INDIA’S TOP RESIDENTIAL DESTINATIONS TO INVEST IN Investment Advisory Report November 2012 INVESTMENT advisory REPORT India’s Residential Destinations
This reportLGHQWLƪHVthe INTRODUCTION top residential destinations in the country from the
investment point of view Balancing return with the associated risk is the property is generally done with leverage in the over the nextƪYH focal point of any investment decision. Equity and form of a housing mortgage. This leverage further years (2013-2017) debt are considered to be the mainstream asset increases the potential for earning higher returns FODVVHV+RZHYHUWKHWUDGHRĝEHWZHHQUHWXUQ since the initial equity contribution is a fraction of and risk in both these asset classes is strikingly the property value. GLĝHUHQW:KLOHHTXLW\DVDQDVVHWFODVVLV associated with high returns albeit with a greater From the perspective of risk, property investment risk score as measured by volatility, a relatively fares better because asset price generally stable debt investment comes with a larger remains stable. It has been established that an compromise on returns. investment in real estate based on sound research can seldom go wrong. In the sense that Real estate, the third mainstream asset class, in comparison to an asset class like equity which RĝHUVWKHEHVWFRPELQDWLRQRIUHWXUQVDQGULVN is dependent on several factors related to the From the perspective of return, real estate XQGHUO\LQJEXVLQHVVOLNHSURĞWDELOLW\OHYHUDJH investment in India has garnered superior returns and corporate governance, a real estate in comparison to other asset classes over a long investment is based on the underlying asset. A term. Further, an investment in residential sound research is inherently founded on deep
IMPORTANT TERMS USED IN THE REPORT
We have developed a TERM MEANING
framework built on ‘top- Metropolitan region 7KHXUEDQUHJLRQDVGHĞQHGE\WKHUHJLRQDOGHYHORSPHQWDXWKRULW\ down approach’ in the Zone A Zone is a geographical division of the metropolitan region comprising of several selection of WKHƪYHPRVW localities that possess similar characteristics in terms of access to employment hubs, promising cities and zones connectivity and demography. In most cases, the metropolitan region is divided into 4-5 within them and ‘bottom- ]RQHVWKDWDUHODEHOHGDV&HQWUDO6RXWK1RUWK:HVWDQG(DVW
up approach’ in the Destination Destination is the most promising residential locality from the perspective of investment selection of top Benchmark location investment destinations ,GHQWLĞHGEDVHGRQWKHQHDUHVWSULFHFRQWRXUDEHQFKPDUNORFDWLRQLVDQHVWDEOLVKHG residential locality that has saturated in terms of real estate growth and infrastructure development and is considered as the most sought after residential market within the ]RQH:LWKUHVSHFWWRSULFHIRUHFDVWLQJIRUWKHGHVWLQDWLRQDEHQFKPDUNORFDWLRQSUHIHUDEO\ in the same zone, becomes the reference point
Property price This map splits the geography of a city in accordance with the prevailing residential contour map SURSHUW\SULFH5HVLGHQWLDOPDUNHWVIDOOLQJZLWKLQDFRQWRXUOLQHFRPPDQGSULFHLGHQWLĞHG by such line
Investor Return It is the IRR (Internal Rate of Return) for a typical investor in residential property
Assumptions for Size of property: 1000 sq. ft. Investment horizon: 5 years calculating Investor Loan to Value ratio: 60% Mortgage rate: 10.5% pa Return Loan tenure: 20 years
Residential Property The price indicates the average capital value in the residential market of the destination Price (` per sq.ft.) and benchmark locations
Hidden Gem Locations where we expect the real estate drivers to gather momentum beyond year 2017 INVESTMENT advisory REPORT ,QGLDßV5HVLGHQWLDO'HVWLQDWLRQV
understanding of the property market along with Although the prominence of real estate as an From the perspective of the study of factors that drive it. asset class is increasing, the investment research risk, property investment in the subject lags much behind in comparison to Real estate is an asset class where an educated other asset classes. With this report, we will make fares better because asset investor can mitigate the risk and enjoy the an incipient foray into the subject by identifying price generally remains associated superior returns at the same time. the top residential destinations in the country stable Coupled with the other mainstream asset classes, IURPWKHLQYHVWPHQWSRLQWRIYLHZIRUWKHQH[WĞYH this investment vehicle can make for an optimally \HDUV 7KHGHVWLQDWLRQVDUH GLYHUVLĞHGSRUWIROLR,QPRVWFDVHVLQYHVWPHQWLQ residential markets that we expect will real estate is fraught with decisions based on gut outperform in terms of the investor returns on feeling and tips which result in poor account of the appreciation in property prices. We investments. Hence, an investor has to clearly KDYHGHYHORSHGDIUDPHZRUNEXLOWRQÞWRSGRZQ delineate a real estate investment from DSSURDFKßLQWKHVHOHFWLRQRIWKHĞYHPRVW speculation. promising cities and zones within them and ÞERWWRPXSDSSURDFKßLQWKHVHOHFWLRQRIWRS 7KHJOREDOĞQDQFLDOFULVLVRI KDVEURXJKW investment destinations. Since real estate about a striking change in the attitude of activities are not restricted to city limits, we have investors. This change towards expectation on considered the entire metropolitan region in our investment returns, growth and risk does not analysis. Our understanding of the local property single out any one asset class but applies to most market and experience in dealing with of the assets whether it is equity, debt, SDUDPHWHUVWKDWGHWHUPLQHDQXUEDQFHQWUHßV commodity or real estate. Amidst this changed growth equips us to develop the framework for scenario it is evident that an advice on this pioneering report. investment in any asset class cannot be generic. Real estate as an asset class is the foremost While selection of the top residential investment example that will witness the challenge thrown by destinations remains the core of this report, we this tenet particularly in this tough economic DOVRSUHVHQWĞYHORFDWLRQVZKHUHZHH[SHFWWKH scenario. Even within real estate as an asset real estate drivers to gather momentum albeit class, the judgment on investment outlook on GXULQJWKHHORQJDWHGWLPHKRUL]RQEH\RQG In most cases, investment commercial real estate and residential real estate 7KHVHORFDWLRQVKDYHEHHQLGHQWLĞHGDVÞKLGGHQ in real estate is fraught FDQQRWEHDXQLĞHGRQH7KHGRPLQDQWIDFWRUV JHPVßLQWKHUHSRUW that drive investment returns for both these are with decisions based on diverse to a great extent. Hence, the investment gut feeling and tips which opinion should take into account each of these result in pOor factors. investments. Hence, an investor has to clearly delineate a real estate investment from speculation INVESTMENT advisory REPORT India’s Residential Destinations
APPROACH FOR IDENTIFICATION OF THE TOP RESIDENTIAL Regional growth within a INVESTMENT DESTINATIONS city is anything but even and the direction of such growth is a critical factor in determining the fate of a particular India residential property Urban centres
Top 100 cities
Top 100 cities based on population
Top 5 cities
Business activity: Banking penetration, hotel room demand, air passenger traffic
Infrastructure development: Current and proposed infrastructure expenditure
Zone
Employment: Occupied office space, industrial activity
Social & physical infrastructure: Analysis of development plan of respective authorities and extensive field survey Destination
Connectivity with important locations
Access to social infrastructure
Special factors: Proximity to premium office space, land availability, lifestyle shift, planned development INVESTMENT advisory REPORT India’s Residential Destinations
From the growth and METHODOLOGY & investment perspective, zones that have high APPROACH concentration of business activity at present and projections of meaningful Selection of top cities in the country increment in future will have a comparative advantage over others The top residential destinations have been picked expenditures were taken as proxies for that have saturated on from the universe of all urban centres in the infrastructure development. The cities were this country. In this multi stage selection, each ranked on these individual parameters and based parameter was chosen in a manner that captures on the average ranking Mumbai, Delhi, WKHFDXVHDQGHĝHFWUHODWLRQVKLSRIVXFK Bengaluru, Chennai and Pune emerged as the top parameters with the growth of residential ĞYHFLWLHV development in the city. With the fundamental prerequisite already in The population base of a city is a crucial indicator SODFHWKHVHĞYHFLWLHVDUHZHOOSUHSDUHGWR RIWKHSRWHQWLDORILWVKRXVLQJPDUNHW,QWKHĞUVW participate in the growth trajectory for the VWDJHRIVHOHFWLRQWRSFLWLHVZHUHLGHQWLĞHG foreseeable future. While a framework was based on their population. The extent of business SUHSDUHGDQGWRSFLWLHVZHUHLGHQWLĞHGRXU activity and thrust on infrastructure development HQGHDYRXUZDVHYHQPRUHVSHFLĞF:HKDYH DUHFULWLFDOIDFWRUVDĝHFWLQJWKHKRXVLQJPDUNHW striven to provide a crystal clear view on and accordingly these selected 100 cities were investment destinations for a typical investor in a studied. Banking penetration, hotel room residential property. This objective meant GHPDQGDQGDLUSDVVHQJHUWUDĠFZHUH LGHQWLĞFDWLRQRIUHVLGHQWLDOGHVWLQDWLRQVWKDW considered as surrogates for business activities would outperform others on the investment return and current and proposed infrastructure scale.
Selection of zone within a city
Regional growth within a city is anything but even the kind of employment generated by such and the direction of such growth is a critical industry. We have captured the extent of factor in determining the fate of a particular employment generation by measuring the residential property. We therefore, split each city TXDQWXPRIRFFXSLHGRĠFHVSDFHDWSUHVHQWDQG into 4-5 zones to capture the quantum and IRUWKHQH[WĞYH\HDUV GLUHFWLRQRIVXFKJURZWK7KLVVSLOWLQWRGLĝHUHQW zones is based on the homogeneity of A regression model capturing the impact of characteristics with respect to access to change in revenue of driver industry on change in employment centres, social and physical RFFXSLHGRĠFHVSDFHZDVGHYHORSHG5HYHQXH infrastructure and demography. SURMHFWLRQVIRUĞUVWWZR\HDUVZHUHEDVHGRQWKH revenue guidance by the respective industry The selection of a preferred zone depends on the associations. Projections for the remaining three SHUVSHFWLYHRIVXFKVHOHFWLRQZKLFKGLĝHUV years were based on the moving average trend of depending on the purpose of purchasing property WKHSUHFHGLQJĞYH\HDUV$OVRWKHXSFRPLQJ which is either end-use or investment. From the VXSSO\RIRĠFHVSDFHLQQH[WĞYH\HDUVLQDOOWKH growth and investment perspective, zones that zones was analysed to understand the balance have high concentration of business activity at between the incremental employment and present and projections of meaningful increment XSFRPLQJRĠFHVSDFH7KXVDFU\VWDOFOHDUYLHZ in future will have a comparative advantage over on employment potential in a particular zone has others that have saturated on this. Growth of been provided. The service sector has emerged as business activity will create abundant a driving force in most of the cases with the employment opportunities which in turn will lead Information Technology and Information to a rise in inward migration and high demand for Technology enabled Services (IT/ITeS) industry residential property in these zones. Hence, we emerging as a dominant employment driver. LGHQWLĞHGWKHGULYHULQGXVWULHVLQHDFK]RQHDQG Besides the quantum of employment generation assessed the impact of their business activity on in the driver industry, the nature of jobs in INVESTMENT advisory REPORT India’s Residential Destinations
accordance with its position in the value chain in development that will have an impact on The service sector has WKHLQGXVWU\ZDVWDNHQDVDGLĝHUHQWLDWLQJ UHVLGHQWLDOPDUNHWVZLWKLQD]RQH:HDVVHVVHG emerged as a driving force element. For instance, employment in software WKHLPSDFWRIH[LVWLQJDQGXSFRPLQJSK\VLFDO development within the IT/ITeS industry has a infrastructure like road, rail and airport projects in most of the cases with GLĝHUHQWLPSDFWRQWKHLQFRPHSURĞOHRI RQWKHUHVLGHQWLDOPDUNHWVRIHDFK]RQH3UHVHQFH the Information employees in comparison to that in the Business RIVRFLDOLQIUDVWUXFWXUHFRPSULVLQJHGXFDWLRQ Technology and 3URFHVV2XWVRXUFLQJ %32 UROH7KLVGLĝHUHQFHLQ healthcare and recreation was also reviewed. Information Technology LQFRPHSURĞOHZLOOLPSDFWDĝRUGDELOLW\LQD diverse manner. enabled Services (IT/ITeS) :HVHOHFWHG]RQHVKDYLQJWKHPRVWSURPLVLQJ IXWXUHRQDFFRXQWRIWKHJURZWKLQWKHTXDQWXPRI industry emerging as a Besides employment, the other important factor RFFXSLHGRĠFHVSDFHDQGLQFUHPHQWDO dominant employment IURPWKHJURZWKDQGLQYHVWPHQWSHUVSHFWLYHLV LQIUDVWUXFWXUHGHYHORSPHQW2YHUWKHIRUHVHHDEOH driver LQIUDVWUXFWXUHGHYHORSPHQW5HJLRQDO IXWXUHWKHVHSUHIHUUHG]RQHVZLOOEHWKHELJJHVW GHYHORSPHQWSODQVDQGĞHOGYLVLWVWRWKH]RQHV EHQHĞFLDULHVEHFDXVHWKH\IDOOLQWKHGLUHFWLRQRI equipped us to assess the scope of infrastructure movement of employment and infrastructure.
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Business activity Infrastructure
&RPPHUFLDO2ĠFH6SDFH Industrial Physical 6RFLDO
IT Sector 0DQXIDFWXULQJ Connectivity (GXFDWLRQ +HDOWKFDUH
Non IT Sector %DVLFXWLOLWLHV :DWHU 3RZHU Entertainment Besides the quantum of employment generation in the driver industry, the nature of jobs in accordance with its Selection of Destination position in the value chain in the industry was taken ZLWKLQ]RQH as aGLƩHUHQWLDting element All the residential markets within the preferred EHQFKPDUNORFDWLRQIRUHDFKGHVWLQDWLRQKDV ]RQHZLOOEHQHĞWRQDFFRXQWRIWKHJURZWKLQ EHHQLGHQWLĞHGEDVHGRQWKHQHDUHVWSULFH employment opportunities and infrastructure FRQWRXU:LWKUHVSHFWWRSULFHIRUHFDVWLQJIRUD GHYHORSPHQW+RZHYHUDIHZRIWKHVHZLOOKDYHD GHVWLQDWLRQDEHQFKPDUNORFDWLRQSUHIHUDEO\LQ FRPSDUDWLYHDGYDQWDJHRYHURWKHUV$ERWWRPXS WKHVDPH]RQHEHFRPHVWKHUHIHUHQFHSRLQW DSSURDFKZDVDGRSWHGWRDQDO\VHWKHH[LVWLQJ and proposed connectivity and social and As mentioned earlier, our analytical focus was physical infrastructure facilities. The approach SULPDULO\WRXQGHUVWDQGWKHVWDWHRIWKHVXEMHFW ZDVPRGHOOHGEDVHGRQRXUĞHOGYLVLWVWRHDFKRI market’s connectivity with important locations WKHUHVLGHQWLDOPDUNHWVLQWKHSUHIHUUHG]RQHDQG and social and physical infrastructure facilities discussions with various stakeholders. This DYDLODEOHFXUUHQWO\DQGDOVRLQWKHIRUHVHHDEOH primary survey coupled with our real estate IXWXUH+RZHYHULQFHUWDLQGHVWLQDWLRQVWKHUH H[SHUWLVHKHOSHGXVWRDUULYHDWWKHEHVW ZHUHYDULDWLRQVZLWKUHVSHFWWRIDFWRUVLPSDFWLQJ destinations from the perspective of investment. future price movements like: 7KHGHVWLQDWLRQVKDYHEHHQDQDO\VHGYLV¢YLVD . 3UR[LPLW\WRSUHPLXPRĠFHPDUNHWV :DGDOD EHQFKPDUNORFDWLRQZKLFKLVDQHVWDEOLVKHG RQHRIWKHVHOHFWHGGHVWLQDWLRQVLQ0XPEDL residential locality that has attained a relatively ZLOOEHQHĞWGXHWRLWVFRQQHFWLYLW\ZLWKWKH KLJKHUVDWXUDWLRQOHYHOLQWHUPVRIUHDOHVWDWH SUHPLXPEXVLQHVVGLVWULFWRIWKH%DQGUD.XUOD JURZWKDQGLQIUDVWUXFWXUHGHYHORSPHQWDQGLV &RPSOH[ %.& FRQVLGHUHGWREHRQHRIWKHPRVWVRXJKWDIWHU . /LPLWHGODQGDYDLODELOLW\ Limited land UHVLGHQWLDOPDUNHWVZLWKLQWKH]RQH7KH DYDLODELOLW\ZLOOOLPLWWKHVFRSHRIQHZ INVESTMENT advisory REPORT India’s Residential Destinations
construction and put an upward pressure on TOP INVESTMENT Over the foreseeable property prices in destinations like Chembur DESTINATIONS RANKED IN future, the preferred in Mumbai. ORDER OF INVESTOR RETURN . Lifestyle shift: Destinations like KR Puram in zones will be the biggest Bengaluru possess the potential to provide a DURING THE NEXT 5 YEARS EHQHƪFLDULHVEHFDXVHthey lifestyle shift, which is possible generally in Investor returns per annum fall in the direFWLRQof projects developed on large land parcels that #1 Ulwe #2 Wadala movement of employment facilitate high rise premium developments #4 Noida #3 Chembur with plush amenities. Extension and infrastrXFWXUH . Planned development: Lack of social infrastructure remains a concern in some destinations as of now. However, on account 22.9% 25.5% 27.0% 29.0% of being in the planned development region, education, healthcare and recreation facilities will eventually come up in destinations like #5 Dwarka Ulwe in Mumbai. Expressway 22.3%
While dynamics of a residential market with #8 Ravet respect to the demand-supply scenario were #7 Hinjewadi considered to understand its depth, the impact of #6Medavakkam factors like quality of projects, premium or DĝRUGDEOHFDWHJRU\RQSURSHUW\SULFHZDVDOVR assessed. It is of paramount importance to assess all these factors in comparison to the benchmark locality and also other localities 21.2% 20.6% 20.1% within the zone. Further, these factors have to be viewed in the context of the prevailing property SULFH'HVWLQDWLRQVFKRVHQDUHGHĞQLWHO\WKHRQHV that would outperform other locations on the #9 Tathawade investment return scale. However, continuing Fontinuing with our with our intention of undertaking a thread bare intention of undertaking a 20.0% analysis and providing an unequivocal thread bare analysis and LQYHVWPHQWYLHZZHKDYHTXDQWLĞHGWKHFDSLWDO #10 Hebbal providing an unequivRFDO appreciation and the resultant investor returns for #11 Pallikarnai investment view, we have investment in these destinations. #12 Wakad #13 KR Puram quDQWLƪHG the FDSLWal As mentioned earlier, to forecast the price appre tion and the FLD movement of a destination, we have considered resultant investor the price of a benchmark location as the 18.6% 18.7% 19.1% 19.3% returns for investment in reference point. The assumption is that the these destinations destination price will grow at a faster pace (as compared to the benchmark location price) because of its relatively higher level of increasing developmental activities. As a result of this, the In the second stage, the price discount of a current price discount of the destination will GHVWLQDWLRQKDVEHHQIRUHFDVWHGIRUWKHQH[WĞYH reduce, making price convergence imminent in years. In order to achieve this, we studied the the future. LPSDFWRIGLĝHUHQWIDFWRUVRQSULFHVRIWKH benchmark location over the last decade. These ,QWKHĞUVWVWDJHZHKDYHIRUHFDVWHGWKHSULFHRI factors include: a benchmark location. Empirical evidence . Incremental employment generation in the indicates that price variation of established zone. UHVLGHQWLDOPDUNHWVLVVLJQLĞFDQWO\H[SODLQHGE\ . New infrastructure projects. the changes in economic activities. In line with . Reduction in time to commute between the this, we have conducted iterations to identify the benchmark location and important places in H[SODQDWRU\YDULDEOHVWKDWVWURQJO\LQğXHQFHG the zone. property price movement in the benchmark locations. India’s economic growth has been Our analysis shows that the occurrence of one of LGHQWLĞHGDVWKHPRVWVLJQLĞFDQWIDFWRU the above mentioned factors or a combination of explaining the price movements. Regression them accelerated the growth of residential equations have been estimated for each of the property prices in a benchmark location before it LGHQWLĞHGEHQFKPDUNORFDWLRQVDQGSULFHKDV stabilized and emerged as a relatively developed been forecasted till 2017. market. Assuming that the destination will have a INVESTMENT advisory REPORT India’s Residential Destinations
REGION-WISE TOP INVESTMENT DESTINATIONS FOR NEXT 5 YEARS Empirical evidence Forecasted Price Appreciation in Percentage indicates that price variation of established residential markets is NORTH VLJQLƪFDQWOy explained by the changes in economic
activities #1 Noida Extension 111% NCR
#2 Dwarka Expressway 108% 145% 100% 98% 133% 97% 125% 91% Ravet Wadala Hinjewadi Chembur Wakad Tathawade Ulwe #1 #2 #3 #4 #5 #6 #7 EAST Mumbai Pune WEST Bangalore #2Hebbal 94%
#4 KR Puram 91%
#1 Medavakkam Chennai 103%
#3 Pallikarnai 93%
SOUTH
similar impact of incremental employment Additionally, in cases where land availability is generation and new infrastructure projects, the not a concern, price growth will not breach the property price in the destination has been DĝRUGDELOLW\WKUHVKROGRIWKHWDUJHWFRQVXPHU forecasted by applying an estimated discount group. As a result of this factor some destinations factor on the future price movements of the did not qualify for the projected price growth and benchmark location. were dropped from the top destinations list. For a typical investor in residential property what 2XUUHVHDUFKLQGLFDWHVWKDWDĝRUGDELOLW\ZLOONHHS PDWWHUVLVWKHHĝHFWLYHUHWXUQUHVXOWLQJIURPWKH a resistance on price movement in many leverage provided through the housing loan. The destinations. Hence, we have created an income same has been calculated and labelled as pyramid of the employees in the driver industry. ‘Investor Return’ arising out of investment in This pyramid is a distribution of all the employees under construction residential property, in these according to their income. Thus, a ceiling was WRSGHVWLQDWLRQVRYHUDSHULRGRIWKHQH[WĞYH applied to our destination price forecast as per \HDUV3URSHUW\VSHFLĞFDWLRQDQGLQYHVWPHQWVL]H the change in this pyramid for the forecast available at a destination along with select horizon. residential projects have also been provided in the report. INVESTMENT advisory REPORT India’s Residential Destinations
in cases where land Risk factors for our outlook availability is not a concern, price growth will not breach the 2XUIRUHFDVWIRURFFXSLHGRĠFHVSDFHUHOLHV HPHUJHQFHDVDVLJQLĞFDQWHPSOR\PHQWSURYLGHU largely on the service sector led by the IT/ITeS LQWKUHHRIWKHWRSĞYHFLWLHV ordability threshold DƩ industry. The sector’s revenue growth during the of the target consumer QH[WĞYH\HDUVZLOOKDYHDQLPSDFWRQWKH The BFSI industry has a meaningful role in the group employment, which is one of the biggest drivers employment trend in cities like Mumbai and of real estate. For the IT/ITeS industry, the Delhi. We have considered a revenue growth rate revenue growth estimates for the initial two years RIEDVHGRQWKHSUHFHGLQJĞYH\HDU have been taken from the industry association moving average growth rate for this industry. and for the remaining three years they have been The employment generated by these industries WDNHQDVWKHSUHFHGLQJĞYH\HDUPRYLQJDYHUDJH KDVDVLJQLĞFDQWLPSDFWRQRXUIRUHFDVWIRU growth rate between 10-12%. RFFXSLHGRĠFHVSDFH+HQFHDQ\PDMRU deviation in their revenue growth will have an While the Indian IT/ITeS industry is DGYHUVHLPSDFWRQRXUIRUHFDVWIRURFFXSLHGRĠFH interconnected with the global economy, reputed space and therefore the fate of the respective research studies have highlighted the destination. interlinkage between the domestic manufacturing sector and this industry. As a result, the weak Additionally, in several cases, the fate of the global economy and a slowdown in the domestic destinations is linked to the delivery of manufacturing sector will have a direct impact on LQIUDVWUXFWXUHSURMHFWVZKLFKPDNHVRXUDQDO\VLV this industry. Our analysis puts a great emphasis YXOQHUDEOHWRDQ\VLJQLĞFDQWGHYLDWLRQIURPWKH on the fate of the IT/ITeS industry because of its SURJUHVVWLPHOLQHRIVXFKSURMHFWV KEY takeaways
. With property options ranging from ranks on the investment return scale. `3,200/sq.ft. to `15,000/sq.ft. and investor . The IT/ITeS industry is the driving force behind returns in the range of 18.6% - 29% pa the growth in most of the destinations. residential real estate will emerge as a . With four investment destinations, Pune has SURPLVLQJDVVHWFODVVIRUWKHQH[WĞYH\HDUV the maximum number of promising residential . With seven destinations, the western region property options. has the highest number of promising . IT/ITeS, Automobile and Engineering sectors residential investment options. are the primary employment drivers in Pune . The top three investment destinations, with . The destinations in Chennai will immensely investor returns in excess of 25% pa, are from EHQHĞWIURPWKHJURZWKRIWKH,7,7H6DQG Mumbai. Automobile industries in Tamil Nadu during the . Only Mumbai ranks ahead of the top QH[WĞYH\HDUV investment destinations of the NCR, the . IT/ITeS and Bio-technology sectors will be the biggest residential market in the country. driving forces behind the growth of . Enhanced connectivity and the proposition of destinations in Bengaluru. WKHGLSORPDWLFHQFODYHZLOOVLJQLĞFDQWO\EHQHĞW the Dwarka Expressway, placing it in high INVESTMENT advisory REPORT India’s Residential Destinations
BENGALURU
Bengaluru (also known as Bangalore), the capital of Karnataka is located in the south-eastern part of the state. The city is located at an altitude of 950m. above the sea level, thereby making its climate very serene. Bengaluru is the third most populous city of India with a very diverse demography. It is also known as the Garden City of India. It houses the largest number of Information Technology (IT) and Information Technology Enabled Services (ITeS) companies in India for which it earned the BENGALURU METROPOLITAN sobriquet of the ‘Silicon Valley’. It also houses numerous public sector REGION POPULATION companies including defence, aerospace and bio-technology. Population in Millions Bengaluru urban agglomeration is known as Bengaluru Metropolitan Region (BMR) comprising Bengaluru urban district, Bengaluru rural district 1991 2001 2011 and Ramanagara district. The Bruhat Bengaluru Mahanagara Palike (BBMP) is in charge of the civic administration of the city. The corporation is spread over an area of 741 sq. km. Bangalore Metropolitan Region Development Authority (BMRDA), an autonomous body created by the Government of Karnataka is the nodal agency looking after the overall 4.84 5.2% 6.54 3.1% 9.59 3.9% development of the BMR. During the last two decades the population growth was phenomenal in the BMR. It rose at an annual rate of 3.9% Population Average Annual Growth GXULQJSULPDULO\GXHWRDKXJHLQğX[RI,7,7H6HPSOoyees. Source: Census 2011, Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations
BENGALURU MAP
Major Roads Railway Line Existing Metro Under Construction Proposed Metro South Zone West Zone Central Zone East Zone North Zone Price Contours (`/ sq.ft)
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Bengaluru Metropolitan Market Overview Region (BMR) is spread over
741 sq. km. 7KH%05PDUNHWFDQEHGLYLGHGLQWRĞYHEURDG emerged a better investment destination compared zones: Central, West, North, East and South. to the south.
The new international airport at Devanahalli ZONE MAJOR RESIDENTIAL DESTINATIONS commenced in 2008. By virtue of this, North Bengaluru became one of the most sought after Central MG Road, Vitthal Mallya Road, destinations of Bengaluru. Numerous real estate Frazer Town, Lavelle Road, and infrastructure projects were announced to Richmond Road, Langford Town enhance the connectivity between Bengaluru city centre and the airport; this included High Speed West Malleswaram, Rajajinagar, Tumkur Rail Link (HSRL), monorail and Metro rail. Moreover, Road, Vijayanagar, Yeshwanthpur to generate employment in this region, the government in association with private companies North Banaswadi, Hebbal, Bellary Road, HDUPDUNHGODUJHLQYHVWPHQWV VXFKDV.,$'%3DUN Hennur, Yelahanka, Jakkur, HBR Layout $LUSRUW7RZQVKLS$HURWURSROLV,QIRUPDWLRQ Technology Investment Region (ITIR), Devanahalli East :KLWHĞHOG2OG$LUSRUW5RDG2OG Business Park (DBP) and Global Finance District Madras Road, KR Puram (GFD). These also attracted a lot of institutional buyers like real estate developers and South Koramangala, Sarjapur Road, HSR hoteliers.This region is on the cusp of becoming the layout, Jayanagar, JP Nagar, new commercial business district (CBD) of Bannerghatta Road, Kanakapura %HQJDOXUX+HQFHLWLVZRUWKZKLOHWRH[SORUHWKLV Road region with respect to the real estate investment. Major micro-markets covered under this zone are South Bengaluru, a locale which until the mid- Hebbal, Devanahalli, Yelahanka and Hennur. 1990s housed a strong Kannada (native language of Karnataka) speaking population now boasts of Before 1990, the eastern zone was home only to being a cosmopolitan region. This was mainly on some of the reputed heavy manufacturing DFFRXQWRIDKXJHLQğX[RISRSXODWLRQIURPDOORYHU LQGXVWULHVOLNH+LQGXVWDQ$HURQDXWLFV/LPLWHG India. Electronic City located on Hosur Road in the +$/ %(0/DQG,7,WKDWZHUHLQVWUXPHQWDOLQWKH VRXWKHPHUJHGDVWKHĞUVW,7KXERI%HQJDOXUXLQ growth of this region. With the dawn of the IT sector 9.59 mn. 1990. Many IT giants like Infosys, HCL some of these industries have gradually turned into Technologies, HP, Wipro, Genpact and Siemens WHFKSDUNV3UR[LPLW\WRWKH2XWHU5LQJ5RDG 255 population in the BMR, an have setup their campuses in this region. With the FRXSOHGZLWKWKHDYDLODELOLW\RIJUDGHGRĠFHVSDFH setting up of these companies, the South attracted major IT/ITeS companies in the eastern increase of 98% in the Bengaluru region became a preferred commercial ]RQH7KLVIXHOOHGWKHH[SDQVLRQRIFRPPHUFLDODQG as well as residential destination. The availability of residential development in this region. last two decades land, strong infrastructure and presence of the &RQVHTXHQWO\:KLWHĞHOG&95DPDQ1DJDU%URRNH middle-income segment have contributed to the )LHOG2OG0DGUDV5RDG,QGLUDQDJDU.53XUDP2OG development of this zone. The residential clusters $LUSRUW5RDG0DKDGHYDSXUD+RRGL&LUFOHDQG6DL LQSUR[LPLW\WRWKH(OHFWURQLF&LW\OLNH6DUMDSXU %DED$VKUDPHPHUJHGDVWKHSUHIHUUHGUHVLGHQWLDO Koramangala, Jayanagar, BTM Layout, destinations among the IT employees. Moreover, Bannerghatta Road and Hosur Road have attracted a large number of immigrants especially the IT RESIDENTIAL PROJECT LAUNCH employees. Social infrastructure like the availability TREND IN BENGALURU of quality hospitals, prestigious educational institutions and retail malls are some of the major * Till September 2012 reasons behind residential demand in this part of Bengaluru. 2007 20082009 2010 2011 2012*
This region started losing its charm since 1998 when the Government of Karnataka announced the 54,075 new international airport at Devanahalli - a town located in the north of Bengaluru. Major IT/ITeS companies started acquiring land closer to the 31,236 31,733 24,741 DLUSRUWLQWKHQRUWKIRUWKHLUH[SDQVLRQ7KH\ 20,608 refrained from buying any new land in this region, 14,439 hampering the overall growth of the South Bengaluru region. In this bargain North Bengaluru Launches Source: Knight Frank Research INVESTMENT advisory REPORT ,QGLDßV5HVLGHQWLDO'HVWLQDWLRQV
RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF BENGALURU
176,832 residential * Till September 2012 units launched since 2007 in the BMR 2007 2008 2009 2010 2011 2012*
32%
25%
180,000 160,000 14% 140,000 11%
No. of Units 120,000 9% 100,000 80,000 5% 60,000 85,808 units 40,000 20,000 launched and 54,687 units Stock Cumulative Absorption % of Unsold Units Source: Knight Frank Research absorbed during 2010 and 2011 in BMR 2OG0DGUDV5RDG:KLWHĞHOG5RDG,73/DQG9DUWKXU changed the dynamics of Bengaluru real estate Road emerged as a business district having many market. Apart from generating thousands of new tech-parks, SEZs, captive campuses and business MREVIRUWKHORFDOUHVLGHQWV%HQJDOXUXKDVEHHQ centres. able to attract a large pool of migrants into these VHFWRUVIURPDFURVVWKHFRXQWU\7KLVKDVHQDEOHG Central Bengaluru is the commercial and retail the real estate market to grow at a tremendous rate KHDUWRIWKHFLW\ZLWKYDULRXVFRUSRUDWHRĠFHV LQWKHODVWĞYH\HDUVHVSHFLDOO\WKHUHVLGHQWLDO ORFDWHGLQPLFURPDUNHWVOLNHWKH0*5RDG9LWWKDO segment that witnessed the launch of over 176,832 57% of under- Mallya Road, Commissariat Street, Ulsoor and units since 2007. /DYHOOH5RDG([FHOOHQWFRQQHFWLYLW\ZLWKYDULRXV construction units are in parts of the city, good physical and social Bengaluru residential market witnessed the launch North and East Bengaluru infrastructure along with the presence of organized of 85,808 units in the last two years (i.e. 2010 and retail has ensured the highest property prices in 2011) accounting for almost 49% of the total units WKLVSDUWRIWKHFLW\7KHSURPLQHQWUHVLGHQWLDO ODXQFKHGVLQFH'XULQJWKHVDPHSHULRG micro-markets of this region include MG Road, 54,687 units were absorbed in the Bengaluru /DQJIRUG5RDG5LFKPRQG7RZQ/DOEDJK5RDG residential market. South and East Bengaluru 9LWWKDO0DOO\D5RDG5HVLGHQF\5RDGDQG)UDVHU ZLWQHVVHGDPDMRUFKXQNRIODXQFKHVDQG 7RZQ0DMRULW\RIWKHUHVLGHQWLDOGHYHORSPHQWVLQ absorption during this period mainly on account of Pennya industrial estate the central locations are bungalows and WKHLUSUR[LPLW\WRWKH,7KXERI(OHFWURQLF&LW\DQG independent residential units, however some :KLWHĞHOG5RDG2YHUWKHSHULRGWKLVUHJLRQKDV SRFNHWVOLNH5LFKPRQG7RZQ5LFKPRQG5RDG emerged as a self-sustaining micro-market spread over 266 acres - 0DOOHVKZDUDP3LSHOLQH5RDGDQG0*5RDGDUH DWWUDFWLQJPDQ\,7HPSOR\HHV one of the largest witnessing growth in multi-storey high-rise constructions as well. industrial areas in Asia ZONE-WISE SPLIT OF UNDER 3ULPDULO\DQLQGXVWULDOKXE:HVW%HQJDOXUXKRXVHV CONSTRUCTION UNITS RQHRIWKHODUJHVWLQGXVWULDODUHDVRI$VLDÜÞ3HHQ\D ,QGXVWULDO$UHDß7KHUHDUHKXJHVHWXSVRIVHYHUDO renowned engineering, transformers, motors and 30% generator companies here. Being an industrial hub, WKLVUHJLRQZDVQRWFDXJKWLQWKH,7,7H6ZDYHRI the mid-1990s, that transformed South and East Bengaluru as one of the most sought after residential markets. However, this region gained a lot of traction with the announcement of the 27% XSFRPLQJLQIUDVWUXFWXUHSURMHFWVYL]HOHYDWHG H[SUHVVZD\PHWURDQGWKHURDGFRQQHFWLYLW\DORQJ WKH7XPNXU5RDG0LFURPDUNHWVVXFKDV 0DOOHVZDUDP *URZWKRIWKH,7,7H6VHFWRUDORQJZLWKWKHVHWWLQJ East North South up of bio-technology units and other large national and multinational manufacturing units have Source: Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations Real Estate Drivers 62 km. Outer Ring Road connects all the major IT hubs from North to South Employment Indicators Infrastructure Development Service Sector Manufacturing Sector Rail Network Road Network IT Sector Biotech Sector Bangalore Metro Corridor I & II Pheripheral Ring Road Monorail Corridor Elevated Road / Expressway High Speed Rail Link Infrastructure Development EXISTING ARTERIAL ROAD NETWORK ROAD NETWORK DISTANCE OBSERVATIONS Outer Ring Road (ORR) 62 km. ORR provides connectivity with all the major highways around the city. Passing across the major suburbs viz. Hebbal - KR Puram - Marathahalli - Sarjapur Rd. - Silk Board Junction Nandi Infrastructure Corridor 42 km. Long peripheral road, connecting Jalahalli in the north with the Enterprises (NICE) Electronic City on Hosur Road in the South. The corridor connects Ring Road Mumbai and Chennai through NH-4 in the western region and NH- 7 in the southern region respectively. Initially a four-lane structure with provision for expansion upto six-lane. NICE Ring Road has HQDEOHGWUDĠFIURP0XPEDLWRPRYHGLUHFWO\WR&KHQQDLZLWKRXW crossing downtown Bengaluru Metro rail operational between Byappanahalli Hosur Road (NH7) 40 km. A four to eight-lane national highway (Part of NH7) connecting and MG Road since Oct 2011 Bengaluru city with Hosur, a town in Tamil Nadu. The Hosur Road passes via the Electronic City one of the largest IT industrial parks of Bengaluru Bengaluru Elevated Toll-way 10 km. A 10 km. long elevated and tolled expressway connecting Bomanahalli to Electronic City EXISTING SUBURBAN RAIL NETWORK METRO TRAIN NETWORK DISTANCE OBSERVATIONS Metro Train Network 6.7 km. Reach I, a 6.7 km. part of the East-West corridor, connecting Phase I, Reach I Byappanahalli with MG Road is operational since October 2011 INVESTMENT advisory REPORT ,QGLDßV5HVLGHQWLDO'HVWLQDWLRQV UPCOMING ARTERIAL ROAD NETWORK A 33 km. High Speed Rail CONNECTIVITY & LENGTH OBSERVATIONS CURRENT EXPECTED Link proposed - will STATUS COMPLETION operate between Cubbon Road and Bengaluru Road widening from Hebbal A six-lane elevated road over the Under 2013-14 to Bengaluru International Airport existing road connecting with the Construction International Airport 20 km. international airport is under construction. The elevated stretch that starts from Kodigehalli gate will be a six-lane highway extending over 4 km. The project will have a series of seven ğ\RYHUVIURP+HEEDOWRWKH7UXPSHW Junction near the airport High Speed Rail Link (HSRL) $NP+65/KDVEHHQSURSRVHG Five Post 2016 33 km. that will connect the city centre with consortiums WKHDLUSRUW7KH+65/ZLOORSHUDWH shortlisted EHWZHHQ&XEERQ5RDGDQG%HQJDOXUX International Airport with two halts in EHWZHHQRQHDW+HEEDODQGDQRWKHU at Yelahanka. Monorail Project %HQJDOXUX$LU5DLO/LQN/WG %$5/ KDV Proposed Post 2015 41 km. proposed 31 km. monorail from JP 1DJDU VRXWK WR+HEEDO QRUWK DQG NPEHWZHHQ3HULSKHUDO5LQJ5RDG 355 DQG0DJDGL5RDG7KLVSURMHFW will function as a feeder service to metro rail as well as the international airport Peripheral Ring Road (PRR) $NP355KDVEHHQSURSRVHGLW Pre-feasibility Post 2016 116 km. will connect the entire peripheral stage arterial road linking all the major KLJKZD\VDQGWKHGLVWULFWURDGV0DMRU FRQQHFWLQJDUHDZRXOGEH+RVXU5RDG WR7XPNXU5RDGYLD.53XUDP%HOODU\ A 116 km. Peripheral Ring 5RDG2OG0DGUDV5RDGDQG6DUMDSXU 5RDG7KH355LVH[SHFWHGWRHDVHWKH Road proposed - FRQJHVWLRQRQWKH255 connecting Hosur Road to Bengaluru Metro Rail Phase I D $NP1RUWK6RXWK 16 PHWUR Under 2014-15 Tumkur Road via KR Puram, 42 km. FRUULGRUKDVEHHQSURSRVHGLWZLOO construction Bellary Road, Old Madras FRQQHFW+HVDUDJKDWWDFLUFOH LQQRUWK Road and Sarjapur Road ZLWK3XWWHQDKDOOL LQVRXWK E $QNP(DVW:HVW (: PHWUR FRUULGRUKDVEHHQSURSRVHGLWZLOO FRQQHFW%\DSSDQDKDOOLZLWK0\VRUH 5RDG 5HDFK,DNPSDUWRIWKH(: FRUULGRUFRQQHFWLQJ%\DSSDQDKDOOL ZLWK0*5RDGLVRSHUDWLRQDOVLQFH 2FWREHU Bengaluru Metro Rail Phase 2 D 3KDVH,,HQYLVDJHVH[WHQVLRQRIWKH In-principle %H\RQG NP 0HWUR3KDVH,RQWKH16FRUULGRU7R approval the north it will be extended upto received from %HQJDOXUX,QWHUQDWLRQDO([KLELWLRQ WKH*RYWRI &HQWUH %,(& DQGWRWKHVRXWKLWZLOOEH Karnataka. H[WHQGHGXSWR1,&(-XQFWLRQ Awaiting approval from E (:FRUULGRULVSODQQHGWREH the Urban H[WHQGHGXSWR:KLWHĞHOGWRWKHHDVW Development and Kengeri to the west. Department 0LQLVWU\ F )XUWKHUWZRQHZOLQHVKDYHEHHQ SODQQHGLQ3KDVH,,RQHFRQQHFWLQJ INVESTMENT advisory REPORT India’s Residential Destinations UPCOMING ARTERIAL ROAD NETWORK Over 2,000 IT & ITeS CONNECTIVITY & LENGTH OBSERVATIONS CURRENT EXPECTED companies present in STATUS COMPLETION Bengaluru including more than 100 Fortune-500 Rashtreeya Vidyalaya (RV) Road with companies Bommasandra in the South, Electronics City on the Hosur road with the city centre d) Another line will be parallel to the NS Corridor of Phase I, running between Nagawara in the north and Gottigere in the South. It will have two Bengaluru generates interchange stations, one at MG Road software exports worth and another at Jayadeva hospital Elevated corridor from Central Silk A 15 km. elevated corridor connecting Pre-Feasibility Beyond 2015 `700 bn. Board Junction to Jayamahal Road Central Silk Board Junction to stage 15 km. Jayamahal Road is envisaged to ease WKHWUDĠFğRZEHWZHHQ1RUWKDQG South Bengaluru. This will also facilitate in reaching the new international airport in the North. Construction of elevated corridor A 28 km. West-East elevated corridor Pre-Feasibility Beyond 2014 between Jnanabharathi and along the Ring Road connecting stage Old Airport Road Tumkur (Jnanabharathi) with Old 650,000 IT 28 km. Airport Road. The corridor will pass professionals directly through Sirsi Circle, Town Hall, Hudson Circle, Vellara junction and Old Airport employed in Bengaluru Road. The proposed corridor is expected to ease the East-West city WUDĠFğRZ Bengaluru - Mysore Expressway A six-lane expressway connecting Land Beyond 2017 140 km. Bengaluru with Mysore is under acquisitions construction. Only peripheral part of 56 km. has been completed till date. IT/ITeS and Bio-technology sector are the driving factors for Bengaluru's growth Employment Indicators in Bengaluru Bengaluru is the IT and Bio-technology capital of professionals. Prominent Fortune-500 companies India. It also houses numerous Government operational in Bengaluru are IBM, Dell, HP, promoted heavy industries including defence CISCO, Sun Microsystems, Microsoft, Toyota, ING, RUJDQL]DWLRQVVFLHQWLĞFHVWDEOLVKPHQWV Tesco, Citigroup, JP Morgan Chase, Goldman aerospace and telecommunication companies. It Sachs, Bosch and Tyco. Prominent Indian IT & also has renowned Indian educational institutions ITeS companies like TCS, Infosys, Wipro and RĝHULQJDSOHWKRUDRIMRERSSRUWXQLWLHV Mahindra Satyam have major operations in the However, Bengaluru’s economy is primarily city. driven by the IT/ITeS sector and bio-technology sector. Bengaluru’s IT/ITeS sector accounts for almost one-third of India’s IT/ITeS revenue and almost IT/ITeS SECTOR half of the Indian Bio-Technology companies are located in Bengaluru. These sectors play a very vital role in the growth of commercial and Over 2,000 IT/ITeS companies, including more residential real estate in Bengaluru. than 100 Fortune-500 companies have established their operations in Bengaluru. These IT/ITeS companies have been predominantly companies in all, generate software exports worth concentrated in South, South East Bengaluru and `700bn. and directly employ over 650,000 the Outer Ring Road (ORR) stretch from Hebbal to INVESTMENT advisory REPORT ,QGLDßV5HVLGHQWLDO'HVWLQDWLRQV Silk Board junction. This region houses many OFFICE SPACE BREAK-UP IT/ITeS sector constitutes renowned tech-parks, IT/ITeS SEZs and captive campuses of Fortune-500 IT companies. Micro- PDUNHWVDORQJ:KLWHĞHOG(OHFWURQLF&LW\255 70% of the total RƬFH 6DUMDSXUDQG%DQQHUJKDWWD5RDGKDYHGHYHORSHG space in Bengaluru into self-sustaining hubs. East Bengaluru has RYHUPQVTIWRIRĠFHVSDFH$SDUWIURPWKH large campuses of IT/ITeS companies such as 'HOO7&6/ 7,QIRWHFK*(+3DQGL*DWHWKHUH DUHQXPHURXVVWDQGDORQHFRPPHUFLDORĠFH EXLOGLQJVOLNH%ULJDGH0HWURSROLV3UHVWLJH 6KDQWLQLNHWDQ(PEDVV\&UHVW,73%*957HFK 3DUN6-5L3DUNDQG6DODUSXULD7HFK3DUNDFURVV WKH,7KXERI:KLWHĞHOGLQ(DVW%HQJDOXUX Source: .QLJKW)UDQN5HVHDUFK (OHFWURQLF&LW\,QGXVWULDO3DUNORFDWHGLQWKH southern region is spread over 330 acres having RYHUPQVTIWRIRĠFHVSDFHLQFOXGLQJWKH BENGALURU OFFICE FDSWLYHRĠFHV,WLVGLYLGHGLQWRWKUHHSKDVHVRI SPACE DYNAMICS Currently the total RƬFH which one is completely dedicated to the bio- space stock in Bengaluru technology sector, while the other two pre- is 92 mn. sq.ft. of which dominantly house IT/ITeS sector companies. 79.80 mn. sq.ft. is occupied 0DMRUFRPSDQLHVKDYLQJRĠFHVKHUHDUH,QIRV\V :LSUR+&/*HQSDFW6LHPHQV7&6DQG0DKLQGUD 140 6DW\DP1RQFDSWLYHFRPPHUFLDORĠFHVSDFHV LQFOXGH6-5(TXLQR[+DULWD,73DUN*OREDO7HFK 100 3DUN695)RUWXQDHDQG+LUDQDQGDQL8SVFDOH 7KH255VWUHWFKEHWZHHQ+HEEDOWR6LON%RDUG 40 -XQFWLRQDFTXLUHGLPSRUWDQFHZLWKWKH commencement of the Bengaluru International $LUSRUWLQLQ'HYDQDKDOOL7KLVVWUHWFKVHUYHV before 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E 2008 as a main junction between the airport and the established IT hub of Bengaluru i.e. Electronic &LW\DQG:KLWHĞHOG7KLVVWUHWFKKDVODUJHPXOWL tenanted IT parks. Major IT parks include Manyata 2 mn. direct and indirect (PEDVV\%XVLQHVV3DUN6DODUSXULD6XSUHPH &HVVQD%XVLQHVV3DUNDQG3UHVWLJH7HFK3DUN JoBS TO BE GENERATED BY 2020 IN BENGALURU The country’s IT/ITeS sector grew at an annual ZONE WISE DISTRIBUTION OF UDWHRIWR`EQGXULQJDQG is estimated to reach `EQE\$VSHU OFFICE SPACE STOCK 1$66&20WKH,7,7H6VHFWRUKDVFUHDWHG tremendous job opportunities, generating over 11 mn. direct and indirect jobs. It is estimated that the sector would create RYHUPQE\DQGFORVHWRPQMREVE\ %HQJDOXUXIRUPVRQHWKLUGRIWKHFRXQWU\ßV WRWDO,7,7H6UHYHQXHV:HH[SHFW%HQJDOXUXWR continue its growth trajectory in-line with the FRXQWU\ßV,7,7H6JURZWK)XUWKHUWKH*RYHUQPHQW of Karnataka proposes to increase employment RSSRUWXQLWLHVLQWKHVRIWZDUHH[SRUWĞHOGWRDERXW PQE\IURPPQDWSUHVHQW With the strengthening of the global economy, robust domestic fundamentals and easy availability of skilled human capital the IT/ITeS &HQWUDO West South East North LQGXVWU\KHUHLVH[SHFWHGWRJURZVLJQLĞFDQWO\LQ the coming years. Source: .QLJKW)UDQN5HVHDUFK INVESTMENT advisory REPORT India’s Residential Destinations BIO-TECHNOLOGY SECTOR RFFXSLHGUHVXOWLQJLQDYDFDQF\OHYHORI Bengaluru retained the top slot for the highest RĠFHVSDFHDEVRUSWLRQLQWKHFRXQWU\LQ)< USD 10 bn. the size of India is ranked among the top 12 biotechnology despite global uncertainties looming large on the Indian Bio-technology destinations in the world and third largest in the KRUL]RQ7KHFLW\ßVRĠFHPDUNHWFORFNHG $VLD3DFLĞFUHJLRQ7KH*RYHUQPHQWRI.DUQDWDND sector by 2015. Current size DEVRUSWLRQRIDOPRVWPQVTIWGXULQJ)< is committed to establishing a Biotech corridor USD 4 bn. translating into an increase of 10% over the for the development of the biotech industry in DEVRUSWLRQZLWQHVVHGLQ)<7KH,7,7H6 .DUQDWDND7KHFRUULGRULQ%HQJDOXUXVKDOOH[WHQG industry still remains the key demand driver for from the Indian Institute of Science to the RĠFHVSDFHLQ%HQJDOXUX*RLQJIRUZDUGZH 8QLYHUVLW\RI$JULFXOWXUDO6FLHQFHV.DUQDWDNDKDV H[SHFWDQRWKHUPQVTIWRIQHZRĠFHVSDFH DODUJHQXPEHURIELRWHFKFRPSDQLHVVXFKDV WREHDGGHGWRWKHH[LVWLQJLQYHQWRU\LQWKHQH[W $VWUD=HQHFD,QGLD%LRFRQ,QGLD&DGLOOD ĞYH\HDUVWDNLQJWKHWRWDOVWRFNWRPQVTIW 6PLWK.OLQH%HHFKDPDQG:RFNKDUGW by the end of 2017. 7KH,QGLDQ%LRWHFKQRORJ\6HFWRULVH[SHFWHGWR 7KHUHFHQWVORZGRZQZLWQHVVHGE\WKH,7,7H6 grow to USD 10 bn. by 2015 from USD 4 bn. VHFWRUJOREDOO\LVH[SHFWHGWRLPSDFWWKH SRVWHGLQĞVFDO%HQJDOXUXKDVHPHUJHG LQFUHPHQWDODEVRUSWLRQRIRĠFHVSDFHLQ DVD%LRWHFKFDSLWDORI,QGLDDFFRXQWLQJRYHU %HQJDOXUXLQWKHHQVXLQJ\HDUV+RZHYHUDGHOD\ 40% or USD 1.6 bn. of the country’s total in the delivery of new projects will lower the 40% of the country's UHYHQXHV2IWKHELRWHFKĞUPVDFURVVWKH YDFDQF\OHYHOVWRE\WKHHQGRI:H FRXQWU\RU DUHORFDWHGLQ.DUQDWDNDDQG bio-technology sector have forecasted an incremental demand of 44-45 RU DUHLQ%HQJDOXUXRZLQJWRULFKKXPDQ contributed by Bengaluru PQVTIWRYHUWKHQH[WĞYH\HDUVWDNLQJWKHWRWDO capital and cost advantage over peers overseas. RFFXSLHGVSDFHLQWKHFLW\WRPQVTIWE\WKH &XUUHQWO\WKHWRWDORĠFHVSDFHVWRFNLQ%HQJDOXUX end of 2017. LVDERXW PQVTIWRIZKLFKPQVTIWLV STATUTORY COSTS AND MARKET NORMS STATUTORY COSTS COST DETAILS 380 biotech companies Stamp duty 5% (On ready reckoner rate) in India - 50% alone in Bengaluru Registration XSWRDPD[LPXPRI` VAT 7% (on agreement value) Service Tax (on under- 3% (on agreement value) construction property) MARKET NORMS NORM DETAILS Time line for property registration Any time until possession Re-sale before possession Allowed Transfer charges payable to builder `200-300 psf Loading (as % of carpet) 33% Remarks Investor friendly market. Gains from lower Stamp Duty are taken back by KLJKHU9$7UDWH(ĝHFWLYHO\WD[HVDUHKLJKHULQFRPSDULVRQWR0XPEDL and Pune INVESTMENT advisory REPORT India’s Residential Destinations NORTH BENGALURU MAP HEBBAL Benchmark location Top destination Employment Hubs EAST BENGALURU MAP KR PURAM :KLWHĝHOG KR Puram B Narayanapura B Halli Terminal Mahadevapura Hudi KIADB Export Promotion Area ,QWHUQDWLRQDO7HFKQRORJ\ CV Raman Nagar 3DUN%DQJDORUH ,73% Major Roads EPIP Zone MG Road Existing Metro Proposed Monorail %URRNHĝHOG Proposed Metro WHITEFIELD AirportMajor Roads Railway Line Benchmark location TopTop destination Employment Hubs INVESTMENT advisory REPORT India’s Residential Destinations Availability of huge land parcels along the road bengaluru dominance in the PREFERRED between the city centre and the BIA has attracted BPO/KPO sectors have won many large corporates. it a place in the dictionary ZONES IN Residential end-users at large prefer residing in as ‘Bangalored’ meaning BENGALURU Northern Bengaluru as against the south; this ‘Outsourced’ was not the case 4-5 years back. The change in preference was mainly on account of shifting of the airport to the north near Devanahalli. We Bengaluru was a laid-back city till the mid-1990s expect the stretch from Hebbal to Yelahanka in when the IT boom reshaped it into a major city of the north to gain large price appreciation in the India. Many large domestic IT companies as well QH[WĞYH\HDUVPDLQO\RQDFFRXQWRILWVSUR[LPLW\ DVWKH)RUWXQHFRPSDQLHVVHWXSWKHLURĠFHV to the airport, connectivity with the city centre here giving a boost to the Bengaluru real estate and upcoming social infrastructure. South Bengaluru micro- market. Today, Bengaluru has become the markets lost its charm software hub of India, commonly known as the East Bengaluru in itself is a well-developed and post the commencement ‘Silicon Valley of India’. Its dominance in the KPO VHOIVXVWDLQLQJ]RQH$WLWVFRUH:KLWHĞHOGDVD (Knowledge Process Outsourcing) and BPO of the Bengaluru micro-market has evolved over the years. It has (Business Process Outsourcing) sectors have won International Airport in become one of the most preferred destinations it a place in the dictionary as ‘Bangalored’ for the IT/ITeS employees, as it is close to the IT North Bengaluru meaning ‘Outsourced’. We believe Bengaluru’s FRUULGRURI:KLWHĞHOGDQG,73%,WDOVRKDVDZHOO dominance in the IT/ITeS sector will continue in developed social infrastructure (school, hospitals the foreseeable future. etc.) and a well-organized retail market. Moreover, this region will have smooth As per the fundamental economics of the real accessibility to the airport with the proposed 116 estate sector, the price appreciation depends on km. Peripheral Ring Road (PRR). The PRR will link two factors - employment and infrastructure Hosur Road with Tumkur Road via KR Puram, development (connectivity). This phenomenon Bellary Road, Old Madras Road and Sarjapur has been witnessed in the South and South-East 5RDG+HQFHPDUNHWVOLNH.53XUDP:KLWHĞHOG regions of Bengaluru. In the mid-1990s, since the Budigere Cross and Old Madras Road will see growth of the IT/ITeS sector many large IT parks some good traction in the next 4-5 years. and campuses have been set-up in the Electronic We anticipate North and &LW\ VRXWK DQG:KLWHĞHOG VRXWKHDVW UHJLRQ Therefore, based on the above developments we East Bengaluru to be the This attracted many software engineers to believe North and East Bengaluru regions will Bengaluru consequently leading to demand for biggestEHQHƪFLDULHVof ZLWQHVVJRRGWUDFWLRQRYHUWKHQH[WĞYH\HDUV residential real estate. Micro-markets such as the BIA and expect them to Bannerghatta Road, Kanakpura, Sarjapur Road, JP emerge as the new Central 1DJDU-D\D1DJDU:KLWHĞHOG9DUWKXU Business Districts (CBD) of Mahadevapura, CV Raman Nagar, Uttarahalli, KR NORTH Bengaluru within the next Puram and Electronic City have emerged as decade residential markets. However, South Bengaluru BENGALURU destinations lost their charm post the commencement of the Bengaluru International Airport (BIA) near Devanahalli in North Bengaluru. As a natural phenomenon for the real estate The focus of the GOK over the last decade has sector, all focus including government, clearly been North Bengaluru. By shifting the corporates and general public at large, has now Bengaluru International Airport (BIA) near shifted northwards – a new growth corridor for Devanahalli in the north thereby replacing old real estate. HAL Bengaluru International Airport, GOK has substantiated its intention in developing North We expect North and East Bengaluru to be the Bengaluru. Since the new airport is 40 km. ELJJHVWEHQHĞFLDULHVRIWKH%,$DQGH[SHFWWKHP outside the city, GOK has also planned Mass to emerge as the new Central Business Districts Transit Systems (MTS) like monorail, Metro-Line (CBD) of Bengaluru within the next decade. This and High Speed Rail Link (HSRL) to enable can be further substantiated by the numerous travellers to reach the airport faster. Also, infrastructure projects undertaken by the commuter rail system has been planned to government such as High Speed Rail Link (HSRL), connect Devanahalli with Yeshvantpur via Metro Lines, monorail and the Peripheral Ring Yelahanka. Additionally, widening of the NH-7 Road that are at various stages of construction. upto BIA from the existing six-lane to eight-lane is On completion, these projects will enhance the XQGHUSURFHVV7KLVFDQVXVWDLQKLJKHUWUDĠFGXH connectivity of the city centre with the BIA. to airport expansion and expected real estate developments on either side of the NH-7. Further, INVESTMENT advisory REPORT ,QGLDßV5HVLGHQWLDO'HVWLQDWLRQV the GOK is also developing the Peripheral Ring witnessing residential developments. Proximity to Road (PRR) as an eight‐lane expressway along the airport and to the commercial hub of `1,150 bn. the periphery of Bengaluru for a total road length Manayata Tech Park has made this pocket of Bengaluru the preferred residential location by Investment earmarked for of 116 km. that will connect all the periphery regions to the airport. Availability of vast vacant the IT population. North Bengaluru land parcels close to the airport and along the road leading to the airport has enabled GOK to $VRQ6HSWHPEHU1RUWK%HQJDOXUXKDVZLWQHVVHG plan projects worth `1,150bn., including DWRWDORI UHVLGHQWLDOXQLWVEHLQJODXQFKHG Devanahalli Business Park (DBP), Aero SEZ, VLQFH2IWKLVDWRWDORIXQLWVKDYH Information Technology Investment Region (ITIR), EHHQDEVRUEHGUHVXOWLQJLQUHPDLQLQJ Bio-Technology, Aerotropolis and many other unsold. Over the years, unsold units have risen recreational developments. mainly on account of low pace of absorption due to uncertain global markets. Announcement of Further, the GOK has also invited many QHZSURMHFWVKDVFRPHGRZQLQWKHĞUVW P FRUSRUDWHVWRVHWXSWKHLUXQLWVRĠFHVLQ1RUWK RIDVRQO\XQLWVKDYHEHHQODXQFKHG Bengaluru. Many large companies such as HAL, DJDLQVWWKHXQLWVODXQFKHGLQ7KH BEML, Infosys, Dynamatic Technologies Ltd, IFCI excess supply from the previous years has had an and Tata Elxsi have signed an MoU with the GOK. DGYHUVHLPSDFWRQWKHXQVROGXQLWVßSHUFHQWDJH 4 mn. direct and 55 multinational IT companies including Infosys, Wipro, TCS and Cognizant have evinced interest indirect employment to be RESIDENTIAL PROJECT LAUNCH LQVHWWLQJXSWKHLURĠFHVLQWKH,7,52YHUPQ genereated over next 3 people are expected to get direct employment TREND IN NORTH BENGALURU decade in North IURPWKH,7,5DQGRYHUPQLQGLUHFW * Till September 2012 Bengaluru employment. Employment due to the ITIR in itself speaks about the growth of this region. These 2007 20082009 2010 2011 2012* developments are expected to completely change 1RUWK%HQJDOXUXIURPDQXQH[FLWLQJORFDWLRQWRD 13,355 bustling self-sustaining city. Growth of the residential market in this zone has been primarily along the Outer Ring Road (ORR) VXFKDV+HEEDO6DKDNDUD1DJDU'ROODUßV&RORQ\ 571DJDU%DQDVZDGL0DKDGHYDSXUDDQG 1DJZDUD+RZHYHUSRVWFRPPHQFHPHQWRIWKH %,$LQWKHVWUHWFKIURP+HEEDOWR%,$LV Launches Source: Knight Frank Research 42,329 units launched and 28,785 units absorbed since 2007 in North Bengaluru RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF NORTH BENGALURU * Till September 2012 2007 2008 2009 2010 2011 2012* 50,000 40,000 15% 30,000 14% 14% No. of Units 10,000 Stock Cumulative Absorption % of Unsold Units Source: Knight Frank Research INVESTMENT advisory REPORT ,QGLDßV5HVLGHQWLDO'HVWLQDWLRQV ORR accounts for almost Existing 35% of the total RƬFH Infrastructure space of Bengaluru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ĞHOG&95DPDQ EHIXUWKHUFODVVLĞHGLQWRIRXUSDUWVEDVHGRQLWV 1DJDU,QGLUDQDJDU0DUDWKDKDOOL%HOODQGXU UHVSHFWLYHFKDUDFWHULVWLFVDVD +HEEDO.53XUDP 9DUWKXU5RDG'ROODUßV&RORQ\571DJDU E .53XUDP0DUDWKDKDOOLF 0DUDWKDKDOOLÜ %DQDVZDGL0DKDGHYDSXUDDQG1DJZDUD7KH 6DUMDSXU5RDGDQGG 6DUMDSXU5RDGÜ6LON%RDUG 'RGGDEDOODSXU5RDG+HQQXU5RDGDQG+HEEDO -XQFWLRQ2IWKHVH D DQG E IRUPSDUWRIQRUWK areas that are connected with the international HDVW%HQJDOXUXDQG F DQG G IRUPSDUWRI DLUSRUWURDGDUHQRZKRWVSRWVIRUSURSHUW\ VRXWKHDVW%HQJDOXUX7KHQHZJURZWKFRUULGRU GHYHORSPHQW7KHSODQWRPDNHWKH2XWHU5LQJ IRU,7GHYHORSPHQWRSHQHGXSLQ%HQJDOXUXRQO\ 5RDG 255 DVLJQDOIUHHVHDPOHVVFRUULGRUZLOO LQDIWHUWKHFRPSOHWLRQRIWKH2557KH255 have far-reaching implications on the growth QRZDFFRXQWVIRUDOPRVWRIWKHWRWDORĠFH along its route. VSDFHRI%HQJDOXUX3UR[LPLW\WRWKHDLUSRUWDQG Upcoming Infrastructure HEBBAL TO BIA ROAD MXQFWLRQVZLOOEHPDGHVLJQDOIUHH7RZDUGVWKH HQGWZRğ\RYHUVZLOOFRPHXSDWWKH.RJLOX&URVV Hebbal to BIA road project DQG9LG\DQDJDUMXQFWLRQVZKLOHIRXU A 3.72 km. six-lane elevated road over the is expected to reduce the underpasses will come up at other crucial existing road is under construction. The project junctions. travel time between Hebbal ZLOOKDYHDVHULHVRIVHYHQğ\RYHUVIURP+HEEDOWR to BIA from 45 minutes to the Trumpet Junction near the airport. The 20-25 minutes elevated road starts from the Kodigehalli gate ELEVATED CORRIDOR FROM and connects to the international airport. This CENTRAL SILK BOARD JUNCTION SURMHFWE\WKH1DWLRQDO+LJKZD\$XWKRULW\RI,QGLD 1+$, LVDWYDULRXVVWDJHVRIFRQVWUXFWLRQIURP TO JAYAMAHAL ROAD +HEEDOWRWKH METRO-LINE Zone (SEZ), IT SEZ and creation of separate Manyata Embassy Business workspaces in the vicinity of the airport, there is also a huge supply of residential layouts. Park has over 7.5 mn. sq. ft. A 24 km. North-South (NS) corridor connecting stock and 9.4 mn. sq. ft. Hesaraghatta circle near Nagasandra (north) with under construction Puttenahalli (south) has been proposed. Along HIGH SPEED RAIL LINK (HSRL) with this, there are also plans (under Metro Phase II) to extend the Metro line from Hesarghatta up A 33 km. HSRL has been proposed and will WRWKH%,$7KHVHVLJQLĞFDQWSURMHFWVZLOODGG connect the city centre with the airport. The HSRL value to the property along this route. will operate between Cubbon Road and BIA with two halts between them, one at Hebbal and the The region has a demand for residential, other at Yelahanka. The HSRL will run parallel to commercial and retail spaces. With plans for the the expressway. development of an aerospace Special Economic Employment Indicators in North Bengaluru North zone of the city has a host of civic Further, there is the aerospace SEZ that is being infrastructure projects, large commercial planned here besides three industrial parks on developments and new residential options that 3,000 acres of land. Many renowned hotels like have changed the characteristics of the localities Oberoi, JW Marriot and Fortune are also planned over the last few years. Bengaluru International here. There is plenty of commercial development Airport has been the main catalyst for the change in the pipeline, with several developers having in this region. The monorail, Metro Rail and bought huge land parcels for development in the Bengaluru-Mysore Infrastructure Corridor (BMIC) stretch from Hebbal to Devanahalli. With so much project as well as the social infrastructure commercial development, we expect residential facilities are together set to drive Bengaluru development to follow suit in this region making North Bengaluru region further ahead. it the most sought after destination in the next 4- is expected to 5 years. generate direct and The existing major employment driver in this region is the IT/ITeS sector. However, in future the Few builders who have planned residential indirect employment of incremental employment in this region will be projects in North Bengaluru are Brigade Group generated from the planned commercial with their Gateway, Ozone Developers with their over 4-4.5 mn. in developments such as ITIR, Aero SEZ, Devanahalli integrated project called Urbana, Prestige with Business Park, Aerotropolis and Global Financial their Ozone and Golfshire Projects, Hiranandani the next decade District. Cumulatively the GOK has envisaged an Upscale with their Chancery, Nitesh with their investment of `1,150bn. in the North Bengaluru Columbus Square and Sobha with their Althea. region and is expected to generate direct and indirect employment of over 4-4.5 mn. in the next 6LQFHRYHUPQVTIWRIRĠFHVSDFH decade. LQFOXGLQJFDSWLYHRĠFHVKDVEHHQFRQVWUXFWHGLQ EMPLOYMENT HUBS IN NORTH BENGALURU SECTOR PROJECT NAME MAJOR COMPANIES IT/ITeS Manyata Embassy Business Park Philips, IBM, ANZ INVESTMENT advisory REPORT ,QGLDßV5HVLGHQWLDO'HVWLQDWLRQV 1RUWK%HQJDOXUX2YHUWKHQH[WĞYH\HDUV PQ NORTH BENGALURU OFFICE Currently the total RƬFH VTIWRIRĠFHVSDFHLVH[SHFWHGWREHDGGHGWR SPACE DYNAMICS WKHH[LVWLQJLQYHQWRU\WKHUHE\WDNLQJLWWRPQ spaFHVWRFNLQ1RUth VTIWE\WKHHQGRI+RZHYHUGHPDQGLV Bengaluru is 7.7 mn. sq.ft. H[SHFWHGQRWRQO\IURPWKH,7,7H6VHFWRUEXWDOVR of . ft. is ZKLFKPQVT IURPWKHDHURVSDFHVHFWRUORJLVWLFFRPSDQLHV RFFXSLHG DQGĞQDQFLDOVHFWRUV([FHVVLYHGHPDQGIRU TXDOLW\RĠFHVSDFHKDVNHSWYDFDQF\OHYHOVLQ ORZHUVLQJOHGLJLWVLQDQGZHH[SHFWLWWR UHPDLQDWWKDWOHYHOWLOO:HIRUHFDVWDQ LQFUHPHQWDOPQVTIWRIRĠFHVSDFHWREH DEVRUEHGRYHUWKHQH[WĞYH\HDUV 3UHIHUHQFHRIWKHFRPSDQLHVWREHLQFORVH We expeFW another 9.5 before 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E SUR[LPLW\RIWKHDLUSRUWDQGHPSOR\HHVß 2008 mn. sq.ft. of new RƬFH SUHIHUHQFHWRVWD\FORVHUWRWKHLUZRUNSODFHZLOO spaFHto beFome RYHUDOOGULYHWKHGHPDQGIRUFRPPHUFLDODVZHOO operational by 2017 DVUHVLGHQWLDOUHDOHVWDWHLQWKLVORFDWLRQ Over 30 mn. sq. ft. of EAST BENGALURU IT/ITeS spaFHLVoperational as of June 2012 in East (DVW%HQJDOXUXKDGVLPLODUFKDUDFWHULVWLFVDVWKDW 5RDG,73/&95DPDQ1DJDU0DKDGHYDSXUD RI%HQJDOXUXFLW\%HLQJDQRQGHVFULSW]RQHXQWLO +RRGL&LUFOHDQG,QGLUD1DJDU Bengaluru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and 15,946 units absorbed SRSXODWLRQ)XUWKHUZLWKWKHJURZWKRI PRPHQWXPDQG PZLWQHVVHGWKHODXQFKRI VLQFH7 in East SRSXODWLRQWKLVUHJLRQKDGDJUHDWGHDORIVRFLDO XQLWVDVFRPSDUHGWRXQLWVODXQFKHG Bengaluru LQIUDVWUXFWXUHWRSURYLGHHQWHUWDLQPHQWRSWLRQVWR WKURXJKRXW([FHVVVXSSO\IURPWKHSUHYLRXV WKHUHVLGHQWV*URZWKRIWKHUHVLGHQWLDOPDUNHWLQ \HDUVKDVDQDGYHUVHLPSDFWRQWKHXQVROGXQLWVß WKLV]RQHKDVEHHQSULPDULO\DORQJWKH:KLWHĞHOG SHUFHQWDJH 5RDG.53XUDP2OG0DGUDV5RDG2OG$LUSRUW RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF EAST BENGALURU * Till September 2012 2007 2008 2009 2010 2011 2012* No. of Units 6WRFN &XPXODWLYH$EVRUSWLRQ RI8QVROG8QLWV Source: .QLJKW)UDQN5HVHDUFK INVESTMENT advisory REPORT India’s Residential Destinations Existing A 15.5 km. metro rail line has been proposed Infrastructure under Phase-II of the Bengaluru Metro CONNECTIVITY FROM OLD along the ORR. The second route starts on the NH- QHDU%DL\DSSDQDKDOOLRĝWKH2OG0DGUDV5RDG MADRAS ROAD TO DEVANAHALLI It then connects with the airport via NH-648 near the Hoskote Industrial area. This stretch has also The distance between the Old Madras Road witnessed a lot of residential traction post the (OMR) in the East and Devanahalli in the North is commencement of BIA. Manyata Tech Park, over 40 km. There are two major routes that :KLWHĞHOG5RDG,73%+RVNRWH,QGXVWULDO3DUN connect the city centre in the east with the airport and other IT space on the ORR are the major QHDU'HYDQDKDOOLLQWKHQRUWK7KHĞUVWURXWH developments fuelling demand for residential Baiyappanahalli – Hebbal – BIA is a 40 km. drive houses in this pocket. Upcoming Infrastructure PERIPHERAL RING ROAD (PRR) EAST BENGALURU OFFICE SPACE DYNAMICS A 116 km. PRR connecting the entire peripheral arterial road linking all the major highways has been proposed. The major 60 connecting areas would be Hosur Road 50 (south) to Tumkur Road (west) via KR Puram 40 (east), Bellary Road (north), Old Madras 30 The new metro line Road and Sarjapur Road (south). The PRR is 20 stretch, a part of East- expected to ease the congestion on the 10 West corridor, will start ORR. before 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E from the Byappanahalli 2008 and terminate at METRO-LINE :KLWHƪHOG on the East A 15.5 km. metro rail line has been proposed under Phase-II of the Bengaluru Metro. This is the extension of the existing metro line which runs between Byappanahalli and MG Road. The new metro line stretch, a part of RESIDENTIAL PROJECT LAUNCH East-West corridor, will start from the TREND IN NORTH BENGALURU %\DSSDQDKDOOLDQGWHUPLQDWHDW:KLWHĞHOG * Till September 2012 on the East. This corridor has 14 metro stations - Jyothipuram, KR Puram, 2007 20082009 2010 2011 2012* Narayanapura, Mahadevapura, Garudacharpalya, Doddanakundi, 6,399 5,415 4,691 Visvesvaraya Industrial Estate, 3,795 Kundalahalli, Vaidehi Hospital, Satyasai 2,961 429 Medical Institute, ITPL, Kadugodi, Ujwala 9LG\DOD\DDQG:KLWHĞHOG Launches Source: Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations Employment Indicators in Since 2008 more than 37 mn. sq. ft. of RƬFHVSace East Bengaluru has been constructed in East Bengaluru The IT/ITeS sector continues to be the major DXWRPRELOHKXE0DQ\-DSDQHVHFRPSDQLHVKDYH employment driver of this region. Over 30 mn. sq. evinced interest in setting up their plants here. IWRĠFHVSDFHZDVRFFXSLHGDVRI-XQH 6LQFHPRUHWKDQPQVTIWRIRĠFH Major IT/ITeS hubs in this region include space has been constructed in Eastern Salarpuria Hallmark, ITPB, RMZ Ecospace, %HQJDOXUX2YHUWKHQH[WĞYH\HDUVZHH[SHFW Prestige Shantiniketan and Bagmane World RYHUPQVTIWRIRĠFHVSDFHWREHDGGHGWR &HQWUH7KHRYHUDOOGHPDQGIRUWKLVORFDWLRQZLOO the existing inventory taking the total stock to 57 EHGULYHQE\WZRPDMRUFKDUDFWHULVWLFVD ,7,7H6 PQVTIWE\WKHHQGRI,7,7H6VHFWRU employees’ preference to stay close to their remains the single largest demand driver for ZRUNSODFHDQGE ZHOOHVWDEOLVKHGVRFLDO WKHVHVSDFHV&XUUHQWO\RIWKHRĠFHVSDFHLQ infrastructure including organized retail market. the region is vacant and this is expected to :HH[SHct another 24 7KHSURSRVHG355ZLOOHQKDQFHFRQQHFWLYLW\RIDOO UHGXFHWRE\:HIRUHFDVWDQ the industrial hubs of Bengaluru. One node of LQFUHPHQWDOPQVTIWRIRĠFHVSDFHWREH mn. sq.ft. of new RƬFH this PRR is Hoskote - an upcoming industrial and DEVRUEHGRYHUWKHQH[WĞYH\HDUV VSace to become RSHUDtional by 2017 EMPLOYMENT HUBS IN EAST BENGALURU SECTOR PROJECT NAME MAJOR COMPANIES IT/ITeS Bagmane World Centre EMC2 IT/ITeS Ferns Icon Lenovo, ST Micro Electronics IT/ITeS ITPB Zone ABB, Accenture, Amazon INVESTMENT DESTINATIONS IN We believe Hebbal and KR Puram toSUovide the BENGALURU highest DSSUHciation in Bengaluru market Hebbal located in the northern region and KR The GOK is carrying out numerous infrastructure Puram in the eastern region are the most projects across the cities that are in various promising residential destinations in Bengaluru. stages of construction. These projects are Proximity to the Manyata Tech Park near Hebbal expected to bring about phenomenal changes in DQG:KLWHĞHOG5RDGQHDU.53XUDPPDNHVWKHVH WHUPVRIFRQQHFWLYLW\DPRQJGLĝHUHQWORFDWLRQV destinations an ideal residential location. ZLWKLQWKHFLW\DQGUHGXFHWKHFRPPXWLQJWLPH Additionally, connectivity of the eastern region 7KHVHIDFWRUVZLOOKDYHDFRQVLGHUDEOHLPSDFWRQ ZLWKWKHQRUWKHUQUHJLRQWKURXJK255DQGWKDWRI WKHUHDOHVWDWHSULFHVDFURVVWKHFLW\+RZHYHU WKHFLW\FHQWUHZLWKWKHDLUSRUWLQWKHQRUWK WKHSULFHDSSUHFLDWLRQZLOOQRWEHXQLIRUPDFURVV WKURXJK1+ %HOODU\5RDG KDYHLPSURYHGWKH WKHFLW\DQGZLOOYDU\EDVHGXSRQYDULRXVWKHPHV commuting experience. Further, the upcoming 355ZKLFKLVH[SHFWHGWRFRQQHFWDOOWKH :HEHOLHYHWKDWRYHUDSHULRGRIWKHQH[WĞYH SHULSKHUDOGLVWULFWVZLOOHDVHFRQQHFWLYLW\IURPWKH \HDUV1RUWK(DVW%HQJDOXUXZLOOSURYLGHWKH eastern region to the airport. Proposed highest appreciation compared to other zones. infrastructure projects such as the monorail, Based on the announced infrastructure projects, Metro and High Speed Rail Link is expected to FRXSOHGZLWKSUR[LPLW\WRWKH,7FRUULGRUZHKDYH further enhance the connectivity from the city VKRUWOLVWHGWZRGHVWLQDWLRQVWKDWORRNSURPLVLQJ FHQWUHWRWKHDLUSRUW7KHVHGHVWLQDWLRQVZLOO in this zone viz. Hebbal and KR Puram. These EHQHĞWLPPHQVHO\IURPWKHDERYHPHQWLRQHG destinations share some common characteristics developments. among themselves making them ideal residential INVESTMENT advisory REPORT India’s Residential Destinations destinations. These destinations are in close 170mn. in 2011 to USD 272mn. in 2017. A large SUR[LPLW\WRWKH,7FRUULGRURI+HEEDO:KLWHĞHOG number of these units are expected to be set- More than 60% of the Road and the ORR (Hebbal-KR Puram- up in the north-east region mainly on account Marathahalli stretch). Additionally, these of favourable regulations, availability of vast incremental RƬFHVSace destinations are also well connected with the land parcels, proximity to the city centre and to be in North and East Bengaluru International Airport and Bengaluru the talent pool of the city. Bengaluru city centre. The upcoming monorail, Metro, HSRL . The distinct feature of these destinations will and elevated road will enhance connectivity be a) proximity to the major employment hubs between the city centre and the airport. of Bengaluru i.e. Manyata Tech Park in the Following are the factors that will have a positive 1RUWKDQG:KLWHĞHOGDQG,73/LQWKH(DVW E impact on the chosen destination: quick and easy accessibility to the city centre . Bengaluru will witness an incremental demand DQGUHWDLOKXEVIRUGDLO\UHTXLUHPHQWV DQGF RIPQVTIWRIRĠFHVSDFHRYHUWKHQH[W distance to the airport. ĞYH\HDUVSULPDULO\GULYHQE\WKH,7,7H6 . Additionally, the upcoming metro, monorail, sector. More than 60% of this will be within HSRL corridor between Hebbal and BIA will North-East Bengaluru. further boost the connectivity of this location. . Bio-technology industry of Karnataka is . Proposed PRR will further enhance the forecasted to grow at an annual average rate connectivity from all the peripheral districts. of 10% over the next six years from USD Bio-technology industry in Karnataka is estimated to grow at 10% CAGR from USD 170mn. in 2011 to USD 272mn. in 2017 INVESTMENT advisory REPORT India’s Residential Destinations DESTINATION 721 units launched and 233 units absorbed in HEBBAL last 21 months in Hebbal RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF HEBBAL * Till September 2012 2007 2008 2009 2010 2011 2012* 35% 33% 1,800 1,500 8% 1,200 900 No. of Units 1% 5% 4% 600 300 Stock Cumulative Absorption % of Unsold Units Source: Knight Frank Research Hebbal was once the end of the northern city limit Developers got attracted to this destination post of Bengaluru. However with Bengaluru’s commencement of the Bengaluru International horizontal growth, Hebbal has witnessed a Airport near Devanahalli in 2008. On account of complete make-over in the last decade. Hebbal, this, 372 new residential units were launched in previously, endowed with a calm and serene 2010, which on a year-on-year basis registered a environment has now become quite active and rise of 285%. lively. Hebbal gained importance as a destination As on September 2012, 557 units out of the total with the establishment of Bengaluru International 1,604 units launched were unsold, implying 34.7% Airport near Devanahalli which is 30 km. away of the total inventory as unsold. from Hebbal. It has now emerged into one of the IT/ITeS hub, housing many tech parks and campuses of IT companies. The infrastructure of Hebbal is outstanding; it has well linked roads We have benchmarked Hebbal to RMV/Sanjay FRQQHFWLQJGLĝHUHQWSDUWVRIWKHFLW\7KLVZLOOEH Nagar which is an established micro-market and We forecast prices in further enhanced once the monorail, HSRL and has characteristics similar to Hebbal. Going Hebbal to appreciate by Metro commence in the next 4-5 years that will forward, we expect the absorption rate to connect the city-centre with the airport. This is increase due to the reasons stated earlier and 94% from 2012 to 2017 expected to immensely increase the residential this will positively impact prices in Hebbal. prices in Hebbal. Currently, Hebbal prices are 33% lower than our benchmarked micro-market. We forecast this There was a dearth of residential projects in discount to narrow down to 10% by the end of 2017 Hebbal before 2008. It witnessed the launch of a resulting in Hebbal prices moving up from mere 110 residential units in 2008. `4,250/sq.ft. to `8,230/sq.ft. RESIDENTIAL PROJECT LAUNCH PRICE FORECAST TREND IN HEBBAL * Figures in `/sq.ft * Till September 2012 2012 2017E 2007 20082009 2010 2011 2012* `9,145 666 `6,350 `8,230 `4,250 372 305 110 RMV/Sanjay Nagar Hebbal 97 55 Launches Source: Knight Frank Research Source: Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations PRICE MOVEMENT `3.6 mn. and * Figures in ` per sq.ft `5.3 mn. are the 9,000 minimum ticket size for 8,000 investment in Hebbal for a 10% 2 BHK and 3 BHK Apartment 7,000 respectively 6,000 5,000 33% 4,000 3,000 2,000 1,000 2007 2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E Hebbal RMV/Sanjay Nagar Discount Margin Source: Knight Frank Research Investment Options in Hebbal INVESTMENT TICKET SIZE SELECT PROJECTS 1250 - 1850 3BHK 5.3 - 7.9 Project Developer No. of Launch Completion Units Date Date 850 - 1100 2BHK 3.6 - 4.7 Waters Equinox 380 Sep-11 Mar-16 Edge Sobha Sobha 498 Jun-11 Mar-15 City Developers Apartment Size in sq.ft. Ticket Size in ` mn. Source: Knight Frank Research Source: Knight Frank Research INVESTMENT advisory REPORT ,QGLDßV5HVLGHQWLDO'HVWLQDWLRQV DESTINATION 6,095 units launched in KR Puram since 2007, of KR PURAM which 42% launched in last 33 months RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF KR PURAM * Till September 2012 2007 2008 2009 2010 2011 2012* Over the nextƪYHyears, we expect KR Puram to No. of Units follow in terms :KLWHƪHOG 6WRFN &XPXODWLYH$EVRUSWLRQ RI8QVROG8QLWV Source: Knight Frank Research of price .53XUDPORFDWHGRQ1+RĝWKH2OG0DGUDV 2YHUXQLWVZHUHODXQFKHGVLQFHLQ.5 5RDGLVNPIURP%DL\DSSDQDKDOOL0HWUR 3XUDPPLFURPDUNHW7KLVOHGWRDQLQFUHDVHLQ VWDWLRQDQGLVMXVWNPIURP0*5RDG,WV XQVROGXQLWVZKLFKDVDSHUFHQWDJHWRWRWDO SUR[LPLW\WRWKH,7FRUULGRURI:KLWHĞHOGDVZHOODV LQYHQWRU\NHSWRQULVLQJVLQFH $VRQ6HSWHPEHU RI0DQ\DWD7HFK3DUNKDVPDGHLWWKHPRVW RIWKHWRWDOXQLWVVWRRGXQVROGLQ.5 VRXJKWDIWHUGHVWLQDWLRQDPRQJWKH,7HPSOR\HHV Puram as there is still some supply overhang of 7KHSURSRVHG3HULSKHUDO5LQJ5RDG 355 ZLOO the previous year. FRQQHFW(DVWHUQ%HQJDOXUXZLWK+RVNRWHZKLFKLV NPIURPWKH.53XUDP:LGHQLQJRIWKH2OG :HKDYHEHQFKPDUNHG.53XUDPZLWK:KLWHĞHOG 0DGUDV5RDG+LJKZD\WRHLJKWODQHKDV ZKLFKLVRQHRIWKHPRVWHVWDEOLVKHGPLFUR enhanced the connectivity; the commute time to PDUNHWVRI(DVW%HQJDOXUX*RLQJIRUZDUGZH ,73/QHDU:KLWHĞHOGKDVUHGXFHGWR H[SHFWWKHDEVRUSWLRQUDWHWRLQFUHDVHGXHWRWKH minutes. Hence, KR Puram-Budigere Cross stretch IDFWRUVVWDWHGHDUOLHUDQGWKLVZLOOSRVLWLYHO\ has emerged as a good destination. Proximity to impact prices in KR Puram. Currently, KR Puram We forecast prices in KR WKH,7KXERI:KLWHĞHOGLPSURYHGFRQQHFWLYLW\ SULFHVDUHORZHUWKDQWKHHVWDEOLVKHG Puram to appreciate by ZLWKWKHDLUSRUWDQGSUR[LPLW\WRWKH PDUNHW:HIRUHFDVWWKLVGLVFRXQWWRQDUURZGRZQ %\DSSDQDKDOOLPHWURUDLOKXEKDYHJHQHUDWHG WRE\WKHHQGRIUHVXOWLQJLQ.53XUDP prices moving up from `3,245/sq.ft. to 91% from 2012 to 2017 LQWHUHVWDPRQJSURVSHFWLYHEX\HUV `VTIW CONNECTIVITY TO IMPORTANT LOCATIONS RESIDENTIAL PROJECT LAUNCH %\5RDG ([LVWLQJ %\0HWUR5DLO 3URSRVHG TREND IN KR PURAM * Till September 2012 2007 20082009 2010 2011 2012* :KLWHĞHOG :KLWHĞHOG 1,118 13 52 13 km mins km mins 881 414 254 'LVWDQFH 7UDYHOWLPH Launches Source: Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations PRICE MOVEMENT `3.1 mn. and * Figures in ` per sq.ft 8,000 `4.7 mn. are the minimum ticket size for 7,000 investment in KR Puram for 6,000 a 2 BHK and 3 BHK 15% Apartment respectively 5,000 4,000 37% 3,000 2,000 1,000 2007 2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E KR Puram :KLWHĞHOG Discount Margin Source: Knight Frank Research PRICE FORECAST Investment Options * Figures in `/sq.ft in KR Puram 2012 2017E `7,370 INVESTMENT TICKET SIZE `5,175 `6,200 `3,245 1450 - 2100 3BHK 4.7 - 6.8 :KLWHĞHOG KR Puram 950 - 1220 2BHK 3.1 - 4.0 Source: Knight Frank Research Apartment Size in sq.ft. Ticket Size in ` mn. Source: Knight Frank Research SELECT PROJECTS Project Developer No. of Launch Completion Units Date Date Purva Puravankara 306 Mar-11 Sep-14 Midtown Pashmina Pashmina 250 Jan-12 Dec-14 Waterfront Developers Purple Purple 135 Jan-11 Dec-13 Woods Estates Source: Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations Yelahanka located HIDDEN GEM further north of Hebbal is at a distance of 19 km Yelahanka Yelahanka located further north of Hebbal is at a CONNECTIVITY TO distance of 19km. from the Bengaluru IMPORTANT LOCATIONS International Airport (BIA). It was initially FROM YELAHANKA envisaged as the satellite city of Bengaluru, but is now a part of the BBMP – The Municipal * By road Destination gained Corporation of Bengaluru. The NH-7 provides prominence only after the excellent connectivity with the airport as well as HEBBAL commencement of the city centre. Bengaluru INTERNATIONAL The destination gained prominence only after the 18 17 AIRPORT km commencement of BIA at Devanahalli. However, km 19 km this was the sole reason for the swift rise in the real estate prices of Yelahanka. The current prices KDYHDOUHDG\EXLOWLQWKHEHQHĞWDULVLQJRXWRIWKH announced projects, which we believe will see light only after 2017. As on date, Yelahanka is still short of social infrastructure including basic amenities like water and electricity. Moreover, the Yelahanka is still short of organised retail market is still non-existent in this social infrastructure and destination. Distance basic amenities The Government of Karnataka has proposed numerous infrastructure projects including Technology Investment Region (ITIR) in widening of elevated road, High Speed Rail Link Devanahalli, Aero SEZ an aviation hub in and Metro Rail to improve the connectivity Devanahalli, Devanahalli Business Park and between the airport and Bengaluru City Centre. Aerotropolis. The Government of Karnataka is in Also, commuter rail system has been planned to talks with banking giants to set up a Global connect Devanahalli with Yeshvantpur via Financial District near Devanahalli. These Yelahanka. developments are expected to completely change Bengaluru International North Bengaluru from an unexciting location to a Airport Area Planning Further, the Government of Karnataka has formed bustling self-sustaining city. Authority formed by Bengaluru International Airport Area Planning Government of Karnataka Authority (BIAAPA) to ensure organized Cumulatively, the above developments have the development of Bengaluru North, Devanahalli potential to generate 4 mn. direct and indirect and Dodaballapur Taluka. A total investment of jobs in North Bengaluru over the next two `1,150bn. has been earmarked in order to make decades. Hence, we believe that Yelahanka’s North Bengaluru a self-sustaining business hub. eventual evolution as a Peripheral Business District will Some of the major investments are Information give birth to a thriving resiential real estate destination. INVESTMENT advisory REPORT India’s Residential Destinations CHENNAI Chennai, the capital of Tamil Nadu, is the fourth most populous city in CHENNAI METROPOLITAN REGION POPULATION India and serves as a gateway to Southern India through its strategically located port. Chennai’s urban agglomeration, also known as the Chennai Population in Millions Metropolitan Region (CMR), is spread over 1,189 sq.km. and consists of parts of Thiruvallur and Kancheepuram districts apart from Chennai city. 1991 2001 2011 As per Census 2011, the total population of CMR was 8.7 mn. The development of the CMR is entrusted to the nodal planning agency Chennai Metropolitan Development Authority (CMDA) which prepares the master plan for the region. CMDA in September 2008 prepared the 5.42 2.4% 6.56 1.9% 8.70 2.9% Second Master Plan for Chennai Metropolitan Area, 2026 outlining the Population Average Annual Growth detailed development plan along with land use, transportation, housing and other important aspects of the CMR. Source: Census 2011, Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations CHENNAI MAP Major Roads U/C Metro Corridor I U/C Metro Corridor II Railway Line South Zone West Zone Central Zone North Zone Price Contours (`/ sq.ft) INVESTMENT advisory REPORT India’s Residential Destinations Chennai Metropolitan Market Region is spread over 1,189 sq.km. with a Overview population of 8.7 mn. Chennai is divided into four broad zones: North, are witnessing growth in high-rise construction as Central, South and West. It may be noted that well. being a coastal city, Chennai does not have an eastern market and faces the Bay of Bengal. The western part of the city has some of the most upcoming locations. The saturation of land banks in Central Chennai has seen westward movement ZONE MAJOR RESIDENTIAL of residential development. Electronic hardware DESTINATIONS corridor in Sriperumbudur and Auto & Auto Ancillary manufacturing units in Oragadam have Central Nungambakkam, Boat Club, Anna UHVXOWHGLQLQFUHDVHGGHPDQGIRUDĝRUGDEOH Nagar, Kilpauk, T Nagar,Mylapore, residential units in this region. Multinationals like R.A Puram Nokia, Dell, Samsung, Saint-Gobain, Renault- West Sriperumbudur, Mogappair, Porur, Nissan and Hyundai have set up their units here. Ambattur, Poonamallee However, lack of social infrastructure, absence of organized retail and distance from the city centre North Ayanavaram, Tondiarpet, have restricted growth of the residential market in Madhavaram, Perambur this zone. South Old Mahabalipuram Road (OMR), GST Road, Adyar, Velachery, South Chennai, along the Old Mahabalipuram Medavakkam Road (OMR) and Grand Southern Trunk (GST) road is rapidly developing as a self-sustaining hub with the presence of a large number of IT SEZs, IT Parks and manufacturing units. Nodes such as North Chennai is primarily an industrial area Perungudi, Sholinganallur and Siruseri on the dotted with various locomotive workshops and OMR along with Tambaram and Mahindra World port related activities. The two major ports City on GST road have created enormous namely Chennai Port and Ennore Port are located employment opportunities in this region. This has in this region. Non-availability of vacant land, Chennai market has inherently led to the development of the narrow arterial roads and lack of employment witnessed the launch of residential market in South Chennai. opportunities have restricted the real estate growth of this region as compared to other parts Additionally, the focus of the state government in more than 105,236 of the city. Destinations such as Tondiarpet, providing excellent road connectivity along these Madhavaram and Perambur are the primary units since 2007 nodes has further helped in the development of residential locations with large under- this region. construction projects in these areas. Residential demand is driven by the business community, traders and public sector employees here. RESIDENTIAL PROJECT LAUNCH Central Chennai is the commercial heart of the FLW\ZLWKYDULRXVFRUSRUDWHRĠFHVORFDWHGLQWKH TREND IN CHENNAI Central Business District (CBD) areas of Anna * Till September 2012 Salai, Nungambakkam, Egmore, Nandanam and others. Excellent connectivity with various parts 2007 20082009 2010 2011 2012* of the city, good physical and social infrastructure and presence of organized retail have ensured 26,152 the highest property prices in this part of the city. 23,803 Locations such as Boat Club Road, Poes Garden, Nungambakkam, T Nagar, Mylapore and RA Puram are some of the prominent residential 14,441 15,505 12,702 areas. Majority of the residential development in 12,633 the central locations comprises bungalows and independent residential units while some pockets like Alwarpet, Kilpauk and Anna Nagar Launches Source: Knight Frank Research INVESTMENT advisory REPORT ,QGLDßV5HVLGHQWLDO'HVWLQDWLRQV RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF CHENNAI As of Q3 2012, 25% of * Till September 2012 the total units remain 2007 2008 2009 2010 2011 2012* unsold 25% 120,000 21% 100,000 12% 80,000 7% 60,000 5% 4% 40,000 No. of Units 20,000 Stock Cumulative Absorption % of Unsold Units Source: Knight Frank Research 33,938 The advent of the IT sector along with the setting ZONE-WISE SPLIT OF UNDER up of large manufacturing units by multi-national units were absorbed CONSTRUCTION UNITS companies have changed the dynamics of during 2010 and 2011 Chennai real estate market. Apart from 5% generating thousands of new jobs for the local residents, Chennai has been attracting a large pool of migrants into these sectors from across the country. This has enabled the real estate market to grow at a tremendous rate during the ODVWĞYH\HDUVHVSHFLDOO\WKHUHVLGHQWLDOVHJPHQW which witnessed the launch of more than 105,236 23% units since 2007. 7% During 2010 and 2011, more than 49,955 units were launched in Chennai. However, only 33,938 units were absorbed during this period resulting LQDVLJQLĞFDQWMXPSLQWKHXQVROGXQLWVß 65% 65% percentage. of the under 7KHSHUFHQWDJHRIXQVROGXQLWVGXULQJWKHĞUVW Central West North South construction units are nine months of 2012 has further increased despite Source: Knight Frank Research located in South Chennai the number of new launches falling drastically. This is primarily because of the supply overhang of the previous years. Chennai is land locked on the eastern side by the Bay of Bengal, thereby restricting its growth to the remaining three sides. Backed by excellent rail and road connectivity, the city has been expanding three ways over the last few decades. However, development on the northern side is subdued as compared to West and South Chennai mainly due to the presence of various industrial pockets and port related activities here. Over the last few years, the focus of developers has been shifting from Central Chennai to the peripheral areas of South and West Chennai due to greater availability of jobs here. INVESTMENT advisory REPORT India’s Residential Destinations IT/ITeS sector constitutes Real Estate Drivers 71% of the total office space in Chennai Employment Indicators Infrastructure Development Service Sector Manufacturing Sector Rail Network Road Network IT Sector Auto & Auto Ancillaries Chennai Metro Corridor I & II Outer Ring Road Monorail Corridor I, II & III Infrastructure Development EXISTING ARTERIAL ROAD NETWORK CONNECTIVITY DESCRIPTION Chennai-Kolkata Starts at Basin Bridge till Kottur Connects Chennai Port with North Chennai Highway (NH 5) Anna Salai Starts at Fort St. George towards the Provides easy access from the city centre to Currently Chennai is GST Road (NH 45) south west via airport till Mahindra suburbs in the south such as Tambaram, connected through World City Vandalur, Maraimalai Nagar and Singaperumalkoil 5 Old Mahabalipuram Starts at Madhya Kailash junction Also known as the IT corridor, connects the Road (OMR) towards the south via Sholinganallur city centre with southern suburbs such as major arterial roads and till Mahabalipuram Perungudi, Siruseri and Kelambakkam Chennai-Bangalore Starts from Chennai Central Station Connects western markets such as 4 Highway (NH 4) via Sriperumbudur till Bangalore and Sriperumbudur with the city centre suburban rail networks East Coast Road Sholinganallur till Mahabalipuram Running parallel to the OMR, connects the till Mahabalipuram coastal locations of South Chennai EXISTING SUBURBAN RAIL NETWORK CONNECTIVITY DESCRIPTION MRTS Chennai Beach - Tambaram - Running parallel to GST road, connects city Chengalpet centre with Mahindra World City via Tambaram and Maraimalai Nagar South West Chennai Beach - Thiruvanmiyur Provides easy connectivity from Velachery via Line - Velachery Tidel Park and Taramani to city centre North Line Chennai Central - Ennore - Connects the northern part of Chennai with Gummidipoondi Central Chennai via Tondiarpet West Line Chennai Central - Avadi - Tiruvallur Connects North Western markets of Ambatur and Avadi with city centre INVESTMENT advisory REPORT India’s Residential Destinations UPCOMING ARTERIAL ROAD NETWORK Most of the upcoming infrastructure CONNECTIVITY DESCRIPTION CURRENT EXPECTED projects will be STATUS COMPLETION operational before Outer Ring Vandalur - The six-lane highway is expected to Under 2012-13 Road I Nazarathpet - decongest the city road by connecting construction 2017 Nemilichery the GST Road (NH 45) with Chennai- Bangalore Highway (NH 4) and NH 205 Outer Ring Nemilichery - Will connect NH 205 with the Chennai- Land 2016-17 Road II Nallur - Minjur Kolkata Highway (NH 5) and TPP road Acquisition at Minjur through a six-lane highway UPCOMING SUBURBAN RAIL NETWORK CONNECTIVITY DESCRIPTION CURRENT EXPECTED STATUS COMPLETION Chennai Metro Washermenpet - Will enhance connectivity between Under 2015 Corridor I Chennai Central Chennai Airport and central Chennai via construction Station - Guindy Chennai Airport Chennai Metro Chennai Central :LOOFRQQHFWWKHKHDY\WUDĠFURXWH Under 2015 Corridor II Station - between city centre and St. Thomas Construction Annanagar - Mount Vadapalani - St. Thomas Mount Chennai Vandalur - Better connectivity for Vandalur and Bidding 2016-17 Monorail Velachery Tambaram with city centre via Valechery stage IT/ITeS and Corridor I Chennai Poonamallee - Will connect West Chennai via Porur Bidding 2016-17 Monorail Kathipara stage Automobile Corridor II sectors to be the driving Chennai Poonamallee - Enhance connectivity of Poonamallee as Bidding 2016-17 factors for Chennai’s Monorail Vadapalani Vadapalani is also a node on Metro stage growth Corridor III Corridor II Employment Indicators in Chennai Being a port city, Chennai has historically been at industries present in the periphery of Chennai. an advantage compared to other metro cities of Apart from the manufacturing plants of Hyundai, South India like Bangalore and Hyderabad. Export Renault-Nissan, Daimler and Eicher Motors, there oriented manufacturing industries have always are numerous Auto Ancillary units spread across been attracted to Chennai due to the presence of the industrial corridor of Sriperumbudur- two major ports with excellent road and rail Oragadam. Additionally, manufacturing plants of connectivity from all the three sides of India. Auto Ford, BMW and Sundram Fasteners on GST road & Auto Ancillary sector is one of the largest have also created large scale employment in the employers among the various manufacturing Auto sector. INVESTMENT advisory REPORT India’s Residential Destinations Apart from Auto & Auto Ancillary, there are OFFICE SPACE BREAK-UP Currently the total office various other manufacturing industries like Electronic Hardware, Apparels, Engineering and space stock in Chennai is Chemicals that have a significant presence in Chennai’s periphery. Companies such as Nokia, 60.7 Samsung, Motorola, Flextronics, Dell, Asian Paints and Saint Gobain have their production mn. sq.ft. of which units located in West and South Chennai. Going forward, we expect the Auto & Auto 44.8 Ancillary sector to be one of the driving factors for mn. sq.ft. is occupied Chennai’s growth. We expect the output of Tamil Nadu’s Auto & Auto Ancillary industry to grow at an annual average rate of 24% over the next five years. Since a large number of manufacturing Source: Knight Frank Research plants are located within the vicinity of the city, Chennai will immensely benefit from this. Since 2000, the IT/ITeS sector has emerged as CHENNAI OFFICE one of the most important drivers of employment SPACE DYNAMICS and has significantly contributed towards the 76% of the total office * Figures in mn. sq.ft growth of the city. space stock is located in South Chennai Unlike manufacturing, IT/ITeS sector creates large scale white collar employment with higher purchasing power. Blue chip companies like TCS, Infosys, Wipro, Capgemini, HCL and Cognizant have established their centres in the city. Currently the IT/ITeS sector forms more than 70% of the total office stock and this share is expected to go up further as new IT/ITeS offices become operational in the coming years. Currently the total office space stock in Chennai is 60.7 mn.sq.ft. of which 67% or 40.4 mn.sq.ft. We expect another has become operational post 2008. However, the Before 2008 2009 20102011 20122013E 2014E 2015E 2016E 2017E 2008 total occupied space stands at 44.8 mn.sq.ft. 22 resulting in a vacancy level of 26%. Although the absorption trend witnessed over the previous five mn. sq.ft. of new office years has been quite healthy, excess supply of space to be operational in new space has led to a significant jump in the next 5 years vacancy levels. The high vacancy level in the existing stock has compelled many developers to strategically delay the delivery period of the on- ZONE WISE DISTRIBUTION OF going under construction projects and postpone the launch of any new projects. Considering this, OFFICE SPACE STOCK we expect another 22 mn.sq.ft. of new office space to become operational in the next five years taking the total stock to 82.6 mn.sq.ft. by the end of 2017. The recent slowdown witnessed by the IT/ITeS 6% sector globally is expected to impact the incremental absorption of office space in Chennai in the coming five years. However, the delay in delivery of new projects will bring some respite 18% and eventually reduce the vacancy levels to 20% by 2017. We have forecasted an incremental 76% demand of 21.1 mn.sq.ft. over the next five years taking the total occupied space in the city to 66 Central West South mn.sq.ft. by 2017 end. Source: Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations Absence of any significant STATUTORY COSTS incremental employment generation in AND MARKET NORMS North STATUTORY COSTS COST DETAILS Chennai over the next few years Stamp Duty 8% on Undivided Share (UDS) of land based on Guidance Value (GV). GV is the rate of land fixed by the state government based on its market will restrict the growth value. The effective rate of stamp duty is 1-2% of property value of real estate in this zone Registration 1% upto a Maximum of `30,000 Value Added Tax (VAT) Nil Service Tax 3% on agreement value. Levied on under construction properties MARKET NORMS NORM DETAILS Time line for property Any time until possession registration Re-sale before Allowed subject to payment of transfer chargers to developer ranging possession `100-200 psf Although Loading 30% on carpet area Central Brokerage 1-2% of property value Chennai will also witness increase in office space, the quantum Preferred Zone of it will be marginal in in Chennai comparison to the South Historically Chennai’s residential market has over the next five years will be largely created in been dominated by end-users with very little South and West Chennai as the majority of the presence of investors, resulting in lower price new office space and manufacturing units is volatility as compared to the markets of Mumbai, being set up here. Although Central Chennai will the NCR and Bangalore. However with the advent also witness increase in office space, the of IT/ITeS sector and rising income levels, the quantum of it will be marginal in comparison to perception towards real estate as an investment the South and West. Similarly, absence of any has changed drastically in the city over the last significant incremental employment generation in few years. Although end-users still form a North Chennai over the next few years will restrict majority of property buyers even today, there has the growth of real estate in this zone. been a considerable rise in investor interest in the recent period. Employment growth and West Chennai is expected to immensely benefit infrastructure development will primarily drive the from the large number of existing and upcoming real estate market of Chennai in the coming manufacturing units on the Sriperumbudur- years. Oragadam industrial corridor. However, absence of any significant IT/ITeS offices apart from the However, certain zones will grow faster than the DLF IT SEZ makes this zone depend largely on the others as the benefit of these factors will accrue growth in the manufacturing sector. more to these zones. Incremental employment INVESTMENT advisory REPORT India’s Residential Destinations Although the manufacturing sector is expected to GST road, is expected to witness maximum grow strongly, going forward, this zone will not be JURZWKLQWKHUHVLGHQWLDOPDUNHWRYHUWKHQH[WĞYH South DEOHWRUHDSWKHEHQHĞWRIODUJHVFDOH \HDUV+HDY\WUDĠFFRQJHVWLRQVDQGDEVHQFHRI employment in the IT/ITeS sector. Higher any mass rapid transport system on the IT purchasing power and preference to reside in Corridor of OMR has resulted in many employees’ Chennai, which close proximity of their work area, makes IT/ITeS SUHIHUULQJWRVWD\FORVHWRWKHLURĠFHVLQWKLV will host three-fourth of employees a dominant force in driving the area. This phenomenon is expected to continue residential market of any region. for the next few years as no new mass rapid the total ock, is RƬFHVW transport system is planned on the OMR. Hence, expected to witness South Chennai, which will host three-fourth of the growth in the IT/ITeS sector of the city will directly maximum growth in the WRWDORĠFHVWRFNLQ&KHQQDLDORQJZLWKWKHODUJH EHQHĞWWKHUHVLGHQWLDOPDUNHWRI6RXWK&KHQQDL residential market over number of manufacturing units located on the the next 5 years SOUTH CHENNAI The focus of Tamil Nadu government over the last located with easy access to both these roads has decade in promoting OMR as an IT/ITeS led to many home buyers preferring these destination along with the setting up of Mahindra destinations. World City on GST road has created immense employment opportunities in South Chennai. South Chennai has witnessed the launch of Additionally, the proximity to Chennai airport, 68,914 residential units since 2007. Of these, a presence of arterial roads and availability of vast total of 50,666 units of this have been absorbed vacant land parcels has enabled this zone to as of Q3 2012, with 26% remaining unsold. There rapidly grow into an emerging residential market. has been a steady rise in the percentage of Since 2000, a large number of IT/ITeS companies unsold units over the years, as the pace of have set up their operations in the numerous IT absorption has not been able to keep up with the Parks and IT SEZs on OMR and GST road. The pace of new launches. A total of 29,245 units 68,914 residential growth in IT/ITeS based employment, gradually were launched in South Chennai during 2010 and sowed the seeds of a bustling residential market 2011, of which only 19,550 units were absorbed. units have been launched in this zone. Preference of employees in staying in South Chennai since FORVHWRWKHLUZRUNSODFHDQGDĝRUGDEOHSULFLQJDV Taking a cue from the market, developers have 2007. Of these, a total of compared to Central Chennai sustained the become cautious before launching any new development of a healthy market in this zone. project and only 61 new projects have been 50,666 launched in 2012 as compared to 147 during Growth of the residential market in South Chennai the previous year. Although the number of new units have been absorbed has been primarily along the three arterial roads launches has reduced drastically, the excess as of Q3 2012 of OMR, GST road and ECR. However, in the last supply from the previous years is impacting the few years a lot of development has taken place unsold units’ percentage. Additionally, within the destinations located between OMR and DEVRUSWLRQGXULQJWKHĞUVWQLQHPRQWKVRI GST road. The advantage of being centrally has been abysmally low. RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF SOUTH CHENNAI * Till September 2012 2007 2008 2009 2010 2011 2012* 26% 22% 70,000 60,000 13% 50,000 11% 40,000 9% 30,000 6% 20,000 No. of Units 10,000 Stock Cumulative Absorption % of Unsold Units Source: Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations SOUTH CHENNAI MAP s s a p Sar y dar Pa B tel Road i a Kunrathur n ADYAR n e h NH C 45 St. Thomas NH Mount 4 Anna International Airport Chennai ad Ro k Airport VELACHERY d n a u o PALLAVARAM r R T t s a o n C r rridor SRIPERUMBUDUR t e h s t chery Road a E u PALLIKARNAI a IT Co o S t Vel a r e CHROMEPET G ss epa NH y 45 Velachery Road Chennai B Chennai TAMBARAM MEDAVAKKAM East Coa st Li nk Road oad da o VANDALUR R k lipuram R n u r T n r SH 121 e h Old Mahaba t u o S t a ad re BAY G SITHALAPAKKAM GUDUVANCHERI OF East Coast Ro NH 45 BENGAL m a r S u H 1 p SIRUSERI a l 21 l a m a M ld O da o d R a o k R n m u a r r T u p n li r a e b h a t h u a M ast Road o o S l d t O t C a s e r Ea G Paranur Proposed Monorail Major Roads NH CHENGALPATTU 45 U/C Metro Corridor I THIRUPORUR U/C Metro Corridor II Airport Chengalpattu Railway Line allapuram Benchmark location Top destination amallapuram Mam o T Employment Hubs To M To Chengalpattu INVESTMENT advisory REPORT India’s Residential Destinations RESIDENTIAL PROJECT LAUNCH up their campuses along this route. ELCOT SEZ Lack of social TREND IN SOUTH CHENNAI DQG6,3&27,73DUNDUHWKHWZRODQGPDUNRĠFH infrastructure and space developments in these segments. * Till September 2012 absence of organized However, lack of social infrastructure and retail have restricted the 2007 20082009 2010 2011 2012* absence of organized retail are the major growth of residential drawbacks of these segments and hence preference among home buyers to reside here is low. Some of the major residential destinations market on OMR 16,740 located here are Thuraipakkam, Sholinganallur, beyond WKHƪUVW toll Navallur, Egattur and Padur. 12,505 plaza 11,889 10,355 9,185 8,240 GRAND SOUTHERN TRUNK (GST) ROAD Launches Source: Knight Frank Research GST road, also known as NH-45, is one of the busiest National Highways in Southern India and starts from Kathipara junction in Guindy till Theni. It is a four-lane highway with various suburban Existing destinations and the Chennai airport located along the road. The setting up of Ford India’s manufacturing plant at Maraimalai Nagar was one Infrastructure RIWKHĞUVWPDMRUGHYHORSPHQWVRQWKLVURDG However, commencement of the 1,550 acres Mahindra World City in 2005 at Chengelpet led to a dramatic change in the development of this Commencement of the 1,550 OLD MAHABALIPURAM ROAD corridor with huge employment opportunities (OMR) being created across the IT/ITeS, Auto & Auto Ancillary and Apparel sectors. In addition to this, acres Mahindra OMR, also known as the IT Highway or Rajiv setting up of Shriram’s The Gateway and Estancia Gandhi Salai, starts from Madhya Kailash IT SEZ have further facilitated growth of the World City Junction near Adyar till Mahabalipuram. It is a six- IT/ITeS sector on this road. led to a dramatic change lane highway being developed in two phases, with Phase I of 20.1 km. from Madhya Kailash Residential development on the GST road has in the development of the Junction to Siruseri already under operation since been centred along the hubs of Chromepet, GST Road with huge 2008. The work on Phase II that will connect Tambaram, Vandalur, Maraimalai Nagar and employment opportunities Siruseri to Mahabalipuram is still underway. Singaperumalkoil. The seamless connectivity throughout the road leaves little variation in being created Phase II is expected to be ready in another 3-4 years. Phase I of OMR is further divided into three terms of price among the various residential segments based on toll plazas. The road from destinations located on GST road, as the time Kailash Junction to Perungudi toll plaza is known taken to travel between them is very marginal. DVWKHĞUVWVHJPHQW EAST COAST ROAD (ECR) Proximity to the city centre, presence of an HVWDEOLVKHGRĠFHPDUNHWDQGDFFHVVWRUHWDLO ECR, also known as the Entertainment Corridor, is malls has enabled rapid development of various a two lane highway built along the coast of the UHVLGHQWLDOPDUNHWVORFDWHGDORQJWKHĞUVW Bay of Bengal connecting Chennai with segment. Some of the major IT/ITeS projects such Pondicherry. The road starts at Thiruvanmiyur in as TIDEL Park, Ramanujan IT Park, Ascendas South Chennai and runs parallel to OMR and International Tech Park, RMZ Millenia Business ĞQDOO\PHUJHVZLWK205DW0DKDEDOLSXUDP6LQFH Park and SP Infocity are located in this segment. the last ten years this road has witnessed considerable real estate development with The road from Perungudi toll plaza till Egattur toll numerous theme parks, boat houses, beaches, plaza is known as the second segment and the 5-star hotels and pubs dotted along the stretch. road beyond Egattur as third segment. These two :LWKWKHDEVHQFHRIDQ\VLJQLĞFDQWRĠFHVSDFH segments of the OMR have also witnessed residential development along this road has been tremendous residential development over the last restricted to second homes and villas. few years, as many IT/ITeS companies have set INVESTMENT advisory REPORT India’s Residential Destinations CHENNAI BEACH- VELACHERY Upcoming MASS RAPID TRANSIT SYSTEM MRTS forms a vital part of the infrastructure (MRTS) Infrastructure in South Chennai as it connects Central Chennai CHENNAI BEACH VANDALUR-VELACHERY with major IT/ITeS hubs on CHENNAI FORT PARK TOWN MONORAIL the OMR like Taramani and CHINTADRIPET Perungudi CHEPAUK TIRUVELLIKENI LIGHT HOUSE THIRUMAYILAI TOWARDS CHENNAI BEACH VIA MRTS MANDAVELI GREENWAYS ROAD KOTTURPURAM KASTURBA NAGAR VELACHERY ST. THOMAS INDIRA NAGAR MOUNT THIRUVANMIYUR ADAMBAKKAM NARAYANAPURAM TARAMANI PUZHUTHIVAKKAM PERUNGUDI TAMBARAM PALLIKARANAI SEMBAKKAM VELACHERY EAST PERUNGALATHUR MEDAVAKKAM CAMP GOWRIWAKKAM IRUMBULIYUR ROAD The Chennai Beach – Velachery MRTS is a mass VANDALUR rapid transit system that currently runs within the city from Chennai Beach to Velachery, covering a distance of 20 km with 17 stations. The network Vandalur- till Velachery became fully operational in 2007 and currently work on the extension of this line The Chennai Monorail that was first announced in from Velachery to St. Thomas Mount is underway. 2006, is finally being pursued by the Tamil Nadu Velacher Work on the extended line is expected to be government on a fast track basis and is currently completed by the end of 2013. MRTS forms a vital at the bidding stage. In Phase I, three corridors Monorail part of infrastructure in South Chennai as it will be constructed, out of which two will enhance connects Central Chennai with major IT/ITeS hubs the connectivity of West with East Chennai and corridor will immensely on OMR like Taramani and Perungudi. one will improve the connectivity of South with benefit South Chennai by North Chennai. providing the much needed SOUTH WEST SUBURBAN The corridor connecting Vandalur with Velachery link to the city centre RAILWAY NETWORK will immensely benefit South Chennai by providing the much needed link to the city. Since Velachery is already connected with Chennai The South West Suburban rail network is Beach via the Chennai Beach-Thiruvanmiyur- operated by the Southern Railways of the Indian Velachery MRTS route, it is expected to become Railway which plies from Chennai Beach to an important transport hub between South and Chengalpet via Tambaram. The route is divided Central Chennai. The 23 km. monorail route is into two points with Tambaram located in the expected to take anywhere between 4-5 years to centre. Trains between Chennai Beach and become fully operational from the time it is Tambaram run every 5-10 minutes which is awarded to the winning bidder. considerably higher than the frequency of 15-25 minutes between Tambaram and Chengalpet. It is However, we expect the benefits will start getting a vital mode of transport for employees working reflected in the residential prices of all the in Mahindra World City which has a dedicated rail destinations that are located on the route, once station on this network known as Paranur. Since construction commences. We expect work to the rail network runs parallel to GST road, it also begin anywhere between the next 8-12 months. serves as an important mode of transport for other employment hubs located on this route such as Estancia IT SEZ and Ford India plant. INVESTMENT advisory REPORT India’s Residential Destinations Employment Indicators Since 2008, more than 30 mn. sq.ft. of office space in South Chennai has been constructed on the OMR and GST road including the captive EMPLOYMENT HUBS IN SOUTH CHENNAI offices of companies like Infosys, Wipro, HCL, TCS and SECTOR PROJECT NAME MAJOR COMPANIES Capgemini OMR IT/ITeSTIDEL Park TCS, Cognizant, QuScient Technologies IT/ITeS Ramanujan IT Park HP, Infosys, Mindtree IT/ITeS Ascendas International Tech Park Amazon, Catepillar IT/ITeS RMZ Millenia Business Park Capgemini, Flextronics, Sasken IT/ITeSSP Infocity Verizon, HSBC, Saksoft IT/ITeSELCOT SEZ Wipro, Cognizant, HCL IT/ITeSSIPCOT IT Park TCS, Cognizant, Patni GST ROAD IT/ITeSShriram The Gateway Accenture, Take Solutions, Redington IT/ITeSEstancia IT SEZ Maveric Systems IT/ITeSMahindra World City Infosys, Capgemini, MindTree Manufacturing Mahindra World City BMW, Sundram Fasteners, Brakes India Manufacturing Ford India Ford India The major employment drivers in South Chennai The traction expected in South Chennai’s office are the IT/ITeS sector and Auto & Auto Ancillary space is bound to create additional employment industry. Since 2008, more than 30 mn sq.ft of in the zone. Since the preference among IT/ITeS office space has been constructed on the OMR employees for residing closer to their workplace and GST road including the captive offices of is high, its impact will be positively felt on the companies like Infosys, Wipro, HCL, TCS and demand for residential units here. Capgemini. However, a lot of this space is still We forecast 18.8 mn. unoccupied as many IT/ITeS companies have delayed their expansion plans due to the recent sq.ft. of incremental SOUTH CHENNAI OFFICE slowdown in the sector. office space to be SPACE DYNAMICS absorbed in South Chennai Over the next five years, another 19.6 mn sq.ft of * Figures in mn. sq.ft. over the next 5 years office space is expected to become operational in South Chennai which will take the total stock to 70 59.8 mn.sq.ft. by the end of 2017. Currently 28% 60 of the total office space in South Chennai is lying 50 vacant and is expected to increase to 35% by 40 2013 as additional space gets constructed. 30 However, 2014 onwards we expect the vacancy 20 10 levels to drop down as delivery of new office space will be lower compared to 2012 and 2013. 2008 2009 20102011 201220132014201520162017E Before 2008 Additionally, we forecast 18.8 mn.sq.ft. of incremental office space to be absorbed over the next five years, which will help in bringing down the vacancy level to 20% by the end of 2017. INVESTMENT advisory REPORT India’s Residential Destinations from Velachery to Medavakkam via Pallikarnai is Out of the total office Investment located between the OMR and GST road and runs parallel to them. It is well connected by road to all space stock of Destinations the employment hubs of South Chennai. Additionally, the Vandalur-Velachery Monorail 59.8 mn.sq.ft. which is in SOUTH project will further enhance the connectivity of these destinations with the city centre in the expected to be Chennai north and GST road in the south as it passes operational in South through each of these locations. These Chennai by 2017, destinations are also well connected with the Incremental employment in the IT/ITeS sector and Chennai International Airport and central enhanced connectivity due to the monorail will 82% will be located on locations such as Adyar and Anna Salai through drive the residential market of South Chennai in Madhya Kailash Junction. We expect the the OMR the coming five years. Although prices will rise in destinations of Pallikarnai and Medavakkam to majority of the destinations located in this zone, witness the maximum amount of price there will be certain destinations that will appreciation in Chennai’s residential market over outperform others. Between the two arterial the next five years. roads- OMR and GST road, we expect OMR to witness higher price growth due to the The primary reasons in brief for these concentration of office space here. Out of the destinations to outperform others in Chennai over total office space stock of 59.8 mn.sq.ft. which is the next five years are: expected to be operational in South Chennai by § Tamil Nadu’s Auto & Auto Ancillary industry is 2017, 82% will be located on the OMR. forecasted to grow at an annual average rate of 24% over the next five years. A large number of Along the OMR, the preference for locations these units are located on GST road and within closer to the city centre is high due to the lack of Mahindra World City in South Chennai social infrastructure and organized retail in the § Chennai will witness an incremental demand of distant suburbs. This makes destinations located 21.1 mn sq.ft of office space over the next five beyond the first and second toll plaza less Destinations like years primarily driven by the IT/ITeS sector. attractive to home buyers in comparison to 88% of this will be within South Chennai. destinations before the first toll plaza. § Accessibility to major employment hubs on Pallikarnai OMR and GST road, proximity to the city centre The above mentioned limitations have led to the and and distance from Chennai airport will be the unprecedented development of destinations such key differentiating factors among the various as Pallikarnai and Medavakkam as they are destinations located in South Chennai. Medavakkam located not only closer to the city centre but also § Pallikarnai and Medavakkam address all the have easy access to OMR and GST road. The route are located not only above factors due to their favorable location. closer to the city centre but also have easy access to OMR and GST road CONNECTIVITY TO IMPORTANT LOCATIONS FROM PALLIKARNAI AND MEDAVAKKAM * By road k, T or a Ka holingan Par ar a W ld hy ila a am r C d s S l L d it a h , lu E a n y Z D i M J r I n h , u E T i a C n S h c 8-25 6-12 M T t e i n o O km mins 4-10 10-18 g n C 40-50 L 36-42 a km mins E l p km mins e t 25-35 15-21 6-12 10-20 mins km 15-20 23-30 km mins 10-15 15-18 km mins km mins m t a S r r h o b r p a i S r r i I a m P A C m a C i l r T h a O e T , e T s h Z n n u E n o IT ir e S a ti Park, S Gateway i Interna Distance Travel time INVESTMENT advisory REPORT India’s Residential Destinations Additionally, the upcoming monorail corridor We expect the destinations between Vandalur and Velachery will further boost the connectivity of these locations with the of Pallikarnai and city centre and GST road. Medavakkam to witness the maximum amount of Most of the factors that will drive the residential prices in South Chennai will be common for all price the destinations located here. However, the degree of influence will be different for each of them depending on the location of the respective appreciation destination within this zone. Adyar, which is the in Chennai’s residential most established destination in South Chennai, market over the next 5 has been considered as the benchmark for comparing prices in this zone and going forward years we expect all the other destinations located here to follow the price trend of Adyar. Currently the residential prices in Pallikarnai and Medavakkam are at a significant discount compared to Adyar. We believe that over the next five years, this discount will narrow down due to the reasons listed earlier. However, the price difference among each of these destinations will persist since the factors influencing price are identical for all of them. Adyar, which is the most established destination in South Chennai, has been considered as the benchmark for comparing prices in this zone INVESTMENT advisory REPORT India’s Residential Destinations Pallikarnai has witnessed DESTINATION the launch of 1,684 PALLIKARNAI units since 2007, of which RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF PALLIKARNAI 1,382 units have been absorbed till Q3 2012 * Till September 2012 2007 2008 2009 2010 2011 2012* 18% 16% 2,000 1,600 4% 1,200 2% 2% 2% 800 No. of Units 400 We forecast prices in Stock Cumulative Absorption % of Unsold Units Source: Knight Frank Research Pallikarnai to increase by 93% in the next 5 years Pallikarnai, which is located a few km. south of The dynamics of Pallikarnai are expected to Velachery, is well connected by road to all the change dramatically in the coming years due to major employment hubs in south Chennai. the upcoming Vandalur – Velachery Monorail However, absence of rail network has restricted network. This will narrow down the current price the growth in prices of this destination. Going GLĝHUHQWLDOEHWZHHQ3DOOLNDUQDLDQG$G\DU forward, this is about to change as the upcoming Currently, prices in Pallikarnai are 65% lower than Vandalur-Velachery Monorail project will Adyar, which is the most established market in VLJQLĞFDQWO\HQKDQFHWKHUDLOFRQQHFWLYLW\RI 6RXWK&KHQQDL,QWKHQH[WĞYH\HDUVZHH[SHFW Pallikarnai with the GST Road and the city centre. this discount rate to narrow down to 49% due to From 2007 to 2010, Pallikarnai witnessed a various reasons discussed before. This will result healthy absorption trend. However, the sudden in prices increasing from `4,200/sq.ft to ` Currently, the percentage surge in new launches during 2011 along with a 8,100/sq.ft by 2017. SULFHULVHRIOHGWRDVLJQLĞFDQWLQFUHDVHLQ of unsold units stands at unsold units’ percentage during the year. Currently, the percentage of unsold units stands 18% at 18%. RESIDENTIAL PROJECT LAUNCH TREND IN PALLIKARNAI PRICE FORECAST * Till September 2012 * Figures in `/sq.ft. 2007 20082009 2010 2011 2012* 2012 2017E 900 `15,858 `12,000 `8,100 `4,200 230 228 181 Adyar Pallikarnai 52 94 Launches Source: Knight Frank Research Source: Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations PRICE MOVEMENT ` 3.3 mn. is the minimum * Figures in ` per sq.ft ticket size investment for a 2 BHK apartment in 16,000 Pallikarnai 14,000 12,000 10,000 49% 8,000 65% 6,000 4,000 2,000 Before 2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E 2008 Pallikarnai Adyar Discount Margin Source: Knight Frank Research Investment Options in Pallikarnai Appartment Sizes start INVESTMENT TICKET SIZE from 571 sq.ft. for a 1 BHK in Pallikarnai 1325 - 2136 3BHK 5.6 - 8.9 SELECT PROJECTS 790 - 1766 2BHK 3.3 - 7.4 Project Developer No. of Launch Completion Units Date Date 1BHK 2.4 - 2.6 571 - 623 Mapleton Appaswamy 473 Jan-11 Apr-13 Akash Rajkham 87 Apr-12 Dec-13 Ganga Apartment Size in sq.ft. Ticket Size in ` mn. Source: Knight Frank Research Source: Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations Medavakkam has witnessed DESTINATION the launch of 5,707 MEDAVAKKAM units since 2007, of which RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF MEDAVAKKAM 4,147 units have been absorbed till Q3 2012 * Till September 2012 2007 2008 2009 2010 2011 2012* 27% 26% 22% 6,000 3% 3% 3% 4,500 No. of Units 3,000 1,500 Stock Cumulative Absorption % of Unsold Units Source: Knight Frank Research Medavakkam, which is around 6 km. south of 2011 and 2012, the percentage of unsold Velachery, is another emerging residential hub inventory increased further despite lesser number with excellent road connectivity with of new launches due to the oversupply from the Sholinganallur on the OMR and Tambaram on GST previous year. As of Q3 2012, the unsold road. Sharing similar characteristics with inventory in Medavakkam stands at 27%. Pallikarnai, the prices in this destination have moved in the same range as Pallikarnai over the 2YHUWKHQH[WĞYH\HDUVZHH[SHFW0HGDYDNNDP ODVWĞYH\HDUV to follow Pallikarnai in terms of price as the EHQHĞWRI9DQGDOXUÜ9HODFKHU\0RQRUDLOQHWZRUN Medavakkam witnessed a large number of new will accrue equally to this destination too. The launches during 2010 and as it lacked the SULFHGLĝHUHQWLDOZLWK$G\DUZLOOVLPLODUO\QDUURZ We forecast prices in capacity to absorb such a huge number, there down from 68% in 2012 to 51% by 2017, resulting ` ` Medavakkam to increase by was a sudden jump in unsold inventory. During in a price rise from 3,800/sq.ft to 7,700/sq.ft. 103% from 2012 to 2017 RESIDENTIAL PROJECT LAUNCH TREND IN MEDAVAKKAM PRICE FORECAST * Till September 2012 * Figures in `/sq.ft 2007 20082009 2010 2011 2012* 2012 2017E 2,411 `15,858 `12,000 `7,700 `3,800 1,256 870 621 315 Adyar Medavakkam 233 Launches Source: Knight Frank Research Source: Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations PRICE MOVEMENT ` 3.4 mn. and * Figures in ` per sq.ft ` 4.6 mn. are the 16,000 minimum ticket Sizes for investment in Medavakkam 14,000 for a 2 BHK and 3 BHK respectively 12,000 10,000 51% 8,000 68% 6,000 4,000 2,000 Before 2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E 2008 Medavakkam Adyar Discount Margin Source: Knight Frank Research Investment Options in Medavakkam Over the nextƪYHyears, we expect INVESTMENT TICKET SIZE SELECT PROJECTS Medavakkam Project Developer No. of Launch Completion to follow Pallikarnai in Units Date Date terms of price 2450 - 2710 4BHK 9.3 - 10.3 Purva Purvankara 756 Mar-11 Mar-14 Windermere Spring Navin 280 Oct-10 Dec-14 1220 - 2161 3BHK 4.6 - 8.2 Field Housing Majestica Vasavi 260 Jul-10 Dec-14 Housing 902 - 1254 2BHK 3.4 - 4.8 Indiabulls Indiabulls 900 Sep-10 May-14 Greens 560 - 715 1BHK 2.1 - 2.7 Source: Knight Frank Research Apartment Size in sq.ft. Ticket Size in ` mn. Source: Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations DELHI-NCR The National Capital Region (NCR) is spread over 33,578 sq. km. making it NATIONAL CAPITAL REGION POPULATION one of the largest urban agglomerations in the world. It was initially FRQFHLYHGXQGHUWKHĞUVW0DVWHU3ODQRI'HOKLLQ DQGFRQFHSWXDOL]HG Population in Millions with the foremost objective of creating a metropolitan area around Delhi, so as to ease out the pressure on the national capital. The NCR 1991 2001 2011 encompasses of the entire National Capital Territory of Delhi as well as select urban areas from its neighbouring states of Haryana, Rajasthan and Uttar Pradesh (UP). By virtue of this development, Gurgaon, Noida and Greater Noida emerged as the major sub-regions of the NCR. 27.36 3.2% 37.10 3.1% 47.38 2.5% Population Average Annual Growth Source: Census 2011, Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations DELHI-NCR MAP '(/+, GHAZIABAD 35000 12000 5000 12,'$ *5($7(512,'$ Major Roads Major Roads Railway Line ([LVWLQJ0HWUR Metro Corridor I Under Construction Metro Metro Corridor II Delhi South Zone *85*$21 Gurgaon FARIDABAD West Zone Faridabad Central Zone Noida (DVW=RQH Greater Noida North Zone Ghaziabad Price Contours (`VTIW Price Contours (`VTIW A National Capital Region Planning Board (NCRPB) was formed under the NCR Planning STATE/UT REGIONS AREA (SQ. KM.) Board Act 1985, by the Ministry of Urban Development. The central focus of the board was to coordinate the development of the NCR with the State Governments of Haryana, Delhi Delhi - National Capital Territory 1,483 Uttar Pradesh and Rajasthan. Led by Gurgaon and Noida, the NCR has witnessed Haryana substantial growth as a centre for e-commerce associated businesses including )DULGDEDG*XUJDRQ0HZDW5RKWDN Sonepat, Rewari, Jhajjhar, Panipat 13,413 RXWVRXUFLQJDQGRĝVKRULQJDFWLYLWLHV0DMRULQGXVWULHVOLNH,7,7H6$XWRPRELOHDQG and Palwal Pharmaceuticals contribute the most towards the economy of this region. UP Meerut, Ghaziabad, Gautam 10,853 Proximity to the national capital and enhanced connectivity due to the metro line Budha Nagar, Bulandshahr across the NCR, has positioned it as the most preferred destination for corporate and and Baghpat 01&VWRVHWXSWKHLURĠFHV7KHSULPHRQHVLQFOXGH0LFURVRIW,%0$PGRFV1RUWH 'HOO1RNLD6$3$FFHQWXUH0RWRURODDQG(ULFVVRQ+HQFHLWLVEHOLHYHGWKDWWKH1&5LV Rajasthan Alwar 7,829 RQWKHEULQNRIHPHUJLQJDVWKH NQRZOHGJH KXERI,QGLD$ORQJWKHJURZWKRIWKH service industry the region witnessed huge immigration. As per Census 2011, the Total 33,578 population of the NCR witnessed a 2.5% annual rise during the decade 2001-2011, the total population now stands at 47.38 mn. INVESTMENT advisory REPORT India’s Residential Destinations National Capital Region Market (NCR) is spread over Overview 33,578 sq.km. The NCR is divided into six broad zones: Delhi, Based on its geographical locations the city is Gurgaon, Noida/ Greater Noida, Faridabad, divided into North Delhi, East Delhi, West Delhi Ghaziabad and Alwar. and South Delhi. North Delhi houses numerous small scale ZONE MAJOR RESIDENTIAL industries and has emerged as one of the major DESTINATIONS markets of small industries. Low-rise Delhi Rohini, Ashok Vihar, Civil Lines, condominiums and narrow streets full of chaos Greater Kailash, South Extension, are the major characteristic of North Delhi. This Hauz Khas, Anand Vihar, Pashchim refrains major white-collared executives from Vihar, Janakpuri, Raja Garden, OLYLQJKHUH,WORRNVHQWLUHO\GLĝHUHQWIURPWKH Tagore Garden, Rajouri Garden more modern New Delhi and south Delhi areas. Population of the NCR Chawri Bazaar, Chandini Chowk, Mori Gate, Gurgaon Dharuhera, Golf Course Road, Sohna Road, MG Road, NH-8, Kashmere Gate, Sadar Bazaar and Tis Hazaari are increased by 20 mn. in Dwarka Expressway, Manesar some of the major micro-markets of Old Delhi. THE last 2 decades Noida/Greater Noida, Noida Extension, Noida- East Delhi is largely inhabited by the middle- Noida Greater Noida Expressway income working class population. The residential real estate market comprises the independent Faridabad Neharpar, Dayal Bagh Colony, houses and DDA apartments. The 2010 Common Sainik Colony Wealth Games held in East Delhi completely Ghaziabad Crossing Republik, Indraprastha changed its landscape and gave the necessary Yojna, Raj Nagar, Raj Nagar growth impetus to this region. Delhi Metro has Extension enhanced the connectivity of East Delhi with major destinations like Delhi City Centre and Alwar Neemrana, Bhiwadi, Behror Noida. Some of the major micro-markets of East Highway, Station Road Delhi are Akshardham, Pushpanjali Enclave, Vivek Vihar, Patparganj, Lakshmi Nagar, Mayur Vihar, and Preet Vihar. 55% of the residential NATIONAL CAPITAL TERRITORY – ZONE-WISE SPILT UP OF under-construction units DELHI in Noida and Greater Noida UNDER CONSTRUCTION UNITS 'HOKLWKHFDSLWDORI,QGLDLVWKHĞIWKPRVW populated city in the world. It is situated in central north India and stands on the west bank 18.8% 0.8% of Yamuna River. It is spread over an area of 1,483 sq. km., 216 m. above sea level and has a population of around 16.75 mn. Delhi is the political hub of India comprising headquarters of all the political parties as well as important 2.0% 23.6% DGPLQLVWUDWLYHRĠFHV,WKDVHYROYHGIURPEHLQJD city of royal power to the seat of bureaucratic power. It has also transpired as one of the central hubs 21.2% of North India's trading and service industry. 33.7% Delhi has emerged as the major commercial centre for small, medium and large scale Delhi Noida Faridabad industries. The information technology (IT), Gurgaon Gt. Noida Ghaziabad electronic, textile and fashion industry are also the major contributors to Delhi's economy. Source: Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations West Delhi is primarily a residential hub with a km. south of New Delhi. The evolution of Gurgaon cosmopolitan population. Sound infrastructure coincides with the 1990s liberalization of the 518,200 residential and a well-developed organized retail market Indian economy. Contemporary Gurgaon is dotted RĝHUHGWKHQHFHVVDU\ERRVWWRWKLVUHJLRQ with high-rise buildings and spectacular malls. units launched in DELHI NCR Additionally, West Delhi region gained Over the years Gurgaon earned the sobriquets of since 2007 prominence due to its proximity to the the 'Millennium City' and the 'Mall City' of India. commercial hubs of Janakpuri, Rajaouri Gardens *XUJDRQLVQRWRQO\DQLQGXVWULDODQGĞQDQFLDO and Punjabi Bagh. Over the years, it has emerged centre of Haryana but also one of the most as the most sought after destination thereby SURQRXQFHG,7,7H6RXWVRXUFLQJDQGRĝVKRULQJ making it one of the major posh localities of hubs in the world. Further, it is also a major hub Delhi. Patel Nagar, Punjabi Bagh, Pitampura, for the automobile, telecom and garment Rohini, Dwarka, Janakpuri and Rajouri Garden are manufacturing industries. Major factors like some of the major micro-markets of this region. availability of huge land parcels, quality commercial properties, proximity to the South DelhiLVFRQVLGHUHGWREHWKHPRVWDġXHQW international airport, favourable government micro-market of Delhi. The residential real estate policies and access to the talent pool lured many comprises independent houses and bungalow corporates to Gurgaon. VW\OHGHYHORSPHQWV0DMRUDGPLQLVWUDWLYHRĠFHV including embassies and consulates are located Some of the prime residential and commercial here. By virtue of this, South Delhi has become micro-markets of Gurgaon include Mehrauli- the most sought after destination among the Gurgaon Road (MG Road), Golf Course Road, Golf KLJKSURĞOHEXUHDXFUDWVDQGWKHWRSFRUSRUDWH Course Extension Road, Sohna Road and NH-8. executives. High residential demand and dearth These locations are well-connected with New of new supply has propelled the residential prices Delhi through the six-lane NH-8 and MG Road. in this part of Delhi. The NH-8 also provides quick and easy access to the New Delhi International Airport. Further, a 14 Its proximity to the international airport, km. Southern Peripheral Road (SPR) covers all the educational institutions and to the city centre has major developments in this part of Gurgaon and made this region the most preferred destination. connects MG Road and Golf Course Extension Moreover, proximity to the commercial hub of Road with NH-8. The connectivity between the Nehru Place and Lajpat Nagar coupled with the adjoining markets of Delhi and Noida is further presence of organized retail further augmented enhanced by the existing metro-rail. Further, a the demand for this region. Some of the major new residential belt has emerged along the micro-markets are Greater Kailash, Chanakyapuri, upcoming 8 lane 18 km. Northern Peripheral Road Lajpat Nagar, Nehru Place, Defence Colony, (NPR) or Dwarka Expressway. This expressway Vasant Kunj, Hauz Khas and Friends Colony. would act as an alternative route for the existing Delhi-Gurgaon Expressway. A 135 km. Kundli- GURGAON Manesar-Palwal (KMP) Expressway is under construction, once completed this expressway will provide connectivity with the major industrial Gurgaon was developed to ease out the KXEVRI+DU\DQD7KLVKDVJLYHQDĞOOLSWR burgeoning growth of New Delhi. It is one of the commercialization in Manesar. four major satellite cities of the NCR, located 30 RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF NCR * Till September 2012 2007 2008 2009 2010 2011 2012* 23.8% 19.2% 600,000 14.1% 500,000 400,000 9.4% No. of Units 7.8% 300,000 9% 200,000 100,000 Supply Demand % of Unsold Units (RHS) Source: Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations Golf Course Road is the most sought after Noida Expressway and the Yamuna Expressway destination owing to its proximity to South Delhi provides connectivity between Noida, Greater 395,650 residential (a posh locality) and hence boasts of the highest Noida and Agra. Greater Noida also boasts of residential property prices in Gurgaon. MG Road ,QGLD VĞUVW *UDQG3UL[ ZKLFKPDUNHGLWSUHVHQFH units absorbed in Delhi NCR is a self-sustaining micro-market with the on the International Motor Racing Circuit. since 2007 presence of well-developed organised retail Moreover it is also emerging as a planned market, superior residential development and industrial region and an educational hub. TXDOLW\FRPPHUFLDORĠFHV'/)&\EHUFLW\8G\RJ 9LKDU6LJQDWXUH7RZHUV'/)&RUSRUDWH3DUN FARIDABAD 6SD]H,73DUN9DWLND%XVLQHVV3DUNDQG8QLWHFK Infospace are some of the major commercial )DULGDEDGLVWKHVRXWKHDVWHUQGLVWULFWRI+DU\DQD buildings. Golf Course Extension Road is catching DQGWKHODUJHVWFLW\RIWKHVWDWH%HLQJDQ up with the Golf Course Road with its quality LQGXVWULDOKXELWKDVRYHUVPDOOVFDOH residential development. LQGXVWULHV7KH)DULGDEDG%DOODEJDUKFRPSOH[ HPSOR\VRYHUSHRSOHLQDSSUR[LPDWHO\ NOIDA PDQXIDFWXULQJXQLWV7KHUHJLRQKDV gained prominence due to its proximity to the 1RLGDFLW\LVORFDWHGLQWKH*DXWDP%XGGKD1DJDU National Capital Territory (NCT) of Delhi, Gurgaon GLVWULFWRI8WWDU3UDGHVK*HRJUDSKLFDOO\LWLV DQG*UHDWHU1RLGD)RUWKHHDVHRIDGPLQLVWUDWLRQ situated to the south-east of Delhi and spread )DULGDEDGGLVWULFWLVGLYLGHGLQWRWZRVXE over 20,316 hectares. New Okhla Industrial GLYLVLRQVYL])DULGDEDGDQG%DOODEJDUK Development Authority is the nodal agency for the overall development of this region. Noida has 7KHFLW\LVNPIURP,6%7'HOKLDQGRQO\NP emerged as one of the major satellite cities of the from the Ashram Crossing on Mathura Road. The NCR after Gurgaon. Noida is well connected with Delhi-Mathura-Agra Road (NH-2) passes through 'HOKL$JUD)DULGDEDGDQG*KD]LDEDG$NP WKHFLW\YLD)DULGDEDG%DOODEJDUKDQG3DOZDO Yamuna Expressway provides connectivity with 0RUHRYHU)DULGDEDGLVFRQQHFWHGZLWK Agra via Mathura; an eight-lane Delhi-Noida-Delhi Delhi through the metro rail service which '1' )O\RYHUFRQQHFWV1RLGDDQG'HOKLDQGD FXUUHQWO\WHUPLQDWHVDWWKH'HOKL)DULGDEDG )DULGDEDG1RLGD*KD]LDEDG )1* KLJKZD\ ERUGHULQ%DGDUSXU SURYLGHVFRQQHFWLYLW\ZLWK)DULGDEDGDQG Ghaziabad. Noida has the Delhi Metro facility till )DULGDEDGKRXVHVVHYHUDO,QGLDQDQG01& the City Centre from Delhi and also up to Vaishali. manufacturing companies. Motorcycles, tyres, The metro will further expand in Noida and also auto-ancillaries, refrigerators, tractors and cover Noida Extension and Greater Noida. switch-gears are some of the major industries in )DULGDEDG/DUVHQ 7XUER / 7 $%%*RRG\HDU Over the years, Noida has developed into an :KLUOSRRO(LFKHU-&%2ULHQW)DQV%KDUDW*HDUV 145,395 residential IT/ITeS hub. A number of IT/ITeS companies like /DNKDQL6KRHV/DIDUJH Greater Noida is a new suburb located 20 km from 1RLGDLQ*DXWDP%XGGKD1DJDUGLVWULFWRI8WWDU 3UDGHVK6SUHDGRYHUDFUHVLWLVVLWXDWHG DERXWNPVRXWKHDVWRI1HZ'HOKLDQGIRUPVD part of the NCR. Greater Noida Industrial Development Authority (GNIDA) is the nodal agency for the overall development of this region. 3K\VLFDOLQIUDVWUXFWXUHRI*UHDWHU1RLGDKDVEHHQ crafted very meticulously by the GNIDA. Wide roads along with service roads for all the major arterial roads have been built. The Noida-Greater /DXQFKHV Source: .QLJKW)UDQN5HVHDUFK INVESTMENT advisory REPORT India’s Residential Destinations GHAZIABAD glass & ceramics, mines & minerals, textiles and Reliance Energy has bio-tech industry. Moreover, this region is one of the nodes for the Delhi-Mumbai Industrial proposed a 1000 hectares Ghaziabad forming one of the major constituents Corridor (DMIC) and Dedicated Freight Corridor multi-product SEZ in of the NCR is strategically located 20 km. to the (DFC). Ghaziabad east of New Delhi. It is a planned industrial city spread over 1,933 sq. km. Moreover, it also acts Rajasthan government has signed an MOU with as a main entrance for the state of Uttar Pradesh. JETRO (Japanese External Trade Organization) for Ghaziabad Development Authority (GDA) is the setting up units in Neemrana. This region is nodal agency for the overall development of the equidistant from Delhi and Jaipur and is also an city. The region has gained prominence due to its important part of the DMIC. These factors have proximity to the National Capital Territory (NCT) of propped up the demand for commercial as well as Delhi, Gurgaon, Noida and Meerut. The city's real residential real estate in this region. estate market witnessed high traction with an improvement in the physical and social The Bhiwadi Industrial Hub is a mere 45 km. from infrastructure. the Gurgaon city centre. Proximity to the city has augmented demand for the residential as well as Two major arterial roads NH-24 and NH-58 commercial real estate in Bhiwadi. It alone passing through Ghaziabad, provide connectivity houses around 2,500 small, medium and large with Lucknow and Badrinath respectively. To industries including MNC industrial units. Some decongest the existing highways, the GDA has of the major companies having their set up in proposed the widening of the NH-24 from the Alwar are ‐ Honda Siel Car, United Breweries, existing four lanes to six lanes. Further, metro rail Lafarge, Jaquar, Amtek India and Shree Cement. has enhanced the connectivity with other regions of the NCR. Further, the connectivity within Ghaziabad will improve with the expansion of the The landscape of the NCR market has witnessed a existing metro rail from Dilshad Garden to New sea change in the last decade mainly on account Bus Stand located near the Meerut Road of new master development plans. Moreover, crossing. Major residential micro-markets like FRQVWUXFWLRQRIYDULRXVğ\RYHUVXQGHUSDVVHV Vaishali, Indirapuram, Vasundhara and Raj Nagar expressways and Metro Rail has enhanced Extension have emerged along these highways. connectivity with all the parts of the region. These have also changed the way people commute, Being an industrial hub it has over 14,000 small- especially due to the Metro Rail. New Delhi being scale industries, majorly manufacturing defence the National Capital is perennially the most products, railway wagons, heavy chains, bicycles sought after destination for commercial as well as and glassware. Besides many large multi-national residential real estate. Further, to support the Alwar is one of the nodes companies, banks, IT and telecom services have burgeoning growth of New Delhi, newer for the Delhi-Mumbai set up their base here. Reliance Energy's destinations like Gurgaon, Noida and Greater Industrial Corridor (DMIC) proposed 1,000 hectares multi-product SEZ, Noida emerged in the peripheral region. Many and Dedicated Freight existing manufacturing units of Coca-cola and ITC companies were attracted to these newer destinations which were meticulously planned Corridor (DFC) have further augmented demand for residential as well as commercial real estate in Ghaziabad. and had a proper blend of residential and commercial real estate developments. The NCR ZLWQHVVHGDKXJHLQğX[RISHRSOHPDLQO\RQ ALWAR account of new jobs being created by the companies. Besides the inclination of the people Alwar is a district in Rajasthan (a state in India) to reside closer to their work-place gave a growth located to the south-west of Gurgaon. It is spread impetus to the residential real estate demand. over 8,380 sq.km. of which 262 sq.km. forms a Since 2007, the NCR residential real estate part of the National Capital Region (NCR). segment witnessed the launch of over 500,000 Rajasthan State Industrial Development and units. Investment Corporation Ltd. (RIICO) is the major nodal agency for the development of Rajasthan. During 2007 and 2009, the NCR residential RIICO has been a catalyst for the overall industrial market witnessed an average new launch of transformation of the state. Over the years with 60,000 units per year. The arithmetic of new progressive industrial policies by the state launches changed completely in the last 2-3 years government, the district is now able to boast of owing to numerous launches of mega townships various industrial hubs. Some of the major in new destinations like Noida and Greater Noida. commercial areas are Bhiwadi, Tapookara, Since 2009, the average residential launch per Khushkhera and Neemrana. These commercial year has increased two-fold to 120,000 units. areas house sectors like cement, automobile, INVESTMENT advisory REPORT India’s Residential Destinations Since 2009, the average Real Estate Drivers residential launch per year has increased two- Employment Indicators Infrastructure Development fold to 120,000 units in delhi NCR Service Sectors Manufacturing Sector Rail Network Road Network IT/ITeS Sector Auto Sector Metro Corridor Dwarka Expressway Other Service Sectors Other Manufacturing Monorail Corridor Yamuna Expressway Sectors Southern Periphral Road KMP Expressway REGULATORY AND MARKET ASPECT NATURE OF LEVY DELHI GURGAON NOIDA/ GHAZIABAD GREATER NOIDA Stamp duty 6% for Men 7% for Men 7% for Men 8% + 2% 5% for Joint 6% for Joint 6% for Joint additional charges 4% for Women 5% for Women 5% for Women Registration 1% of the sale deed `15,000 (for `22,000 1% of market properties above value or `30,000 `2.5mn) whichever is less Service Tax (on under 3.09% 3.09% 3.09% 3.09% construction property) MARKET NORMS ASPECTS DELHI GURGAON NOIDA/ GHAZIABAD GREATER NOIDA Time line for property Any time until Any time until Any time until Any time until registration possession possession possession possession Re-sale before Allowed Allowed Allowed Allowed possession Transfer charges First transfer is `100-`150 `100-`150 payable to builder sometimes free and per sq. ft. per sq. ft. at times it is `100- `150 per sq. ft. Loading 12-20% 33-45% 20-45% 25-33% (as % of carpet) Remarks Speculative Market Speculative Market Speculative Market Speculative Market INVESTMENT advisory REPORT India’s Residential Destinations EXISTING ARTERIAL ROAD NETWORK 165 km. Yamuna Expressway is now open to public ROAD NETWORK LENGTH OBSERVATIONS Delhi-Gurgaon 28 km. In January-2008, an eight-lane access controlled toll expressway along the Expressway NH-8 was started between Gurgaon and Delhi. Starting at Dhaula Kaun in Delhi the expressway terminates on the outskirts of Gurgaon in Manesar. Delhi-Noida Direct 9 km. Started in May-2001, this eight-lane access controlled toll expressway (DND) Flyway provides connectivity between Delhi and the satellite city of Noida. Yamuna Expressway 165 km. The six-lane expressway connecting Greater Noida with Agra started in August-2012. This access controlled toll expressway is a better alternative WR1+ZKLFKHDUOLHUXVHGWRKDQGOHDOOWKH$JUDERXQGWUDĠFIrom the NCR. Noida - Greater 25 km. A six-lane highway providing connectivity between the two satellite cities Noida Expressway of the NCR i.e. Noida and Greater Noida. NH-1 22 km. NH-1 is over 450-km., primarily connecting Delhi with Attari in Punjab. Of this, only 22-km. form a part of Delhi. This entire stretch is an eight-lane highway. It starts from Singhu Border in the northern district of Delhi and terminates at ISBT Kashmiri Gate. NH-2 (Delhi-Mathura 12 km. NH-2 is a 1,465 km. highway providing connectivity between Delhi and Road) West Bengal. A 12-km. stretch in Delhi forming part of the NH-2 is called the Delhi-Mathura Road. It connects Delhi with Mathura via Ashram Chowk. NH-10 18 km. NH-10 is a 403 km. highway providing connectivity between Delhi and Fazilka district of Punjab. Starting from the CBD of Delhi this 18 km. stretch of NH-10 terminates at Tikri Kalan, near the Haryana-Delhi border. Mehrauli-Gurgaon 19 km. A 19 km. stretch along the NH-236 connects Mehrauli (South Delhi) with Road the Gurgaon city centre. Old Delhi- 5 km. Starting from the Samalkha Crossing in New Delhi, this 5 km. road runs Gurgaon Road parallel to Delhi-Gurgaon Expressway (NH8) providing connectivity between Delhi and Gurgaon. Gurgaon-Faridabad 25 km. A 25 km. toll highway starting from Gurgaon's Mehrauli Road in Completion of Gurgaon- Road Sikanderpur and ending at the junction of Pali Bhakri Road in Faridabad, has been built by widening the existing two-lane road to four lanes. Faridabad Road has now enhanced connectivity Ballabhgarh- 28 km. A two-lane 28 km. toll highway connects Faridabad and Sohna, the two Sohna Road major cities of Haryana. It starts from Ballabhgarh and ends at Rewari - between the two cities Palwal. Delhi-Faridabad 4.4 km. The tolled three-lane expressway on NH-2 provides connectivity between Skyway Delhi and Faridabad. EXISTING METRO RAIL NETWORK METRO TRAIN NETWORK LENGTH OBSERVATIONS Delhi Metro Rail 190 km. A well-connected six-lane Mass Rapid Transit System (MRTS) is laid across the NCR. Delhi Airport Metro 22 km. It is a part of the Delhi Metro line starting from New Delhi Railway Station to Express (DAME) the Dwarka Sector 21 connecting the city centre with the Indira Gandhi International Airport. INVESTMENT advisory REPORT India’s Residential Destinations UPCOMING ARTERIAL ROAD NETWORK 136 km. KMP Expressway will connect important CONNECTIVITY LENGTH OBSERVATIONS CURRENT EXPECTED industrial centres in STATUS COMPLETION Haryana Kundli-Manesar- 136 km. An access controlled 4/6 lane expressway Under 2013-14 Palwal (KMP) connecting Kundli with Palwal via Manesar in construction Expressway Haryana. It is proposed to connect important industrial centres in Haryana, and intersects four of India's busiest National Highways: NH-1 near Kundli (Sonipat), NH-10 near Bahadurgarh, NH-8 at Manesar (Gurgaon) and NH-2 near Palwal (Faridabad) Dwarka Expressway also called the Northern Dwarka 18 km. Peripheral Road (NPR) is an eight-lane Under 2014-15 Expressway expressway, providing the shortest construction alternative between the new growth centres of Delhi and Gurgaon. The NPR starting from Dwarka will connect Palam Vihar and the Once completed the forthcoming SEZs in Gurgaon to join the NH-8 near Kherki Dhaula. Dwarka Expressway will enhacne the connectivity A 90 m. wide SPR will connect Gurgaon and between Delhi and Southern 14 km. Manesar with South Delhi through the Under 2013-14 Gurgaon Peripheral Road current MG Road and the Faridabad Highway. construction (SPR) The alignment of SPR (starting from MG Road) connects NH-8 about 1 km. before the Kherki Dhaula Toll Plaza. SPR has acquired the status of national highway and has been allotted number 236. Connecting Faridabad, Noida and Faridabad-Noida- 56 km. Ghaziabad. A stretch of 8 km. out of 16 km., Under Beyond 2016 Ghaziabad (FNG) that falls under the jurisdiction of Noida construction Expressway authority is complete. Rapid Metro Rail Gurgaon - UPCOMING METRO RAIL NETWORK will connect the existing METRO TRAIN LENGTH OBSERVATIONS CURRENT EXPECTED Sikanderpur Metro station NETWORK STATUS COMPLETION with the NH-8 Rapid Metro Rail 6.1 km. This intra-city Metro line connects the Under 2013-14 Gurgaon(RMRG)– existing Sikanderpur metro station with the construction Phase I NH-8. This will provide the much needed access into areas like Cyber City, Mall of India, as well as to the NH-8. Rapid Metro Rail 12 km. A 7 km. extension to the RMRG Phase I, has Bid invited Beyond 2015 Gurgaon (RMRG) been proposed. This will provide connectivity – Phase II between Sikanderpur and Sector 55-56 in South Gurgaon. Another 6 km. metro line has been planned to provide connectivity upto Dwarka in the north. This corridor is an extension of the existing Badarpur- 14 km. Under 2016-17 Faridabad Metro Central Secretariat-Badarpur Metro Line. The Construction Corridor new corridor once completed will connect Delhi with its satellite city of Faridabad. Nine- stations have been planned on this corridor extending upto YMCA Chowk in Faridabad. INVESTMENT advisory REPORT India’s Residential Destinations Employment Indicators in the Gurgaon accounts for 57% of the office space stock National Capital Region of NCR The economy of the NCR is driven by multiple Noida has become a hub for BPOs (Business industries primarily by manufacturing, IT/ITeS, Process Outsourcing) and KPOs (Knowledge small and medium enterprises, banking and Process Outsourcing) services. It has over 21 mn. financial services and consulting. Delhi being the sq. ft. of office stock which is predominantly national capital houses numerous administrative present in Sectors 29, 57 to 60, 62 and 63. offices of the Government of India. Recently, Moreover, many commercial offices and IT Parks Gurgaon and Noida have emerged as a have been planned along the Noida Expressway manufacturing and IT/ITeS hub. and Yamuna Expressway. This will further augment the employment opportunities in this IT/ITeS SECTOR region. A number of IT/ITeS companies like HCL, Dell, Adobe Systems, IBM and AON Hewitt have set up their base here. Over the past decade, Gurgaon, Noida and Greater Noida have emerged as major IT/ITeS The country's IT-ITeS sector during 2004-2011 has centres of India. Proximity to Delhi, sound grown at an annual rate of 22.5% to `1,474bn. infrastructure, cosmopolitan culture, availability and is estimated to reach `3,000bn. by 2017. As of skilled workforce and industry-friendly per NASSCOM, the IT/ITeS sector has created government policies made it a favourable tremendous job opportunities, generating direct destination among the IT/ITeS companies. The and indirect employment of nearly 2.8 mn. and thriving outsourcing industry provides direct and around 8.9 mn. respectively. It is estimated that indirect employment to over 500,000 people. employment growth would be more than 14 mn. Prominent companies having operation in this (directly and indirectly) by 2015 and around 30 region are Genpact, Dell, Amdocs, Norte, HP, mn. by 2030. We expect the NCR to continue its Motorola, TCS, Alcatel, Siemens, HCL, Patni and growth trajectory in-line with the country's IT/ITeS CSC. growth. With the strengthening of global economy, robust domestic fundamentals and A good number of IT/ITeS SEZs have been easy availability of skilled human capital the developed in Gurgaon, Noida & Greater Noida. IT/ITeS industry here is expected to grow Over 22 major IT/ITeS companies are operational significantly in the coming years. in this region spread over 600 hectares of land. In terms of geographical spread, nearly 60% of these developments are concentrated around MANUFACTURING SECTOR Gurgaon, 35% around Noida, including Greater Office space stock in Noida and merely 5% in Delhi. The manufacturing activity in the NCR is Noida 21 mn.sq.ft. concentrated in the sub-regions of Haryana, Uttar Gurgaon has evolved as the major Peripheral Pradesh and Rajasthan. The manufacturing Business District of the NCR. It has over 55 mn. industry in this region was boosted through the sq.ft. of office stock which is primarily creation of Industrial Zones and Special Economic concentrated in the DLF Cyber City (Phase I-V) and micro-markets along the Golf Course Road. This region houses many renowned tech-parks and ZONE WISE DISTRIBUTION OF IT/ITeS SEZ. Micro-markets along the MG Road, OFFICE SPACE STOCK Golf Course Road, DLF Phase I–V and Golf Course Extension have evolved into self-sustaining hubs. 19.8% This is mainly on account of quality commercial offices, superior residential developments and well-developed organised retail markets. Signature Towers, DLF Cyber City, Unitech 57.1% 3.4% Infospace, Vatika Business Park and Global Business Park are some of the notable commercial buildings in Gurgaon. 19.6% Owing to its proximity to New Delhi, favourable industrial policies and huge availability of land, Delhi Gt. Noida Noida Gurgaon Noida has emerged as the preferred destination for IT/ITeS companies. Over the last decade, Source: Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations NCR OFFICE SPACE DYNAMICS Corporation (RIICO) were successful in developing 2ƬFHVSaFHVWRFNLQ1&5 the Japanese zone in an expanse of 1,165 acres, in Neemrana. The major Japanese companies that PQVTIW have invested in Neemrana are Honda 160 Motorcycles and Scooters India Ltd., Nissin 140 Brakes, Mitsui Prime, TPR Autoparts and Daikin 120 Airconditioning. 100 Availability of huge tracts of land coupled with 80 favourable government policies lured many 60 manufacturing companies to this region. 40 Renowned manufacturing companies like Maruti, Suzuki, Hero Motors, Honda, Toyota, Honda-SIEL, 20 Escorts and Samsung Telecommunications have set-up their base here. Before 2008 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2008 By virtue of being the National Capital Region, Stock there would be no dearth of demand for the Occupied Stock residential real estate sector here. IT/ITeS and BFSI are the most dominant industries, moreover, PQVTIWRƬFHVSaFH being the business capital it is home to the o be added VWRFNW GXULQJ corporate headquarters of several companies. 2012-17 Zones (SEZs). Rapid industrialization witnessed in the NCR led to a shift from agriculture in the &XUUHQWO\WKHWRWDORĠFHVWRFNLQWKH1&5LVDERXW composition of the economy (of this region). The 101.48 mn. sq.ft. of which 83 mn. sq. ft. is economy of the NCR is now skewed towards the occupied resulting in a vacancy level of 18%. The manufacturing and service sector. The NCR FLW\ VRĠFHPDUNHWFORFNHGDEVRUSWLRQRIDOPRVW manufacturing sector contributes about 30% to 9 mn. sq.ft. during 2011. The IT/ ITeS industry still the total output of the region. The major UHPDLQVWKHNH\GHPDQGGULYHUIRURĠFHVSDFHLQ manufacturing industries that fuel the NCR the NCR. The current situation indicates that Gurgaon economy are automobile, auto ancillary, with 57% of the total occupied space in the region electronic, textile, switch-gear and farm KDVWKHKLJKHVWGHQVLW\RIRĠFHVSDFHLPSO\LQJ equipments. The region accounts for a a large proportion of employment opportunities substantial part of the country's production of emanating in the NCR. We estimate that the farm equipment (tractors) -20%, motor-cycles – RFFXSLHGRĠFHVSDFHLQWKHUHJLRQZLOOJRXSE\ 50% and cars - 60%. The NCR Planning Board has GXULQJ7KLVJURZWKLQHĝHFWZLOO IT/ITeS DQG BFSI & envisaged an infrastructure investment of around drive the residential markets in the city. &RQVXOWLQJWRJHWKHU USD 25 bn. by 2021, for the comprehensive development of the region. aFFRXQW for 70% of WKH a RƬFHVS FHLQWKH1&5 Constructive measures taken by the respective state governments in the NCR propelled the overall growth of manufacturing industries. OFFICE SPACE BREAK-UP Haryana State Industrial & Infrastructure Development Corporation Limited (HSIIDC), Uttar 15% Pradesh Industrial Development Corporation (UPIDC) and Delhi State Industrial & Infrastructure Development Corporation Limited (DSIIDC) have been instituted by Haryana, UP and Delhi 40% 30% government respectively, to promote industrialization. Consequently, many industrial centres were created in NCR, like IMT Manesar and Udyog Vihar in Gurgaon; Okhla Industrial Complex, Wazirpur Industrial Complex, Rohtak 15% Road Industrial Complex, Kirti Nagar Packing Complex, Bawana and Narella industrial complex IT/ITeS Manufacturing in Delhi. Besides, major industries were set up in BFSI & Consulting Others Ghaziabad and Gautam Buddha Nagar in UP. The Rajasthan Industrial Development and Investment Source: Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations GURGAON MAP Old Gurgaon Road ,ĝFR&KRZN d Roa di tau Pa d d oa a taudi R ro Major Roads Pa n o si xten course e Existing Metro Golf Under Construction Metro Under Construction Dwarka Expressway Airport Railway Line Benchmark location Top destination Employment Hubs GREATER NOIDA MAP Major Roads Railway Line Proposed Metro Rail Noida Greater Noida Benchmark location Top destination Employment Hubs INVESTMENT advisory REPORT India’s Residential Destinations also one of the most pronounced IT/ITeS PREFERRED RXWVRXUFLQJDQGRĝVKRULQJKXEVLQWKHZRUOG 119,404 residential The major prime residential and commercial units launched in Gurgaon ZONES IN micro-markets of Gurgaon include MG Road, Golf during 2007-12 THE NCR Course Road, Golf Course Extension Road, Sohna Road and NH-8. These locations are well- connected with New Delhi through the six-lane NH-8 and MG Road, thereby providing quick and New Delhi being the national capital of the easy access to the New Delhi International country has always been the most preferred Airport. Moreover, a 14 km. Southern Peripheral destination in India. The dominance of the city in Road (SPR) covers all the major developments in EXVLQHVVDQGEXUHDXFUDWLFRĠFHVKDVEHHQWKH this part of Gurgaon and connects MG Road and major driver for real estate development. We Golf Course Extension Road with NH-8. believe New Delhi as a destination will continue with its dominance and be in demand Golf Course Road is the most sought after perpetually. The city is land-locked and as such destination on account of its proximity to South land is hardly available within the city limits. Delhi and hence boasts of the highest residential Hence, to support the ever burgeoning growth of property prices in Gurgaon. MG Road is a self- the city, satellite cities like Gurgaon, Noida, sustaining micro-market with the presence of a Ghaziabad, Faridabad and Greater Noida well-developed orgainsed retail market, superior emerged. However, we do not expect gains in all residential development and quality commercial the residential markets to be identical. We RĠFHV'/)&\EHUFLW\8G\RJ9LKDU6LJQDWXUH believe residential markets of Gurgaon, Noida 7RZHUV'/)&RUSRUDWH3DUN6SD]H,73DUN9DWLND and Greater Noida will grow at a higher %XVLQHVV3DUNDQG8QLWHFK,QIRVSDFHDUHVRPHRI magnitude based on factors like employment the major commercial buildings. Golf Course opportunities and infrastructure developments. Extension Road is catching up with the Golf We have considered all these dynamics while Course Road with its quality residential selecting the investment destinations. development. As a result of our analysis, we expect Gurgaon, A new residential belt has emerged along the Noida and Greater Noida to be the biggest upcoming 18 km. Northern Peripheral Road EHQHĞFLDULHVLQWKHQH[W\HDUV7KHVH]RQHVDUH 135 RU'ZDUND([SUHVVZD\7KLVPZLGH primarily hubs for the IT/ITeS industry and we road is expected to connect Dwarka and Palam anticipate growth momentum to accelerate in the 9LKDULQ1HZ'HOKLZLWK1+QHDU.KHUNL'KDXOD QH[WĞYH\HDUV7KLVH[SHFWDWLRQLVEXLOWRQWKH in Gurgaon. This belt is predominantly a A new residential belt has premise that it is a planned city and there is residential area however a small proportion of it emerged along the visibility on the development of the infrastructure is developed as a commercial area. Proximity to SURMHFWV5HODWLYHO\ORZHURĠFHUHQWDOVODUJH the Dwarka Sub-city, Delhi International Airport upcoming Dwarka RĠFHVSDFHRSWLRQVDQGZHOOGHYHORSHG Expressway residential markets are factors that make this ]RQHDSUHIHUUHGSODFHIRUVHWWLQJXSRĠFHV Going forward, development of the Dwarka RESIDENTIAL PROJECT Expressway in Gurgaon, Metro connectivity in LAUNCH TREND IN GURGAON Noida and Greater Noida will only augment the cause. * Till September 2012 2007 20082009 2010 2011 2012* GURGAON 23,439 Gurgaon is a self-sustaining real estate market comprising all the verticals of real estate viz. 16,492 residential, retail, commercial and industrial. Major factors like availability of huge land parcels, quality commercial properties, proximity 8,939 to the international airport, favourable tax policies and access to the talented workforce lured many corporates to Gurgaon. It is not only DQLQGXVWULDODQGĞQDQFLDOFHQWUHRI+DU\DQDEXW /DXQFKHV Source: .QLJKW)UDQN5HVHDUFK INVESTMENT advisory REPORT India’s Residential Destinations RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF GURGAON Gurgaon witnessed * Till September 2012 absorption of 98,713 units during 2007-12 2007 2008 2009 2010 2011 2012* 17.3% 11% 140,000 120,000 8.1% 100,000 80,000 7.3% 60,000 7.7% 40,000 3.3% No. of Units 20,000 Stock Cumulative Absorption % of Unsold Units Source: Knight Frank Research and proposed diplomatic enclave in Dwarka huge demand for residential real estate. Major Phase II attracted many developers to this micro- developers like DLF, Godrej, Anantraj and Emaar PDUNHW7KHXQGHUFRQVWUXFWLRQ5DSLG0HWUR5DLO MGF have well-perceived these developments Gurgaon (RMRG) is proposed to link various and strategically launched their projects in micro-markets including Mall of India and DLF Manesar. A 135 km. Kundli-Manesar-Palwal (KMP) Phase II & III, thereby enhancing connectivity Expressway will further augment demand for the ZLWKLQ*XUJDRQ7KLVLVH[SHFWHGWRDXJPHQW residential real estate in Manesar. demand for residential real estate in these micro- PDUNHWV'HYHORSHUVOLNH6REKD%373,QGLDEXOOV Hence, based on the above factors we anticipate Raheja and Mahindra Life Spaces have launched Gurgaon market to witness good appreciation projects in this belt. over the next 4-5 years. Manesar located in the south Gurgaon region is a As on September-2012, Gurgaon residential market PDMRULQGXVWULDOKXE,QGXVWULDO0RGHO7RZQ ,07 witnessed a total launch of 119,404 units since – a Haryana government initiative, has given a 2007. Moreover, owing to enhanced connectivity ĞOOLSWRFRPPHUFLDOL]DWLRQLQ0DQHVDU5HQRZQHG and infrastructure development, the zone manufacturing companies like Maruti, Suzuki, witnessed absorption of 98,713 units during the +HUR0RWRUV+RQGD7R\RWDDQG6DPVXQJ same period resulting in 17.3% remaining unsold. IMT is a 1,750-acre ultra 7HOHFRPPXQLFDWLRQVDUHDOUHDG\SUHVHQWLQ Over the last four years the average annual modern Integrated Manesar. Moreover, Manesar has become the absorption of residential units in Gurgaon was most preferred destination for many leading 7KHODXQFKPRPHQWXPFRQWLQXHGLQ Industrial Park FRPSDQLHVLQFOXGLQJPDMRU,7,7H6FRPSDQLHV 2012, as the region witnessed the launch of 7KLVFRXSOHGZLWKWKH5HOLDQFH6(=ZLOOOHDGWR XQLWVGXULQJWKHĞUVWQLQHPRQWKVRI huge employment generation thereby leading to (9m 2012). Existing Infrastructure DELHI-GURGAON EXPRESSWAY 2008, this 8 lane 28 km. access controlled toll expressway has enhanced the connectivity between Delhi and the commercial hub, Gurgaon. Delhi Gurgaon Expressway is the most Starting from Dhaula Kaun in Delhi the breathtaking development in India's transport expressway terminates at Manesar and has 11 KLVWRU\,WSURYLGHVDIUHHğRZLQJDOWHUQDWLYHWR ğ\RYHUVDQGXQGHUSDVVHV7KHH[SUHVVZD\KDV the congested NH-8. Since its opening in January four toll plazas including the 36 lane toll plaza at the Delhi-Haryana Border. INVESTMENT advisory REPORT India’s Residential Destinations GURGAON-FARIDABAD ROAD Extending further, a 13 km. Rapid Metro Rail have 28 km. Delhi-Gurgaon been planned under RMRG Phase II, of which, a 7 LINK Expressway and 25-km. km. line will provide connectivity between Sikanderpur and Sector 55-56 in South Gurgaon Gurgaon-Faridabad Link A 25 km. toll highway starting from Sector-54 of and another 6 km. rapid metro rail will connect Road are the major Gurgaon and ending at the junction of Pali Bhakri with Dwarka in the North. arterial roads Road in Faridabad, has been built by widening the existing two-lane road to four lanes. toll expressway has enhanced the connectivity KMP EXPRESSWAY between Delhi and the commercial hub, Gurgaon. Starting from Dhaula Kaun in Delhi the A 135 km. access controlled expressway expressway terminates at Manesar and has 11 connecting Kundli with Palwal via Manesar in ğ\RYHUVDQGXQGHUSDVVHV7KHH[SUHVVZD\KDV Haryana is under construction. It will connect four toll plazas including the 36-lane toll plaza at important industrial centres of Haryana and the Delhi-Haryana Border. intersect four of India's busiest National Highways: NH-1 near Kundli (Sonipat), NH-10 near Bahadurgarh, NH-8 at Manesar (Gurgaon) and 1+QHDU3DOZDO )DULGDEDG 7KHSURMHFWLV Upcoming expected to be complete by 2013-14. Infrastructure Employment DWARKA EXPRESSWAY Indicators in Dwarka Expressway also called the Northern Peripheral Road (NPR) is an eight-lane 18 km. Gurgaon expressway, providing the shortest alternative between the new growth centres of Delhi and *XUJDRQLVDQLQGXVWULDODQGĞQDQFLDOFHQWUHRI *XUJDRQ7KLVPZLGHURDGZLOOVWDUWIURP Haryana. It has now emerged as one of the Dwarka Sector-21 and end at NH-8 (Gurgaon SURPLQHQWGHVWLQDWLRQVIRU,7,7H6RXWVRXUFLQJ ([SUHVVZD\ QHDU+DOGLUDP7KLVVWUHWFKKDVEHHQ DQGRĝVKRULQJKXEVPDLQO\GXHWRLWVSUR[LPLW\ planned as an alternative link between Delhi and to the national capital coupled with huge Gurgaon, thereby decongesting the Delhi- availability of quality commercial properties and Upcoming eight-lane 18 km. *XUJDRQ([SUHVVZD\ 1+ 7KHURDGZLOODOVR IDYRXUDEOHJRYHUQPHQWSROLFLHV7KHFRPPHUFLDO Dwarka Expressway will aid provide connectivity with the much-touted RĠFHVSDFHLVFRQFHQWUDWHGLQ1RUWK*XUJDRQ in decongesting the Reliance-HSIIDC SEZ besides the Garhi Harsaru existing Delhi-Gurgaon 'U\'HSRW7KHQHZOLQNZRXOGEHSDUDOOHOWRWKH expressway till it merges ahead of the IFFCO GURGAON OFFICE SPACE Expressway &KRZN7KHSURSRVHGH[SUHVVZD\ZLOOWRXFK DYNAMICS new nearby residential colonies and would also WRXFKDFRPPHUFLDOFRUULGRU7KHSURMHFWLVXQGHU construction and is expected to be complete by 2014-15. 80 70 RAPID METRO RAIL GURGAON 60 (RMRG) 50 40 3URPRWHGE\'/)WKLVLVWKHĞUVWPHWURE\DQ\ 30 private company in the NCR. A total of 20 km. 20 rapid metro rail has been planned which will provide connectivity between Sikanderpur in 10 Gurgaon with NH-8. A 6 km. rapid metro rail BeFORE 2008 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E under Phase-I is in advanced stages of 2008 FRQVWUXFWLRQ7KLVZLOOSURYLGHWKHPXFKQHHGHG access into areas like Cyber City, Mall of India Stock and NH8. RMRG Phase-I is expected to commence Occupied Stock commercial operations by 2013-14. INVESTMENT advisory REPORT India’s Residential Destinations majorly around DLF Phase I-V, Sohna Road and &XUUHQWO\*XUJDRQKDVPQVTIWRIRĠFH Gurgaon has emerged as Golf Course Road while the industrial hub is space of which 40 mn. sq. ft. is occupied. We one of the prominent concentrated in South Gurgaon region of H[SHFW*XUJDRQRĠFHVSDFHWRSRVWDQ Manesar. Renowned manufacturing companies HQFRXUDJLQJJURZWKIRUWKHQH[WĞYH\HDUVXQWLO destinations for IT/ITeS like Maruti, Suzuki, Hero Motors, Honda and :KLOHWKHRĠFHVWRFNZLOOLQFUHDVHE\ outsourcing and RƩ- Toyota have their base in Manesar.Major builders WKHRFFXSLHGRĠFHVSDFHZLOOJRXSE\DVWHOODU shoring hubs who have planned residential projects in Gurgaon E\&RQVHTXHQWO\WKHYDFDQF\UDWHZLOO are DLF, Anantraj, Godrej, Unitech and Emaar FRPHGRZQIURPWKHFXUUHQWOHYHORIWR MGF. :HIRUHVHHWKDWWKHHPSOR\PHQW generation happening in the service industry will feed the growth of residential markets in the zone. Employment Hubs in Gurgaon Gurgaon total RƬFH PROJECT NAME LOCATION MAJOR COMPANIES space stock is 55 mn. sq.ft. BPTP I Park Udyog Vihar Cisco, Deloitte of which 40 mn. sq. ft. is occupied DLF Cyber City DLF Cyber City BCG, Cannon, Emerson, Google, KPMG Global Foyer Golf Course Road Ciesta Hospitality, Stryker Hospitality Spaze I-Tech Park Sohna Road Capgemini, Aircel, Shoppers Stop, Yamaha Music JMD IT Park Sohna Road Convergys, Global Expo Gurgaon to witness another 22.3 mn. sq.ft. of new RƬFHVXSSOy by 2017 INVESTMENT advisory REPORT India’s Residential Destinations DESTINATION 18,649 residential units launched in the DWARKA EXPRESSWAY micro-markets along the (Sec 103-106, 109-113) Dwarka Expressway since 2007 RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF DWARKA EXPRESSWAY (Sec 103-106, 109-113) * Till September 2012 2007 2008 2009 2010 2011 2012* 31% 15.6% 18,000 16,000 8.4% 14,000 12,000 No. of Units 10,000 6.5% 8,000 4.2% 6,000 4,000 0.3% 2,000 Stock Cumulative Absorption % of Unsold Units Source: Knight Frank Research A new residential belt has emerged along the comprises Sectors 37, 37C, 37D, 83, 84 and 88. upcoming Dwarka Expressway or Northern This entire belt is predominantly a residential Peripheral Road (NPR). The 18 km. expressway will area with a small portion of commercial and provide an alternative link between Delhi and the industrial developments. commercial hub, Gurgaon. Based on its proximity to the Dwarka Sub-city (Delhi) and to the city 7KRXJKWKHHQWLUHEHOWZLOOLPPHQVHO\EHQHĞW centre of Gurgaon, the expressway can be sub- from the new link road between Gurgaon and divided into two parts viz. North and South. The Delhi, we anticipate the north region (Sec 103- northern stretch starts from Sector 103-106, 109- RIWKHH[SUHVVZD\WREHQHĞWPRUH 113 in close proximity to Dwarka and ends at compared to the south. We base our argument 77% OF THE RESIDENTIAL Sector 99 near the turn where the NPR connects primarily on account of north region's proximity to UNITS WAS launched IN with the NH8. The southern stretch begins from Dwarka Sub-city, Delhi International Airport and Sector 37D the far end of the NPR and terminates the proposed diplomatic enclave in Dwarka Phase the last 21 months near Manesar on the NH-8. The south stretch II. RESIDENTIAL PROJECT LAUNCH TREND IN DWARKA EXPRESSWAY PRICE FORECAST * Till September 2012 * Figures in `/sq.ft 20072008 2009 2010 2011 2012* 2012 2017E 7,456 `17,300 6,839 `10,200 `10,200 `4,900 230 2,146 1,374 Dwarka Sec. 22-23 Dwarka Expressway 694 141 Launches Source: Knight Frank Research Source: Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations PRICE MOVEMENT Annual average * Figures in ` per sq.ft absorption rate in the Dwarka Expressway 3,180 units 18,000 16,000 14,000 12,000 40% 10,000 8,000 52% 6,000 4,000 2,000 2007 2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E Dwarka Sec. 22-23 Dwarka Expressway Discount Margin Source: Knight Frank Research Developers started taking keen interest in this destination has witnessed an average absorption Selected destination locality only in 2009. Since 2009, the Northern of 3,180 units per annum between 2009 and 2011. primarily on account of Region of this belt has witnessed the launch of The rate of unsold inventory climbed to 31% as 17,815 residential units and 92% of these were on Q3 2012, however, understanding the long its proximity to Dwarka launched during the last thirty-three months. The term potential of this destination the developers Sub-city, IGI Airport and destination witnessed healthy sales primarily on continued launching new projects. The the proposed diplomatic account of euphoria associated with the new destination witnessed the launch of 7,456 units in enclave in Dwarka Phase II connectivity. However, the sale momentum has WKHĞUVWQLQHPRQWKVRIDVDJDLQVW XQLWV subsided for the projects launched in 2012. We launched throughout 2011. believe this is just an aberration, as the CONNECTIVITY TO IMPORTANT LOCATIONS FROM SEC.111 * By road IRP G ROAD I A OR M IG T NESAR MA 17 11 km mins 28 17 km mins 9 6 29 18 km mins 13 8 km mins km mins G D E O A C C LF RO ON LA COURSE NAUGHT P Distance Travel time INVESTMENT advisory REPORT India’s Residential Destinations At present, Sec 111 on the Dwaraka Expressway is Investment Major RƬFHPDUNHWVOLNH connected with the important NH-8 through the Major Sushil Aima Marg, which also connects it *ROI CRXUVH5oad and MG with the Urban Extension Road II (UER-II) that Options in Dwarka Road and 9 DUHMXVWNP goes towards the Indira Gandhi International NPUHVSHFWLYHOyIURP6HF $LUSRUW0DMRURĠFHPLFURPDUNHWVOLNH*ROI Expressway RI DwDUND([SUHVVway Course Road and MG Road are just 13 km. and 9 km. from Sector 111. Going forward, the under construction 18 km. Dwarka Expressway will INVESTMENT TICKET SIZE provide an alternative road to the existing congested Delhi-Gurgaon Expressway. Connect- -ivity between the two cities will be enhanced once this expressway is in place. 1,900 - 3,447 3BHK 9.3 - 16.9 Dwarka Sec 22/23 is in close proximity to the selected destination and is also an established residential micro-market with prices averaging at ` 10,200/sq. ft. However, the price in 950 - 1,460 2BHK 4.7 - 7.2 Dwarka Expressway Sec 103-106, 109-113 is around `4,900/sq. ft., which is a 52% discount. Based on our investment rationale as discussed Apartment Size in sq.ft. Ticket Size in ` mn. above we expect prices to rise to `10,200/sq. ft. thereby reducing the discount to 40% by 2017. Source: Knight Frank Research SELECT PROJECTS Project Sector Developer No. of Units Launch Date Completion Date Vedas 108 Raheja Builders 250 Nov-10 Dec-13 The Residency 103 The Landmark Group 500 Dec-10 Mar-14 3ULFHLQ'wDUND([SUHVVway Centrum 103 India Bulls 750 Mar-09 Mar-13 WoLQFUHDVHWo `10,200/sqIW IURPWKHFXUUHQWOHYHOV Aura Phase III 110 Mahindra Life Spaces 110 Apr-11 Mar-14 RI `4,900/sqIWaSULFH DSSUHFLDWLRQLQ\HDUV Source: Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations Connaught Place (CBD) is a GREATER mere 18 km. from Noida Extension NOIDA Greater Noida is a new suburb located 20 km from RESIDENTIAL PROJECT Noida in Gautam Buddha Nagar district of Uttar LAUNCH TREND IN GREATER NOIDA Pradesh. Spread over 20,000 acres, it is situated about 40 km. south-east of New Delhi and forms a * Till September 2012 part of the NCR. Greater Noida Industrial Development Authority (GNIDA) is the nodal 2007 20082009 2010 2011 2012* agency for the overall development of this region. Physical infrastructure of Greater Noida has been 82,150 crafted very meticulously by the GNIDA. Wide roads along with service roads for all the major arterial roads have been built. It also boasts of ,QGLD VĞUVW *UDQG3UL[ ZKLFKPDUNHGLWV presence on the International Motor Racing 127,424 residential units Circuit. launched since 2007 23,619 Greater Noida is well connected with Noida and $JUD$NPVL[ODQH1RLGD*UHDWHU1RLGD 6,860 6,121 3,035 5,638 ([SUHVVZD\FRQQHFWV6HFWRURI1RLGDZLWKWKH Alpha Commercial belt of Greater Noida. Launches Source: Knight Frank Research 0RUHRYHUDNP 5HFHQWO\1RLGD([WHQVLRQKDVHPHUJHGDVDQ DĝRUGDEOHKRXVLQJKXERIWKH1&57KRXJKSDUW of Greater Noida, it is nomenclature as 'Noida ([WHQVLRQ DVLWLVLQFORVHSUR[LPLW\ZLWKWKH 1RLGD&LW\&HQWUH7KLVKHOSVWRGLĝHUHQWLDWHLW INVESTMENT advisory REPORT India’s Residential Destinations RESIDENTIAL DEMAND SUPPLY ANALYSIS OF GREATER NOIDA Recently completed * Till September 2012 Yamuna Expressway has reduced the travel time to Agra to less than 2 hours 2007 2008 2009 2010 2011 2012* 37.4% 36 . 3 % 140,000 29.8% 120,000 100,000 80,000 21.4% 22.2% 60,000 40,000 18% No. of Units 20,000 Stock Cumulative Absorption % of Unsold Units Source: Knight Frank Research Existing Infrastructure YAMUNA EXPRESSWAY NOIDA - GREATER NOIDA EXPRESSWAY A 165 km. six-lane expressway connecting Greater Noida with Agra started in August-2012. This A 25 km. six-lane expressway providing access controlled toll expressway is a better connectivity between the two satellite cities of alternative to NH-2 which earlier used to handle the NCR i.e. Noida and Greater Noida is DOOWKH$JUDERXQGWUDĠFIURPWKH1&57KH operational. It starts at Sector 15A of Noida and expressway has reduced the travel time between ends at the Alpha commercial belt in Greater Noida and Agra from 5 hours to less than 2 Noida. This expressway has reduced the travel KRXUV,WZLOOUHOLHYHWUDĠFFRQJHVWLRQRQWKH1+ time between the commercial centres and (which runs through the cities of Faridabad, residential complexes of Greater Noida with the Ballabgarh and Palwal) and Old Grand Trunk Road Delhi CBD. (NH-91). Metro Rail has been proposed for connecting Eco Village via Sector 71 Upcoming Infrastructure FARIDABAD-NOIDA-GHAZIABAD METRO LINE (FNG) EXPRESSWAY The City Centre Metro line will be extended till Eco Village via Sector 71. Out of the planned four A 56 km. expressway meant to connect Faridabad- stations two will be in Noida Extension. The Metro 1RLGD*KD]LDEDGKDGEHHQğRDWHGZD\EDFNLQ terminal will be near Eco Village-III, which is WKH+DU\DQDJRYHUQPHQWGLGQRWĞQGWKLV around 3 km. from Noida Extension roundabout. feasible and scrapped the idea in 1998. However, In addition to Noida Extension, group housing construction has begun on a stretch of 16 km. projects are also being constructed in various which falls under the jurisdiction of Noida areas of Noida, especially from Sectors 74 to 79, Authority. As on date an 8 km. stretch has been Sectors 112 and 119. The Metro extension will even constructed. This stretch is an important link cater to these areas where nearly 50 housing between Noida and Ghaziabad. Currently, the projects are being constructed. This would be the congested NH-24 is the only link between the two ĞUVW0HWUR5DLOFRQQHFWLQJ1RLGD([WHQVLRQZLWK cities and once the 16 km. stretch is complete, it Delhi-NCR. will provide smooth and hassle free travel between Noida and Ghaziabad. This road will also provide speedy access to Greater Noida. INVESTMENT advisory REPORT India’s Residential Destinations Greater Nodia has Employment Indicators in attracted a total industrial investment of Greater Noida `100 bn. from domestic as well as multinational Greater Noida is emerging as one of the most GREATER NOIDA OFFICE companies remarkable models for the industrial SPACE DYNAMICS infrastructure. It is regarded as the most favoured location for industrial development owing to its favourable government policies, huge availability 10 of land tracts and talented workforce. The region 9 has attracted a total industrial investment of `10,000 crore from domestic as well as multi- 8 national companies. Honda Siel Cars, Daewoo 7 Motors, Yamaha Motors, Delphi Automotive, 6 Samsung India, LG, Videocon and TEVA Pharmaceuticals are some of the major 5 companies that have set up their base here. 4 Greater Noida is emerging as an IT/ITeS hub, 2 mainly due to conscious measures taken by the Greater Noida Industrial Development Authority 1 (GNIDA). Taking cognizance of the IT industry JURZWKWUDFWLRQWKH*1,'$LVRĝHULQJWKHEHVWRI BeFORE 2008 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2008 the infrastructure including uninterrupted power as well as water supply. The sectors in the IT Stock industry that have witnessed remarkable growth Occupied Stock in Greater Noida are IT services, software products, IT enabled Services and e-commerce business. Greater Noida is poised to develop as the next major IT destination with a number of planned or upcoming IT & Bio tech parks such as Wegmans Industries, Amprapali Tech park, Wipro IT Park, Globus IT Park, Habitech Tech Park and EXISITING OFFICE SPACE Kalika Infotech. st ock in Greater Noida - 4 mn. sq .ft MNCs have got an invigorating platform as the government is encouraging their presence here. expect it to increase to 9 World-class infrastructure coupled with investor mn. sq.ft. by 2017 friendly policies have lured many MNCs to set-up base in Greater Noida. Sectors like Alpha, Beta, Gamma, Swarn Nagari, NRI City and Golf Link 1 have emerged as commercial business districts. &XUUHQWO\*UHDWHU1RLGDKDVPQVTIWRIRĠFH space of which 2.4 mn. sq.ft. is occupied. We H[SHFW*UHDWHU1RLGDRĠFHVSDFHWRZLWQHVVDQ HQFRXUDJLQJJURZWKIRUWKHQH[WĞYH\HDUVXQWLO :KLOHWKHRĠFHVWRFNZLOOLQFUHDVHE\ WKHRFFXSLHGRĠFHVSDFHZLOOJRXSE\D VSHFWDFXODUE\&RQVHTXHQWO\WKH vacancy rate will come down from the current OHYHORIWR:HIRUHVHHWKDWWKH employment generation happening in the service industry will feed the growth of residential markets in the zone. INVESTMENT advisory REPORT India’s Residential Destinations 80,246 residential units DESTINATION launched in Noida Extension since 2010 NOIDA EXTENSION RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF NOIDA EXTENSION * Till September 2012 2010 2011 2012* 38.4% 38.6% 90,000 80,000 30.7% 70,000 60,000 50,000 40,000 30,000 No. of Units 20,000 10,000 Stock Cumulative Absorption % of Unsold Units Source: Knight Frank Research Noida Extension comprising Sectors 1, 2, 4, 16B, 6RXQGLQIUDVWUXFWXUHDĝRUGDEOHSULFLQJDQG 16C, 16D and Knowledge Park V have emerged as proximity to Noida made this region the most the most sought after destination. Though, Noida sought after destination in the NCR. Based on the Extension is a part of Greater Noida, it is known above factors, many real estate developers have as 'Noida Extension' on its close proximity with launched huge townships like Amrapali Group's the Noida City Centre. This helps to distinguish it Leisure Park, Leisure Valley, Supertech's Eco from both Noida and Greater Noida. It is an Village and Antriksh's Antriksh Forest. upcoming region for Greater Noida situated in Developers started taking keen interest in this close proximity to Noida. Noida Extension is only locality only in 2010. Since 2010, Noida Extension 7 km. from Noida City Centre and is adjacent to has witnessed the launch of 80,246 residential Noida. Sectors 18, 32 or 62 in Noida are barely 5- units and 81% of these were launched in the year 15 minutes from Noida Extension. Moreover, the 2010. The entire region has come to a standstill CBD of Connaught Place is only 18 km. from this due to the land acquisition problem; as a result region. With the upcoming metro line the this region witnessed very few launches of accessibility will be enhanced. residential projects between 2011 and Q2 2012. However, in August 2012, it received the approval 81% of these were The Yamuna Expressway, F1 Car Racing Circuit to continue with its construction from GNIDA. launched in the year 2010 and Noida-Greater Noida Expressway have Hence, we anticipate launches in this region to completely changed the picture of this region. regain its 2010 momentum. RESIDENTIAL PROJECT LAUNCH TREND IN NOIDA EXTENSION PRICE FORECAST * Till September 2012 * Figures in `/sq.ft 2010 2011 2012* 2012 2017e `11,260 64,890 `6,975 `6,760 `3,200 14,890 1,271 Noida Sec. 50-52 Noida Extension Launches Source: Knight Frank Research Source: Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations PRICE MOVEMENT Prices in Noida Extension * Figures in ` per sq.ft to increase to ` 6,760/ sq.ft. from the current levels of `3,200/sq.ft. 12,000 10,000 8,000 6,000 4,000 2,000 2010 2011 2012 2013E 2014E 2015E 2016E 2017E Noida Sec. 50-52 Noida Extn. Discount Margin Source: Knight Frank Research The destination witnessed healthy sales in 2010 UHVLGHQWLDOKXEDQGWKHXQVROGLQYHQWRU\ SULPDULO\GXHWRSUR[LPLW\WR1RLGDDQGDĝRUGDEOH percentage is anticipated to come down. pricing. However, the sale momentum had slowed down during 2011 and Q2 2012 for the reason 1RLGD6HFWRUVDUHWKHHVWDEOLVKHGPLFUR PHQWLRQHGDERYH:LWKDVROXWLRQWRWKHODQG markets of Greater Noida with prices averaging at DFTXLVLWLRQSUREOHPZHEHOLHYHWKLVGHVWLQDWLRQ `6,975/sq. ft. However, the price in Noida to gain traction. The rate of unsold inventory Extension is around `VTIWZKLFKLVD FOLPEHGWRDVRQ4+RZHYHUWDNLQJ GLVFRXQW:HH[SHFWWKLVGLVFRXQWWRQDUURZ FRJQL]DQFHRIWKHVLWXDWLRQZHEHOLHYHWKLV GRZQWRE\WKHHQGRIUHVXOWLQJLQ destination has a huge potential to grow as a prices moving up to `6,760/sq. ft. Investment Options in Noida Extn. INVESTMENT TICKET SIZE SELECT PROJECTS 4BHK Project Sector Developer No. of Completion 1,995 - 3,400 6.4 - 10.9 Units Date Eco Village -I 1 Supertech 5,000 Apr-15 1,480 - 2,100 3BHK 4.7 - 6.7 Gaur City –II&*DXUVRQV'HF Terrace$PDUSDOL2FW 895 - 1,060 2BHK 2.9 - 3.4 Homes Group Eco Village 16B Supertech 8,000 Sep-14 410 - 580 1BHK 1.5 - 2.2 II & III Source: Knight Frank Research Apartment Size in sq.ft. Ticket Size in ` mn. Source: Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations Over 40,000 acres have Hidden Gem LGHQWLƪHG for constructing 'Global City' Neemrana in Neemrana-Behror area CONNECTIVITY TO IMPORTANT LOCATIONS * By road IWA , GU GHT PL BH DI AD RG U AC O A A E R O N N D G N E O M L C H I DELHI INTERNATIONAL AIRPORT 93 55 km 117 km km 72 km 106 km Distance Neemrana is situated in North-Eastern Rajasthan Following are the factors that make Neemrana the and falls under the National Capital Region (NCR) most sought after investment destination:- of Delhi. It is located close to the NH-8 which . Proximity to the Golden Quadrilateral, NH-8 forms a part of the Golden Quadrilateral. and the Dedicated Freight Corridor Currently, there is absolutely no mass rapid . Proximity to Delhi International Airport (106 transport and as such the region has extremely NP DOVRRĝHUVJRRGFRQQHFWLYLW\ZLWK poor inter zone connectivity. The NH-8 is the only Neemrana. Besides, an independent airport major arterial road providing connectivity with complex is also proposed to be developed important regions in the NCR. The real estate here. development in Neemrana is driven by the fact . 7KHJRYHUQPHQWKDVDOUHDG\LGHQWLĞHGDQG that it is one of the major nodes of the Dedicated designated land for constructing 'Global City’ Freight Corridor (DFC) and Delhi-Mumbai over 40,000 acres in the Neemrana-Behror Industrial Corridor (DMIC). Recently, the area. Once completed this region will have a Rajasthan government allotted 2,500 acres to the capacity of housing one million people. The Japanese companies to set up their operations Cyber City, Medi-City, Knowledge City, here. This region is known as the Japanese Entertainment City, SEZ, World Trade City and Investment Zone. Moreover, the government is Bio-diversity Park have also been planned also setting up an Export Promotion Industrial here. Park (EPIP) in an area of more than 200 acres. Additionally, widening of the NH8 on this route The destination is at a distance of approx. 55 km., FRXSOHGZLWKFRQVWUXFWLRQRIğ\RYHUVZLOO 72 km. and 93 km. from the prominent markets of enhance the connectivity of Neemrana with other the NCR Bhiwadi, Manesar and MG Road, industrial hubs of the NCR. Owing to the above Gurgaon respectively. IDFWRUVZHDQWLFLSDWH1HHPUDQDVKRXOGEHQHĞW immensely and provide superior investment returns over a 10 year time horizon. INVESTMENT advisory REPORT India’s Residential Destinations An Integrated Freight Hidden Gem Complex covering an area of 392 hectares has been Narela planned in Narela CONNECTIVITY TO IMPORTANT Narela is situated in North-West Delhi and forms LOCATIONS the border of Delhi state with Haryana. The 'Narela Industrial Area', started developing in * By road early 1980s and today is one of the important industrial complexes in Delhi. Moreover, Narela 8 13 km km spread over 7,464 hectares was planned as a MANESAR Sub-city by Delhi Development Authority (DDA) in 1990s, after Rohini Sub-city and Dwarka Sub-city. NDLI Currently, there is no mass rapid transport and as KU ( VIA AJMER ROAD) DELHI such the region has extremely poor inter zone 5 , km connectivity. The NH-1 is the only major arterial road providing connectivity of Narela with Delhi HT PLACE UG city centre. However, Delhi Metro Rail Corporation (DMRC) under Phase IV has planned to extend the DELHI INTERNATIONAL AIRPORT CONNA 10 existing Yellow Line (currently running between km HUDA and Jahangirpuri) up to Narela. Further, Narela is located 10 km. from the Kundli node of Distance the KMP Expressway (135 km. expressway), once completed this will provide access to the major industrial hubs like Manesar and Palwal. The destination is at a distance of approx. 10 km., 30 km. and 44 km. from the prominent markets of Kundli, Connaught Place and Delhi Airport respectively. Following are the factors that make Narela the most sought after investment destination:- Ÿ An Integrated Freight Complex covering an area of 392 hectares has been planned. It will A Metro line has been accommodate the wholesale trade, district planned under DMRC Phase centre, metropolitan transport centre and ISBT. IV connecting Narela to Ÿ Another major industrial area has been Jahangirpuri proposed at Bawana accommodating 20,000 industrial plots. Ÿ A Metro line has been planned under DMRC Phase IV. This will be an extension of the existing Yellow Line from Jahangirpuri. We anticipate Narela to benefit immensely based on the above mentioned factors. We expect it to provide a good return on investment over a 10 year time horizon. INVESTMENT advisory REPORT India’s Residential Destinations 600 acres allotted to Hidden Gem Maruti Udyog by HSIDC for their expansion plan MANESAR CONNECTIVITY TO IMPORTANT given a fillip to commercialization in Manesar. It LOCATIONS has been divided into four phases. In Phase I, HSIDC developed 1,750 acres of land; the * By road development of Phase II and Phase IV are in progress. HSIDC has allotted around 600 acres in P COURSE R HT LAC Phase III to Maruti Udyog for their expansion F O UG E, L A A D O D N E G N L project. H O I C 48 Renowned manufacturing companies like Maruti, 26 26 km km km Suzuki, Hero Motors, Honda, Toyota and Samsung Telecommunications are already present in Manesar. Moreover, Manesar has D T become the most preferred destination for many E R L O H leading companies including major IT/ITeS P I R IN I companies. This, coupled with the Reliance SEZ T A ER AL NATION will lead to huge employment generation thereby leading to a huge demand for residential real Distance estate. A 135 km. Kundli-Manesar-Palwal (KMP) Expressway will further augment demand for the residential real estate in Manesar. Manesar is situated on NH-8, the Delhi-Jaipur Road, in south Gurgaon. It is emerging as one of However, distance to the CBD continues to remain the biggest industrial belts of the NCR. This a major concern along with the slow development industrial belt comprises Gurgaon’s industrial of arterial roads. Further, the bottleneck at the corridor, Industrial Model Town (IMT) Manesar second toll plaza at Kherki Dhaula impacts the and Gurgaon’s SEZ belt. Currently the region does travel time to and from Manesar. Uninterrupted not have any mass rapid transport raising power supply continues to be a challenge and concerns regarding inter zone connectivity. with the irregular electric supply, companies are Availability of vast tracts of land, wide roads and forced to invest hugely in power back-up A 135 km. KMP Expressway favourable government policies are the major arrangements. will augment demand for drivers for real estate developments in this the residential real estate destination. Time to travel to and from Manesar will reduce in Manesar considerably post commencement of the KMP and Manesar has tremendous opportunities to grow Dwarka Expressway. All these elements are as an industrial hub and the Haryana State expected to spur investments, primarily in the Industrial Development Corporation (HSIDC) is automobile and ancillaries sector in Manesar. not leaving any stone unturned in making it a Hence, we anticipate Manesar to emerge as the destination worth reckoning. Industrial Model most sought after destination providing a good Town (IMT) – a Haryana government initiative, has return on investment over a 10 year time horizon. INVESTMENT advisory REPORT India’s Residential Destinations Mumbai The Mumbai Metropolitan Region (MMR) is spread over an area of 4,355 MUMBAI METROPOLITAN REGION POPULATION sq. km. that comprises 468 sq. km. of Mumbai city along with certain parts of Thane and Raigad district, which constitute the remaining 3,887 Population in Millions sq. km. The Mumbai Metropolitan Region Development Authority (MMRDA) is the apex body for the planning and development of the MMR. 1991 2001 2011 The region has been witnessing a high population growth as high as 32% during the last two decades. Although the growth rate is lower in comparison to 39% witnessed during 1981-1991, the population base increased significantly to 23.51 mn. in 2011. 13.45 3.38% 17.81 2.85% 23.51 2.82% Population Average Annual Growth Source: Census 2011, Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations MUMBAI MAP AIROLI VASHI KHARGHAR WADALA PRABHADEVI BELAPUR Proposed International Airport ULWE Under Construction Rail Line 10000 Under Construction Metro Rail Under Construction Monorail 20000 RANJANPADA 4000 40000 80000 INVESTMENT advisory REPORT ,QGLDßV5HVLGHQWLDO'HVWLQDWLRQV The MMR is spread over an Market area of 4,355 sq.km. Overview and has a population of 23.51 mn. 7KHUHDOHVWDWHPDUNHWRIWKH005FDQEHGLYLGHG WKH$QGKHUL.XUOD5RDGDQGVRPHDORQJVLGH LQWRIRXU]RQHVLH,VODQG&LW\:HVWHUQ=RQH :HVWHUQ([SUHVVZD\XSWR0DODG:LWKUHVSHFWWR The residential pockets of &HQWUDO=RQHDQG1DYL0XPEDL UHVLGHQWLDOGHYHORSPHQW%DQGUDDQG-XKXDUHWKH PRVWVRXJKWDIWHUORFDWLRQVDQGKHQFHFRPPDQG the island city like &XƩH WKHKLJKHVWSURSHUW\SULFHVLQWKLV]RQH7KH ZONE MAJOR RESIDENTIAL Parade, Napean sea Road ZHVWHUQ]RQHKDVDYLEUDQWVRFLDOLQIUDVWUXFWXUH DESTINATIONS and Worli are amongst ZLWKWKHSUHVHQFHRITXDOLW\UHWDLOHGXFDWLRQ the costliest in the Island city &RODED&XĝH3DUDGH7DUGHR HQWHUWDLQPHQWDQGKHDOWKFDUHRSWLRQV7KH SURSHUW\SULFHVGHFOLQHDVRQHJRHVQRUWKZDUGV country 0DKDODNVKPL3DUHO:RUOL'DGDU 0DKLP6HZUL IURPWKHFLW\FHQWUH:KLOHHPSOR\PHQWDQGVRFLDO LQIUDVWUXFWXUHDUHWKHGULYHUVXQWLO0DODG Western zone %DQGUD$QGKHUL*RUHJDRQ ORFDWLRQVIXUWKHUQRUWKDUHGULYHQE\FRQQHFWLYLW\ With the Arabian Sea on 0DODG%RULYDOL'DKLVDU0LUD SULPDULO\E\VXEXUEDQWUDLQQHWZRUNXSWR9LUDU three sides and lack of 5RDG%KD\DQGDU9DVDL9LUDU land availability there is Central zone :DGDOD&KHPEXU*KDWNRSDU3RZDL 7KHFHQWUDO]RQHFRYHUVWKHQRUWKHUQUHJLRQ limited scope for %KDQGXS0XOXQG7KDQH.DO\DQ VWUHWFKLQJIURP6LRQWR.DUMDW:HKDYH horizontal expansion in 'RPELYLOL.DVDUD$PEHUQDWK ZLWQHVVHGDSKHQRPHQRQRIVKLIWLQRĠFHVSDFH .DUMDW the island city, and the GHYHORSPHQWVQRUWKRIWKH005DQGDVDUHVXOW KLJKTXDQWXPRIRĠFHEXLOGLQJVKDYHFRPHXS only way for large scale Navi Mumbai $LUROL9DVKL1HUXO&%'%HODSXU RQWKH/%6URDG3RZDLDQG7KDQHORFDOLWLHVRI 3DQYHO7DORMD8OZH real estate development is WKLV]RQH7KHVWUHWFKXSWR7KDQHKDVGHFHQW by going vertical VRFLDODQGSK\VLFDOLQIUDVWUXFWXUHDQGWKH SUHVHQFHRIVHYHUDORUJDQL]HGUHWDLORSWLRQVRQ 7KHLVODQGFLW\LVWKHVRXWKHUQVHFWLRQRI0XPEDL WKH/%6URDGLQWKHODVWĞYH\HDUVKDVDGGHGWR In the Western zone, while DQGDOVRUHIHUUHGWRDVROGFLW\7KH]RQHKRXVHV WKHDSSHDORIWKHUHVLGHQWLDOGHYHORSPHQWVLQWKH employment and social WKH&HQWUDO%XVLQHVVGLVWULFW &%' FRPSULVLQJ UHJLRQ7KHFRQQHFWLYLW\LQWKLV]RQHLVPDLQO\ 1DULPDQ3RLQW&RODED&XĝH3DUDGH)RUWDQG infrastructure are the WKURXJKWKH(DVWHUQ([SUHVVZD\DQGWKH %DOODUG(VWDWH0XPEDLLVWKHEXVLQHVVFDSLWDORI VXEXUEDQWUDLQQHWZRUN)URPUHDOHVWDWH drivers until Malad, WKHFRXQWU\DQGDVVXFKWKH&%'LVKRPHWRD GHYHORSPHQWSHUVSHFWLYHWKHPRVWFULWLFDOIDFWRU locations further north ODUJHQXPEHURIFRUSRUDWHKHDGTXDUWHUV7KH EH\RQG7KDQHLVWKHFRQQHFWLYLW\SULPDULO\ are driven by connectivity, %RPED\6WRFN([FKDQJH %6( LVWKHROGHVWVWRFN primarily by suburban train H[FKDQJHLQ$VLDDQGVRPHRIWKHELJJHVW,QGLDQ FRPSDQLHVOLNH5HOLDQFH,QGXVWULHV7DWD network up to Virar &RQVXOWDQF\6HUYLFHV6WDWH%DQNRI,QGLDDQG RESIDENTIAL LAUNCH TREND /DUVHQ 7RXEURRSHUDWHIURPWKHLUKHDGTXDUWHUV IN MMR KHUH:RUOL3UDEKDGHYLDQG/RZHU3DUHODUHRWKHU PDMRURĠFHORFDWLRQV7KHUHVLGHQWLDOSRFNHWVRI * Till September 2012 WKLV]RQHOLNH&XĝH3DUDGH1DSHDQVHD5RDGDQG 2007 20082009 2010 2011 2012* :RUOLDUHDPRQJVWWKHFRVWOLHVWLQWKHFRXQWU\ :LWKWKH$UDELDQ6HDRQWKUHHVLGHVDQGODFNRI 112,543 ODQGDYDLODELOLW\WKHUHLVOLPLWHGVFRSHIRU KRUL]RQWDOH[SDQVLRQLQWKLV]RQHDQGWKHRQO\ ZD\IRUODUJHVFDOHUHDOHVWDWHGHYHORSPHQWLVE\ JRLQJYHUWLFDO 72,129 69,150 7KHJHRJUDSK\EHJLQQLQJIURP%DQGUDWRZDUGV WKHQRUWKLQWKH005LVLGHQWLĞHGDVWKHZHVWHUQ 44,483 41,950 ]RQH,WLVKRPHWRWKHSODQQHGFRPPHUFLDOKXE 37,127 RIWKH%DQGUD.XUOD&RPSOH[ %.& WKDWKDVWKH FRXQWU\ßVODUJHVWVWRFNH[FKDQJHWKH1DWLRQDO 6WRFN([FKDQJH 16( DQGLPSRUWDQWRĠFHVOLNH $PHULFDQ&RQVXODWHDQG%ULWLVK+LJK &RPPLVVLRQ2WKHUVLJQLĞFDQWRĠFHVWRFNLVRQ /DXQFKHV Source: .QLJKW)UDQN5HVHDUFK INVESTMENT advisory REPORT India’s Residential Destinations RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF MMR The momentum in MMR * Till September 2012 residential market is down from 1,12,543 units 2007 2008 2009 2010 2011 2012* launched in 2010 to just 24% 18% 400,000 41,950 units in 350,000 14% 300,000 2012 (Until September) 250,000 200,000 8% 8% 150,000 6% No. of Units 100,000 In the Central zone, while 50,000 distant suburbs beyond Stock Cumulative Absorption % of Unsold Units Source: Knight Frank Research Thane provide DƩordable housing options, they are not self-sustainable with respect to employment through suburban train network. This is because opportunities ZONE-WISE SPLIT OF UNDER ZKLOHWKHVHGLVWDQWVXEXUEVSURYLGHDĝRUGDEOH CONSTRUCTION UNITS housing options, they are not self-sustainable with respect to employment opportunities. Developed as the planned 20% satellite city of Mumbai, Developed as the planned satellite city of Navi Mumbai is emerging as Mumbai, Navi Mumbai is emerging as a self a self-sustained real -sustained real estate market on account of the presence of employment opportunities primarily estate market on account in the IT/ITeS sector. While CBD Belapur has been of the presence of SODQQHGDVWKHRĠFHGHYHORSPHQWKXERWKHU 36% 5% employment opportunities VLJQLĞFDQWRĠFHPLFURPDUNHWVDUH9DVKLDQGWKH primarily in the IT/ITeS Thane-Belapur Road. The zone has several options sector IRUTXDOLW\HGXFDWLRQDQGUHWDLOZLWK9DVKLEHLQJWKH most prominent micro-market commanding the highest property price in the zone. The connectivity is mainly through the suburban rail 39% network that also connects the zone with the 39% of the residential island city and the central zone. Besides, the road supply is concentrated in connectivity is supported by the Thane-Belapur Island city Central zone Western zone Navi Mumbai the Western zone Road and the Palm Beach Road. Source: Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations The Western Expressway Real Estate Drivers and the Eastern Expressway are the Employment Infrastructure Development arteries of road connectivity in Mumbai Service Sectors Road Network Rail Network Air Network BFSI Western Expressway Suburban Train network Upcoming International Airport IT/ITeS Eastern Expressway Upcoming Metro & Monorail network Upcoming Eastern Freeway Infrastructure Development EXISTING ARTERIAL ROAD NETWORK ROAD NETWORK DISTANCE OBSERVATIONS Western Expressway 25 km. Extending from Bandra to Dahisar, this 8 lane arterial road has been enhancing the south-north connectivity in the city instrumental in the city Eastern Expressway 24 km. This 6 lane arterial road between Sion and Thane provides the south- north connectivity Sion Panvel Highway 25 km. This 8 lane road has been instrumental in providing the west-east connectivity between Mumbai and Navi Mumbai The suburban train network is considered as EXISTING SUBURBAN RAIL NETWORK the lifeline of the city and has aVLJQLƪFDQW bearing SUBURBAN TRAIN DISTANCE OBSERVATIONS on the real estate NETWORK development of the Churchgate - Virar 60 km. Crucial for south-north connectivity in the western zone, separate connected regions lines for suburban trains provide excellent connectivity CST - Kalyan - 121 km./115 km. This suburban rail network provides excellent south-north Kasara/Khopoli connectivity of the city with the central suburbs Thane - Panvel 49 km. This suburban rail network provides connectivity with the satellite city of Navi Mumbai UPCOMING ARTERIAL ROAD NETWORK PROJECT DISTANCE OBSERVATIONS STATUS EXPECTED COMPLETION Mumbai Trans 22 km. This `96,300mn. six-lane sea bridge will be Planned Beyond 2017 Harbour Link WKHPRVWVLJQLĞFDQWOLQNEHWZHHQ0XPEDL (MTHL) and Navi Mumbai at Sewri and Nhava UHVSHFWLYHO\7KHĞQDQFLDOIHDVLELOLW\KDV been concluded. The authority has shortlisted contractors so that the work can be commissioned by 2013. INVESTMENT advisory REPORT India’s Residential Destinations PROJECT DISTANCE OBSERVATIONS STATUS EXPECTED The upcoming metro rail COMPLETION network will address the Eastern Freeway 16.8 km. This project will enhance the connectivity of Under 2013 much needed west-east South Mumbai with eastern suburbs and Construction serve as an important link road running connectivity in the city parallel to the Eastern Expressway. This through a mass rapid freeway will begin at CST and go upto Anik transport system and further to Panjarpol and Ghatkopar. The real estate markets of Chembur and Wadala will be the biggest beneficiaries on account of this enhanced connectivity with the Central Business District (CBD) of South Mumbai Multi-modal 140 km. This `100 bn. project is basically broadening Planned Beyond 2017 Corridor (Virar - of the existing route of Virar-Bhiwandi- Alibaug) Panvel-Pen-Alibaug. This corridor will primarily enhance the connectivity at the periphery of the MMR and also with other cities by serving as a link to important national highways that link Mumbai to cities like Ahmedabad, Delhi, Chennai and Bangalore. The land survey work is in progress and Phase I Virar-Chirner (Near JNPT) is expected to be complete by 2017 UPCOMING SUBURBAN RAIL NETWORK PROJECT DISTANCE OBSERVATIONS STATUS EXPECTED COMPLETION Metro Rail Phase 11.40 km. The much needed west-east connectivity Under 2013 I (Versova - through the MRTS will be addressed. This construction Andheri- link will enhance the connectivity with office Ghatkopar) locations of Andheri like MIDC and SEEPZ. Construction work is in the advanced stage on this phase with 12 stations on route. Suburban rail network in Navi Mumbai will be Metro Rail Phase- 31.90 km. The west-east connectivity through this MRTS Planned Beyond 2017 II (Charkop - will benefit residential pockets like Charkop extended on the 32 km. Bandra- and Oshiwara in the western suburbs and stretch from Nerul to Mankhurd) Chembur and Mankhurd in the central suburbs Uran This route will have 7 stations on route and Monorail Phase I 8.2 km. Under 2013 provide connectivity with locations like (Wadala- Construction Chembur) Bhakti Park, BPCL colony and Chembur Monorail Phase II With 11 stations on route this project will 12 km. Planned 2016-17 (Jacob Circle- enhance connectivity in otherwise congested Wadala) locations of Lower Parel and Dadar. Although the financial feasibility is completed, the project work will be commissioned only after a successful run of the Phase I Navi Mumbai Currently the region is connected through the 32 km. Under 2016 suburban train JNPT road. However, this suburban train Construction network network will enhance connectivity and prove extension (Nerul- beneficial to residential markets like Ulwe. Seawood-Uran) The construction work is in progress from the Seawood end and will extend up to Uran Navi Mumbai The 11 elevated stations enroute this metro Under Metro Rail Phase 11.10 km. rail network will enhance connectivity within 2014 construction I (Belapur to the Navi Mumbai zone. Residential pockets Pendhar) of Kharghar will realise the maximum benefit on account of the enhanced connectivity with the commercial hubs of CBD Belapur and Taloja INVESTMENT advisory REPORT India’s Residential Destinations PROJECT DISTANCE OBSERVATIONS STATUS EXPECTED Western zone contributes COMPLETION Navi Mumbai 10.35 km. This section with 7 stations will link Phase I Planned 2016 33% of the occupied Metro Rail Phase at Pendhar and stretch upto Khandeshwar. II & III (Pendhar On completion of this phase, the residential office space in the city to Khandeshwar) micro-markets of Kalamboli, Kamothe and Khandeshwar will benefit by the connectivity with CBD Belapur. Western Elevated 62.27 km. This `210 bn. two track elevated corridor will Bidding Beyond 2017 Rail Corridor enhance the connectivity on the Churchgate - stage (Oval Maidan - Virar section in the western zone. While Virar) being a mass rapid commute option this train corridor will also provide comfortable travelling by employing air conditioned train service. This project will immensely benefit the residential markets of peripheral western suburbs beyond Borivali by enhancing their connectivity with the CBD of South Mumbai and cross section of the Mumbai Metro Phase I. The Rail Board has approved the project and is currently at the bidding stage which is expected to be complete by early 2013. UPCOMING MAJOR INFRASTRUCTURE PROJECT PROJECT OBSERVATIONS STATUS EXPECTED COMPLETION Navi Mumbai In wake of the air travel demand from MMR Planned Phase I by 2015 International increasing from 29 mn. passengers in 2010- Airport 11 to an estimated 119 mn. in 2030-31, this second international airport is being Besides BFSI and IT/ITeS developed in Navi Mumbai. While the industries as dominant residential market has witnessed an enormous growth in anticipation of this office space occupiers, the project, it will provide a major boost to the city is home to corporate economy of the Navi Mumbai region with a headquarters of several host of commercial activities that will come up. The project has secured the Indian and multinational Environmental Clearance in November 2010. companies Phase I will have an annual capacity of 10 mn. passengers Employment Indicators in MMR Mumbai is the financial capital of the country and OFFICE SPACE BREAK-UP as such the high pace of employment generation here will drive the growth of the residential 16% markets. BFSI and IT/ITeS are the most dominant industries and being the business capital it is also home to the corporate headquarters of several companies. 30% 21% The current situation indicates that the western zone with 33% of the total occupied office space in the city has the highest density of office space 33% implying a large proportion of employment Island city Western zone opportunities emanating in the zone. The central Central zone Navi Mumbai zone contributes 30% of the employment. The Source: Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations LPSDFWRIWKHJOREDOĞQDQFLDOFULVLVRQWKH MMR OFFICE The occupied RƬFHVWock HPSOR\PHQWVFHQDULRVWLOOSUHYDLOVDQGWKHUHIRUH SPACE DYNAMICS WKH005RĠFHPDUNHWLVZLWQHVVLQJDYDFDQF\RI in WKHFLW\ will increase by +RZHYHUZHHVWLPDWHWKDWWKLVYDFDQF\ZLOO decline to 9% by 2017 mainly on account of 63% in WKHQH[W 5 years LPSURYHGEXVLQHVVVFHQDULRDQGPXWHGRĠFH 140 VXSSO\:HHVWLPDWHWKDWWKHRFFXSLHGRĠFH 120 VSDFHLQWKHFLW\ZLOOJRXSE\EHWZHHQ 100 Ü7KLVJURZWKLQHĝHFWZLOOGULYHWKH UHVLGHQWLDOPDUNHWVLQWKHFLW\ 80 40 20 2008 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 6WRFN 2FFXSLHG6WRFN 6WaWXWory levies in WKHFLW\ increase WKHcRVW of buying properW\ by as much as 10% STATUTORY COSTS AND MARKET NORMS STATUTORY COSTS COST DETAILS Stamp Duty /HYLHGRQKLJKHURIDJUHHPHQWYDOXHRUUHDG\UHFNRQHUUDWH Registration 1% (up to a Maximum of ` The properW\PDUNHW norms in WKHFLW\PDNHLW Value Added Tax (VAT) RQDJUHHPHQWYDOXH DQLQYHVWor friendly Service Tax (on under RQDJUHHPHQWYDOXH PDUNHW construction property) MARKET NORMS NORM DETAILS Time line for property Any time until possession registration Re-sale before $OORZHG possession Transfer charges payable 0.5% of Base Selling Rate to builder Loading (as % of carpet) 55% - 80% 'HYHORSHUVPDUNHWWKHSURSHUW\DWORDGLQJRQXVDEOHFDUSHWZKLFKLQFOXGHV IUHHRI)6,DQGQRQOLYHDEOHDUHDVOLNHğRZHUEHGGU\LQJDUHDHWF,PSO\LQJDQ HĝHFWLYHORDGLQJRI INVESTMENT advisory REPORT ,QGLDßV5HVLGHQWLDO'HVWLQDWLRQV SURPLVLQJ,7,7H6KXERI1DYL0XPEDLLVLQSODFH The city's real estate PREFERRED WKURXJKWKH9DVKLEULGJHDQGWKH$LUROLEULGJH market is growing in the DQGWKLVZLOOEHHQKDQFHGE\WKH0XPEDL7UDQV +DUERXU/LQN 07+/ :LWKUHVSHFWWRWKH north-east direction ZONES IN FRQQHFWLYLW\ZLWKWKHZHVWHUQ]RQHWKHXSFRPLQJ MMR 0XPEDL0HWURDQGWKH0RQR5DLOSURMHFWZLOOEHD VKRWLQWKHDUPRXUIRUWKLV]RQH Mumbai has gained its fair share of glory by EHLQJWKHĞQDQFLDOFDSLWDORIWKHFRXQWU\7KH NAVI GRPLQDQFHRIWKHFLW\LQWKHEXVLQHVVODQGVFDSH RIWKHFRXQWU\KDVEHHQGULYLQJWKHUHDOHVWDWH MUMBAI GHYHORSPHQW:HH[SHFWWKLVWUHQGWRFRQWLQXHLQ Bandra Kurla Complex WKHIRUHVHHDEOHIXWXUH+RZHYHUZHGRQRWH[SHFW DOOUHVLGHQWLDOPDUNHWVWRUHDSWKHEHQHĞWVRQWKH (BKC), Lower Parel and 'HYHORSHGDVDSODQQHGVDWHOOLWHFLW\RI0XPEDL VDPHVFDOH7KHFLW\LVVXUURXQGHGE\WKH$UDELDQ Worli continue to be 1DYL0XPEDLKDVHPHUJHGDVDVHOIVXVWDLQLQJ 6HDRQWKUHHVLGHVDQGDVVXFKODQGLVH[WUHPHO\ ]RQHZLWKLQWKH0057KLV]RQHKDVWKHSUHVHQFH preferred locations for VFDUFHLQWKH0XPEDLFLW\OLPLWV+HQFHWKH RILQGXVWULDODFWLYLW\LQWKHUHJLRQVRI0DKDSHDQG the BFSI and consulting UHJLRQZLOOJURZWRZDUGVWKHQRUWKDQGWKH 7DORMD+RZHYHUWKHODVWGHFDGHKDVZLWQHVVHGD HDVWHUQWHUULWRU\SUHGRPLQDQWO\1DYL0XPEDL companies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ĞFLDULHVLQWKHQH[WĞYH\HDUV1DYL RWKHUSULYDWHODQGRZQHUVDQGWKHQDXFWLRQVLWDV Running parallel to the 0XPEDLUHJLRQLVSULPDULO\DKXEIRUWKH,7,7H6 SHULWVFLW\ VGHYHORSPHQWSODQ7KH1DYL0XPEDL Eastern Expressway, the LQGXVWU\DQGZHHVWLPDWHWKLVPRPHQWXPWR ]RQHKDVZLWQHVVHGKLJKJURZWKRIUHVLGHQWLDO under construction DFFHOHUDWHLQWKHQH[WĞYH\HDUV7KLVHVWLPDWHLV GHYHORSPHQWLQWKHODVWĞYH\HDUV6LQFH EDVHGRQWKHIDFWWKDWLWLVDSODQQHGFLW\DQG Eastern Freeway project UHVLGHQWLDOXQLWVKDYHEHHQODXQFKHG WKHUHLVYLVLELOLW\RQWKHGHYHORSPHQWRIWKH will boost the KHUHRIZKLFKDOPRVWXQLWVKDYHEHHQ LQIUDVWUXFWXUHSURMHFWV5HODWLYHO\ORZHURĠFH DEVRUEHG+RZHYHUWKHFRQVXPHUDSSHWLWHZDV connectivity of the real UHQWDOVDQGODUJHRĠFHVSDFHRSWLRQVDUHIDFWRUV KLWZLWKWKHVRDULQJSURSHUW\SULFHVSXWWLQJDGHQW estate markets in the WKDWPDNHWKLV]RQHDSUHIHUUHGSODFHIRUWKH,7 RQDĝRUGDELOLW\VLQFH7KHIDOORXWRIKLJK island city and central LQGXVWU\6WUDWHJLFORFDWLRQRQWKH0XPEDL3XQH zone ([SUHVVZD\WKDWFRQQHFWVWKH+LQMHZDGL,7EHOWRI 3XQHZLOOEHEHQHĞFLDOWR1DYL0XPEDL*RLQJ IRUZDUGWKHGHYHORSPHQWRI005 VVHFRQG RESIDENTIAL LAUNCH LQWHUQDWLRQDODLUSRUWLQWKLV]RQHZLOORQO\ TREND IN NAVI MUMBAI DXJPHQWWKHFDXVH * Till September 2012 2XURWKHUSURPLVLQJUHJLRQLQWKH005LVWKH 2007 20082009 2010 2011 2012* FHQWUDO]RQH7KHUHORFDWLRQRIRĠFHRFFXSLHUV WRZDUGVWKHQRUWKLVDWUHQGWKDWZHH[SHFWWR FRQWLQXHDQGWKHFHQWUDO]RQHLVH[SHFWHGWR HPHUJHDVDVLJQLĞFDQWEHQHĞFLDU\RIWKLV:KLOH RĠFHPDUNHWVOLNHWKH%DQGUD.XUOD&RPSOH[ %.& /RZHU3DUHODQG:RUOLFRQWLQXHWREH SUHIHUUHGORFDWLRQVIRUWKH%)6,DQGFRQVXOWLQJ FRPSDQLHVRĠFHGHYHORSPHQWVRQWKH/%65RDG ZLOOIXUWKHUIXHOWKHJURZWKRIWKHUHVLGHQWLDO PDUNHWLQWKLV]RQH2QWKHFRQQHFWLYLW\IURQW ZKLOHWKH(DVWHUQ([SUHVVZD\KDVEHHQWKH OLIHOLQHRIURDGFRQQHFWLYLW\LQWKLV]RQHWKH XQGHUFRQVWUXFWLRQ(DVWHUQ)UHHZD\SURMHFWZLOO EHDJUHDWVXSSOHPHQW,WVFRQQHFWLYLW\ZLWKWKH /DXQFKHV Source: .QLJKW)UDQN5HVHDUFK INVESTMENT advisory REPORT India’s Residential Destinations CENTRAL AND NAVI MUMBAI ZONE MAP AIROLI ANDHERI POWAI JUHU BANDRA KHARGHAR DADAR BELAPUR Proposed PANVEL International Airport Airport Major Roads FORT Under construction Monorail Proposed Monorail Under construction Metro Rail Proposed Metro Rail JNPT COLABA Proposed MTHL Railway Line Under Construction Rail Line Benchmark location URAN Top destination Employment Hubs INVESTMENT advisory REPORT India’s Residential Destinations RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF NAVI MUMBAI 65,403 units out of * Till September 2012 the 87,055 residential units 2007 2008 2009 2010 2011 2012* launched in Navi Mumbai since 2007 are already sold 25% 21% 11% 90,000 80,000 70,000 60,000 6% 50,000 40,000 4% 30,000 No. of Units 3% 20,000 10,000 Cumulative Supply Cumulative Absorption % of Unsold Units Source: Knight Frank Research property price and interest rate was an increase in the unsold inventory to 25% as on Q3 2012. Taking cognizance, a large number of developers have exercised restrain on launching new projects in 2012. Real Estate Drivers Thane-Belapur Road and Palm Beach Road are the Employment Infrastructure Development arteries of road connectivity in Navi Mumbai Road Network Rail Network Air Network Upcoming International IT/ITeS Thane-Belapur Road Suburban train network Airport Manufacturing Upcoming Metro Palm Beach Road rail network Existing Infrastructure THANE-BELAPUR ROAD Thane and towards the south it connects with CBD Belapur. Going further this road connects with the Mumbai-Pune expressway that connects The 20 km. Thane-Belapur Road is the most the MMR with Pune. The importance of this road important road link in the zone providing both the FDQEHJDXJHGE\WKHIDFWWKDWPDMRURĠFHVSDFH intra-zone as well as inter-zone connectivity with locations like Airoli, Rabale, Turbhe, Jui Nagar Navi Mumbai. Towards the north it begins at and CBD Belapur are linked on this road. INVESTMENT advisory REPORT India’s Residential Destinations 0LQGVSDFH,76(=WKHPQVTIWRĠFH Vashi Bridge and Airoli development of Airoli is situated on this road. The Upcoming Bridge provide the inter RWKHUSURPLQHQWRĠFHGHYHORSPHQWVRQWKHURDG are Reliance Corporate Park and Dhirubhai zone connectivity to Navi Ambani Knowledge City. Infrastructure Mumbai PALM BEACH ROAD NAVI MUMBAI METRO NETWORK The Palm Beach Road runs alongside the mangroves on the western coast of this zone. Of the six planned metro corridors in the zone Stretching from Vashi to Belapur this stretch is that would eventually cover a length of 120 km., widely referred to as the Marine Drive of Navi only one i.e. Belapur-Taloja-Khandeshwar Mumbai and boasts of the most expensive corridor, encompassing 21.45 km., is worth properties in the zone. It is a supplementary link considering at this point of time. This corridor will to the Thane-Belapur Road and connects be developed in three phases and once residential markets like Vashi, Sanpada, Nerul completed it will improve the connectivity within and Belapur. The road is developing as a hub for the zone, which currently lacks mass rapid organized retail developments. transport system on this route. It will connect the residential micro-markets of Kharghar, VASHI BRIDGE Khandeshwar and Kalamboli with the employment centre of CBD Belapur. The metro rail network is considered to be a convenient form of The 6-lane Vashi Bridge also referred to as the mass rapid transport system. There is a visibility Sion- Panvel Expressway is a major inter-zone on the progress of the metro rail in the Navi link. Providing East-West connectivity within the Mumbai Zone. The pace of development is MMR, this road connects Navi Mumbai zone at encouraging and we expect that the Phase I will Vashi with the central zone at Mankhurd. At be completed by early 2014. SUHVHQWWKLVOLQNLVWKHĞUVWHQWU\SRLQWDQGDOVR the shortest road network from the island city zone to the Navi Mumbai zone. SUBURBAN TRAIN NETWORK The suburban train network in the zone is fairly AIROLI BRIDGE decent on account of the connectivity with the central zone at Thane and the island city up to The Airoli Bridge serves as the inter-zone Mumbai CST. However, the southern stretch from connector by connecting the Navi Mumbai zone Ulwe to Uran lacked connectivity. It was with the central zone. It links the Eastern connected only by the JNPT road. However, with expressway at Mulund in the Central zone with the under construction 27 km. Nerul-Seawood- the Thane-Belapur Road at Airoli in the Navi 8UDQOLQHWKLVVWUHWFKZLOOZLWQHVVVLJQLĞFDQW Mumbai zone. improvement in connectivity. The network is expected to be ready by 2016. Widely referred to as the lifeline of Mumbai, the train network in the SUBURBAN TRAIN NETWORK entire MMR is very crucial and to a great extent LQğXHQFHVWKHJURZWKRIUHDOHVWDWHGHYHORSPHQW The zone has a decent inter and intra zone in the network. connectivity by the suburban rail network. The suburban train network connects the zone with island city i.e. the CBD locations of Nariman MUMBAI TRANS HARBOUR LINK Point, Fort and Colaba and also the central zone (MTHL) in Thane. Running parallel to the crucial Thane- %HODSXU5RDGLWFRQQHFWVWKHPDMRURĠFHVSDFH locations like Airoli, Rabale, Turbhe, Jui Nagar The MTHL project has the potential to become a and CBD Belapur. game changer in the real estate market. It will connect the Navi Mumbai zone with the Island city zone at Sewri and Nhava respectively, thereby reducing the travel time between these ]RQHVVLJQLĞFDQWO\7KHVRXWKHUQVWUHWFKIURP 8OZHWR8UDQZLOOEHWKHELJJHVWEHQHĞFLDULHVRQ account of their connectivity with the CBD INVESTMENT advisory REPORT India’s Residential Destinations locations of Nariman Point, Fort, and Colaba. The HVWLPDWHG PQLQZKLFKFDQQRWEH The increase of air ĞQDQFLDOIHDVLELOLW\KDVEHHQFRQFOXGHG7KH KDQGOHGE\WKHH[LVWLQJDLUSRUWLQWKHZHVWHUQ DXWKRULW\KDVVKRUWOLVWHGFRQWUDFWRUVVRWKDW ]RQH3DXFLW\RIODQGIRUIXUWKHUH[SDQVLRQLQWKH passenger WUDƬFIUom the WKHZRUNFDQEHFRPPLVVLRQHGE\ H[LVWLQJDLUSRUWKDVSDYHGZD\IRUWKHVHFRQG current 29 mn. passengers LQWHUQDWLRQDODLUSRUWRI005WKDWZLOOFRPHXSLQ to 119 mn. in 2030-31 will be WKH1DYL0XPEDL]RQH7KLVXSFRPLQJ supported by the city's LQWHUQDWLRQDODLUSRUW(QYLURQPHQWDO&OHDUDQFHIRU second international ZKLFKKDVDOUHDG\EHHQVHFXUHGLVH[SHFWHGWR NAVI MUMBAI INTERNATIONAL airport coming up in Navi ZLWQHVVLWV3KDVH,WREHRSHUDWLRQDOE\ AIRPORT (NMIA) %HVLGHVSURYLGLQJDERRVWWRWKHHFRQRP\RI1DYL Mumbai 0XPEDL]RQHZLWKDKRVWRIFRPPHUFLDODFWLYLWLHV LQWKHDOOLHGLQGXVWU\LWZLOOLQFUHDVHWKH $LUWUDĠFLQWKH005LVH[SHFWHGWRLQFUHDVLQJ DWWUDFWLYHQHVVRIRĠFHDQGUHVLGHQWLDOSURSHUWLHV IURP PQSDVVHQJHUVLQWRDQ in the zone. (PSOR\PHQW,QGLFDWRUVLQ As industrial land gives 1DYL0XPEDL way to more lucrative opments, RƬFHGHYHO 7KH]RQHKDVWKHSUHVHQFHRIPDQXIDFWXULQJ JRXSE\DVWHOODUE\DVWKHYDFDQF\ IT/ITeS industry will DFWLYLW\LQWKHVWDWHRZQHGLQGXVWULDOHVWDWHV UDWHZLOOFRPHGRZQIURPWKHFXUUHQWOHYHORI dominate the economic 0,'&DUHDVLQ0DKDSHDORQJWKH7KDQH%HODSXU WR:HDQWLFLSDWHWKDWWKHHPSOR\PHQW landscape of Navi Mumbai 5RDGDQG7DORMDKDYHWKHSUHVHQFHRIVHYHUDO JHQHUDWLRQKDSSHQLQJLQWKHVHUYLFHLQGXVWU\ZLOO VPDOODQGPHGLXPHQWHUSULVHV 60(V 7DORMDKDV IHHGWKHJURZWKRIUHVLGHQWLDOPDUNHWVLQWKH WKHSUHVHQFHRIFRPSDQLHVOLNH([LGH%DWWHULHV zone. $VLDQ3DLQWVDQG$VDKL*ODVV+RZHYHUZLWKWKH JURZWKRIWKHFLW\WKHLQGXVWULDOODQGLVJLYLQJ ZD\WRPRUHHFRQRPLFDOO\IHDVLEOHFRPPHUFLDO NAVI MUMBAI OFFICE RĠFHDQGUHVLGHQWLDOGHYHORSPHQW,QWKH SPACE DYNAMICS IRUHVHHDEOHIXWXUHZHH[SHFWWKHVHUYLFHLQGXVWU\ SULPDULO\,7,7H6WRGRPLQDWHWKHHFRQRPLF ODQGVFDSHRIWKH]RQH The occupied RƬFHVWock in Navi Mumbai will :LWKLQWKH]RQHPRVWRIWKHHPSOR\PHQW JHQHUDWLRQLVRQWKHNPVWUHWFKRIWKH7KDQH increase by 105% in %HODSXUURDG/RFDWLRQVOLNH$LUROL5DEDOH the next 5 years 0DKDSHWRZDUGVWKHQRUWKDQG9DVKL7XUEKH-XL 1DJDUDQG%HODSXUWRZDUGVWKHVRXWKDUH SURPLVLQJRĠFHVSDFHORFDWLRQVZKHUHDPSOH HPSOR\PHQWRSSRUWXQLWLHVDUHDYDLODEOH &XUUHQWO\WKH]RQHKDVPQVTIWRĠFHVSDFHRI 2008 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E ZKLFKDERXWPQVTIWLVRFFXSLHG:H H[SHFWDQHQFRXUDJLQJJURZWKLQWKH 6WRFN GHYHORSPHQWRIRĠFHVSDFHIRUWKHQH[WĞYH 2FFXSLHG6WRFN \HDUVXQWLO:KLOHWKHRĠFHVSDFHVWRFNZLOO LQFUHDVHE\WKHRFFXSLHGRĠFHVSDFHZLOO INVESTMENT advisory REPORT India’s Residential Destinations Of the 6,606 residential DESTINATION units launched in Ulwe ULWE since 2009, 4,805 units are already sold RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF ULWE * Till September 2012 2009 2010 2011 2012* 27% 23% 7,000 6,000 5,000 12% 4,000 3,000 No. of Units 5% 2,000 1,000 Cumulative Supply Cumulative Absorption % of Unsold Units Source: Knight Frank Research Ulwe is a residential market located to the south on account of low end user interest, because of of the Panvel creek. CIDCO, the planning authority lack of mass rapid transport connectivity. The rate of Navi Mumbai, has acquired land from the of unsold inventory climbed to 27% as on Q3 villagers and other private land owners and is 2012 and taking cognizance of the state of developing this location as per its city market, the developers have reduced the new development plan. Hence, it is not yet an ODXQFKHVVLJQLĞFDQWO\ At present, lack of mass established residential destination. Developers rapid connectivity is a started taking keen interest in this locality only in At present, Ulwe is connected with the important concern. However, the 2009. Since 2009, Ulwe has witnessed a launch Thane-Belapur Road through the Uran Road, under construction of 6,606 residential units and almost 83% of these which also connects it with the JNPT Road that were launched between 2010 and 2011. Due to the goes towards the Jawaharlal Nehru Port (Nhava suburaban rail network initial euphoria associated with the investor 6KHYD &%'%HODSXUWKH&,'&2QRWLĞHGRĠFH community, the projects also witnessed healthy micro-market, is just 7 km. from Ulwe enroute this will address it by 2015 sales. However, the rate of sale has subsided now 8UDQ5RDG%HVLGHV&%'%HODSXUĞYHRWKHU RESIDENTIAL LAUNCHES IN ULWE ULWE PRICE FORECAST * Till September 2012 * Figures in `/sq.ft 2009 2010 2011 2012* 2012 2017E ` 2,675 15,802 ` 2,256 10,000 `9,800 `4,000 230 700 Vashi Ulwe 130 Launches Source: Knight Frank Research Source: Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations ULWE PRICE FORECAST Dearth of social * Figures in ` per sq.ft infrastructure is a concern. However, planned development will 18,000 address the same in the 16,000 foreseeable future 14,000 12,000 38% 10,000 8,000 60% 6,000 Ulwe will benefit on account of the corollary 4,000 commercial acivity arising from the upcoming 2,000 international airport and the SEZ land 2009 20102011 20122013E 2014E 2015E 2016E 2017E Vashi Ulwe Discount Margin Source: Knight Frank Research prominent office locations within the zone are at the planned Navi Mumbai Special Economic Zone The discount factor of a maximum distance of just 22 km. Going (NMSEZ). Although plans for the SEZ have been residential capital values forward, the under construction 27 km. Nerul- shelved, we expect large scale commercial Seawood-Uran rail line will connect Ulwe with the developments to come up on this land parcel that in Ulwe in comparison to suburban rail network. This will happen through a will immensely benefit Ulwe. Navi Mumbai Zone Vashi will reduce to 38% by railway station called Bamandongri which is has emerged as a self-sustaining zone; however, 2017 expected to be operational by 2015. Once this the connectivity with the island through the connectivity is in place, Ulwe will be connected proposed Mumbai Trans Harbour Link (MTHL) will with all these major office markets though the increase the attractiveness of this destination. mass rapid transport system. Once completed, the MTHL will be the most significant link between island city zone and Navi The planning of this destination is undertaken by Mumbai in Sewri and Nhava respectively. CIDCO and hence although there is a dearth of social infrastructure at present, the same will be At present, Vashi is the established residential addressed through the auction of earmarked micro-market in the zone with prices averaging at plots for hospitals, schools and other real estate `10,000/sq.ft. However, the price in Ulwe is developments. Proximity to the Navi Mumbai around `4,000/sq.ft., which is a 60% discount. International Airport (NMIA) will help Ulwe on Based on our investment rationale as discussed account of the corollary commercial activities. above we expect this discount to narrow down to Towards the south of the international airport was 38% by 2017. INVESTMENT advisory REPORT India’s Residential Destinations CONNECTIVITY TO IMPORTANT LOCATIONS Ulwe has access to the * By road zone's 5 major O HA RƬFH AIR LI MA PE TURBHE 16 11 markets within a distance km km of 22 km. 22 18 15 7 km km km km C BD R RABALE VASHI BELAPU Distance The RƬFHPDUNHW of CBD Belapur is at a distance of Investment Options in Ulwe just 7 km. INVESTMENT TICKET SIZE SELECT PROJECTS Project Developer No. of Launch Completion Units Date Date 1600 - 1850 3BHK 6.9 - 8.7 Vighnaharta Shree Complex Siddhivinayak 126 Sep-11 Mar-14 880 - 1224 2BHK 3.6 - 5.8 Palacio Platinum 122 Jan-11 Nov-13 Group Ulwe residential property Neelsiddhi Neelsidhi 120 Feb-12 Dec-13 500 - 700 1BHK 2.0 - 2.9 is forecasted to Joya Group Swaraj Swaraj 164 Dec-10 Jul-14 appreciate by 145% Kingston Builders over the next 5 years Apartment Size in sq.ft. Ticket Size in ` mn. Source: Knight Frank Research Source: Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations Of the 3,518 residential DESTINATION units launched in Chembur CHEMBUR since 2007, 2,625 units are sold CHEMBUR RESIDENTIAL MARKET * Till September 2012 2007 2008 20092010 2011 2012* 24% 25% 19% 3500 3000 2500 2000 1500 3% 4% 1000 0% No. of Units 500 Cumulative Supply Cumulative Absorption % of Unsold Units Source: Knight Frank Research Chembur is a residential destination in the central Since 2007, Chembur has witnessed the launch zone of the MMR. The stretch towards the south of of 3,518 residential units, out of which almost Chembur railway station up to Collectors Colony 75% or 2,625 units have been sold. 2010 was an is the most sought after residential catchment. H[FHSWLRQDOO\JRRGSHULRGIRUWKHUHVLGHQWLDO Going further south of the Collectors Colony, the property market for this destination. However, micro-market has the presence of industrial due to the slowdown in the overall Mumbai activity notable amongst which is Rashtriya market, the inventory level in Chembur climbed On account of its Chemicals and Fertilizers and Bharat Petroleum up to 25% in Q3 2012. Taking cue from the startegic location in the 5HĞQHU\7KH(DVWHUQ([SUHVVZD\LVWKHPRVW changed consumer appetite, many developers VLJQLĞFDQWSURMHFWWKDWFRQQHFWVWKHUHJLRQZLWK KDYHUHIUDLQHGIURPODXQFKLQJQHZSURMHFWVWKLV MMR, overall growth of island city zone and other regions of the central year. employment in the city will zone. drive the residential market of Chembur CHEMBUR RESIDENTIAL LAUNCHES CHEMBUR PRICE FORECAST * Till September 2012 * Figures in `/sq.ft 2007 2008 2009 2010 2011 2012* 2012 2017E `55,459 1,601 `36,000 `27,000 `12,000 845 360 377 Prabhadevi Chembur 210 125 Launches Source: Knight Frank Research Source: Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations CHEMBUR PRICE FORECAST The Eastern Freeway * Figures in ` per sq.ft project and the Santacruz Chembur Link Road will 60,000 VLJQLƪFDQWOy enhance the connectivity of Chembur 54,000 with island city and western zone respectively 48,000 42,000 51% 36,000 30,000 24,000 67% 18,000 12,000 6,000 2007 2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E Prabhadevi Chembur Discount Margin Source: Knight Frank Research Being strategically located within the central LVLQDGYDQFHGVWDJHVRIFRQVWUXFWLRQDQGVKDOO The Chembur-Wadala phase zone, Chembur is not only connected with the be operational by H2 2013. of monorail project is in PDMRURĠFHPDUNHWVRIWKHFHQWUDO]RQHEXWDOVR the island city zone, western zone and Navi The Santacruz Chembur Link Road is another an advanced stage of 0XPEDL]RQH+HQFHWKHRYHUDOOJURZWKRI SLYRWDOLQIUDVWUXFWXUHSURMHFWWKDWZLOOFRQQHFW construction and is HPSOR\PHQWLQWKH005ZLOOIHHGWKHUHVLGHQWLDO Chembur with the western zone. This 6.45 km. expected to be PDUNHWRIWKLVGHVWLQDWLRQ'XHWRLWVSUR[LPLW\WR URDGZLOOVWDUWDW$PDU0DKDO-XQFWLRQLQ&KHPEXU operational by early 2013 WKHUHYHUHGRĠFHPDUNHWRIWKH%DQGUD.XUOD and end up to Santacruz East thereby becoming a &RPSOH[ %.& DQGLQFUHDVLQJFRQFHQWUDWLRQRI FRQQHFWLQJOLQNEHWZHHQWKH(DVWHUQ([SUHVVZD\ RĠFHGHYHORSPHQWVLQWKHFHQWUDO]RQHZH DQGWKH:HVWHUQ([SUHVVZD\7KLVOLQNZLOO H[SHFWWKHDWWUDFWLYHQHVVRIUHVLGHQWLDOSURSHUW\ VLJQLĞFDQWO\UHGXFHWKHWUDYHOWLPHIURP&KHPEXU LQWKLVGHVWLQDWLRQWRJRXSLQIXWXUH$WSUHVHQW to the western zone when it is ready in 2013. the destination has connectivity through the Connectivity through a mass rapid transport (DVWHUQ([SUHVVZD\ZKLFKFRQQHFWVLWZLWKWKH system has a particularly high bearing on the SURPLQHQWRĠFHVSDFHORFDWLRQVLQWKHFHQWUDO JURZWKRIUHDOHVWDWHGHYHORSPHQWLQWKH005 zone. Besides, the mass rapid connectivity is 7KHXSFRPLQJNP&KHPEXUÜ:DGDOD-DFRE provided by the suburban rail network that &LUFOHPRQRUDLOSURMHFWLVWKHĞUVWPRQRUDLO FRQQHFWVLWZLWKWKH&%'ORFDWLRQVRI)RUWDQG SURMHFWLQWKH0053KDVH,EHJLQQLQJIURP Nariman Point through Mumbai CST. Chembur and terminating at Wadala is in DGYDQFHGVWDJHVRIFRQVWUXFWLRQDQGH[SHFWHGWR *RLQJIRUZDUGVFDOHRIXSFRPLQJLQIUDVWUXFWXUH be open to public by early 2013. Phase II will SURMHFWVZLOOVLJQLĞFDQWO\ERRVWWKHFRQQHFWLYLW\ FRQQHFW&KHPEXUZLWK-DFRE&LUFOHLQWKHLVODQG RI&KHPEXULQWKHIRUHVHHDEOHIXWXUH7KH(DVWHUQ city zone via Wadala. This project will directly link Freeway Project is one important project that will &KHPEXUZLWKWKHRĠFHPDUNHWRI/RZHU3DUHO OLQN&KHPEXUZLWKWKH&%'RI6RXWK0XPEDL7KLV 7KH0HWUR5DLO3KDVH,, &KDUNRS%DQGUD OLQNUXQQLQJSDUDOOHOWRWKH(DVWHUQ([SUHVVZD\ 0DQNKXUG ZLOOIXUWKHUHQKDQFHWKHFRQQHFWLYLW\ INVESTMENT advisory REPORT India’s Residential Destinations of Chembur with the western zone. Work has been $WSUHVHQW3UDEKDGHYLLVDQHVWDEOLVKHG Limited land availability awarded to the contractor but is lagging behind residential market commanding an average price ` ` will limit the scope of new schedule. While the project is unlikely to be of VTIW$WDQDYHUDJHRI VTIW FRPSOHWHLQRXUIRUHFDVWKRUL]RQRIĞYH\HDUVLW Chembur residential property sells at a 67% construction in Chembur will have a positive impact on prices during this discount. Based on our investment rationale period. GLVFXVVHGDERYHZHIRUHFDVWWKLVGLVFRXQWWR QDUURZGRZQWRE\ CONNECTIVITY TO IMPORTANT LOCATIONS * By road LA CO - KURL VASHI MAN PO UR MP RI A R RI IN K L E O A T A E H A N R X D D ( N D B N A K A C B ) 13 22 7 km km km km Prominent RƬFHPDUNHWV 12 km 8 18 of BKC and Lower Parel are km km located within a distance ofNPIUom Chembur D V A I O KH R LO L ROLI- LBS WER PARE WORLI Distance Investment Options in Chembur INVESTMENT TICKET SIZE Residential property in Chembur would appreciate SELECT PROJECTS 1600 - 1750 4BHK 16 - 19.3 by 125% over the next 5 years Project Developer No. of Launch Completion 1350 - 1700 3BHK 12.8 - 18.7 Units Date Date Views Dheeraj 0D\ Jun-14 Group 1000 - 1150 2BHK 9.5 - 11.5 Brizo Red Brick 132 'HF Dec-14 Residency 600 - 760 1BHK 5.4 - 7.6 Mangal 0DQJDO0RRUWL -DQ Dec-14 Moorti Developer Akshay Akshay Jun-11 Oct-14 $SDUWPHQW6L]HLQVTIW Ticket Size in ` mn. Paradise Corporation Source: Knight Frank Research Source: Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations DESTINATION Of the 1,871 residential units launched in Wadala WADALA since 2007, 1,387 units were launched in 2011 alone WADALA RESIDENTIAL MARKET * Till September 2012 2007 2008 20092010 2011 2012* 56% 56% 46% 2000 With a slew of launches in 41% 41% the premium segment, the 1500 No. of Units perception of Wadala as a 1000 3% residential market has 500 VLJQLƪFDQWOy improved Cumulative Supply Cumulative Absorption % of Unsold Units Source: Knight Frank Research Wadala is a residential market in the here.The destination witnessed very limited supply, central zone. Eastern expressway is the of just 167 residential units, between 2007 and arterial road that connects Wadala with other 2009. However, the consumer perception about regions of the central zone and also the CBD the location started improving in 2010 and in the island city zone. The destination is also 2011.During this period almost 1,704 units were connected by the suburban train network through launched, many of them being positioned at the the Wadala station. It is surrounded by dense high end market. These projects also witnessed residential developments on the south, north healthy absorption at the very initial stage of the Being strategically and western side by Parel-Sewri, Matunga and launch. At present, the destination has an unsold Dadar respectively. Arabian Sea on the eastern inventory of 56%, which is at a nascent stage of located, Wadala will side restricts any further real estate development construction. EHQHƪW from its connectivity with employment hubs across the MMR WADALA RESIDENTIAL LAUNCHES WADALA PRICE FORECAST * Till September 2012 * Figures in `/sq.ft 2007 2008 2009 2010 2011 2012* 2012 2017E `55,459 1,387 `36,000 `35,000 `15,000 313 Prabhadevi Wadala 72 95 Launches Source: Knight Frank Research Source: Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations WADALA PRICE FORECAST Wadala residential market * Figures in ` per sq.ft willEHQHƪW due to its connectivity with the premium RƬFHPDUNHW of 60,000 Bandra Kurla Complex (BKC) 54,000 48,000 42,000 36,000 30,000 24,000 18,000 12,000 6,000 2007 2008 2009 2010 20112012 2013E 2014E 2015E 2016E 2017E Prabhadevi Wadala Discount Margin Source: Knight Frank Research The most important proposition of the Wadala train network connects the destination with residential market is its strategic location in the 0XPEDL&67LQWKHLVODQGFLW\]RQH$QGKHULLQ The region development MMR. Located to the south of the central zone, WKHZHVWHUQ]RQHDQG9DVKLDQG&%'%HODSXULQ authority's intention of this destination is at a comfortable commuting the Navi Mumbai zone. This strategic location developing Wadala in a distance from the employment centres of the along with established road and suburban train island city zone, central zone, western zone as similar manner as BKC will FRQQHFWLYLW\ZLWKWKHLPSRUWDQWRĠFHPDUNHWVLQ well as Navi Mumbai. On account of this strategic each zone make Wadala a promising residential further increase the ORFDWLRQWKHRYHUDOOJURZWKLQWKH005RĠFH market. appeal of this destination market will have a bearing on this destination. Besides, the proximity of 8 km. and 10 km. from 'XULQJWKHQH[WĞYH\HDUV WZRPDMRU SURPLQHQWRĠFHPDUNHWVRI%.&DQG:RUOL infrastructure projects will alter the residential respectively, make it a sought after residential landscape of this destination. The Eastern catchment. As a result, new launches in the last Freeway Project, which is in advanced stages of two years have been positioned at the high end construction and is expected to be operational by segment of consumers. This happened because 2013, will immensely improve the road :DGDODRĝHUVODUJHODQGSDUFHOVWRGHYHORS FRQQHFWLYLW\ZLWKWKH&%'LQWKHLVODQGFLW\]RQH UHVLGHQWLDOSURMHFWVZLWKVN\VFUDSHUVRĝHULQJ Additionally, the mass rapid connectivity through ultra-modern amenities. This provision enables a convenient and modern means of transport will the destination to provide a lifestyle shift and be provided by the upcoming monorail project. command a premium price for the residential 7KHNP&KHPEXUÜ:DGDOD-DFRE&LUFOH property in comparison to the surrounding micro- monorail project will connect Wadala with the markets. XSFRPLQJRĠFHGHYHORSPHQWVLQ&HQWUDO0XPEDL namely Lower Parel. While Phase I connecting At present, the arterial Eastern expressway &KHPEXUZLWK:DGDODZLOOEHUHDG\E\WKH FRQQHFWVWKLVGHVWLQDWLRQZLWKWKH&%'RI ZRUNIRU3KDVH,,FRQQHFWLQJ:DGDODZLWK-DFRE 1DULPDQ3RLQW)RUWDQG&RODED7KHVXEXUEDQ &LUFOHLV\HWWREHFRPPLVVLRQHG INVESTMENT advisory REPORT India’s Residential Destinations Going forward, we expect this destination to price of `15,000/sq.ft., which is a 58% discount Wadala has the potential follow the established market of Prabhadevi. In to Prabhadevi that commands an average price of ` to provide a lifestyle comparison to Prabhadevi residential property, 36,000/sq.ft. Based on our investment rationale the discount has already narrowed down from WKLVGLVFRXQWZLOOQDUURZGRZQLQWKHQH[WĞYH shift, which is possible in 70% in 2007 to 58% in 2012.Wadala commands a years (2013-2017) and come down to 37% by 2017. projects developed on large land parcels that facilitate high rise premium developments with plush CONNECTIVITY TO IMPORTANT LOCATIONS amenities * By road WER P ORL RI- KUR ASHI LO AR W I HE LA V EL D R N O A A D 10 15 21 5 km km km km 13 km 8 18 km km B X A E L N D D P V A R M N T I O A K CO AR IN KH R URLA IMAN PO ROLI- LBS Distance Travel time Investment Options in Wadala INVESTMENT TICKET SIZE SELECT PROJECTS Wadala residential property shall appreciate Project Developer No. of Launch Completion 1950 - 2700 4BHK 28.3 - 45.9 Units Date Date by 133% during the Dosti Dosti Group 288 Nov-10 Sep-14 Ambrosia next 5 years 1500 - 1900 3BHK 22.5 - 30.4 1HZ&XĝH Lodha Group 900 Oct-11 Nov-15 Parade Vishwachand R.K. 100 May-11 Dec-13 1260 -1520 2BHK 18.3 - 25.1 Sky Developers Zeon Ajmera 164 Sep-11 Dec-15 Apartment Size in sq.ft. Ticket Size in ` mn. Source: Knight Frank Research Source: Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations The Mumbai Trans Harbour HIDDEN GEM Link (MTHL) will Ranjanpada VLJQLƪFDQWOy improve WKH FonneFWLYLW\ of Ranjanpada ZLWKWKH revered island FLW\ CONNECTIVITY TO IMPORTANT favour of this location. Being a mass rapid mode LOCATIONS of transport this suburban train link will reduce transit time and provide last mile connectivity to * By road this destination. The attractiveness of residential market is expected to increase with this O HQKDQFHGFRQQHFWLYLW\ZLWKWKHLPSRUWDQWRĠFH AIR LI D BELAP CB UR markets in the Navi Mumbai zone. This project is expected to be complete by 2016. 28 15 km km Additionally, the Mumbai Trans Harbour Link (MTHL) project will be a game changer project for 22 km this destination. This project will radically change the road connectivity and bring a drastic reduction in travel time between Ranjanpada and the Island city zone. At present, the shortest road connectivity between this destination and VASHI Mumbai is through the Vashi Bridge (Sion Panvel Highway). The destination will be amongst the Distance ELJJHVWEHQHĞFLDULHVRQDFFRXQWRIWKLV connectivity with the CBD locations of Nariman 3RLQW)RUW&RODED7KHĞQDQFLDOIHDVLELOLW\KDV Ranjanpada is a locality in the Navi Mumbai Zone. been concluded. The authortiy has shortlisted With absolutely no mass rapid transport, the contractors so that the work can be commissioned region has extremely poor inter zone connectivity. by 2013. The JNPT Road is the only connectivity of Ranjapada with important regions in Navi Mumbai. Currently, the only driver for the real Suburban WUDLQ estate development in this destination is the port CONNECTIVITY TO IMPORTANT FonneFWLYLW\ will related activity in the Jawaharlal Nehru Port Trust (JNPT). LOCATIONS HVWablish Ranjanpada as a in UHVLGHQWLDOPDUNHW WKH The destination is at a distance of approx. 15 km, * By road NPDQGNPIURPSURPLQHQWRĠFHPDUNHWV AN R P nex 4 years IM PO WE AR W of CBD Belapur, Vashi and Airoli respectively. R IN O E A T L L Although these employment centers are at a N comfortable distance, the connectivity is a drawback both in terms of the mode of commute 55 40 45 38 and the transit time. Ranjanpada only has a road km mins km mins connectivity to CBD Belapur, beyond which the suburban train connectivity is available. On DFFRXQWRIFRQWDLQHUWUDĠFIURP-137WKHWUDĠF on the Uran Road, which connects Ranjanpada to Belapur, remains high. Beyond Belapur, the destination is connected to Vashi through the Palm Beach Road and the Thane-Belapur Road and alternatively by the suburban train network. Current Distance in km. However, the under construction rail project on Road Distance post MTHL in km. Nerul-Seawood-Uran line will move the scale in INVESTMENT advisory REPORT India’s Residential Destinations PUNE Pune, also referred to as the ‘Oxford of India’ due to the presence of PUNE METROPOLITAN REGION POPULATION numerous educational institutes, is the seventh most populous city in India and the second largest city in Maharashtra. Pune’s urban agglomeration, Population in Millions also known as the Pune Metropolitan Region (PMR), is spread over 1,340 sq.km. and consists of Pune Municipal Corporation (PMC), Pimpri 1991 2001 2011 Chinchwad Municipal Corporation (PCMC), Pune Cantonment and Khadki Cantonment. As per Census 2011, the total population of PMR was 5.05 mn. Development of the PMR is undertaken by various agencies such as the PMC, PCMC, Public Works Department (PWD) and others. Absence of a 2.49 4.0% 3.76 4.0% 5.05 3.0% single planning authority for the metropolitan region has led to an Population Average Annual Growth inordinate delay in the execution of various infrastructure projects. Although the idea to set up the Pune Metropolitan Regional Development Authority Source: Census 2011, Knight Frank Research (PMRDA) was first initiated in 2008, it is still at the proposal stage. INVESTMENT advisory REPORT India’s Residential Destinations PUNE MAP Major Roads Railway Line Proposed Metro Corridor I Proposed Metro Corridor II South Zone West Zone Central Zone East Zone North Zone Price Contours (`/ sq.ft) INVESTMENT advisory REPORT India’s Residential Destinations Pune Metropolitan Region Market is spread over Overview 1,340 sq.km. and has a population of 5.05 mn. 3XQHLVGLYLGHGLQWRĞYHEURDG]RQHV &HQWUDO FKHDSHUDOWHUQDWHUHVLGHQWLDO]RQHFRPSDUHGWR North, West, South and East. Central Pune. People preferring to reside in SUR[LPLW\WRWKHFLW\FHQWUHEXWXQDEOHWRDĝRUGD KRXVHWKHUHIDYRUWKHVHORFDWLRQV$EVHQFHRI ZONE MAJOR RESIDENTIAL DESTINATIONS DQ\VLJQLĞFDQWHPSOR\PHQWRSSRUWXQLWLHVKDV UHVWULFWHGWKHJURZWKRIWKLV]RQHDVFRPSDUHGWR North Pimpri, Chinchwad, Nigdi, Moshi, RWKHU]RQHV.DWUDM.RQGKZD1,%05RDGDQG Development of Dighi Warje are some of the major residential destinations here. Central Bund Garden Road, Koregaon Hinjewadi as an Park, Deccan, Model Colony, /DUJHQXPEHURI,7,7H6RĠFHVUREXVWSK\VLFDO Kothrud, Swargate IT/ITeS destination has led DQGVRFLDOLQIUDVWUXFWXUHHVWDEOLVKHGRUJDQL]HG to an unprecedented South Warje, Katraj, Kondhwa, NIBM retail market, presence of the Pune airport and proximity to the city centre have resulted in East growth of the western Road, Undri Pune emerging as the most preferred residential part East Kalyani Nagar, Yerwada, Viman ]RQHLQWKHODVWWHQ\HDUV'HYHORSPHQWRI Nagar, Kharadi, Wagholi Road, 0DJDUSDWWD&LW\DVDVHOIVXVWDLQLQJLQWHJUDWHG Hadapsar township and setting up of EON IT Park have West Aundh, Baner, Pashan, Bavdhan, IXUWKHUERRVWHGWKHUHVLGHQWLDOPDUNHWKHUH Wakad, Hinjewadi, Ravet However, the emergence of Hinjewadi in West 3XQHDVDQDOWHUQDWH,7,7H6GHVWLQDWLRQKDVEHHQ JLYLQJDWRXJKFRPSHWLWLRQWRWKHRĠFHVORFDWHG Since 2007, the city has North Pune is primarily an industrial area with KHUH$ORWRIEOXHFKLS,7,7H6FRPSDQLHVSUHIHU various Auto & Auto Ancillary and Engineering witnessed the launch of +LQMHZDGLRYHU(DVW3XQHGXHWRWKHDYDLODELOLW\RI industries located here. The twin towns of Pimpri YDVWYDFDQWODQGRQZKLFKEXLOWWRVXLWRĠFHVFDQ and Chinchwad are host to some of India’s EHFRQVWUXFWHGIRUFDSWLYHXVH$OWKRXJK(DVW 200,301 units of leading auto companies manufacturing plants 3XQHFRQWLQXHVWRDWWUDFWVPDOODQGPLGVL]HG such as Bajaj Auto, Tata Motors, Force Motors and ,7,7H6FRPSDQLHVPRVWRIWKHODUJHUSOD\HUVDUH DaimlerChrysler. Additionally, engineering majors setting up campuses in West Pune. which 154,874 units OLNH7KHUPD[)RUEHV0DUVKDOO7K\VVHQ.UXSSDQG have been absorbed till $OID/DYDODOVRKDYHWKHLUPDQXIDFWXULQJEDVH Q3 2012 KHUH+LVWRULFDOO\1RUWK3XQHKDVEHHQDVHOI VXĠFLHQW]RQHZLWKWKHUHVLGHQWLDOPDUNHW RESIDENTIAL LAUNCH TREND WKULYLQJRQWKHHPSOR\PHQWJHQHUDWHGE\WKH IN PUNE manufacturing sector. Pimpri, Chinchwad, Nigdi and Moshi are some of the prominent residential * Till September 2012 destinations here. 2007 20082009 2010 2011 2012* Central Pune is the commercial heart of the city ZLWKYDULRXVFRUSRUDWHRĠFHVORFDWHGLQWKH Central Business District (CBD) areas of Bund 42,637 Garden Road, M.G Road, Deccan and Shivaji 40,452 38,809 Nagar. Good physical and social infrastructure, 33,104 SUHVHQFHRIRUJDQL]HGUHWDLOH[FHOOHQW connectivity with various parts of the city and 24,866 OLPLWHGDYDLODELOLW\RIYDFDQWODQGKDYHHQVXUHG 20,433 the highest property prices in this part of the city. Destinations such as Koregaon Park, D.P Road, Model Colony and Kothrud are some of the primary residential areas here. Over the years South Pune has emerged as a Launches Source: Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF PUNE 33% and 28% of the * Till September 2012 under construction units 2007 2008 2009 2010 2011 2012* are located in West and 23% East Pune respectively 20% 13% 200,000 10% 160,000 9% 120,000 8% 80,000 No. of Units 40,000 Stock Cumulative Absorption % of Unsold Units Source: Knight Frank Research Development of Hinjewadi as an IT/ITeS ZONE-WISE SPLIT OF UNDER destination has led to an unprecedented growth CONSTRUCTION UNITS of the western part of the city in the last ten years. Residential locations that are in close proximity 18% to Hinjewadi such as Aundh, Baner, Pashan and :DNDGKDYHLPPHQVHO\EHQHĞWHGIURPWKHODUJH number of IT/ITeS jobs created here. Availability RIODUJHWUDFWVRIYDFDQWODQGDWDĝRUGDEOHSULFHV and excellent road connectivity with the city centre has led to the rapid development of this zone. 33% 28% Emergence of the IT/ITeS sector along with the setting up of various manufacturing units in Pune 2% over the last decade has resulted in the city’s real estate market expanding in all four directions. Since 2007, the city has witnessed the launch of 19% more than 200,301 units of which 154,874 units have been absorbed till Q3 2012, resulting in 23% remaining unsold. The percentage of unsold Central West North South East units has witnessed an uptrend in the last few Source: Knight Frank Research years. It has increased from 9% in 2009 to 23% in Q3 2012 as the absorption rate has not been able to match the pace of new launches. The period witnessed the launch of 124,561 units, of which only 86,854 units were absorbed. INVESTMENT advisory REPORT India’s Residential Destinations Real Estate Drivers IT/ITeS, Auto and Employment Indicators Infrastructure Development Engineering Service Sector Manufacturing Sector Rail Network Road Network sectors are the primary employment IT/ITeS Sector Auto & Auto Ancillaries Pune Metro Rail Corridor I & II Ring Road drivers Engineering Infrastructure Development EXISTING ARTERIAL ROAD NETWORK CONNECTIVITY DESCRIPTION Old Mumbai- Starts at Shivaji Nagar towards Mumbai A vital road connecting Pimpri Chinchwad with Pune Highway via Pimpri Chinchwad Central Pune Mumbai-Pune Connects Katraj in the South Pune with Provides seamless connectivity with Hinjewadi Bypass Road (NH-4) Mumbai-Pune Expressway and Pimpri in West, Mumbai-Pune Expressway in North Chinchwad in the North and Pune-Bangalore Highway in the South Pune Nashik Starts at Kasarwadi towards Nashik in Connects North Pune markets like Bhosari and Highway (NH-50) the North via Chakan Moshi with the city center Pune Solapur Starts from Camp in the city centre Provides easy connectivity with Hadapsar in Highway (NH-9) towards Solapur in the East East Pune from the city centre Pune is connected through 4 major arterial UPCOMING ARTERIAL ROAD NETWORK roads CONNECTIVITY DESCRIPTION CURRENT EXPECTED STATUS COMPLETION Outer Ring Theur Phata This road will provide direct Feasibility study 2017-18 Road I (NH-9) - Wagholi - connectivity between NH- 9 in and preparation of Chimbli (NH-50)East Pune and NH-50 in North Pune a detailed project report Outer Ring Chimbali Phata Easy access between North and Feasibility study 2017-18 Road II (NH-50) - NH-4 - West Pune and preparation of Pirangut a detailed project report Outer Ring Pirangut - Will connect West Pune with Feasibility study Post 2018 Road III Sinhagad - Pune- Sinhagad and Pune-Bangalore and preparation of Bangalore Highway in South Pune a detailed project Highway (NH-4) report Outer Ring Katraj (NH-4) -Will directly connect NH- 4 in the Feasibility study Post 2018 Road IV Theur Phata South and NH- 9 in East Pune and preparation of (NH-9) a detailed project report INVESTMENT advisory REPORT India’s Residential Destinations UPCOMING SUBURBAN RAIL NETWORK Phase I of the metro from Ramwadi to Wanaz is CONNECTIVITY DESCRIPTION CURRENT EXPECTED expected to be completed STATUS COMPLETION Pune Metro Ramwadi - Pune :LOOFRQQHFWWKHKHDY\WUDĠFURXWH Undergoing 2017-18 by 2017-18 Rail Corridor I Station - Wanaz between East and West Pune detailed technical- feasibility study Pune Metro Pimpri Chinchwad - Will enhance connectivity between Approval stage Post 2018 Rail Corridor II Shivaji Nagar - North and South Pune Swargate Employment Indicators in Pune Proximity to Mumbai has always been a positive Over the years, the IT/ITeS sector has emerged Currently the IT/ITeS factor for Pune and has enabled it to attract the largest employer in Pune and reshaped its sector accounts for investments from various companies to set up real estate market. The setting up of Rajiv Gandhi their manufacturing plants here. Auto & Auto Infotech Park in Hinjewadi resulted in companies Ancillary and Engineering sectors are the largest such as Infosys, Wipro, TCS and Tech Mahindra 74% of the total employers among the various manufacturing establishing their global delivery centres here. RƬFHVWock industries present in Pune. The emergence of Currently the IT/ITeS sector accounts for 74% of Chakan and Ranjangaon as the new WKHWRWDORĠFHVWRFNDQGWKLVVKDUHLVH[SHFWHGWR manufacturing hubs in the periphery of Pune has JRXSIXUWKHUDVQHZ,7,7H6RĠFHVEHFRPH led to the setting up of plants by companies such operational in the coming years. as Volkswagen, Mahindra & Mahindra, Fiat and Apollo Tyres. 7KHRĠFHVSDFHPDUNHWLQWKHFLW\KDVZLWQHVVHG tremendous growth in the last six years with the Going forward, we expect the Auto & Auto WRWDORĠFHVWRFNLQFUHDVLQJPRUHWKDQWKUHH Ancillary sector to be one of the driving factors for times, from 20.4 mn. sq.ft. in 2007 to 64.7 mn. Pune’s growth. We forecast the output of sq.ft. in Q3 2012. However, the absorption rate Maharashtra’s Auto & Auto Ancillary industry to has been slowing down with each passing year. grow at an annual average rate of 17% over the This has led to a gradual rise in the vacancy level. QH[WĞYH\HDUV7KHSUHVHQFHRIDODUJHQXPEHURI The total occupied space as of Q3 2012 stands manufacturing plants in its vicinity will at 48.2 mn. sq.ft., resulting in a vacancy level of 46% of Pune's RƬFH LPPHQVHO\EHQHĞW3XQH 26%. The slowdown in the IT/ITeS sector coupled space stock is located in with high vacancy levels in the existing stock, West Pune ZONE WISE DISTRIBUTION OF OFFICE SPACE STOCK 5% OFFICE SPACE BREAK-UP 46% 32% 74% 26% 14% 3% Central West North South East Source: Knight Frank Research Source: Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations have compelled many developers to delay the PUNE OFFICE SPACE DYNAMICS launch of new supply by 1-2 years. 90.5 mn. sq.ft. of RƬFH Considering this, we expect an additional 25.8 spa to FHVWRFNLVH[SHFWHG PQVTIWRIRĠFHVSDFHWREHFRPHRSHUDWLRQDO be operational by 2017 LQWKHQH[WĞYH\HDUVWDNLQJWKHWRWDOVWRFNWR PQVTIWE\WKHHQGRI Going forward, we expect the IT/ITeS companies’ preference for Pune to remain high due to the availability of a large talent pool and willingness of employees to relocate here. This will ensure a healthy rate of absorption in the coming years DQGHYHQWXDOO\UHGXFHWKHYDFDQF\OHYHOVWR E\WKHHQGRI:HKDYHIRUHFDVWHGDQ LQFUHPHQWDOGHPDQGRIPQVTIWLQWKHQH[W Before 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017E ĞYH\HDUVWDNLQJWKHWRWDORFFXSLHGVSDFHLQWKH 2008 FLW\WR PQVTIWE\ STATUTORY COSTS AND MARKET NORMS STATUTORY COSTS COST DETAILS Stamp Duty +LJKHURIDJUHHPHQWYDOXHRUUHDG\UHFNRQHUUDWH 26.7 mn. sq.ft. RƬFH Registration XSWRDPD[LPXPRI` spaFHLVIoreFDsted to be Value Added Tax (VAT) absorbed in the next 5 RQDJUHHPHQWYDOXH years Service Tax RQDJUHHPHQWYDOXH/HYLHGRQXQGHUFRQVWUXFWLRQSURSHUWLHV MARKET NORMS NORM DETAILS Time line for property registration :LWKLQGD\VRIERRNLQJ Re-sale before possession Allowed subject to payment of transfer charges Loading RQFDUSHWDUHD Brokerage RISURSHUW\YDOXH INVESTMENT advisory REPORT India’s Residential Destinations destinations, thereby reducing the preference for PREFERRED any single location. In contrast to this, more than Re-sale before RIWKHRĠFHVLQ:HVW3XQHDUHORFDWHGLQ Hinjewadi. This increases the importance of the possession is not allowed ZONE IN destinations that are located in close proximity to in most of the projects PUNE Hinjewadi. 6RXWK3XQHZLOOQRWZLWQHVVDQ\VLJQLĞFDQWJDLQ Pune residential market has historically been an in the residential market, as it is primarily end-user driven market which has ensured dependent on East and West Pune where most of minimal price volatility. However, 2007 onwards the employment hubs are located. Additionally, investor participation has witnessed an The attractiveness of WKHSULFHVKHUHDUHHTXLYDOHQWWRPRVWRIWKH increasing trend with local investors as well as emerging destinations of East and West Pune those from Mumbai buying properties in the leaving little room for further appreciation. Pimpri peripheral areas. This is despite the fact that Similar is the case with Central Pune. most of the developers discourage investor Chinchwad participation by restricting re-sale before The above mentioned reasons make a compelling possession. case for the preference of West Pune over other as a manufacturing hub is zones. Although in terms of social infrastructure slowly fading out, with Employment growth and infrastructure West Pune still lags; we expect this gap to be development will be the primary drivers of the ĞOOHGXSUDSLGO\LQWKHFRPLQJ\HDUV$ODUJH many companies shifting real estate market in Pune in the coming years. number of educational institutes, organized retail their units to alternate However, the impact of infrastructure and entertainment avenues are expected to cheaper locations development will be comparatively low, as most EHFRPHRSHUDWLRQDOKHUHLQWKHQH[WĞYH\HDUV of the upcoming infrastructure projects are still at a very nascent stage and will not be operational before 2018. Growth in employment will be largely WEST PUNE from the IT/ITeS sector followed by the manufacturing sector. Maharashtra government’s push to the IT/ITeS North Pune, where majority of the existing sector by setting up of the Rajiv Gandhi Infotech PDQXIDFWXULQJSODQWVDUHORFDWHGZLOOEHQHĞW Park in Hinjewadi has changed the face of West from the growth in the Auto & Auto Ancillary Pune. Currently, Phase I, II and III of the park are sector. However, the impact of this will be limited operational with campuses of IT/ITeS majors such as no new units are being set up here due to the as Infosys, Wipro, TCS, Tech Mahindra and While 16.8 mn. sq.ft. of paucity of large vacant land parcels and high cost Cognizant present here. Apart from this, various of existing land. The attractiveness of Pimpri companies are operating out of the Dlf Akruti IT incremental ock RƬFHVW Chinchwad as the manufacturing hub is slowly SEZ, Blueridge SEZ, Embassy Techzone and will be added to the West fading out, with many companies shifting their Ascendas International Tech Park which together Zone, the East will add units to alternate cheaper locations. Most of the DFFRXQWIRURYHUPQVTIWRIRĠFHVWRFN3ODQV only 9 mn.sq.ft. new manufacturing plants are coming up along for further expansion into Phase IV and V are the periphery of Pune like Chakan and XQGHUZD\DQGODQGDFTXLVLWLRQLVDOUHDG\LQ Ranjangaon which are located 32 km. and 50 km. away from the city centre respectively. Hence, no VLJQLĞFDQWEHQHĞWRILQFUHPHQWDOHPSOR\PHQW RESIDENTIAL PROJECT LAUNCH will be felt on North Pune. TREND IN WEST PUNE East and West Pune will accrue the maximum * Till September 2012 EHQHĞWRILQFUHPHQWDOHPSOR\PHQWLQ3XQHDV 2007 20082009 2010 2011 2012* PRUHWKDQWKUHHIRXUWKRIWKHH[LVWLQJRĠFH space stock and 95% of the upcoming stock will be located here. However, within these two 14,947 zones, the West Zone will account for majority of 13,850 WKHXSFRPLQJRĠFHVSDFH:KLOHPQVTIW 11,150 RILQFUHPHQWDORĠFHVWRFNZLOOEHDGGHGWR:HVW 10,513 =RQHWKH(DVWZLOODGGRQO\ PQVTIW,Q DGGLWLRQWRWKLVRĠFHVLQ(DVW3XQHDUHVSUHDG DFURVVGLĝHUHQWGHVWLQDWLRQVVXFKDV+DGDSVDU Kharadi, Kalyani Nagar, Magarpatta City and Nagar Road. This distributes the demand for residential space evenly across these Launches Source: Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations WEST PUNE MAP NH 4 DEHUROAD To Khandala CANTOMENT CHIKHALI M u m b a i - P u n e E xp r es sw ay CHINCHWAD RAVET NH 4 PIMPRI TATHAWADE PIMPRI CHINCHWAD NH 4 WAKAD HINJEWADI BALEWADI Baner Road BANER AUNDH SUS PASHAN LAVALE BAVDHAN Major Roads PIRANGUT Railway Line Paud Road Benchmark location Karve Road Top destination Paud Road Employment Hubs INVESTMENT advisory REPORT India’s Residential Destinations SURFHVV2YHUWKHQH[WĞYH\HDUV+LQMHZDGLLVVHW 5RDGZLOODOVRZLWQHVVVLPLODUSKHQRPHQD Over the next 5 years, WREHFRPHRQHRIWKHODUJHVWRĠFHVSDFHKXEVLQ )URPWR4:HVW3XQHKDVZLWQHVVHG ,QGLDZKLFKZLOOEHQHĞWWKHDGMRLQLQJUHVLGHQWLDO the launch of 73,035 units. The absorption during markets. WKHVDPHSHULRGKDVEHHQXQLWVZLWK Hinjewadi is set remaining unsold. The unsold units’ percentage to become one of the 3UHIHUHQFHRIHPSOR\HHVLQVWD\LQJFORVHWRWKHLU LQFUHDVHGFRQVLGHUDEO\SRVW XQLWV ZRUNSODFHDQGDĝRUGDEOHSULFLQJDVFRPSDUHGWR ZHUHODXQFKHGGXULQJDQG7KHXQVROG largest RƬFHVSace hubs &HQWUDO3XQHZLOOGULYHWKHGHPDQGIRUKRXVLQJLQ XQLWVßSHUFHQWDJHKDVPRYHGXSIURPLQ in India this zone. Destinations along the route to to 22% in Q3 2012. Developers have taken stock +LQMHZDGLVXFKDV%DQHU3DVKDQ%DYGKDQDQG RIWKLVRYHUVXSSO\VLWXDWLRQDQGKHQFHUHGXFHG :DNDGKDYHDOUHDG\HPHUJHGDVSUHIHUUHG WKHQXPEHURIQHZODXQFKHV2QO\QHZ UHVLGHQWLDOORFDWLRQVIRUHPSOR\HHVZRUNLQJKHUH SURMHFWVFRQVLVWLQJRIXQLWVKDYHEHHQ *RLQJIRUZDUGGHVWLQDWLRQVORFDWHGZLWKLQ launched in 2012. +LQMHZDGLDQGDORQJWKH0XPEDL3XQH%\SDVV RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF WEST PUNE From 2007 to Q3 2012, West Pune has witnessed the * Till September 2012 2007 2008 2009 2010 2011 2012* launch of 73,035 units 22% 17% 10% 70,000 6% 60,000 50,000 5% 40,000 4% 30,000 20,000 No. of Units 10,000 Stock Cumulative Absorption % of Unsold Units Source: Knight Frank Research The unsold units’ EXISTING UPCOMING SHUcentage has movedXS INFRA- INFRA- from 6% in 2009 to 22% STRUCTURE STRUCTURE in SEPTEMBER 2012 MUMBAI-PUNE BYPASS ROAD OUTER RING ROAD II & III 7KH0XPEDL3XQH%\SDVV5RDGLVDQDUWHULDOURDG 7KH2XWHU5LQJ5RDGĞUVWSURSRVHGLQZLOO LQ:HVW3XQHWKDWVWDUWVDWWKH0XPEDL3XQH EHDNPORQJULQJURDGLQWKHSHULSKHU\RI ([SUHVVZD\LQWKHQRUWKDQGFRQQHFWVZLWKWKH 3XQHDQG3LPSUL&KLQFKZDGZKLFKZLOOEH 3XQH%DQJDORUHKLJKZD\QHDU.DWUDMLQWKHVRXWK GHYHORSHGE\WKH0DKDUDVKWUD6WDWH5RDG 7KHURDGSDVVHVWKURXJKWKHHQWU\SRLQWRI 'HYHORSPHQW&RUSRUDWLRQ 065'& LQIRXU +LQMHZDGLDW:DNDGDQGDFWVDVDYLWDOWUDQVLW SKDVHV7KHREMHFWLYHRIWKLVURDGLVWRUHGXFH route for the various residential destinations WUDĠFFRQJHVWLRQZLWKLQWKHFLW\E\GLYHUWLQJ ORFDWHGLQWKH:HVW=RQH6LQFHLWLVDIRXUODQH outstation vehicles onto this road. KLJKZD\ZLWKWZRODQHVHUYLFHURDGVWKHWLPH taken to various locations on this route is 3KDVH,,RIWKH2XWHU5LQJ5RDGZLOOVWDUWIURP marginal. The road provides multiple access &KLPEDOL3KDWDRQWKH3XQH1DVKLN+LJKZD\ 1+ SRLQWVWRZDUGVWKHFLW\FHQWUHWKURXJKWKH LQWKHQRUWKDQGFRQQHFW3LUDQJXWLQWKHZHVW .DOHZDGL5RDG%DQHU5RDGDQG3DVKDQ6XV YLD0XPEDL3XQH+LJKZD\DQG5LKH3KDVH,,,ZLOO Road. Residential development in West Pune has FRQQHFW3LUDQJXWZLWKWKH3XQH%DQJDORUH been centred along the various access points of +LJKZD\ 1+ LQWKHVRXWKYLD6LQKDJDG7KHVH this road. URDGVZLOOSDVVWKURXJKWKHZHVWHUQVLGHRI INVESTMENT advisory REPORT India’s Residential Destinations Hinjewadi and directly connect with the Mumbai- feasibility study and prepare a detailed project Residential development in Pune Expressway in north the and Pune- report. The construction of Phase II and III will Bangalore Highway (NH-4) in the south thereby take a significantly longer time as a large number West Pune has been reducing the strain on the existing Mumbai-Pune of natural bodies and defence land are located on centred along the various Bypass Road. this route. We expect Phase II to be ready by 2018 access points of the and Phase III post 2018. Other than the Outer MSRDC in June 2012 invited global bids for Ring Roads, there are no major infrastructure Mumbai- appointment of consultants to carry out the projects planned in West Pune. Pune Bypass Road EMPLOYMENT INDICATORS IN WEST PUNE The major employment driver in West Pune is the employees for residing closer to their workplace IT/ITeS sector. Since 2008, more than 22 mn. is high, its impact will be positively felt on the sq.ft. of office space has been constructed in this demand for residential units here. zone including the captive offices of companies like TCS, Infosys, Wipro and Cognizant. In the next five years, an additional 16.8 mn. sq.ft. of WEST PUNE OFFICE SPACE office space will become operational taking the DYNAMICS total office stock in West Pune to 47.3 mn. sq.ft. by the end of 2017. Currently 28% of the total office stock in West Pune is lying vacant as the slowdown in the 50 IT/ITeS sector has compelled many companies to 40 delay their expansion plans. However, the slow pace of delivery in new projects and improvement 30 in absorption rate in the coming years will bring 20 down the vacancy levels to 16% by 2017. We 10 forecast an incremental absorption of 17.6 mn. The Outer Ring Road will sq.ft. in the next five years taking the total Before 2008 2009 20102011 201220132014201520162017E occupied space to 39.5 mn. sq.ft. by 2017. 2008 be 170 km. long, along The traction expected in West Pune’s office space the periphery of Pune and is bound to create additional employment in the Pimpri Chinchwad zone. Since the preference among IT/ITeS INVESTMENT DESTINATIONS IN WEST PUNE Employment opportunities in the IT/ITeS sector Balewadi, Pashan and Bavdhan have witnessed will be the primary driver of the residential market considerable price appreciation, as they are not in West Pune. Although prices will rise in majority only located close to the city centre but also are of the destinations located in this zone, there will easily accessible from Hinjewadi. Rapid be certain destinations that will outperform development of physical infrastructure, organized others. Destinations that are in close proximity to retail, social infrastructure and entertainment Hinjewadi or located along the Mumbai-Pune avenues over the last couple of years have Bypass Road will witness higher price resulted in West Pune becoming a self-sufficient appreciation as compared to farther locations zone. This has reduced the need for staying due to the concentration of office space here. closer to the city centre. Instead, proximity to the In the last ten years, locations such as Baner, workplace has become a key factor when buying INVESTMENT advisory REPORT India’s Residential Destinations a house. These factors have led to the emergence to the workplace has gained paramount We forecast an of newer residential destinations like Hinjewadi, importance for buying a house. Wakad, Tathawade and Ravet. Apart from being in Ÿ Hinjewadi, Wakad, Tathawade and Ravet incremental absorption of close proximity to Hinjewadi, prices in these address all the above factors due to their destinations are also significantly lower as favourable location 17.6 mn. sq.ft. of office compared to Baner, Balewadi, Pashan and Bavdhan. The difference in price will eventually Additionally, prices in these destinations are still space in West Pune in the narrow down resulting in higher appreciation for at a significant discount compared to nearby next 5 years these locations. locations of Baner, Balewadi, Pashan and Bavdhan. This discount will narrow down in the Going forward, we expect Hinjewadi, Wakad, coming five years. Tathawade and Ravet to witness the maximum amount of price appreciation in Pune’s residential Most of the factors that will drive the residential market. While Hinjewadi is located within the prices in West Pune will be common for all the Rajiv Gandhi Infotech Park, the other three are destinations located here. However, the degree of situated along the Mumbai-Pune Bypass Road. influence of these factors on each of the The primary reasons in brief for these four destinations will be different depending on their destinations to outperform others in Pune over location in West Pune. Aundh, which is the most the next five years are: established destination in West Pune, has been Ÿ Pune will witness an incremental demand of considered as the benchmark for comparing 26.7 mn.sq.ft. of office space over the next five prices in this zone and going forward we expect years primarily driven by the IT/ITeS sector. all the other destinations located here to follow 66% of this will be within West Pune. the price trend of Aundh. Ÿ Unlike East Pune, 80% of offices in the west are concentrated in Hinjewadi. This increases Currently the residential prices in Hinjewadi, the importance of residential markets located Wakad, Tathawade and Ravet are significantly in close proximity to Hinjewadi. lower as compared to Aundh. We believe that Ÿ With West Pune emerging a self-sufficient zone over the next five years, this discount will narrow over the years, the need for residing closer to down due to the reasons listed earlier. the city centre has reduced. Instead, proximity INVESTMENT advisory REPORT India’s Residential Destinations We expect Hinjewadi, DESTINATION Wakad, Tathawade and Ravet to witness the HINJEWADI maximum amount of price appreciation RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF HINJEWADI * Till September 2012 2007 2008 2009 2010 2011 2012* 28% 20,000 24% 15,000 18% 17% 10,000 14% No. of Units 12% 5,000 Stock Cumulative Absorption % of Unsold Units Source: Knight Frank Research The growing preference for the walk-to-work onwards, resulting in an increase in the concept among the IT/ITeS employees has led to percentage of unsold units with each passing the emergence of Hinjewadi as the most sought year. Currently the percentage of unsold units after residential location. The presence of various stands at 24%. integrated township projects within Hinjewadi takes care of all the necessary requirements of Going forward, we expect the absorption rate to the residents such as education, organized retail increase due to the reasons mentioned earlier and entertainment. and this will positively impact prices in Hinjewadi. Currently, Hinjewadi prices are 49% lower than Since 2007, 15,070 units have been launched, of Aundh. We forecast this discount to narrow down which 11,466 have been absorbed till Q3 2012. to 29% by the end of 2017 resulting in Hinjewadi The launch of various township projects has prices moving up from `4,000/sq.ft. to Currently the percentage ensured a steady supply of new units 2010 `8,000/sq.ft. of unsold units stands at 24% in Hinjewadi RESIDENTIAL PROJECT LAUNCH TREND IN HINJEWADI PRICE FORECAST * Till September 2012 * Figures in `/sq.ft 2007 20082009 2010 2011 2012* 4,214 2012 2017E 3,750 4,076 `11,200 `7,800 `8,000 `4,000 1,881 975 175 Aundh Hinjewadi Launches Source: Knight Frank Research Source: Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations PRICE MOVEMENT We forecast prices in * Figures in ` per sq.ft Hinjewadi to increase by 100% from 2012 to 2017 12,000 10,000 29% 8,000 6,000 4,000 49% 2,000 BEFORE 200820 09 20 10 20 11 2012 2013E 2014E 2015E 2016E 2017E 2008 Hinjewadi Aundh Discount Margin Source: Knight Frank Research Investment Options in Hinjewadi Ticket size in Hinjewadi INVESTMENT TICKET SIZE SELECT PROJECTS starts from `3.4 mn. Project Developer No. of Launch Completion Units Date Date for a 2 BHK 1220 - 1800 3BHK 4.9 - 7.2 Megapolis Kumar 4000 Mar-08 Dec-13 Properties and ABIL Life Kolte Patil 2100 Feb-11 Dec-14 860 - 1370 2BHK 3.4 - 5.5 Republic Developers Blue Ridge Paranjape 2000 Oct-07 Dec-13 571 - 930 1BHK 2.3 - 3.7 Schemes The Crown TCG Real 165 Sep-11 Mar-14 Greens Estate Sovereign Saarrthi 172 Dec-07 Mar-13 Group Apartment Size in sq.ft. Ticket Size in ` mn. Source: Knight Frank Research Source: Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations From 2007 till Q3 2012, a DESTINATION total of 15,570 units WAKAD haS been launched of which 12,864 units have RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF WAKAD been absorbed in Wakad * Till September 2012 2007 2008 2009 2010 2011 2012* 13% 17% 15,000 8% 7% 7% 10,000 4% No. of Units 5,000 Stock Cumulative Absorption % of Unsold Units Source: Knight Frank Research Till a few years back, Wakad was a non-descript units were absorbed during 2007 and 2008. Post place. However, proximity to the Rajiv Gandhi 2008, the absorption rate has considerably Infotech Park in Hinjewadi has led to many reduced due to the slowdown in the IT/ITeS IT/ITeS professionals preferring to reside here as sector. Currently, 17% of the total units remain the travel time to work is hardly 10 minutes by XQVROGZKLFKLVVLJQLĞFDQWO\KLJKHUWKDQLQ road. Additionally, it is well connected with 2007. nearby locations such as Baner, Aundh, Pashan and Bavdhan. Despite these reasons, prices in Going forward, we expect the absorption rate to Wakad have been historically at a discount as remain healthy, as a growing number of IT/ITeS compared to these nearby locations. companies have begun to prefer Hinjewadi for setting up their operations. Moreover, the drop in Availability of vast tracts of vacant land attracted new launches in 2012 will help in reducing the We forecast prices in the attention of many developers and led to the unsold inventory of previous years. The traction Wakad to increase by launch of more than 100 projects in Wakad since expected in Wakad will reduce the price discount 2007. From 2007 till Q3 2012, a total of 15,570 from 42% to 23% as compared to Aundh in the 91% in the coming 5 units have been launched of which 12,864 units FRPLQJĞYH\HDUV:HIRUHFDVWWKHSULFHVWR have been absorbed. More than 50% of the total increase from `4,500/sq.ft. to `8,600/sq.ft. by years the end of 2017. RESIDENTIAL PROJECT LAUNCH TREND IN WAKAD PRICE FORECAST * Till September 2012 * Figures in `/sq.ft 2007 20082009 2010 2011 2012* 2012 2017E `11,200 4,234 `7,800 `8,600 3,077 3,081 `4,500 2,576 1,495 1,106 Aundh Wakad Launches Source: Knight Frank Research Source: Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations PRICE MOVEMENT A drop in new launches in * Figures in ` per sq.ft 2012 will help in reducing the unsold inventory of THE previous years 12,000 10,000 23% 8,000 6,000 4,000 42% 2,000 BEFORE 200820 09 20 10 20 11 2012 2013E 2014E 2015E 2016E 2017E 2008 Wakad Aundh Discount Margin Source: Knight Frank Research Investment Options in Wakad Ticket sizeS in Wakad start INVESTMENT TICKET SIZE SELECT PROJECTS from `3.6 mn. for a 2 BHK 1600 - 2700 7.2 - 12.2 Project Developer No. of Launch Completion Units Date Date Pristine Pristine 384 Sep-11 Dec-13 Prolife Properties 1470 - 1750 6.6 - 7.9 Park Pride Purple 192 Jun-11 Oct-14 Turquoise Group 800 - 1500 3.6 - 6.8 Kalpataru Kalpataru 188 May-10 Dec-13 Splendour Casa Aum Housing 290 Jan-11 Dec-13 580 - 950 2.6 - 4.3 Imperia Elite DNV Builders 376 Mar-11 Feb-13 Apartment Size in sq.ft. Ticket Size in ` mn. Homes Source: Knight Frank Research Source: Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations Tathawade can be DESTINATION considered as an extension of Wakad with Tathawade only 4 km. separating them RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF TATHAWADE * Till September 2012 2010 2011 2012* 27% 1,400 22% 1,200 1,000 800 600 4% No. of Units 400 200 Stock Cumulative Absorption % of Unsold Units Source: Knight Frank Research Tathawade can be considered as an extension of coming years as the destination will observe an Wakad with only 4 km. separating them. It is increase in absorption rate and lesser number of located on the eastern side of the Mumbai-Pune new launches. Bypass Road and can be accessed from Hinjewadi through the Dange Chowk Road. Tathawade has ,QWKHQH[WĞYH\HDUVWKHSULFHWUHQGLQ similar characteristics as Wakad except that the Tathawade will mirror that of Wakad as these two prices are 5% lower here. markets are closely linked together. However, the In the next 5 years, the GLĝHUHQFHLQSULFHEHWZHHQWKHPZLOOUHGXFHRYHU price trend in Tathawade Tathawade is a relatively new residential market the years and prices in Tathawade will be almost will mirror that of Wakad with most of the projects launched only during equal to that of Wakad by 2017. Similar to Wakad, as these two markets are the last three years. Of the 1,415 units launched the price discount in Tathawade as compared to since 2010, 1,038 units have been absorbed till Aundh will reduce from 45% to 24% resulting in Q3 2012. Although the percentage of unsold prices moving up from `4,300/sq.ft. to closely units is currently high, we expect it to fall in the `8,500/sq.ft. by 2017. linked RESIDENTIAL PROJECT LAUNCH TREND IN TATHAWADE PRICE FORECAST * Till September 2012 * Figures in `/sq.ft 2010 2011 2012* 2012 2017E `11,200 ` 876 7,800 `8,500 `4,300 305 234 Aundh Tathawade Launches Source: Knight Frank Research Source: Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations PRICE MOVEMENT We forecast prices in * Figures in ` per sq.ft Tathawade to increase by 98% in the coming 5 years 12,000 10,000 24% 8,000 6,000 4,000 45% 2,000 2010 20 11 2012 2013E 2014E 2015E 2016E 2017E Tathawade Aundh Discount Margin Source: Knight Frank Research Investment Options in Tathawade INVESTMENT TICKET SIZE SELECT PROJECTS Project Developer No. of Launch Completion Units Date Date 1250 - 1500 3BHK 5.4 - 6.5 Elementa Akshar 850 Oct-10 Dec-14 Developers Ganga Goel Ganga 144 Dec-11 Jun-14 920 - 1200 2BHK 4.0 - 5.2 Aurum Deployment Park Bhojwani 282 Jun-12 Dec-14 590 - 950 1BHK 2.5 - 4.1 The Nook Homes Palladio Vilas 150 Sep-11 Sep-13 Javdekar Apartment Size in sq.ft. Ticket Size in ` mn. Group Source: Knight Frank Research Source: Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations We forecast prices in Ravet DESTINATION to increase by 97% in RAVET the coming 5 years RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF RAVET * Till September 2012 2010 2011 2012* 2,000 30% 1,800 1,600 17% 1,400 16% 1,200 1,000 No. of Units 800 600 400 200 Stock Cumulative Absorption % of Unsold Units Source: Knight Frank Research Ravet, which is further 5 km. north of Tathawade units remaining unsold. However, going forward and located on the eastern side of the Mumbai- we expect the absorption rate to increase, backed Pune Bypass Road is another destination that will by the incremental employment in Hinjewadi and LPPHQVHO\EHQHĞWIURPWKHJURZWKLQ lower prices compared to nearby destinations. employment in Hinjewadi. The destination has In the coming years, the price trend in Ravet will historically remained at a discount as compared mirror that of Wakad and Tathawade as these to Wakad and Tathawade, as it is located farther markets are closely linked together. However, north of Hinjewadi. prices in Ravet will continue to remain at a marginal discount compared to these Residential activities in Similar to Tathawade, residential activities in destinations due to its farther location from Ravet started post 2010 Ravet started post 2010 and a total of 1,744 units Hinjewadi. Similar to Wakad and Tathawade, the has been launched since then. Since the discount in price of Ravet as compared to Aundh destination is relatively new, the absorption rate will reduce from 49% to 30% resulting in prices and a total of 1,744 has been slow and only 1,216 units have been increasing from `3,950/sq.ft. to `7,800/sq.ft by units has been launched absorbed till date resulting in 30% of the total 2017. since then RESIDENTIAL PROJECT LAUNCH TREND IN RAVET PRICE FORECAST * Till September 2012 * Figures in `/sq.ft 2010 2011 2012* 2012 2017E 757 `11,200 715 `7,800 `7,800 `3,950 272 Aundh Ravet Launches Source: Knight Frank Research Source: Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations PRICE MOVEMENT Ticket sizeS in Ravet start * Figures in ` per sq.ft from `3.2 mn. For a 2 BHK 12,000 10,000 30% 8,000 6,000 4,000 49% 2,000 2010 20 11 2012 2013E 2014E 2015E 2016E 2017E Ravet Aundh Discount Margin Source: Knight Frank Research Investment Options in Ravet INVESTMENT TICKET SIZE SELECT PROJECTS 1178 - 1360 3BHK 4.7 - 5.4 Project Developer No. of Launch Completion Units Date Date Celestial Rama Group 1200 Mar-10 Dec-16 820 - 1200 2BHK 3.2 - 4.7 City and Pharande Spaces Silver Rohan 240 Nov-11 Dec-13 700 - 850 1BHK 2.8 - 3.4 Gardenia Construction Serene S. D. Tapkir 138 Jun-11 Jul-13 Scapes Apartment Size in sq.ft. Ticket Size in ` mn. Source: Knight Frank Research Source: Knight Frank Research INVESTMENT advisory REPORT India’s Residential Destinations DISCLAIMER The statements made, information and opinions All statements by Knight Frank in this expressed or provided in this publication are intended report that are not statements of historical fact only as a guide to some of the important constitute “forward looking statements”. Readers can considerations that relate to the real estate sector in identify forward looking statements by terminology India. This report is published for general information like “aim”, “anticipate”, “intend”, “believe”, only and does not contain or purport to contain all the “continue”, “estimate”, “expect”, “may”, “objective”, information that any potential investor, looking to “plan”, “potential”, “project”, “pursue”, “shall”, make any investments in India may require. Neither “should”, “will”, “would” or other words or phrases of this report nor any other information supplied in similar import. 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