INDIA REAL ESTATE RESEARCH - JANUARY - JUNE 2018 - Knight Frank
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RESEARCH INDIA REAL ESTATE RESIDENTIAL AND OFFICE JANUARY - JUNE 2018 AHMEDABAD | BENGALURU | CHENNAI | HYDERABAD | KOLKATA | MUMBAI | NCR | PUNE
INDIA REAL ESTATE
TABLE OF CONTENTS
Bengaluru... 34-51
Ahmedabad... 16-33
Chennai... 52-67
Connecting
People
All India... 04-15
& Property,
Perfectly.
Hyderabad... 68-85
Mumbai... 96-113
NCR... 114-131
Kolkata... 86-95
Pune... 132-149
3
RESEARCH INDIA REAL ESTATE
INDIA MARKET SNAPSHOT
PARAMETER H1 2018 CHANGE YOY
Launches (housing units) 91,739 46%
Sales (housing units) 124,288 3%
Unsold inventory (housing units) 497,289 -17%
Quarters to sell (QTS) 11.2 -
Note- 1 square meter (sq m) = 10.764 square feet (sq ft)
Source: Knight Frank Research
3%
INDIA YoY increase in sales
during H1 2018
• The Indian residential market lower prices and holding off new
volumes have been spiralling down launches to alleviate mounting financial
and breaching new lows in terms of stress. There has also been a more
supply and sales for practically every concerted effort by this community to
successive year in this decade. An decrease ticket sizes by constricting
Both sales and investor frenzy in the early part of this unit sizes and reducing prices in
decade inspired a prolonged focus response to the market’s demands.
launches have grown of developers in launching lifestyle
• This redirected focus of developers on
over the past 18 projects targeted at the premium
increasingly launching and re-pricing
segment at progressively higher prices.
projects at lower ticket-sizes, that cater
months and are at their These prices eventually reached
to the needs of the bulk of the home-
unsustainable levels causing end-user
buyers, has been paying dividends.
highest level since demand to crack and price growth to
RESIDENTIAL MARKET taper down and head into negative
46%
the demonetisation territory as end-users and investors
alike stayed away from the market over
period at approximately the past 3 years.
124,000 and 92,000 • Developers, in cognizance of this
YoY increase in units weakening demand scenario and
launched during H1 2018 units respectively. mounting unsold inventories, have been
concentrating on freeing up capital
locked in inventory, at increasingly
4 5
RESEARCH INDIA REAL ESTATE
• The government has aggressively growth number that looks inordinately
pushed a culture of transparency large due to the low base of H1 2017.
through measures such as INDIA MARKET ACTIVITY
• While the Mumbai residential market
Demonetisation, Goods and Services
also experienced the largest sales
Tax (GST) and the Real Estate
volume among all the cities, the most
(Regulation and Development) 160000 Launches Sales
YoY growth was experienced by
Act, 2016 (RERA) that have helped
Bengaluru at 22%. The home-buyer in
shore up home-buyer confidence.
this city has been especially receptive
The government’s ‘Housing for All
to the relaxations in the qualification
scheme by 2022 and the granting of
criteria for projects under the PMAY,
infrastructure status to the affordable
such as interest subsidies and increase
17%
housing sector have also been aimed 140000
of the extent of carpet area to 160
at boosting housing supply for the
square metres for MIG – I and 200
low and mid-income segments, and
square metres for MIG – II.
improving affordability of the home-
buyer. • The current QTS level stands
YoY drop in unsold inventory levels marginally lower at 11.3 quarters at the
• While these measures have helped
end of H1 2018, ame as the previous 120000
home-buyer sentiment, they have
year; however one must also consider
irrevocably changed the business
the entire time taken by a developer
of real estate for the developer. The
from launch to the complete sale of
developers’ community is coming to
a project that is considered the life
terms with these unprecedented events
cycle of a project from the developer’s
and just beginning to stabilise and find
perspective. The project life cycle for 100000
its footing.
the 8 cities under review has increased
No. of Units
• This period of stabilisation, right-sizing from 24.4 to 27.4 quarters which shows
and right-pricing of new residential that in H1 2018, it takes more time for a
product and improving home- developer to exit a project compared to
buyer sentiment due to increased a year ago. All cities show a worsening
transparency have culminated in a trend based on this parameter, with the 80000
45% YoY growth in units launched exception of Hyderabad and Chennai
Growing at 128% YoY, during H1 2018 and a more modest 3%
YoY growth during the same period
where the market downturn seems to
be easing off.
the Mumbai residential for sales. The YoY growth in supply is
especially exceptional considering that
market accounted for a the preceding 3 periods have averaged 60000
an equally steep 43% YoY drop in
massive 40% of the total supply volumes due to the reasons
detailed above.
units launched in the 8
• Both sales and launches have grown
cities under coverage over the past 18 months and are at their
40000
highest level since the demonetisation
during H1 2018. This period at approximately 124,000 and
92,000 units respectively.
surge is primarily due
• Growing at 128% YoY, the Mumbai
to the temporary lifting residential market accounted for
a massive 40% of the total units 20000
of the ban on new launched in the 8 cities under coverage
compared to 25% in the previous
constructions since period. This surge in launches is
primarily due to the temporary lifting
March 2018 in the of the ban on new constructions since
March 2018 in the Mumbai municipal
Mumbai municipal area area. Notably, Pune and Hyderabad
0
H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 H2 2017 H1 2018
also saw the number of units launched
Source: Knight Frank Research
grow by 78% and 44% respectively, a
6 7
RESEARCH INDIA REAL ESTATE
RESIDENTIAL
• Weighted average prices have fallen
an average of 3% across cities with PROJECT LIFE CYCLE
Mumbai seeing the most decline at
9% YoY. Hyderabad saw prices move
up 8% due to record sales during this
40
38
LAUNCHES AND SALES
period, most of which took place in the
36
higher priced, ready to move in stock.
34 Launches (housing units) Sales (housing units) % Change (YOY)
This effectively also caused unsold
inventory levels in Hyderabad to fall 32
44% YoY, the highest among all cities 30
under coverage. 28
26
• During the last four years, the growth
in residential prices in most of the top 24
eight cities of India has been below 22 9,123
90%
retail inflation growth and the gap has 20
H1 2018
progressively increased since H1 2016, 18
18,047
with exception of Hyderabad. The long- 16 5%
awaited drop in prices is a healthy step 14
NCR
toward market recovery as this along
12
with other measures such as reduction
10
in unit sizes across cities will boost
8
home-buyer affordability and eventually MUMBAI PUNE BENGALURU NCR CHENNAI
get buyers back to the market. The 6
HYDERABAD KOLKATA AHMEDABAD INDIA
pace at which developers continue to 4
align themselves to the new regulatory 2 6,393
norms and launch new products in 0 1,323 -35%
-21% H1 2018
the right ticket sizes that appeal to the H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 H2 2017 H1 2018
H1 2018 6,591
homebuyer’s interests, will determine Source: Knight Frank Research 8,087 -19%
the trajectory of the market going 3%
forward. KOLKATA
AHMEDABAD
CONSUMER PRICE INFLATION ABOVE REAL ESTATE PRICE
GROWTH FOR MOST MARKETS 35,974
128%
14,100
H1 2018 78%
135 32,412 H1 2018
3,706
1.0%
16,451 44%
-6% H1 2018
130 MUMBAI
CPI 8,313
5%
PUNE
125
HYDERABAD HYDERABAD
120 15,556
BENGALURU 11%
H1 2018
6,523
8%
115 NCR 25,802 H1 2018
22%
MUMBAI 8,585
-3%
110 BENGALURU
CHENNAI
PUNE CHENNAI
105
KOLKATA
8%
100
AHMEDABAD
95
Q1-2013
Q2-2013
Q3-2013
Q4-2013
Q1-2014
Q2-2014
Q3-2014
Q4-2014
Q1-2015
Q2-2015
Q3-2015
Q4-2015
Q1-2016
Q2-2016
Q3-2016
Q4-2016
Q1-2017
Q2-2017
Q3-2017
Q4-2017
Q1-2018
Q2-2018
Hyderabad the only city showing
significant price growth in India
Source: Knight Frank Research
All maps are for representational purpose not to scale
8 9
RESEARCH INDIA REAL ESTATE
RESIDENTIAL RESIDENTIAL PRICING
UNSOLD INVENTORY H1 2018 H1 2018
Unsold inventory (YoY growth) QTS (in quarters) Age of inventory (in quarters) Price range in H1 2018 in `/sq m Price range in H1 2018 in (`/sq ft)
12 month change (YOY) 6 month change (YOY)
157,907 17.4
(-12%)
45,908
21 (4,265)
[0%] [2%]
NCR NCR
39,054 12.2
20,119 7.1 (-0.2%)
35,446
12.6
(-37%) 30,354 (3,293)
10.1 (2,820) [-8%] [-3%]
[2%] [0%]
KOLKATA
KOLKATA
AHMEDABAD AHMEDABAD
27,448 3.3
119,526 8 (-32%) 78,933
(-14%) 12.3 (7,333) 48,007
15.4 [-9%] [-5%] (4,660)
[-5%] [-1%] 43,185
(4,012)
MUMBAI MUMBAI [8%] [5%]
PUNE 12,749 3.4 PUNE
(-44%)
HYDERABAD 18.4 HYDERABAD
50,881
(4,727)
[-2%] [3%]
10.7 48,567
98,866 (4,512)
(-13%) BENGALURU 22,579 5.7 BENGALURU [-4%] [0%]
12.6
(-20%)
CHENNAI 14.5 CHENNAI
All maps are for representational purpose not to scale All maps are for representational purpose not to scale
10 11
RESEARCH INDIA REAL ESTATE
INDIA OFFICE MARKET ACTIVITY
SECTOR-WISE SPLIT OF TRANSACTIONS
2.5 New Completions Transactions
OFFICE MARKET
2.0
H1 2017
1.5
mn sq m
1.0
5%
0.5
0.0
H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 H2 2017 H1 2018 H1 2018
Note- 1 square meter (sq m) = 10.764 square feet (sq ft)
YoY Growth in rental levels during
Source: Knight Frank Research
H1 2018
INDIA OFFICE MARKET VACANCY
INDIA MARKET SNAPSHOT
20%
H1 H1
PARAMETER H1 2018 CHANGE YOY 18% Industry
17%
16%
2017 2018
16%
15%
New completions mn sq m (mn sq ft) 1.7 (18.2) -10% 14% BFSI 20% 18%
13%
12%
12%
12%
12%
Transactions mn sq m (mn sq ft) 2.0 (21.5) 12% IT/ITES 33% 28%
10%
Weighted average rental in 779 (72) 5% 8% Manufacturing 18% 14%
`/sq m/month (`/sq ft/month) 6%
4% Other Services 29% 40%
Stock mn sq m (mn sq ft) 60.4 (650) -
2%
Note: BFSI includes BFSI support services
Vacancy (%) 12.1% - 0%
H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 H2 2017 H1 2018
Note- 1 square meter (sq m) = 10.764 square feet (sq ft) Source: Knight Frank Research
Source: Knight Frank Research • The Indian office space market saw 2.0 the lowest vacancy levels among all 28% of the transacted volume during
The Indian office space mn sq m (21.7 mn sq ft) of transactions markets, the Bengaluru office market H1 2018 compared to the 33% in the
market saw 2.0 mn sq • Supply of quality office space has been the bane of the Indian office space market registering a healthy 13% growth YoY
hile 1.7 mn sq m (18.2) mn sq ft) of
saw rentals vault by a remarkable 17%
thanks largely to corporates taking up
previous period.
in recent years as occupiers have been hard pressed to find viable options across • The share of the Other Services
m (21.7 mn sq ft) of markets. A steady demand scenario in the face of consistently low supply volumes has office space came online during the space in the higher priced CBD and
sector has been consistently growing
pushed down vacancy levels from 19.4% in H1 2013 to 12.1% in H1 2018. same period. The highest spurt in Off-CBD business districts. Companies
and has eclipsed that of the IT/ITeS
transactions registering a transactions was experienced by the have also been entering en masse
sector during H1 2018 by taking up
• Consistently falling since H1 2013, the vacancy level is close to its decadal low. The Pune office market that grew at 118% into pre-commitments to lock in prime
healthy 13% growth YoY lack of fresh office space is most visible in the IT/ITeS sector dominated markets of YoY, primarily due to a 0.1 mn sq m (1.1 office space in this extremely supply
40% of the in the recently concluded
period on the back of increased take-
Bengaluru, Pune and Hyderabad that currently have single digit vacancy levels at 3.5%, mn sq ft) lease inked by a BFSI sector constrained market.
while 1.7 mn sq m (18.2 5.7% and 6.8% respectively while Chennai stands precariously poised at 11%. major during H1 2018.
up by ecommerce and co-working
• The IT/ITeS sector share in transactions companies.
mn sq ft) of office space • Office space development has traditionally lost out to residential development due • Strong transactions growth also has increasingly been showing signs
• The co-working sector took up 0.3 mn
to the much longer gestation period that an office property requires to stabilize spurred rentals during the period that of weakening in recent periods due
sq m (2.8 mn sq ft), which translates
came online during the and achieve its full market valuation. Comparatively, a residential developer can grew at a robust 5% YoY during H1 to macro headwinds in the form of a
to a significant 32% of the space
look forward to exit from his investment over a much shorter time horizon. Even 2018. Led by the Bengaluru office slowdown in spending as well as an
same period. private equity investors have been more inclined to acquire stabilized assets as an market, all markets with the exception inclination to insource by the USA and
transacted by the other services sector
overwhelming 89% of their investments have been routed toward the acquisition of or 13% of the total space transacted
of Mumbai experienced healthy growth several European countries. Losing
already matured assets. during H1 2018.
in rentals during the period. With ground since H2 2016, it accounted for
12 13
RESEARCH INDIA REAL ESTATE
OFFICE OFFICE RENTAL
TRANSACTIONS H1 2018 H1 2018
Rental value range in H1 2018 in `/sq m/month (`/sq ft/month) 12 month change 6 month change
Completions mn sq m (mn sq ft) Transactions mn sq m (mn sq ft) YoY change
0.3 (3.6) 0.3 (3.4) 840 4%
(78)
102% 6% 0%
NCR NCR
0.08 (0.9) 0.04 (0.4) 452 6%
(42)
-59% -59% 3%
AHMEDABAD
AHMEDABAD
0.41 (4.4) 0.27 (2.9) 0.25 (2.7) 0.36 (3.9) 1,169 -8%
710 8%
(109)
-42% -7% 54% 118% -5% (66)
4.8%
MUMBAI MUMBAI
PUNE 0.16 (1.7) 0.25 (2.7) PUNE 8%
570
HYDERABAD HYDERABAD (53)
-14% 15% 3.9%
0.34 (3.7) 0.6 (6.5)
0% 13%
0.11 (1.2) 0.16 (1.8) 754 17%
619 4%
BENGALURU (70) BENGALURU
CHENNAI 10% -9% 11% CHENNAI (57)
0.9%
All maps are for representational purpose not to scale All maps are for representational purpose not to scale
14 15
RESEARCH INDIA REAL ESTATE
AHMEDABAD MARKET SNAPSHOT
PARAMETER H1 2018 CHANGE YOY
Launches (housing units) 1,323 -29%
Sales (housing units) 8,087 2%
Price (weighted average) `30,354 sq m (`2,820/sq ft) 2%
Unsold inventory (housing units) 20,119 -37%
Quarters to sell 7.1
Age of unsold inventory (in quarters) 10.1
Note- 1 square meter (sq m) = 10.764 square feet (sq ft)
Source: Knight Frank Research
52%
AHMEDABAD Drop in sales in H1 2018, from the
peak levels during H1 2011.
• “This time around there have been very both by Ahmedabad Municipal
few new launches. Advertisements Corporation (AMC) and Ahmedabad
of new projects that used to be in Urban Development Authority (AUDA),
your face, in the past, is missing this has been made available online. This
time around,” stated one of the major initiative is facing teething problems.
players in the city’s real estate market. One, the major stakeholders in the city
The spark is missing with regards new went to the extent of stating that ever
launched units in the city in H1 2018. since passing of plans has been made
The drop in new • New launches in H1 2018 were a mere
online, no developer has been able to
get the necessary approvals. These 2
1,323 units, which is 29% less than
launches has more the number of units in H1 2017. The
issues we believe is a passing phase
and things should get sorted out soon.
to do with the market numbers do paint a sorry figure but
the drop in new launches has more • The western part of the city continued
RESIDENTIAL MARKET trying to adjust to the
95%
to do with the market trying to adjust to remain the hotbed for new launches
to the new policies rather than any in the city. Of the total launches, in
new policies rather than fundamental flaw in the market. H1 2018, close to 60% happened in
West Ahmedabad. During H1 2018
any fundamental flaw in • There are a couple of reasons that
could be attributed to the drop in
locationsalong Sindhu Bhavan Road,
Drop in new launches in H1 2018, from the Bopal Ambli Road saw action. Further
peak levels during H1 2018 the market. new launches in the city. First, under
South Bopal and Sela remained
RERA the time taken to launch a
one of the preferred locations in
project has increased considerably.
West Ahmedabad. North and East
Further, passing of project plans,
16 17
RESEARCH INDIA REAL ESTATE
Ahmedabad, which are comparatively also be utilised for affordable housing 7.1 in H1 2018. At present, the city has
affordable markets in the city, are schemes. more than 20,000 unsold units, which
the other areas that witnessed new are in various stages of construction. AHMEDABAD MARKET ACTIVITY
• While there is not much to cheer about
launches in H1 2018.
new launches, sales remained steady • East Ahmedabad is one of the better
• A major chunk of the new units in H1 2018 compared to H1 2017. In performing markets in the city, which
10000 Launches Sales Wt. Avg. Price (RHS) 30000
launched in H1 2018 have been in the fact, sales in H1 2018 increased by 2% attests the homebuyers’ affinity
29,816
29,816
29,816
29,816
affordable housing segment. 71% of over H1 2017. Prospective homebuyers towards affordable houses. This micro
the units launched in the city were who were in a wait-and-watch mode market has a low QTS of 6.5 and its
priced below `5 mn. Further, close to have moved in and this, to a great age of inventory is 9.6. Affordable
29,684
40% of the new launches in the city extent, had managed to push up sales pricing coupled with easy access to
9000
were priced below `2.5 mn. The major marginally in H1 2018. major employment hubs and integrated
reason for the bulk of new launches, development has helped this micro
• Due to subdued market conditions,
in the affordable housing segment, in market in attracting homebuyers.
homebuyers were expecting a
the city, is the government’s initiative
reduction in prices. This however, has • In H1 2018, North Ahmedabad has the
29,386
to make the land available for such 8000 29500
not happened. In fact, prices have highest level of inventory. This however,
projects.
largely remained stable in H1 2018, and should not be much of a concern
• The government’s initiative is apparent compared to H1 2018 have moved up because its QTS is only 7.5 and the
in the General Development Control marginally. Most importantly, the dust age of inventory is only 9.0. This micro
Regulations, 2021, which came out around policy initiatives like the Real market along with East Ahmedabad
7000
in late 2014. In order to enhance the Estate (Development and Regulation) has emerged as a major hub for
supply of affordable housing, a new Act, 2016 (RERA) and the Goods and affordable housing projects and as
residential zone for affordable houses Services Tax (GST) has settled, which already indicated earlier is a favourite
(Residential Affordable Housing Zone) has emboldened homebuyers to go among homebuyers.
was identified within a one-km-wide head and arrive at the “BUY” decision. 6000 29000
• Like North Ahmedabad, the western
stretch on the outer side of SP Ring
• The affinity of homebuyers towards part of the city too has a high level of
Road covering 76 sq km of area.
affordable housing projects is very unsold inventory but in the recent past
This overlay zone shall be applicable
No. of Units
evident in Ahmedabad. Markets of this micro market has witnessed a lot
only for development of affordable
East and North Ahmedabad, which are of traction. It is a preferred location for
`/ sq m
housing with unit sizes up to 80 sq m. 5000
largely considered hubs for affordable people working in GIDC Sanand and
Apart from this, the area cleared by
housing projects, witnessed close to companies located along SG Highway.
38 mill closures in Ahmedabad will
56% of the sales in H1 2018.
• Due to its proximity to business
districts along SG Highway and 4000 28500
Close to 40% of the new Sanand, West Ahmedabad in recent
28,376
years has been a favourite among
launches in the city were homebuyers, especially from those
with white-collar jobs. Of the total
priced below ` 2.5 mn. sales in the city, the share of West 3000
Ahmedabad in H1 2018 was 28%,
The major reason for the which is the same as in H1 2017.
bulk of new launches, in • “This is one of the best times for
anyone who wants to buy a house in 2000 28000
the affordable housing the city,” stated one of the developers.
The reasoning is simple, capital values
segment, in the city, of housing units has not witnessed any
change compared to H1 2017, there are
is the government’s various options that one can choose 1000
initiative to make the from and most importantly, the interest
29%
rate on home loans are still low.
land available for such • The low level of new launches and
steady sales has had a bearing on the
projects. quarters to sell (QTS) and the existing
0
H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 H2 2017 H1 2018
27500
unsold inventory. In H1 2017, the QTS
Source: Knight Frank Research
Drop in new launches in H1 2018
stood at 7.7 and this has come down to
compared to H1 2017
18 19KHORAJ AMBAPUR
DANTALI
VALAD
KHODIYAR
RESEARCH INDIA REAL ESTATE
LILAPUR
ZUNDAL KARAI
LAPKAMAN
TRAGAD
LIMBADIA
AMIYAPUR
SUGHAD
RESIDENTIAL
MEDRA
CHANDKHEDA
KOTARPUR
LAUNCHES AND SALES
NIGAM NAGAR RAIPUR
RAKANPUR
OGNAJ
RANASAN
SANTEJA
BHAT
GOTA 250 ENASAN
-74% Launches (housing units) Sales (housing units) % Change (YOY)
GIDC NARODA
H1 2018
2,304 NOBLE NAGAR
CHANDLODIA -9% SABARMATI
HANSOL BILASIYA
NORTH 278 VAHELAL
-63%
VIJAY NAGAR
CHANAKYAPURI H1 2018
NAVA NARODA 2,217
SOLA VILLAGE 13%
MEGHANI
NARANPURA
NAGAR
EAST
MEMNAGAR KRISHNANAGAR
THALTEJ DUBESHWAR
795 NIKOL
KATHWADA Markets of East and
870%
NAVRANGPUR
H1 2018
0 North Ahmedabad, which
2,231 -100%
BOPAL
BODAKDEV 3%
H1 2018
BAPUNAGAR
are largely considered
SHAHPUR 478
WEST -17%
ODHAV hubs for affordable
BHUVALDI
KUBADTHAL
02%
INDUSTRIAL
housing projects,
GIDC ESTATE
SPRING VALLEY CENTRAL INDUSTRIAL
AREA ODHAV
KHADIA
NIYOJAN NAGAR
witnessed close to 56%
SHERKOTDA KANBHA
of the sales in H1 2018.
BAGODARA
Increase in sales in H1 2018, com-
HELA
KUJAD
pared to H1 2017
VASNA
VEJALPUR-2 AMRAIWADI
MAHADEV
MAKARABA JUHAPURA NAGAR
0
-100%
H1 2018 RAMOL
SARKHEJ GAM 857 ISANPUR MEMADPUR
24%
CHALODA BHAVDA
GIDC BAKROL BURNI
SINGARVA
VATVA
SOUTH GERATNAGAR
SANATHAL VATVA
PIPLAJ MICRO-MARKET LOCATIONS
NAROLGAM
CENTRAL Paldi, Vasna, Navrangpura, Maninagar, Dudheshwar, Ambawadi
VINZOL UNDREL
DHAMATVANA
VANZAR
EAST Naroda, Vastral, Nikol, Kathwada Road, Odhav
NORTH VANCH Gota, New Ranip, Tragad, Chandkheda, Motera
LAXMIPUR HATHIJAN
SOUTH Narol, Vatva, Vinzol, Hathijan
Source: Knight Frank Research
VISALPUR BADODRA
All maps are for representational purpose not to scale
HIRAPUR
ASLALI
20 21
GAMDIKHORAJ AMBAPUR
DANTALI
VALAD
KHODIYAR
RESEARCH INDIA REAL ESTATE
LILAPUR
ZUNDAL KARAI
LAPKAMAN
TRAGAD
LIMBADIA
AMIYAPUR
SUGHAD
RESIDENTIAL
MEDRA
CHANDKHEDA
KOTARPUR
UNSOLD INVENTORY H1 2018
NIGAM NAGAR RAIPUR
RAKANPUR
OGNAJ
RANASAN
SANTEJA
BHAT
GOTA ENASAN
6.7 Unsold inventory (YoY growth) QTS (in quarters) Age of inventory (in quarters)
5,834 GIDC NARODA
(-41%)
9.0 NOBLE NAGAR
CHANDLODIA SABARMATI
HANSOL BILASIYA
VAHELAL
NORTH
VIJAY NAGAR 4,828 6.5
CHANAKYAPURI
(-39%)
NAVA NARODA 9.6
SOLA VILLAGE
MEGHANI
NARANPURA
NAGAR
EAST
MEMNAGAR KRISHNANAGAR
THALTEJ DUBESHWAR
KATHWADA
5,030 7.6 NIKOL
NAVRANGPUR
(-47%)
11.6 1,408 7.5
BODAKDEV
(-37%)
BOPAL
7.6 BAPUNAGAR
37%
SHAHPUR
KUBADTHAL
WEST ODHAV BHUVALDI
INDUSTRIAL
GIDC ESTATE
SPRING VALLEY CENTRAL INDUSTRIAL
AREA ODHAV
KHADIA
NIYOJAN NAGAR
SHERKOTDA
Drop in unsold inventory in H1 2018
KANBHA
BAGODARA
compared to H1 2017
HELA
KUJAD
VASNA
VEJALPUR-2 AMRAIWADI
MAHADEV
MAKARABA JUHAPURA NAGAR
3,018 7.9
RAMOL
SARKHEJ GAM (35%)
11.5
ISANPUR MEMADPUR
CHALODA
SINGARVA
GIDC BAKROL BURNI The western part of the
BHAVDA
VATVA
SOUTH
city too has a high level
GERATNAGAR
SANATHAL VATVA
PIPLAJ
of unsold inventory
but in the recent past
NAROLGAM
VINZOL UNDREL
this micro market
DHAMATVANA
VANZAR
VANCH
has witnessed a lot of
LAXMIPUR HATHIJAN
traction.
VISALPUR BADODRA
All maps are for representational purpose not to scale
HIRAPUR
ASLALI
22 23
GAMDIKHORAJ AMBAPUR
DANTALI
VALAD
KHODIYAR
RESEARCH INDIA REAL ESTATE
LILAPUR
ZUNDAL KARAI
LAPKAMAN
MOTERA
TRAGAD
36,598-38,697 LIMBADIA
AMIYAPUR
(3,400-3,595)
[0%] [0%]
SUGHAD
RESIDENTIAL PRICING
MEDRA
CHANDKHEDA
KOTARPUR
H1 2018
NIGAM NAGAR RAIPUR
RAKANPUR
OGNAJ
RANASAN
SANTEJA
CHANDKEDA
GOTA
28,525-30,247 BHAT
ENASAN
(2,650-2,810) Price range in H1 2018 in `/sq m Price range in H1 2018 in (`/sq ft)
GIDC NARODA
[1%] [0%]
NOBLE NAGAR 12 month change (YOY) 6 month change (YOY)
CHANDLODIA SABARMATI
HANSOL BILASIYA
VAHELAL
NORTH
VIJAY NAGAR NIKOL
CHANAKYAPURI
21,528-23,304
NAVA NARODA (2,000-2,165)
SOLA VILLAGE
[0%] [0%]
MEGHANI
NARANPURA
NAVRANGPURA NAGAR
EAST
KRISHNANAGAR
MEMNAGAR 57,049-59,923
(5300-5567)
THALTEJ
[0%] [0%] DUBESHWAR
KATHWADA
NIKOL
BOPAL NAVRANGPUR
34,445-36,544
(3,200-3,395)
BODAKDEV
[1%] 1%] AMBAVADI VASTRAL
BOPAL 61,355-61,969 BAPUNAGAR
21,528-22,981
SHAHPUR
(5700-5850) (2,000-2,135) KUBADTHAL
WEST [1%] [0%] ODHAV BHUVALDI
[1%]INDUSTRIAL
[0%]
PRAHLAD NAGAR GIDC ESTATE
SPRING VALLEY 58,987-60,171 CENTRAL INDUSTRIAL
AREA ODHAV
KHADIA
(5,480-5,590)
NIYOJAN NAGAR
[1%] [1%]
SHERKOTDA KANBHA
BAGODARA
HELA
KUJAD
VASNA
VEJALPUR-2 AMRAIWADI
MAHADEV
MAKARABA JUHAPURA NAGAR
ASLALI CIRCLE
13,778-14,574
(1,280-1,354) RAMOL
SARKHEJ GAM [0%] [0%]
ISANPUR MEMADPUR
CHALODA BHAVDA
GIDC BAKROL BURNI
SINGARVA
VATVA
SOUTH GERATNAGAR
SANATHAL VATVA
VATVA
Due to subdued market
PIPLAJ
15,608-17,018
(1,450-1,581) conditions, homebuyers
NAROLGAM
[1%] [2%]
VINZOL were expecting a
UNDREL
DHAMATVANA
VANZAR
reduction in prices.
VANCH
LAXMIPUR HATHIJAN
This has however, not
happened.
VISALPUR BADODRA
All maps are for representational purpose not to scale
HIRAPUR
ASLALI
24 25
GAMDIRESEARCH INDIA REAL ESTATE
AHMEDABAD OFFICE MARKET ACTIVITY
4.0 New Completions Transactions
OFFICE MARKET
3.5
3.0
2.5
mn sq m
2.0
1.5
1.0
59%
Drop in transactions in H1 2018
0.5
0.0
H1 2015 H2 2015 H1 2016
Note- 1 square meter (sq m) = 10.764 square feet (sq ft)
Source: Knight Frank Research
H2 2016 H1 2017 H2 2017 H1 2018
59%
Drop in new completions in H1
compared to H1 2017 2018 compared to H1 2017
AHMEDABAD OFFICE MARKET VACANCY
30%
24.6%
25%
23.7%
AHMEDABAD MARKET SNAPSHOT
22.1%
20.1%
19.6%
20%
PARAMETER H1 2018 CHANGE YOY
15%
New completions mn sq m (mn sq ft) 0.08(0.9) -59%
10%
The Ahmedabad office Transactions mn sq m (mn sq ft) 0.04(0.4) -59%
5%
market witnessed office Weighted average rental in 452 (42) 6%
`/sq m/month (`/sq ft/month)
space transaction of 0%
H1 2016 H2 2016 H1 2017 H2 2017 H1 2018 Major part of the new
Stock mn sq m (mn sq ft) 1.8 (19.4) 9%
0.04 mn sq m (0.47 mn Source: Knight Frank Research
supply that got added to
Vacancy (%) 24.63
sq ft) in H1 2018, which • The steep fall in the amount of office
space transacted in H1 2018 can
compared to 0.2 mn sq m (2.2 mn sq ft)
in H1 2017. During H1 2018, new office
the stock came in CBD
Note- 1 square meter (sq m) = 10.764 square feet (sq ft)
is 59% lower than the Source: Knight Frank Research
be attributed to the fact, that there completions were completed in only 12 West along SG Highway,
were no large transactions. The projects, largely in the central business
space transacted in H1 • The Ahmedabad office market witnessed office space transaction of 0.04 mn sq m largest transaction was that of Claris district (CBD) and CBD West. Corporate Road, off CG
(0.47 mn sq ft) in H1 2018, which is 59% lower than the space transacted in H1 2017. Lifesciences, which took up 0.01 mn
2017. While it is indeed While it is indeed a substantial fall in office space transaction, it needs to be looked at sq m (0.1 mn sq ft) of office space.
• Major part of the new supply that got
added to the stock came in CBD West
Road, Drive In Road and
with a pinch of salt. The next largest transaction to happen
a substantial fall in office in H1 2018 was that of Home Credit,
along SG Highway, Corporate Road, off Science City Road. Close
• H1 2017 witnessed a new record, in the amount of office space transacted in CG Road, Drive In Road and Science
which took up 0.006 mn sq m (0.065
space transaction, it needs Ahmedabad. For the first time office space transaction, in the city, touched 0.11 mn sq
mn sq ft) of space.
City Road. Close to 86% of the new to 86% of the new supply
m (1.14 mn sq ft). When compared to H1 2016, the fall in transacted office space in H1 supply came up along these locations.
to be looked at with 2018 is 37%. • New completions on the other hand The balance 14% came up at Ellis came up along these
witnessed a dip of 59% in H1 2018 Bridge.
a pinch of salt. • This is a worrying factor because office space transaction in the second half of the year
compared to H1 2017. During H1 locations.
typically falls compared to the first half. This has been the trend since 2016. If this same
2018, only 0.08 mn sq m (0.9 mn sq
trend continues in 2018, then it certainly is a cause of worry.
ft) of office space entered the market
26 27RESEARCH INDIA REAL ESTATE
• The office market in Ahmedabad is in H1 2018 compared to H1 2017 has
still in its infancy, compared to urban resulted in the drop in transacted office
SECTOR-WISE SPLIT OF TRANSACTIONS
centres like Mumbai, Bengaluru space.
and Delhi NCR. The necessary
• CBD West garnered the largest amount
infrastructure is in place, and of late,
of office space within the city. Of the
developers have moved in to meet
total transacted office space in the
the requirements of companies either
city, CBD West accounted for 97%,
moving into the city or expanding their
thereby making it one of the most
presence in the city. In the present day,
preferred business districts in the H1 2017
this has led to a situation where the
city. Further within CBD West, SG
supply outstrips demand. This explains
Highway accounted for 32% of the
the double digit vacancy rates in the
total transacted office space. This
city, which has increased slightly since
further attests the growing fondness
H1 2016. In H1 2018, the vacancy rate
of occupiers towards this part of
in the city is 24.63%, up from 22.16% in
9%
Ahmedabad. The other micro market
H1 2017.
that could be a star of the future is
• Unlike other real estate markets, like Sindhu Bhavan Road. Even though
Bengaluru and Hyderabad, the office this micro market witnessed only
market in Ahmedabad is not driven one large transaction, its share in the H1 2018
Increase in office stock in H1 2018 by the IT/ITeS sector. The Banking, total transacted space stood at 22%.
compared to H1 2017 Financial services and Insurance (BFSI) This area is fast becoming one of the
sector had been the major driver for most preferred locations for occupiers
office space in the city till H2 2017. This and residential developments, which
has however, changed in H1 2018. The certainly augurs well for this micro
major driver for office space in the city market.
in H1 2018 is the Other Services sector.
• Even though the office market in
Its share in the total transacted office H1 H1
Ahmedabad is in its infancy, among Industry
space, in the city, has increased from 2017 2018
the early signs of this market steadily
19% in H1 2017 to 43% in H1 2018.
The interesting part is that co-working
growing is that rentals are firming up BFSI 48% 24%
both in CBD West and the peripheral
space, which is making its presence
felt in more mature markets, also made
business district (PBD). Lack of quality IT/ITES 15% 10%
office space is creating an upward
its entry in Ahmedabad, in H1 2018.
pressure on rentals in the city. Manufacturing 18% 23%
While there is only one transaction
Unlike other real estate for co-working space in the city, the • Though the office market in the city is
Other Services 19% 43%
markets, like Bengaluru important point is that a beginning has considered to be in its nascent stage,
been made. there are a couple of transactions Note: BFSI includes BFSI support services
and Hyderabad, the office • The share of the manufacturing sector
where rents have been above ` 538/
sq m/month (`50 per sq ft per month).
has improved from 18% in H1 2017 to
market in Ahmedabad 23% in H1 2018.
To give an example, there were a AVERAGE DEAL SIZE
couple of transactions on SG Highway AND NUMBER OF DEALS
is not driven by the IT/ • The share of BFSI has fallen to 24% in where the rents were above ` 646/sq
ITeS sector. The Banking,
H1 2018. In H1 2017, the BFSI sector
accounted for 48% of the transacted
m/month (`60 per sq ft per month).
There was also a transaction on SG
1,990 (21,417)
Average Deal Size in sq m (sq ft)
space in the city. The share of IT/ Highway which was done at ` 700/
Financial services and ITeS sector has also fallen in H1 2018 sq m/month (`65 per sq ft per month).
BUSINESS DISTRICT CLASSIFICATION
H1 2017
Insurance (BFSI) sector had compared to H1 2017. Its share fell from Elsewhere, on Corporate Road there
BUSINESS DISTRICT MICROMARKETS 54
15% in H1 2017 to 10% in H1 2017. were transactions done at ` 624/sq m/
Number of Deals
been the major driver for • The average deal size in H1 2018 is
month (`58 per sq ft per month).
Bodakdev, Keshav Baug, Prahladnagar, Satellite,
CBD West
reported to be 1,064 sq m (11,457 sq
office space in the city till ft), which is 47% lower than the average
SG Highway, Thaltej
1064 (11,457)
Average Deal Size in sq m (sq ft)
H2 2017. This has however, deal size in H1 2017. The number of PBD Gandhinagar, GIFT City
deals done in H1 2018 also fell to 42 H1 2018
changed in H1 2018. from 54 in H1 2017. CBD Ashram Road, Ellis Bridge, Paldi
42
• The drastic dip in the average deal size Number of Deals
coupled with lesser number of deals Source: Knight Frank Research
28 29KHORAJ AMBAPUR
DANTALI
VALAD
KHODIYAR
RESEARCH INDIA REAL ESTATE
LILAPUR
ZUNDAL KARAI
LAPKAMAN 0.0007 (0.01)
TRAGAD
-96% AMIYAPUR
LIMBADIA
SUGHAD
OFFICE
MEDRA
CHANDKHEDA
PBD KOTARPUR
TRANSACTIONS H1 2018
NIGAM NAGAR RAIPUR
RAKANPUR
OGNAJ
RANASAN
SANTEJA
BHAT
GOTA ENASAN
Transactions mn sq m (mn sq ft) YoY change
GIDC NARODA
NOBLE NAGAR
CHANDLODIA SABARMATI
HANSOL BILASIYA
VAHELAL
VIJAY NAGAR
CHANAKYAPURI
NAVA NARODA
SOLA VILLAGE
MEGHANI
NARANPURA
NAGAR
MEMNAGAR KRISHNANAGAR
THALTEJ DUBESHWAR
0.00039 0.04 (0.46)
32%
KATHWADA
(0.0042)
NAVRANGPUR
NIKOL
100% -57%
BODAKDEV
BOPAL BAPUNAGAR
SHAHPUR
KUBADTHAL Within CBD West, the share of office
CBD CBD WEST ODHAV BHUVALDI
space transacted along SG Highway
INDUSTRIAL
GIDC ESTATE
SPRING VALLEY INDUSTRIAL
AREA ODHAV
KHADIA
NIYOJAN NAGAR
SHERKOTDA KANBHA
BAGODARA
HELA
KUJAD
VASNA
VEJALPUR-2 AMRAIWADI
MAHADEV
MAKARABA JUHAPURA NAGAR
CBD West garnered the
SARKHEJ GAM
ISANPUR
RAMOL
largest amount of office
MEMADPUR
CHALODA
space within the city.
BHAVDA
GIDC BAKROL BURNI
SINGARVA
SANATHAL
VATVA
GERATNAGAR Of the total transacted
VATVA
PIPLAJ office space in the city,
NAROLGAM CBD West accounted for
VINZOL
97%, thereby making it
UNDREL
DHAMATVANA
VANZAR
VANCH
one of the most preferred
LAXMIPUR HATHIJAN
business districts
in the city.
VISALPUR BADODRA
HIRAPUR
ASLALI
30 31
GAMDIKHORAJ AMBAPUR
DANTALI
VALAD
KHODIYAR
RESEARCH INDIA REAL ESTATE
LILAPUR
ZUNDAL KARAI
LAPKAMAN
TRAGAD
431-484 5% LIMBADIA
AMIYAPUR
(40–45)
0% SUGHAD
OFFICE RENTAL
MEDRA
CHANDKHEDA
PBD KOTARPUR
H1 2018
NIGAM NAGAR RAIPUR
RAKANPUR
OGNAJ
RANASAN
SANTEJA
BHAT
GOTA ENASAN Rental value range in H1 2018 in `/sq m/month (`/sq ft/month) 12 month change 6 month change
GIDC NARODA
NOBLE NAGAR
CHANDLODIA SABARMATI
HANSOL BILASIYA
VAHELAL
VIJAY NAGAR
CHANAKYAPURI
NAVA NARODA
SOLA VILLAGE
MEGHANI
NARANPURA
NAGAR
MEMNAGAR KRISHNANAGAR
THALTEJ DUBESHWAR
06%
KATHWADA
NIKOL
431-538 5%
377-484
NAVRANGPUR
0%
(40–50)
(35–45) 3%
BODAKDEV 0%
BOPAL BAPUNAGAR
SHAHPUR Increase rentals in H1 2018
KUBADTHAL
compared to H1 2017
CBD CBD WEST ODHAV BHUVALDI
INDUSTRIAL
GIDC ESTATE
SPRING VALLEY INDUSTRIAL
AREA ODHAV
KHADIA
NIYOJAN NAGAR
SHERKOTDA KANBHA
BAGODARA
HELA
KUJAD
VASNA
VEJALPUR-2 AMRAIWADI
MAHADEV
MAKARABA JUHAPURA NAGAR
RAMOL
SARKHEJ GAM
ISANPUR MEMADPUR
Even though the office
CHALODA
GIDC BAKROL BURNI
market in Ahmedabad is
BHAVDA
SINGARVA
VATVA
SANATHAL VATVA
GERATNAGAR
in its infancy, among the
PIPLAJ early signs of this market
NAROLGAM
steadily growing is that
VINZOL UNDREL
VANZAR
DHAMATVANA
rentals are firming up
VANCH both in CBD West and the
LAXMIPUR HATHIJAN
peripheral business district
(PBD).
VISALPUR BADODRA
HIRAPUR
ASLALI
32 33
GAMDIRESEARCH INDIA REAL ESTATE
BENGALURU MARKET SNAPSHOT
PARAMETER H1 2018 CHANGE YOY
Launches (housing units) 15,556 11%
Sales (housing units) 25,802 22%
Price (weighted average) `50,880/sq m (`4,727/sq ft) -2%
Unsold inventory (housing units) 98,866 -13%
Quarters to sell 10.7 -
Age of unsold inventory (in quarters) 12.6 -
Note- 1 square meter (sq m) = 10.764 square feet (sq ft)
Source: Knight Frank Research
07%
BENGALURU Drop in Sales in H1 2018, from the
levels during H2 2015
• With residential launches and sales recover from its previous low but also
both having bottomed out in H2 witnessed a 22% year-on-year (YoY)
Post the implementation 2017, Bengaluru’s residential market growth with nearly 25,802 units sold.
of the Karnataka Real witnessed a remarkable comeback in Comparing the healthy sales volume
H1 2018 on both parameters. Post the in H1 2018 with the same in H1 2016,
Estate (Regulation and implementation of the Karnataka Real presents a 2% sales drop. Though
Development) Rules, 2017 Estate (Regulation and Development) not a positive trend, during this period
Rules, 2017 in July 2017, the operating Bengaluru’s residential segment
in July 2017, the operating model of residential real estate traversed through sequential periods
model of residential development is fast undergoing a of declining sales volume in the light of
transformation with visible signs of market slowdown followed by policy
real estate development consolidation amongst developers changes intermittently and can be seen
is fast undergoing a and development management recovering in 2018.
gaining popularity. Due to the Real
transformation with visible Estate (Regulation and Development)
RESIDENTIAL MARKET
13%
signs of consolidation Act, 2016 (RERA) enactment, the
opportunities available for dispute
amongst developers and resolution has brought the fence sitters
development management back who are once again instilling trust
in Grade A developers.
Year-on-Year drop in unsold gaining popularity.
inventory in H1 2018
• H1 2018 can aptly be regarded as
the period of sales rebound, as
not only did the residential market
34 35RESEARCH INDIA REAL ESTATE
• Pent-up demand from end-users for • During H1 2018, a marketing blitzkrieg Road, Sarjapur Road and Attibele.
quality projects has translated into has been unleashed on Bengaluru’s
• The implementation of the nationwide BENGALURU MARKET ACTIVITY
heightened sales volume in selected residential segment with developers
scheme of PMAY and according
projects on Sarjapur Road, Kanakpura competing aggressively to highlight
infrastructure status to the affordable
Road, Thanisandra, Kannur and RERA compliancy, availability of
sector has attracted a lot of private
Devanahalli. With the right mix of occupation certificate (OC), PMAY 30,000 Launches Sales Wt. Avg. Price (RHS) 52,500
equity (PE) funding for this sector,
52,205
developer credibility and affordability, eligibility and ready-to-move-in
which is expected to continue growing.
units in these locations have witnessed projects to gain a larger market share,
Of the total new launches in Bengaluru
better sales traction in H1 2018. Of the especially of the ` 40–75 lakhs pricing
52,000
in H1 2018, 60% catered to the ` 25–50
total sales volume in H1 2018, South segment.
lakh bracket.
Bengaluru accounted for 48% of the 27,000
• Many have upped the ante by throwing
whole pie, followed by North Bengaluru • Developers are in no hurry to reduce 52,000
in waiver of parking charges, clubhouse
51,721
at 20%. the base selling prices, as affordable
fees, infrastructure charges and
and RERA registered projects are
• The demand-side intervention GST. Free wardrobes, kitchen, vanity,
yielding good end-user response.
facilitated by the government’s multiple zero maintenance costs, assured 24,000
51,451
Aggressive marketing strategies and
relaxations for projects under Pradhan rentals and No Pre-EMI schemes are
residential projects nearing completion
Mantri Awas Yojana (PMAY), such as in vogue and are being used to lure
are helping the developers win the 51,500
interest rate subsidies and second homebuyers. Innovative marketing
confidence of end-users. In the light
time increase of the extent of carpet strategies such as home exchange
of improving market health, weighted
area to 160 square metres for MIG – I plans, homefests showcasing OC 21,000
average residential prices remained
and 200 square metres for MIG – II, received projects and price discovery
stagnant with only 2% YoY marginal dip
has enabled more MIG end-users methods, which were earlier unheard
50,881
coming to fore in H1 2018.
to qualify for interest rate subsidy of, have been successful in winning the
51,000
benefits. Simultaneously, the dust buyers’ trust in a recovering market. • Though sales have picked up
has settled on the aftermath of RERA momentum and new project launches 18,000
• The buoyancy in sales volume coupled
implementation giving a fillip to sales have also commenced, a growing
with RERA compliance processes
of RERA registered projects, as all concern amongst Non-Banking
largely being streamlined at the
No. of Units
micro markets reported sales growth Financial Companies (NBFCs) cannot
developers’ end has encouraged many
solidifying in H1 2018. As a result, the be ignored as several developers’
developers to foray afresh in the market 15,000 50,500
unsold inventory reduced by 13% YoY loans are in distress and possibility
and bring to life plans of launching
to 98,866 units during this period. of defaults and pile up of incremental
projects, which were forever simmering
costs for refinancing can mar the
`/ sq m
on the backburner. For the first time
prospects for many residential players.
in the past 18 months, new residential
The sector is not out of the woods yet
12,000
The implementation of launches strengthened as 15,556
units were launched in H1 2018. This
as the financial health of developers is
50,000
50,052
vital for execution and delivery.
the nationwide scheme represents a 11% YoY growth.
of PMAY and according • Despite healthy sales volume and
reduction in unsold inventory, the
infrastructure status to quarters to sell (QTS) increased from
9,000
the affordable sector has 10.0 in H1 2017 to 10.7 in H1 2018.
49,500
Though projects nearing completion
attracted a lot of private and under RERA continue to lure
equity (PE) funding for
49,396
buyers, it is the under-construction 6,000
projects that are struggling to attract
this sector, which is buyers impacting the overall city’s QTS
expected to continue leading it to rise continuously.
49,000
growing. Of the total new • The western micro market, which has
3,000
historically witnessed fewer launches,
launches in Bengaluru in emerged a surprise frontrunner noting
36%
H1 2018, 60% catered a 142% YoY growth in launches as
few projects with large number of
to the ` 25–50 lakh units were launched. New launches 0 48,500
bracket also increased by 30% YoY in South H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 H2 2017 H1 2018
Bengaluru with many new projects
Source: Knight Frank Research
Drop in launches in H1 2018 from
being concentrated on Kanakpura
the levels during H1 2016
36 37RESEARCH BEML LAYOUT INDIA REAL ESTATE
RK HEGDE
1,858 NAGAR
-53%
H1 2018
5,238
SAHAKARA
NAGAR
27%
RESIDENTIAL
NORTH
LAUNCHES AND SALES
JALAHALLI
ASHWATH
NAGAR
HEBBAL
Launches (housing units) Sales (housing units) % Change (YOY)
YESHWANTHPUR
KALYAN
NAGAR BATTARAHALLI
JAYBHAMNAGAR
SHIVA NAGAR
RAGAVENDRA BANASWADI
NAGAR
MALLESWARAM
4,762
142% MAHADEVAPURA
Of the total sales
BASAVESHWARA RAJAJINAGAR
H1 2018 NAGAR
2,890 CV RAMAN
volume in H1 2018,
NAGAR
58%
0 891 WHITEFIELD
WEST 0%
H1 2018
-54% South Bengaluru
VIJAYANAGAR NEW H1 2018
77
THIPPASANDRA
30%
60%
5,135 accounted for 48% of
1%
the whole pie, followed
VARTHUR KODI
CENTRAL EAST MARATHAHALLI
CHAMRAJPET VILLAGE
by North Bengaluru at
YoY increase in launches in South
20%. in H1 2018
ADUGODI
BANASHANKARI
KADUBEESANAHALLI
KORAMANGALA
KENGERI
SATELLITE TOWN
JAYANAGAR
ITTAMADU
BTM
LAYOUT
J.P.
NAGAR HSR
LAYOUT
KUMARASWAMY MICRO-MARKET LOCATIONS
LAYOUT
DODDAKANNELLI
KENGERI
CENTRAL MG Road, Lavelle Road, Langford Town, Vittal Mallya Road, Richmond Road
8,045 HONGASANDRA
30%
H1 2018 EAST Whitefield, Old Airport Road, Old Madras Road, KR Puram, Marathahalli
12,462
23% WEST Malleswaram, Rajajinagar, Yeshwantpur, Tumkur Road, Vijayanagar
SOUTH NORTH Hebbal, Bellary Road, Hennur, Jakkur, Yelahanka, Banaswadi
KUMARASWAMY
LAYOUT
Koramangala, Sarjapur Road, Jayanagar, JP Nagar, HSR Layout, Kanakpura Road, Bannerghatta
SOUTH
Road
Source: Knight Frank Research
All maps are for representational purpose not to scale
38 39RESEARCH BEML LAYOUT INDIA REAL ESTATE
RK HEGDE
NAGAR
21,420 11.6
(-16%) SAHAKARA
NAGAR
13.5
RESIDENTIAL
NORTH
UNSOLD INVENTORY H1 2018
JALAHALLI
ASHWATH
NAGAR
HEBBAL
Unsold inventory (YoY growth) QTS (in quarters) Age of inventory (in quarters)
YESHWANTHPUR
KALYAN
NAGAR BATTARAHALLI
JAYBHAMNAGAR
SHIVA NAGAR
RAGAVENDRA BANASWADI
NAGAR
MALLESWARAM
9,806 12.4 BASAVESHWARA RAJAJINAGAR MAHADEVAPURA
NAGAR
(-2%)
15%
11.0 CV RAMAN
NAGAR
WHITEFIELD
WEST
300 8.6 8.7
VIJAYANAGAR NEW
21,231
(23%) THIPPASANDRA
(-12%)
14.4 12.9 Annual decline in unsold units in
VARTHUR KODI South Bengaluru during H1 2018
CENTRAL EAST MARATHAHALLI
CHAMRAJPET VILLAGE
ADUGODI
BANASHANKARI
KADUBEESANAHALLI
KORAMANGALA
KENGERI
SATELLITE TOWN
ITTAMADU
JAYANAGAR Though projects nearing
BTM
LAYOUT
completion and under
J.P.
NAGAR HSR
LAYOUT
RERA continue to lure
KUMARASWAMY
LAYOUT buyers, it is the under-
DODDAKANNELLI
construction projects that
KENGERI
HONGASANDRA
46,109 11.1
(-15%)
are struggling to attract
12.4
buyers impacting the
KUMARASWAMY
SOUTH overall city’s QTS leading
LAYOUT
it to rise continuously.
All maps are for representational purpose not to scale
40 41YELAHANKA
43,000–70,000
RESEARCH (4,000–6,500) BEML LAYOUT INDIA REAL ESTATE
[-13%] [-9%]
RK HEGDE
NAGAR
TUMKUR ROAD
32,300–64,600 SAHAKARA
NAGAR THANISANDRA
RESIDENTIAL PRICING
(3,000–6,000) 32,300–86,100
[-1%] [-5%] (3,000–8,000)
[-5%] [0%]
NORTH
H1 2018
JALAHALLI
ASHWATH
HEBBAL NAGAR
53,800–107,600 HENNUR
YESHWANTPUR (5,000–10,000) 37,700–80,700
62,400–113,000 [1%] [3%]HEBBAL (3,500–7,500))
[-8%] [-3%] Price range in H1 2018 in `/sq m Price range in H1 2018 in (`/sq ft)
(5,800–10,500)
[-6%] [-1%]
YESHWANTHPUR
KALYAN
12 month change (YOY) 6 month change (YOY)
MALLESWARAM NAGAR BATTARAHALLI
JAYBHAMNAGAR
86,100–150,700
(8,000–14,000)
K.R. PURAM SHIVA NAGAR
[-1%] [-2%]
43,000–70,000
WEST
(4,000–6,500)
RAGAVENDRA BANASWADI [-2%] [0%]
NAGAR
WHITEFIELD
43,000–75,300
MALLESWARAM
(4,000–7,000)
RAJAJI NGAR [-15%] [-8%]
75,300–161,500
(7,000–15,000)
[-2%] [-3%]RAJAJINAGAR
BASAVESHWARA
MAHADEVAPURA
NAGAR
LAVELLE ROAD CV RAMAN
LANGFORD TOWN
226,000–322,900 NAGAR
161,500–226,000
(21,000–30,000)
(15,000–21,000) WHITEFIELD
[-2%] [-2%]
[0%] [0%]
15%
VIJAYANAGAR NEW
THIPPASANDRA
MARATHAHALLI
43,000–75,300 VARTHUR KODI
(4,000–7,000)
CENTRAL [-5%] [-8%]
MARATHAHALLI
CHAMRAJPET VILLAGE
YoY decline in prices in Whitefield
and Bannerghatta Road
EAST
ADUGODI
BANASHANKARI
KADUBEESANAHALLI
KORAMANGALA
KENGERI
SATELLITE TOWN
JAYANAGAR
ITTAMADU
BTM
LAYOUT
SARJAPUR ROAD
43,000–80,700
(4,000–7,500)
J.P. [-4%] [-4%]
Aggressive marketing
NAGAR HSR
LAYOUT
KUMARASWAMY
LAYOUT
KENGERI DODDAKANNELLI
strategies and
HONGASANDRA residential projects
nearing completion are
helping the developers
SOUTH
KUMARASWAMY
LAYOUT
win the confidence of
end-users.
All maps are for representational purpose not to scale KANAKPURA ROAD BANNERGHATTA ROAD ELECTRONICS CITY
43,000–75,300 32,300–75,300 37,700–59,200
(4,000–7,000) (3,000–7,000) (3,500–5,500)
42 [-14%] [-10%] 43
[7%] [9%] [-15%] [-13%]RESEARCH INDIA REAL ESTATE
BENGALURU OFFICE MARKET ACTIVITY
0.7 New Completions Transactions
OFFICE MARKET
0.6
0.5
0.4
mn sq m
0.3
0.2
33%
0.1
0.0
BENGALURU MARKET SNAPSHOT H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 H2 2017 H1 2018
Bengaluru’s share in H1 2018 Note- 1 square meter (sq m) = 10.764 square feet (sq ft)
leasing across top seven cities
PARAMETER H1 2018 CHANGE YOY
Source: Knight Frank Research
New completions mn sq m (mn sq ft) 0.34 (3.7) 0% • The central business district and Off has dropped to 38% of the total
central locations (CBD and Off CBD,) leasing volume in H1 2018. While the
Transactions mn sq m (mn sq ft) 0.61 (6.5) 13% garnered the second highest share challenges posed by the global political
in Bengaluru’s leasing with a 16% environment still loom large for Indian
Weighted average rental in 754.55 (70.1) 17%
`/sq m/month (`/sq ft/month)
share, with co-working operators IT companies, new technological
Co-working operators
and IT/ITeS comprising majority of innovations in the form of big data
Stock mn sq m (mn sq ft) 13.37 (144.5) 6%
demand. The presence of many co- analytics and machine learning will (classified as a sub-sector
working operators is also giving a chic open new doors for job seekers. With
Vacancy (%) 3.5 -
makeover to the old CBD buildings and Bengaluru retaining its spot as the in Other Services Sector)
attracting new age tenants, a trend we top tech job market in the country,
Source: Knight Frank Research expect to continue. continuous evolution of companies in accounted for 0.11 mn sq
IT/ITeS should help this sector gain
• Unlike H2 2017, when the average deal
ground in the long term. m (1.27 mn sq ft) leasing
size in Bengaluru had shrunk by 37%
• In the first half of 2018, Bengaluru retained its top position amongst India’s top 8 cities
with its total leasing volume accounting for 33% share. Healthy pre-commitments,
YoY, H1 2018 noted a relatively lesser • Co-working operators (classified as a in H1 2018 garnering a
12% YoY decline in average deal size. sub-sector in Other Services Sector)
entry of new foreign and domestic occupiers and expansion of real estate footprint by
emerging sectors largely contributed to the strong office space demand for Bengaluru,
Whilst it is premature to say that large- accounted for 0.11 mn sq m (1.27 mn 19% share of the total
sized deals are back in vogue, the sq ft) leasing in H1 2018 garnering a
a city which has inherently remained tenant-favourable due to its intrinsic location
current trend is indicative of occupiers 19% share of the total pie. This is a pie. This is a phenomenal
attractiveness.
in some sectors no longer shying away phenomenal 199% annual upswing in
In the first six months of • In H1 2018, Bengaluru noted 0.34 mn sq mt (3.7 mn sq ft) of new supply infusion which from committing to large-sized office leasing by this category of occupiers
199% annual upswing in
is at par with H1 2017. ORR and PBD East witnessed a large chunk of this total supply
2018, strong occupier with 38% and 25% respectively. Though the new supply remains in line with H1 2017,
spaces and scaling up hiring plans. over H1 2017 as activity-based working
leasing by this category of
Against the backdrop of rising concern and community spaces become the
demand translated into the infusion of many projects which deferred completions in 2017 will ease the supply about automation, this is good news. norm for modern day office occupiers occupiers over H1 2017 as
pressure in some micro-markets, such as ORR where vacancy continues to remain With India on the brink of emerging seeking a collaborative eco-system.
0.61 mn sq m (6.5 mn minimal. as the fastest growing economy in
• In only a year’s time, intense expansion
activity-based working and
the world, a positive impact can be
• In the first six months of 2018, strong occupier demand translated into 0.61 mn sq
sq ft) overall leasing for m (6.5 mn sq ft) overall leasing for Bengaluru, registering a 13% year-on-year (YoY)
expected on the real estate footprint of
by existing co-working operators and
entry of new co-working operators
community spaces become
the ever-growing occupier segment in
Bengaluru, registering a growth. Strong occupier demand and pre-commitments catalysed office space
Bengaluru.
such as WeWork, Kafnu, Indiqube the norm for modern day
consumption in the city in H1 2018, amongst other factors. and Workshaala has changed the
13% year-on-year (YoY) • Buoyed by demand from IT/ITeS and co-working operators, Outer Ring Road
• For the past year and a half, the share landscape of flexible office space office occupiers seeking a
of the IT/ITeS sector in Bengaluru’s formats in the city. In H1 2018, ORR
(ORR) as a micro market continued to outperform the others accounting for 43% of
growth. Bengaluru’s total leasing volume. It is interesting to note that the average deal size for
leasing volume has constantly been and CBD & Off CBD micro markets collaborative eco-system.
weakening. From a 57% share in H1 remained popular for co-working
all transactions concluded in ORR alone admeasures nearly 8,732 sq m (94,000 sq ft),
2017 leasing, the share of this sector operators who leased 45% and 28%
indicative of large office formats dominating occupier interest in this belt.
44 45RESEARCH INDIA REAL ESTATE
BENGALURU OFFICE MARKET VACANCY
SECTOR-WISE SPLIT OF TRANSACTIONS
10%
8%
8%
8%
7%
6%
6%
H1 2017
4%
4%
3.5%
3%
2%
3.5%
0%
H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 H2 2017 H1 2018
Source: Knight Frank Research
H1 2018
Vacancy in H1 2018
of the total leasing volume of the co- • Infusion of limited supply in the past
working category respectively during 12 months has fostered rental growth
this period. across many micro markets leading
to a 17% YoY upswing in weighted
• In the backdrop of transformation of
average rentals at the city level in H1
India’s Banking, Financial services and
2018. Acute shortage of quality spaces
Insurance (BFSI) sector, its share in H1 H1
in CBD & Off CBD and ORR led to a
Unlike H2 2017, when Bengaluru office space consumption
17% and 15% YoY rental growth in both
Industry
2017 2018
jumped from 9% of total leasing in H1
these micro markets, respectively.
the average deal size in 2017 to 13% in H1 2018. As technology BFSI 9% 13%
penetration in the BFSI sector is • A robust pre-commitments pipeline,
Bengaluru had shrunk by increasing, newer companies and job strong foothold of IT/ITeS giants, IT/ITES 57% 38%
roles are being created to prepare new emerging sectors’ rapid office
37% YoY, H1 2018 noted a the sector for a technological shift in space consumption, heightened Manufacturing 8% 8%
the coming years, which has started interest in the city’s CBD will keep the
relatively lesser 12% YoY reflecting in the BFSI sector’s office occupier demand strongly glued to
BUSINESS DISTRICT CLASSIFICATION Other Services 26% 41%
decline in average deal space leasing in Bengaluru already. Bengaluru. Developers should focus
on constructing large tracts of new BUSINESS DISTRICT MICROMARKETS
Note: BFSI includes BFSI support services
• Led by e-commerce occupiers’
size. Whilst it is premature expansion, primarily in the suburban
office stock and timely completion of
Central business district (CBD) and MG Road, Residency Road, Cunningham Road, AVERAGE DEAL SIZE
under-construction projects to fulfil
business district (SBD) locations, the AND NUMBER OF DEALS
to say that large-sized share of this category accounted for
the demand wave that is largely a mix off CBD Lavelle Road, Richmond Road, Infantry Road
of both traditional and new emerging
deals are back in vogue, 12% of the total leasing volume in H1
2018.
sectors. Suburban business district (SBD)
Indiranagar, Koramangala, Airport Road, Old
Madras Road
4,925 (53,014)
Average Deal Size in sq m (sq ft)
the current trend is • As strong occupier demand has
• On the office development front,
H1 2017
recent market interactions indicate that Peripheral business district (PBD)
continually outpaced new supply, the Whitefield
indicative of occupiers vacancy in the city’s office market
few leading commercial developers East
131
are reinventing themselves and
has been on a decline. From 4% in
in some sectors no H1 2017, it continues to remain low at
apportioning nearly 60–70% of their Peripheral business district (PBD)
Electronics City, Bannerghatta Road
Number of Deals
future development potential on South
longer shying away from 3.5%. Addition of huge quantum of new
creating co-working environments and 4,312 (46,420)
supply in subsequent quarters is the Peripheral business district (PBD)
millennial-friendly workspaces. Going Average Deal Size in sq m (sq ft)
committing to large-sized need of the hour as the tech capital of
forward, co-working as a sub-sector North
Thanisandra, Yelahanka, Devanahalli
the country is expected to attract large H1 2018
office spaces and scaling volume of deals. In H1 2018, an 8%
will attract a major chunk of upcoming
YoY growth in total deal volume was
supply over traditional office formats. Outer Ring Road (ORR)
Hebbal ORR, Marathahalli ORR, Sarjapur Road
ORR
141
up hiring plans. noted, a trend likely to strengthen in the
Number of Deals
second half of 2018. Source: Knight Frank Research
Source: Knight Frank Research
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