbai and Central Mumbai Source R contribute to just about 4% of the un- sold inventory, they face the worst QTS at 16 and 17, respectively.
• The Peripheral Central Suburbs is the • Peripheral western suburbs had the 34,971 25,403 32,077 largest market in the MMR in terms highest percentage of inventory in ready of the quantum of under-construction possession category. As the unit size for UNITS UNITS UNITS housing units. This lead has been inventory in this category cannot be var- maintained for a long period of time. ied, the developers who are unwilling to H1 2016 H2 2016 H1 2017 However QTS was lowest for the Thane reduce the prices are finding it difficult market. to find the desired number of buyers.
I RE UNSOLD MICRO-MARKET-WISE QTS VS AGE OF INVENTORY MICRO-MARKET INVENTORY ENTRAL AI • Along with supply, the demand has also ENTRAL S R S NA I AI ERI ERAL ENTRAL S R S Central Mumbai 4,281 ESTERN S R S S T AI T ANE ERI ERAL ESTERN S R S shifted towards affordable housing, which is evident from the jump in sales Central Suburbs 19,453 20 in the peripheral central suburbs. Navi Mumbai 24,618 17 Peripheral Central 31,758 Suburbs 14 Peripheral Western 22,126 Suburbs 11
South Mumbai 1,174 8 Thane 13,192
Western Suburbs 22,051 5 A E NS LD IN ENT R IN ARTERS A E NS LD IN ENT R
Mumbai 138,653 2 2 5 8 11 14 17 20 Source: Knight Frank Research TS
Source R Note: The size of the bubble indicates the quantum of unsold inventory 98 99 RESEARCH INDIA REAL ESTATE
5. PRICE MOVEMENT IN H1 2017 OFFICE MARKET • Residential property prices in Mumbai pays only 5% upfront and remaining on are witnessing a time correction since possession, have become a widespread the last two years. The demonetisation phenomenon. A price protection plan The new landscape of 1. MUMBAI OFFICE MARKET decision has further fuelled consumer is also being offered to prospective transparency, efficiency and I RE expectation of price cuts. However, no consumers to assuage concerns in the STOCK, NEW COMPLETIONS, NEW COMPLETIONS AND TRANSACTIONS – governance brought collectively HALF-YEARLY TREND H1 2017 witnessed the across-the-board price cuts have been event of a price decline. TRANSACTIONS AND NEW COMPLETIONS TRANSACTIONS highest supply of new recorded in the market except for some by the demonetisation scheme, VACANCY TRENDS projects in Mira Road and Virar. benami property law and 8.0 completions over the past
• In case of an under-construction the real estate regulation will • The office transactions have been several years. The new project, price reduction disturbs the challenge the status quo of slowing down since H2 2015. The 7.0 supply increased to 7.6 equation with existing buyers and real estate investment and overall transactions were down by 19% mn sqft during H1 2017 investors. Hence, most cases have YoY and 5% sequentially. The GDP 6.0 reported to offer indirect discounts by transactions growth of India for the quarter ending higher by 54% YoY. This waiving stamp duty and registration March 2017 was 6.1%, indicating a has caused significant 5.0 charges. Instances of free gifts, in the significant slowdown in the economy increase in vacancy rates. form of gold and consumer appliances post demonetisation. The slowdown mn sqft or a liberal financing plan, where a buyer in business environment was one of 4.0 Across MMR the vacancy the primary reasons for low demand of rates had reduced to 19.6% office spaces. 3.0 during H2 2016; however, PRICE MOVEMENT IN SELECT LOCATIONS • Over the past few years developers it jumped back to 21.9% shunned office developments plans in 2.0 in H1 2017 higher than H1 favour of residential projects, which has caused significant constrain in supply 2016. LOCATION MICRO-MARKET PRICE RANGE IN H1 2017 12-MONTH 6-MONTH 1.0 of Grade A office spaces in preferred (`/SQ FT) CHANGE CHANGE locations of the city. In spite of the Lower Parel Central Mumbai 25,000–36,000 1% 0% slowdown in GDP growth a significant 0.0 number of discussions have surfaced
Worli Central Mumbai 31,000–55,000 1% 0% H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 between occupiers and developers Ghatkopar Central Suburbs 12,000–22,000 1% 1% in the recent past. However, the talks I RE Source R OFFICE SPACE STOCK AND VACANCY LEVELS – have not translated into transactions Mulund Central Suburbs 10,700–14,000 2% 0% HALF-YEARLY TREND primarily because the developers are STOCK OCCUPIED STOCK VACANCY (RHS) Powai Central Suburbs 14,500–20,000 2% 1% holding on to rates and are unwilling to reduce their rates while negotiating Panvel Navi Mumbai 4,000–6,500 -2% -2% 140 23% with potential occupiers. 22.6% Kharghar Navi Mumbai 6,700–9,000 3% 1% 22.5% • H1 2017 witnessed the highest Vashi Navi Mumbai 10,000–15,000 1% 0% 120 21.9% supply of new completions over the 21.9% 22% Badlapur Peripheral Central Suburbs 2,700–3,500 0% 0% past several years. The new supply 21.6% 21.6% increased to 7.6 mn sqft during H1 2017 100 Dombivali Peripheral Central Suburbs 4,500–6,000 2% 2% higher by 54% YoY. This has caused Mira Road Peripheral Western Suburbs 5,500–7,300 -3% -2% 21% significant increase in vacancy rates. 80 Virar Peripheral Western Suburbs 4,500–5,500 -4% -2% Across the MMR the vacancy rates had reduced to 19.6% during H2 2016; Tardeo South Mumbai 40,000–60,000 0% 0% 60 however, it has jumped back to 21.9% 20% Ghodbunder Road Thane 6,000–10,000 -1% 0% in H1 2017 higher than the vacancy rates during H1 2016. The vacancy 40 Naupada Thane 14,000–18,000 0% 0% levels were lowest in Central Mumbai at 19.6% Andheri Western Suburbs 15,000–22,000 0% 0% 0.4%, followed by BKC at 5.2%. 19% 20 Bandra(West) Western Suburbs 40,000–60,000 0% 0% • The total occupied stock increased by 6% YoY and sequentially by 3% to 103 Borivali Western Suburbs 11,000–15,000 -1% 0% 0 Mn sqft. 18% Dahisar Western Suburbs 9,000–11,000 0% -1% H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017
Goregaon Western Suburbs 13,000–15,000 -1% -1% Source R
Source: Knight Frank Research 100 101 RESEARCH INDIA REAL ESTATE
2. SECTOR ANALYSIS 3. DEAL SIZE ANALYSIS I RE SELECT TRANSACTIONS SECTOR-WISE SPLIT OF TRANSACTIONS
• There was a slowdown in demand • The average deal size during H1 45% from the BFSI sector and the IT/ITES. 2017 increased by 57% YoY and
42% OCCUPIER BUILDING LOCATION APPROX AREA (SQ FT) Sequentially both the sectors saw a 29% sequentially since the volume of drop of 45% in demand, which led 40% deals dropped by 48% YoY and 27% Jacobs Gigaplex Navi Mumbai 120,000 to companies under the category sequentially. Syedna Trust Fort House Fort 120,000
of ‘other services’ becoming the 35% 34% • Not only were the volume of 33% Novartis Inspire BKC BKC 100,000 largest consumers of office space 32% transactions lower, the largest for H1 2017, which generally require 31% 30% transaction in terms of sqft of space TCE Reliable Empire Navi Mumbai 90,000 smaller size units compared to IT/ leased was also lower in H1 2017. The Zydus HQ 460 Goregoan East 80,000 ITES. This category which comprises largest transaction in H1 2017 was
25% 24% e-commerce, consulting, media etc. 120,000 sqft compared to 250,000 sqft Here Maps Gigaplex Navi Mumbai 65,000
also recorded a staggering 96% 22% 21% 21% in H2, 2016. New York Film School Urmi Lower Parel 40,000 sequential increase in demand in H1 20% 2017. 17% Vertex Rupa Solitaire Navi Mumbai 40,000 16% I RE • While developments within India 15% AVERAGE DEAL SIZE AND NUMBER OF DEALS FDC Pharma Independent building Andheri West 38,000 have a limited impact on the Indian IT industry, global developments SBI Bank Kalpavruksha Navi Mumbai 36,000
10% 9% AVERAGE DEAL SIZE (SQFT) particularly Americas and the Europe, NUMBER OF DEALS (RHS) Source: Knight Frank Research has put the technology sector under pressure, hence the demand from IT/ 5% 40000 280 4. BUSINESS DISTRICT ITES has been reducing. Coupled I RE ANALYSIS BUSINESS DISTRICT-WISE TRANSACTION SPLIT with absence of any large deals in H1 0% 2017, the IT sectors’ demand share has
BFSI 240 H1 2016 H1 2017 almost halved from 16% in H2 2016 to IT/ITeS H1 2016 • Office rent consciousness coupled 45% 9% in H1 2017. The demand share of 30000 H2 2016 with the changing profile of residential the manufacturing sector during the 200
H1 2017 OTHER SERVICES MANUFACTURING catchments across the metropolitan same period was stable around 32% 40% sqft Source R Number region is translating into movement of sequentially. 160
office demand to the north of the city 35% 35% Note: BFSI includes BFSI support services 20000 where rents are much lower compared 3.8 3.1 120 to the central business districts. 31% 30% • SBD Western and PBD witnessed 28% mn sq ft mn sq ft the largest contribution to the office 80 25% H1 2016 H1 2017 10000 demand during H1 2017. Given
the residential density and good 20% 40 20% connectivity to localities in SBD West, the companies in the other services 15%
15% 14%
0 0 sector which generally have smaller 13% 11% space requirements preferred taking 11% 10%
10% 9%
H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 office space up in these regions.
Source R Sequentially both the BFSI 5% Not only were the volume and IT/ITES companies saw 2% of transactions lower, a drop of 45% in demand 0% the largest transaction PBD SBD SBD WEST BKC & CBD & in terms of sqft of space Off-BKC Off-CBD MUMBAI which led to companies 3.8 3.3 3.1 CENTRAl CENTRAL under the category of ‘other Source R leased was also lower mn sq ft mn sq ft mn sq ft services’ becoming the in H1 2017. The largest largest consumers of office H1 2016 H2 2016 H1 2017 transaction in H1 2017 was space in H1 2017. 120,000 sqft compared to 250,000 sqft in H2, 2016. 102 103 RESEARCH INDIA REAL ESTATE
MUMBAI METROPOLITAN REGION MAP BUSINESS DISTRICT MICRO-MARKETS A C
R
S
S CBD & off-CBD Nariman Point, Cuffe Parade, Ballard Estate, Fort, Mahalaxmi, Worli
S
S
C
R
A Bandra Kurla Complex & off-Bandra S
C A BKC, Bandra (E), Kalina and Kalanagar BHYANDAR Kurla Complex (BKC & off-BKC) S C S A S S R
R Central Mumbai Parel, Lower Parel, Dadar, Prabhadevi A C R E S C MIRA ROAD C R R SBD West Andheri, Jogeshwari, Goregaon, Malad C H R C S S C R S R R
C
A BHIWANDI SBD Central Kurla, Ghatkopar, Vikhroli, Kanjurmarg, Powai, Bhandup, Chembur R C C R S C R DAHISAR R C C C E Source: Knight Frank Research E S S A KALYAN S H R R S S A A S R E BORIVALI R E S S A S DOMBAVILI 5. RENTAL TREND I RE E S A
S GHODBUNDER ROAD S A S WEIGHTED AVERAGE RENTAL MOVEMENT E C A R KANDIVALI S H A R C R C S NAUPADA KALWA H A • The rental values have increased 125 S A MALAD H THANEC R in most office markets except for E peripheral business districts which had 120 C GOREGAONC H C A the highest vacancy rates of 32%. Due C C AIROLI E A 115 S to lower vacancy levels compared to C A H BHANDUP R rest of the city, both BKC and Central SBD WEST A H S A S S 110 A Mumbai recorded 6% surge in rentals S JOGESHWARI C A R S in H1 2017 over H1 2016. A GHANSOLI A S 105 ANDHERI E H VIKHROLI H • The rents for MMR appreciated to `118/ A C R S A H S sqft/month in H1 2017 higher by 1% S (INR/sq.ft./month) 100 The rental values have VILE PARLES A S SBD CENTRAL A S YoY compared to `117/sqft/month in H1 A C C S E increased in most A R A A 2016. The rents had gone up during H2 GHATKOPAR 95 C C SANTACRUZ S MUMBAI S 2016 due to fall in vacancy rates. office markets except A C A KURLA R C H 90 S for peripheral business BKC & off-BKC CHEMBUR S A S SANPADA C VASHI S S BANDRA S C C E districts which had the A RC S 85 SION H
C HARA NAVI MUMBAI S A S S highest vacancy rates of WADALA S H NERUL S A H H 80 C S 32%. S C S A KHARGHAR A R C H A AR A S DADAR A BELAPUR S A A A
C H12014 H22014 H12015 H22015 H12016 H22016 H12017 A A LOWER C A S PAREL Source R C E PRABHADEVI WORLI CENTRAL MUMBAI C PANVEL
H MAHALAKSHMI S ULWE C
NEPEAN SEA ROAD S BUSINESS DISTRICT-WISE RENTAL MOVEMENT S S S MALBAR HILL A
A
R CBD & off-CBD
C
S S BUSINESS DISTRICT RENTAL VALUE RANGE IN H1 12-MONTH CHANGE 6-MONTH CHANGE 2017 (`/SQ FT/MONTH) S S S S S BKC & Off-BKC 220-330 6% 2% R COLABA R H R S R CBD & Off-CBD 160-250 2% 0% S A Central Mumbai 170-200 6% 3% A S C PBD 50-90 -4% -3% C
C C SBD Central 80-150 3% 2% A A S C SBD West 80-140 2% 1%
Source: Knight Frank Research 104 105 RESEARCH INDIA REAL ESTATE
GETTING THINGS RIGHT – INFRASTRUCTURE PUSH IN GURUGRAM
- BY ANKITA SOOD
rban growth is an inevitable The saying that people follow jobs proved whopping 500% from 2001 to 2011. The Gurugram has been lost with bumper-to- phenomenon and the only reason right in the case of Gurugram when economic pull factor of the city is such that bumper traffic jams at various junctions. Uwhy Gurugram is different is Maruti made its foray in the city in the thenumber of vehicles that enter Gurugram the fact that it happened too fast for 1980s. In 1983, the Maruti Suzuki plant This spurt in job creation are three times more than the ones this city. Projected from the start as the proved to be a major turning point in resulted in the movement registered in the city. This has put pressure on the seamless ‘millennium city’, Gurugram grew by leaps Gurugram’s economy, which was then of people to the city and connectivity to the economic hub and and bounds owing to it being a natural followed by the movement of General the monsoons in 2016 proved to be a Gurugram’s population extension to the country’s capital and its Electric (GE) in 1997. This paved the As time passed, and office and residential wake-up call for the authorities. The rains proximity to the international airport in way for other multinational corporations grew by over a whopping developments took place, Gurugram brought Gurugram to a standstill and left New Delhi. Factors such as the availability (MNCs) such as American Express, IBM, 500% from 2001 to 2011. slackened its pace of infrastructure people stranded helplessly on various of huge land parcels, favourable tax Microsoft, Infosys, Ericson and many The economic pull factor development and somewhere lost the lead such important junctions. The result of this policies, availability of manpower and more, to set up businesses in Gurugram of the city is such that the it had maintained over its contemporary was the push to either speed up work or good connectivity to national highways, which in turn, changed the social and number of vehicles that market Noida. If we look at the past few construct new decongestion alternatives all worked in favour of this city. So much physical landscape of the city. years, Gurugram has been struggling such as like flyovers and underpasses in enter Gurugram are three so, that Gurugram took the lead over its with the delivery of various infrastructure the city. Most of the road infrastructure contemporary market – Noida, in terms of times more than the ones projects, unlike Noida. While work on the construction underway is slated to finish the supply and absorption of office space This spurt in job creation resulted in registered in the city. roads and metro connectivity in Noida has by 2019. Let’s take a view at some of the or price appreciation of residential real the movement of people to the city and been going on in record speed, the pace major ongoing infrastructure projects in estate. Gurugram’s population grew by over a of development in Gurugram has been Gurugram that will help in decongesting extremely slow. The breeze of the roads in the city. 106 107 RESEARCH INDIA REAL ESTATE
The 16-lane expressway. The upcoming OUTLOOK (partially open) 10.5-km, 16-lane This push for improvement in infrastructure, expressway will join NH-8 at Shankar especially road infrastructure, in Gurugram Chowk to Sectors 55–56 on Golf Course will not only decongest the city but also Road. This will connect Golf Course add to the brand value of this city and Road with the commercial district of DLF enhance its attractiveness as a location for Cybercity on one end and to the upcoming business and residence. However, even residential and office corridor of Golf in the present day there are projects like Course Extension Road on the other. The the Dwarka Expressway in Gurugram that road, once complete, will provide the much have been delayed for more than a decade. needed swift connectivity between these It is only wise that the authorities take corridors and will ease the travel time to cognisance of the fact that the resource DLF Cybercity by half, as it would take only pressure on Gurugram is only going to 8–10 minutes to reach the office hub of DLF increase in future owing to it being an Cybercity from Golf Course Extension. At economic nucleus. Going forward, if the present, the Genpact crossing is the only physical infrastructure does not keep pace patch left. with the economic development, then INDIAN FARMERS FERTILIZERS office locations of Sohna Road and DLF Gurugram would only be a ‘millennium city’ CORPORATION (IFFCO) CHOWK Cybercity and is expected to halve the on paper. travel time . In the present day coming to RAPID METRO This is a complex intersection in Gurugram Soha Road and DLF Cybercity from the where vehicles converge from multiple Another important infrastructure push sectors of New Gurugram (Sectors 81–95) points such as the retail corridor of has been the linking of the Rapid Metro could take anywhere between 1–1.5 hours Mehrauli–Gurugram (MG) Road, Old to Sectors 55–56 in Gurugram. The during peak office hours. Gurugram, Sector 17/18 and Shankar now operational, 7-km-long line from Chowk. Once completed, this flyover will Sikandarpur metro station to Sectors facilitate the movement from Jaipur to Delhi 55–56 has made the commute to Golf SIGNATURE TOWER and also help movement towards the office Course Road and Golf Course Extension hub of Udyog Vihar and the Old Gurugram This is a two-way, four-lane underpass on Road smoother from the DLF Cybercity. area. It will also further facilitate easy the Delhi–Gurugram Expressway (NH-8). However, the woes of unreliable road access to the retail stretch of MG Road The underpass will improve connectivity to transport on this stretch for last mile- It is only wise that from Sector 14 and Sector 17. the residential catchment of Old Gurugram connectivity still remains a problem. On the authorities take and Palam Vihar via the Maharana Pratap a broader level, the metro has opened cognisance of the fact that Chowk. This improvement in access will up areas like Golf Course Extension the resource pressure on HERO HONDA CHOWK make the residential catchment of Old and improved its perception of being Gurugram, like Sector 14, and further down inaccessible without having a vehicle. The Gurugram is only going to The 1.4-km and eight-lane flyover at the the areas like Palam Vihar well connected metro on this route has five metro stations increase in future owing Hero Honda Chowk is nearing completion with offices in Signature Tower and and will cater to the riders from Golf and will bring relief to commuters on to it being an economic Unitech Cyber Park.Prominent hospitals Course Road Sectors 42, 43, 53, 54, 55, 56 the Delhi–Jaipur Highway or NH-8, who nucleus. Going forward, if like Max and Fortis would see seamless and DLF Phase 1 to commercial and office in peak times have to crawl to enter or the physical infrastructure connectivity While the underpass will stretches of DLF Cybercity and MG Road. exit Gurugram. This flyover will also provide a seamless drive to the metro The attractiveness of the Golf Course Road does not keep pace provide additional connectivity to the interchange at HUDA City Centre, it will and the areas along Golf Course Extension with the economic upcoming Dwarka Expressway where the also improve access to the packed F&B Road will only increase with the completion development, then new residential sectors (81–95) of New hub in Sector 29. of these two major infrastructure projects Gurugram are coming up. Once completed, Gurugram would only be a (16-lane expressway and Rapid Metro) by the flyover will also ease access to ‘millennium city’ on paper. the end of 2017. 108 109 RESEARCH INDIA REAL ESTATE
focusing on completing pending I RE projects as opposed to launching MICRO-MARKET SPLIT OF LAUNCHED UNITS new ones. . Ambiguity over RERA guidelines in Haryana and Uttar H1 2016 H2 2016 H1 2017 Pradesh which house the two major 100%
residential markets of Gurugram and 90%
Noida respectively has also slowed 82% 80% new projects. . While RERA rules in Haryana are at the draft stage, the 70%
Uttar Pradesh government has notified 60% it. But, in absence of a gazette the 50% 44%
regulation is yet to come into force. 41% 40% • The uncertainty coupled with slow 30% 27% sales velocity and time correction 20% 14% 12% in price since 2013 has brought 13% 13% 11% 7% stagnancy to the market. NCR today 10% 7% 2%
has the highest unsold inventory under 0% 0% 0% 0% 0% 0% 0% different stages of construction but is Delhi Faridabad Ghaziabad Greater Noida Gurugram Noida struggling to find buyers. Source R • Althoughthe sales volumeshave dropped by 26% YoY in H1 2017, it has shown a marginal increase over the demonetisation-induced slump in H2 NATIONAL CAPITAL 2016. REGION (NCR) 2. MARKET SPLIT OF RESIDENTIAL LAUNCHES 17,462 9,273 4,800
• The new launches in NCR have come UNITS UNITS UNITS RESIDENTIAL MARKET down to a staggering 4,800 units in H1 2017 registering a YoY drop of 73%. On H2 2016 H1 2017 1. NCR RESIDENTIAL MARKET I RE H1 2016 an average, NCR’s six- monthly new LAUNCHES, SALES AND PRICE NCR MARKET TRENDS - HALF-YEARLY launches have been above 50,000 units TRENDS With the attraction towards in the past, but have hit rock bottom in LAUNCHES SALES WT. AVG. PRICE (RHS) ready to move in projects 50000 5000 H1 2017. complete or are nearing completion. • New launches in NCR have shrunk to Also, the fact that most of the projects and the structural change a staggering minimal of 4,800 units • Many factors have contributed to this 45000 are construction linked, developers in the Indian Real Estate in H1 2017 registering a 73% de- drop, such as the looming uncertainty are rushing to finish their previously growth YoY compared to H1 2016. The 40000 4700 over RERA that pushed developers to market in the form RERA 4578 launched inventories in order to market shows no respite even from complete projects in hand instead of 4511 becoming a reality, new 35000 starting newones. The fear of provision regulate their cash flows.
the bottomed out last half of 2016 4444
4400 launches in the National and registered a 48% de-growth in 4346 for re-registration under the of the 30000 4400 Real Estate Regulatory Authority Capital Region have come
new launches compared to H2 2016. 4250 4250 (RERA) have also caused developers TICKET-SIZE SPLIT ANALYSIS Dwindling consumer confidence 25000 to a historical low. Also,
Number of units OF LAUNCHED UNITS in the market courtesy delay in ` \sq ft to control the launch of new projects 20000 4100 and concentrate more on project since most of the projects projects marred by litigations and poor H1 2016 H2 2016 H1 2017 connectivity in potential growth areas completions. Under this law, all real have a construction-linked 15000 has slowed the market. That slowdown estate projects (including those under <2.5 mn 8% 2% 70% payment plan, developers has restricted developers to launch construction and the ones which are 10000 3800 2.5-5 mn 56% 14% 11% are concentrating on new projects. yet to get a completion certificate 5-7.5 mn 15% 35% 7% 5000 ) have to be registered with the real completing their existing • The new launches in NCR have been estate regulator. 7.5-10 mn 14% 33% 12% projects to boost their cash dwindling since 2010, but have come 0 3500 to its nadir in H1 2017. With the Real • Developers have also taken note of 10-20 mn 8% 4% 0% flows the fact that the buyer preference has
Estate (Regulation and Development) H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 >20 mn 0% 11% 0% shifted towards projects that are either Act, 2016 a reality, developers are Source R 110 111 RESEARCH INDIA REAL ESTATE
• It is also interesting to note that 70% I RE 4. MARKET HEALTH • The quarters to sell unsold inventory MICRO-MARKET SPLIT OF SALES (QTS) is the number of quarters required of the 4,800 units launched in H1 2017 The NCR residential market have been in the less than `2.5 Mn I RE to exhaust the existing unsold inventory H1 2016 H2 2016 H1 2017 category signifying the inclination of is showing green shoots of QUARTERS TO SELL (QTS) UNSOLD in the market. The existing unsold in- INVENTORY ANALYSIS 50% 47% ventory is divided by the average sales the supply side towards the affordable recovery in H1 2017 with NCR 20
housing segment. The central gov- 45% 43% velocity of the preceding eight quarters
40% sales marginally picking ernment has granted the infrastruc- in order to arrive at the QTS number 40% 18 ture status to the affordable housing up from its nadir point for that particular quarter. A lower QTS 35% indicates a healthier market. segment, which in turn has incentivised in H2 2016. Our survey 16 developers to launch projects in this 30% 28% suggests that there is an • The QTS of NCR has been moving in price bracket. 14 25% 23%
22% close range of 17–18 in the past six
19% improvement in the buyer
• Gurugram known for its luxurious prop- 20% 18% 12 quarters stands at 18 quarters at the 17% sentiment in H1 2017 owing erties and unaffordable ticket size saw 14% end of June 2017, which is extremely 15%
11% 10 high. This translates that if the sales 85% of its new supply in the less than 10% to the streamlining of the `2.5 mn price bracket. Sectors such as 10% NO OF QUARTERS velocity remains the same, it would take real estate sector through 8 95, 95A and 36 in Gurugram saw new 5% approximately 4.5 years to exhaust the 2% 2% 1% 1% 1% 0% the implementation of current unsold inventory of 180,370 launches under the Pradhan Mantri 0% 6 Awas Yojna (PMAY) in H1 2017. DELHI FARIDABAD GHAZIABAD GREATER NOIDA GURUGRAM NOIDA RERA, which is slowly units. 4 • New launches in the micro-market of Source R bringing back confidence • Though there have been no new launch- Greater Noida have dropped by 93% es in Ghaziabad and Greater Noida to the market. 2 in H1 2017 compared to the same remain still NCR’s comparatively better dence to the market. period in 2016. Taking cognisance of 0 performing markets, with a QTS of 17 the volume of unsold inventory in this • Though there is a YoY 26% drop in and 15, respectively. Affordability op- Jun-14 Jun-15 Jun-16 Jun-17 Mar-15 Mar-16 Mar-17 micro-market, developers in Greater sales in the overall market in H1 2017, Sep-14 Dec-14 Sep-15 Dec-15 Sep-16 Dec-16 tions add to the attractiveness of these Noida have refrained from launching there has been a huge uptick in the Source R markets, which has helped sales trickle new projects. The market is known for micro-markets of Ghaziabad and Noida. in. its residential property offerings under • Ghaziabad which is mostly an under the `5 mn category. `50 Mn ticket size market has regis- 23,092 16,913 17,188 tered a 40% growth in sales in H1 2017. Primarily catering to the affordable and UNITS UNITS UNITS 3. MARKET-WISE the mid-segment, Ghaziabad includes H2 2016 H1 2017 RESIDENTIAL SALES established residential clusters such H1 2016 as Kaushambi, Vaishali and Indirapu- • Approximately 17,188 units were sold ram and the relatively newer areas of in the first half of 2017, compared to Raj Nagar Extension, NH 24, including I RE 23,092 units in H1 2016, thus registering Crossings Republic. Ghaziabad has MICRO-MARKET-WISE QTS VS AGE OF INVENTORY UNSOLD a drop of 26%. However, on a half year- MICRO-MARKET always garnered interest from price will have a positive reverberation on the INVENTORY ly comparison, the market is showing DEL I ARIDA AD A IA AD RETER N IDA R RA N IDA sensitive buyers. green shoots of recovery and sales have residential market as well. The Central Delhi 1,539 22 picked up by a marginal 2% in H1 2017 • Noida on the other hand registers a Government has given its final approval for a greenfield international airport at Faridabad 5,677
compared to H2 2016. 42% increase in H1 2017 sales com- TERS 20 pared to the same period in 2016. Jewar which is expected to finish its first Ghaziabad 29,711 • Demand in NCR had been on a down- phase in 5–6 years. The government has
ward spiral since 2013 and H2 2016 • On a half- yearly comparison, sales in Greater Noida 69,019 IN A R 18 already set aside 3,000 hectares for this R Greater Noida and Noida have started saw the lowest half yearly sales with project and once operational the airport Gurugram 47,480 to look up post the currency demone- 16 only 16,913 units. This historic low in is expected cater to 30–50 million tisation initiative in H2 2016 and have Noida 26,944 sales was evidence to the Indian Gov- passengers a year. The coming of the gone up by 9% and 10% respectively. 14 ernment’s move to clamp down black airport will give a major boost to the NCR 180,370 This uptick in sales is majorly due to money which brought the NCR real office and residential market in Noida estate market on its knees. the traction in the affordable housing Source: Knight Frank Research 12
and Greater Noida, which was lagging A E NS LD IN ENT segment which is in the price bracket of • However, our survey suggests that there behind Gurugram due its distance from `<5 mn. 10 is an improvement in the buyers’ senti- the airport. 12 14 16 18 20 22 24 26 28 30 32 34 36 ment in H1 2017 owing to the stream- • Going forward, the recent announce- TS Source R lining of the real estate sector through ment of a new airport at Jewar in the implementation of RERA which is Greater Noida will add to the attractive- ness of Noida as an office market which slowly bringing back the buyers’ confi- Note: The size of the bubble indicates the quantum of unsold inventory 112 113 S S A R S S S SONEPAT S S R A E S H S A S S S C S S H S A S R R S A R R S R S H
C S S R A S A BAGHPAT S R R S S S S H R R S A S S S A H R S S S S S A S C HAR H A S S A S S H C S H R C NARELA S S S S A A S R S S S A S S R H S R MODINAGAR R
AUCHANDI S S R A C E H H RESEARCH A INDIA REAL ESTATE S R S H R S S S H S H A H R E R A S C NATIONAL CAPITAL REGION MAP S S C S H S S S S S C C C S A S S A S A R ROHINI S A S C S R S S S S S S H R S S C S S S S S H A R S S S S S A C S S AZADPUR H A C S S R E S S S S A S R AHA R ARH ASHOK VIHAR SHAHDARA R S S A H C A R S SAHIBABAD S A GHAZIABAD R CHANDNI S S CHOWK C S S R CONNAUGHT PLACE A S R H H R C C E C H H S A S JANAKPURI C C S C R C E R INDIA NAJAFGARH C MAYUR VIHAR R S GATE R S R S DELHI C R E R S S R S A CANTONMENT A S C C DWARKA E S S S S S S S A S S S S R S A S C C S R R S S S A R OKHLA C E S S S C S S DHANSA S S H A S S HAUZ KHAS GREATER S S S KAILASH C S C C NOIDA S R S S H S R KAPASHERA S S S E R S C R S A S S C S C S E S S S C S S C S S R S S S GREATER NOIDAS A S S S S S C C S A A S C C H A S S S R R S S PARI E S A A CHOWK H A C C E S S S C AR H GURUGRAMS H A AR S A S S S S ARAJIV CHOWK S S A S S A S H S S S S S S S C S S H S S S S S S S S S S S S S S R H S S S S S S S S S A E S A S S S S FARIDABAD S S S A S S S S A S A S A A ESAR S R C S R A S S S S S A S S A A R S S S BALLABHGARH 114 115 S S S S R C S R C A A S C S A S A A S S A S S S S A S C S A S S H S R C S S S C RESEARCH INDIA REAL ESTATE
4. PRICE MOVEMENT IN H1 2017 OFFICE MARKET
• Prices in the NCR residential market that time making the market more had already started correcting in the unaffordable. first half of 2016, where the market 1. NCR OFFICE MARKET • The stable pace of absorption and • The fact that there has been no corrected for the first time and STOCK, NEW COMPLETIONS, the shrinking supply has nudged increase in prices since 2013 signifies registered a 4% YOY drop. The story TRANSACTION AND VACANCY down vacancy levels to 17.7% in H1 that developers are cognisant of the continues in the first half of 2017 TRENDS 2017 compared to 20.6% in H1 2016. accumulating inventory and slow sales as well and the market has seen no However, vacancy levels in micro- velocity which has restrained them movement in weighted average prices markets of Gurugram such as DLF from increasing prices. which clearly shows a time correction. • The office stock in NCR stood at 144 Cybercity and Golf Course Road have mn sq ft at the end of June 2017, of reached single digits. • Factors such as speculative increase which 119 mn sq ft is occupied stock. in prices over opening up of new • The new completions in NCR have I RE land parcels, announcement of new OFFICE SPACE STOCK AND VACANCY LEVELS – infrastructure projects and investor been dwindling since 2016 and have HALF-YEARLY TREND
interest in micro-markets such as failed to pick up even in the first half STOCK OCCUPIED STOCK VACANCY (RHS) Gurugram had fuelled the overnight of 2017. New completions registered a Project delays that YoY drop of 36% in H1 2017 with only increase in prices during 2010-2011 160 22% plagued the real estate
1.8 mn sq ft entering the market. Fresh 21.5% supply of office space had already market were visible in the 140 21.0% 20.7% 21% bottomed out in 2016 and the story is 20.6% PRICE MOVEMENT IN SELECT LOCATIONS office market as well. As no different in the first half of 2017.
120 20.0% a result new completions • In terms of leasing, NCR saw a 20% in NCR have reached an total of 3.2 mn sq ft of office space 100 LOCATION MICRO-MARKET PRICE RANGE IN H1 2017 12-MONTH 6-MONTH 18.9% all-time low. Only 1.8 mn transactions in H1 2017, registering a 19% (`/SQ FT) CHANGE CHANGE 9% drop compared to the same period sq ft of new completions 80 in 2016. 17.7% hit the NCR market in H1 Yamuna Expressway Greater Noida 3,295–3,557 0% 0% 18% 60 2017 registering a 36% Sector Chi V Greater Noida 3,474–3,514 -1% 0% I RE 17% decline from the same Sector 16 B Greater Noida 3,100–3,400 0% 0% NEW COMPLETIONS AND TRANSACTIONS – HALF-YEARLY TREND 40 period in 2016. Sector 16 C Greater Noida 2,668–3,866 0% 0% NEW COMPLETIONS TRANSACTIONS 16% 20 Sector 78 Noida 5,500–5,627 -1% 1% 8
Sector 70 Noida 4,100–4,101 -7% 0% 0 15% Sector 117 Noida 4,800–4,880 0% 1% 7 H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 Sector 143 B Noida 3,970–5,200 0% 1% 6 Source R Sector 37 Gurugram 4,200–5,600 0% 0%
Sector 49 Gurugram 7,700–10,200 0% 0% 5 2. SECTOR ANALYSIS Sector 67 Gurugram 9,100–9,200 0% 2% • The proportion of BFSI in its total leased mn sq ft Sector 79 Gurugram 4,200–6,200 -2% -2% 4 office space in NCR has dropped by a striking 80% in H1 2017. The sectors Sector 82 Gurugram 3,700–5,900 -1% -1% 3 average transaction size also dropped NH-24 Bypass Ghaziabad 2,842–3,000 1% 1% from 21,196 sq ft in H1 2016 to a mere 14,919 in H1 2017. Some of the major Raj Nagar Extension Ghaziabad 2,884–2,900 -3% -1% 2 transactions in this sector were from Crossings NH24 Ghaziabad 3,200–3,300 -1% 1% companies such as HDFC Ergo, RBL Sector 37 Faridabad 4,704–7,200 13% 1% 1 Bank and Dena Bank in Connaught Place, Delhi. Sector 75 Faridabad 2,500 – 3,500 -20% 0% 0 • The main driver of office space in NCR Sector 76 Faridabad 2,720–2,900 0% 0% fails to impress in H1 2017 as well even
H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 though there is a YoY 14% uptick in the S R total space taken up by the sector. The Source: Knight Frank Research 116 117 RESEARCH INDIA REAL ESTATE
share of IT/ITeS is on a decline from I RE 3. DEAL SIZE ANALYSIS 2014. Factors such as consolidation, SECTOR-WISE SPLIT OF TRANSACTIONS SELECT TRANSACTIONS cloud computing, automation and • The average transacted space which protectionist policies by developed had come down significantly to 19,850 45% countries have all contributed to the sq ft in H1 2016 has recovered to 42% slowed growth of this sector. Adding to 41% 27,300 sq ft in H1 2017. OCCUPIER BUILDING LOCATION APPROX AREA (SQ FT) this the SEZ supply in NCR is in short 40% • Gurugram yet again led the tally of the Amazon Unitech Infospace Sector – 62, Noida 200,000 supply and we believe that the slump 36% number of deals with 58% of the total in leasing is a temporary phase for the 35% Hi Pad Dayal Tower Sector – 63, Noida 150,000 34% 105 deals in H1 2017, followed by SBD IT/ITeS sector. Some of the noteworthy Delhi and Noida with 22 and 16 deal Google Rolta Tower Udyog Vihar 1, Gurugram 140,000 transactions in this sector have been 30% 29% conversions respectively. Locations
28% AECOM SP Infocity Udyog Vihar – 1, Gugranur 66,000
Google in Gurugram and Hi Pad in 28% such as Saket Aerocity in SBD Delhi Noida. Honeywell Unitech Trade Center Sushant Lok, Gugugram 65,000 25% and sector 62 in Noida were among the • The Other Services sector accounted most preferred locations for occupiers Pay U Bestech Business Tower Sohna Road, Gurugram 65,000 for 42% of the total office space 21% in this half. Skootr Building 9 DLF Cybercity, Gurugram 45,000 demand in H1 2017, which is almost 20% at par with the H1 2016 levels. Some 17% International Finance Corporation World Mark– 3 Aerocity, SBD Delhi 38,000 of the large transactions in this sector 15% I RE
13% AVERAGE DEAL SIZE AND NUMBER OF DEALS Awfis Lotus Business Park Noida Greater Noida Expressway, Noida 30,000 include PayU, Gartner, Amazon and Ameriprise Financial. 10% AVERAGE DEAL SIZE (SQ FT) HDFC Argo Konnectus Minto Road, CBD Delhi 23,000 8% • The share of manufacturing in the total NUMBER OF DEALS (RHS) NDTV Good Earth Business Bay Sector – 6, Noida 20,000 transacted pie of H1 2017 stands at 5%
34% compared to 29% in H1 2016. 3% 40000 200 Aramco Two Horizon Center Golf Course Road, Gurugram 20,000 The sector registers a 6% increase in 0% the total transacted space in H1 2017 Accenture World Mark – 3 Aerocity, SBD Delhi 18,000 BFSI
compared to the same period in 2016. IT/ITeS Demand from the sector has seen a H1 2016 Kone Elevator India Private Limited Discovery Tower Sector – 62, Noida 12,000 steady increase post the Make in India H2 2016 30000 150
H1 2017 OTHER SERVICES campaign. Some of the prominent MANUFACTURING Dena Bank Konnectus Minto Road, CBD Delhi 7,000 transactions in the manufacturing S R sq ft
Number AIS Research Tapasya Corporate Heights Noida Greater Noida Expressway, Noida 7,000 sector include Vivo Mobile, Stryker in Note: *BFSI includes BFSI Support Services
Gurugram and Mitsui & Co in Aerocity in 20000 100 Source: Knight Frank Research SBD Delhi.
The share of IT/ITeS 10000 50 is on a decline from 2014. Factors such as 4. BUSINESS DISTRICT ANALYSIS consolidation, cloud 0 0 computing, automation 3.5 3.8 3.2 BUSINESS DISTRICT MICROMARKETS
and protectionist policies H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 mn sq ft mn sq ft mn sq ft CBD Delhi Connaught Place, Barakhamba Road, Kasturba Gandhi Marg and Minto Road by developed countries S R have all contributed to H1 2016 H2 2016 H1 2017 SBD Delhi Nehru Place, Saket, Jasola, Bhikaji Cama Place, Mohan Cooperative and Aerocity the slowed growth of this Gurugram Zone A M.G. Road, NH-8, Golf Course Road and Golf Course Extension Road sector. Adding to this the Gurugram Zone B DLF CyberCity, Sohna Road, Udyog Vihar and Gwal Pahari SEZ supply in NCR is Gurugram Zone C Manesar in short supply, and we Noida Sectors 16, 18, 62, 63 and the Noida–Greater Noida Expressway believe that this slump Faridabad Sector Alpha, Beta, Gamma and Tech Zone in leasing is a temporary phase for the IT/ITeS sector. 118 119 S S A R S S S SONEPAT S S R A E S H S A S S S C S S H S A S R R S A R R S R S H
C S S R A S A BAGHPAT S R R S S S S H R R S A S S S A H R S S S S S A S C HAR H A S S A S S H C S H R C NARELA S S S S A A S R S S S A S S R H S R MODINAGAR R
AUCHANDI S S R A C E H H RESEARCH A INDIA REAL ESTATE S R S H R S S S H S H A H R E R A S C NATIONAL CAPITAL BUSINESS DISTRICT MAP S S C S H S S S S S C C C S A S S A S A R ROHINI S A S C S R S S S S S S H R S S C S S S S S H A R S S S S S A C S S AZADPUR H A C S S R E S S S S A S R AHA R ARH ASHOK VIHAR SHAHDARA R S S A H C A R S SAHIBABAD S A GHAZIABAD R CHANDNI S S CHOWK C S S R CONNAUGHT PLACE A S R H H R C C E C H H S A S JANAKPURI C C S C R C E R INDIA NAJAFGARH C MAYUR VIHAR R S GATE R S R S DELHI C R E R S S R S A CANTONMENT A S C C DWARKA E S S S S S S S A S S S S R S A S C C S R R S S S A R OKHLA C E S S S C S S DHANSA S S H A S S HAUZ KHAS GREATER S S S KAILASH C S C C NOIDA S R S S H S R KAPASHERA S S S E R S C R S A S S C S C S E S S S C S S C S S R S S S GREATER NOIDAS A S S S S S C C S A A S C C H A S S S R R S S PARI E S A A CHOWK H A C C E S S S C AR H GURUGRAMS H A AR S A S S S S ARAJIV CHOWK S S A S S A S H S S S S S S S C S S H S S S S S S S S S S S S S S R H S S S S S S S S S A E S A S S S S FARIDABAD S S S A S S S S A S A S A A ESAR S R C S R A S S S S S A S S A A R S S S BALLABHGARH 120 121 S S S S R C S R C A A S C S A S A A S S A S S S S A S C S A S S H S R C S S S C RESEARCH INDIA REAL ESTATE
• Gurugram yet again emerged as the I RE 5. RENTAL TREND I RE Gurugram yet again emerged most preferred office market in NCR in BUSINESS DISTRICT-WISE TRANSACTION SPLIT WEIGHTED AVERAGE RENTAL MOVEMENT The stable pace of H1 2017. It accounted for 55% of the as the most preferred office • The new completions in NCR have dried absorption and the H1 2016 H1 2017 total transaction pie of 3.2 mn sq ft. up and only 1.8 mn sq ft was pumped 78 market in NCR in H1 2017. More than half of the leasing activity in 70% into the market in H1 2017. Just as the shrinking supply has on 76 Approximately 55% of the the business district was concentrated residential sector even the office market one hand nudged down 74
in locations such as DLF Cybercity, 62% total transacted space faced delayed projects that brought vacancy levels to 17.7% Golf Course Road and Golf Course 60% in this supply crunch in NCR. Also, 72
of 1.7 mn sq ft here was 55% in H1 2017 compared to Extension Road. Approximately 55% whatever supply has been coming up in 70 of the total transacted space of 1.7 the past one year has been in peripheral 20.6% in H1 2016 and in the micro-markets of 50% 68 mn sq ft was in these micro-markets. DLF Cybercity and Golf areas of Greater Noida which has failed have also created upward Some of the prominent occupiers who to attract the occupiers. Another factor 66 Course Road. Some of the leased space in Gurugram in H1 2017 64 pressure on rentals. 40% that is of major concern to the market
are PayU, AECOM, Tower Research, (INR/sq.ft./month) prominent occupiers here in is the lack of good quality supply. The 62 Rentals across business Gartner, Google and Honeywell. occupiers are looking for good quality H1 2017 are PayU, AECOM, 60 districts have firmed up 30% 29% buildings with ready infrastructure and • Noida registered a 14% increase in the Tower Research, Gartner, amenities which is currently in short 58 in H1 2017 with occupiers
total transacted space in H1 2017 com- 23% supply. 56 Google and Honeywell. pared to the same period in 2016. With willing to pay more for 20% this increase in the leasing activity, the • This lack of quality office space has put 54 quality office buildings. 15% percentage share of Noida in the total 52 12% an upward pressure on rentals and has 10% office take up has also gone up to 29% pushed the weighted average rental 50 in H1 2017 from 23% in H1 2016. values from `70 per sq ft per month in 2% H12016 H12014 H22014 H12015 H22015 H22016 H12017 1% H1 2016 to `75 per sq ft per month in 0% 0% • Known for its options for IT/ITeS’s 0% 0% 0% H1 2017 registering a YoY increase of back office, the announcement of a Source R TER CBD - DELHI 7%. NOIDA new airport at Jewar in Greater Noida NOIDA GRE A ARIDABAD
is set to increase the attractiveness of F SBD - DELHI GURUGRAM
Noida as an office market. The Central Source R BUSINESS DISTRICT-WISE RENTAL MOVEMENT Government has given its final approval for a greenfield international airport at Jewar which is expected to finish its first phase in 5–6 years. The government BUSINESS DISTRICT RENTAL VALUE RANGE IN H1 12-MONTH CHANGE 6-MONTH CHANGE has already set aside 3,000 hectares 2017 (`/SQ FT/MONTH) for this project and once operational CBD Delhi 214–350 4% 0% the airport is expected cater to 30 – 50 million passengers a year. The coming SBD Delhi 93–163 1% 0% of the airport will give a major boost Gurugram Zone A 106–165 12% 6% to the office market in Noida, which was lagging behind Gurugram due its 3.5 3.2 Gurugram Zone B 72–134 8% 6% distance from the airport. Some of the Gurugram Zone C 25–35 0% 0% major transactions in Noida in H1 2017 mn sq ft mn sq ft Noida 44–70 9% 3% are Amazon, Awfis, Paytm, Hi Pad and H1 2017 Norgen. H1 2016 Source: Knight Frank Research • Leasing activity in CBD Delhi was steady and concentrated around Connaught Place on Minto Road while Aerocity and Saket were the most pre- ferred micro-markets in SBD Delhi. No- tably so, most of the leasing in Aerocity was concentrated in Bharti Worldmark. Some of the notable transactions in this area involve International Finance Corporation, Accenture, Haliburton and Duff & Phelps 122 123 RESEARCH INDIA REAL ESTATE
to the connectivity between Noida and of this micro market. The only airport in in infrastructure and competitive office Greater Noida once the route is extended Delhi NCR, Indira Gandhi International rentals, it is the lack of quality office from the existing Noida City Centre station Airport in Delhi, is approximately 50 km spaces and the distance from the airport to Pari Chowk, in Greater Noida. The link, from the Noida–Greater Noida Expressway. that is slowing the pace of movement of which is slated to be completed by early It could take anywhere between 2–2.5 NOIDA-GREATER NOIDA offices in the corridor. In this regard, the 2018, will provide an alternative mode of hours or more during the peak hours of recent announcement of a new airport travel for the workforce. morning and evening traffic to commute at Jewar in Greater Noida will add to the from the Noida–Greater Noida Expressway EXPRESSWAY attractiveness of Noida as an office market to the airport. On the other hand, it takes which will have a positive reverberation on COMPETITIVE RENTALS 30–40 mins to cover a distance of 16 km the residential market as well. The Central WHAT IS STOPPING THE OCCUPIER? from Golf Course Road in Gurugram to Apart from seamless connectivity, Government has given its final approval for the airport. It is clearly a choice that the competitive rentals in the range of `35–55 a greenfield international airport at Jewar - BY ANKITA SOOD occupiers, especially corporates, make per square feet per month give this corridor which is expected to finish its first phase in while setting up their offices along the an added advantage over other similar 5–6 years. The government has already set t is an established fact that the two Noida–Greater Noida Expressway. locations in Delhi NCR like DLF Cyber City, aside 3,000 hectares for this project and stalwarts of the Delhi NCR office where rentals are in the range of `110–120 once operational the airport is expected market are Gurugram and Noida and I per square feet per month and Noida, cater to 30–50 million passengers a year. they monopolise 75% of the current office QUALITY OFFICE SPACE where rentals range between `45–70 per The coming of the airport will give a major stock of 144 mn sq ft. Both these micro square feet per month. Companies such There is a dearth of quality office boost to the office market in Noida, which markets are magnets for employment as SafeNet, IGATE, Genpact, Jubiliant space along the Noida–Greater Noida was lagging behind Gurugram due its and infrastructure in Delhi NCR, and Foodworks Ltd, NEC, Dell and Newgen Expressway to attract occupiers willing to distance from the airport. their prominence is evident from the are some of the major occupiers on this pay higher rentals. The Expressway is yet fact that they absorb 85–90% of the Also, development of good quality office stretch, with transactions ranging between to see state-of-the-art office space, such total annual offtake of Delhi NCR. Good stock is critical for speeding up the pace of 60,000–90,000 sq ft. as Bharti Worldmark at Aerocity in Delhi connectivity and robust infrastructure movement of companies along this stretch. or One Horizon Center on Golf Course attracted occupiers to set up base in Road in Gurugram, which commands the these markets, thus creating a plethora of READY RESIDENTIAL PRODUCT highest office rentals in NCR. By virtue of white-collar employment opportunities. their location and building specifications, In the last few years, Gurugram has taken The Expressway has a ready-to-move-in these office spaces command rentals in over the lead from Noida, in terms of residential catchment, especially in sectors the range of `150–250 per square feet per supply and absorption of office space in 93, 94, 137, 143 and 168. Unlike a few years month. NCR. Whereas Gurugram has hubs like back, when the stretch was perceived It is an established fact DLF Cybercity, Golf Course Road and as distant and uninhabitable, today, the Noida–Greater Noida Expressway boasts that the two stalwarts Sohna Road, Noida has not been able EASE OF DOING BUSINESS to attract and garner the same occupier of being one of the most developed of the Delhi NCR office interest for its 24-km, six-lane highway, corridors in Delhi NCR with ready social As per our survey, occupiers have rated market are Gurugram popularly called the Noida–Greater Noida and physical infrastructure in the form of Gurugram higher than Noida on the ease and Noida and they schools and hospitals and connectivity. of doing business parameter. Occupiers Expressway. monopolise 75% of the There are a large number of property believe that governance issues are better options on this stretch that run in the range taken care of in Gurugram than in Noida. current office stock WHAT’S GOING FOR THE of `3,800–5,900 per sq ft, even the rental We believe that authorities, in Noida, of 144 mn sq ft. Both EXPRESSWAY? value in this corridor is comparatively low should take cognisance of this fact and these micro markets are as compared to the developed stretches in improve the perception, of the micro SEAMLESS CONNECTIVITY magnets for employment Gurugram. market. and infrastructure in The singularity of this corridor is in its Delhi NCR, and their seamless connectivity with Delhi through the Delhi Noida Direct (DND) Flyway, which WHAT IS GOING AGAINST THE THE POTENTIAL GAME CHANGERS prominence is evident will be augmented further by the upcoming EXPRESSWAY? from the fact that they Having delved into the strengths and 30-km Noida–Greater Noida Metro link. The missing airport:Even though there a lot weaknesses of the corridor, it can be absorb 85–90% of the Construction work on this metro route is of factors that work for the Expressway, the said that though the Noida–Greater total annual offtake of in progress, and it will add immense value lack of easy access nullifies the advantages Noida Expressway has upped its game Delhi NCR. 124 125 RESEARCH INDIA REAL ESTATE
REAL ESTATE DYNAMICS AND THE Pune’s office market is distributed broadly INFRASTRUCTURE across the east and west zones. Currently, more than 80% of the city’s office space The residential catchments of Pune are stock is accounted for by these two zones, Spread across the spread across the length and breadth while the remaining is spread across the of the city. We take a look at the major limits of more than one central, north and south zones. This means residential segments and also the office civic body, this project that more than 80% of the city’s white- sectors to understand the need for urban will enhance the north- collared workforce commutes to either the transport that is affordable, convenient and East or West of the city. south connectivity contemporary. through the PCMC- Swargate corridor Unlike its cousin city Mumbai, Pune’s Central Pune, with residential localities and the east-west suburban train network is not the such as Koregaon Park, Dhole Patil connectivity through commuting option of choice. The city Road, Model Colony and Kothrud, is is also not equipped with metro rail or Vanaz-Ramwadi the commercial heart of the city, with monorail connectivity. While there is a corridor. numerous corporate offices located in the network of the bus rapid transit system central business district (CBD) areas of (BRTS), the BRTS network does not do Bund Garden Road, M. G. Road, Deccan, justice to this mass movement of the Senapati Bapat Road and Shivajinagar. population. The biggest challenge that the Neighbourhoods such as Katraj, Kondhwa, city currently faces is the absence of a NIBM Road and Warje in South Pune are PUNE PLAYING mass rapid transit system (MRTS) because affordable alternative to Central Pune for of which a large section of the workforce home buyers . However, they lack a strong either has to travel via private vehicles or CATCH UP WITH THE employment appeal. employer-provided transportation to reach their workplaces. Metro rail as an MRTS has been a long pending demand of the MRTS PUSH North Pune, with major residential localities city. The upcoming metro rail plan is a push such as Pimpri, Chinchwad, Nigdi and in this direction. The Phase 1 shall have Moshi are primarily industrial areas with a route of 31.2 km, out of which the first various automobile and auto ancillary as corridor will run from PCMC to Swargate, - BY VIVEK RATHI well as engineering industries located here. a distance of 16.5 km, and the subsequent The twin towns of Pimpri and Chinchwad corridor will run from Vanaz to Ramwadi, THE CANVAS OF PUNE CITY AND absence of a single, unified planning host the manufacturing units of some of which is a length of 14.6 km. Spread across THE LARGER METROPOLITAN authority for the metropolitan region India’s leading automobile companies, the limits of more than one civic body, REGION has led to an inordinate delay in the such as Bajaj Auto, Tata Motors, Force this project will enhance the north-south execution of various infrastructure projects. Motors and DaimlerChrysler. On the other the residential Pune’s urban agglomeration, also known connectivity through the PCMC-Swargate However, last year, the Government of hand, East Pune, with anchor localities like catchments of as the Pune Metropolitan Region (PMR), corridor and the east-west connectivity Maharashtra finally notified the formation Viman Nagar, Kharadi, Wagholi, Hadapsar is spread over 3,500 sq km and consists through Vanaz-Ramwadi corridor. Thus, Aundh, Baner, Wakad, of a regional development body, called the and Dhanori, has been developed and of the Pune Municipal Corporation (PMC), the proposed metro rail network will come Hinjewadi and Pune Metropolitan Region Development much sought-after residential market on Pimpri Chinchwad Municipal Corporation as a big relief to the commuters in the Bavdhan make up the Authority (PMRDA). PMRDA’s integrated account of the presence of a large number (PCMC), Pune Cantonment and Kirkee region. It is only in December 2016 that the development plan (DP) for the entire region of IT/ITeS offices and social infrastructure. action centre market (Khadki) Cantonment. According to Census state government gave its approval to the will replace the individual development Similarly, the residential catchments of of West Pune. This 2011, the total population of the PMR was project, which is targeted to be completed plans of the various local bodies, including Aundh, Baner, Wakad, Hinjewadi and has been possible 5.75 mn. in an ambitious timeframe by 2021. While the PMC and PCMC. The PMRDA may Bavdhan make up the action centre market this will set the ball rolling on the city’s mainly on account of a also be responsible for major infrastructure of West Pune. This has been possible most significant infrastructure parameter, robust presence of IT/ projects, such as the metro rail and outer mainly on account of a robust presence of % The development of the PMR is undertaken the ultimate success will depend on how 80 ITeS companies in the ring roads; the benefit of which accrues IT/ITeS companies in the vicinity. by various agencies, such as the PMC, well and how fast the next phases of the beyond the conventional city limits. More than 80% of the city’s white-collared vicinity. PCMC, the Public Works Department metro rail become a reality. workforce commutes to either the East or (PWD) and others. Until last year, the West of the city. 126 127 RESEARCH INDIA REAL ESTATE
and Development) Act 2016 by 2. MARKET SPLIT OF TICKET-SIZE SPLIT ANALYSIS notifying the law as well as putting the RESIDENTIAL LAUNCHES OF LAUNCHED UNITS regulator in place on 1st May 2017. • In terms of launches, East and South This single largest change in history H1 2016 H2 2016 H1 2017 Pune were the largest markets in of real estate industry will protect the the H1 2017. In East micro-market, <2.5 mn 27% 21% 54% consumer and provide a level playing localities like Kharadi, Wagholi, field to all stakeholders by increasing 2.5-5 mn 47% 49% 31% Hadapsar and Keshav Nagar were the the transparency and governance largest contributors. 5-7.5 mn 19% 18% 5% standards in the real estate industry. 7.5-10 mn 5% 3% 9% However, between 1st May 2017 • In Pune’s southern micro-market, and 31st July 2017 the window for Pisoli saw the largest share of launches 10-20 mn 1% 8% 1% registration of projects, any project in one project. The other localities in >20 mn 1% 0% 0% whether new or on-going ones were the south micro-market have been barred from advertising, marketing or Katraj, Undri, and NIBM Road. selling without registration with RERA. Source: Knight Frank Research With developers re-directing efforts from sales to RERA compliance, pace I RE of launches was lower in this period. MICRO-MARKET SPLIT OF LAUNCHED UNITS • The government’s efforts towards
H1 2016 H2 2016 H1 2017 ‘Housing for All’ agenda and incen- tives offered to fulfil this objective have
With developers 50% started to reflect in the supply side response. The ‘less than 2.5 mn’ ticket re-directing efforts from ` 45% size saw its launches share increase sales to RERA compliance, from 27% in H1 2016 to 54% in H1 pace of launches was lower 40% 2017. PUNE in H1 2017 35% • With residential property price around 31% 31% `3,500-4,500 per sqft the markets such 30% 28% 28%
28% as Pisoli, Chikhali, Kane Phata, Talwade 25%
24% saw the maximum launches in the ‘less 25% than ` 2.5 mn’ ticket size. 22%
• In the backdrop of these landmark 21% 19% RESIDENTIAL MARKET 20% 19% events this performance has also been 16% 1. PUNE RESIDENTIAL dictated by the developers baggage of 15% MARKET LAUNCHES, SALES I RE PUNE MARKET TRENDS - HALF-YEARLY unsold inventory, which until a year ago AND PRICE TRENDS was mainly in the under construction 10%
LAUNCHES SALES WT. AVG. PRICE (RHS) category. However, now ‘ready for 6% 5% • After the tumultuous H2 2016 when 25000 5000 possession’ apartments are also
available across markets. 1% 1% the demonetisation needle punctured 0% the market pulling down residential In Pune’s southern • The government has been paying CENTRAL EAST WEST NORTH SOUTH sales and launches by 38% and 19% micro-market, Pisoli 20000 4900 focused attention to the affordable Source R 4860 4860 respectively, H1 2017 has ushered as 4860 housing segment of the realty market. 4835 saw the largest share of an eventful period. 4819 Housing loan interest rates, at around launches in one project. • In H1 2017, launches stood at 7,905 8-8.5%, are at the lowest level last 15000 4800 seen in 2009 and developers have The other localities in units and sales at 17,480 units i.e. 4747 launches lower by 9% and sales been forthcoming in offering freebies south micro-market Number of units ` \sq ft and discounts to attract demand. As higher by 11% compared to H1 2016. have been Katraj, Undri, In comparison to the demonetisation 10000 4700 a consequence of these developments period of H2 2016, the launches are housing sales have seen 11% and NIBM road. 4614 sequentially 30% lower and the sales a improvement in H1 2017 compared to 8,713 11,300 7,905 modest 4% higher. 5000 4600 H1 2016.
• The first two months of H1 2017 saw UNITS UNITS UNITS consumers and the industry as a whole grapple with the aftermath 0 4500 H1 2016 H2 2016 H1 2017 of demonetisation. Further, the
state of Maharashtra was the first to H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 implement the Real Estate (Regulation Source R 128 129 RESEARCH INDIA REAL ESTATE
PUNEA MICRO-MARKETB C MAP D E F G H I J 3. MICRO-MARKET WISE RESIDENTIAL SALES
Dehu o Shiroli T
d
a
o
R
T o Khandala k
i
h MICRO-MARKET LOCATIONS
s
a
N
1 - 1
T o Khandala
e
n
u P Chimbhali Central Koregaon Park, Boat Club Road, Erandwane, Deccan, Kothrud, Model Colony
NH 4 East Viman Nagar, Kharadi, Wagholi, Hadapsar, Dhanori, Chincholi
M u Chikhali m
b 0 a Mumbai Pune Bypass Road 5 West Aundh, Baner, Wakad, Hinjewadi, Bavdhan, Pashan i - P y u a
n w e h
E g x i
p H
re l
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sw n North Pimpri, Chinchwad, Moshi, Chikhali, Chakan, Talegaon o
a i y t
a 2 MoshiN 2 Nigdi Chinchwad South Kondhwa, Ambegaon, Undri, Dhayari, Warje, Sinhgad Road Ravet Akurdi
Pimpri National Highway 4 Bosari • Looking at the infrastructure dynamics
I RE of the city, absence of a mass rapid I RE Tathawade 0 MICRO-MARKET SPLIT OF SALES
5 QUARTERS TO SELL (QTS) UNSOLD Aundh Road y a transit system (MRTS) is the the biggest Pimpri w INVENTORY ANALYSIS h
g 3 i Dighi 3 H
l NH 4 a n challenge for the city. A large section ti o H1 2016 H2 2016 H1 2017 PUNE Pimpri Na 10 Chinchwad of the workforce either has to travel via Rahatani private vehicles or employer-provided Dighi 50% 9 Wakad transportation to reach their workplac- Hinjewadi 45% es. Hence there is a strong preference 8 Pimple Pune Kalas International to choose residential properties in the Pimple Dapodi Dhanori Airport Gurav 4 Nilakh To Koregaon 4 Bhima 40% proximity to the place of work. 7 Viman Wagholi Mahalunge Khadki Nagar Mumbai Pune Bypass Road 35% • Hence, the demand was spread across 6
Road Nagar micro-markets. West and south markets Nande Baner Aundh Ganeshkhind Chande N Yerwada a Kharadi t 30% 5 i Sus o contributed to 27% and 28% respec- n 28%
a 28% l
H NO OF QUARTERS 27% i 27% g h w tively. Ashok a 25%
y
Kalyani 25% 4 24%
25% 24% 4
G 23% a Nagar ne Nagar 23% s d hk a h o 5 in 5 d R
Pashan 21% R a o Sangamvadi ad w h
d 20% n Mundhwa u 20% 3 Gokhalenagar Bund Garden Road Kavadewadi KoregaonM 4. MARKET HEALTH
Park Annexed Lavale a
o
R
s
s 2 a 15%
Bavdhan p
y B
JM Road i
d d a
a Ghorpadi
Pirangut r • The quarters to sell unsold inventory
o Pune a
R h
. K
G
.
M 10% 1 Paud Road Kothrud (QTS) is the number of quarters required Sadashiv Solapur Road to exhaust the existing unsold inventory Paud Road Peth Hadapsar 6 Wanowri National Highway 9 6 5% 0
N Pune
a in the market. The existing unsold in-
t i
o To Uruli Kanchan 2% 2% 2%
n Contonment
a l
Parvati
H Bibvewadi i
g ventory is divided by the average sales h Jun-14 Jun-15 Jun-16 Jun-17 Warje Mar-15 Mar-16 Mar-17
Darshan w 0% Sep-14 Dec-14 Sep-15 Dec-15 Sep-16 Dec-16
a
y
4 velocity of the preceding eight quarters National Highway 4 CENTRAL EAST WEST NORTH SOUTH Source R Vadgaon Phursungi in order to arrive at the QTS number Budruk Source R Shivane KondhwaMohamadwadi for that particular quarter. A lower QTS d a Khurd o R d a Undri w s indicates a healthier market. a S Dhankawadi Katraj 7 Narhe Kondhwa 7 • Until a year ago the developers bag- Dhayari Budrukh The developers Phata Wadaki gage of unsold inventory was mainly Pisoli Gaon in the under construction category. baggage of unsold
Dive Ghat Road However, now ‘ready for possession’ M inventory, until a year u Jambhulwadim b a i P apartments are also available across u n e ago was mainly in the B y
p
a
s markets. s
R T
8 o o Dive Gaon 8 a
d under construction 15,688 16,800 17,480 • Of the unsold inventory of around
N
a t category. However, now i o n a 40,000 units, east, eest and north l H ig h w a y UNITS UNITS UNITS ‘ready for possession’ 4 micro-markets are the largest contrib- Kondhwa Road utors. The share of ready possession apartments are also Aatekar Vasti Gogalwadi Patharwadi H1 2016 H2 2016 H1 2017 inventory, which indicates that the sales available across
y Vasvewadi a schedule has stretched far beyond the 9 w 9 h g i
H Chambhali To Satara
e r markets. o construction schedule of the project,
l a
a r
g
a t
n a
a S
B
o
e has increased. Of the available inventory T
n
u P in each market, south and north Pune A B C D E F G H I J 130 131 RESEARCH INDIA REAL ESTATE
markets have higher number of such PRICE MOVEMENT IN H1 2017 I RE ready possession stock. MICRO-MARKET-WISE QTS VS AGE OF INVENTORY • The Pune weighted average price has • Virtually no market has seen a price • The Pune residential market has seen stagnated at `4,860 per sqft. for the rise over the last six months. Some ENTRAL EAST EST N RT S T a receding unsold inventory level. From last one year implying no price growth localities have seen a marginal the peak of around 71,000 units in H1 13 for buyers of residential property. This price decline to the tune of 1 to2%. 2014, the latest inventory level is around has weakened the investment premise Developers have also been forthcoming 40,000 units. Consequently, the QTS of the residential property asset class. in offering freebies and offers to attract
has also come down to an all-time low 12 demand. of 4.5 quarters.
• Amongst the micro-markets, the central PRICE MOVEMENT IN SELECT LOCATIONS Pune market on account of being the 11 premium market has the highest QTS of 7.2 quarters.The age of unsold inventory is also among the highest in the city, 10 LOCATION MICRO-MARKET PRICE RANGE IN H1 2017 12-MONTH 6-MONTH indicating that a large number of previ-
ously launched projects are still unsold IN ARTERS A E NS LD IN ENT R (`/SQ FT) CHANGE CHANGE in this micro-market. 9 Koregaon Park Central 13,000 - 17,000 -1% -1% 3 4 5 6 7 8 • The south micro-market with localities Source R TS Kothrud Central 7,500 - 13,000 -1% -1% such as Kondhwa, Ambegaon, Undri Erandwane Central 13,500 - 18,000 -1% -1% and Warje have the lowest QTS of 3.3 UNSOLD MICRO-MARKET quarters. INVENTORY Boat Club Road Central 14,500 - 19,500 0% 0%
Central 1,108 Kharadi East 5,300 - 6,300 2% 0%
East 10,597 Wagholi East 3,500 - 4,600 2% 0%
West 10,616 Dhanori East 3,900 - 4,800 0% 0%
North 10,994 Hadapsar East 4,600 - 6,000 3% 0%
South 6,826 Aundh West 7,800 - 9,500 3% 0%
PUNE 40,141 Baner West 5,600 - 8,000 0% 0%
Hinjewadi West 4,800 - 5,900 5% 0% Source: Knight Frank Research Note: The size of the bubble indicates the quantum of unsold inventory Wakad West 5,400 - 6,200 -1% -1% Moshi North 3,700 - 4,300 0% 0%
Chikhali North 3,500 - 4,100 0% -2%
Chakan North 3,000 - 3,400 3% 0%
Ambegaon South 4,400 - 5,500 -1% -1%
Undri South 3,900 - 4,800 1% -1%
Kondhwa South 4,600 - 5,700 1% -1%
Source: Knight Frank Research 132 133 RESEARCH INDIA REAL ESTATE
OFFICE MARKET
1. PUNE OFFICE MARKET 2. SECTOR ANALYSIS I RE STOCK, NEW COMPLETIONS, I RE The headwinds that OFFICE SPACE STOCK AND VACANCY LEVELS – A trend emerges here TRANSACTION AND VACANCY HALF-YEARLY TREND SECTOR-WISE SPLIT OF TRANSACTIONS the Indian IT industry TRENDS as we see firms like STOCK OCCUPIED STOCK VACANCY (RHS) • In H1 2017, the share of the IT/ITeS H1 2016 H2 2016 H1 2017 is facing, due to the industry was the highest at 60%– a 70% Awfis and Smartworks anti-outsourcing wave in 70 25% decline in comparison to the same pe- that provide co-working • The Pune office market is witnessing 64% riod last year; the manufacturing sector
the developed markets an ironical situation on account of 60% space taking up office on the other hand has suffered with a 60%
the demand-supply dynamics. The 60 20% and the automation significant decline in share. The BFSI space in markets headwinds that the Indian IT industry 20% drive, has been a factor. sector share is marginally lower at 12% like Nagar Road and is facing, due tothe anti-outsourcing
50 16% in H1 2017 compared to 14% in H1 50% However, shortage of wave in the developed markets and the Hadapsar.
15% 2016. automation drive, has been a factor. 44% relevant office supply 15% However, shortage of relevant office 40 • The other services sector has been a for the city’s largest 40%
supply for the city’s largest occupier 11% promising group with its share jumping occupier segment has segment has been a major factor for from 13% in H1 2016 to 22% in H1 33%
30 9.3% the decline in transactions by 12% to 10% 2017. A trend emerges here as we see 8.2%
been a major factor 7.9% 30% 1.8 mnsqft in H1 2017 compared to H1 firms, like Awfis and Smartworks that for the decline in 2016. 20 provide co-working space, have taken 22% transactions. up space in markets like Baner, Nagar • In the case of new completions, H1 5% 20% Road and Hadapsar. The concept of 2017 recorded 1.7 mnsqft, a 35% 10 14% 14%
co-working spaces essentially involves 13%
increase compared to H1 2016. 12%
groups of start-ups, creative con- 10% However, a significant portion of these 10% 9% 0 0% sultants, freelancers and Small and I RE were small projects with a leasable 5% NEW COMPLETIONS AND TRANSACTIONS – Medium Enterprises (SMEs) who share area of less than 0.1 mnsqft, which are HALF-YEARLY TREND H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 workspace and break through ideas, ex- not the ones desired by the city’s top Source R 0% NEW COMPLETIONS TRANSACTIONS pand their business horizon and gain a
occupier industry. BFSI 3.5 fresh standpoint on their own business- IT/ITEs • Since the global financial crisis era of es by dint of sharing workspaces. Such
2008–09, the overall vacancy level in co-working space providers have taken Source R OTHER SERVICES 3.0 the city has been coming down each up as much as 1,28,000 sq ft of office MANUFACTURING year. In H1 2017, the vacancy level space during H1 2017. Note: BFSI includes BFSI support services remained 7.9% compared to 9.3% 2.5 in H1 2016. In the yesteryears, the vacancy level in the market had been
2.0 as high as 28% in 2009.The vacancy
mn sq ft level in locations such as Kharadi, Viman Nagar, Yerwada and Nagar 1.5 Road, which are highly preferred by occupiers, is even lower with absolutely no availability of good quality office 1.0 space. • For the remaining part of the year, we 2.0 1.8 1.8 0.5 expect a similar situation as no major new supply has been lined up.Such mn sq ft mn sq ft mn sq ft a scenario would put pressure on 0.0 occupiers to sign the available quality H1 2016 H2 2016 H1 2017 space. H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017
Source R 134 135 RESEARCH INDIA REAL ESTATE
3. DEAL SIZE ANALYSIS PUNE BUSINESS DISTRICT MAP I RE AVERAGE DEAL SIZE AND NUMBER OF DEALS
• With occupiers cognizant of the AVERAGE DEAL SIZE (SQ FT)
disappearing quality space, in H1 2017, • The largest deals in excess of a 0.1 mn NUMBER OF DEALS (RHS) we saw larger deals taking place and sq ft were from the IT/ITeS sector with 60000 120 consequently, the average deal size companies like Fiserv and TIA increased from 40,000 sqft in H1 2016 Technology taking up spaces. to 47,800 sqft in H1 2017. 50000 100
SELECT TRANSACTIONS 40000 80 Number sq ft OCCUPIER BUILDING LOCATION APPROX AREA 30000 60 (SQ FT) Bhosari
Fiserv Inorbit Nagar Road 255,000 20000 40
TIA Technology WTC Kharadi 132,000 Pimpri Chinchwad Western Union Business Bay Yerwada 91,000 10000 20 SBD NORTH HSBC Business Bay Yerwada 90,000 Hinjewadi Wakad
Amdocs SP Infocity Phursungi 55,000 0 0 PBD WEST BALEWADI Accenture Blue Ridge Hinjewadi 50,000 H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 SBD EAST Awfis Business@Mantri Nagar Road 50,000 Source R Vishrantwadi Nagar Road Baner Yerwada Aundh Kharadi Source: Knight Frank Research SBD WEST Kalyani CBD & OFF-CBDNagar SB Road Bund Garden Road Deccan Bavdhan Kothrud CAMP PBD EAST 4. BUSINESS DISTRICT ANALYSIS Satara Road Hadapsar BUSINESS DISTRICT MICROMARKETS SBD SOUTH Wanowrie
CBD and offCBD Bund Garden Road, S. B. Road, Camp, Deccan, University Road, Shankar Sheth Road Bibwewadi Phursungi SBD East Kalyani Nagar, Yerwada, Nagar Road, Vishrantwadi, Hadapsar
PBD East Kharadi, Phursungi, Wanowrie
SBD West Wakdewadi, Aundh, Baner, Kothrud, Balewadi
PBD West Hinjewadi, Bavdhan, Wakad Major Roads Railway Line Source: Knight Frank Research Proposed Metro Corridor I Proposed Metro Corridor II • SBDEast, which includes locations IT occupiers because of the lower such as Kalyani Nagar, Yerwada, Nagar rentals here. In the absence of large- Road and Hadapsar, witnessed a sharp space availability in existing projects, jump in its share of the total transaction occupiers are not going over board for volume, as many big-ticket deals took built-to-suit (BTS) deals on account of place in this micromarket in H1 2017. uncertainty in the operating environment of the IT/ITeS industry. • PBD West, as a market, is generally preferred by large-space requirement 136 137 RESEARCH INDIA REAL ESTATE
5. RENTAL TREND I RE KEY CONTACTS BUSINESS DISTRICT-WISE TRANSACTION SPLIT • With the improving occupancy level
H1 2016 H1 2017 in the market, the office rents in Pune have been on an ascent for more than ADVISORY, RETAIL & HOSPITALITY INDUSTRIAL & ASSET SERVICES AHMEDABAD 50% Balbir Singh Khalsa five years. The weighted average rent Gulam Zia Balbir Singh Khalsa 47% Branch Director has reached `61 per sqft per month, an Executive Director - Advisory, National Director 45% Retail & Hospitality [email protected] [email protected] increase of 7% compared to H1 2016 [email protected] 40% and 2% compared to H2 2016. CHENNAI 38% Saurabh Mehrotra OFFICE AGENCY Kanchana Krishnan 36% • The lack of significant IT/ITeS supply Branch Director 35% National Director - Advisory Viral Desai will keep occupiers on edge. At the [email protected] [email protected] National Director same time, rent growth fromnow on will [email protected] 30% BENGALURU be moderate, as inter-city comparison Aditya Sachdeva Director - Retail PROJECT MANAGEMENT Shantanu Mazumder 25% will be made between these elevated 24% [email protected] Senior Branch Director rent levels by the cost-conscious IT Deben Moza [email protected] Executive Director 20% occupiers. CAPITAL MARKETS [email protected] HYDERABAD Rajeev Bairathi Samson Arthur 15% 14% I RE Executive Director RESEARCH WEIGHTED AVERAGE RENTAL MOVEMENT Branch Director 12% [email protected] Dr. Samantak Das [email protected] 10% 9% Chief Economist and National Director 8%
7% FACILITY MANAGEMENT [email protected] 70 PUNE
5% Nellie Samuel 5% Executive Director Paramvir Singh Paul [email protected] Branch Director 0% [email protected] 60 SBD SBD PBD PBD EAST EAST WEST WEST In the absence of CBD & OFF-CBD Source R REPORT AUTHORS large-space availability in existing projects, 50 Vivek Rathi Vice President – Research occupiers are not going Pankaj Anup Toppo over board for built- (INR/sq.ft./month) Vice President – Research 40 to-suit (BTS) deals on Yashwin Bangera account of uncertainty Assistant Vice President – Research Sangeeta Sharma Dutta in the operating 30 3.3 1.8 Assistant Vice President – Research environment of the IT/ mn sq ft mn sq ft Ankita Sood ITeS industry. Lead Consultant – Research H1 2016 H1 2017 20 Nibodh Shetty Consultant – Research H12014 H22014 H12015 H22015 H12016 H22016 H12017 Kaushal Vartak Source R Consultant – Research BUSINESS DISTRICT-WISE RENTAL MOVEMENT COPY EDITOR
Soubhik Mitra Content Lead, BUSINESS DISTRICT RENTAL VALUE RANGE IN H1 12-MONTH CHANGE 6-MONTH CHANGE Marketing & Public Relations 2017 (`/SQ FT/MONTH) Deborah Herbert Copy Editor - Advisory Services CBD and off CBD 70–100 2% 1% DESIGN & GRAPHICS SBD East 55–85 5% 2%
SBD West 50–75 4% 2% Mahendra Dhanawade Manager – Graphic & Design, PBD East 45–75 4% 1% Marketing & Public Relations
PBD West 35–48 2% 1%
Source: Knight Frank Research 138 139 COMMERCIAL BRIEFING For the latest news, views and analysis of the commercial property market, visit knightfrankblog.com/commercial-briefing/ RESEARCH
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