INDIA REAL ESTATE RESEARCH - JANUARY - JUNE 2018 - Knight Frank

 
INDIA REAL ESTATE RESEARCH - JANUARY - JUNE 2018 - Knight Frank
RESEARCH

INDIA REAL ESTATE
RESIDENTIAL AND OFFICE

JANUARY - JUNE 2018

   AHMEDABAD | BENGALURU | CHENNAI | HYDERABAD | KOLKATA | MUMBAI | NCR | PUNE
INDIA REAL ESTATE RESEARCH - JANUARY - JUNE 2018 - Knight Frank
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
INDIA REAL ESTATE RESEARCH - JANUARY - JUNE 2018 - Knight Frank
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

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INDIA REAL ESTATE RESEARCH - JANUARY - JUNE 2018 - Knight Frank
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

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INDIA REAL ESTATE RESEARCH - JANUARY - JUNE 2018 - Knight Frank
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
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INDIA REAL ESTATE RESEARCH - JANUARY - JUNE 2018 - Knight Frank
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

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INDIA REAL ESTATE RESEARCH - JANUARY - JUNE 2018 - Knight Frank
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

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INDIA REAL ESTATE RESEARCH - JANUARY - JUNE 2018 - Knight Frank
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

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INDIA REAL ESTATE RESEARCH - JANUARY - JUNE 2018 - Knight Frank
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
INDIA REAL ESTATE RESEARCH - JANUARY - JUNE 2018 - Knight Frank
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                                                                                                                                                                                                                                                                                          19
KHORAJ                                                                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
                                                                                                                                                                                                                                       GAMDI
KHORAJ                                                              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
                                                                                                                                                                                                                                    GAMDI
KHORAJ                                                           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
                                                                                                                                                                                                                                 GAMDI
RESEARCH                                                                                                                                                                                                                                                                    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                                                                                                                                                                                                                                                                                                           27
RESEARCH                                                                                                                                                                                                                              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                                                                                                                                                                                                                                                                                 29
KHORAJ                                                              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
                                                                                                                                                                                                           GAMDI
KHORAJ                                                              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
                                                                                                                                                                                                                GAMDI
RESEARCH                                                                                                                                                                          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                                                                                                                                                                                                                     35
RESEARCH                                                                                                                                                                                                                                                 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                                                                                                                                                                                                                                                                                         37
RESEARCH                                                                                                                                                                                                                                                                                                               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                                                                                                                                                                                                                                                                                                                                                                                        39
RESEARCH                                                                                                                                                                                                                                                                                                                    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                                                                                                                                                                                                                                                                                                                                                                                                 41
YELAHANKA
                                                                                                                                        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                                                                                                                                                                                                                                                                                                45
RESEARCH                                                                                                                                                                                                                           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

46                                                                                                                                                                                                                                                                              47
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