INDEPENDENT MARKET RESEARCH REPORT by Cushman & Wakefield India

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INDEPENDENT MARKET RESEARCH REPORT by Cushman & Wakefield India APPENDIX - INDEPENDENT MARKET RESEARCH REPORT By Cushman & Wakefield India This independent market research has been carried out by Cushman & Wakefield India as per the requirements stated by and is addressed to its client, Ascendas Property Fund Trustee Pte Ltd (as Trustee-Manager of Ascendas India Trust). The report expresses Cushman & Wakefield India’s independent opinion and not necessarily that of Ascendas Property Fund Trustee Pte Ltd (as Trustee-Manager of Ascendas India Trust). 31 March 2011 A India: Economic & Commercial Real Estate Overview F Hyderabad Commercial Market Overview 1 India Economic Overview 1 Micro-Market Description 2 Investment Scenario in India 2 Supply, Absorption & Vacancy Trends 3 Overview of IT/ITES Industry in India 3 Supply, Absorption Trends for Office Space in Suburban Market 4 Overview of Office Space Market in India 5 Outlook G The V: Property Analysis 1 Introduction B Bangalore Commercial Market Overview 2 Profile of The V, Hyderabad 1 Micro-Market Description 3 Location & Accessibility 2 Supply, Absorption & Vacancy Trends 4 Tenant Mix 3 Supply and Absorption Trends in PBD for Commercial Space 5 Development Performance 6 Competition Analysis C ITPB: Property Analysis 7 SWOT Analysis 1 Introduction 2 Location & Accessibility H CyberPearl: Property Analysis 3 Tenant Mix 1 Profile of CyberPearl, Hyderabad 4 Development Performance 2 Location & Accessibility 5 Competition Analysis 3 Tenant Mix 6 SWOT Analysis 4 Development Performance 7 Outlook 5 Competition Analysis 6 SWOT Analysis D Chennai Commercial Market Overview 7 Outlook 1 Micro-Market Description 2 Supply, Absorption & Vacancy Trends I Caveats & Limitations 3 Supply, Absorption Trends for Office Space in Suburban Market E ITPC: Property Analysis 1 Introduction 2 Location & Accessibility 3 Tenancy Mix 4 Development Performance 5 Competition Analysis 6 SWOT Analysis 7 Outlook 150 A INDIA: ECONOMIC & COMMERCIAL REAL ESTATE OVERVIEW 1 India Economic Overview India is the world’s twelfth largest economy at market exchange rates and the fourth largest economy when adjusted for purchasing power parity1. With growing urbanisation, 30% of the Indian population currently is city-dwelling and by 2050, the percentage is expected to touch 55%2. Indian economy has been one of the fastest growing economies in the world and has consistently demonstrated a positive growth rate averaging just below 9% over the last five-years3. With the onset of global recession, India’s economy did suffer a visible impact. By the third quarter of 2008, India felt the tremors of the economic meltdown. However, in spite of the meltdown, the estimated Gross Domestic Product (“GDP”) for 2010 – 11 was INR 48,792 billion4 (USD 1,084 billion5) as compared to INR 44,937 billion (USD 998 billion) for 2009 – 10 (+8.6% year on year). The GDP for April, 2010 – December, 2010 was at INR 35,534 billion (USD 789 billion) as compared to INR 32,713 billion (USD 726 billion) for April, 2009 – December, 2009 (8.6% year on year). The projected growth rate of GDP for 2011 – 12 estimated at 9%6 suggests that domestic momentum remains strong for India. There are several progressive indicators for the economy at large, including positive estimates for the GDP, exports and Foreign Direct Investment (“FDI”) for the year ahead. India’s exports during the year 2010-11 amounted to USD 245.8 billion (provisional), as compared to USD 178.7 billion recorded during 2009-10. India’s imports during 2010-11 stood at USD 350.7 billion (provisional), as compared to USD 288.3 billion during 2009-10. Overall, trade deficit for 2010- 11 amounted to USD 104.9 billion (provisional), as compared to USD 109.6 billion during 2009-10. In line with the rebound in global economic activity and trade, India’s exports have registered positive growth rates since November 20097. India’s foreign exchange reserves increased to USD 279.1 billion by March 2010, from USD 252.0 billion as on March 2009 and have further increased to USD 294.0 billion as at January 7, 2011. In the recent times, India has entered into several Free Trade Agreements and Preferential Trade Agreements like South Asia Free Trade Agreement (SAFTA), Global System of Trade Preferences (GSTP), Asia Pacific Trade Agreement (APTA), India-ASEAN FTA and others, with the objective of promoting trade with many countries and regional groupings of which Commonwealth countries are members8. As per the Ministry of Commerce & Industry, Government of India, the country registered exports of USD 164.7 billion (INR 7,516 billion ) during the year April – December, 2010 registering a growth of 29.5% in Dollar terms and 23.4% in Rupee terms over the same period last year9. The Indian banks too have emerged stronger and have made it to the list of ‘Top 500 Global Financial Brands 2009’ with the biggest gainer being HDFC Bank, besides 13 government-run, new entrants. Indian banks have been considered safe and secure with net average NPA of 1% in 2009-10. The Average Capital Adequacy Ratio (“CAR”) of private sector banks improved from 15.23% in FY 2008-2009 to 17.45% in 2009-1010, indicating a strong performance by the Indian banking sector. The Indian Economy is growing at a faster pace after the recent recession; however the rising global commodity and crude oil prices would have an adverse affect on the inflation and trade deficit. Indian economy being second fastest growing economy in Asia with a well established banking system and vibrant trade links, provides a great opportunity for investment in India. 2 Investment Scenario in India According to the World Investment Report 2010, global investment inflows are expected to reach over INR 54 trillion \ (USD 1.2 trillion), INR 58.5–67.5 trillion (USD 1.3–1.5 trillion), and INR 72–90 trillion (USD 1.6-2 trillion) by 2010, 2011, and 2012, respectively. However, majority of the investments are expected to be in the services and primary sectors. According to United Nations Conference on Trade And Development World Investment Prospects Survey 2009 - 2011, India ranked 3rd among global FDI destinations after China and United States (“US”) in 2009, and is expected to remain among the top five most attractive destinations for international investors during 2010-11. Ernst and Young’s 2010 European Attractiveness Survey is another study that ranks India in the top five, where India is the fourth most attractive FDI destination in 2010. According to Department of Industrial Policy & Promotion, Ministry of Commerce and Industry, 1 CIA World Factbook 2010. 2 United Nations. 3 Central Statistical Organisation (CSO), Government of India. 4 Ministry of Statistics and Programe Implementation, CSO. 5 Exchange rate: 1USD = INR 45. 6 Union Budget 2011 – 2012 – Macro Economic Framework Statement. 7 www.eximbankindia.com. 8 http://commerce.nic.in. 9 Ministry of Commerce and Industry, Government of India. 10 A Profile of Banks 2009-10, Reserve Bank of India. 151 APPENDIX - INDEPENDENT MARKET RESEARCH REPORT By Cushman & Wakefield India A INDIA: ECONOMIC & COMMERCIAL REAL ESTATE OVERVIEW (continued) 2 Investment Scenario in India (continued) total FDI11 inflow was recorded at INR 1,165.5 billion (USD 25.9 billion) (up to February 2011), as compared to INR 1,674.0 billion (USD 37.2 billion) during FY 2010. Likewise, investment trends in 9M FY 2011 (Apr – Dec 2010) have been moderate, recording total FDI of only INR 731.712 billion (USD 16.03 billion)13. Mauritius, Singapore and US were the top investing countries in India accounting for 42.2%, 9.4%, and 7.5%, respectively in the cumulative total FDI inflows since Apr 2000-Dec 2010. Country wise cumulative FDI Equity Inflow (April ’00 - Dec ‘10) 2,500 – 42% – 45% – 40% 2,000 – – 35% – 30% 1,500 – – 25% – 20% 1,000 – In INR Billion – 15% (%) of total flow 9% 7% –10% 500 – 5% 4% 4% 4% 2% 2% 1% – 5% 0 – – 0% UK USA UAE Japan Cyprus France Mauritius Singapore Germany Netherlands Source: Ministry of Commerce and Industry 11 Includes equity, reinvested earnings, and other capital. 12 Department of Industrial Policy & Promotion, Ministry of Commerce and Industry. 13 Exchange rate : USD 1 = INR 45. 152 A INDIA: ECONOMIC & COMMERCIAL REAL ESTATE OVERVIEW (continued) 2 Investment Scenario in India (continued) Sector wise cumulative FDI Equity Inflow (April ‘00 - Dec ‘10) 1,400 – – 25% 21% 1,200 – – 20% 1,000 – 800 – – 15% 600 – 8% 8% 7% 7% –10% In INR Billion 400 – (%) of total flow 4% 4% 3% 3% – 5% 200 – 2% 0 – – 0% Power Metal Service Telecom Computer Petroleum Chemical Real Estate Automobile Construction Source: Ministry of Commerce and Industry The service sector accounted for the highest total FDI with cumulative inflow of INR 1,182.7 billion (USD 26.4 billion) from Apr 2000 till Dec 2010 accounting for 21% share of the total inflow. Computer Software & Hardware and Telecommunication sectors ranked 2nd and 3rd in cumulative total FDI inflows (from Apr 2000 till Oct 2010), attracting INR 471.4 billion (USD 10.6 billion) (with a share of 8.5%) and INR 467.2 billion (USD 10.2 billion) (with a share of 8.1%), respectively. Housing & real estate sector attracted INR 420.5 billion (USD 9.4 billion) from Apr 2000 to Dec 2010 (7.4% of the cumulative total FDI inflow). State wise cumulative FDI Equity Inflow (April ‘00 - Dec ‘10) 250,000 – – 40% 35% – 35% 200,000 – – 30% 150,000 – – 25% 19% – 20% 100,000 – – 15% In INR Billion (%) of total flow – 10% 50,000 – 6% 5% 5% 5% 1% – 5% 0 – – 0% Delhi Mumbai Chennai Kolkata Bangalore Ahmedabad Hyderabad Source: Ministry of Commerce and Industry During Apr 2000 to Dec 2010, Mumbai region (which includes Maharashtra, U.T. of Dadra & Nagar Haveli, Daman & Diu) attracted the highest cumulative Equity FDI inflow in India of INR 1,976 billion (USD 44.2 billion) (35% of the cumulative Equity FDI inflow).
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