india office property market overview- july 2014
TRANSCRIPT
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8/12/2019 India Office Property Market Overview- July 2014
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Office Property Market OverviewINDIA
July 2014
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RESEARCH & FORECAST REPORTSYDNEY CENTRAL BUSINESS DISTRICT
Research & Forecast ReportIndia I Office | July 2014
2 Research & Forecast Report | July 2014 | Office | Colliers International
Jun-13 Jun-14
Repo rate 7.25% 8.00%
Reverse
Repo Rate 6.25% 7.00%
CRR 4.00% 4.00%
Inflation (WPI) 5.16% 5.43%
PLR1 9.70% - 10.25% 10.00% - 10.30%
Deposit Rate2 7.50%- 9.00% 8.00% - 9.25%
Exchange Rate
INR - USD 57.62 60.01
INR - EURO 76.87 81.25
Jun-13 Jun-14 YoY %
Change
Gold 26,717 27,598 3.30%
Silver 41,026 42,199 2.86%
Equity
(BSE Sensex)19,326 25,190 30.35%
Realty Index 1,603 2,029 26.59%
RETURN ON ALTERNATIVE INVESTMENTS
MACRO ECONOMIC OVERVIEW
Overall, market sentiment witnessed animprovement this quarter after thegeneral elections. As Prime MinisterMr. Narendra Modi took charge at theCentre with a clear mandate, investorconfidence picked up in expectation thatthe new government would revitalise theeconomy. Consequently, the CII BusinessConfidence Index for 2Q 2014 increasedto 53.7 from 49.9 in the previousquarter.
Te capital markets also performed well,with both the BSE Sensex and the BSERealty Index showing an upward swing.Te rupee strengthened and evenshowed signs of recovery during thequarter, hovering in the range of 60 to60.5 per US dollar.
Te first quarter GDP growth figuresposted a marginal decrease from 4.7% in4Q 2013 to 4.6% in 1Q 2014.
Te office property market witnessed anew wave of leasing activity in Bangaloreand Pune, while cities like Mumbai,
Chennai recorded a moderate increasein absorption QoQ. Approximately 8million sq. ft. of office space was leasedacross eight major cities in India duringthe quarter. Te I / IeS sectorsremained primary demand driver.
COLLIERS VIEW: Te office propertymarket is expected to continue tostrengthen for the remainder of 2014. Terestoration of business confidence isexpected to gain steam, on the back ofthe positive business outlook. Adequate
supply in the pipeline in all the marketswill ensure steady rentals across the citiesin the medium term, while vacancy mayfall marginally in cities like Bangaloreand Pune.
ECONOMIC BAROMETER
Source: Colliers International India Research
Note: All values in the above tables are as on 15th of June
2013 and 2014
1SBI Prime Lending Rate2SBI interest rate < INR 1 crore Term Deposits for 1 Year
INR
Crore
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Apr-14
Jul-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
90
0
2,000
12,000
14,000
16,000
8,000
10,000
4,000
6,000
2008-09
2012-13
2013-14
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
110
70
50
170
150
130
1-Apr-
14
11-Apr-
14
21-Apr-
14
1-May-
14
11-May-
14
21-May-
14
31-May-
14
10-Jun-
14
20-Jun-
14
30-Jun-
14
InPercentage
4%
6%
8%
10%
12%
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-Mar14
Jan-Mar13
Oct-Dec12
Jun-Sep12
Oct-Dec11
Jul-Sep11
Apr-Jun11
Jan-Mar11
Gross Domestic Product at Factor Cost
0%
2%
Apr-Jun12
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In 2Q 2014, demand for Grade A officespace increased moderately andabsorption levels increased by 16% QoQto 0.49 million sq. ft. compared to thelast quarters 0.42 million sq. ft. BFSIand consulting firms remain the primeoccupiers with about 30% of the total
absorption.
In a major investment transactionBlackstone acquired 247 Park, aleased commercial asset admeasuringapproximately 1 million sq. ft. located at
Vikhroli for a consideration of INR 10.5billion.
Tis quarter saw completion ofapproximately 0.50 million sq. ft. ofGrade A commercial office space.Projects completed include Sahar
Business Centre by Te ContinentalGroup at Andheri (E); KrishnaCorporate Pride at Andheri (W) andKrishna Corporate Centre at Andheri(E) both by Krishna Ventures.
Both rental and capital values remainedlargely stable across the micro-marketsowing to large vacant stock and cautiousdemand.
In a major infrastructure boost, Mumbaisfirst Metro Rail started operation
this quarter. It is connecting Versova,Andheri and Ghatkopar on an 11.4 kmstretch, providing swift connectivity.
COLLIERS VIEW: A cautious approachfrom occupiers has resulted in lowabsorption since 1Q 2014. Futureabsorption is likely to improve dueto improved business confidence.However, rents are expected to remainon the same levels, except locations likeBKC, where a marginal increase can be
witnessed in premium projects due to
limited supply.
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% 0%
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%
2Q 2014 3Q 2014F
Vacancy
Absorption
Construction
Rental Value
Capital Value
CITY OFFICE BAROMETER
KEY UNDER CONSTRUCTION PROJECTS
BUILDING NAME DEVELOPER AREA (SQ. FT.) LOCATION POSSESSION
Newa Bhakti Knowledge City Park New Tech City Group 600,000 Airoli, Navi Mumbai 2015
Zillicon Kanakia Spaces 525,000 Kurla 2014
Chromium Tech-Pro Projects (KGA) 200,000 JVLR. Off Powai 2014
TOP 5 TRANSACTIONS OF THE QUARTER
CLIENT BUILDING NAME AREA (SQ. FT.) LOCATION LEASE/SALE
Pfizer The Capital 90,000 BKC Lease
Pearl Academy S M Centre 70,000 Andheri East Lease
ICICI Lombard Vishwaroop IT Park 55,000 Navi Mumbai Lease
HPCL Marathon Futurex 51,000 Lower Parel Sale
Halliburton Oberoi Commerz 31,000 Goregaon East Lease
Andheri East24%
Thane / LBS21%
CBD
1%
Worli /Prabhadevi
1%
Goregoan /JVLR4%Powai
4%Navi Mumbai
2%Malad6%
Lower Parel20%
BKC15%
Kalina2%
AVAILABLE SUPPLY IN PRIME AREAS
2Q2008
2Q2009
2Q2010
2Q2014
2Q2013
2Q2015F
2Q2012
2Q2011
505,000
0 0
100
10,000
150
15,000
200
20,000
250
25,000
30,000
AVERAGE RENTAL AND CAPITAL VALUE TREND
RentalValues-INR
PerSq
.ft.
PerMonth
CapitalValues-INRP
erSq.
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 indica-tive asking price for Grade A office space.
Forecast
* Indicative Grade A rents in INR per sq. ft. per month.
0
0.4
0.8
0.6
0.2
1.2
1.0
1.6
1.4
1.8
2.0
2Q2013 3Q2013 4Q2013 1Q2014 2Q2014
QUARTER WISE ABSORPTIONMillion Sq. ft.
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In 2Q 2014, overall lease volumesdecreased due to the union elections.
About 0.25 million sq. ft. of officespace was leased during the quarter,
which is approximately 20% less thanthe previous quarter. More than 70%of these deals were concluded in theOkhla micro-market where occupiers
from IeS segment took up most of thisoffice space, followed by consulting,automobiles and pharma companies inthe Jasola, Saket and Vasant Kunj micro-markets.
During the surveyed quarter, no newcommercial Grade A projects /parts ofthe project were completed and no newprojects were launched.
Approximately 2.8 million sq. ft. ofGrade A commercial office space was
available for fit-out. Most of this supplywas concentrated in Jasola and Saket.
A decline in absorption put pressure onaverage rents and resulted in a 4-10%decline in almost all micro-marketsQoQ.
Tis quarter, the local authority clearedPhase III of the Barapullah Bridge. Tis
will connect the INA market with MayurVihar. Te bridge will be constructedbetween the DND Flyway and
Nizamuddin Bridge over the YamunaRiver. Tis project, costing approximatelyINR1,200 crore, is expected to be readyby the end of 2017.
COLLIERS VIEW: Demand is expectedto improve in the coming quarter, asthe companies with an increasingexpectations of business improvementramped up their plans for growth.Rental and capital values are expectedto increase marginally due to limitedsupply of Grade A office space.
Delhi
Source: Colliers International India Research
Micro Market Rental
Values*% Change
QoQ YoY
ConnaughtPlace
150 - 450 -4% -10%
Nehru Place 150 - 225 -6% -6%Saket 140 - 175 -10% -5%
Jasola 90 - 120 -7% -7%
Netaji Subhash 65 - 75 0% 0%
2Q 2014 3Q 2014F
Vacancy
Absorption
Construction
Rental Value
Capital Value
CITY OFFICE BAROMETER
KEY UNDER CONSTRUCTION PROJECTS
BUILDING NAME DEVELOPER AREA (SQ. FT.) LOCATION POSSESSION
NBCC Redevelopment NBCC Ltd. 1,300,000 Kidwai Nagar 2016
NBCC Plaza NBCC Ltd. 350,000 Okhla 2014
Parsvnath 27 Parsvnath Ltd. 150,000 K.G. Marg 2016
TOP 5 TRANSACTIONS OF THE QUARTER
CLIENT BUILDING NAME AREA (SQ. FT.) LOCATION LEASE/SALE
Moser Baer Okhla Phase 3 70,000 Okhla Lease
Snapdeal Okhla Phase 3 50000 Okhla Lease
C&B Fashion Splendour Forum 18,000 Okhla Lease
Publicis Okhla Phase 3 15,000 Jasola Lease
Hyundai Corporate One 14,800 Jasola Lease
0
0.1
0.15
0.2
0.25
0.3
0.05
0.35
2Q2013 3Q2013 4Q2013 1Q2014 2Q2014
QUARTER WISE ABSORPTION
2Q2008
2Q2009
2Q2010
2Q2014
2Q2013
2Q2015F
2Q2012
2Q2011
505,000
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-INR
PerSq
.ft.
PerMonth
CapitalValues-INR
PerSq.
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 indicativeasking price for Grade A office space.
Forecast
* Indicative Grade A rents in INR per sq. ft. per month.
AVAILABLE SUPPLY IN PRIME AREAS
Jasola36%
Nehru Place4%
Saket32%
Connaught place28%
Million Sq. ft.
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A steep decline in absorption waswitnessed during the quarter withonly 0.53 million sq. ft. of office spaceabsorbed, against last quarters 1.67million sq. ft. Te I/IeS sector,contributing only 35% of this absorption.
In this quarter, the city added about
0.6 million sq. ft. of new, Grade A officesupply. Projects contributing this supply
were Eros ower, IFFCO ower,Concept Cyber Park and ARC ower.
Projects launched during 2Q 2014,include SS Omnia by SS Group atSector 86 and Conscient One byConscient Group at Sector 109. Teseprojects together will add more than 0.4million sq. ft. of Grade A commercialoffice space by the end of 2017.
More than 17 million sq. ft. of Grade Acommercial office space was availablefor fit-out during the quarter. Of this,more than 50% of the supply wasconcentrated in the Manesar, GolfCourse Road Extension and Sohna Roadmicro-markets.
Rents in almost all micro-marketsdeclined by an average of 9% QoQ, exceptDLF Cyber City where rents increased by4% QoQ as this micro market becomesoccupiers preference due to the recent
start of operations of the Rapid Metro,which tremendously increased theconnectivity of the micro-market.
COLLIERS VIEW: Positive sentimentsare predicted to result in increasedoverall office space absorption in comingquarters. DLF Cyber City, Golf CourseRoad and its extension will remainthe preferred micro-markets. Recentinfrastructure development, such asroad widening and extension of RapidMetro lines to Golf Course ExtensionRoad, is likely to give a further boost to
these micro-markets.
Gurgaon
Source: Colliers International India Research
Micro Market Rental
Values*% Change
QoQ YoY
MG ROAD 90 - 110 -13% -17%
Golf Course Rd 85 - 125 -9% -7%
Institutional Sect.(18,32,44) 50 - 60 -4% -8%
Golf Course RdExt./Sohna Rd 45 - 65 -4% -3%
NH8 45 - 125 -3% -3%
Udyog Vihar& IndustrialSectors
35 - 50 0% -11%
Manesar 35 - 40 -9% -6%
DLF Cyber City 80 - 85 4% 8%
2Q 2014 3Q 2014F
Vacancy
Absorption
Construction
Rental Value
Capital Value
CITY OFFICE BAROMETER
KEY UNDER CONSTRUCTION PROJECTS
BUILDING NAME DEVELOPER AREA (SQ. FT.) LOCATION POSSESSION
One on One Vatika Group 1,200,000 NH 8 2017
Conscient One Conscient Group 250,000 Sector 109 2017
SS Omnia SS Group 180,000 Sector 86 2017
TOP 5 TRANSACTIONS OF THE QUARTER
CLIENT BUILDING NAME AREA (SQ. FT.) LOCATION LEASE/SALE
Edifecs DLF Worldtech Park 120,000 NH 8 Lease
Ibibo Good Earth City Center 36,000 South City 2 Lease
Oxygen Plot No 94 35,000 Sector 32 Lease
Louis Berger Plot No 2 35,000 Sector 32 Lease
Sun Life Financial Unitech Cyber Park 30,000 Sector 32 Lease
0
0.4
0.2
0.6
1.0
0.8
1.4
1.2
1.8
1.6
2Q2013 3Q2013 4Q2013 1Q2014 2Q2014
QUARTER WISE ABSORPTION
2Q2008
2Q2009
2Q2010
2Q2014F
2Q2013
2Q2015F
2Q2012
2Q2011
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-INR
PerSq
.ft.
PerMonth
CapitalValues-INR
PerSq.
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 indica-tive 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 Road5%
Golf Course Road11%
DLF Cyber City2%
Institutional Sec-tors (Sec44, 32, 18)
5%
Manesar23%
National Highway 815%
Udyog Vihar &Industrial Sectors
11%
Golf Course Road
Ext./Sohna Road28%
Million Sq. ft.
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In 2Q 2014, leasing activities remainedsluggish and only 0.12 million sq. ft.of office space was leased. Relocationremained the primary demand generator
with companies relocating to NOIDAexpressway due to better connectivityand infrastructure.
Te only project that was completed thisquarter was MMR Heights, measuring0.15 million sq. ft. and developed byMMR Group at Sector 127. Projectslaunched this quarter include, AssotechBusiness Cresterra by Assotech Realtyat Sector 135 and MMR 52 Avenue byMMR Group at Sector 52. ogether theseprojects will add about 0.8 million sq. ft.of Grade A commercial office space bythe end of 2017.
During the surveyed quarter, more than8 million sq. ft. of Grade A and Grade Bcommercial office space was availablefor fit-out.
Both rents and capital values posted anaverage decline of 9% QoQ. However,rental values in Industrial Sectorsremained stable. Weak governance andlimited Grade A commercial office spaceare the major factor for lower demand.
During 2Q 2014, I giant, Infosys, hascompleted the formalities of 1.11 lakh
sq m land acquisition in Sector 85 locatedat NOIDA Greater NOIDA Expressway.Te company plans to launch operationsfrom this site in 3 years.
COLLIERS VIEW: NOIDA is expected towitness new office space completions ofapproximately 4.5 mn sq. ft. by the endof 2014. Most of this upcoming supply isnon-I/IeS office space. Te additionof Grade A non-I/IeS office space isexpected to attract corporate occupiersto this market.
NOIDA
Source: Colliers International India Research
Micro Market Rental
Values*% Change
QoQ YoY
InstitutionalSectors (Non IT) 40 - 85 -11% -11%
InstitutionalSectors (IT) 25 - 65 -14% -14%
ComercialSectors
90 - 100 -3% -5%
IndustrialSector
18 - 48 0% 5%
2Q 2014 3Q 2014F
Vacancy
Absorption
Construction
Rental Value
Capital Value
CITY OFFICE BAROMETER
KEY UNDER CONSTRUCTION PROJECTS
BUILDING NAME DEVELOPER AREA (SQ. FT.) LOCATION POSSESSION
Assotech Business Cresterra Assotech Realty 500,000 Sector 135 2017
K Rasa K8 K Rasa Group 500,000 Sector 129 2019
MMR 52 Avenue MMR Group 250,000 Sector 52 2017
TOP 5 TRANSACTIONS OF THE QUARTER
CLIENT BUILDING NAME AREA (SQ. FT.) LOCATION LEASE/SALE
News Nation Plot 13 & 14 42,000 Sector 126 Lease
Adobe GYS Universal 25,000 Sector 125 Lease
Mentor Graphics India Glycols 15,000 NOIDA Expressway Lease
Calyptu Design Seystem India Glycols 15,000 NOIDA Expressway Lease
Housing.com Technopolis 4,400 Sector 62 Lease
0
0.2
0.4
0.6
1.0
0.8
1.2
2Q2013 3Q2013 4Q2013 1Q2014 2Q2014
QUARTER WISE ABSORPTION
2Q2009
2Q2010
2Q2014
2Q2013
2Q2015F
2Q2012
2Q2011
20
102,000
0 0
40
304,000
50
6,000
70
60
8,000
80 12,000
10,000
AVERAGE RENTAL AND CAPITAL VALUE TREND
RentalValues-INR
PerSq
.ft.
PerMonth
CapitalValues-INR
PerSq.
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 indicativeasking price for Grade A office space.
Forecast
* Indicative Grade A rents in INR per sq. ft. per month.
Industrial Sectors(Sec. 1-9, 57-60, 63-65)
(Grade B)15
Commercial Sectors(Sec 18) (Grade B)
1
Institutional Sectors(Sec.16A, 62, 125-142
84%
Million Sq. ft.
AVAILABLE SUPPLY IN PRIME AREAS
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During 2Q 2014, Chennai witnessed amarginal 8% increase in absorption overthe previous quarter. Approximately0.61 million sq. ft. was leased duringthe surveyed period. I/IeS sector,
with about 70% of the total absorption,remained the primary occupier followed
by the BFSI, advisory, manufacturing,real estate and entertainment industries.
Projects / parts of the project completedduring the quarter include Centre Point2 by K G Builders and ICON by SriKausalya Construction Ltd, both locatedat Guindy. Tese projects togethercontributed about 0.20 million sq. ft. ofGrade A commercial office space to thecitys total inventory.
No new commercial Grade A projects
/ parts of the project were launchedduring the quarter. Mahindra life spaceacquired approximately 550 acres landparcel to develop its second integratedbusiness city.
In 2Q 2014, more than 13 million sq. ft.of Grade A office supply was availablefor fit-out. About 71% of this availablesupply was concentrated in OMR (ICorridor) and Ambattur.
Despite improved demand, rents and
capital values for Grade A office spaceremained stable across all micro-markets. Te primary reason for thisis high vacancy levels in almost all themicro markets.
COLLIERS VIEW: Tere is an increaseddemand from the I/IeS segment,
which will ensure that net absorptionlevels will remain positive. Guindy inSBD and OMR will remain the preferredlocation however, rents are likely toremain on the same levels in view of
large accumulated vacant supply.
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%
2Q 2014 3Q 2014F
Vacancy
Absorption
Construction
Rental Value
Capital Value
CITY OFFICE BAROMETER
KEY UNDER CONSTRUCTION PROJECTS
BUILDING NAME DEVELOPER AREA (SQ. FT.) LOCATION POSSESSION
Divyashree Point Divyasree Developers 600,000 OMR 2014
Estancia B1 & B3 L&T & Arun Excello 490,000 GST Road 2014
DLF IT SEZ - Block 2 DLF Ltd. 250,000 Manapakkam 2015
TOP 5 TRANSACTIONS OF THE QUARTER
CLIENT BUILDING NAME AREA (SQ. FT.) LOCATION LEASE/SALE
KBR Prestige Polygon 92,000 Mount Road Lease
Samsung EA Chambers 60,000 Royapettah Lease
Nokia RMZ Millenia 40,140 OMR Lease
Scope Futura Tech park 38,930 OMR Lease
Aricent Technologies ASV Chandilya 25,000 OMR Lease
0
0.4
0.2
1.0
0.6
0.8
1.4
1.6
1.2
1.8
2Q2013 3Q2013 4Q2013 1Q2014 2Q2014
QUARTER WISE ABSORPTION
2Q2008
2Q2009
2Q2010
2Q2014
1Q2014
2Q2015F
2Q2012
2Q2011
101,000
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-INR
PerSq
.ft.
PerMonth
CapitalValues-INR
PerSq.
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 indica-tive 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%
CBD16%
GST Rd3%
Velachery1%
Vadapalani0%
OMR (IT Corridor)47%
Ambattur24%
Million Sq. ft.
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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% 10%
Electronic City 24 - 32 0% 0%
Bannerghatta Rd. 50 - 60 0% 0%
Outer Ring Rd. 53 - 62 5% 5%
2Q 2014 3Q 2014F
Vacancy
Absorption
Construction
Rental Value
Capital Value
CITY OFFICE BAROMETER
KEY UNDER CONSTRUCTION PROJECTS
BUILDING NAME DEVELOPER AREA (SQ. FT.) LOCATION POSSESSION
Manyata Embassy Business Park Embassy Group 777,520 Hebbal 2015
Primal Park Primal Group 600,000 Sarjapur Road 2016
MTB SEZ 3 Ascendas 600,000 Whitefield 2016
TOP 5 TRANSACTIONS OF THE QUARTER
CLIENT BUILDING NAME AREA (SQ. FT.) LOCATION LEASE/SALE
L & T RMZ Eco World 500,000 Outer Ring Road Lease (LOI signed)
24/7 Prestige Platina 450,000 Outer Ring Road Sale (LOI signed)
Oracle Prestige Tech Park 350,000 Outer Ring Road Lease (LOI signed)
ANZ RMZ Eco World 350,000 Outer Ring Road Lease
Mindtree Global Village 300,000 Mysore Road Lease
2Q2008
3Q2009
4Q2010
2Q2014
2Q2013
2Q2015F
2Q2012
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-INR
PerSq
.ft.
PerMonth
CapitalValues-INR
PerSq.
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 indicativeasking price for Grade A office space.
Forecast
* Indicative Grade A rents in INR per sq. ft. per month.
Robust demand for Grade A officespace continued this quarter. Tecity witnessed 4.22 million sq. ft.(including LOI singed deals) of officelease transactions, which representsa 12% QoQ increase. More overKPMG and Honeywell pre-committed
approximately 1.6 million sq. ft. in RMZEco World at ORR.
In the surveyed quarter, the city added0.68 million sq. ft. of Grade A officesupply. Projects contributing to this newinventory were SVR Platinum by anindividual developer at Electronic City,and Bhartiya - SEZ- Block1 by BhartiyaGroup at Tanisandra Road.
Looking at the strong demand,various developers launched projectslike Prestige rinity Circle, HM
Residency Road, Sattva Magnificia &Eminence, Primal Park, MB SEZ3 and Manyata Embassy BusinessPark - G3 Block. Tese projects togetherare expected to add 2.8 million sq. ft. ofGrade A commercial office space by theend of 2016.
More than 11 million sq. ft. of Grade Acommercial office space was availablefor fit-out. Of this, about 70% of thesupply was concentrated in EPIP Zone,
Whitefield and Outer Ring Road.
Despite robust demand, rents andcapital values remained stable in almostall micro-markets, except Outer RingRoad, where rents rose by 5% QoQ.
COLLIERS VIEW: More than 50% of thetotal office space absorption in the top8 cities took place in Bengaluru. Tisstrong demand will continue for theshort to medium term as evidenced bythe large volume of enquiries and RFPsin the currently in the market.
AVAILABLE SUPPLY IN PRIME AREAS
Hosur Road3%
CBD7%
Bannerghatta Road2%
Electronic City15%
EPIP Zone/Whitefield
38%
Outer Ring Road35%
2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014
QUARTER WISE ABSORPTION
0.5
0
1.5
1.0
2.5
2.0
3.0
4.5
4.0
3.5
Million Sq. ft.
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In 2Q 2014, approximately 0.15 millionsq. ft. of Grade A office space was leased.Tis represents a decline in absorption tothe tune of around 25% QoQ. Most of thetransactions emanated due to occupiersrelocating or expanding their real estatefootprint. Micro-markets that were most
sought after during the quarter wereSector V and New own.
Te city witnessed completion ofprojects/ parts of the project, including;Merlin Infinity by Merlin Group andMartin Burn Business Park by MartinBurn Group both of which are locatedat Sector V Salt Lake. Tese projectstogether add about 1 million sq. ft. to thecitys total Grade A inventory.
No new commercial Grade A projects/ parts of the project were launchedduring the quarter.
A decline in absorption levels impactedrental values during the surveyedquarter, resulting in a 1-3% declineon a QoQ basis in almost all micro-markets, except SBD where rents remainunchanged. However, capital valuesin all micro-markets remained stableowing to local demand.
During this quarter, Unitech CorporateParks (UCP), the London Stock
Exchange-listed firm, has sold its stake toCanadas Brookfield Asset Managementin its six Unitech Corporate Parks (UCP)I SEZ projects located in Kolkata,NOIDA and Gurgaon for a considerationof 205.9 million (INR2,050 crore).
COLLIERS VIEW: New governmentinitiatives to develop infrastructure arelikely to support demand for commercialoffice space. However, rents are likelyto remain on the same levels across allmicro-markets, due to high vacancy
levels.
Kolkata
Source: Colliers International India Research
Micro Market Rental
Values*% Change
QoQ YoY
CBD** 95 - 120 -2% -13%
East Kolkata *** 70 - 80 0% -6%
Salt Lake /Sector V
43 - 50 -3% -5%
New Town/Rajarhat
34 - 36 -1% -4%
2Q 2014 3Q 2014F
Vacancy
Absorption
Construction
Rental Value
Capital Value
CITY OFFICE BAROMETER
KEY UNDER CONSTRUCTION PROJECTS
BUILDING NAME DEVELOPER AREA (SQ. FT.) LOCATION POSSESSION
Weston Sidhha Group 250,000 Bentinck Street 2017
Pressman House Pressman 140,000 New Town 2015
Arya Hub Arya Realty 85,000 Taratala 2017
TOP 5 TRANSACTIONS OF THE QUARTER
CLIENT BUILDING NAME AREA (SQ. FT.) LOCATION LEASE/SALE
HDFC BIPL 37,000 Sector V Lease
KPMG Godrej Waterside 30,000 Sector V Lease
BMA Wealth Globsyn 22,000 Sector V Sale
Lafarge Cement DLF-IT Park1 16,900 New Town Lease
OTIS BIPL 9,000 Sector V Lease
0
0.2
0.1
0.3
0.4
0.6
0.5
0.7
2Q2013 3Q2013 4Q2013 1Q2014 2Q2014
QUARTER WISE ABSORPTION
2Q2008
2Q2009
3Q2010
2Q2014
2Q2013
2Q2015F
2Q2012
2Q2011
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-INR
PerSq
.ft.
PerMonth
CapitalValues-INR
PerSq.
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 indicativeasking price for Grade A office space.
Forecast
* Indicative Grade A rents in INR per sq. ft. per month.** Park Street, Camac Street, Chowranghee Rd., and AJC Bose Rd.*** EM Bypass, Topsia, and Ruby
NEW SUPPLY IN PRIME AREAS
Salt Lake - Sector V91%
New Town, Rajarhat9%
Million Sq. ft.
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10 Research & Forecast Report | July 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% 5%
Airport Rd. /Pune station 45 - 75 5% 8%
Aundh 45 - 60 0% 0%
Senapati Bapat 55 - 85 0% 0%
Bavdhan 35 - 45 0% 0%
Kalyani Nagar 45 - 60 0% 0%
Nagar Rd. 40 - 60 0% 0%
Hinjewadi 32 - 45 0% 3%
Hadapsar/Fursungi 38 - 65 8% 13%
Kharadi 32 - 65 0% 0%
2Q 2014 3Q 2014F
Vacancy
Absorption
Construction
Rental Value
Capital Value
CITY OFFICE BAROMETER
KEY UNDER CONSTRUCTION PROJECTS
BUILDING NAME DEVELOPER AREA (SQ. FT.) LOCATION POSSESSION
Convex Panchshil Realty 496,000 Kharadi 2015
Commerzone B8 K Raheja 420,000 Yerwada 2015
Inorbit IT Building K Raheja 195,500 Wadgaon Sheri 2015
TOP 5 TRANSACTIONS OF THE QUARTER
CLIENT BUILDING NAME AREA (SQ. FT.) LOCATION LEASE/SALE
Flextronics Embassy Tech Zone 125,000 Hinjewadi Lease
Spice Tailor World Trade Centre 88,000 Kharadi Lease
ADP Commerzone 52,000 Yerwada Lease
Surya Hospital Devi Yash 50,000 Wakad Lease
Capsilion India Cybercity 45,000 Hadapsar Lease
0
0.4
0.2
0.8
0.6
1.0
1.2
1.4
1.6
1.8
2Q2013 3Q2013 4Q2013 1Q2014 2Q2014
QUARTER WISE ABSORPTIONMillion Sq. ft.
2Q2008
2Q2009
2Q2010
2Q2014
2Q2013
2Q2015F
2Q2012
2Q2011
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-INR
PerS
q.
ft.
PerMonth
CapitalValues-INR
PerSq.
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 indicativeasking price for Grade A office space.
Forecast
* Indicative Grade A rents in INR per sq. ft. per month.
Pune witnessed improved occupiersentiment this quarter. Te officeabsorption increased 34% QoQ.Occupiers from the I/IeS sector werethe primary contributor of this demandand took up more than 45% of thetotal absorption of 1.12 million sq. ft.
Approximately 20% of this absorptionwas in special economic zones (SEZ);occupiers like Flextronics, CapsilionIndia, Optara Systems and CompucomSystems leased large office spaces.
More than 0.7 million sq. ft. of GradeA office space was added to the citysinventory.
New project launches includes PushpakBusiness Hub by Pushpak Realty at
Wakad, and Commerzone Building 8at Yerwada launched by K Raheja Crop.Tese projects are expected to add morethan half a million sq. ft. to the citys totalGrade A inventory by the end of 2015.
During 2Q 2014, more than 5.2 millionsq. ft. of Grade A office space was readyfor fit-out, compared to last quarters 5.7million sq. ft. clearly indicating a drop inthe vacancy rate.
Rents and capital values remainedlargely unchanged, except in micro-markets like Airport Road, Hadapsar and
Fursungi where rents increased by anaverage of 7% QoQ.
COLLIERS VIEW: Continued demandfrom the I/IeS sector is likely incoming quarters. A tight supply anddemand situation will result in rise inrental values in select micro-markets likeHinjewadi, Hadapsar and Airport Road
where rents are likely to increase in therange of 2 - 5% due to limited supply.
AVAILABLE SUPPLY IN PRIME AREAS
Bavdhan2%
Kalyani Nagar8%
Senapati Bapat
Road5%
Aundh1%
Baner8%
Bund Garden5%
Airport road/pune station
13%
Hinjewadi19%
Nagar Road22%
Kharadi11%
Hadapsar/Fursungi6%
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Mumbai
Te 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 I/
IES destinations, while Airoli at Navi Mumbai and Lal Bahadur
Shastri Marg are emerging as new office and I/IES submakets.
Delhi
Te 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
Te prime business locations in Gurgaon are MG Road, GolfCourse Road, Cyber City and Udyog Vihar. Manesar on the
outskirts of Gurgaon is alsoemerging as the citys 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 I Corridor, the SBD and the PBD.
Te SBD comprises Guindy,Manapakkam, Velachery and other
areas. Te PBD primarily includes Ambattur and GS Road,
while the I 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
Te major business locations in Kolkata are CBD (Park Street,
Camac Street, Chowranghee Rd, AJC Bose Rd), East Kolkata
(EM Bypass, opsia, Ruby), Salt Lake/ Sector V and New own /
Rajarhat. Te area around Park Street, Camac Street and AJC Bose
road houses number of high-rises commercial buildings such as
Chatterjee International Centre, ata Centre, Everest House and
Industry House among others.
Pune
Te prime office sub-markets of Pune include Deccan Gymkhana,
Bund Garden Road, Senapati Bapat Road & Camp (CBD), while
the Off CBD includes Aundh, Airport Road and Kalyani Nagar,
among other locations. Te eastern corridor, along with Nagar
Road and Kharadi, have emerged as a preferred location for
financial and I/IES companies.
Office Submarkets
CIY BAROMEERS
Increasing as compared to previous quarter
Decreasing as compared to previous quarter
Remained stable from previous quarter
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12 R h & F R | J l 2014 | Offi | C lli I i l
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