PROPERTY INSIGHTS India Quarter4, 2018

INDIA REAL ESTATE OVERVIEW Introduction

Economy

During the July-September quarter, growth of the Indian economy eased to 7.1%, primarily due to the challenges brought about by higher oil prices, resulting in a much higher import bill and the continuing weakening of the rupee. Private consumption, after picking up in the fiscal’s first quarter, slowed to 7% in the second quarter, while investment demand accelerated to 12.5% in the second quarter, indicating a revival in investment activity. International Monetary Fund (IMF) has pegged India’s growth at 7.3% in the current financial year, against a global growth of 3.9%. Inflation has remained well below RBI forecast, which targets to keep the rate at 4% in the medium term. During the April-October period, industrial output grew 5.6% as compared to 2.5% over the same period of the previous year. In October, it stood at an 11-month high of 8.1%. Despite the concerns regarding rising NPAs and the liquidity crisis, there has been a slight cheer for the economy in general. With a decline in global crude prices and with India’s inflation continuing to trend down in the third quarter of the fiscal year, the signs look positive for GDP growth to be sustained despite the country likely to enter a period of relative inactivity in the wake of the impending general elections. Introduction

GDP growth rate & Repo Rate

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

GDP Growth Repo rate

Source: World Bank, RBI

The structural reform process started in the country has yielded fruit in the form of continued improvement in the World Bank’s Ease of Doing Business rankings. In the latest rankings, India jumped a massive 23 spots to the 77th position. This marked a total improvement of 53 spots in the last two years. The jump was underpinned by significant improvements in laggard areas such as construction permits, cross border trade, access to credit and starting a business. India in fact, was among the top 10 countries in terms of improvement for the second year in a row and was ranked number 1 among South-East Asian Countries and BRICS nations. The tables below showcases India’s progress on the rankings and the year-on-year improvement across major parameters (2017 to 2018) which were instrumental in India’s progress

India’s Ease of Doing Business Rankings.

2014 2015 2016 2017 2018 142 130 130 100 77

Key performance indicators 2017 Rank 2018 Rank

Dealing with Construction Permits 181 52 Starting a Business 156 137 Enforcing Contracts 164 163 Trading Across Borders 146 80 Getting Credit 29 22 Getting Electricity Connection 29 24 Introduction

Key performance indicators 2017 Rank 2018 Rank

Registering Property 154 166 Paying Taxes 119 121 Resolving Insolvency 103 108 Protecting Minority Investors 3 7

For the real estate sector, the reforms initiated in the form of single window clearance in Delhi and online building permit system in Mumbai along with similar reforms being undertaken by other states bodes well for domestic developers, with the commercial markets doing exceedingly well even as the residential sector continues its slow journey towards recovery. Improvement in credit points towards the fact that new startups and the SME sectors have been able to access structured finance better through financial inclusion and an improved credit cycle. We also expect more improvements in contract enforcements and property registrations as these are critical for business investments and protection of ownership rights. With the new Insolvency and Bankruptcy Code in 2018, we expect India’s rankings to improve even further in the next edition.

Regulatory Overview

The government has extended the CLSS (Credit Linked Subsidy Scheme) for MIG-I & II category of homebuyers. Previously, having increased the carpet area of apartments under the two categories, the government had managed to bring in a lot of apartments of higher sizes under the scheme cover.

RERA: Taking Stock

More than a year into the enforcement of the Real State Regulatory Authority (RERA), Indian states have achieved varied levels of progress. While states like Maharashtra, Karnataka, Gujarat have fully operational RERA portals, with an established conflict resolution mechanism, several states are lagging in implementation. Maharashtra has taken the lead in forming its RERA portal and has the highest share of registered projects followed by Gujrat and Karnataka. Apart from these, other states like Telangana and Haryana are yet to see substantial project details on the portals. But slowly and steadily we are seeing an increase in the number of registrations in these states. On the other hand, West Bengal has steered away from the national RERA policy, and notified its own state policy- WB-HIRA (West Bengal Housing Industry Regulatory Authority).

The following table lists down the number of projects registered with states.

State No. Of Projects Registered Maharashtra 19,194 Karnataka 2,292 Telangana 140# Tamil Nadu 857 Haryana 521 West Bengal 328 Gujarat 3,880 Uttar Pradesh 4,500

Note: As accessed from state RERA portals on January 05, 2019. #With the website becoming operational recently, registration data is slowly being uploaded to the portal. Also, the website only requires only those projects to be registered which received permission on or after January 1, 2017. Impact on Residential Sector

Discussing the impact of the NBFC crisis on India’s residential sector

Over the last five years, the residential sector has been reeling under slowing sales and mounting inventory, which was further exacerbated by demonetization in 2016, followed by the regulatory changes brought about by the implementation of RERA and GST in 2017, both of which while being gamechanger moves also led to a virtual re- invention of existing business practices in the sector in 2018, making this year, one of disruption and change. The commercial office sector, on the other hand, has been growing at a rapid pace, with occupiers being relentless in their uptake of space. Following the strong showing by the Indian office markets, the stable price regime in the residential sector and slowly recovering buyer confidence on the back of structural reforms also led to some green shoots of recovery in the residential asset class during the first three quarters of 2018. There was a definite pick-up of both launch activity as well as sales momentum. However, towards the latter half of the year the NBFC crisis, precipitated by the IL&FS default brought in to focus the asset-liability mismatch on NBFCs’ balance sheets. NBFCs had become the primary source of funding for the residential sector from refinancing existing loans to funding new projects as well as meeting the last mile and bridge funding needs of developers. In the wake of banks having reduced their lending exposure to the real estate sector in general, NBFCs had been able to raise money from banks and other sources to help the sector tide over its credit needs. The liquidity issues largely arose due to the NBFCs taking on short-term borrowings which were used to make long-term loans, thereby creating low-seasoned loan books which caused the mismatch.

Share of NBFCs in active loan sanctions to RE has increased

100% 90% 30% 80% 35% 48% 55% 57% 70% 62% 60% 50% 40% 70% 30% 65% 52% 45% 43% 20% 38% 10% 0% FY13 FY14 FY15 FY16 FY17 FY18*

Banks NBFCs Impact on Residential Sector

The result in the wake of the IL&FS crisis has been two-fold in nature. NBFCs stopped disbursals in the short-term across the board – tranche disbursals of ongoing loans were stopped, new loan sanctions were not disbursed and ongoing transactions put on the backburner. The other impact was that the NBFCs were no longer able to raise money from banks and other financial institutions who were now shying away from lending to them. This led to an increase in the interest rate of commercial papers of such NBFCs, which made fund-raising more expensive for them.

The impact on the residential sector was also immediate. With working capital loans stopped, many had trouble progressing with ongoing construction. Others who had planned new launches based on such funding agreements, had to put off their project launch.

The impact overall is likely to be long-term. NBFCs, particularly non-deposit ones had operated with only minor regulatory oversight by RBI. They had provided loans to developers for land purchase and even helped in early stage funding through structured loans. This points to more defaults by NBFCs as in the current, slowly improving sales environment and the over-leveraged developers, existing developer loans can become seriously impaired.

The government, though has taken note of this and there has been a spate of easing norms by the RBI to help NBFCs tide over the liquidity crisis. From allowing banks to lend more against government securities held by them to increasing the share of loans with maturity over 5 years to 20% of loan book being securitized and reducing the minimum holding period for raising funds via securitisation of loans of original maturity above 5 years, these are likely to help NBFCs tide over the crisis in the short-term.

However, there is a long-term need to revisit regulatory oversight of NBFCs as well as introducing reforms for rating the NBFCs’ loan portfolio as well as lending norms to be followed by NBFCs themselves

In a nutshell, the impact on the real estate sector has been summarized below:

Ÿ A freeze on funding will impact developers’ cash flows, thereby impacting their ability to launch new projects. In 2019, the market is likely to see fewer project launches, after an upward trend seen in 2018 where in residential launches (Jan-Dec) rose 38% y-o-y

Ÿ Since the NBFC crisis ballooned, even disbursement of previously approved loans has been halted. This is leading to stalling of several projects across cities, at a time when several residential projects are already facing delays on a long-term basis

Ÿ The ongoing liquidity crunch will also affect disbursement of home loans till the time NBFCs operations return to normal levels Impact on Residential Sector

Ÿ Homebuyers’ preference for ready-to-move-in properties will intensify due to fears of projects stalling. For perspective, since last year, preference of ready properties has been on the rise due to 12% GST applicable on under-construction properties against no GST for completed projects with occupation certificates

Ÿ While JDAs have become the norm in the industry brought about by RERA, the current crisis will heighten the need for consolidation in the industry. Grade A developers will be able to shine in this scenario, partnering with smaller developers who hold land but not the financial strength to execute projects

Ÿ There is likelihood of a consolidation in the NBFC sector as well, with probable defaults likely and only the bigger players standing a better chance of survival

Ÿ NBFCs and HFCs are likely to focus on increasing their retail home loan exposure which have lower default risks Real Estate Market Snapshot

Residential

67% 39% 68% Increase in new unit launches Share of affordable segment in Contribution of Mumbai, during 2018 overall launches in 2018 Bengaluru and Pune in new launches during 2018

Office

17% 33.9 msf Single-digit vacancy In key locations across Increase in gross leasing over New supply in 2018 IT markets of Bengaluru, Pune, last year; highest ever recorded Hyderabad and Chennai

Retail

5.1 msf F&B, 13.9% New mall supply in 2018 Apparels Pan-India vacancy in malls Most active in leasing Indian Residential Sector Overview

Affordable Segment Mid Segment

Chennai and Pune witnessed strong Mumbai and Bengaluru contributed 62% q-o-q growth in launches of total launches during Q4 2018

High-end Segment Luxury Segment

Share increased from 11% to 16% during Only Bengaluru & Hyderabad saw launches Q4 2018 with major share by Bengaluru in the luxury segment during Q4 2018 New Launches in Q4 2018 (in units)

5% 3% 1% 3% 10% 1% 15%

24% 24% 33% 32%

52%

58%

75% 49% 73 % 85% 66% 44% 33%

16%

Ahmedabad Bengaluru Chennai Delhi-NCR Hyderabad Mumbai Pune

Affordable Mid High-end Luxury Key Trends

Unit launches increased by 26% q-o-q across the top 8 cities (Delhi-NCR, Bengaluru, Mumbai, Chennai, Hyderabad, Pune Kolkata and Ahmedabad) during Q4 2018. Mumbai and Bengaluru continued to contribute the maximum towards new launches with their respective shares being 30% and 29%. All the eight cities recorded a q-o-q growth in launches in Q4, with Hyderabad, Pune and Mumbai taking the lead. On a yearly basis, new launches were up by a massive 67% across the top 8 cities with Bengaluru, Chennai and Pune leading amongst all cities in terms of overall annual launches for 2018. Mid segment constituted a 50% share in the overall unit launches for Q4 2018 share, followed by the affordable segment which saw a q-o-q decline but still held a 32% share. Mumbai and Bengaluru saw the maximum launches in the mid segment, whereas Chennai and Pune led in terms of recording maximum launches in the affordable segment. High-end segment observed a marginal q-o-q rise with its share of launches increasing 11% to 16%, backed by new project announcements in Bengaluru and Hyderabad during the quarter.

Buyers continued to prefer mid and affordable segment options due to their relative low-ticket sizes, even as preference remained towards completed and close to completion properties from a risk mitigation perspective. Government’s recent clarification about GST being applicable on completed projects without occupation certificate has come as a further jolt to the sector. With RERA registrations being actively monitored by buyers, such registered projects and those by well-known developers with proven credentials of quality and delivery were given higher preference by the buyers. Developers shall continue to focus on completing under-construction projects on fast track, given the demand for such properties and the delay penalty under RERA.

1Ahmedabad, Bengaluru, Chennai, Delhi-NCR, Hyderabad, Kolkata, Mumbai and Pune Index

Mumbai ...... 1

Delhi-NCR ...... 4

Bengaluru ...... 7 Mumbai Residential Overview

New unit launches continued to grow during Q4 Unit launches gather momentum 2018 with an increase of 36% q-o-q, and stood at nearly 12,950 units. On a yearly basis, new launches were up 57% in 2018 compared to the last year. Share of launches in price segments

Project launches during the quarter were given a push 4% 4% by big scale projects in the Thane submarket followed by 13% 8% Western suburbs submarket in terms of activity. 45%

69% Developers continued to launch projects in the 77% affordable and mid-segment categories across all 51% submarkets during the quarter. 19% 10% Projects in the mid-segment category contributed 2016 2017 2018 nearly 58% of total launches, with the affordable < 7,500 7,501 - 25,000 25,001 - 40,000 > 40,000 category holding a 33% share. The preference for buying a ready-to-move in or Source: Cushman & Wakefield Research nearing possession property remained the favoured For details on project launches, refer Annexure option by homebuyers to get the benefits of GST The values in the legend are in INR/sf. exemption on completed projects.

Average Capital Values – High-End (INR ‘000/sf)

Location 2016 2017 2018

South 48.0 - 75.0 48.0 - 75.0 48.0 - 75.0

South Central 46.0 - 83.0 46.0 - 83.0 46.0 - 83.0

Central 27.0 - 65.0 27.0 - 61.0 27.0 - 61.0

North 28.0 - 50.0 28.0 - 50.0 28.0 - 50.0

Far North 12.5 - 20.0 12.5 - 20.0 12.5 - 20.0 North East 15.0 - 24.0 15.0 - 24.0 15.0 - 24.0

Average Capital Values – Mid Segment (INR '000/sf)

Location 2016 2017 2018 South 40.0 - 50.0 40.0 - 50.0 40.0 - 50.0

South Central 45.0 - 58.0 45.0 - 58.0 45.0 - 58.0

Central 23.0 - 45.0 23.0 - 45.0 23.0 - 45.0

North 20.0 - 30.0 20.0 - 30.0 20.0 - 30.0

Far North 10.0 - 16.0 10.0 - 16.0 10.0 - 16.0 North East 10.0 - 14.0 10.0 - 14.0 10.0 - 14.0

Source: Cushman & Wakefield Research

1 Launches – segment-wise across submarkets (%)

Submarkets Affordable Mid High-end Luxury Total (Number of units)

Eastern Suburbs 37% 58% 5% 0% 1,300 Western Suburbs 34% 61% 15% 0% 3,329 South Central 0% 0% 100% 0% 708 Thane 34% 66% 0% 0% 5,201 Navi Mumbai 46% 54% 0% 0% 1,775

KEY TO SUBMARKETS:

Eastern Suburbs: Sion, Wadala, Kurla, Chembur, Ghatkopar, Vikhroli, Powai, Chandivali, Kanjurmarg, Bhandup, Mulund Western Suburbs: Andheri, Jogeshwari, Goregaon, JVLR, Malad, Kandivali, Borivali, Dahisar South Central: Worli, Prabhadevi, Lower Parel / Parel, Dadar, Matunga Thane: Thane, Ghodbunder Road Navi Mumbai: Airoli, Ghansoli, Rabale, Koparkhairane, Vashi, Turbhe, Sanpada, Nerul, Belapur, Kharghar, Panvel

% indicates proportion of unit launches in different segments within a submarket.

Source: Cushman & Wakefield Research

There has been an increased number of end-users Malad, Kandivali, Borivali etc. have a strong under- in the market who are buying homes following the construction pipeline. Through Q4 2018, select large implementation of MahaRERA. Homebuyers are projects were completed across locations such as looking at projects offering lucrative deals with easy Dadar, Wadala, Andheri, Malad and Juhu. With buyers payment plans, though with caution being exercised. preferring to buy completed / ready possession or The trend of buying ready to move in properties and nearing possession properties we expect to see projects nearing completion continued to remain a top increased construction activities by the developers preference among homebuyers during the quarter. across all submarkets.

The submarket of Thane including the peripheral The capital and rental values have largely remained locations of Dombivali and Mira Road and locations in stable in both the mid and high-end segments across Navi Mumbai like Kharghar, Taloja and Nerul most of the markets. However, prices in South Central witnessed improved construction activity during the and Eastern suburbs submarkets have witnessed fourth quarter of 2018. Areas such as Wadala, some positive movement during the quarter, mainly Kanjurmarg, Mulund in the Eastern suburbs and due to higher prices in new launched projects during Western Suburbs locations of Andheri, Goregaon, the quarter.

2 Outlook

Residential

Launches Price Buyer sentiment

Developers are offering small unit sizes to attract potential homebuyers and, in turn, improve affordability. Most likely there will be more launches in the affordable and mid segment categories than in the high-end segments, as most of the demand is for the former

The emerging submarkets in the Mumbai Metropolitan Region are expected to grow at a faster pace in terms of demand due to better affordability, and may also see some price growth going forward

With the extent of coverage and proactive action undertaken by Maha RERA, we are likely to see reduced risk of project delays and the regulator’s intervention in resolving pending matters is also providing a positive push to market sentiment Office

Absorption Vacancy Rentals

About 6.6 msf of incremental Grade A office supply expected by end-2019

Overall absorption volumes are expected to increase in the medium term, supported by strong demand in select submarkets where a lack of supply is likely to be remedied going forward. Office occupiers in the co-working, BFSI and IT/ITeS sectors shall remain the major contributors towards leasing activity across all submarkets.

Rent appreciation is anticipated in select submarkets on the back of low vacancy rates and high demand by occupiers.

Retail

Leasing Vacancy Rentals

Mall leasing is expected to gain traction in select submarkets such as Lower Parel, Link Road (Andheri W) and Ghatkopar, resulting in rentals moving upwards owing to limited supply.

Main street rentals in BKC and Chembur are expected to firm up as demand strengthens amidst limited supply.

3 Delhi-NCR Residential Overview

New unit launches recorded at 7,693 units, saw a Rationalization of unit launches drop of 21% during 2018 y-o-y. However, Q4 2018 saw a 15% q-o-q increase in launched units. The high unsold inventory in Delhi NCR with only a steady offtake as Share of launches in price segments well as the ongoing NBFC crisis impacting liquidity for developers are factors limiting new launches. 10% 17% 38% 52% Dwarka Expressway and sectors near NH8 in 54% Gurugram constituted 61% of the new unit launches during Q4 2018. During 2018, Gurugram accounted for 36% 31% 45% of the new unit launches, while Noida had a share 61% of 37%. Core areas of Delhi also noted new launches in 2016 2017 2018 2018 after a hiatus of 6 years. < 3,500 3,501 - 8,000 8,001 - 20,000 > 20,000

Mid segment had a majority share in new unit launches both during the fourth quarter as well as the entire year. The segment had a 61% share in new unit Source: Cushman & Wakefield Research launches during 2018. For details on project launches, refer Annexure The values in the legend are in INR/sf.

Average Capital Values – High-End (INR ‘000/sf)

Location 2016 2017 Q 2018

South-West 38.0 – 53.0 32.0 – 49.0 32.0 – 49.0

South-East 24.0 – 35.0 24.0 - 35.0 24.0 - 35.0

South-Central 25.7 – 43.0 25.0 - 43.0 25.0 - 43.0

Central 60.0 - 90.0 60.0 - 90.0 60.0 - 90.0

Gurugram* 11.0 – 16.5 10.0 – 16.2* 10.0 – 16.2

Noida 7.5 – 9.0 7.0 – 9.0 7.0 – 9.0

Average Capital Values – Mid Segment (INR '000/sf)

Location 2016 2017 Q 2018

South-East 20.9 – 25.7 20.0 – 25.0 20.0 – 25.0

South-Central 23.8 – 33.3 23.8 – 33.3 23.8 – 33.3

Gurugram* 4.5 - 9.0* 4.5 - 9.0* 4.5 - 9.0 Noida* 4.0 – 6.5* 4.0 - 6.5* 4.0 - 6.5

*Capital values have been recalibrated historically Source: Cushman & Wakefield Research 4 Launches – segment-wise across submarkets (%)

Submarkets Affordable Mid High-end Luxury Total (Number of units) Delhi 0% 0% 0% 0% 0 Gurugram 0% 85% 15% 0% 1643 Noida 0% 100% 0% 0% 100

KEY TO SUBMARKETS: Gurugram: Excludes Manesar, Sohna Noida: Excludes Greater Noida, Noida Extension

% indicates proportion of unit launches in different segments within a submarket. Source: Cushman & Wakefield Research

Average capital values remained largely stable With an aim to streamline slum redevelopment in across most submarkets during the fourth quarter. Delhi, the Delhi Development Authority (DDA) approved However, rental values increased by 7-15% q-o-q for an in-situ slum redevelopment policy. As part of this, both high-end and mid segment properties owing to slum clusters on land parcels owned by DDA will be increased traction for rented properties in most of the auctioned to private developers. Developers will in turn submarkets in the city. construct flats for selling as well as rehabilitation of slum dwellers along with commercial usage of a portion New completions were noted in residential of the land. Such a policy framework will facilitate corridors including Dwarka Expressway, Golf Course organized real estate development in parts of Delhi. Road Extension and Noida Expressway during the fourth quarter. More projects in these corridors are Forward movement on the Land Pooling Policy scheduled for completion in the upcoming quarters as under DDA is also gaining ground with the regulations several developers maintain the thrust on execution of being finalized. The DDA aims to create a single-window existing projects in Delhi NCR. clearance for projects under this policy.

5 Outlook

Residential

Launches Price Buyer sentiment

New unit launches expected to remain subdued in the upcoming year, on account of factors like the ongoing NBFC liquidity concerns and 2019 being an election year, which is likely to slow down the approval process

Sales are likely to remain steady with a slow and gradual improvement in buyer sentiment

Capital prices across submarkets to remain stable due to current unsold inventory levels

Office

Absorption Vacancy Rentals

Delhi NCR is expected to see additional new supply of around 2.9 msf in Q1 2019 in office corridors including Golf Course Road Extension and NH8 in Gurugram as well as Noida Expressway, some of which might get deferred

Leasing is expected to maintain positive momentum over the next few quarters, with the non-CBD region of Gurugram expected to lead the office transaction activity

Overall market rents are likely to remain largely unchanged in the upcoming quarter

Retail

Leasing Vacancy Rentals

Apparels, lifestyle and F&B brands are likely to be the major demand drivers for retail spaces with international retailers planning to expand in the city

Steady demand is expected to keep rentals across malls and main streets largely unchanged in Q1 2019

6 Bengaluru Residential Overview

New unit launches of 12,429 units in the last Rationalization of unit launches quarter of 2018.

Share of launches in price segments Nearly 49% of the new launches in this quarter 1% 2% 1% 6% 5% 1% were in the mid segment, followed by the affordable 19% category with a 16% share.

77% 80% 52% With buyers pushing for affordability, developers are reducing apartment areas to keep ticket sizes 17% 13% 28% reasonable. 2016 2017 2018

Also, the focus of developers in terms of new < 2,800 2,801 - 8,000 8,001 - 20,000 > 20,000 project launches is moving towards growth corridors Source: Cushman & Wakefield Research For details on project launches, refer Annexure along major arterial roads The values in the legend are in INR/sf.

Average Capital Values – Mid-End (INR '000/sf)

Location 2016 2017 Q1 2018

Central 10.0 - 12.5 10.0 – 12.5 10.0 – 12.5

East 4.3 – 6.0 4.3 - 6.0 4.3 - 6.0 South East 4.5 – 6.75 4.5 – 6.75 4.5 – 6.75

South 7.0 – 10.0 7.0 – 10.0 7.0 – 10.0

North 4.5 – 6.5 4.5 – 6.5 4.5 – 6.5

South West 5.0 – 7.0 5.0 – 7.0 5.0 – 7.0

Off Central I 7.0 – 11.0 7.0 – 11.0 7.0 – 11.0

Off Central II 6.5 – 8.5 6.5 – 8.5 6.5 – 8.5

North West 6.5 – 7.5 6.5 – 7.5 6.5 – 7.5

Average Capital Values – High-End Segment (INR '000/sf)

Location 2016 2017 Q1 2018

Central 18.0 - 21.0 18.0 - 21.0 18.0 - 21.0

South 7.5 – 11.5 7.5 – 11.5 7.5 – 11.5 Off Central 8.5 - 12.0 8.5 - 12.0 8.5 - 12.0

East 6.5 - 10.0 6.5 - 10.0 6.5 - 10.0 North 7.5 - 11.5 7.5 - 11.5 7.5 - 11.5 Central 18.0 - 21.0 18.0 - 21.0 18.0 - 21.0 7 Source: Cushman & Wakefield Research

7 Launches – segment-wise across submarkets (%)

Submarkets Affordable Mid High-end Luxury Total (Number of units)

North 29% 71% 0% 0% 3625 East 44% 56% 0% 0% 2418 North West 100% 0% 0% 0% 1651 South 72% 0% 28% 0% 2879 Cental 0% 0% 0% 100% 72 South East 0% 0% 100% 0% 265

KEY TO SUBMARKETS: North: Hebbal, Bellary Road, Yelahanka, Doddaballapur Road, Hennur Road, Thanisandara Road, Hebbal, Jakkur, Devanahalli East: Marathahalli, Whitefield, Old Airport Road, Old Madras Road, Budigere Cross, Whitefield, Old Airport Road North-west: Malleshwaram, Rajajinagar, Tumkur Road, Malleshwaram, Rajajinagar, Yeshwantpur South: Jayanagar, J P Nagar, Kanakapura Road, Bannerghatta Road, BTM Layout, Banashankari, Koramangala Central: Brunton Road, Artillery Road, Ali Askar Road, Cunningham Road, Lavelle Road, Palace Cross Road, Off Cunningham Road, Ulsoor Road, Richmond Road, Sankeys Road South-east: Sarjapur Road, Outer Ring Road (Marathahalli- Sarjapur), HSR Layout, Hosur Road

% indicates proportion of unit launches in different segments within a submarket.

Source: Cushman & Wakefield Research

At 34% and 33% respectively, the East and South submarket, in locations like Old Madras Road, West submarkets reported the most number of Whitefield etc. This was followed by the North under-construction projects. These were spread submarket which had a share of 34% in the overall across the locations of Doddanekundi, K R Puram, completions in Q4 2018. Varthur in East and Mysore road, Kanakpura road, The capital values in both the high-end and mid VV Nagar in South West. segments remained largely range-bound. Around 7,744 units were completed this quarter and 51% of these completed units were in the East

8 Outlook

Residential

Launches Price Buyer sentiment

Launches are expected to increase despite existing unsold inventory

Prices are expected to remain stable and buyers can make the best of available offers

Office

Absorption Vacancy Rentals

About 2.5 msf of Grade A supply is expected to be operational in the first quarter of 2019

Robust demand and low vacancies in prominent office corridors and preleasing activity in upcoming supply is likely to give an upward push to rents in the next quarter

Retail

Leasing Vacancy Rentals

About 0.60 msf of mall space became operational in Q4 2018 with another 0.23 msf likely to become operational in Q1 2019

Rentals in the upcoming malls are quoting higher than the market average, with strong demand and limited vacancy in quality malls giving a positive push to rental growth

9 This research report has been prepared by Cushman & Wakefield specially for distribution to Citibank customers.

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