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India Real Estate Outlook January - June 2014

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Information about India Real Estate Outlook January - June 2014
Real Estate

Published on September 16, 2014

Author: ganil

Source: slideshare.net

Description

India Real Estate Outlook January - June 2014, Market Overview, DEMAND AND SUPPLY TREND, CITY-WISE LAUNCHES: H1 Trend, CITY-WISE ABSORPTION, WEIGHTED AVERAGE PRICE INDEX, TICKET SIZE SPLIT OF LAUNCHED UNITS, RESIDENTIAL MARKET HEALTH, VACANCY TREND, NEW COMPLETION & ABSORPTION/VACANCY, DEAL SIZE ANALYSIS, RENTAL INDEX MOVEMENT,
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India Real Estate Outlook January – June 2014

Launches (units) Absorption (units) Jan – June 2014 142,983 -32% Y-o-Y July – Dec 2014 (E) 169,602 5% Y-o-Y 2014 Year End (E) 312,585 -16% Y-o-Y Jan – June 2014 119,282 -27% Y-o-Y July – Dec 2014 (E) 152,764 26% Y-o-Y 2014 Year End (E) 272,046 -4% Y-o-Y Residential Market Overview

New Completions (mn. sq.ft.) Absorption (mn. sq.ft.) Vacancy % Jan - June 2014 16.4 -4% Y-o-Y July – Dec 2014 (E) 20.9 9% Y-o-Y 2014 Year End (E) 37.5 3% Y-o-Y Jan - June 2014 17.9 -4% Y-o-Y July – Dec 2014 (E) 18.7 22%Y-o-Y 2014 Year End (E) 36.5 8% Y-o-Y 2013 Year End 20% June 2014 19% 2014 Year End (E) 18% Office Market Overview

Residential  Mumbai  Pune  NCR  Bengaluru  Chennai  Hyderabad

DEMAND AND SUPPLY TREND Extreme volatility in demand and supply over the last 2 years across NCR, Mumbai, Pune, Bengaluru, Chennai and Hyderabad Slow economic growth, rising interest rates, high inflation and weak rupee have led to negative sentiments but we see a revival in launches and absorption, which will be far less than the peak of H1 2013 Half-yearly Launches and Absorption (Top Six Cities) 100,000 120,000 140,000 160,000 180,000 200,000 220,000 Number of units Launches Absorption Residential Market H1 2014 - New launches fell by 32% compared to H1 2013 H1 2014 - Sales volume dropped by 27% Sales volume: H1 2014 - 119,282 H1 2013 - 164,000

CITY-WISE LAUNCHES: H1 Trend Residential Market Steep fall in launches during H1 2014 across all cities in comparison to H1 2013 NCR witnessed the steepest fall of 43% in H1 2014 compared to H1 2013, followed by Mumbai at 38% while Bengaluru fell by 16% (units) 67,948 45,326 30,537 31,458 20,332 10,704 57,007 62,252 42,155 20,720 16,832 11,266 35,512 35,767 35,545 16,883 11,377 7,899 - 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 Mumbai NCR Bengaluru Pune Chennai Hyderabad H1 2012 H1 2013 H1 2014

CITY-WISE ABSORPTION: H1 Trend Residential Market All markets witnessed shrinkage in demand with NCR at 37%, followed by Pune 30% in H1 2014 over H1 2013 Bengaluru witnessed a lowest de-growth of 14% 44,609 35,302 22,935 23,122 14,461 9,167 41,377 45,302 31,844 20,937 14,020 10,009 31,210 28,500 27,256 14,719 10,315 7,282 - 10,000 20,000 30,000 40,000 50,000 Mumbai NCR Bengaluru Pune Chennai Hyderabad H1 2012 H1 2013 H1 2014 (units)

CITY-WISE LAUNCHES: H2 Trend Residential Market Projection of an improved scenario in H2 2014 in comparison to H2 2013 Chennai leading by 31%,followed by Hyderabad at 25% in H2 2014 over H2 2013 Pune is the only market which is expected to witness a significant de- growth at 23% 53,667 54,804 37,236 24,513 16,747 12,022 52,222 33,516 36,145 24,652 8,015 7,376 57,333 37,000 36,568 18,960 10,488 9,252 - 10,000 20,000 30,000 40,000 50,000 60,000 70,000 Mumbai NCR Bengaluru Pune Chennai Hyderabad H2 2012 H2 2013 H2 2014 E (units)

CITY-WISE ABSORPTION: H2 Trend Residential Market All markets expected to improve in H2 2014 with Mumbai at 49% followed by Bengaluru at 26% over H2 2013 At 11% growth, Pune will be the lowest among the 6 cities 41,369 45,464 27,757 24,895 14,961 9,884 32,717 26,119 25,522 17,858 10,424 8,419 48,812 30,500 32,044 19,808 11,929 9,672 - 10,000 20,000 30,000 40,000 50,000 60,000 Mumbai NCR Bengaluru Pune Chennai Hyderabad H2 2012 H2 2013 H2 2014 E (units)

WEIGHTED AVERAGE PRICE INDEX Residential Market Price appreciation in Bengaluru fastest at 11% followed by Hyderabad at 9% in H1 2014 compared to H1 2013 Going forward, Mumbai expected to lead in price appreciation during H2 2014 at 10% compared to H2 2013, on the back of a strong revival in absorption 90 100 110 120 130 Index value (Base:H1 2012=100) Mumbai NCR Bengaluru Pune Chennai Hyderabad

TICKET SIZE SPLIT OF LAUNCHED UNITS January to June 2014 Residential Market Pune emerged as the most affordable city during H1 2014 with 83% of new launches below the ticket size of `5 mn 0% 20% 40% 60% 80% 100% Mumbai NCR Bengaluru Pune Chennai Hyderabad Mumbai remains the most premium market, with 34% of total launches during H1 2014 being priced above the ` 10 mn price bracket <2.5 mn. 2.5-5 mn. 5-7.5 mn. 7.5-10 mn. 10-20 mn. > 20 mn. 83% 34%

RESIDENTIAL MARKET HEALTH Age of Inventory compared to QTS Residential Market Mumbai’s health is the poorest with the highest QTS and maximum number of unsold inventories from previous years Note: Size of the bubble indicates the quantum of unsold inventory QTS – Time period taken to liquidate the unsold inventory at the sales velocity of last 8 quarters 6 7 8 9 10 11 12 13 6 8 10 12 14 Age of unsold inventory in quarters QTS Mumbai NCR Hyderabad Bengaluru Pune Chennai Bengaluru among the healthiest

Office  Mumbai  Pune  NCR  Bengaluru  Chennai  Hyderabad

VACANCY TREND New Completion, Absorption and Vacancy Level (Top Six Cities) Office Market Steady recovery over the last two years in the office markets, with vacancy levels falling from 21% in H2 2012 to 19% in H1 2014 16% 18% 20% 22% - 5 10 15 20 25 H1 2012 H2 2012 H1 2013 H2 2013 H1 2014 H2 2014E Mn sq ft New Completion Absorption Vacancy (RHS) H1 2014 has seen a turnaround which is expected to sustain for the next 6 months as a result vacancy levels to further drop to 18% by the end of 2014

NEW COMPLETION & ABSORPTION New Completion, Absorption and Vacancy Level (Top Six Cities) Office Market Absorption in 2014 to touch 36.5 mn sq ft – an 8% jump from the 33.9 mn sq ft reported in 2013 New completions will grow by 3% to 37.4 mn.sq.ft in 2014, compared to 36.4 mn sq ft in 2013 20 23 17.1 19.2 16.4 20.9 17.5 14.7 18.5 15.3 17.9 18.7 - 5 10 15 20 25 H1 2012 H2 2012 H1 2013 H2 2013 H1 2014 H2 2014E Mn sq ft New Completion Absorption

CITY-WISE NEW COMPLETION – H1 Trend Office Market Bengaluru witnessed new project completion growth of 76% in H1 2014 over H1 2013 All other markets witnessed de-growth with Mumbai and Hyderabad being the highest at 25% 5.9 3.6 4.1 0.9 3.1 2.4 3.8 3.5 1.7 2.4 1.7 4.0 2.9 4.0 3.0 2.0 1.5 3.0 - 1 2 3 4 5 6 7 Mumbai NCR Bengaluru Pune Chennai Hyderabad Mn sq ft H1 2012 H1 2013 H1 2014

CITY-WISE ABSORPTION – H1 Trend Office Market 3.4 3.4 6.0 1.4 1.2 2.1 3.8 3.4 4.7 2.8 1.2 2.6 2.5 3.5 6.0 2.1 1.8 1.9 - 1 2 3 4 5 6 7 Mumbai NCR Bengaluru Pune Chennai Hyderabad Mn sq ft H1 2012 H1 2013 H1 2014 Mumbai witnessed a maximum fall of 34% in H1 2014 compared to H1 2013, followed by Pune and Hyderabad Chennai, Bengaluru and NCR witnessed a positive growth at 47%, 29% and 3% respectively

CITY-WISE VACANCY – H1 Trend Office Market Bengaluru, Pune and Chennai witnessed fall in vacancy from H1 2013 to H1 2014 Hyderabad saw an increase, Mumbai and NCR were stagnant 21% 20% 18% 25% 23% 13% 22% 21% 14% 22% 24% 16% 22% 21% 11% 20% 22% 19% 0% 5% 10% 15% 20% 25% 30% Mumbai NCR Bengaluru Pune Chennai Hyderabad H1 2012 H1 2013 H1 2014

CITY-WISE NEW COMPLETION – H2 Trend Office Market 6.0 6.0 3.3 1.3 3.8 2.7 3.8 3.5 5.5 1.2 2.5 2.7 6.6 4.0 4.5 2.6 1.1 2.1 - 1 2 3 4 5 6 7 Mumbai NCR Bengaluru Pune Chennai Hyderabad Mn sq ft H2 2012 H2 2013 H2 2014 E Pune and Mumbai expected to grow the fastest at 125% and 73% respectively in H2 2014 over H2 2013 South markets projected to plunge with Chennai at 58%, followed by Hyderabad and Bengaluru

CITY-WISE ABSORPTION – H2 Trend Office Market 2.6 3.0 3.4 1.6 2.1 2.0 2.4 3.2 4.9 1.2 2.5 1.2 4.2 4.0 3.8 2.2 2.2 2.3 - 1 2 3 4 5 6 Mumbai NCR Bengaluru Pune Chennai Hyderabad Mn sq ft H2 2012 H2 2013 H2 2014 E At 96%, Hyderabad will lead in absorption growth followed by Pune and Mumbai in H2 2014 over H2 2013 Bengaluru and Chennai to witness a decline

CITY-WISE VACANCY – H2 Trend Office Market Other than Mumbai and Hyderabad where vacancy levels will remain stagnant, all other markets will witness a decline in H2 2014 over H2 2013 23% 22% 17% 23% 24% 14% 23% 21% 14% 21% 23% 18% 23% 20% 11% 20% 20% 18% 0% 5% 10% 15% 20% 25% 30% Mumbai NCR Bengaluru Pune Chennai Hyderabad H2 2012 H2 2013 H2 2014 E

SECTOR-WISE ABSORPTION SPLIT January – June 2014 Office Market IT/ITeS continues to hold the maximum share in total absorption across all cities, except Mumbai The share of IT/ITeS ranges between 39-78% The share of the other services sector (consulting, retail, eCommerce, infrastructure and real estate) has been increasing steadily over the last few years 0% 20% 40% 60% 80% 100% Mumbai NCR Bengaluru Pune Chennai Hyderabad IT/ITeS BFSI (Including support service) Manufacturing Other Services IT / ITeS Manufacturing (excl factory) BFSI (including support services) Other Services

DEAL SIZE ANALYSIS Office Market The total number of deals has increased from 542 in H1 2013 to 623 in H1 2014 An increase in the number of deals indicates a wider participation in transaction by occupiers However, the average deal size has reduced in all the cities except Bengaluru - 20,000 40,000 60,000 80,000 Sq ft H1 2013 H1 2014

RENTAL INDEX MOVEMENT Office Market Growth in office rentals has been relatively constrained across the 6 cities, unlike residential The weighted average rentals in Mumbai has been going down since 2012 due to PBD and SBD shares increasing steadily compared to CBD & off-CBD markets 80 100 120 140 Index value (Base:H1 2012=100) Mumbai NCR Bengaluru Pune Chennai Hyderabad In contrast, Pune has higher demand of CBD and SBD markets compared to the PBD ones

Contact KnightFrank.India@in.knightfrank.com Mumbai I Bengaluru I NCR I Pune I Hyderabad I Chennai I Kolkata

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