h1 2014_market insights

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Capri Global Capital Limited

Market InsightsSeptember 2014



Macro EconomicPerformance

ResidentialSegmentOverview

Key

Developments Appendix

CONTENTSCONTENTS

1 2 3 4

2




Macro Economic Performance1



4

Positive signals as economy grew fastest in the past ninequarters…

• As the political impasse gave way to a s trong decisive mandate to the Modi-led government, the trend of declining economic activity witnessed in last twoyears was reversed. Economic growth revived to surpass industry expectations during the April-June quarter of 2014-15;

• Growth revival was led by resurgence in manufacturing sector which grew by 3.5% (after experiencing contraction in the past two quarters), with overallindustrial growth at 4.2% vis-à-vis -0.4% in Q1 2013-14;

• A stable Government with an incremental reformist approach has led to revival in business sentiments. Investments rebounded in April –June 2014-15,with gross fixed capital formation registering a 7% growth (highest in the past 24 months) vis-à-vis 2.8% contraction during in the same quarter last year; &

• Going forward, for a sustained momentum in economic activity, provision of a conducive policy environment focused on reducing supply bottlenecks in the

system would be critical.

5.70%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

Q1 2012-13 Q2 2012-13 Q3 2012-13 Q4 2012-13 Q1 2013-14 Q2 2013-14 Q3 2013-14 Q4 2013-14 Q1 2014-15

GDP Growth

Average Growth Rate (Past Nine Quarters)

Source: Ministry of Statistics and Programme Implementation and CGCL Research

Quarterly GDP Growth (%)



5

Post a period of limited activity, FDI increased by 22% in April-June 2014-15…

• Improved investor sentiment on account of stable central leadership coupled with a revival in growth has led to increased foreign investment in recentmonths. Total FDI inflows during April-June 2014-15 were USD 11 bn vis-à-vis about USD 9 bn witnessed during the corresponding period in 2013-14;

• Resonating with the momentum in overall investment flows, the FDI flows for construction development increased y-o-y by 68% during April-June2014-15; &

• Going forward, the momentum of FDI flows is expected to be sustained as the Government focuses on improving the business environment. Fewmeasures include – increased foreign investment limits in defense and insurance sectors to 49% coupled with relaxation of FDI norms in real estate(built-up asset and capital conditions relaxed).

0

1

2

3

4

5

6

7

0

10

20

30

40

50

60

70

2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15*

USD bnUSD bn

Total FDI (USD Billion) FDI Equity flows (USD Billion)

Services Sector**27%

ConstructionDevelopment:

Townships, Housing,built-up

Infrastructure16%

Telecommunications11%

Computer Softwareand Hardware

9%

Drugs &Pharmaceuticals

8%

Automobile Industry7%

Chemicals(excluding Fertilizers)

6%Power

6%

MetallurgicalIndustries

5%

Hotel & Tourism5%

FDI Inflows (USD Bn) Cumulative FDI Inflows

–

Sectoral Distribution (%)

Source: Department of Industrial Policy and Promotion and CGCL Research

** Services sector includes Financial, Banking, Insurance, Non- financial/ business, Outsourcing, R&D, Courier, Tech. Testing and analysis



6

FIIs confidence in Realty stocks renewed in May and June2014…

• Revival in business sentiments during the last two months of Q2 2014 (on the back of a decisive political mandate in general elections) was reflectedin institutional investments too ~ Net Foreign Institutional Investments (FIIs) (both debt and equity) in May and June s tood at over USD 11 bn;

• Reflecting the overall market, investments in realty stocks also witnessed increase during May and June 2014 ~ listed developers such as OberoiRealty, Omaxe, amongst others, witnessed an increase in FII shareholdings (as a percentage of total shareholding) in recent months; &

• Increase in foreign investments have had a positive impact on the Rupee movement as well vis-à-vis major global currencies.

-60

-40

-20

0

20

40

60

80

100

120

-4

-2

0

2

4

6

8

January February Morch April May June

USD mnUSD bn

FII Realty (USD Million) Total FII (USD Billion)

FIIs have invested USD 124 mn inMay and June 2014 in Realty stocks

Net FII Flows (Jan-Jun 2014)

Source: Securities and Exchange Board of India, National Securities Depository Limited and CGCL Research



7

But countervailing factors kept the Rupee stable in Jan- Aug 2014…

54

55

56

57

58

59

60

61

62

63

64

1/1 1/15 1/29 2/12 2/26 3/12 3/26 4/9 4/23 5/7 5/21 6/4 6/18 7/2 7/16 7/30 8/13 8/27

Exchange Rate (INR/USD)INR/USD

Post reaching a peak in May, the Rupee declined by morethan 3% till August on account of global factors such as theongoing Iraq crisis

The Rupee gained by more than 5% against the US dollar onthe back of growing expectations of a stable government atthe Centre

Month/Day

Source: Reserve Bank of India and CGCL Research

• Post a volatile period in 2013, the Indian Rupee has largely been range bound in first eight months of 2014, appreciating by around 2% during theperiod; &

• Going forward, the Rupee is expected to remain range bound with factors such as pro-reform Government policies expected to strengthen the Rupee,

while concerns over capital outflows on possible increase of interest rates by the US Federal Reserve may weaken the Rupee.

Rupee Movement vis-à-vis US Dollar (Jan-Aug 2014)



8

500

750

1,000

1,250

1,500

1,750

2,000

2,250

2,500

5,000

7,500

10,000

12,500

15,000

17,500

20,000

22,500

25,000

27,500

30,000

1/1 1/15 1/29 2/12 2/26 3/12 3/26 4/9 4/23 5/7 5/21 6/4 6/18 7/2 7/16 7/30 8/13 8/27

Realty Index ValueSensex Index Value

S&P BSE Sensex S&P BSE Realty Index

Buoyed by foreign capital inflows, Sensex touched recordlevels, however, Realty stocks underperformed…

• Overall, during the first eight months of 2014, Sensex and Realty Index increased by 26% and 17% respectively ~ The Realty Index hasunderperformed the overall Sensex, owing to a decline witnessed in past two months on the back of poor performance of index’s major players such

as DLF and Unitech, which have witnessed legal setbacks in the months of July and August.

Post formation of a stable Government, the Sensexhas sustained momentum to reach 26,638 by

August-end, however, the Realty Index has not beenable to match Sensex, declining by 23% aftertouching peak in June 2014

Between January and May 2014 (week of announcement of general electionresults), both Sensex and Realty Index increased witnessing 17% and 34%increment respectively

Stock Indices ~ BSE Sensex and Realty Index (Jan-Aug 2014)

Source: Bombay Stock Exchange and CGCL Research



9

0%

2%

4%

6%

8%

10%

12%

14%

Percentage

CPI (IW) Repo Rate Reverse Repo Rate

Further, credit costs remained high as the Central Bankmaintained a hawkish stance to curb inflation…

• Retail inflation eased in the first half of 2014 to below 8% levels (the short term target set by RBI), as the Central bank’s tight monetary policy in thepast 15 months have yielded results coupled with slower annual increments in fuel and cloth prices;

• However, despite sub 8% levels, the Central bank kept the repo and reverse repo rates stable in 2014 on account of concerns remaining overpossibility of inflation heading north over monsoon deficit in conjunction with the Central bank’s focus on ensuring continued trend of loweredinflation levels as growth picks up; &

• Unchanged repo and reverse repo rates left banks with limited room for reduction of lending rates, which led to continuance of higher funding costsfor the real estate sector.

Credit Costs ~ Repo and Reverse Repo (%) and Inflation ~ CPI (%)

Source: Ministry of Statistics and Programme Implementation, Reserve Bank of India and CGCL Research

RBI target of 8% inflation by January 2015 RBI target of 6% inflation by January 2016




2Residential Segment Overview



0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

H2 2013H1 2014

N u m b e r o f U n i t s

Absorption (units)

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

H2 2013 H1 2014


Supply (units)

63%

37%

65%

35%

Top 3 cit ies Other 4 Cities

70%

30%

73%

27%

Top 3 cities Other 4 Cities

Overview|H1 2014

112,797 units

37% decline vis-à-vis H2 2013

Supply share

in H1 2014

Supply share

in H2 2013

103,040 units;

23% decline vis-à-vis H2 2013

Absorption

share in H1

2014

Absorption

share in H2

2013

• Subdued economic environment since past two years, high inflation and interest rates, coupled with rising inventory levels led to restrained demand-supply activity;• Despite a decline in new launches, overall unsold inventory levels increased by more than 10% during the review period. The increase was led by NCR which

observed an increment in its unsold stock by approximately 8%;• Demand-supply activity was primarily focused on affordable housing segment during the review period, with preference for projects offering 2 and 3 BHK

configurations; &• The weighted average price in five of the top seven cities witnessed subdued appreciation during H1 2014, amidst pressures owing to high unsold inventory levels.

Appreciation in MMR and Pune was primarily skewed due to launches above the prevailing base sale price in the city coupled with decline in new launches.11

Absorption Distribution ~ Top 3 and Other Four Leading Cities*

Overall Supply (units) Supply Distribution ~ Top 3 and Other Four Leading Cities*

Overall Absorption (units)

Notes: *Top 3: MMR, NCR and Bengaluru; Other Four: Chennai, Pune, Hyderabad and KolkataSource: PropEquity and CGCL Research




City Level Insights

Mumbai-MMR

Bengaluru

Hyderabad Kolkata

Delhi-NCR

Chennai

Pune

H1 2014



H1 2014

Supply (New Launches): 28,008 units

Absorption: 27,774 units

Weighted Avg. Launch Price: INR 8,324/sft

Mumbai Metropolitan Region

Mumbai, Navi Mumbai & Thane



62%

20%

18%

Thane Navi Mumbai Mumbai0

7,500

15,000

22,500

30,000

37,500

45,000

52,500

60,000

H1 2011H2 2011H1 2012H2 2012H1 2013H2 2013H1 2014


0

7,500

15,000

22,500

30,000

37,500

45,000

52,500

60,000

67,500

75,000

H1 2011 H2 2011 H1 2012 H2 2012 H1 2013 H2 2013 H1 2014


45%

31%

24%

Thane Mumbai Navi Mumbai

Demand-Supply Activity… Half Yearly City Level Supply (units)

Micro-market wise Absorption Distribution (H1 2014)

Source: PropEquity and CGCL Research

Average Supply

Micro-market wise Supply Distribution (H1 2014)

Half Yearly City Level Absorption (units)

Average Absorption

• Owing to dampened sentiments of previous seven to eight quarters, the demand albeit subdued, continued to be led by end users vis-a-vis investors in theMMR, with the former focusing on affordability which led to dominance of cost effective peripheral locations in Thane and Navi Mumbai, while Westernsuburbs led within the core Mumbai city (on back of proximity to commercial hubs and better connectivity to other parts of the city);

• As unsold inventory levels remained high along with impending elections both at the Centre (May 2014) and at the State (Oct 2014), developers continued todiscount with approximately 50% reduction in new launches in H1 2014, focusing primarily on mid and high end segments in peripheral locations of MMR; &

• Some of the projects launched included Runwal Eirene by Runwal Group, Acropolis Ph-III by Arkade Group, Godrej City by Godrej Properties, Western Heightsby Adani Group, Transcon Auris Ivorine by Transcon Developers, amongst others.

14



0

50

100

150

200

250

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

H1 2011 H2 2011 H1 2012 H2 2012 H1 2013 H2 2013 H1 2014

U n s o l d I n v e n t o r y ( N u m b e r o f U n

i t s -

' 0 0 0 )

P r i c e ( I N R / s f t )

Weighted Average Price - New Launches Unsold Inventory

Pricing and Unsold Inventory… Pricing (INR/sft) and Unsold Inventory (units)

MMR Residential H1 2014* H2 2013

Weighted Average Price – New Launches (INR/sft)

8,324 6,195

Unsold Inventory (units – ‘000)

213.76 213.53

• As decline in new launches outpaced the decrease in absorption, the demand-supply gap for the region reduced during the review period, which in turn led toonly marginal increase in unsold inventory levels during H1 2014; &

• The weighted average price of new launches witnessed an increment of 34% during H1 2014 in MMR, as Mumbai city (having higher prices than averageMMR base sale price) had a larger share in new launches during the review period (31% in H1 2014 vis-à-vis 21% in H2 2013).

Notes: The base data for the analysis incorporates row houses/villas, Independent floors/low rise and PlotsSource: PropEquity and CGCL Research

15



42%

58%

Top10 Locations Others

45%

55%


17%

83%

Top 10 Developers Others

Top 10 Developers based on Absorption (units)

Top Ten Performers… Top 10 Locations based on Absorption (units)

Location

Absorbed

Units

Dombivali (E) (Thane) 3,191

Badlapur (Thane) 1,530

Panvel (N.Mum) 1,484

Virar (W) (Thane) 1,224

Kalyan(W) (Thane) 931

Ulwe (N.Mum) 913

Ambernath (Thane) 902

Ghodbunder Road(Thane) 901

Nalasopara (W)

(Thane) 781 Vasai (E) (Thane) 730

Top 10 Locations based on New Supply (units)

Top 10 Developers based on New Supply (units)

Location

Absorbed

Units

Lodha Group 2,332

Runwal Group 524

Godrej Properties 346

Sugandhi Builders 261

Rashmi Housing 251

Kalpataru 210

Rustomjee Group 201

Raunak Group 191

Panvelkar 177

ShreenathEnterprises 164

39%

61%


Location

Launched

Units

Runwal Group 2,132

Vijay Group 2,000

Lodha Group 1,012


Hiranandani 720

Soham Developers 700

Arkade Developers 634

Adhiraj Constructions 600

Wadhwa Group 590

Vaastu Siddhi Group 559

Location

Launched

Units

Neral (N. Mum) 2,196

Dombivali (Thane) 1,332

Panvel (N.Mum) 1,312

Virar (W) (Thane) 1,268

Andheri (W) (Mum) 833

Dahisar (E) (Mum) 786

Worli (Mum) 784

Powai (Mum) 761

Sector 37 Kharghar(N.Mum) 730

Majiwada (Thane) 708

Notes: The base data for the analysis incorporates row houses/villas, Independent floors/low rise and PlotsMum - Mumbai; N.Mum - Navi MumbaiSource: PropEquity and CGCL Research

16



H1 2014




National Capital Region

Delhi, Gurgaon, Noida, Gr. Noida,

Ghaziabad & Faridabad



1.3%

23.7%

42.0%

18.5%

0.8%

13.7%

Faridabad Ghaziabad Greater Noida Gurgaon New Delhi Noida0

10,000

20,000

30,000

40,000

50,000

60,000

H1 2011H2 2011H1 2012H2 2012H1 2013H2 2013H1 2014


0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

H1 2011 H2 2011 H1 2012 H2 2012 H1 2013 H2 2013 H1 2014


0.4%

23.2%

41%

23.5%

1.1%

10.9%

Faridabad Ghaziabad Greater Noida Gurgaon New Delhi Noida




Average Supply



Average Absorption

• High interest costs coupled with sluggish economic activity in the past 24 months meant residential traction in NCR continued to remain tepid during H1 2014as both investors and end-users adopted a cautious approach. Absorption witnessed a decline of approximately 51% vis-à-vis H2 2013 ~ more than 65% ofthe sales were accounted by Greater Noida and Ghaziabad (primarily in mid segment) followed by Gurgaon (with traction in both mid and high end projects);

• As the region remained a supply laden market, developers remained hawkish towards new launches and focused on completion of existing projects ~ newsupply declined by 25%, with units primarily being released in mid end segment in Greater Noida and Ghaziabad and in high end segment in Gurgaon; &

• Key projects launched included One India Bull by IREL (Indiabulls), Oasis by Godrej Properties, Enviro City by Lotus Greens Developers, amongst others.

18



0

20

40

60

80

100

120

140

160

180

200

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

H1 2011 H2 2011 H1 2012 H2 2012 H1 2013 H2 2013 H1 2014

U n s o l d I n v e n t o r y ( N u m b e r o f U n

i t s -

' 0 0 0 )




NCR Residential H1 2014* H2 2013


4,124 3,842


182.34 169.13

• The demand-supply gap for NCR was maximum during the review period, as a steep decline in absorption outpaced decline in new launches, thus leading toan increase of approximately 8% in unsold stock in H1 2014 ~ more than 46% of the unsold inventory was accounted by Greater Noida followed byGhaziabad and Gurgaon at approximately 19% and 17% respectively; &

• The weighted average price of new launches witnessed a moderate increment of 7% during H1 2014, as Gurgaon (having higher prices than average NCRbase sale price) had a relatively larger share in new launches during the review period (23% in H1 2014 vis-à-vis 13% in H2 2013).

Notes: *an increase in price and a decline in unsold inventory taken as positive and vice versa

Source: PropEquity and CGCL Research19



51%49%

Top 10 Locations Others

42%58%


22%78%


46%54%




Location

Absorbed

Units

Raj Nagar Ext. (Gzb.) 1,055

Tech Zone IV (Gr. Noida) 1,030

Yamuna Exp. (Gr. Noida) 943

Sec.16C (Gr. Noida) 705

Sec. 1 (Gr. Noida) 704

NH-24 Bypass (Gzb.) 679

Pratap Vihar (Gzb.) 532

Sec. 6B (Gr. Noida) 500

Jaypee Sp. City (Gr. Noida) 278

Crossings NH-24 (Gzb.) 270



Location

Absorbed

Units

Prateek Buildtech 450

Amrapali Group 391

Vatika Group 374Mahagun 332

Supertech Limited 324

Wave Infratech 320

Jaypee 308

Gaursons India 273

Oasis Group 236


Location

Launched

Units

Yamuna Expressway(Gr. Noida) 2,500

Pratap Vihar (Gzb.) 2,188

Sector 1 (Gr. Noida) 1,622

NH-24 Bypass (Gzb.) 1,610

Sector Omicron-1(Gr.Noida) 1,150

Tronica City (Gzb.) 1,038

Sector 16B (Gr. Noida) 1,000

Tech Zone IV(Gr. Noida) 978

Sector 5 (Gurg.) 950Sector 129 (Noida) 900

Notes: The base data for the analysis incorporates row houses/villas, Independent floors/low rise and PlotsGzb - Ghaziabad; Gr. Noida - Greater Noida; Gurg - GurgaonSource: PropEquity and CGCL Research

Location

Launched

Units

Vihaan Developers 2,000

Prateek Buildtech 1,388

Gaursons India 1,246

Vatika Group 1,175

Magnum Group 1,038

Agarwal Developers 1,000

Amrapali Group 980

Mahagun 924

Bayaweaver 900

IREL (Indiabulls) 888

20



H1 2014




Bengaluru



1%

34%

8%

44%

13%

Central North East North West South East South West0

5,000

10,000

15,000

20,000

25,000

30,000

H1 2011H2 2011H1 2012H2 2012H1 2013H2 2013H1 2014


• Led by steady demand from IT workforce, the Bengaluru residential market remained most resilient during H1 2014, with the decline in sales at 5%, being thesmallest across top seven cities;

• Owing to high unsold stock, developers remained cautious with subdued new launches, primarily in mid and high end segments. Some of the projectslaunched included Republic of Whitfield by DivyaSree Developers, Purva Palm Beach by Puravankara, E City Town II by GM Infinite dwelling, amongst others; &

• Proximity to commercial hubs and affordable price points led to continuance of attractiveness of peripheral locations such as Electronic City, Whitefield, Hennur

Road, Sarjapur Road, Marathahalli, Hebbal, KR Puram, amongst others, across North East and South East micro markets of the city.

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

H1 2011 H2 2011 H1 2012 H2 2012 H1 2013 H2 2013 H1 2014


1%

27%

6%

50%

16%

Central North East North West South East South West




Average Supply



Average Absorption

22



0

10

20

30

40

50

60

70

80

90

100

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

H1 2011 H2 2011 H1 2012 H2 2012 H1 2013 H2 2013 H1 2014

U n s o l d I n v e n t o r y ( N u m b e r o f

U n i t s -

' 0 0 0 )



Pricing and Unsold Inventory…

• Steady demand coupled with fewer launches led to reduction in demand-supply gap, which in turn led to a marginal increase in unsold inventory levelsduring the review period; &

• Despite slowdown in launches, the weighted average price of new launches witnessed a moderate increment of 7% during H1 2014, as developers factoredin increase in input costs.

Pricing (INR/sft) and Unsold Inventory (units)

Notes: *an increase in price and a decline in unsold inventory taken as positive and vice versa

Bengaluru Residential H1 2014* H2 2013


4,556 4,239


87.13 86.89

Source: PropEquity and CGCL Research23



55%

45%

Top10 Developers Others

21%79%


44%

56%




Location

Absorbed

Units

Whitefield 2,764

Electronic City 2,206

Sarjapur Road 1,171

Sarjapur 947

Hosur Road 789

K.R. Puram 736

Haralur Road 683

Bannerghatta Road 631

Kanakpura Road 618

Hennur Road 607



Location

Absorbed

Units

Prestige Group 970

DivyaSree 840

Puravankara 819Shriram Properties 509

Provident Housing 467

PrabhavathiBuilders 396

DS-Max Properties 390

Sobha Developers 336

Indya Estates 328

Dreamz Infra 327

Location

Launched

Units

GM Infinite Dwelling 1,400

DivyaSree 1,300

Prestige Group 1,211

Shriram Properties 1,096

Mahaveer ReddyStructures 980

Namma Mane Housing 900

Shapoorji Pallonji 703

Esteem Group 700

Puravankara 651

Assetz 449

Location

Launched

Units

Electronic City 2,176

Hoskote 1,613

Whitefield 1,465

Gunjur 1,211

Sarjapur Road 1,204

Hennur Road 1,091

Haralur Road 1,080

Yeshwantpur 840

Thanisandra 721

Binnypet 703


71%

29%

Top10 Locat ions Others

24



H1 2014




Chennai



0

5,000

10,000

15,000

20,000

H1 2011H2 2011H1 2012H2 2012H1 2013H2 2013H1 2014


0

5,000

10,000

15,000

20,000

25,000

H1 2011 H2 2011 H1 2012 H2 2012 H1 2013 H2 2013 H1 2014


6%

30%

64%

North East North West South East South West

Demand-Supply Activity… Half-yearly City Level Supply (units)




Half-yearly City Level Absorption (units)

1%13%

38%

48%


Average Absorption

Average Supply

• The overall macro economic condition impacted the Chennai market too, with end users delaying purchases, while developers focused on completion ofexisting projects. Consequently, a decline of 12% and 14% was witnessed in supply and absorption respectively during H1 2014;

• Availability of land parcels, affordability, proximity to IT hubs coupled with improving connectivity owing to under construction metro network remained keydrivers for demand-supply activity in peripheral locations of South West and South East Chennai. The 12-15 km Old Mahabalipuram Road (OMR) stretch inSouth East including Semmancherry, Thiruporur, Thuraipakkam, Kelambakkam, Egattur, Indiranagar, Perungudi remained most active; &

•

Key projects launched included Eden Park Ph II (Almond-Marigold & Peach) by L&T Properties, Serene by Mantri Developers, amongst others. 26



0

5

10

15

20

25

30

35

40

45

50

0

1,000

2,000

3,000

4,000

5,000

6,000

H1 2011 H2 2011 H1 2012 H2 2012 H1 2013 H2 2013 H1 2014

U n s o l d I n v e n t o r y ( N u m b e r o f U n i t s -

' 0 0 0 )




• In the past one year, the city based developers have responded prudently to the subdued demand levels in the region by holding on to new launches.Consequently, demand led supply by more than 2,000 units in both H2 2013 and H1 2014, thus leading to a 5% decline in unsold stock in past 12 months; &

• An increase of 15% in weighted average price of new launches during first six months of 2014 is primarily on account of launch of projects in higher budgetsegments and in part due to decreasing unsold stock.


Chennai Residential H1 2014* H2 2013


4,997 4,358


42.18 44.45


27



74%26%


35%65%

Top10 locations Others

66%

34%


22%

78%




Location

Absorbed

Units

Padur (OMR) 3,191

Perumbakkam 1,530

Porur 1,484

Ambattur 1,224

Siruseri (OMR) 931

Padappai 913

Tambaram 902

Sholinganallur (OMR) 901

Kelambakkam (OMR) 781

Chromepet 730



Location

Absorbed

Units

Arun ExcelloFoundations 2,332

L&T Properties 524 VGN 346

Pdotg Constructions 261

Amarprakash Group 251

Ruby Builders 210

Step Stone 201

Mahindra Lifespaces 191

Jain Housing &Constructions 177

TVH Builders 164

Location

Launched

Units

Hall Mark Infrastructure 860

L&T Properties 712

Vijay Shanthi 548

Ruby Builders 538

BSCPL Infrastructure 383

TVH Builders 357

Vishwakarma(Chennai) 284

Tata 250

Isha Homes 216

Mantri Developers 168

Location

Launched

Units

GST Road 860

Siruseri (OMR) 712

Sriperumbudur 636

Pallavaram 552

Tambaram 458

Arasankazhani (OMR) 383

Padur (OMR) 357

Chembarambakkam 350

Sholinganallur (OMR) 288

Manapakkam 258


28



H1 2014

Supply (New Launches):15,366 units



Pune



• At an overall level, with the background of a cautious environment, the city’s residential market witnessed sluggish activity during H1 2014, as both supply andabsorption declined by 50% and 19% respectively;

• The North West micro market has led the demand-supply activity in recent years; however, as prominent locations of Wakad and Hinjewadi (being commercialhubs) in the micro market lead to saturation, the focus has shifted to adjoining areas of Ravet, Punawale, Moshi, amongst others offering units at lower pricepoints. Besides these, locations such as Hadapsar, Handewadi Road, Phursungi, Bavdhan etc. in Southern micro markets of the city have been witnessingincreasing interest owing to proximity to SP Infocity (IT Park) and Mumbai-Pune Highway; &

• Key projects launched included Dream City by DS Kulkarni Developers, Stargaze by Kolte Patil Developers, Presidio by Prithvi Edifice, amongst others.

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

H1 2011 H2 2011 H1 2012 H2 2012 H1 2013 H2 2013 H1 2014


0

5,000

10,000

15,000

20,000

25,000

30,000

H1 2011H2 2011H1 2012H2 2012H1 2013H2 2013H1 2014


29%

31%

22%

18%

North East Pune North West Pune South East Pune South West Pune

Demand-Supply Activity… Half-yearly City Level Supply (Units)





22%

42%

21%

15%


Average Absorption

Average Supply

30



0

10

20

30

40

50

60

70

80

90

0

1,000

2,000

3,000

4,000

5,000

6,000

H1 2011 H2 2011 H1 2012 H2 2012 H1 2013 H2 2013 H1 2014

U n s o l d I n v e n t o r y ( N u m b e r o f U n i t s -

' 0 0 0 )




• Unsold inventory levels declined by more than 2% during H1 2014, as decline in absorption was corresponded by a sharper decrease in new launches by thedevelopers; &

• The weighted average price increased by 31% during H1 2014, primarily skewed on account of new launches above the prevailing base sale price in the city.The increase was further accentuated owing to rising input costs materials coupled with a steep decline in new launches.


Pune Residential H1 2014* H2 2013


5,547 4,229


79.23 81.80


31



17%

83%


41%59%


65%35%

Top10 Locat ions Others

53%

47%


Location

Launched

Units

D.S. KulkarniDevelopers 1,044

Pride Housing 1,000

Darode Jog 872Kolte Patil Developers 703

Rohan Builders 550

Prabhavee Group 450

Prithvi Shelters 450

Saarrthi Group 376

Mantri Developers 306

Gulmohar Builders 300

Paradigm Construction 300



Location

Absorbed

Units

Wagholi 1,177

Moshi 986

Wakad 792

Dhanorie 792

Chakan 618

Hadapsar 600

Talegaon 570

Undri 515

Hinjewadi 509

Ambegaon budruk 485



Location

Absorbed

Units

Kolte Patil Developers 586

Pride Housing 496

Maple Group 301Darode Jog 286

Kumar Properties 275

D.S. Kulkarni Developers 213

Aksha Group 204

Kumar UrbanDevelopment 184

Goel GangaDevelopment 175

Shivtara Properties 171

Location

Launched

Units

Wagholi 1,460

Hadapsar 1,132

Dhanorie 1,000

Kondhwa Road 856

Kharadi 694

Bavdhan 650

Pirangut 650

Moshi 600

Lonikand 376

Undri 340


32



H1 2014

Supply (New Launches): 3,421units



Hyderabad



0

2,000

4,000

6,000

8,000

10,000

H1 2011H2 2011H1 2012H2 2012H1 2013H2 2013H1 2014


12%

60%

9%

19%


• Political uncertainty over the long standing demand for formation of the new State finally ended in H1 2014, however, this had marginal impact on the real estateactivity during the review period, as buyers remained in a wait and watch mode to understand how the division process would transpire going forward. Consequently,both supply and demand remained subdued during the first six months of 2014;

• The western micro markets (owing to proximity to commercial hubs) led demand-supply activity followed by locations in Eastern region (on back of improvingconnectivity due to upcoming Phase I of metro line). Locations that were most active included: Miyapur, Gachibowli, Kondapur, Tellapur (North West); Manikonda,Toli Chowki, Kokapet (South West); Nagole, LB Nagar (South East); &

•

Key projects launched included Akash Lake View by YSK Infra Projects Limited, Sulakshana by TNR Estates, Trendset Rhythm by Trendset Builders, amongst others.

0

5,000

10,000

15,000

H1 2011 H2 2011 H1 2012 H2 2012 H1 2013 H2 2013 H1 2014


8%

57%

18%

17%







Average Supply

Average Absorption

34



28.00

29.00

30.00

31.00

32.00

33.00

34.00

35.00

36.00

37.00

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

H1 2011 H2 2011 H1 2012 H2 2012 H1 2013 H2 2013 H1 2014

U n s o l d I n v e n t o r y ( N u m b e r o f

U n i t s -

' 0 0 0 )




Hyderabad Residential H1 2014* H2 2013

Weighted Average Price – New Launches (INR/sft) 3,114 3,375


31.69 34.28

• Unsold stock in the city declined by more than 7% during H1 2014, as decline in absorption was corresponded by a sharper decrease in new launches by thedevelopers as they continued to focus on project completions; &

• The weighted average price of new launches decreased by about 8% during H1 2014, as new launches were primarily focused in cost effective peripherallocations which had average pricing below the city level average base sale price.


35



60%40%


71%29%


21%

79%


45%55%

Top 10 Locat ions Others



Location

Absorbed

Units

Manikonda 664

Miyapur 480

Patancheru 399

KPHB 354

Kondapur 341

Chandanagar 312

Kompally 260

Gachibowli 254

LB Nagar 248

Tellapur 212



Location

Absorbed

Units

Krushi Realtors 250


Aparna Constructions& Estates 206

Aditya Constructions 183

Prajay EngineersSyndicate 163

Rajapushpa Properties 126

Rashmi RealtyBuilders 125

Praneeth Developers 108

Legend Estates 107

Trendset Builders 101

Location

Launched

Units


Armsburg Properties 216

Vertex Homes 216Sivaa ShakthiConstructions 210

Muppa Homes 205

TNR Estates 197

Mahanagar Homes 180

Tripura Constructions 165

Jain SrikarConstructions 157

Trendset Builders 140

Location

Launched

Units

Kokapet 426

LB Nagar 257

KPHB 256

Hi-tech City 253

Suchitra Circle 216

Gopanapalli 205

Miyapur 198

Nagole 180

Lingampally 165

Kondapur 140


36



H1 2014




Kolkata



3%

54%

7%

22%

10%

3%1%

Central North East North West South East South West Outskirts 24 Paraganas

0

2,000

4,000

6,000

8,000

10,000

H1 2011H2 2011H1 2012H2 2012H1 2013H2 2013H1 2014


• Post a period of stagnation, the residential real estate market in Kolkata showed initial signs of recovery during H1 2014, as new launches witnessed increaseof about 45% vis-à-vis H2 2013. Launches were primarily focused in mid-end segment across peripheral locations in Eastern and Southern micro-marketsincluding New Town, Rajarhat, Garia, amongst others (on back of proximity to major IT/ITeS such as Sector V, Salt Lake coupled with ongoing infrastructuredevelopments including widening of Rajarhat Expressway, metro expansion, amongst others);

• However, demand continued to remain restrained as end-users that primarily drive sales in the city continued to postpone their investment decisions; &• Key projects launched included Siddha Nation by Siddha Group, The RainForest by Mounthill Realty, PS Srijan Ozone by PS Group, amongst others.

3%

65%

6%

18%

3%

5%

Central North East North West South East South West Outskirts 24 Parganas






0

5,000

10,000

15,000

H1 2011 H2 2011 H1 2012 H2 2012 H1 2013 H2 2013 H1 2014


Average Supply

Average Absorption

38



57%43%


57%43%


80%20%


60%

40%




Location

Absorbed

Units

Rajarhat 1,676

Garia 253

Barasat 220

Narendrapur 160

Sonarpur Road 158

Madhyagram 138

Behala 132

Howrah 132

Uttarpara 111

Amtala 106



Location

Absorbed

Units

Ideal Developers 410

Mounthill Realty 211

Tata 209Siddha Group 164

Vibgyor Group 159

Team Taurus 113

Eden Group 101

Srijan Realty 85

MagnoliaInfrastructure 85

BGA Realtors 83

Location

Launched

Units

Siddha Group 1,434

Vedic Realty 560

Mounthill Realty 400

Dhoot Group 377

PS Group 291

Merlin Group 234

Tata 225

Nestwood Estates 197

Trident Group 193

Arrjavv 184

Location

Launched

Units

Rajarhat 2,779

Beliaghata 500

BT Road 477

Baruipur 364

Dum Dum 305

Garia 272

Howrah 267

Sinthi 193

Narendrapur 167

Kaikhali 150


40




Key Developments3



SE I’s REIT Regulations

Norms for Investment

Investment can be made incommercial real estate assets oran SPV (minimum 50% controlwith REIT);

Minimum 80% of REIT’s assets

should comprise of completedand revenue generatingproperties;

Maximum 20% of assets can beinvested across developmentalproperties1, MBS2, listed/unlisteddebt of companies in real estatesector, government securities,money market instruments/cashequivalents and equity shares of

listed companies in India3

; Investment should be in atleast 2projects (with maximum of 60%of asset value in one project);&

Investment in units of anotherREIT cannot be made.

Norms for Listing

Notes:

1investments to be restricted to 10% of REIT’s assets’ value; 2MBS-Mortgae Backed Securities; 3comapnies listed on recognized stock exchange in India having minimum 75% of their operating incomefrom real estate activity ;*Detailed provisions for related party transactions, valuation of assets, disclosure requirements, etc. are provided in regulations

Norms for Parties

REITs to be set up as a trust: tohave parties such as Trustee,Sponsor(s) and Manager;

Sponsor: Minimum net worth ofINR 200 million and 5 years realestate experience;

Manager: Minimum net worth ofINR 50 million; 5 years fund

management experience; andatleast 50% of investmentcommittee should beindependent. Endowed withREIT’s operational responsibilities;

Trustee: To be a SEBI registereddebenture trustee, with noassociation withSponsor/Manager. Will overseeREIT’s activities;&

Maximum 3 sponsors, with lock-

in of 25% for 3 years, and 15%for lifetime of REIT.

Minimum REIT’s assets’

value: INR 5 billion; Minimum issue size for initial

offer: INR 2.5 billion; Minimum public float: 25%; Minimum subscription size of

lots: INR 200,000; Minimum trading lot of REIT

units: INR 100,000;& Minimum outside unit

holders: 20.Other Important Norms

At least 90% of net

distributable cash flows to bedistributed to investors(atleast on half yearly basis);

Full valuation of assets to beundertaken on yearly basis,with half yearly updations ofthe same by a principalvaluer;&

For ordinary matters 60% unitholders consent required,while 75% (positive content)

required for specifiedmatters*.

Key Takeaways…

43




Appendix

4



City

Micro-

markets

Key Locations

Hyderabad

North East Uppal, Nacharam, AS Rao Nagar, Bowenpally, Sainikpuri

North West Samajiguda, Begumpet, Jubilee Hills, Banjara Hills, Ameerpet, Kukatpally, Madhapur, Kondapur, Gachibowli, Miyapur, Nizampet, Nallagandla,Chandanagar,Kompally, Bachupally

South East Himayath Nagar, Nagole, Hyderguda

South West Manikonda, Rajendra Nagar

Kolkata

Central Alipore HO, Ballygunge, Camac St. Elgin Road, Esplanade, Gurusaday Road, Park Street, Rawdon Street, Ultadanga

North East BT Road, Jessore Road, Kankurgachi, lake town, Paikpara, Rajarhat, Salt lake, Sinthimore, VIP Road

North West Howrah, Kona Expressway

South East EM Bypass, Garia, Jodhpur Park, Kasba, Queens Park, Ras Behari Avenue, Santoshpur, Tollygunge

South West Behala, Maheshtala, New Alipore,

Outskirts Baruipur, Hooghly, Mumbai Expressway

24Parganas

North 24 Paraganas, South 24 Paraganas

Micro-market Classification

Source: CGCL Research46



Abbreviation Full Form

Bn Billion

BSE Bombay Stock ExchangeCPI Consumer Price Index

CRR Cash Reserve Ratio

DDT Divided Distribution Tax

GDP Gross Domestic Product

GST Goods and Services Tax

FDI Foreign Direct Investment

FII Foreign Institutional InvestorIT Information Technology

ITeS Information Technology enabled Services

MAT Minimum Alternate Tax

List of Abbreviations

Source: CGCL Research

Abbreviation Full Form

MBS Mortgage Backed Securities

MMR Mumbai Metropolitan RegionMn Million

NCR National Capital Region

OMR Old Mahabalipuram Road

PPP Public Private Partnership

RBI Reserve Bank of India

REIT Real Estate Investment Trust

SEBI Securities and Exchange Board of IndiaSeZ Special Economic Zone

SLR Statutory Liquidity Ratio

Y-o-Y Year on Year

47



Viswajit Srinivasan

Key Contacts

Viswajit is responsible for origination of real estate debt funding opportunities,assessment and oversight through to deal execution. Prior to joining CapriGlobal Capital, Viswajit led the Corporate Advisory Services business for JLL,India. Viswajit's areas of focus included, RE Portfolio Management, InvestmentManagement, Asset Monetisation/Divestment & Acquisition, Entry/Exit Strategies& Development of Marketing strategies & collateral for RE focused PE funds.

Viswajit has in the past worked with global majors such as Cushman & Wakefield, Ernst & Young and BMR Advisors.

Ashish Khanna

Director – Business Development Wholesale LendingCapri Global Capital Limited4th Floor Merchant Chambers41, Sir Vithaldas Thackersey MargNew Marine LinesMumbait: +91 22 4088 8100e: [email protected]

Deputy Manager – India Research Wholesale LendingCapri Global Capital Limited2nd Floor, B1/H9 BuildingMohan Cooperative Industrial EstateMathura RoadNew Delhit: +91 11 4777 3000e: [email protected]

Ashish is responsible for leading the in-house real estate research function of theorganization, coupled with analytics and business development support forwholesale debt funding opportunities. In his prior assignments, Ashish hasworked with International Property Consultancy firm, CBRE and a Delhi-basedinfrastructure research company and has worked on various Indian and globalresearch assignments spanning across real estate, transport, gas and urbaninfrastructure segments.

48



• Capri Global Capital Limited (CGCL) is a leading Indian Non-Banking Finance Company (NBFC) operating since 1997. Thecompany is registered with Reserve Bank of India (RBI) and listed on both the Bombay Stock Exchange (BSE) and the National StockExchange (NSE). At CGCL, we are proud of our lineage and have since inception, achieved significantly commendable milestones

as we move towards our objective of strengthening our position as “India’s leading NBFC”.

• Erstwhile known as Money Matters Financial Services Limited (MMFSL), the company, in October 2012, entered into a strategicalliance with Capri Global Capital (CGC), a part of Capri Capital Partners LLC (CCP), a Chicago based USD 3.7 billion fund inreal estate and structured equity investments. As per the arrangement between MMFSL and CGC, the name of MMFSL has beenchanged to “Capri Global Capital Limited” (CGCL) w.e.f. 24th July, 2013.

• As part of our business activities, CGCL is predominantly focused into Asset Financing and Lending business. The WholesaleLending Business segment provides specialized and holistic solutions to Indian corporates helping them build and grow theirbusinesses with initial funding, mezzanine financing, acquisition financing etc. We focus on products in the structured credit space

backed by adequate collaterals and cash flows to build a secured and quality wholesale lending portfolio.• As part of the diversification and growth plans, in 2012 CGCL forayed into SME and Retail Lending Business with special focus on

Priority Sector Lending. The division focuses on generating supreme quality asset book spread across multiple locations where theMSME clusters exist.

• Prior to 2012, CGCL offered financial solutions related to Debt Advisory Service and has to its credit transactions close to INR50,000 crore in debt advisory space during FY2009 to FY2011. In October 2010, CGCL successfully completed a QualifiedInstitutional Placement (QIP) and raised INR 445 crores thereby foraying into Asset Financing and Lending business. We successfullyattracted investments from Wellington Management Company LLP, Morgan Stanley, Fidelity, Goldman Sachs, etc.

• CGCL has the requisite skill set to provide specialized knowledge and expertise, and deliver financial solutions to a range of clientsacross the industry spectrum that include power, steel, ports, roads, financial services, auto, telecom, textiles, hospitality, retail andreal estate. Our thrust is our intellect, having a total experience of over 250 man-years from diverse backgrounds such as Banks,Financial Institutions, Investment Banking firms, Private Equity funds, large Corporate/s (ICICI, Axis, Standard Chartered Bank,Deloitte, Barclays Bank, Reliance Capital, CB Richard Ellis, Knight Frank, Jones Lang LaSalle among others).

About Us

49



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Disclaimer: The information presented in this document is in summary form and is therefore intended for general interest and understanding only. We at CGCL confirm that information contained herein, including projections, hasbeen obtained from reliable sources. While we do not doubt their accuracy, we have not yet verified them and make no guarantee, warranty or representation about them. It is not intended to be a substitute for detailed research orthe exercise of professional judgment. Nether CGCL nor any other member of the CGCL subsidiaries can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in thispublication. On any specific matter, reference should be made to the appropriate advisor. Also, this information is offered entirely for use by CGCL clients and professionals and all rights to the material are reserved and cannot bereproduced without prior written consent.

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