india office trends to watch for in 2016

Trends to watchfor in 2016

Table of Contents

InfographIcs 2015 Actual & 2016 Forecast 4

IndIa - offIce market performance 2015 & trends to watch for In 2016 Most cities in ‘sweet spot’ in terms of office supply and demand fundamentals, indicating

strong outlook 6

mumbaI - shows strong demand

Office absorption doubles in 2015, over 6.5 million sq ft recorded 8

delhI - offIce market takes a step back In 2015

Absorption plunged down by 25% YoY to 0.89 million sq ft 10

gurgaron - 2015, the best for offIce market In last 5 years

With 5.59 million sq ft, office absorption reached to the levels of 2011 12

noIda - offIce market recovered

City recorded, 45% YoY increase in demand 14

chennaI - offIce market rebounds

Technology sector drives the demand; absorption up by 25%YoY 16

bengaluru - contInues to top In offIce market

Office market outperform with absorption over 13 million sq ft 18

kolkata - occupIers remaIned cautIous Office absorption down by 60% YoY in 2015, but 2016 looks positive 20

pune - upholds offIce absorptIon, crosses 5 mIllIon sq ft IT/ITeS remained as the prime driver with 74% of the total absorption 22

3 Research & Forecast Report | January 2016 | <<India>> | Colliers International

New Delhi/NCR

- 40.2 million sq ft was absorbed in 2015 in major metros

- Bengaluru tops the chart with 33% share followed by Delhi NCR with 23%

- 58% of the total absorption was contributed by IT/ITeS Sector followed by BFSI 19%

13.4

6.6

9.1

12.0

6.0

8.1

5.0 5.0 5.1 5.0

20152016 Forecast (In mn sq ft)

1.0 1.1

ABSORPTION

Bengaluru Mumbai Pune Chennai Kolkata

2015 actual | 2016 forecast IndiaOffice

Mumbai, Delhi-NCR, Bengaluru,Chennai, Kolkata & Pune

INDIA OFFICE TRENDS 3 TO WATCH IN 2016

MAJOR OFFICE SALE TRANSACTIONS *

~ ` 1,060 Cr

SP Infocity, Chennai

Buyer: CPPIB-Shapoorji Pallonji

Seller: Faery Estates

The Ruby, Mumbai

Buyer: Axis BankSeller: Ruby Group

~ ` 1,340 Cr ~ ` 1,479 Cr

~ ` 850 Cr

~ ` 320 Cr

Occupiers across all sectors will continue to become more space efficient, doing more with less space as their leases come up for renewal.

* Secondary sources like media publications

1

Grade A office space, rents are expected to strengthen for quality office space in almost all the micro markets.

2

3

BPTP Crest, GurgaonBuyer: RMZ Corp

Seller: BPTP

247 Park, MumbaiBuyer: Blackstone

Seller: HCC Real Estate

GRADE - A AVERAGE RENTAL GROWTH

IABMU

M

RCN IHLED

IANNEHC

ATAKLOK

PUNEURULAGNEB

2015 2016 Forecast

NEW SUPPLY - 2015 & PIPELINE 2016

IABMU

M

RCN IHLED

IANNEHC

ATAKLOK

PUNEURULAGNEB

2015 2016 Forecast (in million sq ft)

TOP 10 LEASE TRANSACTIONSIN 2015

Wells Fargo Embassy Tech Village 860,000 Bengaluru

Shell RMZ Eco World 788,000 Bengaluru

Snapdeal ASF Tower and Center 500,000 Gurgaon

Amazon Constellation Business Park 500,000 Bengaluru

IBM Bhartiya City 500,000 Bengaluru

Accenture Shriram Gateway SEZ 393,000 Chennai

Siemens Panchshil Business Park 342,080 Pune

Accenture Divyashree Point 325,000 Chennai

Client Building Name Area(In sq ft) City

VACANCY LEVELS

RCN IHLED

3.36 5.

48

12.8

5

8.75

7.87

11.7

4

2.51 3.05

2.18

1.74

IABMU

M

2015 2016 Forecast

ATAKLOK24

.5%

24.0

%

URULAGNEB

13.0

% 12.0

%12

.0%

1.0%

0.9% 2.

6%

2.5%3.2%

1.9%

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%

IANNEHC12

.5%

14.0

0

PUNE

19.5

%20

.5%

Godrej BKC, MumbaiBuyer: Abbott India

Seller: Godrej Properties

3.50

3.50

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%21

.0%

5.9% 6.

9%

6.2%

-4.7

%

4.7%

Abbott Godrej BKC 400,000 Mumbai

One Indiabulls Park 400,000 ChennaiYes Bank

Government support with major policy level changes, such as Real Estate Regulation Bill, Land Bill, GST Bill are expected to favour real estate sector.

Return on Alternative Investments

Economic Barometer

Note: 1 Estimates as per International Monetary Fund2 Wholesale Price Index (WPI) Till Nov 20153 SBI interest rate < INR 1 crore Term Deposits for≤ 1 Year

Exchange Rates 2014 2015

INR - USD 61.85 66.37

INR - EURO 77.41 72.84

Parameters 2014 2015 YoYCHANGE

Gold 26,507 25,206 -4.91%

Silver 35,999 33,215 -7.73%

Equity(BSE Sensex) 27,506 26,079 -5.19%

Realty Index 1,502 1,327 -11.68%

Research & Forecast Report

India | OfficeJanuary 2016

India office market performance 2015 & trends to watch for in 2016Most cities in ‘sweet spot’ in terms of office supply and demand fundamentals, indicating strong outlook

2015 was another solid year for the Indian office market, with improvements in both demand and supply. The office market got its much needed support at macro economy level. The economy expanded to 7.40% in 2015 underpinned by low inflation, low interest rates and growth in investments. We have recorded about 40.21 million sq ft office space lease transactions excluding pre-commitment of another 3 million sq ft in India’s eight major cities. This was about 15% more than the absorption in 2014. New construction continued to trend upwards, reaching nearly 32 million sq ft in 2015, up from 24 million sq ft in 2014. The ratio of absorption to new supply, one of the key metrics we use to gauge the supply-demand balance of the Commercial Real Estate (CRE) markets, indicates that office users absorbed more amount of space, than what was added to new supply indicating dropping vacancy rates.

Bengaluru, with about 13.43 million sq ft of office absorption and 12.85 million sq ft of new construction continued to hold its number one position across cities. The city shared about 33% and 41% respectively, in total absorption and new supply among eight major cities in India this year. Mumbai and NCR office transaction volume reached a post-recession high of 6.57 and 9.10 million sq ft in 2015 witnessing an increase of 111% and 18% from last year, respectively. Pune and Kolkata shared 12% and 2% in the total office absorption.

The occupier group made their long-pending decisions and India saw some big ticket office deals in 2015, such as ‘Wells

Indicators 2014 2015Gross Domestic Product 6.60% 7.40%

Business Confidence Index 49.90% 56.40%

Repo Rate 8.00% 6.75%

Reverse Repo Rate 7.00% 5.75%

Cash Reserve Ratio 4.00% 4.00%

Inflation (WPI)2 0.00% -2.15%

Prime Lending Rate 10.00% - 10.25% 9.70% - 10.00%

Deposit Rate3 8.00% - 9.00% 7.75% - 8.00%

Source: Government of India, Colliers International India Research

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FDI in Real Estate

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Fargo’ took 0.8million sq ft in Bengaluru, ‘Snapdeal’ took 0.5 million sq ft in Gurgaon, ‘Abbott’ took 0.4 million sq ft in Mumbai, ‘Yes Bank’ took 0.4 million sq ft in Chennai and ‘Siemens’ took 0.3 million sq ft in Pune. The demand was primarily driven by technology sector while e-commerce emerged as a significant contributor of this demand within this sector. Across cities, Grade A office space in suburban markets remained in preference for technology occupiers who were the top contributors to the office demand.

The real estate sentiments further boosted due to some of the key announcements such as rationalisation of the capital gains tax for REITs and InvITs, subject to payment of Securities Transaction Tax (STT), relaxation in FDI norms for real estate sector, inclusion of CRE in the ambit of Real Estate Regulatory Authority (RERA) bill etc.

Private equity activity in the commercial sector continued to gain momentum. Institutional investors, both domestic and overseas, are demonstrating an increased appetite and willingness to engage. The commercial market witnessed several leased asset sales such as Abbott India Ltd bought Godrej BKC, Mumbai for INR 1,479 crore, CPPIB-Shapoorji Pallonji bought S P Infocity, Chennai for INR 1,340 crore, Blackstone invested INR 1,060 crore to buy 247 Park from HCC Real Estate Ltd. in Mumbai.

Trends to watch for in 2016

Outlook for office market looks strong, as currently, most of the Indian markets are in the “sweet spot” in terms of supply-and-demand fundamentals. In 2015, most of the cities witnessed low vacancy, a steady increase in development activity and less speculative development. The combination of positive economy, stronger job growth prospect and limited and targeted construction activity bodes well for the market in 2016.

Occupiers across all sectors will continue to become more space efficient, doing more with less space as their leases come up for renewal. But as hiring activity is expected to increase further, firms will need more space to house additional workers.

Looking at the RFPs floating in the market, the office real estate market in 2016 is expected to be at par with 2015 in terms of office absorption though capital and rental values are likely to remain stable. Nevertheless, for Grade A office space, rents are expected to strengthen for quality office space in almost all the micro markets.

We expect that private enterprise will play a major role in the industrial and warehousing sector, given the government’s push for “Make in India” and the rise of e-tailing. Also, if REITs take off this year, the office market will see more overseas investment in 2016 with big capital chasing limited premium office developments.




Mumbai shows strong demandOffice absorption doubles in 2015, over 6.5 million sq ft recorded

2015 was a solid year for the Mumbai office market with absorption totaling 6.57 million sq ft; this was more than double of last year’s absorption of 3.12 million sq ft. Apart from this, IT/ITeS giant TCS has pre-committed 2 million sq ft in Hiranandani Estate, Thane, which is expected to materalise by 3Q 2018. Sector wise, BFSI commanded the absorption with about 34% share, followed by IT/ITeS 28% and Pharma 15%. Western Suburbs micro market including, Andheri (E), Malad, Goregaon (E), Jogeshwari (E) outperformed with more than 32% of the total absorption, followed by BKC (Bandra-Kurla-Complex) 22%, Navi Mumbai 16%, Central Suburbs & Central Mumbai 12% each, Thane 5% and CBD 2%.

This year, we recorded a number of outright transactions in office market including, purchase of about 400,000 sq ft office space in, ‘Godrej BKC’, by Abbott India; 200,000 sq ft by Axis Bank in ‘The Ruby’, developed by Ruby Group at Dadar; and 100,000 sq ft each by SBI and Edelweiss in L&T Sea Woods and Kohinoor City located at Navi Mumbai and Kurla, respectively.

Equivalent to our last year’s forecast, more than 3.36 million sq ft of new supply was added in 2015. Till 4Q 2015, approximately 7.6 million sq ft of vacant Grade A office space was available for lease or sale in the Mumbai office market. Most of this supply was situated in Andheri (E) and Thane/ LBS Marg 19% each, Worli/ Prabhadevi 13%, Navi Mumbai 12%, BKC & Powai 9% each, Malad 7%, Goregaon 5%, Lower Parel 3% and CBD & Kalina 2% each. Due to robust absorption and limited new supply, the overall vacancy levels fell in 2015 from 14% in 2014 to 13% in 2015.

Office rents witnessed an average increase of about 1% YoY across the micro-markets. A few locations, such as CBD, Andheri (E), Navi Mumbai and Powai recorded an increase in

*Indicative Grade A rents in INR per sq ft per month**Nariman Point, Ballard Estate & Fort

MICRO MARKETS RENTALVALUE*

% CHANGEQoQ YoY

CBD** 200 - 250 0% 5%

Worli/Prabhadevi 180 - 210 0% -5%

Lower Parel 145 - 190 0% 0%

BKC 225 - 320 0% 0%

Kalina 150 - 200 0% 0%

Goregaon / JVLR 100 - 110 0% 0%

Andheri East 90 - 130 0% 5%

Malad 80 – 100 0% 0%

Powai 120 - 130 0% 4%

Navi Mumbai 70 - 100 0% 6%

Thane / LBS 60 - 75 0% 0%


Mumbai | OfficeJanuary 2016

INDICATORS 2014 2015 2016F 2017F

Vacancy

Absorption

Construction

Rental Value

Capital Value

Rental Values

City Office Barometer

Source: Colliers International India Research






Key under construction projects

the range of 4 to 6%, while Worli/ Prabhadevi witnessed an annual decrease of about 5%.

This year, the state Government has given nod to new Information Technology (IT) and Information Technology Enabled Services (ITES) policy. The policy aims at making state an IT, animation and gaming industry hub by attracting INR 50,000 crore of investment and creating 1 million jobs by 2020.


The office market of Mumbai has started showing strong fundamentals, which is evident from the revived occupier demand. 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 2016. 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 2016, approximately 11 million sq ft office supply is expected to hit the market, which will help to 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 2015.

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02010 2011 2012 2013 2014 2015 2017F2016F

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New Supply (In Mln sq ft) Absorption(In Mln sq ft) Vacancy(In %)

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clIent buIldIng name area (sq ft) locatIon lease / sale

Abbott India Godrej BKC 400,000 BKC Sale

E-Clerx Mindspace SEZ 200,000 Navi Mumbai Lease

Axis Bank The Ruby 200,000 Dadar Sale

Home Credit Pvt Ltd Reliable Tech Space 160,000 Navi Mumbai Lease

Lupin Kalpataru Inspire 150,000 Santacruz Lease

buIldIng name developer area (sq ft) locatIon possessIon

Seawood Grand Central Tower I & II L & T Infrastructure 1,350,000 Navi Mumbai 2016

Godrej BKC Godrej Group 1,200,000 BKC 2016

Kohinoor Square Kohinoor Group 800,000 Dadar 2016

Forecast

New Supply, Absorption and Vacancy Trends

Average Rental and Capital Value Trend

Top 5 Transactions of 2015




Delhi office market takes a step back in 2015Absorption plunged down by 25% YoY to 0.89 million sq ft

Delhi witnessed over 0.89 million sq ft of office absorption during this year, which was about 25% less than the 2014 absorption of 1.18 million sq ft. CBD with 34% share in the total absorption remained the most preferred location among occupiers. Newly developed office micro market Aerocity also grabbed about 26% share in this demand while Saket and Jasola shared only 12% and 8%, respectively. This year, the average deal size has gone down to 9,500 sq ft as compared to last year’s 16,500 sq ft which may be the primary reason for fall in absorption.

Sector wise, BFSI, with a 32% share in absorption, holds the top position, followed by IT/ITeS 30%, Manufacturing 12%, Pharma 10% and others 16%. In notable office transactions, Hike took 60,000 sq ft in Bharti Worldmark at Aerocity, VFS Global & HP took 50,000 sq ft each in R Cube Centre and Red Fort Capital Tower, both located at Connaught Place and Amarchand Mangaldas took 44,000 sq ft in Religare House located at Saket.

In 2015, about 0.91 million sq ft of new supply was added to the city’s Grade A commercial office space. This new supply was primarily concentrated in Okhla, Mohan Cooperative, Aerocity and Pusa Road. Currently, the city has about 1.8 million sq ft of vacant stock available for lease/sale. Limited new supply addition resulted in marginal decrease in the city vacancy levels.

Despite low absorption, average rents in Delhi increased by 2% YoY, while Connaught Place and Jasola, recorded a 2% YoY decline in rents. Capital values on an average increased by 4% YoY across the micro markets, except Saket where capital values declined by 10% YoY.

During the year, Delhi Development Authority (DDA) has

Rental Values

*Indicative Grade A rentals in INR per sq ft per month**Connaught Place***Netaji Subhash Place


% CHANGEQoQ YoY

CBD** 180 - 450 0% -1%

Nehru Place 180 - 250 2% 8%

Saket 130 - 225 1% 8%

Jasola 90 - 130 0% -2%

NSP*** 70 - 120 0% 0%


INDICATORS 2014 2015 2016F 2017F

Vacancy

Absorption

Construction

Rental Value

Capital Value


Delhi | OfficeJanuary 2016







approved a commercial project on 51 hectare land named “Dwarka Centre” near metro corridor in Dwarka. The project will include a 14-hectare Dwarka Business Centre, which will act as a financial hub for banks and financial institutions.


We expect an increase in absorption in 2016, especially from BFSI, IT/ITeS, Media & Entertainment and Government sector. Micro markets like Connaught Place, Aero City, Saket and Okhla will continue to see maximum traction.

The city has a number of under construction projects such as “Skipper House” at Barakhamba Road, “Parsvnath 27” at KG Marg, “RPS Infinia” alongside Mathura Road and NBCC Plaza at Kidwai Nagar which are likely to add more than 4 million sq ft of commercial office space. However, we are not expecting much new supply in 2016 as all these projects will take atleast 2-3 years for completion. Thus in the next 12 months, there will be a marginal upward pressure on rents. Besides this, the premium Grade A buildings will continue to demand premium due to limited availability.

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 . 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 2015.



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2010 2011 2012 2013 2014 2015 2017F2016F

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VFS Global R Cube Centre 50,000 Connaught Place Lease

HP Red Fort capital Tower 50,000 Connaught Place Lease

Amarchand Mangaldas Reliagare House 44,000 Saket Lease

BBC Bharti Worldmark 40,000 Aero City Lease

BTMU Bharti Worldmark 40,000 Aero City Lease



NBCC Plaza NBCC 1,300,000 Kidwai Nagar 2016

RPS Infinia RPS Developer 1,200,000 Mathura Road 2016

Skipper House Govt. Trust 160,000 Barakhamba Road 2016




Gurgaon 2015, the best for office market in last 5 yearsWith 5.59 million sq ft, office absorption reached to the levels of 2011

2015 was the best year for office market in the last 5 years. The city recorded 5.59 million sq ft of office leasing, which was about 18% more than the last year’s absorption of 4.73 million sq ft. Growth was predominantly driven by IT/ITeS and BFSI sectors, sharing about 64% and 20%, respectively. The average deal size increased from 27,700 sq ft to 31,300 sq ft this year and approximately 40% of the transactions fell in the range of 50,000 to 150,000 sq ft. Micro-market wise, Udyog Vihar shares about 23% of the total absorption, followed by Golf Course road 17%, Golf Course Road Extension/Sohna Road 17%, DLF Cyber City and National Highway 8 (NH 8) 12% each, Institutional Sectors 10%, and others like MG Road, Gwal Pahari etc shared 9%. Golf Course road and its extension remained the most preferred market among occupiers; the market is expected to improve connectivity with Delhi tremendously once the metro becomes operational.

The strong demand was complemented by robust new construction. The year witnessed approximately 4.77 million sq ft of new construction, about 49% more than the previous year’s new supply of 3.20 million sq ft. Major projects completed during the year include, “Two Horizon Centre” (1.2 million sq ft) at Golf Course Road, “DLF Corporate Greens” (0.69 million sq ft) at Sector 74A and “JMD Empire” (0.45 million sq ft) at Sector 62. Beside this, more than 10.2 million sq ft of office space is available for lease in the Gurgaon market; about 32% of this vacant stock was located in Udyog Vihar and Industrial Sectors, followed by NH 8 19%, Golf Course Road Extension and Sohna Road 15%, Manesar 11%, Golf Course Road 9%, M G Road 5% and Institutional Sectors 4%. The city witnessed decrease in vacancy levels this year.

Rents showed a mixed pattern this year, a few micro markets,

*Indicative Grade A rentals in INR per sq ft per month


% CHANGEQoQ YoY

MG Road 110 - 140 -2% 2%

DLF Cyber City (IT) 100 - 110 6% 11%

Golf Course Road 100 - 180 4% 14%

Institutional Sectors (Sec 44, 32, 18) 60 - 90 -3% 0%

Golf Course Road Ext./Sohna Road 60 - 75 0% 0%

National Highway 8 50 - 130 0% -10%

Udyog Vihar & Industrial Sectors 30 - 40 3% -7%

Manesar 38 - 45 0% -2%


Gurgaon | OfficeJanuary 2016

INDICATORS 2014 2015 2016F 2017F

Vacancy

Absorption

Construction

Rental Value

Capital Value

Rental Values








such as DLF Cyber City, Golf Course Road and MG Road recorded an increase in the range of 2 to 14% YoY due to limited supply, while NH 8, Udyog Vihar and Manesar witnessed an annual decrease of about 6%. This resulted in a marginal increase of 1% yoy in average Grade A office rents.

On the infrastructure front, the State Government has infused fresh funds of INR 1,200 crores for Kundli-Manesar-Palwal (KMP) Expressway project. The completion of the expressway would not only provide high speed link to northern Haryana with its southern districts like Gurgaon, Faridabad and Palwal, but also de-congest National Capital Territory of Delhi. Also, construction work of Rapid metro rail extension from Sikanderpur metro station to Sector 56 is in its advance stages and the entire stretch is likely to be ready by end of 2016.


We forecast robust occupier demand in 2016 due to a number of large RFPs already floating in the market. However, market may see some consolidation among e-commerce occupiers which took large spaces in 2015. Among premium occupiers NH-8, Golf Course Road, its extension and Cyber City will continue to remain the preferred choice while occupiers looking for affordability will focus on micro markets such as Udyog Vihar, Institutional sectors, Sohna Road and Manesar. Rents are expected to increase marginally in select micro markets.

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. 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 2015.

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Snapdeal ASF Tower and Center 500,000 Udyog Vihar Lease

Google India Signature Tower 2A & 3 403,000 Sector 15 Lease

NTT Data Spelndor Trade Tower 250,000 Golf Course Road Extension Lease

Samsung Two Horizon Centre 200,000 Golf Course Road Lease

Zomato Media One Horizon Center 126,000 Golf Course Road Lease

2010 2011 2012 2013 2014 2015 2017F2016F

Forecast

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ASF Insignia Phase II ASF Infrastructure 1,400,000 Gwal Pahari 2016

Reach Commercia Reach Promoters 550,000 Sohna Road 2016

Unitech Infospace-Tower V Unitech Ltd. 500,000 NH 8 2016




NOIDA office market recoveredCity recorded, 45% YoY increase in demand

The office market of NOIDA witnessed resurgence with 45% increase in office absorption on YOY basis. The city recorded about 2.62 million sq ft of office absorption as compared to the last year’s figures of 1.80 million sq ft. More than 80% of this demand was from IT/ITeS sectors, followed by Manufacturing 6%, BFSI 5%, and others 8%. NOIDA Expressway remained the most preferred micro market among Grade A occupiers and about 46% of the office transactions were concluded in sectors such as 125, 127, 132 and 135 located along NOIDA Expressway. Beside this, Institutional Sectors shared 20%, Greater NOIDA 14%, Industrial Sector (IT) 13% and Commercial Sectors 6% in overall office demand.

In 2015, more than 3 million sq ft of new office supply entered into the market. Most of this new supply was located along NOIDA Expressway, Sector 16, Sector 16A and Sector 32.

Major projects completed during the year include NPX Tower (Nehru Place Extension) 1 million sq ft by Urbtech India Developers located at Sector 153, “World Trade Tower” 0.8 million sq ft by ET Infra Developers Pvt. Ltd at Sector 16 and “Assotech Business Cresterra” 0.5 million sq ft by Assotech at Sector 135.

More than 11.7million sq ft of office space is available for lease in the NOIDA market, of which about 85% is located in Industrial Sectors (Sector 1 – 9, 57 – 60 and 63 - 65), followed by Institutional Sectors 14% (Sector 16A, 62, 125 – 142) and Commercial Sector 1% (Sector 18).

NOIDA market witnessed 3% YoY average increase in rental values for Grade A office space across all the micro markets, except Commercial Sector where rents declined by 7% YoY and Institutional Sector (IT) where rents remained stable. Capital values also increased by 8% YoY, indicating market recovery.

Indicative Grade A rentals in INR per sq ft per month*Sector 18**Sector 16A, 62, 125-142***Sector 124, 57-60, 63-75


% CHANGEQoQ YoY

Commercial Sectors* 80 - 110 -5% -7%

Institutional Sectors (Non IT)** 70 - 110 6% 13%

Institutional Sectors (IT)** 45 - 60 -5% 0%

Industrial Sector (IT)*** 35 - 55 0% 5%


Noida | OfficeJanuary 2016

INDICATORS 2014 2015 2016F 2017F

Vacancy

Absorption

Construction

Rental Value

Capital Value

Rental Values








This year, Noida witnessed a few en-bloc commercial asset sales, such as Kotak Mahindra Group and New Vernon Capital have jointly bought Green Boulevard, an Information Technology (IT) park located in sector 62. This was 3C’s second large transaction during this year in terms of divesting its assets. Earlier this year, it sold Oxygen, a Special Economic Zone located in NOIDA to Blackstone Group.

On the infrastructure front, NOIDA plans to construct a six-lane elevated flyover between NOIDA Sector 41 to NOIDA Special Economic Zone of Phase-II industrial area.


The market will continue to garner the interest of cost sensitive occupiers and is expected to witness increase in absorption. Despite huge vacancy, developers who have sold their office projects on strata sale basis will to add speculative supply in the market. This will keep rental levels low and vacancy levels high in the market. NOIDA expressway, sector 16 and sector 62 markets will continue to get occupier’s favor because of their strategic location and availability of talent pool.

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. 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 2015.

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Cognizant Infospace II 250,000 Sector 135 Lease

Genpact Stellar IT Park 100,000 Sector 135 Lease

Oracle Express Trade Towers 2 100,000 Sector 132 Lease

Reliance Jio Logix Cyberpark 100,000 Sector 62 Lease

SafeNet Unitech Infospace 90,000 Sector 135 Lease

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Wave One Wave Infratech 1,000,000 Sector 18 2016

I Thum Beaver International 500,000 Sector 62 2016

Cosmic Corporate Park III Cosmic Group 500,000 Sector 154 2016




Chennai Office market reboundsTechnology sector drives the demand; absorption up by 25%YoY

Chennai office absorption remained in line with Colliers last year’s forecast of about 5 million sq ft; this was 25% more than the previous year’s absorption of 4.11 million sq ft. This year, a number large size lease transactions were concluded by technology and BFSI sectors and companies such as Accenture, took over 718,000 sq ft in Shriram Gateway SEZ and Divyashree located along GST Road and OMR, respectively; Yes Bank leased 400,000 sq ft in India Bulls; Ericsson and BNP Paribas both leased more than 200,000 sq ft in SP Infocity and Center Point 2.

About 71% of the total absorption was contributed by IT/ITeS firms, followed by BFSI 9%, Pharma 7%, Manufacturing 5%, Engineering 4% and others 3%. Micro market wise OMR (Old Mahabalipuram Road) with 45% share in overall demand, remained the most preferred micro market, followed by CBD, off CBD, GST Road and MPR (Mount Poonamallee Road) which together accounts for 42% absorption and 12% by Ambattur and Manapakkam.

In 2015, Chennai witnessed about 3.16 million sq ft of new office supply. Most of this new supply was concentrated in Rajiv Gandhi Salai (IT Corridor). Major project completed during the year was “Chennai One SEZ- North Block” (1.2 million sq ft) by IG3 infra Ltd., which alone contributes 38% of this new supply.

Till December 2015, the total available supply for lease / fit-out stood at 5.8 million sq ft. By micro-market, OMR (IT corridor-pre & post toll) accounted for about 56% of this total available supply, followed by Ambattur 18%, CBD 18%, Off CBD 5%, GST Road and MPR together 3%. Limited new construction completions and increased absorption has led to decrease in vacancy levels to 14% in 2015 from last year vacancy levels of 19.5%.

*Indicative Grade A rentals in INR per sq ft per month** OMR I (Madhya Kailash – Perungudi- Toll gate I) ***OMR II (Thoraipakkam to Sholinganallur) & OMR III (Semmencherry to Siruseri)


% CHANGEQoQ YoY

CBD 65 - 80 0% 4%

Off CBD 50 - 60 0% 0%

Ambattur 30 - 38 17% 17%

OMR (Pre Toll)** 50 - 60 0% 4%

OMR (Post Toll)*** 25 - 40 0% -7%

Mount-Poonamallee Road 50 - 60 0% 0%

GST road 35 - 45 0% 7%


Chennai | OfficeJanuary 2016

INDICATORS 2014 2015 2016F 2017F

Vacancy

Absorption

Construction

Rental Value

Capital Value

Rental Values








A few micro markets such as CBD, OMR (Pre Toll) and GST Road witnessed an increase in rents in the range of 4 to 7% while OMR (Post Toll) recorded 7% decrease this year. The asking rents in Ambattur increased significantly from INR 26 - 32 to INR 30 - 38 per sq ft. This is due to the significant drop in vacancy levels after few large transactions concluded in this market.

In a private equity investment, Brookfield Asset Management has picked up 80% stake in an upcoming 200 acres industrial park in Sriperumbudur which is apparently being developed by Bengaluru-based realty developer Embassy Group.


Chennai office market is expected to continue momentum led by IT/ITeS and BFSI sectors. OMR and CBD, being preferred locations will see more demand and thus can witness an upward pressure in rents. In last 2-3 years, Chennai does not witness substantial new launches. This was primarily due to high vacancy levels. This year also we are forecasting limited new construction as market will be recovering with recent flood massacre. Moreover we may see delay in various approval process due to upcoming elections. This will result in further decline in vacancy levels.

Notes: 1. Office Market: Prime office properties in Chennai are located in seven principal sub markets: CBD, Off CBD, Ambattur, OMR I, II & III, Mount - Poonamallee Road, GST Road. 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 2015.

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Accenture Shriram - The Gateway 393,000 GST Road Lease

Yes Bank One Indiabulls Park 400,000 Ambattur Lease

Accenture Divyashree Point 325,000 OMR Lease

Ericsson SP Infocity 216,000 OMR Lease

Income Tax Department BSNL Building 197,000 OMR Lease


Chennai One SEZ – South Block IG3 infra Ltd 1,200,000 Pallavaram Thoraipakkam Road 2016

Ramanujan IT Park (Cambridge Tower) TRIL 800,000 Rajiv Gandhi Salai 2016

Ramanujan IT Park (Infinity Tower) TRIL 450,000 Rajiv Gandhi Salai 2016

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Bengaluru continues to top in office marketOffice market outperforms with absorption over 13 million sq ft

The Bengaluru office market continued its momentum in 2015 and city remained on the top with about 33% share in total absorption across eight major cities. Through out 2015, the Bengaluru market recorded total absorption of about 13.43 million sq ft, slightly below last year’s 13.77 million sq ft. This year, the pre-commitment for under construction office space has been reduced to about 1 million sq ft from the previous year’s number of more than 4 million sq ft.

The city’s traditional primary office demand driver IT/ITeS shared about 57% (7.69 million sq ft) of the total absorption, followed by BFSI 20%, Manufacturing 13% and others 9%. Grade A office space remained in preference among occupiers. Micro market wise, Outer Ring Road was the most preferred micro market which shared 63% of the total absorption, followed by Whitefield and Electronic City 30% and CBD 7%.

The robust absorption was accompanied with affirmative new construction of approximately 12.8 million sq ft which is about 60% more than the last year. Beside this, about 6.47 million sq ft of Grade A office space was available for fit-outs till 4Q 2015; 59% of this available supply was located in EPIP Zone/ Whitefield and Electronic City, 17% in Outer Ring Road, 9% in CBD and rest 15% in Bannerghatta Road and Hosur Road micro markets. Despite, large new supply addition the vacancy levels for Grade A office market declined marginally as demand superseded the supply. Bengaluru has ample of new supply in the pipeline of approximately 21 million sq ft in next 3 years, which will further keep the vacancy levels the same in the coming years, due to high occupier demand.

During the year, average rental values registered an increase of 11% YoY, which was contributed by micro markets such as Electronic City, Bannerghatta Road, Outer Ring Road (Marthalli

*Indicative Grade A rentals in INR per sq ft per month**Northern part of ORR - KR Puram till Hebbal


% CHANGEQoQ YoY

CBD 90 - 130 0% 0%

Outer Ring Road (Marathalli - Sarjapur) 65 - 68 6% 13%

Bannerghatta Road 60 - 68 5% 13%

Outer Ring Road (North)** 55 - 65 0% 9%

Hosur Road 25 - 40 0% 0%

EPIP Zone/ Whitefield 28 - 36 0% 0%

Electronic City 28 - 36 0% 8%


Bengaluru | OfficeJanuary 2016

INDICATORS 2014 2015 2016F 2017F

Vacancy

Absorption

Construction

Rental Value

Capital Value

Rental Values








- Sarjapur) and Outer Ring Road (North). Other micromarkets witnessed a stable rent scenario during the year. Capital values also increased on an average by 7% YoY across all the micro markets.

To support the rapid real estate growth in the city, Bangalore Development Authority (BDA) has levied 5% Metro Rail cess on the guidance value of the total land area of new layouts and high-rise buildings. Also for the Metro Phase II Bangalore Metro Rail Corporation (BMRCL) had signed a sovereign loan agreement for €200 million (INR 1,500 crore) with Agence Francaise Development (AFD).

In a major land transaction this year, Embassy Group has acquired 100 acre land for INR 500 crore to develop the business park from Cornerstone Group in Varthur near Whitefield.


Over the next 12 months, the outlook for office market looks positive with a number of companies such as HCL, Thomas Reuters, Mercedes, Netmagic, GE, are on an expansion spree within the city. Vacancy rates are expected to remain flat, as new supply is likely to supplement the demand. However rents are likely to rise marginally in select micro markets such as ORR – Marthalli – Sarjapur and North Bengaluru due to limited Grade A vacant stock.

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). 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 2015.


Wells Fargo Embassy Tech Village 860,000 Outer Ring Road BTS - Lease

Shell RMZ Eco World 788,000 Outer Ring Road Lease

Amazon Constellation Business Park 500,000 Outer Ring Road Lease

ANZ RMZ Eco World 298,930 Outer Ring Road Lease

LinkedIn India Global Technology Park (Maple tree) 246,000 Outer Ring Road Lease


Embassy Tech Village - 7B Block Embassy Group 800,000 Outer Ring Road 2016

Mantri Cornerstone A&C Mantri Developer 700,000 Indiranagar 2016

MTB SEZ 3 Ascendas 620,000 Whitefield 2016

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Kolkata occupiers remained cautious

Office absorption down by 60% YoY in 2015, but 2016 looks positive

Office absorption in Kolkata declined to 1 million sq ft in 2015; down by about 60% from previous year of 1.66 million sq ft. IT /ITeS remained as the key occupiers with 46% share in the total absorption, followed by Pharma 11%, BFSI 10% and Engineering, Manufacturing and Logistics at 8% each and remaining 9% by FMCG , Media & Entertainment sector. Location wise Sector V/ New Town saw maximum traction with 89% share in absorption, followed by CBD & New CBD 10% and SBD 1%. Among the renowned deals this year, British Telecom took 0.10 million sq ft in DLF SEZ at New Town, Cerner Corporation took 70,000 sq ft in Martin Burn Business Park at Sector V and Reliance Jio took 50,000 sq ft in Globsyn Crystal at Sector V.

Despite weak demand, in line with our last year’s forecast, the city saw about 2.17 million sq ft of new construction in 2015; this is almost double than one year earlier. Major completions this year include”Godrej Genesis” measuring 1.3 million sq ft by Godrej Properties located at Sector V, “Unitech Infospace Phase 3A & 3B” 0.50 million sq ft by Unitech Ltd. at Rajarhat and “Arch Waterfront” 0.27 million sq ft by Arch Group located at Sector V.

In 2015, both capital values and rents declined in the range of 2 – 4% YoY, except in CBD and PBD micro markets which saw stable rents this year. Decline in absorption and increase in new supply pushed the vacancy upward.

In a significant private equity transaction, Milestone Capital Advisors exited from “Millennium Tower-I”, located in Rajarhat New Town. The building is occupied by IBM. According to VCCircle market reports, the company exited its investment of INR 57 crore made in March 2008 for over INR 91 crores, which includes rental income of around INR 34 crores earned over a period of 7 years.

*Indicative Grade A rentals in INR per sq ft per month**Park Street, Camac Street, Chowranghee Road, AJC Bose Road*EM Bypass, Topsia, Ruby****Rajarhat


% CHANGEQoQ YoY

CBD** 85 - 115 0% 0%

SBD*** 80 - 100 0% 0%

Sector V 40 - 48 0% -4%

PBD **** 34 - 35 0% 0%


Kolkata | OfficeJanuary 2016

INDICATORS 2014 2015 2016F 2017F

Vacancy

Absorption

Construction

Rental Value

Capital Value

Rental Values









Although absorption remained on lower side in 2015, but in the last quarter few technology giants such as IBM and PWC have shown interest to consider Kolkata market again for their office requirements. If this materialises, the city is likely to see increase in absorption in next 12 months.

We anticipate rents to remain on the same levels in CBD and SBD locations, but select micro markets like Salt Lake and New Town may witness a decline on account of piled up inventory and huge supply pipeline.

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. 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 December2015.


British Telecom DLF SEZ 108,000 Sector V Lease

Cerner Corporation Martin Burn Business Park 70,000 Sector V Lease

Reliance Jio Globsyn Crystal 55,000 Sector V Sale

Siemens VAI Godrej Water Side 46,770 Sector V Lease

Oversees Packaging EN 34 32,800 Sector V Lease


Technopolis 2 Forum Projects 1,200,000 Bantala 2016

PS Srijan Tech Park II PS Group & Srijan 925,000 Sector V 2016

Primac Tower Primac Group 47,000 Sector V 2016

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Pune upholds office absorption, crosses 5 million sq ftIT/ITeS remained as the prime driver with 74% of the total absorption

Riding on the back of robust leasing from IT/ITeS sector, the city recorded highest office absorption of 5.03 million sq ft in 2015; this is about 2.4% more than the last year’s number of 4.91 million sq ft. Locations in the east, such as Viman Nagar, Yerwada, Station Road and Hinjewadi outshined other micro markets with more than 40% of the total absorption, followed by Bavdhan, Hadapsar/ Phursungi 17% and CBD 14%. Some notable transactions this year include, Siemens India taking 0.34 million sq ft in Panchshil Business Park - Tower C located at Balewadi, Amazon, Vodafone India, L&T, BNY Mellon, UBS, Concentrix Corporation and Seagate Technology taking over 0.1 million sq ft each in various Grade A buildings located in Nagar Road, Hinjewadi, Airport Road and Kharadi micro markets.

Contradictory to our last year’s predication of 5.12 million sq ft new supply, only 3.5 million sq ft of new construction was completed in 2015. This is because, a few projects were deferred for completion in 2016. Robust absorption and less new construction has resulted in drop in vacancy levels, to about 20.5%. Major projects completed during the year were, “Marvel Edge” (0.3 million sq ft) by Marvel Group at Viman Nagar, “Cello Platina” (0.16 million sq ft) by Cello at F C Road and “Supreme HQ” (0.1 million sq ft) by Supreme Landmarks at Baner. The total vacant stock as of 4Q 2015 was about 3.9 million sq ft. Most of this supply was located in Hinjewadi 23%, Airport Road/Station Road 15%, Nagar Road 14%, Bund Garden 13%, Kharadi 10%, Senapati Bapat Marg 8%, Kalyani Nagar 6%, and rest 11% was shared by Baner, Hadapsar and Bavdhan micro markets

During the year, average rents registered an increase of 7%

*Indicative Grade A rentals in INR per sq ft per month


% CHANGEQoQ YoY

Baner 48 - 57 2% 5%

Bund Garden 50 - 65 0% 0%

Airport road/ Pune station 55 - 85 4% 7%

Aundh 45 - 60 0% 0%

Senapati Bapat Road 60 - 95 3% 11%

Bavdhan 35 - 45 0% 0%

Kalyani Nagar 45 - 62 0% 2%

Nagar Road 45 - 60 0% 5%

Hinjewadi 38 - 50 0% 14%

Hadapsar/Fursungi 42 - 65 2% 4%

Kharadi 42 - 80 6% 15%


Pune| OfficeJanuary 2016

INDICATORS 2014 2015 2016F 2017F

Vacancy

Absorption

Construction

Rental Value

Capital Value

Rental Values








YoY, which was contributed by micro markets like Airport Road/ Station Road, Hinjewadi, Hadpsar/ Fursungi, Senapati Bapat Road, Baner, Kalyani Nagar & Nagar Road. Capital values were also marginally up by 2% YoY in select micro markets.

This year HDFC PMS has exited its investment in a commercial & six residential projects of Marvel Realtors for over INR 152 crore.


Pune will continue to garner interest of technology firms due to its affordable rents and availability of large talent pool. In the last two years Pune market has not witnessed many new launches as developers remained cautious in adding more speculative supply. Thus, we are not expecting much new supply addition this year and predict that vacancy will decline further. Rents and capital values are expected to inch-up marginally across micro markets for Grade A premium buildings.

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. 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 2015.


Siemens India Panchshil Business Park 342,080 Balewadi Lease

Amazon Inorbit IT 195,500 Nagar Road Lease

Vodafone India Services Business @ Mantri 133,380 Nagar Road Lease

UBS Commerzone B8 110,000 Yerwada Lease

Seagate Technology HDD EON Free Zone SEZ 107,640 Kharadi Lease


Acendas Phase II Acendas 615,000 Hinjewadi 2016

World Trade Centre - B Panchshil Realty 555,000 Kharadi 2016

World Trade Centre - C Panchshil Realty 555,000 Kharadi 2016

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About Colliers International

colliers.com

67 countries on 6 continentsUnited States: 140 Canada: 31 Latin America: 24

199 EMEA: 108

$2.3billion in annual revenue

1.7billion square feet under management

16,300professionals

Primary Authors:

Surabhi Arora Associate Director | Research +91 124 456 [email protected]

Sachin Sharma Manager | [email protected]

Amit Oberoi I National DirectorValuation & Advisory Services & [email protected]

For Office Services:

Mumbai: George Mckay I South Asia [email protected]

Delhi / NCR: Vikas Kalia | National [email protected]

Bengaluru: Goutam Chakraborty I [email protected]

Pune: Rishav Vij I Senior Associate [email protected]

Chennai: Shaju Thomas | Senior Associate Director [email protected]

Kolkata: Swapan Dutta I Senior Associate [email protected]

Colliers InternationalTechnopolis Building, 1st Floor, DLF Golf Course Road, Sector 54, Gurgaon - 122 002TEL +91 124 456 7500

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