India office-trends-to-watch-for-in-2015

India Office: Trends to watch
for in 2015

3 Research & Forecast Report | January 2015 | Colliers International
Table of Contents
Infographics
2014 Actual & 2015 Forecast 4
Year in review 2014 6
Mumbai
Transaction volumes pick up towards
the end of the year 8
Delhi
Office demand doubled in 2014;
Prospects looks bright 10
Gurgaon
Absorption dipped by 13% YoY in 2014
but good prospects for 2015 12
NOIDA
Recovery seems to be on cards with
revived IT/ITeS demand 14
Chennai
Developers remain cautious due to
low absorption 16
Bengaluru
Steals the show with over 13.77 million
sq ft of absorption 18
Kolkata
Market is likely to remain stagnant in 2015 20
Pune
Another Silicon Valley in the making 22

13.77
4.11
3.12
4.91
7.71
12.36
6.36
3.80
5.13
1.10
7.97
VACANCY TRENDS
34.92 MN SF was absorbed in 2014 in 6
major metros
Bengaluru tops the chart with 40% share
followed by Delhi NCR with 22%
66% of the total absorption was contributed
by IT/ITeS Sector followed by BFSI 13%
ABSORPTION
C
H
E
N
N
A
I
P
U
N
E
M
U
M
B
A
I
D
E
H
L
I
N
C
R
B
E
N
G
A
L
U
R
U
14.0%
15.0%
19.0%
20.0%
22.5%
23.0%
20.5%
21.5%
19.0%
19.5%
K
O
L
K
A
T
A
INDIA OFFICE TRENDS
3TO WATCH IN 2015
NEW SUPPLY - 2014 & PIPELINE 2015 MAJOR OFFICE SALE TRANSACTION *
MUMBAI
DELHINCR
CHENNAI
KOLKATA
PUNE
BENGALURU
3.30
5.23
7.16
3.47
5.20
5.12
1.14
1.00
3.00
12.98
10.25
8.00
2014 2015 Forecast (in MN SF)
GRADE - A AVERAGE RENTAL GROWTH
MUMBAI
DELHINCR
CHENNAI
KOLKATA
PUNE
BENGALURU
3.8%
1.9%
1.3%
2.7%
6.5%
10.2%
1.5%
3.00%
2.7%
8
2014 2015 Forecast
2014 2015 Forecast
2014
2015 Forecast (In MN SF)
`625 Cr
Express Towers,
Mumbai
Buyer: Blackstone
& Panchshil
Seller: Indian
Express Group
Hindustan
Unilever Building,
Mumbai
Buyer: HDFC
Seller: HUL
`900 Cr`870 Cr
Galaxy IT Park, NOIDA
& Blue Ridge SEZ,
Pune
Buyer: Blackstone
Seller: IDFC
Alternatives
`115 Cr
`300 Cr
-7.0%
2.00%
Mumbai, Delhi-NCR, Bengaluru
Chennai, Kolkata & Pune
India
Office
Strong economic growth will lead to better
performing leasing markets and strong
investment demand.
* Secondary sources like media publication
1
IT/ITes will continue to dominate tenant
demand with increase share of E-com-
merce companies.
2
Office market will see more en-block sales
due to great interest of off shore groups
entering Indian markets for REIT listing.
3
13.0%
13.0%
1.30
Equinox Tech Park, Bengaluru
Buyer: Infosys Technologies
Seller: Equinox Realty
Oxygen SEZ, NOIDA
Buyer: Blackstone
Seller: 3C Developers
Chennai
Bengaluru
Pune
Mumbai
Delhi NCR
Kolkata
2014 ACTUAL I 2015 FORECAST
0.0%
4 5Research & Forecast Report | January 2015 | Colliers International Research & Forecast Report | January 2015 | Colliers International

Return on Alternative Investments
Economic Barometer
Note:
1 Estimates as per International Monetary Fund
2 Wholesale Price Index (WPI) Till Nov 2014
3 SBI interest rate < INR 1 crore Term Deposits for≤ 1 Year
Research &
Forecast Report
India | Office
January | 2015
Year in Review
2014
The year 2014 was an eventful one for the commercial real
estate market in India. Despondency was the overbearing
mood in the first half, that changed overnight with the
announcement of the general election results. With the
outcome of the elections and a resulting stable government,
the overall sentiment started improving in the second half
of the year as reflected by the Business and Consumer
confidence indices’s. Also, there was an improvement in
other macro-economic indicators notably the GDP and
the inflation. The improved economic sentiment led to
companies revisiting their office space requirement and
future expansion plans. Some of this was reflected in the
total space absorbed in 2014. We anticipate more robust
expansion plans in 2015.
About 35 million sq ft of office space was absorbed in
2014 in the top 6 cities of India. This is 11% more than the
absorption in 2013.
Bengaluru had the lion’s share of the office space demand.
Over 39% of the office space absorbed in the top 6 cities
in 2014 was occupied in Bengaluru, followed by Delhi
NCR (22%) and Pune (14%). The demand for Grade ‘A’
office space was driven by technology companies. Taking
cues from the positive economic sentiments, most large
occupiers are reviewing their long pending CRE decisions.
Tenants in expansion mode relocated and locked in large
office spaces at favourable lease terms in these cities. For
instance, e-commerce giant Flipkart leased 3.5 million sq
ft in Bengaluru, KPMG and Honeywell pre-committed to
approximately 1.6 million sq ft in Bangalore, Accenture pre-
committed around 0.9 million sq ft in Pune and Aricent took
around 0.5 million sq ft in Gurgaon.
The real estate sentiments were further boosted due to
some key announcements regarding real estate in the
Indicators 2013 2014
Gross Domestic
Product
4.70% 5.70%
1
Business
Confidence Index
45.70% 57.00%
Repo Rate 7.75% 8.00%
Reverse Repo Rate 6.75% 7.00%
Cash Reserve Ratio 4.00% 4.00%
Inflation (WPI)
2
7.52% 0.00%
Prime Lending Rate 10.00% - 10.30% 10.00% - 10.25%
Deposit Rate
3
8.00% - 9.05% 8.00% - 9.00%
Exchange Rates 2013 2014
INR - USD 60.56 61.85
INR - EURO 80.41 77.41
Parameters 2013 2014
YoY
CHANGE
Gold 29,877 26,507 -11.28%
Silver 43,413 35,999 -17.08%
Equity
(BSE Sensex)
21,171 27,506 29.92%
Realty Index 1,433 1,502 4.79%

union budget 2014, such as pass through status for REITs,
rationalisation in FDI norms, creation of smart cities, etc.
and private equity activity in the commercial sector has also
begun to show momentum. Institutional investors, both
domestic and overseas, are demonstrating an increased
appetite and willingness to engage in the Indian real estate
commercial market. 2014 saw a lot more interest in leased
asset sales as investors start preparing for the REITs in the
market.
Large funds like Blackstone, continued to invest heavily
in income yielding leased commercial assets. A joint
venture between Embassy Group and Blackstone has
acquired a majority stake in a 106 acres office development
in Bangalore for INR1,951 crore ($324 million). A joint
venture of Blackstone and Panchshil acquired an Express
Tower located at Nariman Point, Mumbai for INR870 crore.
Morgan Stanley, who was looking for commercial real estate
assets since last year, inked its first commercial deal with
a $175 million investment in a Wadhwa Group “One BKC”
project located at BKC. A number of other funds, such as
Canada Pension Plan Investment Board (CPPIB), Maple
Tree and Tishman Spyer, are also looking for leased asset
investment aggressively in India.
Trends to watch in 2015:
The overall economic sentiment is positive, there is a
marginal growth in GDP and industrial output, software
export revenues are up and the inflation rate is abating. The
vision rolled out by the new government is encouraging.
In 2015, we look forward to seeing the government provide
more specific action items in implementing these vision
statements, like “Housing for All by 2022”, development of
Smart Cities and Industrial Corridors, investment in urban
infrastructure and affordable housing, and the focus on
“Make in India”. For the real estate sector, we await to see the
first listing on the REIT, more FDI inflow due to improving
economy and the rationalization of the norms, and the
introduction of the Real Estate Regulator bill.
We expect that the office real estate market in 2015 will
outperform 2014 in terms of office absorption though
capital and rental values in are likely to overall remain
stable to a moderate increase. However, rents are expected
to witness upward pressure for “Grade A” properties with
superior specifications and location, due to lack of such
properties. Approximately 40 million sq ft of grade A office
space will likely be added to the 6 major metros of India,
with Bengaluru continuing to garner the lion’s share both
in terms of absorption and new supply. Vacancy levels are
likely to decrease in almost all the markets as new supply
addition reached to year low in 2014 and not many projects
have been launched in 2014.
We are bullish on the industrial and warehousing sectors
as well, given the governments focus on “Make In India”
for the industrial sector. Also over the coming years, if
REITS take off, then they will boost the hospital segment
as well. We also expect more overseas funds investing in
India. Currently many of them are re-evaluating India as an
investment destination.
FDI in Real Estate
5000
10000
15000
20000
25000
30000
0
2006-07
2010-11
2007-08
2011-12
2012-13
2008-09
2013-14
2009-10
Apr-Oct14
Gross Domestic Product at Factor Cost
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
Jan-Mar10
Apr-Jun10
Jul-Sep10
Oct-Dec10
Jan-Mar11
Jan-Mar12
Jan-Mar13
Jan-Mar14
Apr-Jun11
Apr-Jun12
Apr-Jun13
Apr-Jun14
Jul-Sep11
Jul-Sep12
Jul-Sep13
Jul-Sep14
Oct-Dec11
Oct-Dec12
Oct-Dec13
Oct-Dec14
Business Confidence Index
0
10
20
30
40
50
60
70
80
90
100
Jan10
Jan12
Jan11
Jan13
Jan14
Apr10
Apr12
Apr11
Apr13
Apr14
Jul10
Jul12
Jul11
Jul13
Jul14
Oct10
Oct12
Oct11
Oct13
Oct14
IndexINRCrore

Transaction
volumes pick up
towards the end of
the year
The first three quarters of the year remained quite dull
for the Mumbai commercial office market with falling
absorption and negligible new supply. However, the market
revived towards the end of the year as transaction volumes
picked up in 4Q 2014. Despite a revival in demand, the total
absorption of 3.12 million sq ft in 2014 was 44% lower than
the 5.6 million sq ft absorption witnessed in 2013.
The average deal size declined significantly this year
and approximately 60% of the transactions fell in the
range of 5,000 to 20,000 sq ft. The primary reason for this
decline is limited participation of cost-conscious IT/ITeS
companies and cautious occupier sentiment in view of
the economic slowdown witnessed in the previous years.
Many corporations put their investment decisions on hold,
waiting to see how the city’s economic scenario shapes up,
especially in light of the new policies expected to be set by
the new state government.
BFSI, with a 39% share, continued to be the dominant sector
leasing office space in Mumbai, followed by engineering
(15%) and IT/ITeS (8%). Western suburbs, including
locations like Andheri East, Goregaon and Malad, remained
the most preferred location among occupiers and had about
a 32% share of the total absorption, followed by Thane (19%)
and BKC (18%).
New supply added to the Mumbai market during 2014 was
3.3 million sq ft. This is well below the 5 year average of new
annual supply of 8 million sq ft. Approximately 7.4 million
sq ft of vacant Grade A office space is available for lease or
sale in the Mumbai office market. Overall vacancy levels
Rental Values
*Indicative Grade A rents in INR per sq ft per month
**Nariman Point, Ballard Estate & Fort
Research &
Forecast Report
Mumbai | Office
January 2015
MICRO MARKETS
RENTAL
VALUE*
% CHANGE
QoQ YoY
CBD** 200 - 230 0% -12%
Worli/Prabhadevi 185 - 225 1% 2%
Lower Parel 145 - 190 5% 4%
BKC 225 - 320 0% 0%
Kalina 150 - 200 0% -9%
Goregaon / JVLR 100 - 110 0% 10%
Andheri East 80 - 130 0% -3%
Malad 80 – 100 0% 5%
Powai 110 - 130 0% 9%
Navi Mumbai 45 - 90 0% 22%
Thane / LBS 50 - 100 0% 13%
City Office Barometer
INDICATORS 2014 2015
Vacancy
Absorption
Construction
Rental Value
Capital Value

Source: Colliers International
have fallen to 14% in 2014 from 14.5% in 2013. There is
around 11 million sq ft of new Grade A office space forecast
to be completed in 2015; however, most the supply is
expected to hit the market towards the end of 2015.
While capital values have remained largely stable across
all micro-markets, the overall rents witnessed a 4% YoY
increase in 2014 despite lower absorption levels due to
limited new supply and lack of quality office space.
In 2014, the city got a major infrastructure boost, as
Mumbai’s much awaited first Metro Rail started operations
this year connecting Versova, Andheri and Ghatkopar on
an 11.4 km stretch, providing swift connectivity. Apart from
this, the state government has also increased the ready
reckoner rates for residential and commercial properties by
up to 20% in 26 posh zones.
Trends to watch for in 2015:
The office market of Mumbai has started showing strong
fundamentals, which is evident from the revived occupier
interest. With the new state government in place and
positive vibes from the centre in terms of favourable policies
for the city’s real estate and major infrastructure projects,
the city is likely to augur well in 2015. Over the next six
months, we anticipate a rise in commercial demand in this
market with tenants seeking quality office space. Given the
lack of supply and increasing demand, we also expect a
positive outlook for landlords, while in the second half of
2015, approximately 11 million sq ft office supply is expected
to hit the market, which will help keep rents stable during
the year.
Notes:
1. Office Market: 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.
2. Rents/Capital Value: Market average of indicative asking price for Grade A office space.
3. Available Supply: Total Grade A office space being marketed for sale or lease in surveyed quarter.
4. City Barometer: Represents increase, decrease or stable scenario; as compared to previous quarter.
5. All the figures in the report is based on market information as on 25th December 2014.
Top 5 Transactions of 2014
Key Under Construction Projects
CLIENT BUILDING NAME AREA (SF) LOCATION LEASE / SALE
Edelweiss Capital Kohinoor City 133,000 Kurla Sale
Willis Insurance India i-Think Techno Campus 130,000 Thane Lease
DHL India Silver Utopia 100,000 Andheri East Lease
Pfizer India The Capital 90,000 BKC Lease
Poddar International School Hamilton 90,000 Thane Lease
BUILDING NAME DEVELOPER AREA (SF) LOCATION POSSESSION
Godrej BKC Godrej Properties 1,020,000 BKC 2015
Seawood Grand Central Tower
I & II
L & T Infrastructure 1,350,000 Navi Mumbai 2015
Lodha Codename Business
Class
Lodha Group 1,260,000 Thane 2015
New Supply, Absorption And Vacancy Trends
Average Rental And Capital Value Trend
300
250
30,000
25,000
20,000
15,000
10,000
5,000
0
200
150
100
50
0
12 30%
25%
20%
15%
10%
5%
0%
10
8
6
4
2
0
2010 2011 2012 2013 2014 2015F 2016F
2008
2009
2010
2011
2012
2013
2014
2015
2016
Forecast
New Supply (In Mln sqft) Absorption(In Mln sqft) Vacancy(In %)
RentalValuesINRPersqftPerMonth
CapitalValuesINRPersqft

Office demand
doubled in 2014;
Prospects look
bright
Delhi witnessed approximately 1.18 million sq ft of lease
transactions during 2014, which is almost double the 2013
leasing of 0.6 million sq ft. The absorption was concentrated
in the submarkets of Okhla (24%), CBD (19%), Jasola (17%),
Saket (7%) and other locations such as Aero City, Vasant
Kunj, Mohan Corporative.
The IT/ITeS sector continued to have the highest share in
demand (44%), followed by BFSI (19%) and manufacturing
(11%).
This year, about 1.0 million sq ft of new supply was added to
the city’s Grade A commercial office space. Due to limited
additional supply and improved absorption levels, the city
vacancy has decreased marginally. The overall available
stock was reduced marginally to the tune of 2.2 million sq ft
from 2.7 million sq ft in 2013. The city will continue to have
restrained new supply in the next three years as only a few
projects are under construction in the city like Parsvnath’s
The Parsvnath 27 KG Marg, Infinia by RPS Developers and
NBCC Plaza; they are likely to add about 3.38 million sq ft
by the end of 2017. Another project that was launched in
2014, Vegas by Pratham Group at Dwarka Sector 14, will add
another 1.2 million sq ft to the city; however, the expected
completion of this project is 2019.
Despite improved absorption, rents in Delhi remained
stable on average, except Jasola, where rents rose by 2% YoY;
Connaught Place witnessed a 1% fall in rents YoY. Capital
values declined on average by 2% YoY across the micro-
markets due to restricted sales transactions in the city.
Rental Values
**Connaught Place
***Netaji Subhash Place
MICRO MARKETS
RENTAL
VALUE*
% CHANGE
QoQ YoY
CBD** 185 - 450 4% -1%
Nehru Place 175 - 225 0% 0%
Saket 140 - 190 8% 0%
Jasola 95 - 130 7% 2%
NSP*** 65 - 75 0% 0%
Research &
Forecast Report
Delhi | Office
January 2015
Vacancy
Absorption
Construction
Rental Value
Capital Value

In 2014, the city did not witness any major infrastructure
project completion; however, the state government has
announced Phase III of the Barapullah Bridge, which will
be built between the DND Flyway and Nizamuddin Bridge
and will connect the INA market with Mayur Vihar. Apart
from this, the government has also raised circle rates by
20% uniformly across the entire category A to H. These
rates were last revised in November 2012, when they were
hiked by more than 200%. The rationale for increasing circle
rates is to reduce the gap between the “going market rate”
at which transactions are occurring and the government
prescribed minimum value for registration of properties.
However, the rate increase cause few location having circle
rates more than the market rates as the location categories
formulated by the government cover large areas that do not
account for the substantial variance in prices within each of
the area categories. Sales transactions were reduced in the
period after the last rate hike.
The Delhi office market is now in recovery mode after the
general elections. Improved tenant demand from the IT/
ITeS and BFSI sectors has mitigated much of the vacancy
risk. The expected completion of about 1.5 million sq ft of
new Grade A office space in 2015 will help to maintain the
supply and demand equilibrium in the market. As a result,
we do not expect much change in current vacancy levels.
Overall rents will remain stable; however, due to limited
supply, quality buildings will continue to fetch premium
above-market rates.
Snapdeal
Independent Building -
A-28
115,000 Mohan Co-operative Lease
GodFrey Philips Omaxe Square 77,610 Jasola Lease
VFS Global Bharti World Mark 70,000 Aero City Lease
Moser Baer Okhla Phase 3 70,000 Okhla Lease
Mankind Pharmaceuticals DLF Prime Tower 54,000 Okhla Lease
NBCC Plaza NBCC 1,300,000 Kidwai Nagar 2016
RPS Infinia RPS Developer 1,000,000 Mathura Road 2015
NBCC Plaza NBCC 350,000 Okhla 2015
250
300
30,000
35,000
40,000
25,000
20,000
15,000
10,000
5,000
0
200
150
100
50
0
Notes:
1. Office Market: The commercial areas in New Delhi can be broadly classified into the CBD (Connaught Place), SBD Nehru Place, Bhikaji Cama Place, Netaji Subhash Place, Jasola
and Saket .
Forecast
New Supply (In Mln sqft) Absorption(In Mln sqft)
New Supply And Absorption Trends
2
2
1
1
0
2010 2011 2012 2013 2014 2015F 2016F
2008
2009
2010
2011
2012
2013
2014
2015
2016

Absorption dipped
by 13% YoY in
2014 but good
prospects for 2015
Gurgaon remained the most active and preferred market
in 2014 among corporate occupiers in the NCR region.
The satellite city shared about 67% of overall absorption in
NCR. Gurgaon recorded leasing volumes of 4.73 million
sq ft in 2014, which is approximately 13% less than the
previous year’s absorption of 5.47 million sq ft. IT/ITeS was
the primary contributor of this demand, followed by the
BFSI and logistics sectors. The share of the IT/ITeS sector
has further increased to 62% of the total absorption this
year. Last year, IT/ITeS accounted for only 53% of the total
absorption.
Due to its connectivity advantages and affordable rents,
NH8 remained the most preferred location and accounted
for 31% of the total absorption followed by Institutional
Sectors (16%) and Udyog Vihar (14%).
With the overall cautious market sentiments during the year,
developers had deferred constructing new office space.
As a result, new supply in 2014 was 3.2 million sq ft, down
from 4.53 million sq ft in 2013. The city is expected to see
completion of about 3.5 million sq ft of new office space
in 2015 as developers are expected to focus on completing
their existing projects, especially those with ready
structures.
More than 16.8 million sq ft of office space is available
for lease in the Gurgaon market, of which about 37% is
located in the Golf Course Road Extension and Sohna Road,
followed by NH8 (19%), Udyog Vihar (18%) and Golf Course
Road (12%). Vacancy is expected to remain stable in 2015 as
developers will remain cautious in adding more speculative
Research &
Forecast Report
Gurgaon | Office
January 2015
Rental Values
MICRO MARKETS
RENTAL
VALUE*
% CHANGE
QoQ YoY
MG Road 90 - 140 2% -2%
DLF Cyber City (IT) 85 - 90 4% 11%
Golf Course Road 85 - 140 0% 0%
Institutional Sectors
(Sec 44, 32, 18)
55 - 95 0% 0%
Golf Course Road
Ext./Sohna Road
55 - 75 4% 15%
National Highway 8 50 - 150 5% 14%
Udyog Vihar &
Industrial Sectors
35 - 50 0% -11%
Manesar 40 - 42 9% 0%
Vacancy
Absorption
Construction
Rental Value
Capital Value

supply in view of current vacancy levels.
Office rents witnessed an average increase of about 6%
YoY across the micro-markets. A few locations, such as
Institutional Sectors, Golf Course Road, Sohna Road and
National Highway 8 recorded increases in the range of 10 to
15%, while Udyog Vihar and Industrial Sector witnessed an
annual decrease of about 11%.
The city lacks basic infrastructure and has not witnessed
any improvement in 2014 either. However, a few projects,
such as the Rapid Metro project by DLF and the Subhash
Chowk Flyover, have picked up pace and are expected to be
completed by 2016. Gurgaon District Administration has
revised the circle rate in its five zones, Gurgaon, Manesar,
Sohna, Farukhnagar and Pataudi, on an average by 15%.
Gurgaon will remain the preferred office destination in NCR.
The leasing profile will be dominated by corporate offices
of large IT/ITeS companies. As business confidence in the
economy picks up, we expect these tenants to commit to
large office spaces, especially in Special Economic Zones.
Supply demand equilibrium will keep rents in check in
peripheral locations; however, rents in micro-markets
like Cyber City, Udyog Vihar and NH8 will continue to
strengthen further. Golf Course Road and its Extension
Road are positioning themselves as significant future
development destinations with large upcoming supply.
However, the development of Golf Course Road and Golf
Course Extension Road will be tied to Metro projects and 16
lane highway which are set to serve this market by 2016.
Aricent Unitech Infospace 550,000 Sector 21, Dundahera Lease
TCS Hines Skyview Tower 450,000 National Highway 8 Lease
WNS DLF Silokhera 145,000 National Highway 8 Lease
Accenture Unitech Infospace 120,986 Sector 21, Dundahera Lease
Copal Partners
Plot 267
120,000 Udyog Vihar Lease
Business Club AIPL Group 700,000
Golf Course Extension
Road
2015
Parsvnath IT Park Technicia Parsvnath Developers 695,000 Sohna Road 2015
Unitech Infospace, Phase 2
Building 7
Unitech Developers 450,000 National Highway 8 2015
100
120
140
8,000
10,000
14,000
12,000
6,000
4,000
2,000
0
80
60
40
20
0
Notes:
1. Office Market: The prime business locations in Gurgaon are MG Road, Golf Course Road, Cyber City and Udyog Vihar. Manesar on the outskirts of Gurgaon is also emerging as
the city’s new office destination.
Forecast
6
5
4
3
2
1
0
2010 2011 2012 2013 2014 2015F 2016F
2008
2009
2010
2011
2012
2013
2014
2015
2016

Recovery seems to
be on cards with
revived IT/ITeS
demand
The NOIDA office market seems to have entered recovery
mode in the second half of 2014. Revived tenant demand
from the IT/ITeS sector and other associated industries has
resulted in an increase in office absorption towards the end
of the year. In 2014, NOIDA recorded total office absorption
of around 1.8 million sq ft compared to last year’s 2.28
million sq ft.
The city continues to be driven by back offices of medium-
sized IT/ITeS companies that contributed 59% of the total
office absorption, followed by BFSI 21% and engineering,
media and entertainment 19%. Among the landmark deals
concluded during the year, Samsung leased 0.15 million
sq ft of Grade A office space in Okaya Building located at
Sector 62. NEC HCL took 0.12 million sq ft in Logix Techno
Park at Sector 127 and RDB Insurance took 0.10 million sq
ft in building A-31 located at Sector 64. Private equity fund
Blackstone’s acquisition of two commercial properties, 3C’s
Ozone IT SEZ comprising of 1.5 million sq ft of built-up-area
and IDFC owned Galaxy IT Park comprising of 1.3 million
sq ft is viewed as a ratification of NOIDA as an important
current and future IT destination.
This year, not many projects witnessed completion in
NOIDA, and only 1.07 million sq ft of Grade A office space
was added to the city’s total inventory. With approximately
19 million sq ft of office space at different levels of
construction, developers refrained from launching more
speculative supply.
The market witnessed 2% average increase YoY in rental
Research &
Forecast Report
NOIDA | Office
January 2015
Rental Values
**Sector 18
***Sector 16A, 62, 125-142
****Sector 124, 57-60, 63-75
MICRO MARKETS
RENTAL
VALUE*
% CHANGE
QoQ YoY
Commercial
Sectors**
95 - 110 0% 0%
Institutional
Sectors (Non IT)***
50 - 100 -7% 0%
Institutional
Sectors (IT)***
30 - 75 5% 0%
Industrial Sector
(IT)****
18 - 50 5% 8%
Vacancy
Absorption
Construction
Rental Value
Capital Value

values for Grade A office space across all the micro-markets.
Capital values also increased by 3% YoY, indicating market
revival.
In 3Q 2014, the local governing body approved the hike
in circle rates by 2% for commercial properties, except
for sectors 18 and 38A, where a 17% hike was approved.
For institutional properties, the circle rates increased by
10%. On the contrary, the development authority gave
a nod to the much needed mixed land-use policy that
allows commercial activities in residential sectors. These
commercial activities are allowed in residential areas
having roads with width of 24 m or more. This is likely to
stimulate further other real estate activities like construction
of hospitals, banks, schools, ATM kiosks, guest houses and
other business premises.
In 2015, occupiers, especially from IT/ITeS, will remain
as the prime drivers, similar to 2014. Approximately 10
million sq ft of grade A office space is at various stages of
construction in NOIDA, which is expected to complete in
next 3 years. However market is likely to see limited new
supply in 2015 as developers will refrain completing project
and adding more speculative supply until substantial leasing
volumes return. The rents expected to increase marginally in
medium term due to restricted new supply.
Samsung Okaya Building 150,000 Sector 62 Lease
NEC HCL Logix Techno Park 120,000 Sector 127 Lease
RDB Insurance
A-31
108,000 Sector 64 Lease
Harris Broadcasting Correnthum 80,000 Sector 62 Sale
Mediatek SB Tower 68,000 Sector 16A Lease
Delhi One The 3C Company 2,000,000 DND Flyway 2015
Mist Avenue Bhasin Group 1,000,000 Sector 143 2015
I Thum Beaver International 500,000 Sector 62 2015
70
90
80
8,000
10,000
16,000
14,000
12,000
6,000
4,000
2,000
0
60
50
40
30
10
20
0
Notes:
1. Office Market: 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.
Forecast
6
5
4
3
2
1
0
2010 2011 2012 2013 2014 2015F 2016F
2009
2010
2011
2012
2013
2014
2015
2016

Developers remain
cautious due to low
absorption
Chennai witnessed improved occupier sentiment as
leasing activities gained momentum during the end of
the year. Overall, transaction volumes decreased and the
office market witnessed about 4.11 million sq ft of office
absorption which is about 24% less than the last year
absorption of 5.43 million sq ft. Occupiers from the IT/
ITeS sectors were the primary contributors to this demand
followed by BFSI and Pharma. Guindy, despite being
the most preferred sub-urban micro market, did not see
much new lease transactions due to very limited vacant
stock available and most of this demand is shifted to OMR
which is emerging as the second most preferred suburb. A
number of large floor plate deals were concluded on this
stretch. For instance, around 0.1 million sq ft was leased
by Tata Consultancy Services and Scope International in
Ramanujam IT SEZ and Futura Tech Park respectively.
Another big ticket deal was concluded by Capegemini
admeasuring 0.07 million sq ft in Prestige Cyber Towers.
Construction continues to remain stagnant and the city
witnessed completion of only 0.8 million sq ft of office
space which is significantly less than the last 5 year average
of about 4 million sq ft. A number of developers deferred
delivery timelines of their under construction projects
in 2014 in view of lower demand. Limited new supply
addition led overall Grade A vacancy levels to decline to
below 20% this year. The available supply of Chennai Grade
A office property market remained at approximately 12.5
million sq ft By submarket, OMR accounted for 47% of the
available supply, followed by Ambattur 24% and CBD 16%.
Approximately 15 million sq ft of grade A office space is
under various stages of construction however, the city will
see limited supply addition as developers continue to defer
Research &
Forecast Report
Chennai | Office
January 2015
Rental Values
**OMR I (Madhya Kailash – Perungudi-Toll gate I)
***OMR II (Thoraipakkam – Sholinganallur) & OMR III (Semmencherry
– Siruseri)
MICRO MARKETS
RENTAL
VALUE*
% CHANGE
QoQ YoY
CBD 60 - 80 0% 0%
Guindy 50 - 60 0% 4%
Ambattur 20 - 30 0% 0%
OMR I** 45 - 60 0% 4%
OMR II & III*** 25 - 45 0% 0%
GST Road 35 - 40 0% 0%
Vacancy
Absorption
Construction
Rental Value
Capital Value

supply until substantial demand returns in the market.
Despite improved demand, rents and capital values for
Grade A office space remained stable across all micro-
markets. Rental values remained stable due to tight
corporate budgets and reduced demand for office space.
Trends to watch for in 2015
We anticipate renewed demand for office space, led by
the IT/ITeS sector. Guindy and Ambattur being preferred
locations will see greater demand and thus can witness an
upward pressure in rental values. Similarly the OMR until
Perungudi is also a preferred IT/ITeS destination and will be
impacted similarly. By contrast, rents on the farther stretch
of OMR from Sholinganallur to Navalur and Siruseri to
Sipcot are expected to remain stable.
Accenture Shriram Gateway SEZ 220,000 GST Road Lease
BNP Paribas Center Point 2 180,000 Guindy Lease
TCS Ramanujam IT SEZ 109,000 OMR Lease
Citi Bank Ramanujam IT SEZ 104,000 Taramani Lease
Astra Zeneca Ramanujam IT SEZ 104,000 Taramani Lease
SP InfoCity, OMR Phase 2 Shapoorji Pallonji Group 1,200,000 OMR 2015
Chennai One (BPO Park) Phase 2 ETL Developers 1,100,000 OMR 2015
Estancia Block B2 L&T & Arun Excello 469,000 GST Road 2015
Notes:
1. Office Market: Prime office properties in Chennai are located in four principal sub-markets: the CBD, SBD (Guindy, Manpakkam,Velachery) and the PBD (Old Mahaballipuram
Road (OMR).
120
9,000
10,500
12,000
7,500
6,000
4,500
3,000
1,500
0
105
90
75
60
30
15
45
0
Forecast
10 25%
20%
15%
10%
5%
0%
8
6
4
2
0
2010 2011 2012 2013 2014 2015F 2016F
2008
2009
2010
2011
2012
2013
2014
2015
2016

Bengaluru steals
the show with over
13.77 million sq ft
of absorption
The city tops the chart with about 49% share in the pan India
absorption in 2014. Robust leasing activities, especially
from the IT / ITeS sector with about 73% of the city’s total
absorption, backed up the overall absorption, resulting in
an enormous growth from 8.65 million sq ft in 2013 to 13.77
million sq ft in 2014. Over and above this, approximately,
4.38 million sq ft of office space has been pre-committed
in various IT parks that are under construction. Outer Ring
Road outshined other micro-markets as the most preferred
micromarket with more than 51% of the total absorption,
followed by Whitefield 20% and the CBD 6%.
The market has benefitted from both the increased
demand from the IT/ITeS sector and the booming
Indian e-commerce sector. The most significant deals in
2014 include the 3.8 million sq ft office space taken by
e-commerce giant Flipkart, which alone contributed about
25% in the city’s total absorption. Moreover, existing tenants
such as KPMG, IBM, L&T and Cap Gemini leased large
office spaces to accommodate their growing operations.
Private equity players also showed equal interest in this
market. The market witnessed one of the largest JV deals
between Black Stone Group and Embassy Group amounting
to INR 1,951 crores for Vrindavan Tech Village spread over
106 acres.
Strong absorption was complemented by robust new supply
of approximately 7.17 million sq ft. About 9.1 million sq ft
of supply was available for lease in the market in 4Q 2014,
of which about 70% was equally distributed in EPIP Zone
Whitefield and ORR. The remaining 30% of the supply
Research &
Forecast Report
Bengaluru | Office
January 2015
Rental Values
**Northern part of ORR - KR Puram till Hebbal
MICRO MARKETS
RENTAL
VALUE*
% CHANGE
QoQ YoY
CBD 90 - 130 16% 22%
Outer Ring Road
(Marathalli -
Sarjapur)
55 - 63 4% 7%
Outer Ring Road
(North)**
53 - 60 8% 28%
Bannerghatta Road 50 - 60 0% 0%
EPIP Zone/
Whitefield
28 - 36 0% 0%
Hosur Road 25 - 40 0% 8%
Electronic City 26 - 33 0% 5%
Vacancy
Absorption
Construction
Rental Value
Capital Value

was shared by CBD, Electronic City, Hosur Road and
Bannerghatta Road. Supply demand equilibrium helped to
keep the vacancy levels stable for the Grade A office market.
The city has a robust new supply pipeline of approximately
33 million sq ft in the next 3 to 5 years, which will further
keep the vacancy levels in check in the coming years.
Despite robust absorption, rents increased marginally on
the average by 3.5% YoY across all micromarkets, barring
locations like Bannerghatta and EPIP Zone/Whitefield
where rents remained stable. Capital values also recorded
an increase of 6% YoY across micro markets.
The state government of Karnataka also played an active
role this year to support the real estate momentum by
approving the execution of Phase 2 of the Namma Metro,
which will connect Byappanahalli to IPTL-Whitefield
and Mysore Road terminal to Kengeri. An elevated road
project costing INR1,200 crores will be constructed from
Basaveshwara Circle to Hebbel to facilitate a hassle-free
drive to Kempegowda International Airport (KIA).
A number of big RFPs floating in the market will keep
absorption momentum ongoing in 2015. Moreover,
companies like Honeywell and Goldman Sacs plan to set up
their campuses in Bangalore. Vacancy is expected to remain
stable if developers continue to deliver under-construction
projects as per the expected delivery dates. Rents may rise
marginally in the ORR–Marathalli–Sarjapur stretch due to
limited vacant stock while other locations will have stable
rental scenarios.
Flipkart Embassy Tech Village 3,500,000 Outer Ring Road Lease
KPMG RMZ Eco World 800,000 Outer Ring Road Lease
Volvo India Pvt. Ltd. RMZ Eco World 800,000 Outer Ring Road Sale
L&T RMZ Eco World 500,000 Outer Ring Road Lease
WIPRO Divyasree Technopark 500,000 Whitefield Lease
Maple Tree - 1 Phase Adamas Builder 900,000 Outer Ring Road 2015
Bagmane Constellation Business
Park - Virgo Block
Bagmane Developers 800,000 Outer Ring Road 2015
RGA Tech Park Primal Realty 800,000 Sarjapur Road 2015
8,000
10,000
12,000
6,000
4,000
2,000
0
70
60
50
40
30
10
20
0
Notes:
1. Office Market: Prime office properties in Bengaluru can be divided into three principal sub-market-CBD/Off CBD (MG Road, Millers Road, Vittal Mallya Road etc.) the SBD
(Banerghatta Road & Outer Ring Road (ORR)) and PBD (Hosur Road, EPIP Zone, Electronic City and Whitefield).
Forecast
20 20%
15%
10%
5%
0%
15
10
5
0
2010 2011 2012 2013 2014 2015F 2016F
2008
2009
2010
2011
2012
2013
2014
2015
2016

Market is likely to
remain stagnant in
2015
The Kolkata office occupier market continually remains
subdued for the second consecutive year as a result of the
policy level issues, with total absorption totalling around
1.66 million sq ft in 2014. This figure is similar to the 2013
levels. The primary contributor of this demand was BFSI
with around 25% share, followed by IT/ITeS with 21%
and the construction sector with 16%. Major transactions
include the purchase of large office spaces by local
companies and leases of about 40,000 sq ft by Serco Global,
30,000 sq ft by KPMG and 29,000 sq ft by British Telecom.
Due to weakening demand and policy level stagnancy,
developers deferred their projects and only about 1.14
million sq ft of prime office space was added to the city
office space. Major completions this year include Merlin
Infinity measuring 0.43 million sq ft and Martin Burn
Business Park consisting of 0.4 million sq ft office space.
Most of the projects completed this year are located in
Sector V/New Town. Around 16 million sq ft of office
space is at various levels of construction in the city, and is
expected to be completed by 2017.
Grade A office rents in Kolkata have continued on a
downward trend and declined by 7% YoY in the face of
relatively weak demand. Capital values showed mixed
trends across the city, with the CBD registering 3% increase
YoY on the back of domestic investor demand. Peripheral
locations like Sector V and New Town recorded a 16% YoY
decrease.
Limited supply addition and below-average absorption kept
the vacancy on the same levels.
For the first time in Kolkata, the local government reduced
Research &
Forecast Report
Kolkata | Office
January 2015
Rental Values
**Park Street, Camac Street, Chowranghee Road, AJC Bose Road
***EM Bypass, Topsia, Ruby
****Salt Lake, Rajarhat
MICRO MARKETS
RENTAL
VALUE*
% CHANGE
QoQ YoY
CBD** 85 - 115 -5% -11%
SBD*** 65 - 75 -7% -7%
Sector V/ New
Town
42 - 50 0% -6%
PBD**** 34 - 35 -1% -4%
INDICATORS 4Q 2014 1Q 2015 F
Vacancy
Absorption
Construction
Rental Value
Capital Value

the circle rate in the range of 8% to 33% across the city to
streamline property valuation by reducing discrepancies
between registration price and actual market value of
properties.
Looking at the weak demand, developers refrained from
launching new projects. Hence, no major new project was
launched in 2014. This further created an impact on the
rents as it declined by 7% YoY on the average across all the
micromarkets, except in SBD locations like EM Bypass,
Topsia and Ruby, where rents remained stable. Similarly,
capital values declined in Sector V and New Town by 10%
YoY but it rose by 8% YoY in the CBD due to robust demand
by local companies. All other micromarkets remained
stable.
The next year is expected to remain stagnant until the city
receives a boost at the policy level. Developers will refrain
from completing their projects until they see a strong signal
of improving demand. The market will remain tenant
favourable and rents may decline further in peripheral
locations due to robust under-construction developments
in the pipeline. However, rents for prime office spaces
located in the CBD will remain unaltered due to consistent
demand and limited supply in this location.
Mount Hill Realty Godrej Water Side 70,000 Sector V/ New Town Sale
RDB Group Godrej Water Side 70,000 Sector V/ New Town Sale
Serco Global BIPL 38,000 Sector V/ New Town Lease
KPMG Godrej Water Side 30,000 Sector V/ New Town Lease
British Telecom DLF-II 29,351 Sector V/ New Town Lease
Mani Twin Mani Group 1,800,000 Rajarhat 2015
Technopolis 2 Forum Projects 1,200,000 Bantala 2015
Magnacon Infinity Group 740,000 Salt Lake 2015
Notes:
1. Office Market: The major business locations in Kolkata are CBD (Park Street, Camac Street, Chowranghee Rd, AJC Bose Rd), East Kolkata (EM Bypass, Topsia, Ruby), Salt Lake/
Sector V and New Town / Rajarhat.
8,000
10,000
12,000
6,000
4,000
2,000
0
120
100
80
60
20
40
0
Forecast
5 25%
20%
15%
10%
5%
0%
4
3
2
1
0
2010 2011 2012 2013 2014 2015F 2016F
2008
2009
2010
2011
2012
2013
2014
2015
2016

Another Silicon
Valley in the
making
The Pune market remained robust in 2014, with office
take-up rising by 41%, to 4.91 million sq ft. The strength of
demand from the IT/ITeS sector (85%), together with BFSI
and Engineering, contributed to this increase. The city has
continually increased its share in overall absorption in the
last three years by seizing Mumbai IT/ITeS demand. The
availability of Grade A office space, especially in special
economic zones with affordable rentals and proximity to
the financial capital, has attracted many IT/ITeS companies
to consider this location as an alternative to Mumbai.
Locations in the west, such as Viman Nagar, Yerwada,
Station Road and Hinjewadi, witnessed the maximum
number of transactions with 45% share of total market
absorption, followed by CBD with 14% and Hadapsar/
Phursungi with 12%. Among the renowned deals this year,
HSBC took 0.50 million sq ft in Panchshil Business Bay at
Yerwada, BMC took 0.25 million sq ft in Yerwada. While,
Accenture India leased 0.2 million sq ft and pre-committed
another 0.8 million sq ft in SP Infocity SEZ. A side from the
foregoing, this city also garnered interest from large private
equity players such as Black Stone, which bought Blue Ridge
SEZ in Pune from fund manager IDFC.
Accompanying the demand, approximately 2.8 million
sq ft of new supply was added to the Pune office market.
However, this is less than last year’s new supply of around
3.5 million sq ft Most of this supply was concentrated in
SBD micromarkets, such as Viman Nagar, Yerwada and
Hadapsar.
Overall vacancy rate decline marginally during the year at
approximately 21.5%. The total vacant stock as of December
2014 was about 4.9 million sq ft. Approximately 9 million
sq ft is expected to hit the market in the next three years,
Research &
Forecast Report
Pune | Office
January 2015
Rental Values
MICRO MARKETS
RENTAL
VALUE*
% CHANGE
QoQ YoY
Baner 45 - 55 0% 0%
Bund Garden 50 - 65 0% 0%
Airport road/pune
station
45 - 75 0% 13%
Aundh 45 - 60 0% 0%
Senapati Bapat
Road
55 - 85 0% 0%
Bavdhan 35 - 45 0% 0%
Kalyani Nagar 45 - 60 0% 0%
Nagar Road 40 - 60 0% 0%
Hinjewadi 32 - 45 0% 3%
Hadapsar/Fursungi 38 - 65 0% 17%
Kharadi 32 - 65 0% 0%
Vacancy
Absorption
Construction
Rental Value
Capital Value

BMC Business Bay 252,000 Yerwada Lease
HSBC Business Bay 505,000 Yerwada Lease
Cognizant Wadhawa IT Park 150,000 Hinjewadi Lease
Flextronics Embassy Tech Zone 138,000 Hinjewadi Lease
HDFC Bank MIT Marathon 124,217 Bund Garden Road Lease
SP Infocity Building 5 Shapoorji Pallonji Group 800,000 Phursungi 2015
Commerzone Building 8 K Raheja Corp 420,000 Yerwada 2015
Acendas Phase II Acendas 615,000 Hinjewadi 2015
Notes:
1. Office Market: The prime office sub-markets of Pune include CBD (Deccan Gymkhana, Bund Garden Road, Senapati Bapat Road & Camp), Off CBD (Aundh, Airport Road and
Kalyani Nagar) and the eastern corridor, along with Nagar Road and Kharadi, which have emerged as a preferred location for financial and IT/ITES companies.
6,000
7,000
8,000
5,000
4,000
3,000
2,000
1,000
0
80
70
60
50
20
10
40
30
0
RentalValuesINRPerSqFtPerMonth
CapitalValuesINRPerSqft
Forecast
6
5
25%
20%
15%
10%
5%
0%
4
3
2
1
0
2010 2011 2012 2013 2014 2015F 2016F
which seems to be in tandem with the expected absorption.
Most of this supply will be located in suburban and
peripheral micromarkets. East and west Pune micromarkets
will continue to interest occupiers due to availability of
large floor plates, better infrastructure and proximity to
residential pockets of the city.
During the year, average rental values registered an increase
of 3% YoY, which was contributed by micromarkets like
Airport Road/Pune station, Hinjewadi, Hadpsar and
Phursungi. Other micromarkets witnessed a stable rent
scenario during the year. Capital values this year remained
stable YoY across all micromarkets.
The office market outlook for 2015 looks promising for
Pune. IT/ITeS will continue to play an important role in
the city’s overall commercial office space absorption,
primarily attributed to projects that have already seen pre-
commitments or long-established interest from various IT/
ITeS companies.
Overall rents and vacancy levels are unlikely to change in view
of the supply in tandem with absorption. However, rents in
SEZ are expected to increase due to the very limited space
available and the thin supply pipeline.
2008
2009
2010
2011
2012
2013
2014
2015
2016

About Colliers International
colliers.com
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6 continents
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$2.1
billion in
annual revenue
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billion square feet
under management
15,800
professionals
Primary Authors:
Surabhi Arora
Associate Director | Research
+91 124 456 7500
surabhi.arora@colliers.com
Sachin Sharma
Assistant Manager | Research
Amit Oberoi I National Director
Valuation & Advisory Services & Research
For Office Services:
Mumbai: George Mckay I South Asia Director
george.mckay@colliers.com
Delhi / NCR: Vikas Kalia | National Director
vikas.kalia@colliers.com
Bengaluru: Goutam Chakraborty I Director
goutam.chakraborty@colliers.com
Pune: Rishav Vij I Associate Director
rishav.vij@colliers.com
Chennai: Kaushik Reddy I Director
kaushik.reddy@colliers.com
Kolkata: Swapan Dutta I Senior Associate Director
swapan.dutta@colliers.com
Colliers International
Technopolis Building, 1st Floor,
DLF Golf Course Road,
Sector 54, Gurgaon - 122 002
TEL +91 124 456 7500
485

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