Office Property Market Overview
INDIA
April 2014
research & forecast Report
SYDNEY CENTRAL BUSINESS DISTRICT
Research & Forecast Report
India I Office | April 2014
2 Resea...
3
	During 1Q 2014, the Mumbai office•	
markets witnessed a further decline
in office space absorption indicating
cautious ...
4 Research & Forecast Report | April 2014 | Office | Colliers International
	Delhi witnessed improved demand as•	
office a...
5
	In 1Q 2014, occupiers leased more than•	
1.6 million sq ft of Grade A office space
in Gurgaon, a modest increase of 5%
...
6 Research & Forecast Report | April 2014 | Office | Colliers International
	The total volume of office absorption•	
in 1Q...
7
	In Chenani, leasing transaction volumes•	
continued to remain below average.
Total absorption was 0.56 mn sq. ft.
durin...
8 Research & Forecast Report | April 2014 | Office | Colliers International
Bengaluru (Bangalore)
Source: Colliers Interna...
9
	The city witnessed improved demand•	
this quarter and recorded Grade A
absorption of about 0.18 million sq
ft. More tha...
10 Research & Forecast Report | April 2014 | Office | Colliers International
Pune
Source: Colliers International India Res...
11
Mumbai
The major business locations in Mumbai are the CBD (Nariman
Point, Fort and Ballard Estate), Central Mumbai (Wor...
12 Research & Forecast Report | April 2014 | Office | Colliers International
Copyright © 2014 Colliers International.
ensu...
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India office property market overview april 2014

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HIGHLIGHTS

• uring 1Q 2014, office absorption in eight major cities was recorded at around 8 MN SF, 7% up from last quarter.

•Bangalore and NCR topped the chart contributing 75% in the total absorption.

•All markets, with the exception of Mumbai, Chennai and Pune, have witnessed increase in office absorption.

•With positive signals emanating from the global economy, which finds resonance in our improved export performance, we anticipate further improvement in sentiments after the elections

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India office property market overview april 2014

  1. 1. Office Property Market Overview INDIA April 2014
  2. 2. research & forecast Report SYDNEY CENTRAL BUSINESS DISTRICT Research & Forecast Report India I Office | April 2014 2 Research & Forecast Report | April 2014 | Office | Colliers International www.colliers.com Mar-13 Mar-14 Repo rate 7.50% 8.00% CRR 4.00% 4.00% WPI1 5.65% 4.68% PLR2 9.70%-10.25% 10.00%-10.25% Deposit Rate3 7.50%-9.00% 8.00%-9.25% Exchange Rate INR - USD 54.28 61.35 INR- Euro 70.37 85.34 Mar-13 Mar-14 YoY % Change Gold 29,348 30,382 3.52% Silver 53,859 46,262 -14.11% Equity (BSE Sensex) 19,428 21,810 12.26% Realty Index 2,048 1,388 -32.25% Return on Alternative Investments MACRO ECONOMIC OVERVIEW India’s economic growth decreased to• 4.7% in 4Q 2013 from 4.8% in 3Q 2013. On a positive note, the Business Confidence Index (BCI) rose to 54.9 in 4Q 2013 from 45.7 in the previous quarter showing an increase in business confidence levels. The volatility in the rupee exchange rate• has reduced significantly in the surveyed quarter ensuring continued foreign institutional investor interest in Indian financial securities. Net export figures reflecting both export• growth and import compression suggest that export-led sectors such as information technology and pharmaceuticals are performing better in 2014. About 8 million sq ft. of office space was• leased across the eight major cities in India showing a 7% increase on QoQ basis. All markets, with the exception of Mumbai, Chennai and Pune, have witnessed increase in office absorption. Bangalore and NCR topped the chart contributing 75% in the total absorption. COLLIERS VIEW : Occupiers are looking beyond the CBD and SBD markets for more strategic opportunities. In 2014, we should see a continuation of this trend, as players in search of more cost-effective solutions will move towards the PBD. With positive signals emanating from the global economy, which finds resonance in our improved export performance, we anticipate that after the elections, the office market will start seeing a revival in terms of absorption, supply and new project launches. ECONOMIC BAROMETER Source: Colliers International India Research Note: All values in the above tables are as on 15th of March 2013 and 2014 1 Wholesale Price Index 2 SBI Prime Lending Rate 3 SBI interest rate < INR 1 crore Term Deposits for ≤1 Year INRCrore Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13 Jul-09 Jul-10 Jul-11 Jul-12 Jul-13 Oct-10 Oct-11 Oct-12 Oct-13 Oct-09 Business Confidence Index 10 20 30 40 50 60 70 80 0 2,000 12,000 14,000 16,000 8,000 10,000 4,000 6,000 2008-09 2012-13 Apr-Jan2014 2010-11 2011-12 2009-10 2005-06 2006-07 2007-08 FDI in Real Estate BSE Sensex Realty Index* Rebase to 100 BSE Sensex & Realty Index 90 80 100 110 60 70 50 120 130 1-Jan-14 12-Jan-14 23-Jan-14 3-Feb-14 14-Feb-14 25-Feb-14 8-Mar-14 19-Mar-14 30-Mar-14 InPercentage 4.0% 6.0% 8.0% 10.0% 12.0% Jan-Mar09 Apr-Jun09 Jul-Sep09 Oct-Dec09 Jan-Mar10 Apr-Jun10 Jul-Sep10 Oct-Dec10 Jan-Mar12 Apr-Jun13 Jul-Sep13 Oct-Dec13 Jan-Mar13 Oct-Dec12 Jun-Sep12 Oct-Dec11 Jul-Sep11 Apr-Jun11 Jan-Mar11 Gross Domestic Product at Factor Cost 0.0% 2.0% Apr-Jun12
  3. 3. 3 During 1Q 2014, the Mumbai office• markets witnessed a further decline in office space absorption indicating cautious occupier sentiment. This lack of demand can be attributed to a low level of IT/ITeS sector participation in the overall absorption, which is currently the primary demand generating sector across the cities. This quarter only about 0.42 million sq• ft of Grade A office space was leased with a few mid-sized deals concluded in Central and Western Suburbs, and Navi Mumbai. Construction activities remained slow.• No projects / phases of projects were completed this quarter. Developers also refrained from launching new projects due to low demand. More than 7.5 million sq ft of Grade A• commercial office space was available for fit-out during the surveyed quarter of which, about 80% was concentrated in micro-markets like Andheri East, Lower Parel, BKC and Thane / LBS Road. Vacancy remained almost stable due to the limited addition of new supply. Rents and capital values for Grade A office space remained stable in all of the micro-markets. COLLIERS VIEW:• Sectors like BFSI and FMCG, have become cautious in office uptake. This coupled with reduced IT/ITeS absorption is likely to result in lower demand in 2014. Rents and capital values are thus expected to remain stable; however, micro-markets such as Andheri, BKC (Bandra-Kurla- Complex) and Lower Parel could see an upward movement in the range of 1 - 2% QoQ due to continued interest from the occupiers. Mumbai Source: Colliers International India Research Micro Market Rental Values* % Change QoQ YoY CBD 226 - 260 0% 0% Andheri East 91 - 125 0% 0% BKC 226 - 320 0% 1% Lower Parel 141 - 180 0% 0% Malad 81 - 90 0% 1% Navi Mumbai 56 - 75 0% 1% Powai 101 - 120 0% 0% Worli/ Prabhadevi 176 - 225 0% 0% Goregaon/ JVLR 81 - 110 0% 1% Kalina 175 - 211 0% 0% Thane / LBS 51 - 100 0% 1% 1Q 2014 2Q 2014F Vacancy Absorption Construction Rental Value Capital Value CITY OFFICE BAROMETER KEY UNDER CONSTRUCTION PROJECTS Building Name Developer AREA (Sq. Ft.) LOCATION POSSESSION Chromium Tech-Pro Projects (KGA) 200,000 JVLR. Off Powai 2014 One BKC Wadhwa Developers 1,200,000 BKC 2015 Newa Bhakti Knowledge City Park New Tech City Group 600,000 Airoli 2015 TOP 5 TRANSCATIONS OF THE QUARTER CLIENT Building Name AREA (Sq. Ft.) LOCATION LEASE/SALE GS Engineering Lodha iThink 30,000 Thane Lease Merck Pharma Lighthall 70,000 Andheri East Lease Phillip Capital Urmi Estate 20,000 Lower Parel Lease Temple Packaging Lotus Corporate Park 20,000 Goregaon East Lease Teradata Mindspace SEZ 30,000 Airoli Lease Andheri East 24% Thane / LBS 21% CBD 1% Worli / Prabhadevi 1% Goregoan / JVLR 4% Powai 4%Navi Mumbai 2% Malad 6% Lower Parel 20% BKC 15% Kalina 2% AVAILABLE SUPPLY IN PRIME AREAS 1Q2008 1Q2009 1Q2010 1Q2014F 1Q2013 1Q2015F 3Q2015F 1Q2012 1Q2011 50 5,000 0 0 100 10,000 150 15,000 200 20,000 250 25,000 30,000 AVERAGE RENTAL AND CAPITAL VALUE TREND RentalValues-INRPerSq.ft.PerMonth CapitalValues-INRPerSq.ft. Note: Available Supply: Total Grade A office space being mar- keted for sale or lease in surveyed quarter. Average Rental/Capital Values: Market average of indicative asking price for Grade A office space. Forecast * Indicative Grade A rents in INR per sq ft per month. 0.00 0.50 1.00 1.50 2.00 2.50 1Q2013 2Q2013 3Q2013 4Q2013 1Q2014 QUARTER WISE ABSORPTION Million Sq.ft.
  4. 4. 4 Research & Forecast Report | April 2014 | Office | Colliers International Delhi witnessed improved demand as• office absorption nearly doubled this quarter amounting to approximately 0.3 million sq ft. Approximately 60% of this total absorption is contributed by large office space occupiers such as Moser Bear, Snapdeal and VFS Global. Remaining 40% of the leases were small office spaces (5,000 - 10,000 sq ft) occupied by the corporate offices of BFSI, airlines, real estate and media companies. In the surveyed quarter, the city added• 0.8 million sq ft of new, Grade A office supply. Projects contributing this supply were Hyatt Commercial Block by Asian Hotels in Bhikaji Cama Place; Ambience TowerbyAmbienceDeveloperinRohini; and Prime Tower by DLF in Okhla Phase I. The total Grade A supply available for fit-• out this quarter was about 2.5 million sq ft, mainly concentrated in Jasola, Saket and Connaught Place. Averagerentandcapitalvaluesremained• unalteredduring1Q2014,howeversome new buildings demanding above-market prices due to their premium location and amenities offered. COLLIERS VIEW:• Occupiers will remain cost-conscious and prefer small Grade A properties for their corporate offices in the CBD area. The upcoming new supply in Aero City near the airport is expected to have an impact on the market dynamics with nearly 0.9 million sq ft forecasted to get operational in 2014. The location is expected to attract a significant number of occupiers due to itsadvantageouslocationandavailability of Grade A buildings with state-of-the- art amenities. Delhi Source: Colliers International India Research Micro Market Rental Values* % Change QoQ YoY Connaught Place 175 - 450 -2% -12% Nehru Place 175 - 225 0% 8% Saket 160 - 190 6% 2% Jasola 95 - 130 2% -7% Netaji Subhash 65 - 75 0% 0% 1Q 2014 2Q 2014F Vacancy Absorption Construction Rental Value Capital Value CITY OFFICE BAROMETER KEY UNDER CONSTRUCTION PROJECTS Building Name Developer AREA (Sq. Ft.) LOCATION POSSESSION NBCC Plaza NBCC Ltd. 350,000 Okhla 2014 NBCC Redevelopment NBCC Ltd. 1,300,000 Kidwai Nagar 2016 Parsvnath 27 Parsvnath Ltd. 150,000 K.G. Marg 2016 TOP 5 TRANSCATIONS OF THE QUARTER CLIENT Building Name AREA (Sq. Ft.) LOCATION LEASE/SALE H&M India Religare Building 11,500 Saket Lease LG Electronics Religare Building 24,150 Saket Lease Moser Baer Okhla Phase 3 70,000 Okhla Lease Snapdeal Okhla Phase 3 50,000 Okhla Lease VFS Global Bharti Worldmark 70,000 Aero City Sale 0.00 0.10 0.15 0.20 0.25 0.30 0.05 0.35 1Q2013 2Q2013 3Q2013 4Q2013 1Q2014 QUARTER WISE ABSORPTION 1Q2008 1Q2009 1Q2010 1Q2014 1Q2013 1Q2015F 3Q2015F 1Q2012 1Q2011 50 5,000 0 0 100 10,000 150 15,000 200 20,000 250 300 25,000 40,000 35,000 30,000 AVERAGE RENTAL AND CAPITAL VALUE TREND RentalValues-INRPerSq.ft.PerMonth CapitalValues-INRPerSq.ft. Note: Available Supply: Total Grade A office space being mar- keted for sale or lease in surveyed quarter. Average Rental/Capital Values: Market average of indicative asking price for Grade A office space. Forecast * Indicative Grade A rents in INR per sq ft per month. AVAILABLE SUPPLY IN PRIME AREAS Jasola 34% Nehru Place 4% Saket 34% Connaught place 28% Million Sq.ft.
  5. 5. 5 In 1Q 2014, occupiers leased more than• 1.6 million sq ft of Grade A office space in Gurgaon, a modest increase of 5% from last quarter. This marginal increase in the office space absorption figure is an indication of the reviving occupier confidence level. IT/ITeS and BFSI were the most active• occupiers leasing large office spaces. The total available stock for lease or sale• was approximately 16 million sq ft. New supplyenteringthemarketaccountedfor approximately 1.5 million sq ft. Projects contributing to this new supply include Palm Square and Eros Tower, located at Golf Course Extension Road; and Palm Spring Plaza and One Horizon Centre at Golf Course Road. Projects launched this quarter include• Gateway by Unitech Ltd and Biosphere by Emmar MGF, both located on MG Road; and KST Tower by KST Group on the Dwarka Expressway. All of these projects will add approximately 1 million sq ft to the city’s Grade A inventory by 2018. Rents and capital values remained flat• compared to last quarter. However, MG Road and the institutional sectors witnessed marginal decreases in the range of 1 to 3% QoQ. Limited availability of large floor plate Grade A office space resulted in low demand in these micro- markets COLLIERS VIEW:• In 2014, it is likely that lease volumes will increase. Stock in cost-effective locations, like Golf Course Extension Road and Sohna Road, will be preferred,primarilybecauseofoccupiers interest in high-quality assets at cheaper rents. Gurgaon Source: Colliers International India Research Micro Market Rental Values* % Change QoQ YoY MG Road 95 - 135 -2% -4% Golf Course Rd 90 - 140 2% 18% Institutional Sect. (18,32,44) 50 - 65 0% -6% Golf Course Rd Ext./Sohna Rd 50 - 65 2% 2% NH8 50 - 125 0% 0% Manesar 40 - 42 0% 2% DLF Cyber City 78 - 80 0% 5% 1Q 2014 2Q 2014F Vacancy Absorption Construction Rental Value Capital Value CITY OFFICE BAROMETER KEY UNDER CONSTRUCTION PROJECTS Building Name Developer AREA (Sq. Ft.) LOCATION POSSESSION Biosphere Emaar MGF 350,000 MG Road 2018 KST KST Group 350,000 Dwarka Expressway 2018 Unitech Gateway Unitech Ltd. 350,000 MG Road 2018 TOP 5 TRANSCATIONS OF THE QUARTER CLIENT Building Name AREA (Sq. Ft.) LOCATION LEASE/SALE Accenture Unitech Infospace 120,986 Sector 21, Dundahera Lease Aricent Group Unitech Infospace 550,000 Sector 21, Dundahera Lease Copal Partners Plot 267 120,000 Udyog Vihar - Phase 2 Lease Oracle One Horizon Centre 90,000 Golf Course Road Lease WNS DLF Silokhera 145,000 NH-8 Lease 0.00 0.40 0.20 0.60 1.00 0.80 1.40 1.20 1.80 1.60 1Q2013 2Q2013 3Q2013 4Q2013 1Q2014 QUARTER WISE ABSORPTION 1Q2008 1Q2009 1Q2010 1Q2014F 1Q2013 1Q2015F 3Q2015F 1Q2012 1Q2011 20 2,000 0 0 40 4,000 60 6,000 100 80 8,000 120 10,000 12,000 AVERAGE RENTAL AND CAPITAL VALUE TREND RentalValues-INRPerSq.ft.PerMonth CapitalValues-INRPerSq.ft. Note: Available Supply: Total Grade A office space being mar- keted for sale or lease in surveyed quarter. Average Rental/Capital Values: Market average of indicative asking price for Grade A office space. Forecast * Indicative Grade A rents in INR per sq ft per month. AVAILABLE SUPPLY IN PRIME AREAS MG Road 5% Golf Course Road 11% DLF Cyber City 4% Institutional Sec- tors (Sec44, 32, 18) 3% Manesar 25% National Highway 8 17% Udyog Vihar & Industrial Sectors 4% Golf Course Road Ext./Sohna Road 31% Million Sq.ft.
  6. 6. 6 Research & Forecast Report | April 2014 | Office | Colliers International The total volume of office absorption• in 1Q 2014 in NOIDA was recorded at 0.21 million sq. ft. dominated mostly by consulting, Engineering and BFSI segments in sector 62 and Sector 127. Share of sector 62 in the total absorption pie has increased as corporate are able to get better deals with more options at competitive rentals. The delivery of World Trade Tower in• Sector 16 and two individual buildings in Sectors 6 and 125 contributed approximately 0.9 million sq ft of new space to the market. Despite low absorption levels,• developers continued to launch new, commercial Grade A towers in their mixed-use projects in sectors along the NOIDA Expressway. New launches this quarter include Downtown by Sikka Developer, and Cosmic Corporate Park III by Cosmic Developers. These projects will contribute another 1.5 million sq ft of Grade A non-IT office space to the city’s inventory by 2019. Rents in almost all micro markets• remained stable due to low transaction volumes. Sectors along the NOIDA Expressway command premiums in terms of rents due to the location and connectivity advantages. COLLIERS VIEW:• NOIDA is expected to witness new office space completions of approximately 4.5 mn sq. ft. by the end of 2014. Most of this upcoming supply is non-IT/ITeS office space. The addition of Grade A non-IT/ITeS office space is expected to attract corporate occupiers to this market. NOIDA Source: Colliers International India Research Micro Market Rental Values* % Change QoQ YoY Institutional Sectors (Non IT) 50 - 90 0% 5% Institutional Sectors (IT) 30 - 75 0% 9% Comercial Sectors 95 - 100 -5% 0% Industrial Sector 18 - 48 5% 20% 1Q 2014 2Q 2014F Vacancy Absorption Construction Rental Value Capital Value CITY OFFICE BAROMETER KEY UNDER CONSTRUCTION PROJECTS Building Name Developer AREA (Sq. Ft.) LOCATION POSSESSION Cosmic Corporate Park III Cosmic Group 500,000 Sector 154 2016 Downtown Sikka Group 450,000 Sector 104 2019 K Rasa - K8 K Rasa 500,000 Sector 129 2019 TOP 5 TRANSCATIONS OF THE QUARTER CLIENT Building Name AREA (Sq. Ft.) LOCATION LEASE/SALE eGain India Unitech Infospace 11,000 Sector 62 Lease Media Tek S B Tower 30,000 Sector 16 Lease RDB Insurance A-31 108,000 Sector 64 Lease Tata Consultancy Engineering Ltd. Green Boulevard - Tower B 15,785 Sector 62 Lease Tata Consultancy Engineering Ltd. Green Boulevard - Tower C 15,786 Sector 62 Lease 0.00 0.20 0.40 0.60 1.00 0.80 1.20 1Q2013 2Q2013 3Q2013 4Q2013 1Q2014 QUARTER WISE ABSORPTION 1Q2009 1Q2010 1Q2014 1Q2013 1Q2015F 3Q2015F 1Q2012 1Q2011 20 10 2,000 0 0 40 30 4,000 50 6,000 70 60 8,000 80 12,000 10,000 AVERAGE RENTAL AND CAPITAL VALUE TREND RentalValues-INRPerSq.ft.PerMonth CapitalValues-INRPerSq.ft. Note: Available Supply: Total Grade A office space being mar- keted for sale or lease in surveyed quarter. Average Rental/Capital Values: Market average of indicative asking price for Grade A office space. Forecast * Indicative Grade A rents in INR per sq ft per month. AVAILABLE SUPPLY IN PRIME AREAS Commercial Sectors (Sec 18) (Grade B) 0.6% Industrial Sectors (Sec. 1-9, 57-60, 63-65) (Grade B) 15.8% Commercial Sectors (Sec 18) (Grade B) 0.2% Institutional Sectors (Sec.16A, 62, 125-142 83.3% Million Sq.ft.
  7. 7. 7 In Chenani, leasing transaction volumes• continued to remain below average. Total absorption was 0.56 mn sq. ft. during the quarter. The majority of leases signed were for smaller, sub-25,000 sq ft office spaces. Micro-markets like Old Mahabali Puram Road and Guindy remained the standout performers this quarter. Having quality office space on offer combined with affordability has enabled these micro-markets to be preferred destinations for occupiers. A few projects / phases of projects• were completed this quarter, including Ramaniyam ISHA by RamaniyamGroup at Thoraipakkam; KPR Towers at Nungambakkam; and VikramVikra at Vadapalani. All of these projects together add 0.09 million sq ft of Grade A office space to the city’s total inventory. New project launches continued to• remain limited. A phase of about 0.25 million sq ft in DLF IT SEZ-Block 2, located at Manapakkam, was launched by DLF Ltd this quarter and is expected to be completed by the end of 2015. The lack of major tenant moves and• expansions by large occupiers has seen rentscontinuetoremainsteadyinalmost all micro-markets. COLLIERS VIEW:• The outlook for the leasing market across Chennai over the next 9 months is more positive than the previous two quarters. Improving sentiment and prospects for the global economy as well as rising business and consumer confidence should all combine to boost the sentiment of IT/ ITeS tenants who make up the bulk of tenants in Chennai. Chennai Source: Colliers International India Research Micro Market Rental Values* % Change QoQ YoY CBD 65 - 85 0% 0% Guindy (SBD) 50 - 60 0% 0% Ambattur 25 - 30 0% 0% OMR (IT Corridor) 25 - 45 0% 8% GST road 35 - 40 0% 0% 1Q 2014 2Q 2014F Vacancy Absorption Construction Rental Value Capital Value CITY OFFICE BAROMETER KEY UNDER CONSTRUCTION PROJECTS Building Name Developer AREA (Sq. Ft.) LOCATION POSSESSION DLF IT SEZ - Block 2 DLF Ltd. 250,000 Manapakkam 2015 Infinite Square SKCL Ltd. 84,000 Guindy 2014 Rajkamal Suites Khivraj Group 66,000 Nugambakkam 2014 TOP 5 TRANSCATIONS OF THE QUARTER CLIENT Building Name AREA (Sq. Ft.) LOCATION LEASE/SALE Athena SP Infocity 65,000 OMR Lease Cash Edge Prestige Polygon 25,000 Anna Salai Lease Equitus Spencer Plaza 37,000 Anna Salai Lease Isuzu Prestige Centre Court 30,000 Vadapalani Lease Kone Prestige Centre Court 30,000 Vadapalani Lease 0.00 0.40 0.20 1.00 0.60 0.80 1.40 1.60 1.20 1.80 1Q2013 2Q2013 3Q2013 4Q2013 1Q2014 QUARTER WISE ABSORPTION 1Q2008 1Q2009 1Q2010 1Q2014 1Q2013 1Q2015F 3Q2015F 1Q2012 1Q2011 10 1,000 2,000 3,000 5,000 4,000 6,000 8,000 7,000 0 0 20 30 40 70 60 50 AVERAGE RENTAL AND CAPITAL VALUE TREND RentalValues-INRPerSq.ft.PerMonth CapitalValues-INRPerSq.ft. Note: Available Supply: Total Grade A office space being mar- keted for sale or lease in surveyed quarter. Average Rental/Capital Values: Market average of indicative asking price for Grade A office space. Forecast * Indicative Grade A rents in INR per sq ft per month. AVAILABLE SUPPLY IN PRIME AREAS Guindy (SBD) 8% CBD 16% GST Rd 3% Velachery 1% OMR (IT Corridor) 47% Ambattur 24% Million Sq.ft.
  8. 8. 8 Research & Forecast Report | April 2014 | Office | Colliers International Bengaluru (Bangalore) Source: Colliers International India Research Micro Market Rental Values* % Change QoQ YoY CBD 80 - 100 0% 0% Hosur Rd. 20 - 40 0% 0% EPIP Zone/ Whitefield 28 - 36 0% 16% Electronic City 23 - 32 0% -7% Bannerghatta Rd. 50 - 60 0% 8% Outer Ring Rd. 50 - 60 0% 3% 1Q 2014 2Q 2014F Vacancy Absorption Construction Rental Value Capital Value CITY OFFICE BAROMETER KEY UNDER CONSTRUCTION PROJECTS Building Name Developer AREA (Sq. Ft.) LOCATION POSSESSION Pritech - Block 14 Primal Group 600,000 ORR - Marathahalli Sarjapur 2015 RMZ ECO WORLD - APPL - 4A RMZ CORP 990,000 Marathahalli Sarjapur 2015 RMZ ECO WORLD - APPL - 7 RMZ CORP 790,000 ORR - Marathahalli Sarjapur 2015 TOP 5 TRANSCATIONS OF THE QUARTER CLIENT Building Name AREA (Sq. Ft.) LOCATION LEASE/SALE Capgemini Divyasree Technopark 440,000 Whitefield Lease IBM Embassy Business Park 770,000 Hebbal Lease Sony RMZ Eco World 240,000 Outer Ring Road Lease TCS Global Axis 300,000 Whitefield Lease Titan Industries Divyasree Technopolis 163,000 Yamalur Lease 1Q2008 1Q2009 1Q2010 1Q2014 1Q2013 1Q2015F 3Q2015F 1Q2012 1Q2011 10 1,500 0 0 20 3,000 30 4,500 40 6,000 50 60 7,500 9,000 AVERAGE RENTAL AND CAPITAL VALUE TREND RentalValues-INRPerSq.ft.PerMonth CapitalValues-INRPerSq.ft. Note: Available Supply: Total Grade A office space being mar- keted for sale or lease in surveyed quarter. Average Rental/Capital Values: Market average of indicative asking price for Grade A office space. Forecast * Indicative Grade A rents in INR per sq ft per month. Strong demand for Grade A office space• witnessed during 1Q 2014 resulted in a 35% QoQ increase in absorption in the Bengaluru market. IT/ITeS remained the primary demand driver contributing approximately 80% in the total absorption of 3.8 million sq ft. This includes approximately 1.7 million sq ft pre-commitment deals from companies like IBM, Ericson and Hindustan Coca Cola Beverages for expansion purposes. During the quarter, many large scaled• projects / phases of projects were completed and added over 2.9 million sq ft of Grade A office space to the city’s total inventory. Enthused by this demand, a number of• developers launched additional towers in their existing projects, including Divyasree Technopolis-Block D; Mantri Cornerstone-Block B; Pritech-Block 14 and RMZ ECO WORLD – Towers 4A, 4B and all of these projects together will add over 4.8 million sq ft office space to city’s inventory by the end of 2015. Withdemandandsupply complementing• each other, vacancy levels remain unaltered and about 11 million sq ft of Grade A stock was available for fit-out during the quarter. The capital and rental values also• remained steady in almost all micro- markets in the city. COLLIERS VIEW:• The strong software export figures indicate increase in IT/ ITeS uptake in the coming quarters in the city. We anticipate modest increases in rents in micro-markets like Outer Ring Road and CBD due to occupier preference to other micro-markets like Whitefield and Electronic City. AVAILABLE Supply in Prime Areas Hosur Road 3% CBD 9% Bannerghatta Road 2% Electronic City 16% EPIP Zone/ Whitefield 41% Outer Ring Road 29% 1Q2013 2Q2013 3Q2013 4Q2013 1Q2014 QUARTER WISE ABSORPTION 0.00 0.50 1.50 1.00 2.00 3.50 3.00 2.50 4.00 Million Sq.ft.
  9. 9. 9 The city witnessed improved demand• this quarter and recorded Grade A absorption of about 0.18 million sq ft. More than 90% of these deals were concluded in the Salt Lake-Sector V and New Town micro-markets. This quarter, various local occupiers have relocated from their old structures to new and better facilitated structures. Construction activities remained slow• during the quarter and only a few properties were completed including Pecon Tower by Pecon Group and Rishi Techpark by Mittal Group, both of which areatNewTown.Together,theseprojects contributed about 0.1 million sq ft of Grade A commercial office supply. Projects launched this quarter include• Weston by Siddha Group at Bentinck Street; Arya Hub by Arya Realty at Taratala; and Pressman House by Pressman at New Town. The projects are expected to be completed by 2017 and will contribute about 0.47 million sq ft of Grade A commercial office space in the city. Rental values declined in the range of 1• to 4% QoQ in most of the micro-markets, except SBD where rents remained stable. During the same quarter, capital values remained stable, except for Sector V where capital values decline by 3% QoQ. COLLIERS VIEW:• Upcoming infrastructure developments like metro corridors will improve the overall connectivity of the city. Micro-markets like Salt Lake-Sector V and New Town will continue to see occupier interest. Rents and capital values are expected to remain under pressure due to prevailing high vacancy in suburban micro- markets. Kolkata Source: Colliers International India Research Micro Market Rental Values* % Change QoQ YoY CBD 95 - 120 -4% -10% SBD 70 - 80 0% -6% Sector V/ New Town 46 - 50 -2% -2% PBD 34 - 37 -1% -3% 1Q 2014 2Q 2014F Vacancy Absorption Construction Rental Value Capital Value CITY OFFICE BAROMETER KEY UNDER CONSTRUCTION PROJECTS Building Name Developer AREA (Sq. Ft.) LOCATION POSSESSION Arya Hub Arya Realty 85,000 Taratala 2017 Pressman House Pressman 140,000 New Town 2015 Weston Sidhha Group 250,000 Bentinck Street 2017 TOP 5 TRANSCATIONS OF THE QUARTER CLIENT Building Name AREA (Sq. Ft.) LOCATION LEASE/SALE Disha Palm Mall 16,000 Gariahat Lease Serco Global BIPL 38,000 Sector-V Lease SGS Eco Space 15,000 New Town Lease Sterling Ferrero Net Guru 10,400 Sector-V Lease Vasan Eye Care Individual 10,000 Chetla Lease 0.00 0.20 0.10 0.30 0.40 0.60 0.50 0.70 1Q2013 2Q2013 3Q2013 4Q2013 1Q2014 QUARTER WISE ABSORPTION 1Q2008 1Q2009 1Q2010 1Q2014F 1Q2013 1Q2015F 3Q2015F 1Q2012 1Q2011 40 20 2,000 0 0 60 4,000 80 6,000 100 8,000 120 10,000 12,000 AVERAGE RENTAL AND CAPITAL VALUE TREND RentalValues-INRPerSq.ft.PerMonth CapitalValues-INRPerSq.ft. Note: Available Supply: Total Grade A office space being mar- keted for sale or lease in surveyed quarter. Average Rental/Capital Values: Market average of indicative asking price for Grade A office space. Forecast * Indicative Grade A rents in INR per sq ft per month. NEW SUPPLY IN PRIME AREAS Sector V 33% PBD 31% SBD 36% Million Sq.ft.
  10. 10. 10 Research & Forecast Report | April 2014 | Office | Colliers International Pune Source: Colliers International India Research Micro Market Rental Values* % Change QoQ YoY Baner 45 - 55 0% 0% Bund Garden 50 - 65 0% -12% Airport Rd. / Pune station 42 - 63 3% -2% Aundh 45 - 60 0% 9% Senapati Bapat 55 - 85 0% -10% Bavdhan 35 - 45 0% -2% Kalyani Nagar 45 - 60 0% 0% Nagar Rd. 40 - 60 0% 11% Hinjewadi 32 - 45 3% 7% Hadapsar/ Fursungi 33 - 50 4% 8% Kharadi 32 - 65 0% 18% 1Q 2014 2Q 2014F Vacancy Absorption Construction Rental Value Capital Value CITY OFFICE BAROMETER KEY UNDER CONSTRUCTION PROJECTS Building Name Developer AREA (Sq. Ft.) LOCATION POSSESSION Siddhivinayak Vision Siddhivinayak Group 200,000 Tathawade 2014 The Melange Cosmos Group 70,000 Fugewadi 2015 W One U.D. Developers 80,000 Wanowari 2015 TOP 5 TRANSCATIONS OF THE QUARTER CLIENT Building Name AREA (Sq. Ft.) LOCATION LEASE/SALE BMC Business Bay 251,000 Yerwada Lease Compucom Software Limited S P Infocity 45,000 Phursungi Lease Fundtech AG Trade Center 87,000 Bavhdan Lease Gallaghar Giga Space Delta 2 34,900 Viman Nagar Lease Geometric Limited Blue Ridge 27,000 Hinjewadi Lease 0.00 0.40 0.20 0.80 0.60 1.00 1.20 1.40 1.60 1.80 1Q2013 2Q2013 3Q2013 4Q2013 1Q2014 QUARTER WISE ABSORPTION Million Sq.ft. 1Q2008 1Q2009 1Q2010 1Q2014 1Q2013 1Q2015F 3Q2015F 1Q2012 1Q2011 20 10 1,000 0 0 30 2,000 50 40 3,000 70 60 4,000 80 5,000 8,000 7,000 6,000 AVERAGE RENTAL AND CAPITAL VALUE TREND RentalValues-INRPerSq.ft.PerMonth CapitalValues-INRPerSq.ft. Note: Available Supply: Total Grade A office space being mar- keted for sale or lease in surveyed quarter. Average Rental/Capital Values: Market average of indicative asking price for Grade A office space. Forecast * Indicative Grade A rents in INR per sq ft per month. Pune has witnessed more than 0.85• million sq ft of absorption in 1Q 2014, which is relatively less than the last quarter’s net absorption of 1.55 million sq ft. However, more than 65% of the transactions were for expansion indicating rebounding business confidence levels. About 1 million sq ft of new Grade A• supply was added to the city’s total inventory. Of this 0.8 million sq ft was contributed by Business Bay Tower I by Panchshil Realty, located at Yerwada. Total Grade A total supply available• for fit-out was about 5.7 million sq ft. mainly concentrated in the Hinjewadi and Kharadi micro-markets. This is an increase of about 1.19 million sq ft of Grade A office space over the previous quarter indicating increasing vacancy in peripheral areas. In most of the micro-markets rents and• capital values remained unchanged, however a few micro-markets like Airport Road, Hinjewadi, Hadapsar and Fursungi witnessed an increase in the range of 3 - 4% on a quarterly basis. This is primarily due to the availability of grade A office space with a low rental base as compared to the other parts of the city. COLLIERS VIEW:• IT/ITeS will continue tobethemajoroccupierofGradeAoffice space in the city. Despite the demand / supply equilibrium in the city, rents in micro-markets located towards the north-west and south-east will see a rise in the range of 3 - 5% on a yearly basis. This is because of the large floor-plate of the Grade A inventory with ready social infrastructure that will continue to lure occupiers in the near future. AVAILABLE Supply in Prime Areas Bavdhan 2% Kalyani Nagar 7% Senapati Bapat Road 3% Aundh 2% Baner 11% Bund Garden 7% Airport road/ pune station 11% Hinjewadi 20% Nagar Road 13% Kharadi 17% Hadapsar/Fursungi 7%
  11. 11. 11 Mumbai The major business locations in Mumbai are the CBD (Nariman Point, Fort and Ballard Estate), Central Mumbai (Worli, Lower Parel and Parel), Bandra Kurla Complex (BKC) and Andheri Kurla stretch. Powai, Malad and Vashi are the preferred IT/ ITES destinations, while Airoli at Navi Mumbai and Lal Bahadur Shastri Marg are emerging as new office and IT/ITES submakets. Delhi The commercial areas in New Delhi metropolitan area can be broadly classified into the CBD (Connaught Place), SBD Nehru Place, Bhikaji Cama Place, Netaji Subhash Place, Jasola and Saket . Gurgaon The prime business locations in Gurgaon are MG Road, Golf Course Road, Cyber City and Udyog Vihar. Manesar on the outskirts of Gurgaon is alsoemerging as the city’s new office destination. NOIDA NOIDA market is comprised of sectors broadly classified as institutional, industrial and commercial sectors. Institutional sectors include sec 16A, 62 and125-142, industrial sectors include sec 1-9, 57-60 and 63- 65 while sector 18 is the most developed commercial sector. Chennai Prime office properties in Chennai are located in four principal sub-markets: the CBD, the IT Corridor, the SBD and the PBD. The SBD comprises Guindy,Manapakkam, Velachery and other areas. The PBD primarily includes Ambattur and GST Road, while the IT Corridor is the Old Mahaballipuram Road (OMR) in south Chennai. Bengaluru (Bangalore) Prime office properties in Bengaluru can be divided into three principal sub-market— CBD, the SBD consisting of Banerghatta Road & Outer Ring Road(ORR) and PBD including Hosur Road, EPIP Zone, Electronic City and Whilefield. Kolkata The major business locations in Kolkata are CBD (Park Street, Camac Street, Chowranghee Rd), SBD (AJC Bose Rd, Ballygunge circular Rd, East Kolkata) and PBD (New Town & Rajarhat). The area around Park Street, Camac Street and AJC Bose road houses number of high-rises commercial buildings such as Chatterjee International Centre, Tata Centre, Everest House and Industry House among others. Pune Theprimeofficesub-marketsofPuneincludeDeccanGymkhana, Bund Garden Road, Senapati Bapat Road & Camp (CBD), while the Off CBD includes Aundh, Airport Road and Kalyani Nagar, among other locations. The eastern corridor, along with Nagar Road and Kharadi, have emerged as a preferred location for financial and IT/ITES companies. Office Submarkets CITY BAROMETERS Increasing as compared to previous quarter Decreasing as compared to previous quarter Remained stable from previous quarter
  12. 12. 12 Research & Forecast Report | April 2014 | Office | Colliers International Copyright © 2014 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 colliers.com 63 countries on 6 continents United States: 146 Canada: 44 Latin America: 25 186 EMEA: 84 $2.1 billion in annual revenue 1.46 billion square feet under management 15,800 professionals Primary Authors: Surabhi Arora I Associate Director Research surabhi.arora@colliers.com +91 124 456 7500 Mumbai: George Mckay I South Asia Director george.mckay@colliers.com Delhi / NCR: Ajay Rakheja I Director ajay.rakheja@colliers.com Vikas Kalia | National Director vikas.kalia@colliers.com Amit Oberoi I National Director Valuation & Advisory Services & Research amit.oberoi@colliers.com Sachin Sharma I Assistant Manager Research sachin.sharma@colliers.com Technopolis Building, 1st Floor, DLF Golf Course Road, Sector 54, Gurgaon - 122 002 TEL +91 124 456 7500 Bengaluru: Yogesh Bheemaiah I Director yogesh.bheemaiah@colliers.com Pune: Rishav Vij I General Manager rishav.vij@colliers.com Chennai: Kaushik Reddy I Director kaushik.reddy@colliers.com Kolkata: Ajay Rakheja I Director ajay.rakheja@colliers.com 485

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