India office property market overview

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We anticipate, in the medium terms, cities with lower inventory overhang (such as Bangalore and Mumbai) will witness strengthening in the rental and capital values. This is primarily because of the overall strengthening in business confidence based on the government’s keen resolve to introduce numerous fiscal and economic reforms. RBI has indicated that they would positively review lowering the repo rate in 1Q 2013. This should increase liquidity in the market; and the positive business environment should lead to recovery in the country’s economic growth and increase in demand for commercial and residential real estate.

For a more detailed analysis of the trends in each market kindly click here to download the report. I am sure you will find it to be an interesting read.

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India office property market overview

  1. 1. OfficeProperty Market OverviewINDIAQUARTERLY UPDATE | JANUARY | 2013Accelerating success.
  2. 2. 4Q 2012 | OFFICE Research & forecast report SYDNEY CENTRAL BUSINESS DISTRICT research & forecast Report India office market MACRO ECONOMIC OVERVIEW ECONOMIC INDICATORS Gross Domestic Product at Factor Cost • GDP growth in the July - September quarter 10.0% 9.0% of 2012 was 5.3%, contracting marginally 8.0% from in the last quarter. 7.0% 6.0% • eadline inflation based on the wholesale H 5.0% In Percentage 4.0% price index inched down to 7.24% for the 3.0% 2.0% month of November 2012, as compared to 1.0% 7.45% in October 2012. It was 9.46% during 0.0% Jan - Mar 09 Apr - Jun 09 Jul - Sep 09 Oct - Dec 09 Jan - Mar 10 Apr - Jun 10 Jul - Sep 10 Oct - Dec 10 Jan - Mar 11 Apr - Jun 11 Jul - Sep 11 Oct - Dec 11 Jan - Mar 12 Apr - Jun 12 Jun - Sep 12 the corresponding month of the previous year.ECONOMIC BAROMETER • The Reserve Bank of India reduced the CRR (Cash Reserve Ratio) of scheduled banks by FDI in Real Estate Dec-11 Dec-12 25 basis points from 4.50 to 4.25% with 16,000 14,000 REPO RATE 8.50% 8.00% effect from 3 November 2012 to induce 12,000 immediate liquidity in the market. However, 10,000 REVERSE REPO 7.50% 7.00% the central bank did not provide any repo rate 8,000 INR Crore RATE cut this quarter. 6,000 4,000 CRR 6.00% 4.25% • India’s foreign direct investment (FDI) inflow 2,000 INFLATION 7.74% 7.24% was around USD1.94 billion in October 2012, 0 2005 - 06 2006 - 07 2007 - 08 2008 - 09 2009 - 10 2010 - 11 2011-12 April -Oct 12 which was nearly 65% above the same month PRIME 9.75% - 10.75% 10.00% - 10.75% last year. LENDING Rate DEPOSIT RATE • his quarter, the commercial office markets in T 7.75% - 9.50% 8.00% - 9.00% (<1 YEAR) India have shown mixed trends. Overall, rents BSE Sensex & Realty Index Foreign Ex- and capital values remained stagnant with a 120 change 54.96 54.43 downward bias. Notwithstanding the current 115 INR - USD economic difficulties, the leasing activity in 110 Mumbai, Delhi and Gurgaon Bangalore 105 INR- Euro 69.29 71.31 remained steady; however, the Chennai, 100 Kolkata and NOIDA markets experienced 95 relatively weak demand. 90Return on Alternative Investments 1-Oct-2012 16-Oct-2012 31-Oct-2012 15-Nov-12 30-Nov-12 15-Dec-12 • COLLIERS VIEW: Business confidence is up Dec-11 Dec-12 YoY % based on the government’s keen resolve to * Rebase to 100 BSE Sensex Realty Index Change introduce numerous fiscal and economic reforms. RBI has indicated that they would Gold 27,670 30,885 11.62% positively review lowering the repo rate in 1Q Exchange Rates SILVER 52,250 60,040 14.91% 2013. This should increase liquidity in the 60 75 market; and the positive business environment 55 70 EQUITY (BSE should lead to recovery in the country’s 50 65 SENSEX) 15,881 19,317 21.64% economic growth and increase in demand for REALTY INDEX 1,505 2,067 37.35% commercial and residential real estate. In the 45 60 medium terms, cities with lower inventory 40 55 overhang (such as Bangalore and Mumbai) 1-Oct-12 16-Oct-12 31-Octl-12 15-Nov-12 30-Nov-12 15-Dec-12 Note : All values in the above tables are as on 15th of December, 2011 and December, 2012 will witness strengthening in the rental and capital values. However in the short term * Rebase to 100 USD Euro rental values across board will be under Source: Colliers International India Research stress. www.colliers.com
  3. 3. INDIA | 4Q 2012 | OFFICE MUMBAI AVAILABLE Supply in Prime Areas Goregoan / JVLR • ore than 9.3 million sq ft of commercial M 8% Worli / Prabhadevi Kalina 1% Grade A office space was available for fit-out Powai 1% 4% in 4Q 2012. About 24% of this total available Malad 5% Thane / LBS space was concentrated in Andheri East. Navi Mumbai 22% 6% • A number of projects / part of the projects were completed this quarter resulting in CBD 1% the addition of approximately 4 million sq ft of Grade A office space to the city’s total Lower Parel 20% inventory. Andheri East 24% • easing activity picked up in the Mumbai Grade L BKC 8% A office market during 4Q 2012 and few large deals were concluded during the quarter. The MumBAI city’s total absorption for 2012 totalled around Grade a Capital Values 6.23 million sq ft. Sectors which primarily 35000CITY OFFICE BAROMETER contributed to this absorption were Banking, 30000 Finance Services and Insurance (BFSI) and Capital Values -INR Per Sq.ft. 3Q 2012 4Q 2012 25000 IT/ITes. 20000 Vacancy • verage rental and capital values in Mumbai A 15000 Absorption remained stable in 4Q 2012 across all micro- 10000 Construction markets due to ample availability of stock and 5000 new developments in the pipeline. Rental Value 0 CBD Andheri East BKC Lower Parel Malad Navi Mumbai Powai Worli/ Prabhdevi Goregaon / JVLR Kalina Thane / LBS • he Maharashtra State Road Development T Corporation (MSRDC) has opened a second Micro Market Rental % Change flyover, named Patlipada, on the Thane- Values QoQ YoY Ghodbunder Road. A total of four flyovers — the AVERAGE RENTAL AND CAPITAL TREND Patlipada, Waghbil, Kapurbawdi and Manpada CBD 225 - 275 0% -9% 300 30000 were planned on this road, of which Waghbil Forecast Andheri East 90 - 125 0% 0% and Patlipada flyover are now operational; Rental Values -INR Per Sq.ft. Per Month 250 25000 Capital Values -INR Per Sq.ft. BKC 225 - 315 0% 3% work on the Manpada flyover is in the final 200 20000 Lower Parel 130 - 200 0% 0% stages and is expected to be operational by the end of January 2013. 150 15000 Malad 80 - 90 0% 0% 100 10000 Navi Mumbai 55 - 75 0% 0% • COLLIERS VIEW: 4Q 2012 witnessed an Powai 100 - 120 0% 0% increase in absorption of office space. The 50 5000 demand showed a clear preference for 0 0 Worli/ Prabhdevi 175 - 225 0% 0% premium quality office space. We anticipate 4Q2008 4Q2009 4Q2010 4Q2011 4Q2012 4Q2013F 1Q2008 Goregaon/ JVLR 80 - 110 0% -5% that in short to medium term the rental values Note: Kalina 175 - 210 0% 0% for such properties will command a premium Available Supply: Total Grade A office space being marketed for sale or lease in surveyed quarter. Thane / LBS 50 - 100 0% 0% due to limited supply. Though, overall market Grade A Rental/Capital Values: Indicative asking price for Grade A office space. rentals will witness stability on account of Prime Office Average Rental Trends: Average market rental values for Grade A properties.Note: All the rentals shown above are indicative Grade A rentals in INR per sq ft per month. demand/supply equilibrium. KEY MARKET TRANSACTIONS CLIENT Building Name AREA (Sq. Ft.) LOCATION TRANSCATION TYPE Covidien Boomerang 9,900 Andheri Lease Lhoist Sahar Plaza (Windfall) 6,630 Andheri Lease QAD India Techniplex 15,000 Goregaon Lease Vertex Group Sigma IT Park 22,490 Rabale Lease Visa The Capital 20,000 BKC Lease Woodfield Systems (India) Ltd. NITCO Biz Park 10,000 Thane Sale KEY UNDER CONSTRUCTION PROJECTS BUILDING NAME Developer AREA (Sq. Ft.) LOCATION Expected Completion Kohinoor Square Kohinoor Group 779,000 Central Mumbai 2013 Marathon Icon Marathon Group 175,500 Central Mumbai 2013 Mindspace IT SEZ Bldg. No.11 K Raheja Corp 400,500 Navi Mumbai 2013 Source: Colliers International India Research Colliers International | p. 3
  4. 4. INDIA | 4Q 2012 | OFFICE DELHI AVAILABLE Supply in Prime Areas Connaught place 2% • bout 1.6 million sq ft of Grade A office space A Nehru Place was ready for fit-out in 4Q 2012. The majority 10% of this supply was located in SBD locations such as Jasola and Saket. Jasola • No new supply was added during the surveyed 59% quarter to the Delhi commercial Grade A office stock. Saket • Occupier demand remained steady during the 29% quarter. A number of small transactions were concluded in the CBD while SBD locations like Jasola and Saket recorded few mid-size transactions. Grade a Capital Values delhi 60000CITY OFFICE BAROMETER • Amid steady occupier demand and limited supply availability the rental values for Grade 50000 Capital Values -INR Per Sq.ft. 3Q 2012 4Q 2012 A offices remained stable in almost all micro- 40000 markets.Vacancy 30000Absorption • Capital values remained stable in almost all 20000 micro-markets and no major activity wasConstruction witnessed in the sales market. However, the 10000Rental Value state government has announced the new 0 Connaught Place Jasola Nehru Place Saket circle rates with effect from 5 December 2012 in the capital. As per the notification, the circleMicro Market Rental % Change rate in Category A colonies went up by 200%, Values QoQ YoY in Category B by 50% and the rest by 22%. At AVERAGE RENTAL AND CAPITAL TRENDNehru Place 180 - 192 1% 4% present, there are eight categories of colonies 400 40000 in Delhi (A through H). The circle rate is the ForecastConnaught Place 330 - 384 0% 2% 350 35000 Rental Values -INR Per Sq.ft. Per Month minimum rate for registration of properties.Netaji Subhash 65 - 75 0% 0% Capital Values -INR Per Sq.ft. 300 30000Jasola 112 - 130 -2% -5% 250 25000 • COLLIERS VIEW: While the demand has comeSaket 162 - 180 7% 1% down marginally as compared to previous 200 20000Note: All the rentals shown above are indicative Grade A rentals in INR per sq ft per month. years, the rental values remained stable during 150 15000 2012. Most of the developers are adopting a 100 10000 wait and watch approach awaiting for new 50 5000 announcement on city development plans. No 0 0 1Q2008 4Q2008 4Q2009 4Q2010 4Q2011 4Q2012 4Q2013F major supply is expected in near term except in Aerocity which is an emerging location in Note: Available Supply: Total Grade A office space being marketed for sale or lease in Delhi near International Airport. We anticipate surveyed quarter. Grade A Rental/Capital Values: Indicative asking price for Grade A office space. rental values to remain stable due to limited Prime Office Average Rental Trends: Average market rental values for Grade A supply and muted demand. properties. KEY MARKET TRANSACTIONS CLIENT Building Name AREA (Sq. Ft.) LOCATION TRANSCATION TYPE Franklin Templeton Ashoka Estate 5,200 Barakhamba Road Lease Oriflame Corporate One 50,000 Jasola Lease State Bank of India Jeevan Bharti 20,000 Connaught Place Lease Thales Group Konnectus 18,450 Minto Road Lease USG Corporation DLF Jasola 1,710 Jasola Lease KEY UNDER CONSTRUCTION PROJECTS BUILDING NAME Developer AREA (Sq. Ft.) LOCATION Expected Completion Caddie Commercial Tower Caddie Hotel 100,000 Aerocity 2013 DLF Towers Okhla DLF Ltd. 420,000 Okhla 2013 Ambience Commercial Tower Ambience Group 150,000 Vasant Kunj 2013 Source: Colliers International India Research p. 4 | Colliers International
  5. 5. INDIA | 4Q 2012 | OFFICE GURGAON AVAILABLE Supply in Prime Areas DLF Cyber City • More than 14 million sq ft of Grade A office 4% NH8/Udhyog Vihar space was available for fit-out in 4Q 2012. 21% Most of the available supply was concentrated on Golf Course Road, Golf Course Road Extension, Udyog Vihar, NH-8 up to Manesar. Manesar • During the surveyed quarter, construction 17% activities remained upbeat and several projects Golf Course Road/ / parts of the projects contributing more than Ext /Sohna Road 51% Institutional Sectors / 0.5 million sq ft of Grade A office space were Sushant Lok MG Road 2% 5% added to the city’s total inventory. • This quarter a number of projects / parts Gurgaon of the projects were launched, admeasuring Grade a Capital Values about 1 million sq.ft. Most of these projects are 25000CITY OFFICE BAROMETER expected to be completed by the end of 2015 and will add about 1 million sq ft of Grade A 20000 Capital Values -INR Per Sq.ft. 3Q 2012 4Q 2012 office space to the city’s total inventory. 15000 Vacancy • ccupier demand remained strong and a O 10000 Absorption number of mid-size (20,000 to 25,000 sq ft) Construction transactions were recorded during 4Q 2012. 5000 The total absorption recorded during the year Rental Value 0 was to the tune of 4 million sq ft. NH8/Udhyog Vihar Manesar MG Road Golf Course Road/Ext /Sohna Road Institutional Sectors / Sushant Lok Golf Course Road/Ext /Sohna Road (IT) Vihar (IT) Manesar (IT) NH8/Udhyog Micro Market Rental % Change • Rental values recorded a marginal increase in Values the range of 1 to 2% in select micro-markets AVERAGE RENTAL AND CAPITAL TREND QoQ YoY such as Golf Course Road, Golf Course M. G. Road 110 - 120 -2% -1% Extension Road and Sohna Road. However, 120 Forecast 12000 Golf Course Rd./ 55 - 110 1% -7% rental values remained under pressure in the Rental Values -INR Per Sq.ft. Per Month 100 10000 Ext /Sohna Rd. CBD and declined by 2%. All other micro- Capital Values -INR Per Sq.ft. NH8/Udhyog 80 8000 Vihar 110 - 140 0% 10% markets witnessed steady rents QoQ. 60 6000 Manesar 45 - 62 0% 5% • COLLIERS VIEW: In view of the sustained trend Institutional 40 4000 Sectors / 60 - 117 5% 1% of cost-saving initiatives adopted by most of Sushant Lok the office occupiers, Udhyog Vihar and Sohna 20 2000Note: All the rentals shown above are indicative Grade A rentals in INR per sq ft per month. Road will remain the most preferred location 0 0 4Q2008 4Q2009 4Q2010 4Q2011 4Q2012 4Q2013F because of affordable rentals and location 1Q2008 advantages. The office rental value growth Note: will be capped in medium term due to existing Available Supply: Total Grade A office space being marketed for sale or lease in surveyed quarter. vacancy and the forthcoming new supply. Grade A Rental/Capital Values: Indicative asking price for Grade A office space. Prime Office Average Rental Trends: Average market rental values for Grade A properties. KEY MARKET TRANSACTION CLIENT Building Name AREA (Sq. Ft.) LOCATION TRANSCATION TYPE AB Sciex India Plot No 121 22,000 Udyog Vihar Lease ACS Xerox Park View Business Tower 40,000 Sohna Road Lease Mudra Communications Ltd. Platinum Towers 30,000 Udyog Vihar Lease Pepsico Ltd. Pioneer Urban 150,000 Golf Course Ext Rd. Lease SAP India Vatika Towers 9,500 Sector 54 Lease KEY UNDER CONSTRUCTION PROJECTS BUILDING NAME Developer AREA (Sq. Ft.) LOCATION Expected Completion DLF Building 14 Tower D DLF Ltd. 731,800 NH-8 2013 Success Tower Suncity Projects 200,000 Golf Course Ext Rd. 2013 Unitech Infospace, Gurgaon Phase 2 Building 7 Unitech Ltd. 432,000 NH-8 2013 Source: Colliers International India Research Colliers International | p. 5

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