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INSITE REPORT

October - December 2017

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Methodology FROM The Insite Report by 99acres.com captures the NARASIMHA’S DESK... quarterly capital trends and the annual rental analysis of residential apartments in key real estate markets – Delhi NCR, Mumbai Metropolitan Region (MMR), Bangalore, Struggles of 2017 are expected to bear fruits in 2018; Pune, Chennai, Hyderabad, States might assure RERA-compliance and more Kolkata and Ahmedabad. In order to assess the prevailing accountability in the ensuing quarters sentiment, the report delves deep into demand and supply of properties across The real estate industry underwent The struggles of this year are varied budget segments and some of the most radical reforms expected to bear fruits in 2018, occupancy stages. While and avant-garde policy changes in which will see States assuring RERA- demand is a function of 2017. Residential demand, sales compliance and more accountability queries received, supply is and supply took a hit on the back of in the ensuing quarters. We also based on property listings uncertainties surrounding Real Estate expect more tax reforms in Union posted on 99acres.com in options for projects under PMAY. (Regulation and Development) Act Budget 2018-19 for increasing home Oct-Dec 2017. The ease in navigation and and Goods and Services Tax (GST). loan appetite and affordability. technological advances helped While the first half of the year was Demand is also expected to grow 99acres become 1.5x bigger than testimony to plummeting numbers, on the back of various infrastructure the next big competition. 99acres the second half saw stakeholders projects including new airports, has significantly gained time share in a contemplative mode. Buyers flyovers, metros and other Game Changers 2017 Demand-Supply Analysis both on mobile and desktop Contents 06 10 waited for RERA to unfurl its full connectivity links in the pipeline. platforms (up from 48 percent to Policy reforms that transformed the real Demand-supply trends of residential impact on property prices and Focus on smart city projects will also 51 percent among top four players estate market in 2017 apartments in Oct-Dec 2017 builders were seen acclimatising boost real estate sentiment. in December 2017), share of time to the new norms. Despite the Amidst the challenging market spent for app stands at 54 percent challenges, average weighted capital conditions, 99acres offered full RERA in December 2017*. Not only this, From Narasimha’s Desk Market Movers Annexures ‘asks’ did not go south barring 03 07 11 support and insights to buyers by the mobile application and site are Delhi NCR and Mumbai – where CBO’s perspective on current market News that impacted Ahmedabad’s providing project level RERA details most engaged with average time inventory overhang was highest sentiment realty market in Oct-Dec 2017 covering approval documents, spent 50 percent higher than the across the country. construction progress and legal next competitor. With the trust and Improved focus on budget housing compliance across platform. Buyers credibility that it has built, mobile National Outlook Ahmedabad at a Glance 04 08 segment, increased affordability post can also review RERA registration application traffic of 99acres has Snapshot of real estate ambience across Capital price movement in key tax incentives announced in Union status of agents. This is coupled grown by 120 percent, YoY. top 8 metro cities micro-markets of Ahmedabad Budget 2017-18 and repo rate cut with easy access via filters and *Source: SimilarWeb in August 2017 ensured consistent notifications. The site also assists end-user demand. Compact homes buyers in easy discovery of Pradhan Market Indicators 05 Ahmedabad 09 with modern amenities and good Mantri Awas Yojana (PMAY) projects. Narasimha Jayakumar Changes in capital rates and inventory Key highlights - Ahmedabad’s capital connectivity to the city centres ruled 99acres has also tied up with top Chief Business Officer 99acres.com status QoQ; and rental values YoY and rental market in Oct-Dec 2017 the roost in metros. banks to extend easy home finance 99acres 99acres 4 INSITE : AHMEDABAD India’s No.1 Property Portal India’s No.1 Property Portal INSITE : AHMEDABAD 5

National Outlook Market Indicators

HOME BUYING SENTIMENT Capital Values Rental Values Supply RERA transformed the market from uncertain to mended buyer confidence in Oct-Dec 2017. Enquiries and sales improved marginally across cities. After an elongated lull, the premium market saw enhanced traction in cities like Bangalore and Pune, suggesting an impending revival. With improving clarity BANGALORE on GST, sales are expected to revive across categories and budget segments.

DELHI NCR

PROPERTY PRICES MUMBAI Price growth remained restricted across metros with inventory-heavy markets of Delhi NCR and Mumbai witnessing corrections in some popular housing pockets. Prices may further dip in luxury and ultra-luxury segments in the year because of low buyer appetite for such projects. Other categories are, however, CHENNAI unlikely to see any major correction in Jan-Mar 2018. PUNE

HYDERABAD RENTAL LANDSCAPE The general wait-and-watch climate regarding home buying since the last one year led the rental market across cities to tread a growth path this quarter. The trend is expected to continue even amidst an improving buying KOLKATA sentiment owing to a prolonged decision making cycle in the wake of multiple market ambiguities. AHMEDABAD

* Capital values represent quarterly change * Rental values represent yearly change * Supply is basis properties listed on 99acres.com

SUPPLY The markets are plush with residential inventory, however, saleable supply in the primary market appears low on account of slow-paced registrations under RERA. Fresh inventory levels may soar in the ensuing quarters owing to increased registrations and new launches on the back of clarity in the norms. 99acres 99acres 6 INSITE : AHMEDABAD India’s No.1 Property Portal India’s No.1 Property Portal INSITE : AHMEDABAD 7

GAME CHANGERS 2017 Market Movers

Affordable housing sales lift market sentiment REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016 (RERA) Adherence to RERA norms and a large number of affordable project registrations The year was about realty stakeholders struggling and conforming to the biggest reform in the history of under the Act renewed homebuyer confidence. This pushed the city to become the real estate – RERA. The Act which fully came into force on May 1, 2017 sent the market in a frenzy. With second highest contributor in the affordable housing segment, at 24 percent of the many States failing to meet RERA deadlines, new launches were put on a back burner and buyers awaited more clarity impacting overall housing demand. While 2017 kept the market on tenterhooks, the New Year is total sales, only second to Mumbai. expected to bring perspicuity, trust and confidence. More States are expected to finalise rules, have functional RERA websites and start with the project registration, approval and complaint lodging processes. This will subsequently benefit demand and supply dynamics and take real estate closer to a revival mode. Metro Phase II strengthens connectivity grid Notification of rules – 26 states/UTs The detailed project report (DPR) for the second phase of Ahmedabad metro has Website – 16 States/UTs Permanent Regulators – 6 States/UTs provided the much-needed impetus to the transport network across , Interim Regulators – 20 States/UTs Gandhinagar, Vastral and . This phase would add 34.6 km to the existing two lines that are under progress as part of Phase I. Disclaimer: Data as on 31st December 2017 Highway projects reinforce the infrastructure initiative

GOODS AND SERVICES TAX (GST) As part of the renovation drive across , the foundation stone of national highways worth Rs 5,285 crore has been laid. The construction of Rs 962 crore Cable Introduction of a new taxation system after two big blows in the form of demonetisation and RERA jolted the market further. With the market getting acclimatised to the new tax reform, buyers stood away from under- Stayed Signature Bridge between Beyt Dwarka and Okha on NH-51 will lead this construction properties due to an effective 12 percent GST associated with such units. While ready-to-move infrastructure undertaking. affordable units were the flavour of the year, a steep fall in demand for the former category rocked the market in H2 2017. Ahmedabad utilises smart city project funds optimally Efficient and judicious utilisation of smart city project funds demonstrated Ahmedabad’s focus on strengthening IT infrastructure, development of new areas PRADHAN MANTRI AWAS YOJANA (PMAY) and management of its heritage. Out of the total Rs 196 crore allocated, Rs 80.15 The revised Credit Linked Subsidy Scheme (CLSS) under PMAY, which amended the carpet area in MIG-I crore has already been expended in the direction. category from 968 sq ft to 1,300 sq ft and under the MIG-II segment from 1,200 sq ft to 1,615 sq ft, came as a welcome move. The advantages of the change, however, are yet to fully unfurl. The affordable housing category already constitutes maximum demand across metros and the industry awaits CLSS to reach its full potential as the most significant housing demand driver.

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AHMEDABAD Ahmedabad at a Glance After recovering from the triple impact of demonetisation, the implementation of RERA and GST, the onset of festive season from October onwards marked a revival in end-user demand in the city. The average capital values recorded marginal increment in Oct-Dec 2017 as against Jul-Sep 2017, with suburban localities featuring at the top of the capital graph. Sales, absorption and new launches were restricted to the affordable housing category with inventory priced under Rs 40 lakh.

Price movement in key micro-markets Key Highlights Locality Average ‘Ask’ Rate QoQ YoY (Per sq ft) Change Change Situated in North Ahmedabad, has homebuyers with their robust transportation network, Chandkheda 2,400 - 2,950 5% 7% developed into a residential hub as social and civic well-planned interior roads, premium educational infrastructure is fast blooming in the vicinity. Working institutions, renowned hospitals and upmarket retail 3,200 - 4,250 -1% 5% populace at ONGC office prefer this suburb to the and commercial establishments. city owing to its locational advantage and plethora Satellite 5,000 - 6,300 2% 5% The rental segment continued to benefit from the of investment opportunities. Capital prices here have lackluster capital market, recording a two percent gone up by five percent, QoQ, owing to the rising Bopal 3,300 - 3,900 1% 1% rise in average prices, YoY. Separated by a railway line, demand for competitively priced housing units. Prahlad Nagar – an established locality and Makarba 3,900 - 4,950 -1% 6% Vastral posted a five percent increment in capital – a developing housing pocket - mutually benefitted South Bopal 3,400 - 4,400 0% 3% prices, QoQ. It stands to benefit from its strategic each other on account of rental inventory in different location along the east-west line of the ongoing metro budget segments. While the former offers rental stock Ghatlodia 3,100 - 3,850 0% 0% phase-I. with asks hovering around Rs 25,000 per month for a 3/4BHK, the latter offers relatively affordable units Another popular locale, Ghatlodia, is a top ranking Vejalpur 3,000 - 3,550 -2% -1% on lease. neighbourhood in the city with renowned schools and Bodakdev 5,400 - 6,400 3% 3% prominent residential localities such as Pratap Chowk, Vaishnodevi Circle and Maninagar followed suit, with KK Nagar, Sayona City and Chanakyapuri. a six and five percent increase in rental prices, YoY, 4,850 - 5,500 2% 4% respectively. Several reputed residential projects, Densely populated and self-sufficient Maninagar is the proximity to corporates, presence of popular * Average ‘ask’ rates have been calculated as per listings posted on 99acres.com in the current quarter capital of East Ahmedabad and hosts a train station eateries, and retail brands are the major reasons along the Ahmedabad-Mumbai line where major behind the surge in demand from tenant community trains halt. Other preferred localities in Ahmedabad in these localities. such as Bodakdev and Vastrapur have charmed 99ACRES OUTLOOK

Elimination of black money and implementation of new during the quarter. The under-construction segment faced Capital performance of key micro-markets Rental performance of key micro-markets norms under RERA and GST were the highlights of H1 the perils of GST at 12 percent on works contract services. 2017. In a crackdown against benami properties, it was Prospective buyers turned fence-sitters; while others 8% revealed that out of 517 notices issued by the Income Tax shifted their preference to possession-ready apartments. 6 8 department, 136 notices were from Ahmedabad region. Luxury properties witnessed limited availability as 5% 5%

RERA has helped bring transparency and accountability in cash-strapped stakeholders avoided venturing into this 6% 6% 4 6 the sector. About 1,000 realty agents and 800 projects have segment. Even reputed brands have now shifted focus on 5% been registered under RERA so far. developing low budget homes.

2 4 Ready-to-move affordable inventory stole the show The beginning of next fiscal 2018-19 should spell relief for % Change % Change

in the quarter, as increasing number of developers the fence-sitters who are wary of the far-reaching impact 0% 0 2 recorded transactions in the budget home category within of existing government policies. While 2017 was grappling Rs 40 lakh. Affordable localities such as Vastral, Chandkheda with the path-breaking initiatives, the New Year will witness -1% -1% 0% and South Bopal stood at the center of real estate activities a revival in sales and new launches. -2 0 Chandkheda Vastral Ghatlodia Maninagar Naranpura Makarba Prahlad Nagar Vaishnodevi Maninagar Gota Circle Locality Locality

* %change represents quarterly capital movement * %change represents yearly rental movement 99acres 99acres 10 INSITE : AHMEDABAD India’s No.1 Property Portal India’s No.1 Property Portal INSITE : AHMEDABAD 11

DEMAND-SUPPLY ANALYSIS An effective 12 percent GST on under-construction units acted as a roadblock for the segment, which observed a two percent Annexures decline in availability in Oct-Dec 2017 against the previous quarter. Buyers continued with their ‘wait-and-watch’ approach with hopes pinned on a reduction in applicable GST, like a lot of other commodities. Availability of possession-ready stock saw a two percent jump, QoQ, with Bopal and Shilaj in West Ahmedabad and Maninagar in the East leading the supply. CAPITAL VALUES CAPITAL VALUES Locality Oct-Dec 2017 Locality Oct-Dec 2017 Key Trends Bodakdev 5900 Vastrapur 5250 Demand distribution for under-construction and Bopal 3700 Vatva 1950 ready-to-move inventory remained stable in the Chandkheda 2950 Vejalpur 3500 quarter, with the latter dominating the demand graph, at 92 percent. Low and mid-income housing Chandlodia 3125 categories continue to lead the popularity chart, and Distribution of Residential Apartments Ghatlodia 3850 RENTAL VALUES supply in these segments, too, witnessed a marginal Ghuma 3850 increase, QoQ. UC RTM Demand UC RTM Supply Gota 3300 Bodakdev 15 Demand-supply equilibrium in the low and mid- housing segment widened marginally in the last Gurukul 5000 Bopal 12 80 quarter of the year. This could be attributed to the 70% 71% 70% 71% Jagatpur 3350 Chandkheda 8 increasing preference for budget homes in the city. 70 Jodhpur 5750 Chandlodia 9 End-users, who were previously seeking properties in 60 the high-income housing category, have also shifted Makarba 3850 Ghatlodia 11 50 their focus to competitively priced compact homes. Maninagar 3900 Gota 8 40 Demonetisation has hurt demand for premium Memnagar 5275 Gurukul 13 30 properties as these cash-dependent segments have Motera 3250 Jagatpur 8 lost their sheen to affordable housing segment. This 20 was reflected in a three percent fall in preference for Naranpura 4883 Jivraj Park 12 Rs 1 crore and above homes. Availability, too, dropped 10 2200 Jodhpur 15 marginally as developers and owners withdrew supply 0 Narol 2025 Oct-Dec Jul-Sep Makarba 14 in the segment. 2017 2017 Nava Naroda 2200 Maninagar 12 Oversupply of units priced between Rs 60 lakh and Navrangpura 6217 Memnagar 14 Rs 1 crore is likely to continue into the New Year. Graph depicts the availability of residential apartments wrt other property types, QoQ, along with the distribution of Nehru Nagar 5775 Motera 8 Absorption is likely to remain meagre in the category under-construction and ready stock owing to restrained appetite. Developers ,too, have New Ranip 3075 Naranpura 14 shelved their plans of new launches in the segment. Nikol 2200 Navrangpura 16 5650 Nehru Nagar 16

Demand Supply Prahlad Nagar 5400 New Ranip 7 Ramdev Nagar 5150 Paldi 13 30 Satellite 6375 Prahlad Nagar 17 25 -7% -6% 0% -6% -10% 0% Science City 4750 Ramdev Nagar 16 -2% 5% -9% -9% 6% 4% 20 11% 11% 12% 6025 Satellite 16

15 Shela 3000 Science City 11 Shilaj 3467 South Bopal 11 10 South Bopal 3700 Thaltej 14 5 Thaltej 5575 Vaishnodevi Circle 10

0 Vaishnodevi Circle 3600 Vasna 11 Oct-Dec Jul-Sep Oct-Dec Oct-Dec Jul-Sep Oct-Dec Oct-Dec Jul-Sep Oct-Dec Oct-Dec Jul-Sep Oct-Dec Oct-Dec Jul-Sep Oct-Dec 2017 2017 2016 2017 2017 2016 2017 2017 2016 2017 2017 2016 2017 2017 2016 Vasna 4200 Vastrapur 15 Within Rs 25 Lakh Rs 25-40 Lakh Rs 40-60 Lakh Rs 60 Lakh - Rs 1 Crore Rs 1 Crore and Above Vastral 2300 Vejalpur 12 Graph depicts the fluctuation in supply wrt demand for residential properties in various budget categories

*All prices are per sq ft rates *Average ‘ask’ rates have been calculated as per listings posted on 99acres.com in the current quarter IN ES OIONS O BUY, SELL, RENT PROPERTY

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