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www.colliers.com/india
Residential Property Research
and Forecast Report
August 2016
Quarterly Review
INDIA | RESIDENTIAL
August 2, 2016
Residential sector
on the cusp of
slow recovery
The Real Estate (Regul...
Colliers Quarterly Q2 2016
MUMBAI | RESIDENTIAL
August 2, 2016
Moving towards
recovery despite a
relaxed quarter
High unso...
Copyright © 2016 Colliers International.
The information contained herein has been obtained from
sources deemed reliable. ...
Colliers Quarterly Q2 2016
GURGAON | RESIDENTIAL
August 2, 2016
Mid segment
gaining traction
Growth in number of new launc...
Copyright © 2016 Colliers International.
The information contained herein has been obtained from
sources deemed reliable. ...
Colliers Quarterly Q2 2016
NOIDA | RESIDENTIAL
August 2, 2016
Demand likely to
improve in coming
quarters
Following the en...
Copyright © 2016 Colliers International.
The information contained herein has been obtained from
sources deemed reliable. ...
Colliers Quarterly Q2 2016
BENGALURU | RESIDENTIAL
August 2, 2016
End-user demand
to drive new
launches
Strong office sect...
Copyright © 2016 Colliers International.
The information contained herein has been obtained from
sources deemed reliable. ...
Colliers Quarterly Q2 2016
CHENNAI | RESIDENTIAL
August 2, 2016
Recovery on cards
but at slower pace
Rising office sector ...
Copyright © 2016 Colliers International.
The information contained herein has been obtained from
sources deemed reliable. ...
Colliers Quarterly Q2 2016
PUNE | RESIDENTIAL
August 2, 2016
Market sentiment
likely to improve
further in H2 2016
With st...
Copyright © 2016 Colliers International.
The information contained herein has been obtained from
sources deemed reliable. ...
Copyright © 2016 Colliers International.
ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any...
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Residential Property Research and Forecast Report - April 2016

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The Real Estate (Regulation and Development) Act,
2016 has renewed overall market sentiment and
induced a positive feeling amongst buyers. Increasing
enquiries indicate that the transaction volumes
should improve towards the end of the year,
especially during the festive season.

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Residential Property Research and Forecast Report - April 2016

  1. 1. www.colliers.com/india Residential Property Research and Forecast Report August 2016
  2. 2. Quarterly Review INDIA | RESIDENTIAL August 2, 2016 Residential sector on the cusp of slow recovery The Real Estate (Regulation and Development) Act, 2016 has renewed overall market sentiment and induced a positive feeling amongst buyers. Increasing enquiries indicate that the transaction volumes should improve towards the end of the year, especially during the festive season. Forecast at a glance Demand Demand should stay healthy in the mid- end segment especially in projects nearing completions Supply Developers are likely to hold new lauches till the festive season Capital Values Should remain stable; however select prime areas with limited supply should continue to demand a premium Rental Rate To remain stable till the end of this year as many markets have inventory overhang Construction Developers set to remain focused on completion and delivery of existing projects to regain buyers’ confidence New launches witnessed uptrend During the second quarter of 2016, the top six cities1 in India noted the launch of about 24,000 new residential units, taking the H1 2016 total to approximately 42,000 units. In Q2 2016, Bengaluru witnessed the maximum number of launches and accounted for about 48% of the total units followed by Pune 21% and Mumbai 16%. Gurgaon and NOIDA remained subdued in terms of new launches as developers remained focused in their efforts to address the existing inventory overhang. Developers are offering deep discounts and freebies across cities to lure fence sitters, investors as well as end-users. However, we saw most of the sales happenning in ready to move or in projects nearing completions. There have been limited number of new launches in previous eight-nine quarters. We anticipate an increase in new launches in coming quarters, as many developers are looking to the festive season to launch their projects. Most markets are extremely price conscious and project pricing should remain a key criterion for the success of a project. Return on Alternative Investments INDICATORS Q1 2016 Q2 2016 QOQ% CHANGE Gold 27,583 31.507 14.23% Silver 35,403 44,755 26.42% Fixed Deposit* 7.25% 7.25% 0.00% Equity – BSE 24,346 27,144 11.49% S&P BSE Realty Index** 1,176 1,542 31.12% Source: Government of India, Colliers International India Research *SBI fixed deposit rate for a period of more than one year and amount below INR 1 Crores **S&P BSE Realty Index is a free float weighted index, comprised of real estate development companies in BSE – 500 Index 1 Bengaluru, Chennai, Pune, Mumbai, Noida and Gurgaon
  3. 3. Colliers Quarterly Q2 2016 MUMBAI | RESIDENTIAL August 2, 2016 Moving towards recovery despite a relaxed quarter High unsold stocks and lack of potential buyers should reduce the number of launches in H2 2016. Transaction volumes are likely to improve towards the end of the year, especially during the festive season. Forecast at a glance Demand Demand should stay healthy in the mid- end segment, with buyers looking for attractive payment plans Supply We forecast limited supply additions due to prevailing inventory overhang Capital Values Set to remain stable across most locations barring a few luxury launches in Worli and South Mumbai Rental Rate Likely to experience a marginal increase in some micro markets due to limited supply Construction Most projects likely to be completed on time with minimal delays in permissions and approvals Slowdown in residential market During Q2 2016, new unit launches amounted to 3,800, raising the total so far this year to 10,300. The decrease in the number of launches is primarly due to the fact that Q1 witnessed unit launches in bulk by a few big developers. Comparatively, there were not many bulk unit launches in this quarter. Western suburbs such as Goregaon, Andheri, Malad witnessed 37% of new launches, followed by Central suburbs (Chembur, Ghatkopar, Vikhroli) with 22%, Navi Mumbai with 21%, Thane with 17% and Central Mumbai (Dadar, Chinchpokli) with 3%. Some major new launches this quarter include projects by Godrej Properties (The Trees – Phase II), Sonam Builders (Indraprasth), Ruparel Realty (Sky Greens) and Today Global Group (Sai Vrindavan). Market Trends Micro Markets Capital Values (INR Per Sq Ft) QOQ% Change YOY% Change South Mumbai 47,500 - 68,000 -1% -1% Worli 47,000 - 58,000 -1% 1% Prabhadevi 46,000 - 55,000 0% -2% Bandra 30,000 - 52,000 1% 2% Khar 27,000 - 35,000 2% 3% Santacruz 24,500 - 29,500 0% 4% Juhu 27,000 - 32,000 2% 5% Andheri 19,000 - 22,000 -2% 2% Powai 21,000 - 27,000 0% 9% Thane 7,500 - 12,500 - - Navi Mumbai – Prime Areas 9,000 - 20,000 - - Navi Mumbai – Emerging Areas 5,000 - 10,000 - - Source: Colliers International India Research Note: Above values represents indicative base selling price for premium properties for secondary market products
  4. 4. Copyright © 2016 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report. For more information: Sumit Jain National Director Residential Services Sumit.jain@colliers.com Kunal Madhani Deputy General Manager Residential Services Kunal.madhani@colliers.com Authors: Surabhi Arora Senior Associate Director Surabhi.arora@colliers.com Uttara Nilawar Manager Uttara.nilawar@colliers.com Amit Oberoi National Director Amit.oberoi@colliers.com There was a good mix in the type of new launches this quarter with several launches in the mid-end (70%), high- end (25%) and luxury segments (5%). Average Capital Value Trends Source: Colliers International India Research Note: Dotted lines in the chart above represent forecasted values Average Rental Values Source: Colliers International India Research Note: Rental Values in INR per sq ft per month There has been a marginal increase of 1-2% qoq in capital values within select micro markets such as Worli, Bandra, Khar, Juhu and Andheri. Overall, residential prices in most Mumbai micro markets remain unchanged. On a similar note, rental values also exhibited minimal deviation of 1-2% qoq in South Mumbai and Western micro markets. Maharashtra Housing and Area Development Authority (MHADA) has stated that redevelopment of dilapidated colonies in localities like Bandra, Kurla, Lower Parel is set to gain pace with MHADA authorities offering new incentives to developers taking up redevelopment projects. Thus, new stock should be introduced in the market in the form of redevelopment projects. For high-end and luxury apartments, BKC is one of the emerging new micro markets with major new completions such as Signia Isles, Signature Island and Naman Residency. Micro markets in South Mumbai continue to dominate the high-end luxury residential market. Colliers View There will be limited new project launches in the high end and luxury segment. However, selected micro markets in Thane, Kandivali and Navi Mumbai should witness new launches in the mid-end and affordable segment. Looking forward, we expect that rents and capital values will remain stable in the coming quarters as well. We expect the health of the market to improve moderately following the introduction of redevelopment project incentives by MHADA and the new Development Plan (DP). The new draft DP strongly emphasises affordable housing, setting a target of 1.0 million affordable houses to be built all over India in the coming years. Developers offering affordable housing projects will be able to avail Floor Space Index (FSI) of up to 4.0 on all plots. Also, areas previously demarcated as No Development Zones (NDZs) will be used for such projects. 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 Q22010 Q22011 Q22012 Q22013 Q22014 Q22015 Q22016 Q22017F Q22018F INRpersqft South Mumbai Worli Prabhadevi Bandra Khar Santacruz Juhu Andheri Powai Thane Navi Mumbai - Prime Areas Navi Mumbai - Emerging Areas 0 20 40 60 80 100 120 140 160 180 SouthMumbai Worli Prabhadevi Bandra Khar Santacruz Juhu Andheri Powai Thane NaviMumbai-Prime Areas NaviMumbai- EmergingAreas INRpersqftpermonth
  5. 5. Colliers Quarterly Q2 2016 GURGAON | RESIDENTIAL August 2, 2016 Mid segment gaining traction Growth in number of new launches should remain muted in coming quarters if the inventory overhang is to be addressed. Golf Course Extension Road is likely to witness an uptick in sales primarily in projects near completion. Dwarka Expressway may experience growth in sales volume if the infrastructure improves in accordance with the recent timelines issued by the state government. Forecast at a glance Demand Increase in number of enquiries indicates that demand will pick up in the coming quarters; demand shall remain skewed towards developers with proven track record Supply Limited new launches likely in the short term amidst rising concerns about consumer activism, litigation and Regulatory Act coming into force Capital Values Set to remain stable in most of the micro markets in the short term Rental Rate Should remain stable due to high vacancy in prime projects and large supply pipeline Construction A number of projects should see completion in micro markets such as Golf Course Road and New Gurgaon Subdued growth in new launches The second quarter of 2016 continued to see subdued transaction volume. Most of the developers have exercised caution in their launch strategies, as the markets have registered a build-up of inventory due to lower sales volume from last nine quarters. In total, 1,580 units were launched this quarter in the mid-luxury segment. Notably, the Tata La Vida project was launched on Dwarka Expressway in Sector 113 at a base price of INR 8,500 per sq ft in affordable luxury segment.The project was launched at about 20% less than the previous launch of Tata Gateway at the same location in 2013 which was a high-end project. Ambience Group launched 2 BHK apartments in Ambience Creacions, Sector 22 at a base price of INR 10,500 per sq ft. Golf Course Extension Road has started gaining impetus with the completion of a few projects. Major deliveries include Pioneer Park and Emaar MGF Palm Drive. Besides this, New Gurgaon micro market has started witnessing end-user activity in both the rental and sale segments on account of its connectivity with NH8 and Manesar. Currently, the absorption of residential space in this area is skewed towards the INR4,500-6,000 per sq ft price band and rents are very low due to absence of proper social infrastructure. Market Trends Micro Markets Capital Values (INR Per Sq Ft) QOQ% Change YOY% Change Golf Course Road 11,000-36,000 0% 0% Sushant Lok 14,500-18,000 8% 0% DLF Phase 1 11,000-13,000 0% 0% NH-8 10,000-18,000 -2% 0% Sohna Road and Ext 6,500–11,000 4% 0% Source: Colliers International India Research Note: Above values represents indicative base selling price for premium properties for secondary market products.
  6. 6. Copyright © 2016 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report. For more information: Sumit Jain National Director Residential Services Sumit.jain@colliers.com Avnish Yadav Deputy General Manager Residential Services Avnish.yadav@colliers.com Authors: Surabhi Arora Senior Associate Director Surabhi.arora@colliers.com Parul Bhargava Senior Analyst Parul.bhargava@colliers.com Amit Oberoi National Director The capital values have registered a slight correction in NH8 compared to the previous quarter. However,Sushant Lok and Sohna Road have recorded an escalation in the range of 4% to 8% in capital values owing to their strategic location; an uptick in construction activity in this area by local builders was noted. Average Capital Value Trends Source: Colliers International India Research Note: Dotted lines in the chart above represent forecasted values Average Rental Values Source: Colliers International India Research Note: Rental Values in INR per sq ft per month Rental values have remained stable compared to Q1 but declined by an average of 22% versus Q2 2015. The correction in rents has been primarily seen in the luxury segment. Amidst heightened concerns over the delay in possession and high price points, affordable housing is gaining traction in the newly developed sectors across the city. Developers are pushing hard to grab the opportunity in the price range of INR 15 lakhs to 25 lakhs for one and two bedroom, home and kitchen apartments. It also allays the fear of delay in possession because government notification for affordable housing states that all such projects should be necessarily completed within four years of the approval of building plans or grant of environmental clearance, whichever is later. In Q2 2016, the Transit Oriented Development (TOD) Policy was approved by the district planning committee which aims to wean off the problem of traffic congestion by proposing a Floor Space Index (FSI) of 3.5 in the Intense TOD Zone and FSI of 2.5 in the Transition TOD Zone. Multi storey group housing projects adjoining the proposed Metro links along SPR and NPR should benefit in the long term owing to scope for redesigning and availability of vacant land parcels. Mature and saturated corridors such as Golf Course road will have much lesser leeway in redesigning. Colliers View We expect New Gurgaon to see increased traction on account of its good connectivity with NH-8 and availability of number of residential projects in the mid- segment and affordable category. However, social infrastructure development will remain a challenge in short term. Recently, the Dwarka Expressway has been granted the National Highway status and also the development body has decided to alter the alignment of Sector 37C- 37D Road which will augment the connectivity of these areas to other parts of the city through Pataudi Road. The initial response in the newly launched projects indicates that the market has latent demand and smaller units are more likely to draw the attention of buyers. 0 4,000 8,000 12,000 16,000 20,000 24,000 28,000 32,000 Q22010 Q22011 Q22012 Q22013 Q22014 Q22015 Q22016 Q22017F Q22018F INRpersqft Golf Course Road Sohna Road & Ext DLF Phase I Sushant Lok NH-8 0 10 20 30 40 50 60 GolfCourseRoad SohnaRoad&Ext DLFPhaseI SushantLok NH-8 INRpersqftpermonth
  7. 7. Colliers Quarterly Q2 2016 NOIDA | RESIDENTIAL August 2, 2016 Demand likely to improve in coming quarters Following the entry of national level players such as Godrej and Tata Housing in NOIDA market, the market should see a couple of new launches in H2 2016. A number of projects are likely to see completion in the wake of the Real Estate (Regulation and Development) Act, 2016 and ongoing consumer activism and protests over project delays. Forecast at a glance Demand Mid segment ready to move in projects are likely to remain in demand in H2 2016 Supply We expect a number of new project launches by national level developers during upcoming festive season Capital Values Set to remain stable in most of the micromarkets Rental Rate Shall remain under pressure in H2 2016 due to continuous addition of new supply Construction Developers are likely to push completion of existing projects amidst increased disrest among buyers over project delays Government contemplating initiatives to allay the fears of homebuyers During Q2 2016, almost 6,000 units were issued completion certificates, most of them located in Sectors 45, 74,75,76 and in sectors along NOIDA Expressway. Amidst heightened concerns over the delay in possession and to allay the fear of home buyers, the authorities of Noida, Greater Noida and Yamuna Expressway have decided to hire an external agency for floor wise monitoring of residential and commercial realty projects so that the developer is left with no leeway in deviating from the sanctioned plans.NOIDA Authorities are also mulling an exit policy for beleaguered developers looking to surrender surplus land to deal with the liquidity issues. Rents in all the micro-markets have remained stagnant in Q2 except Sector 92 and 93 which have registered a 6% dip in rents. A number of new projects witnessed completion in sectors along NOIDA expressway.The increase in supply has resulted in downward pressure on rental values. Market Trends Micro Markets Capital Values (INR Per Sq Ft) QOQ% Change YOY% Change Sector 44 7,400 - 9,500 0% -16% Sector 92,93 6,500 – 9,500 -6% 3% Sector 50 6500 - 8000 0% -1% Sector 61,62 5,800 – 6,200 0% -3% Sector 28,29,37 7,500–9,500 0% 0% Sector 70 to 79 4,300-5,500 -1% 8% Source: Colliers International India Research Note: Above values represents indicative base selling price for premium properties for secondary market products
  8. 8. Copyright © 2016 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report. For more information: Sumit Jain National Director Residential Services Sumit.jain@colliers.com Avnish Yadav Deputy General Manager Residential Services Avnish.yadav@colliers.com Authors: Surabhi Arora Senior Associate Director Surabhi.arora@colliers.com Parul Bhargava Senior Analyst parul.bhargava@colliers.com Amit Oberoi National Director Similarly, capital values in developed sectors along the Expressway also witnessed a correction of 6% on a QOQ basis mainly on account of increased supply in the market. Average Capital Value Trends Source: Colliers International India Research Note: Dotted lines in the chart above represent forecasted values Average Rental Values Source: Colliers International India Research Note: Rental Values in INR per sq ft per month Over Q2, a few national level real estate developers have evinced interest in NOIDA and laid out plans to expand their footprint in the city by entering into partnerships with local developers.Godrej Properties tied up with AR Landcraft to develop a 100 acre township project at Greater NOIDA. It also partnered with Lotus Greens in the last quarter to develop 36 acres of land parcel in Sector 150. In an another deal, ATS Infrastructure formed a second joint venture with Logix group to develop a mixed-use project on a 12 acre land parcel in Sector 124. Altico Capital also forayed into the market in partnership with Lotus Greens group for a residential project named 'Arena I', which is part of a larger Sports City development at Sector-79. This should bring in much required credibility and help to ease the bearish sentiment. Notwithstanding a sluggish growth in the residential segment, the Noida Authority gave approval for a 14.19% hike in land allotment rates which will lead to further augmentation in prices. Land rate in A category highly-developed residential sectors like 14, 14A, 15A, was enhanced from INR 68,750 to INR 81,400. For group housing, the minimum reserved price which was between Rs 35,420 and Rs 93,750 depending on the category of sectors have been revised and are now in the range of Rs.41,940 to Rs. 111,000. Colliers View With numerous elevated road, bridges and metro route projects in construction phase and a number of projects witnessing completions, NOIDA should see an increase in residential demand in H2 2016.The fact that many IT/ITeS companies have signed up office spaces in H1 2016 augers well for residential market in the medium term. 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 Q22010 Q22011 Q22012 Q22013 Q22014 Q22015 Q22016 Q22017F Q22018F INRpersqft Sector 44 Sector 50 Sector 61,62 Sector 92/93 Sector 28,29,37 Sector 100 to 110 Sector 70 to 79 0 5 10 15 20 25 30 Sector44 Sector50 Sector61,62 Sector92/93 Sector 28,29,37 INRpersqftpermonth
  9. 9. Colliers Quarterly Q2 2016 BENGALURU | RESIDENTIAL August 2, 2016 End-user demand to drive new launches Strong office sector performance and development of various IT Parks in several southern, eastern and south eastern peripheral locations should boost residential sales in these areas. Forecast at a glance Demand Likely to strengthen as a consequence of strong office sector demand Supply Current oversupply situation and delayed project deliveries likely to curtail new launches in the next quarter Capital Values Set to remain stable while a few micro markets such as Kormangala, Jayanagar and Sadashivanagar may witness a slight uptrend due to limited supply Rental Rate Should remain stable in H2 2016 due to continuous addition of new supply Construction Developers set to remain focused on completion and delivery of existing projects to regain buyers’ confidence Spurt in new project launches New unit launches in Bengaluru’s residential property market almost doubled from Q1 2016 and stood at nearly 11,500 units at the end of Q2. Steady end-user demand coupled with strong office market fundamentals which are crucial to development of new residential clusters remained the primary catalyst behind the high volume of new launches in this quarter. A high proportion, 62%, of new launches in this quarter was concentrated in the peripheral areas of existing commercial hubs in the city. In terms of location, Devanahalli (26%), Budigere Cross (14%) and extensions of Kanakpura Road (12%) comprised a significant share of total new launches. Interestingly, the new project launches have happened at about 10% lower than last quarter‘s weighted average prices which shows buyers‘ sensitivity towards affordability. Market Trends Micro Markets Capital Values (INR Per Sq Ft) QOQ% Change YOY% Change Central 20,000-30,000 0% 4% Cooke Town 7,500-14,000 0% 0% Jayanagar 8,500-10,500 0% 0% Sadashivanagar 9,000-15,000 0% 0% Airport Road 8,500-11,000 0% 8% Indiranagar 8,000-13,000 5% 5% Bannerghatta Road 5,000-8,500 4% 4% Kormangala 7,000-11,000 6% 6% Whitefield 5,000-8,500 6% 6% Yelahanka 4,000-10,000 0% -7% Source: Colliers International India Research Note: Above values represents indicative base selling price for premium properties for secondary market products
  10. 10. Copyright © 2016 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report. For more information: Sumit Jain National Director Residential Services Sumit.jain@colliers.com Aakanksha Anand Senior Manager Residential Services Aakanksha.anand@colliers.com Authors: Surabhi Arora Senior Associate Director Surabhi.arora@colliers.com Divya Grover Senior Manager Divya.grover@colliers.com Amit Oberoi National Director Amit.oberoi@colliers.com Mid-end apartment projects in peripheral locations with smaller configurations were most prevalent in this quarter’s launches which augurs well with the target end-user segment of information technology workforce across the city. Average Capital Value Trends Source: Colliers International India Research Note: Dotted lines in the chart above represent forecasted values Average Rental Values Source: Colliers International India Research Note: Rental Values in INR per sq ft per month Capital values largely remained stable barring a few micro markets near central areas such as Indiranagar and Kormangala which noted a 5-6% q-o-q uptick due to revision in guidance values along with property taxes earlier in the year. Established peripherals such as Whitefield and Bannerghatta Road also noted a 6% q-o-q uptick for the same reason. However, rental values largely remained stable across micro markets. This quarter also witnessed the completion of a few residential projects near the southern peripheral areas of Outer Ring Road, Electronics City and Whitefield. Prominent amongst those were Bren Palms on Hosur Road and Amber by Concorde Group on Sarjapur Main Road. Colliers View Unwavering demand in the office sector coupled with the inherent popularity of Bengaluru amongst global corporates is a positive sign for Bengaluru’s residential sector in the mid to long term. Despite several challenges related to physical infrastructure, the inauguration of Bengaluru Metro Rail Corporation Limited (BMRCL)‘s 17 kms underground Purple Line should boost connectivity between Baiyappanahalli in east with Mysuru Road in the west. The state government has also approved the proposed Elevated Corridor Project of Bengaluru Development Authority (BDA) which will connect Basaweshwara Circle to Hebbal Flyover and reduce the commute time to the airport considerably. However, as these infrastructure projects will likely take a long time to be completed, the inner city areas and southern and eastern peripheral areas should continue to lead the end-user demand. 0 4,000 8,000 12,000 16,000 20,000 24,000 28,000 32,000 Q22010 Q22011 Q22012 Q22013 Q22014 Q22015 Q22016 Q22017F Q22018F INRpersqft Central Cooke Town Jayanagar Sadashivanagar Airport Road Indiranagar Bannerghatta Road Kormangala Whitefield Yelahanka 0 10 20 30 40 50 60 70 80 Central CookeTown Jayanagar Sadashivanagar AirportRoad Indiranagar BannerghattaRoad Koramangala Whitefield Yelahanka INRpersqftpermonth
  11. 11. Colliers Quarterly Q2 2016 CHENNAI | RESIDENTIAL August 2, 2016 Recovery on cards but at slower pace Rising office sector absorption coupled with several planned infrastructure upgrades is helping to revive the sentiment amongst end-users in the residential segment. Increasing enquiries, value deals and vigorous marketing by developers should all help revive the sector in H2 2016. Forecast at a glance Demand Enquiries have started picking up for ready to occupy residential stock. We expect this trend to continue in H2 2016 Supply Limited new supply likely to enter the market in the wake of project delays Capital Values May remain steady with some locations such as Boat Club and Nungambakkam demanding higher capital values due to limited land availability Rental Rate Likely to remain stable till the end of the year due to current availabilities Construction Delays in obtaining project approvals as well as construction delays will probably result in limited new completions New launches remain steady During Q2 2016, Chennai’s residential property sector showed green shoots of recovery as new unit launches remained steady over the previous quarter and stood at about 2,100 units. This is primarily because of increased confidence amongst property developers owing to a stable state government retaining power following the Tamil Nadu Assembly Elections 2016. In keeping with end-users‘ need for affordability, developers steered clear of launching projects aimed at high-end and luxury segments and focused on the mid-segment (78%) and affordable (21%) categories at competitive base selling prices to boost sales velocity. The weighted average base selling price for all units launched this quarter was INR 4,500 per sq ft which is 20% lower than Q1 2016 when it was recorded at INR 5,600 per sq ft. Of all locations, Poonamallee comprised nearly 38% of total launches as a young demographic segment employed in nearby information technology and manufacturing hubs with high disposable incomes is emerging as a key demand driver. Connectivity to pivotal arterial roads such as the NH-4, Chennai Bypass Road and Outer Ring Road is a major draw for this location. Market Trends Micro Markets Capital Values (INR Per Sq Ft) Q0Q% Change YOY% Change Boat Club 26,000-35,000 0% 0% Nungambakkam 19,000-26,000 0% -6% Alwarpet 18,500-26,000 0% -3% Besant Nagar 13,500-17,500 0% -2% Adyar 13,000-17,000 0% 0% Anna Nagar 13,500-17,000 0% 3% T. Nagar 13,500-20,500 0% 5% Velachery 7,000-10,000 0% 10% Sholinganallur 4,800-5,950 0% -4% Siruseri 3,990-5,500 0% -10% Source: Colliers International India Research Note: Above values represents indicative base selling price for premium properties in secondary market
  12. 12. Copyright © 2016 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report. For more information: Sumit Jain National Director Residential Services Sumit.jain@colliers.com Authors: Surabhi Arora Senior Associate Director Surabhi.arora@colliers.com Divya Grover Senior Manager Divya.grover@colliers.com Amit Oberoi National Director Amit.oberoi@colliers.com Other peripheral locations such as Thirumuzhisai (11%) and Avadi (11%) also noted significant launches in the affordable segments as two mid sized housing apartment projects were launched by renowned developers. Average Capital Value Trends Source: Colliers International India Research Note: Dotted lines in the chart above represent forecasted values Average Rental Values Source: Colliers International India Research Note: Rental Values in INR per sq ft per month Capital values and rental values remained stagnant during this quarter owing to low sales velocity and delays in delivery of new residential projects to end- users. These factors have rationalised prices in most micro-markets. Value deals from developers such as free car parking, cash discounts, floor rise charge waiver and freebies such as home furnishings are driving sales amongst buyers in favoured locations. East Coast Road, Alwarpet, R.A. Puram, Medavakkam and Pallikarnai are a few locations where such deals have taken place in the recent months. The steady growth of the commercial office sector, the boost to manufacturing jobs and capacity expansion in other sectors are positive growth signs for the residential market. Colliers View The overall outlook for the residential property sector is positive as an uptrend in launches coupled with aggressive marketing by developers should help drive sales recovery going forward. We expect that the extension of Chennai Metro Rail Phase I from Little Mount to Chennai Airport will improve connectivity on this 9 kms stretch by the end of this year. Once operational, Phase I expansion should help improve connectivity to the Central Business District (CBD) and south-west suburbs and stimulate housing demand near these micro-markets. Chennai Metro Rail Limited (CMRL) has also received approval from the state government to carry out a project feasibility study for Phase II which will cover the North West and South East corridors. With several government initiatives such as the proposed Chennai-Bengaluru Industrial Corridor (CBIC) to boost the manufacturing sector, more jobs should be created which will spur housing demand in the long term. 0 4,000 8,000 12,000 16,000 20,000 24,000 28,000 32,000 Q22010 Q22011 Q22012 Q22013 Q22014 Q22015 Q22016 Q22017F Q22018F INRpersqft Boat Club Nungambakkam Anna Nagar Adyar Besant Nagar T. Nagar Alwarpet Velcachery Sholinganallur 0 10 20 30 40 50 60 70 80 BoatClub Nungambakkam AnnaNagar Adyar BesantNagar T.Nagar Alwarpet Velachery Sholinganallur Siruseri INRpersqftpermonth
  13. 13. Colliers Quarterly Q2 2016 PUNE | RESIDENTIAL August 2, 2016 Market sentiment likely to improve further in H2 2016 With steady growth in the number of launches this quarter, Pune is likely to see an increase in developers offering big discounts to conclude transactions for potential clients so that they can turn their focus to new launches in coming quarters. Forecast at a glance Demand Enquiry to conversion ratio set to improve in H2 2016 Supply We expect a decrease in the number of new launches in the short term as developers are likely to hold new launches till the festive season Capital Values Should remain stable; huge supply pipeline should prevent prices from rising Rental Rate Continued trend of stable rents over the last two quarters should prevail in H2 2016 as well Construction Uncertainty due to the adoption of new Development Control Regulations in Pune likely to cause delays in completion of projects QoQ increase in new launches The Pune residential market witnessed launch of about 5,000 units in Q2 2016, bringing the total for the year to 7,200. The number indicates that new launches more than doubled in Q2 over Q1. However, these unit launches were mostly concentrated in select micro markets where a few major developers have launched huge residential projects on large land parcels admeasuring 15 - 20 acres. Most of these developments cater to high end or luxury segment. The mainstay of the business of Pune developers, the budget segment, i.e. homes in the price range of INR 35 to 45 lakh has experienced a slow quarter in terms of new launches. The micro market in east Pune, Mundhwa had the highest number of unit launches with a 46% share, all in the mid segment. It was followed by Wakad and Baner with 24%, Undri with 12%, Balewadi and Bavdhan with 7%, Pimpri with 6% and lastly Kalyani Nagar with 5%. Launches in north and west Pune were mostly in the mid-end segment. Market Trends Micro Markets Capital Values (INR Per Sq Ft) QOQ% Change YOY% Change Kalyani Nagar/Viman Nagar/Karadi 5,800-16,500 0% -4% Deccan/Camp/ Boat Club 7,000-15,000 0% -4% Magarpatta/ Hadapsar 4,800-7,800 0% 0% Baner/Hinjewadi/ Wakad/Pashan 4,800-9,500 0% 0% Kothrud/Bavdhan/ Wajre 6,200-12,000 0% 0% NIBM/Undri/ Kondhwa 4,400-6,250 0% -5% Pimpri/Chinchwad /Chakan 4,700-5,800 0% -4% Source: Colliers International India Research Note: Above values represent indicative base selling price for premium properties for secondary market products
  14. 14. Copyright © 2016 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report. For more information: Sumit Jain National Director Residential Services Sumit.jain@colliers.com Hiren Bulsara Assistant Manager Residential Services Hiren.bulsara@colliers.com Authors: Surabhi Arora Senior Associate Director Surabhi.arora@colliers.com Uttara Nilawar Manager Uttara.nilawar@colliers.com Amit Oberoi National Director Amit.oberoi@colliers.com QoQ capital values and rental values remained stable; however, we have observed a 4-5% decline in capital values since last year. Average Capital Value Trends Source: Colliers International India Research Note: Dotted lines in the chart above represent forecasted values Average Rental Values Source: Colliers International India Research Note: Rental Values in INR per sq ft per month Business in Pune residential real estate is largely driven by the demand engendered due to large number of professionals employed by the IT/ITeS sector. As these companies are moving their headquarters to other new locations such as Kharadi, Bavdhan and Yerwada, buyers have been encouraged to consider buying homes in far flung locations such as Wagholi, Punawale, Marunji and Undri. Major developers such as Godrej Properties (Godrej Infinity at Mundhwa), Kolte Patil (Western Avenue at Wakad), Nyati Group (Nyati Equatorial at Bavdhan), Naiknavare Developers (Avon Vista at Balewadi) continued to dominate the residential market in Q2 in terms of new launches. The Bangalore-based premier real-estate developer, Puravankara Projects, has launched its first project, Purva Silversands in Mundhwa. Colliers View The Pune market is experiencing a wave of uncertainity at the moment due to the introduction of new Development Control Regulations (DCR). Developers catering to the affordable segment are cautious about launching new projects. The DCR will bring in new norms such as increase in floor space index (FSI) usage, transfer of development rights applicability and the introduction of fungible FSI once they receive a nod from the state government. We expect the residential market to pick up once DCR norms are approved. The long awaited metro project is also scheduled to start in subsequent quarters which should lead to an increase in land values in adjoining areas, thereby possibly pushing up capital values at some favourable locations. Pune Municipal Corporation is planning to take up 14 smart city projects recently launched by Prime Minister Narendra Modi. We expect Pune to capitalise on several of the aforementioned circumstances making it one of the most dynamic residential markets in the country. 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 Q22010 Q22011 Q22012 Q22013 Q22014 Q22015 Q22016 Q22017F Q22018F INRpersqft Kalyani Nagar/Viman Nagar/Kharadi Deccan/Camp/Boat Club Magarpatta/Hadapsar Baner/Hinjewadi/Wakad/Pashan Kothrud/Bavdhan/Wajre NIBM/Undri/Kondhwa 0 5 10 15 20 25 30 35 40 Kalyani Nagar/Viman Nagar/Kharadi Deccan/Camp/B oatClub Magarpatta/Had apsar Baner/Hinjewadi/ Wakad/Pashan Kothrud/Bavdha n/Wajre NIBM/Undri/Kon dhwa Pimpri/Chinchwa d/Chakan INRpersqftpermonth
  15. 15. Copyright © 2016 Colliers International. ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report. About Colliers International Group Inc. Colliers International Group Inc. (NASDAQ: CIGI; TSX: CIG) is an industry leading global real estate services company with more than 16,000 skilled professionals operating in 66 countries. With an enterprising culture occupiers, owners and investors worldwide. Services include strategic advice and execution for property solutions; appraisal, valuation and tax consulting; customized research; and thought leadership consulting. help clients accelerate their success. Colliers has been ranked among the t International Association of Outsourcing Professionals’ Global Outsourcing for 11 consecutive years, more colliers.com 554 66 countries on 6 continents United States: 153 Canada: 34 Latin America: 24 Asia : 39 ANZ: 192 EMEA: 112 $2.5 billion in annual revenue 2 billion square feet under management 16,000 professionals Primary Authors: Surabhi Arora Senior Associate Director | Research +91 124 456 7500 surabhi.arora@colliers.com Parul Bhargava Senior Analyst | Research parul.bhargava@colliers.com Divya Grover Senior Manager | Research divya.grover@colliers.com Uttara Nilawar Manager | Research uttara.nilawar@colliers.com Amit Oberoi National Director | Knowledge Systems amit.oberoi@colliers.com Colliers International Technopolis Building, 1st Floor, DLF Golf Course Road, Sector 54, Gurgaon - 122 002 TEL +91 124 456 7500 Sumit Jain National Director | Residential Services sumit.jain@colliers.com For Residential Services:

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