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City Report - Bangalore Market Overview 2009

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Snapshot of the Report: …

Snapshot of the Report:

A concentrated effort by the government has managed to revive the Indian economy and 8+ % of growth is expected in 2010.
Signs of revival in the CBD market, with further supply coming up in Grade A properties, and the Metro Rail nearing completion, leasing activities is expected to pick up in 2010.
The SBD markets of Bangalore will be the engine of growth as completion rates along with rental and capital values being high.
Mixed responses from the PBD market with Whitefield becoming a hot destination for office space.
The retail market’s turn around and expansion plans are being executed. About , 3,585,000 sq ft of area is under construction.
Due to cheaper interest rates, demand for residential property has shot up, especially in 950-1050 sq ft category in Peripheral Residential Market, 15000 apartments scheduled for completion in the following years.


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  • 1. CITY REPORT BANGALORE MARKET OVERVIEW 2009
  • 2. CONTENTS Summary p. 3 Bangalore Map p. 4 Bangalore Commercial Market p. 5 i) Overview p. 5 ii) Micro Market Description p. 5 iii) Outlook p. 8 iv) Major Projects Completed p. 9 v) Major Projects Under Construction p. 10 vi) Major Transactions p. 11 Bangalore Retail Market p. 12 i) Overview p. 12 ii) Micro Market Description p. 12 iii) Key Projects Completed p. 14 iv) Key Projects Under Construction p. 14 v) Key Transactions p. 15 Bangalore Residential Market p. 16 i) Overview p. 16 ii) Micro Market Description p. 16 iii) Major Projects Under Construction In 2009 p. 17 Glossary p. 18 CITY REPORT BANGALORE MARKET OVERVIEW - 2009
  • 3. SUMMARY Bangalore Real Estate Market The commercial market witnessed highest number of The Bangalore Residential market witnessed limited number completions along the Outer Ring Road in the secondary of newly launched projects across the micro markets during business district. The overall Grade A commercial 2009 because the developers postponed the launch of their developments in 2009 crossed the total completed figures of projects on account of ample availability in under 2008 signifying the initial signs of revival. The infrastructural construction projects. The concept of budget apartments development like the Traffic and Transit Management where in the total Built Up Area (BUA) for apartments varied centres, flyovers and ongoing metro construction in the CBD from 950 sq ft to 1,050 sq ft gained popularity in the and the SBD are expected to boost leasing activities in these Peripheral Business Districts. For the year 2010, it is micro markets in 2010. expected that the completion of flyovers, elevated highways and complementary commercial and retail projects will In the Bangalore Retail Market, expansions in secondary high boost the demand for Residential Real Estate in Secondary streets were more active as compared to under construction and Peripheral micro-markets. malls and primary high streets. This was largely on account of limited availability of ready to occupy stores in newly launched malls and vacant properties at reasonable rates on primary high streets. Limited budget for expansion and delay in mall completions, encouraged the retailers to opt for reasonable yet lucrative secondary micro-markets. CITY REPORT BANGALORE MARKET OVERVIEW - 2009 I3I
  • 4. BANGALORE MAP ad Hin rab du Do de pu d Hy Harohalli r Bal -7 lap NH ur Bangalore So R d International uth N Airport River / Water Bodies ern Yelahanka Kere Major Roads Ra ilw Park / Green Area ay d yR Roads r Yelahanka lla New Town Be Yeshvan tpur R d Railway Station CBD Chikka Bommasandra Agrahara Airport SBD Outer / Inner PBD Ring Road Bellary Rd Sou Rajiv Gandhi ther n Ra Nagar ilwa y Kodigehalli Chikka Bagalakunte Kodigehalli Byatarayanapura Rachana B Kere Halli Kodig Kere ehalli anav Rd Defence BEL ar R Colony So NH-4 Rd ut d Esteem Mall -4 he NH i all rn Hebbal ah Ra Jalahalli Kere Nagavara J al ilw Lottegollahalli Kere ay d Bupasandra Rd ain R Tum Nagavara 403, The Estate, Rd k Lottegollahalli M ur Hebbal n Rd Ro Mattikere 121, Dickenson Road ai vara ad M Peenya ry u Hennuru d ur sR Bella Naga li Rd nn banhal Yeshvantpur Yashvantpur ra Kariro ad He Suburb Anandapuram NH dM Ol Bel Road -4 Oute Bhattarahalli r Yellarnallappachetty Rd Ring Ramanamaharishi Rd Roa Kere d anhalli Chikkabanhalli C -4 VR Ramamurthy NH Bhattara Old Mattadahalli Kam am Nagar halli d iR an Tu Krishnarajapura Rd all R m di a nah ku r R sw d Munireddypalya Jaya Banaswadi na B Channasandra Channasandra oa d Domsandra Hegga Ba sR Belatur d Belatur Rd mah Hegganahalli Malleshvaram Krishnaraja dra Devasandra Ma Sadarmangal Rd e Rd Puram Old al R Pinelin Bangalore Jayamahal Sta Chord West of Palace Bangalore tio d Palace i Rd n Chord Rd East Rd u god Rd Kodugodi Baiyyappana Wh Kod Cox itefi r Halli eele Town eld R Cantonment -4 d NH Wh d Whitefield adi R Taj Mag Ou Westend Hudi Whitefield Link Rd ter Rd as Rd in Rd adr Chord Rd ce Course Road Raj Rd Rin Ma Bangalore City Ra Race Bhavan Chinnaswamy Cricket Ulsoor O ld M Lake Indira gR ield ga Railway Station Seshad Course d 1 Ma di R ri Rd Vidhan Stadium Nagar Brigade Tech sity R oa d Cubbon Whitef Soudha Park d KSRTC High Rd Magadi Rd Bus Terminal Court MG R 2 Main Rd Univer Rd oad Ulsoor Brigade Rd Cubbon WHITEFIELD ba ChMajestic Park Shanthala d ur R st ikp Nagar Rd n d Ka ete mo C V Raman hanro Rich Nagar Borewell Rd rd Rd Dodda Su Chikpete Vict d ori a R yR d Kodihalli LB Shastri o Cho ra Nekkundi RM ed Rd Nagar n Richmond Elevat Victoria jai LanTown Channapanhalli n g fo da Albert Victor Rd rd Airport Road HAL sR Rd Road Urvashi d re Vimanpura so Lal B Vartur Rd Bull Temple Rd My Chamarajpet agh Bangalore Vartur Rd Fo Marattahalli Southern HAL K R Road Lal rt Golf Course Airport Un Bagh Innovative Rd Multiplex Vartur ive Bangalore University Kere rsi ay Railw ty Basavangudi ilw Rd a nR Vartur Kanakpura Rd er Kormangala ad ay h Ro ut Mar Bellandur Soul Space So g Jayanagar igo in w Tank rR Adarsh Palm ad te da Ro Salarpuria Softzone Retreat d Ou Rd rR Rd e or rtu Bannerghatta ys Hosakerehalli Bellandur Va M Kere Banashankari Sarjapur Rd Agara Mandivala Kere South End Rd Outer Rin g Ro ad lli Rd BTM Layout ha HSR Layout ra Sar NH U tta Mandivala jap ur -7 Outer Ring Road Tank Rd Rd U ttarahalli Uttarahalli Bommanahalli Kambipu as V d antp aR u ra Ho ur Rd ra kp Chandrapura Chikka sur na Nayakamahalli Rd Ka Rd Begur Rd atta R d Kudlu oa Rd Ele JP Kudlu ctr Nagar Dodda Chunchg Bannerghatta Begur on Kalsandra Ma ic du ura Sale Anekal rai Cit kp m na y Ka CITY REPORT BANGALORE MARKET OVERVIEW - 2009 I4I
  • 5. BANGALORE COMMERCIAL MARKET i) Overview ii) Micro Market Description The Bangalore office market witnessed continuous increase in a) Central Business District (CBD) supply of Grade A buildings along all the micro-markets across the four quarters of 2009. The total supply in 2009 was approximately Supply & Vacancy Trend 9.20 mn sq ft as compared to 5.19 mn sq ft in 2008. The largest The CBD witnessed completion of 0.53 mn sq ft with six new amount of completion was recorded along Outer Ring Road stretch developments over the four quarters of 2009 as compared to almost while the CBD also significantly contributed to Grade A stock as non-existent supply of Grade A buildings in year 2008. On account of compared to 2008. significant addition to Grade A stock, the vacancy rate closed at In the year 2009, the rental and the capital values increased in the 1.8% in 2009 while it remained as low as 0.1% in 2008. With the high range of 1.4%-15% and 2.9%-10.2% respectively across the micro demand in CBD we expect the vacancy rates to reach near zero markets except in Electronic City, while the vacancy rates were also levels. In 2009 the total volume of transactions was approximately 0.41 significantly high across micro markets as compared to 2008. The mn sq ft in the CBD of which about 0.13 mn sq ft (31.71%) was taken average vacancy rate in CBD stood at 1.8% while in SBD and PBD it up in the fresh supply (new development), while the remaining was was marked approximately at 8.5% and 17% respectively in 2009. taken up in second generation buildings. This constituted of three large sized transactions and couple of small and medium-sized transactions in the range of (~8,000 to 15,000 sq ft). Supply & Vacancy Trend 6,000 2.00% Rental & Capital Values 5,900 1.80% Despite the increase in vacancy rate in this micro-market, the average rentals of Grade A buildings marginally increased by 4.29% 5,800 1.60% from INR 70/sq ft/month in 1H 2009 to INR 73/sq ft/month in 2H Stock (’000 sq.ft) 5,700 1.40% Vacancy Rate 2009, signifying improvement in the market scenario on account of 5,600 1.20% increased number of inquiry for spaces in CBD. The y-o-y change in 5,500 1.00% the rental values was insignificant as it increased by ~1.39% in 2009 5,400 0.80% from 2008. The y-o-y decrease is on the account of decrease in 5,300 0.60% rentals during 1Q 09. The capital values also increased marginally 5,200 0.40% by 4.28% from INR 7,200/sq ft in 1H 2009 to INR 7,508/sq ft in 2H 5,100 0.20% 2009, while the y-o-y increase was approximately 2.85%. 5,000 0.00% Infrastructure Development Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 In addition to the ongoing metro project, Traffic and Transit Management Centre is proposed at the India Express circle in CBD, in order to promote public transport which in turn is expected to reduce the traffic congestion in CBD. . These public infrastructure Rental & Capital Values developments along with the development of two 5 Star Hotel Rental Value (INR/sq.ft/month) 85 8500 projects is expected to push up the rental values in future, on Capital Value (INR/sq.ft) 80 8000 account of greater demand which is expected in the quarters to come. 75 7500 70 7000 65 6500 60 6000 55 5500 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 CITY REPORT BANGALORE MARKET OVERVIEW - 2009 I5I
  • 6. b) Secondary Business District (SBD) Supply & Vacancy Trend The SBD continued to be the most preferred location for occupiers due to sufficient supply of Grade A buildings at competitive prices, Supply & Vacancy Trend capacity to serve affordable residential requirement and supporting 26,000 8% public infrastructure to enhance its connectivity to the entire city. 24,000 7% The total new completion of Grade A buildings in SBD was 22,000 6% approximately 5.67 mn sq ft in 2009 of which 4.18 mn sq ft was Stock (’000 sq.ft) Vacancy Rate 20,000 5% delivered in 1H 2009. Compared to 2009 the total Grade A office supply in 2008 was approximately 3.86 mn sq ft. Most of the 18,000 4% completions in 2009 were along the eastern stretch of outer ring 16,000 3% road (Marathahalli – Sarjapur). On the other hand Koramangala, Old Airport Road and 100 Ft Indiranagar had very limited supply of 14,000 2% Grade A buildings in 2009, but had significant supply of Grade B 12,000 1% mixed use projects (viz. office and retail), which help in maximizing the project's overall rental returns. 10,000 0% Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 The vacancy rate significantly increased and stood at 7.5% by the end of 2009 as compared to 0.1% in 2008. This marginal increase in the vacancy rate was on account of increased supply in 2009 and fall of few major deals that were concluded in 2008. The total volume of transaction in SBD was the highest as compared to other micro-markets and stood at 3.15 mn sq ft in 2009. SBD recorded the highest number of transactions on account of availability of operational Business Parks and SEZ. Rental & Capital Values The average rental value in the SBD significantly increased by 12.5% Rental & Capital Values from INR 40/sq ft/month in 1H 2009 to INR 45/sq ft/month in 2H 46 4500 2009, which was on account of increased demand for office space in Rental Value (INR/sq.ft/month) this micro-market. The y-o-y rental value also witnessed a positive 45 4400 change of approximately 12.5% from 2009 to 2008 on account of Capital Value (INR/sq.ft) 44 4300 increased number of activities in this location, similarly the capital 43 value also increased marginally by 10.2% from INR 4,000/sq ft 4200 42 during 1H 2009 to INR 4,409/sq ft by 2H 2009. 4100 41 4000 Infrastructure Development 40 In order to decrease traffic congestion and travel time to these 39 3900 micro-markets, Traffic and Transit Management centers are being 38 3800 developed in Kormangala, Old Airport road, Bannerghatta road and Jayanagar. Adequate public infrastructure accompanied by 37 3700 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 adequate supply at reasonable commercials is expected to continue attracting occupiers to these locations. CITY REPORT BANGALORE MARKET OVERVIEW - 2009 I6I
  • 7. c) Periphery Business District (PBD) Supply & Vacancy Trend The market in the Whitefield area of PBD picked up during 2009, as significant number of medium to large sized spaces were taken up. Supply & Vacancy Trend The availability of new commercial developments with larger floor 18,000 26% plates at rentals much lower than other micro-markets attracted 17,000 occupiers with larger space requirement. 24% 16,000 The total supply of Grade A buildings in Whitefield was 22% Stock (’000 sq.ft) 15,000 approximately 2.73 mn sq ft in 2009 as compared to just 0.74 mn sq Vacancy Rate 14,000 20% ft in 2008. With the increase in the supply in Whitefield, the vacancy 13,000 18% rate also stood as high as 15.1%. while the rental values On the other hand the supply in Electronic City halved in 2009 as the 12,000 16% addition in 2009 was close to 0.28 mn sq ft as compared to addition 11,000 14% of 0.59 mn sq ft in 2008. The vacancy rate increased from 21.1% to 10,000 24.1% on account of slower leasing activities due to lack of proper 9,000 12% access roads and limited supply of new Grade A developments. 8,000 10% Rental & Capital Values Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 The rental values in Whitefield rose by approximately 15% from INR 26/sq ft/month in 1H 2009 to INR 30/sq ft/month in 2H 2009. The increase in rental values was on account of addition of new projects in PBD which are in proximity to the SBD, thus offering competitive space. The capital value also showed an upward movement as it increased from INR 2,400/sq ft in 2008 to INR 2,555/sq ft in 2009 Rental & Capital Values (+6.45%). 29 2900 The rental and the capital value in Electronic City remained Rental Value (INR/sq.ft/month) stagnant at INR 23/sq ft/month and INR 2,300/sq ft respectively 28 2700 Capital Value (INR/sq.ft) throughout 2008 and 2009. 27 2500 Infrastructure Development 26 2300 The ongoing construction of elevated highway from Silk Board junction to Electronic City was finally completed in January 2010 25 2100 which dramatically reduced the travel time to Electronic City by 24 1900 reducing the traffic congestion on this stretch. Apart from this, no major infrastructure developments were witnessed in the PBD. 23 1700 22 1500 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 CITY REPORT BANGALORE MARKET OVERVIEW - 2009 I7I
  • 8. iii) Outlook a) Central Business District (CBD) A total of 0.3 mn sq ft of fresh Grade A supply is lined for completion in 2010 in CBD. The early signs of revival in the market coupled with addition in fresh stock are expected to bring in further momentum in the leasing activities. b) Secondary Business District (SBD) The year 2010 is expected to have fresh Grade A supply of ~4.54 mn sq ft with approximately 2.55 mn sq ft being on the eastern stretch of Outer Ring Road. The eastern stretch of outer ring road is expected to become the preferred location for commercial occupiers on account of the availability of large land parcels suitable for commercial development, its capacity to manage corresponding residential requirement at affordable rates and the construction of fly over which would significantly reduce traffic congestion. c) Periphery Business District (PBD) In 2010, Whitefield area is likely to witness supply of approximately 6.62 mn sq ft while Electronic City is expected to add approximately 1.15 mn sq ft to Grade A buildings. Activities in Electronic City are accepted to gain momentum from 1Q 2010, with the completion of elevated highway and adequate supply of Grade A developments in the micro-market. CITY REPORT BANGALORE MARKET OVERVIEW - 2009 I8I
  • 9. iv) Major Projects Completed Major Projects Completed Property Location Micro Total built up Completion market area (sq ft) date Prestige Nebula (Block 1) Cubbon Road CBD 61,300 Q1 2009 Salarpuria Cambridge Mall Cambridge Road CBD 1,20,000 Q1 2009 (Commercial Space) The Residency Residency Road CBD 1,20,000 Q4 2009 Prestige Dynasty Ulsoor Road CBD 1,23,286 Q4 2009 Baghmane World Outer Ring Road SBD 4,50,000 Q2 2009 Technology Centre Block I Sarjapur- Outer Ring Pri Tech (Block 6 & 7) SBD 18,00,000 Q2 2009 Road Sarjapur-Kormanagala Vaishnavi Solitare SBD 1,10,000 Q3 2009 Road Embassy Manyata (C1,F2) Hebbal Outer Ring SBD 10,66,000 Q2 2009 Road Embassy Manyata (L5) Hebbal Outer Ring SBD 3,82,000 Q3 2009 Road Global Technology Place Outer Ring Road SBD 2,08,000 Q4 2009 Kalyani Magnum (Phase II) Outer Ring Road SBD 4,20,000 Q4 2009 Adarsh SEZ (Honneywell Sarjapur ORR SBD 5,05,000 Q2 2009 Block) Gopalan Global Axis Whitefield PBD 12,00,000 Q2 2009 Gopalan Global Axis Whitefield PBD 6,00,000 Q4 2009 Embassy Paragon Whitefield PBD 4,00,000 Q2 2009 Sri Ranga IT Park Electronic City PBD 1,20,000 Q2 2009 CITY REPORT BANGALORE MARKET OVERVIEW - 2009 I9I
  • 10. v) Projects Under Construction Projects Under Construction Property Location Micro Total built up Completion date market area (sq ft) ( expected ) Cosmo Lavelle Lavelle Road CBD 1,50,000 Q2 2010 Vaswani Centropolis Langford Town CBD 1,63,000 Q4 2010 Salarpuria Triton Off KH Road CBD 50,000 Q1 2010 North Star Malleshwaram-Rajajinagar SBD 11,00,000 Q1 2010 Prestige EXORA (SEZ) Phase-1 Outer Ring Road SBD 7,00,000 Q2 2010 Sigma Grand Outer Ring Road SBD 5,00,000 Q4 2010 Outer Ring Road Vrindavan Tech Park Phase II SBD 6,00,000 Q2 2010 (Eastern Stretch) Embassy Manyata IBM Block-G1 Hebbal Outer Ring Road SBD 4,00,000 Q1 2010 Embassy Manyata NSN Block-L6 Hebbal Outer Ring Road SBD 3,82,000 Q4 2010 Adarsh SEZ (Multitenanted) Sarjapur ORR SBD 5,00,000 Q2 2010 Corporate Centre Whitefield PBD 4,72,000 2010 Prestige Shantiniketan Whitefield PBD 31,00,000 Q1 2010 Brigade Metropolis Summit 2 Mahadevpura - Whitefield PBD 5,88,000 Q2 2010 Bhoruka IT Park Phase II Whitefield PBD 4,23,000 Q3 2010 Bearys Global Research Triangle Whitefield Ashram Road PBD 12,50,000 Q1 2010 Harita IT Park Block I Electronic City - Phase 1 PBD 3,85,000 Q1 2010 Fortune Tech Park Electronic City - Phase 1 PBD 3,50,000 Q2 2010 Source: BNP Paribas Real Estate, India CITY REPORT BANGALORE MARKET OVERVIEW - 2009 I10I
  • 11. vi) Major Transactions Major Transactions Tenant Property Micro District Size Year market (sq ft) Serco BPO Prestige Libra Lalbagh Road CBD 55,000 Q2-Q3 2009 Citrix Systems Prestige Dynasty Ulsoor Road CBD 1,27,000 Q4 2009 LSI Logic Global Technology Place Sarjapur ORR SBD 2,50,000 Q4 2009 Northen Operating Outer Ring Road Manyata Embassy Business Park SBD 1,24,166 Q1 2009 Services Nokia Siemens Outer Ring Road Manyata Embassy Business Park SBD 6,45,000 Q1 2009 Networks IBM Manyata Embassy Business Park Outer Ring Road SBD 4,00,000 Q1 2009 Cisco Prestige Cessana Business Park Sarjapur ORR SBD 2,60,000 Q2 2009 Colt Telecom Manyata Embassy Business Park Outer Ring Road SBD 36,000 Q2-Q3 2009 DigiCaptions Embassy Golf Links Business Park Inner Ring Road SBD 29,000 Q2-Q3 2009 Educomp Solutions HM Vibha Towers Koramangala SBD 34,700 Q1 2009 Indegene Embassy Golf Links Business Park Inner Ring Road SBD 26,000 Q2 2009 TESCO NR Enclave Whitefield PBD 1,30,000 Q3 2009 Source: BNP Paribas Real Estate, India CITY REPORT BANGALORE MARKET OVERVIEW - 2009 I11I
  • 12. BANGALORE RETAIL MARKET i) Overview ii) Micro Market Description The year 2009 saw measured activities from the developers as the a) Shopping Centre retailers preferred secondary high streets over the under construction malls. This resulted in developers delaying the Supply & Vacancy Trend The Bangalore shopping centre witnessed fresh supply of completion of malls under construction which subsequently delayed the completion timelines of these projects. approximately 0.41 mn sq ft and 0.35 mn sq ft in the secondary and the suburban micro-market respectively in 2009 as compared to The slow moving strategy adopted by retailers during 2009 led supply of 0.15 mn sq ft and 0.37 mn sq ft in the primary and many mall developers to postpone their project completion in 2010. secondary micro-market respectively during 2008. The addition of Hence the total supply of malls remained close to 1.11 mn sq ft in fresh stock in 2009 was less as compared to the expected figure, 2009 which denotes only 50% of the total expected supply for 2009. since the developers delayed the launch of projects on account of The total mall supply in 2008 was only 0.52 mn sq ft across all implied effects of credit crunch and slowdown in the global market. micro markets which helped developers command the lease terms on the back of high demand from retailers. Although 2009 did not Retail Market Sentiment witnessed major activities in the mall market, the high street The retailers showed less interest in signing up spaces in under market saw initial signs of revival with emergence of new construction malls as their funds were blocked in the mall projects secondary high streets across the city. that were already delayed. The limited availability of retail space in operational malls and higher mall rentals as compared to most of Less availability of the ready built space in malls and emergence of the high streets increased the retailer's interest towards emerging high streets has stabilized the rental values which have shown only secondary high streets. Retailers were encouraged to expand in a marginal increase. these micro-markets as they could immediately start operations there and gain on first mover advantages like location preference, 2800 0.03 reasonable rentals and potential but untapped market. One the 2600 other hand, vacancy rates in the operational malls remained low to 0.025 the tune of 1.5% because of the limited supply across micro- 2400 markets. 2200 0.02 2000 A drop of 5% and 1.69 % was observed in rental values in primary 0.015 and secondary micro markets respectively over 2008-09. 1800 Willingness of developers of operational malls to lease the limited 1600 0.01 vacant spaces at a discounted price was the prime reason for this y- 1400 o-y decline. 0.005 1200 1000 0 Outlook Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 The Bangalore Mall Market is expected to witness completion of 3.59 mn sq ft in the secondary and the suburban micro-market, of which nearly 3.1 mn sq ft is expected in the secondary micro- Stock (’000 sq.ft) Vacancy markets of Bannerghatta road, outer ring road (eastern stretch) and Malleshwaram. Even though a significant larger supply is piling up 250 in comparison to the previous year, retailers are not expected to 230 cannibalize on their sales-per-foot in the medium to long term as 210 this supply would be catering to different residential catchment 190 scattered across the city. 170 150 The eastern stretch of outer ring road (Mahadevpura - Sarjapur 130 110 ORR) also witnessed launch of two major hypermarkets totaling to 90 approximately 0.09 mn sq ft in 4Q 2009. Availability of large land 70 parcels suitable for mixed use development anddensely populated 50 surrounding areas have made this micro-market a lucrative Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 location for large retail formats. Competition from the emerging high streets is expected to keep the Primary Secondary mall rentals range bound and an increase in Mall rental values is not expected over the next two years. CITY REPORT BANGALORE MARKET OVERVIEW - 2009 I12I
  • 13. b) High Street High street Micro Rental values Supply & Vacancy Trend market (2009) Owing to the limited supply and high rental values in operational Commercial Street CBD 180 and under construction malls, high streets remained preferred MG Road CBD 200 business location for retailers. Brigade Road CBD 150 High Street Market Sentiment Indiranagar 100 Ft Road CBD 100 There were signs of increased sentiment of retailers in the Koramangala 80 Ft Road CBD 70 secondary high streets of DVG Road (Banashankhari), Kamanahalli Jainagar 4th Block CBD 120 Main road, New BEL road and Jayanagar (9th Block) , but business Marathahalli (Home stop SBD 100 on primary high streets of Indiranagar 100 Ft Road and CMH Road junction) temporarily slowed down on account of ongoing Metro Vitthal Malya Road SBD 120 construction. Sampige Road SBD 60 Outlook New emerging high streets are expected to retain retailer's interest on the account of favorable lease terms, readily available space and favorable residential catchment. . Demand for the retail space to the tune of 750 – 1,000 sq ft is expected to remain buoyant in high streets over a medium to longer term. Affordable rentals and thick residential catchment which have attracted the retailers are further expected to increase the momentum of activities in these emerging secondary high streets during 2010. The rental levels on the high streets are expected to remain range bound for next six months. Increased retailer activity is expected to continue on the primary high streets of Indiranagar 100 ft road and CMH road after the completion of Metro link in these micro markets. CITY REPORT BANGALORE MARKET OVERVIEW - 2009 I13I
  • 14. iii) Key Projects Completed Key Projects Completed Property Location Total built up Micro Completion area (sq ft) market date Gopalan Arch Mall Raj Rajeshwarinagar 1,63,000 SBD Completed Banngalore Central JP Nagar 2,50,000 SBD Completed Forum Value Mall Whitefield 7,63,000 PBD Completed iv) Key Projects Under Construction Key Projects Under Construction Property Location Total built up Micro Completion area (sq ft) market date Mantri Mall Malleshwaram 9,00,000 SBD Q1 2010 Royal Meenakshi Mall Bannerghatta Road 3,70,000 SBD Q2 2010 Soul Space Spirit Marathahalli - Sarjapur ORR 2,00,000 SBD Q4 2010 Brigade Orion Rajkumar Road 11,00,000 SBD Q4 2010 Gopalan Innovation Mall Bannerghatta Road 1,80,000 SBD Q1 2010 Signature Shopping Mall Old Madras Road 3,05,000 SBD Q4 2010 The Arcade (Brigade Whitefield Road 80,000 PBD Q2 2010 Metropolis) Forum Shantiniketan Whitefield Road 4,50,000 PBD Q4 2010 CITY REPORT BANGALORE MARKET OVERVIEW - 2009 I14I
  • 15. v) Key Transactions Key Transactions Tenant Property Location Total built up area (sq ft) More Hypermarket Stand Alone Mahadevpura 60,000 Marks & Spencers Mantri Mall Malleshwaram 35,000 Star India Bazaar (Tata Trent) Royal Meenakshi Mall Bannerghatta Road 60,000 Taco Bell Mantri Mall Malleshwaram 3,500 Reliance Trends Mantri Mall Malleshwaram 25,000 Reliance Footprints Mantri Mall Malleshwaram 6,000 Reliance Digi Mantri Mall Malleshwaram 18,000 Reliance Timeout Mantri Mall Malleshwaram 18,000 Reliance Home Mantri Mall Malleshwaram 21,000 Showoff Mantri Mall Malleshwaram 17,000 Odessy Books Mantri Mall Malleshwaram 9,500 Kalanjali Mantri Mall Malleshwaram 7,000 Prestige Manstore Mantri Mall Malleshwaram 6,500 Health & Glow Mantri Mall Malleshwaram 6,000 CITY REPORT BANGALORE MARKET OVERVIEW - 2009 I15I
  • 16. BANGALORE RESIDENTIAL MARKET i) Overview Low lending rates coupled with ample supply across the micro Capital Values markets has increased the demand for the residential Micro market of RMV in North Bangalore has seen an increase of condominium segment across secondary and peripheral markets of 10% in capital values over 2008, while the capital values in other Bangalore. On account of low supply and high demand, premium locations of the city were stagnant. apartments commanded high absorption rates in primary micro Many developers are waiting to clear the vacant stock before they market of Bangalore. launch any new project and are aggressively marketing their Capital Values have not shown significant increase across all the projects and wooing customers with special offers and rates. The micro markets, as was witnessed in early 2006-07. high vacancy in this market was due to fewer developments as the developers abstained from taking up any new commercial as well ii) Micro Market Description as retail projects. The construction of flyovers and metro in the secondary micro market thus causing chaotic traffic jams is another a) Primary Residential Market reason for high vacancy as the buyers are waiting for the work to get Supply & Vacancy Trend over or reach completion before they take possession of their dream Absorption in primary micro market is not a major function of homes. lending rates and primarily the demand in this micro-market is derived from the High Income Group (HIG) or elite class. Also the sale of apartments in this micro market is through exclusive c) Peripheral Residential Market invitation of the focused clientele by the developers. Supply & Vacancy Trend Huge stock under completion and slow absorption rate kept the Capital Values Capital values in primary micro market are in the range of INR 9,000 capital values at bay. At present there are approximately 15,000 per sq ft – INR 11,000 per sq ft in the CBD. The price may vary apartments under construction in peripheral micro markets of depending on the location and neighborhood of the project. Bangalore. However due to the recent economic depression the rentals are also Capital Values at an all time low in this market. Many developers have postponed Developers are also considering launch of budget apartments in the launch of their projects in these areas due to unavailability of peripheral locations due to low land prices. The typical built up area funds and vacant stock of completed projects. of these apartments vary from 950 sq ft to 1,050 sq ft. We expect the Capital values to show a downward momentum in b) Secondary Residential Market shorter term till the demand supply balance is attained. No new Supply & Vacancy Trend projects are expected to launch in a short to medium term. With the Ample supply, increased absorption in old projects and competitive completion of the Elevated Expressway on Hosur Road, the travel pricing kept the capital values range bound. There has been less time has reduced dramatically to Electronic city and this may help number of new projects launched because of the huge vacant stock increase the demand for residential properties in this micro market. in under construction projects. The demand is also expected to rise in and around Bannergatta Road and Whitefield area as the developers have resumed the construction of malls which were put on hold due to lack of investor interest and funds. CITY REPORT BANGALORE MARKET OVERVIEW - 2009 I16I
  • 17. iii) Major Projects Under Construction In 2009 Major Projects Under Construction In 2009 Project Developer Location Number of Size Micro apartments (sq ft) market Gold Opus Gold Developer Millers Road 14 3,000 Each CBD Nitesh Camp David Nitesh Developers Frazer Town 125 1,250 Each CBD Vaishnavi Nakshatra Vaishnavi Group Yeshwantpur 64 1,195 &1,699 SBD Each Smondoville Patel Reality Electronic City 400 360 to 1,350 PBD Each Hiranandani Hiranandani Upscale Bannerghatta Road 300 1,265 to 2,061 PBD Upscale Each Gold Towers Gold Developers Hennur Main Road 194 1,800 to 2,800 PBD Each CITY REPORT BANGALORE MARKET OVERVIEW - 2009 I17I
  • 18. GLOSSARY Absorption: Occupied Stock (n) – Occupied Stock (n-1); Where “n” is the specified Recent: Building less than 10 years old. period (quarter, year etc.) Renovated: Building which has undergone renovation work not requiring for Bare Shell: Premises consisting of basic structure with lifts, power supply to planning permission less than 5 years ago. junction box, water supply line, toilets Modern: High-performance building over 10 years old. BPO: Business Process Outsourcing Old: Low-performance building over 10 years old. BUA: Built up area CCI (Cost of construction index): Index that makes quarterly measurements of CBD: Central Business District construction prices for new house building. It is the price after VAT paid by the SBD: Secondary Business District owner to construction companies. It excludes land-related prices and costs (site development, special foundations, etc.), fees and financial costs. PBD: Periphery Business District Demand: A search for premises expressed to BNP Paribas Real Estate. The Completed Stock: Either the building has received occupancy certificate or the analysis pertains only to the flow of new demand expressed. client has moved in and occupied space and started working in a particular premises For the occupier: Operation undertaken by an occupier for its own purposes. DU: Dwelling Unit New Supply: Any new building and/or heavily refurbished building that adds to the existing stocks. These are analysed according to progress. EPIP: Export Promotion Industrial Park Completed new supply: Buildings on which construction work is finished. FAR: Floor Area Ratio (BUA/ Plot Area) Under construction: Buildings on which construction has effectively begun. Prior Grade A: Space Office Space with efficiency in excess of 75%, floor plate in excess demolition work is not taken into account. of 15,000 sq. ft., Car Parking ratio of atleast 1 per 1000 sq. ft., Floor-to-ceiling height in excess of 3.75 m, Power provision of 1.25KVA per 100 sq. ft. with 100% Planning permission granted: Authorisation to build obtained, generally booked power-backup wherever applicable and professionally managed facilities after settlement of third party claims. Ground Coverage: It is the total covered area on ground by the built component Planning permission submitted: Planning permission requested, being and is expressed as a percentage of the plot area processed. Hard Option: Real estate space reserved by the lessee for future occupation Pre-letting: Transaction by an occupier more than 6 months before the delivery of within a particular time frame and at a pre-decided rental the building. INR: Indian National Rupees Headline rent: Annual rent per square meter, featured on the lease, and expressed excluding taxes and charges. Does not include attached premises such Pre-lease: Space committed for lease before completion of construction as parking areas, archives, staff canteens, etc. If the rental is progressive, the Speculative Stock: The stock which can be leased and excludes Built-to-Suit value applied is the average for the first 3 years or the fixed term of the lease. (BTS) and Campus facilities. Average headline rent: Weighted average of rented area. The average featured is Stock: Cumulative Supply a moving average over 3 quarters, to smooth out the changes. Supply: New construction in a particular specified period Underlying rent: Annual rent per square meter expressed free of tax and charges and excluding advantages agreed by the owners (rent incentive building works, Tier I Cities: NCR, Mumbai and Bangalore etc). Tier II Cities: Chennai, Hyderabad, Pune, Kolkata Prime rents: Represents the top headline rent (excluding non significant Transaction Volumes: Total number of transaction in a particular specified period transactions) for an office unit:- of standard size, of the highest quality and Vacancy: Total vacant space in the completed stock specification, in the best location in each market. Warm Shell: Premises consisting of power backup, high side A.C., common area fit Top rent: Represents the top headline rent for an office unit. It is not necessarily a outs and fitted out toilets prime rent. Q on Q: Quarter on Quarter Second hand premises: Premises that have been previously occupied by an occupier for vacant for more than 5 years. y-o-y: year-on-year (All growth figures in this report are y-o-y unless otherwise mentioned Renovated: Premises that have been renovated for the new occupier. IT: Information Technology Very good condition: High-performance premises of high quality. ITES: Information Technology Enabled Services (includes various services Existing state of repair: Low-performance premises that can be rented as they ranging from call centres, claims processing, medical transcription, e-CRM, SCM are. to back-office operations such as accounting, data processing, and data mining) To be renovated: Low performance premises that need renovation. ORR: Outer Ring Road Supply available within 1 year: All premises and buildings available within 1 year Repo Rate: Rate that an eligible depository institution (such as a bank) is charged including the supply available immediately, new supply that has not been pre-let to borrow short term funds directly from the central bank through the discount and second hand supply that will be vacated definitively (notable terminated window leases). Reverse Repo Rate: Interest rate that a bank earns for lending money to the Take-up: Rental or sale of a property asset, finalised by the signature of a lease or Reserve Bank of India in exchange for government securities a bill of sale including turnkey transactions and owner-occupier. The transaction is only taken into account once any existing conditional clauses have been lifted. SEC A, B, C & D Socio: Economic Classification; SEC A represents the highest propensity to spend and SEC D represents the lowest propensity to spend. Vacancy rate: Ration measuring the relationship between the supply immediately available and the existing stock. Sq.ft: Square Feet Stamp Duty: Form of tax charged on instruments (written documents) requiring a physical stamp (for government legality) to be attached to or impressed. BNP Paribas Real Estate cannot be held responsible if, despites its best efforts, the information contained in the present report turns out to be inaccurate or Mn: Million incomplete. This report is released by BNP Paribas Real Estate and the New: Building built within the last 5 years. information in it is dedicated to the exclusive use of its clients. The report and the information contained in it may not be copied or reproduced without prior Major Refurbishment: Building which has undergone structural alteration less permission from BNP Paribas Real Estate. than 5 years ago, subject to planning permission. CITY REPORT BANGALORE MARKET OVERVIEW - 2009 I18I
  • 19. LOCATIONS ALLIANCES BAHRAIN ABUDHABI ALBANIA JAPAN RUSSIA Bahrain Financial Harbour Al Bateen Area Danos & Associates RISA Partners Astera West Tower Plot No. 144, W-11 Boulevard Deshmoret e Kombit 5F Akasaka Intercity 1-11-44 10, b.2 Nikolskaya Str. INDIA 16th Floor New Al Bateen Municipality Twin Towers - Tower 2 Akasaka, Minato-ku Moscow, 109012 P.O. Box 5253 Street 32 11th Floor 107-0052 Tokyo Tel/Fax: +7-495-925 00 05 Bangalore Manama P.O. Box 2742 Tirana Tel: +81-3-5573 8011 403, The Estate, Tel: +971-505 573 055 Abu Dhabi, UAE Tel: +355-4-2280488 Fax: +81-3-5573 8012 SERBIA 121, Dickenson Road, Fax: +971-44 257 817 Tel: +971-505 573 055 Fax: +355-4-2280192 Danos & Associates Fax: +971-44 257 817 Bangalore - 560 042 BELGIUM NETHERLANDS 6, Vladimira Popovica Street Tel: +91 80 4050 8888 AUSTRIA Holland Realty Partners Belgrade 11000 Blue Tower JERSEY Dr. Max Huber & Partner J.J. Viottastraat 33, 1071 JP Tel: +381-11-2600 603 Fax: +91 80 4050 8899 Avenue Louise 326 4th Floor, Conway House Dr. Karl-Lueger-Platz 5 Amsterdam, Fax: +381-11-2601 571 B14 Louizalaan Conway Street 1050 Brussels St Helier 1010 Vienna Tel: +31-20-305 97 20 Contact: Amit Porwal Tel: +32-2-646 49 49 Jersey Je2 3NT Tel: +43-1-513 29 39 0 Fax: +31-20-305 97 21 UKRAINE amit.porwal@asia.bnpparibas.com Fax: +32-2-646 46 50 Tel: +44-15 34-62 90 01 Fax: +43-1-513 29 39 14 Astera Fax: +44-15 34-62 90 11 NORTHERN IRELAND 2a Konstantinovskaya Street DUBAI BULGARIA Whelan Property Consultants 04071, Kiev Mumbai Emmar Square LUXEMBOURG Danos & Associates 44 Upper Arthur Street Tel: +38-044-501 50 10 704, Level 7, MMTC House, C-22, Building No. 1, 7th Floor EBBC, Route de Trèves 6 28, Hristo Botev Boulevard Belfast Bt1 4GJ Fax: +38-044-501 50 11 Bandra Kurla Complex, Bandra (E), P.O. Box 7233 Bloc D Sofia Tel: +44-28-9044 1000 Dubai, EAU 2633 Senningerberg Tel: +359-2-9532314 Fax: +44-28-9033 2266 USA Mumbai - 400 051 Tel: +971-505 573 055 Tel: +352-34 94 84 Fax: +359-2-9532399 Cresa Partners Tel: +91 22 6138 8088 Fax: +971-44 257 817 Fax: +352-34 94 73 SLOVAKIA 200 State Street Fax: +91 22 6138 8089 CANADA Modesta (Dr. Max Huber & 13th Floor FRANCE ROMANIA Cresa Partners Partner Group) Boston, Massachusetts 02109 13 boulevard du Fort de Vaux Union International Center Tel: +1-612-767 12 78 Heydukova 12-14 Tel: +1-612-767 12 78 Contact: Sangram Tanwar 75017 Paris 11 Ion Campineanu Street Fax: +1-612-337 8459 811 08 Bratislava Fax: +1-612-337 8459 sangram.tanwar@asia.bnpparibas.com Tel: +33-1-55 65 20 04 Sector 1 Tel: +421-2-3240 8888 Fax: +33-1-55 65 20 00 Bucharest 010031 CYPRUS Fax: +421-2-3214 4777 Tel: +40-21-312 7000 Delhi Danos & Associates GERMANY Fax: +40-21-312 7001 35, I. Hatziosif Ave PORTUGAL Level 4, Wing B, Statesman House, Goetheplatz 4 2027, Nicosia Fenalu 60311 Frankfurt SPAIN Barakhamba Road, Tel: +49-69-2 98 99 0 María de Molina, 54 Tel: +357-22 31 70 31 Av. Duarte Pacheco New Delhi - 110 001 Fax: +49-69-29 29 14 28006 Madrid Fax: +357-22 31 70 11 Empreendimentos das Tel: +91 11 3044 6406 Tel: +34-91-454 96 00 Amoreiras IRELAND Fax: +34-91-454 96 04 GREECE Torre 2, 14° - Sala H Fax: +91 11 3044 6507 Danos & Associates 1070-102 Lisbon 40 Fitzwilliam Place Dublin 2 UNITED KINGDOM 1, Eratosthenous Str. Tel: +351-21-3833106 Contact: Ankit Tyagi Tel: +353-1-66 11 233 90 Chancery Lane 11635 Athens Fax: +351-21-3833107 ankit.tyagi@asia.bnpparibas.com Fax: +353-1-67 89 981 London WC2A 1EU Tel: +30-210 7 567 567 Tel: +44-20-7338 4000 Fax: +30-210 7 567 267 ITALY Fax: +44-20-7430 2628 For all corporate/central enquiries Corso Italia, 15/A contact Tasneem Gandhi at 20122 Milan USA Tel: +39-02-58 33 141 787 Seventh Avenue +91 9930141009 or email at Fax: +39-02-58 33 14 39 31st Floor tasneem.gandhi@asia.bnpparibas.com New York, NY 10019 Tel: +1-917-472 4970 Fax: +1-212-471 8100 www.realestate.bnpparibas.com