kf investment advisory report nov-2012

This report thetop residentialdestinations in thecountry from theinvestment point of viewover the nextyears (2013-2017)

Balancing return with the associated risk is the focal point of any investment decision. Equity and debt are considered to be the mainstream asset

and risk in both these asset classes is strikingly

associated with high returns albeit with a greater risk score as measured by volatility, a relatively stable debt investment comes with a larger compromise on returns.

Real estate, the third mainstream asset class,

From the perspective of return, real estate investment in India has garnered superior returns in comparison to other asset classes over a long term. Further, an investment in residential

INVESTMENTadvisory REPORTIndia’s Residential Destinations

INTRODUCTION

property is generally done with leverage in the form of a housing mortgage. This leverage further increases the potential for earning higher returns since the initial equity contribution is a fraction of the property value.

From the perspective of risk, property investment fares better because asset price generally remains stable. It has been established that an investment in real estate based on sound research can seldom go wrong. In the sense that in comparison to an asset class like equity which is dependent on several factors related to the

and corporate governance, a real estate investment is based on the underlying asset. A sound research is inherently founded on deep

IMPORTANT TERMS USED IN THE REPORT

TERM MEANING

Metropolitan region

Zone A Zone is a geographical division of the metropolitan region comprising of several localities that possess similar characteristics in terms of access to employment hubs, connectivity and demography. In most cases, the metropolitan region is divided into 4-5

Destination Destination is the most promising residential locality from the perspective of investment

Benchmark locationresidential locality that has saturated in terms of real estate growth and infrastructure development and is considered as the most sought after residential market within the

in the same zone, becomes the reference point

Property price This map splits the geography of a city in accordance with the prevailing residential contour map

by such line

Investor Return It is the IRR (Internal Rate of Return) for a typical investor in residential property

Assumptions for Size of property: 1000 sq. ft. Investment horizon: 5 yearscalculating Investor Loan to Value ratio: 60% Mortgage rate: 10.5% paReturn Loan tenure: 20 years

Residential Property The price indicates the average capital value in the residential market of the destination Price (` per sq.ft.) and benchmark locations

Hidden Gem Locations where we expect the real estate drivers to gather momentum beyond year 2017

We have developed aframework built on ‘top-down approach’ in theselection ofpromising cities and zoneswithin them and ‘bottom-up approach’ in theselection of topinvestment destinations

From the perspective ofrisk, property investmentfares better because assetprice generally remains stable

understanding of the property market along with the study of factors that drive it.

Real estate is an asset class where an educated investor can mitigate the risk and enjoy the associated superior returns at the same time. Coupled with the other mainstream asset classes, this investment vehicle can make for an optimally

real estate is fraught with decisions based on gut feeling and tips which result in poor investments. Hence, an investor has to clearly delineate a real estate investment from speculation.

about a striking change in the attitude ofinvestors. This change towards expectation oninvestment returns, growth and risk does notsingle out any one asset class but applies to mostof the assets whether it is equity, debt,commodity or real estate. Amidst this changedscenario it is evident that an advice oninvestment in any asset class cannot be generic.Real estate as an asset class is the foremostexample that will witness the challenge thrown bythis tenet particularly in this tough economicscenario. Even within real estate as an assetclass, the judgment on investment outlook oncommercial real estate and residential real estate

that drive investment returns for both these arediverse to a great extent. Hence, the investmentopinion should take into account each of thesefactors.

INVESTMENTadvisory REPORT

Although the prominence of real estate as anasset class is increasing, the investment researchin the subject lags much behind in comparison toother asset classes. With this report, we will makean incipient foray into the subject by identifying the top residential destinations in the country

residential markets that we expect willoutperform in terms of the investor returns onaccount of the appreciation in property prices. We

promising cities and zones within them and

investment destinations. Since real estateactivities are not restricted to city limits, we haveconsidered the entire metropolitan region in ouranalysis. Our understanding of the local propertymarket and experience in dealing with

growth equips us to develop the framework forthis pioneering report.

While selection of the top residential investmentdestinations remains the core of this report, we

real estate drivers to gather momentum albeit

In most cases, investmentin real estate is fraughtwith decisions based ongut feeling and tips whichresult in pOorinvestments. Hence, aninvestor has to clearlydelineate a real estateinvestment fromspeculation

The top residential destinations have been picked from the universe of all urban centres in the country. In this multi stage selection, each parameter was chosen in a manner that captures

parameters with the growth of residential development in the city.

The population base of a city is a crucial indicator

based on their population. The extent of business activity and thrust on infrastructure development

and accordingly these selected 100 cities were studied. Banking penetration, hotel room

considered as surrogates for business activities and current and proposed infrastructure


From the growth andinvestment perspective,zones that have high concentration of business activity at present andprojections of meaningfulincrement in future willhave a comparativeadvantage over othersthat have saturated onthis

METHODOLOGY & APPROACH

Selection of top cities in the country

expenditures were taken as proxies for infrastructure development. The cities were ranked on these individual parameters and based on the average ranking Mumbai, Delhi, Bengaluru, Chennai and Pune emerged as the top

With the fundamental prerequisite already in

participate in the growth trajectory for the foreseeable future. While a framework was

striven to provide a crystal clear view on investment destinations for a typical investor in a residential property. This objective meant

would outperform others on the investment return scale.

Selection of zone within a cityRegional growth within a city is anything but even and the direction of such growth is a critical factor in determining the fate of a particular residential property. We therefore, split each city into 4-5 zones to capture the quantum and

zones is based on the homogeneity of characteristics with respect to access to employment centres, social and physical infrastructure and demography.

The selection of a preferred zone depends on the

depending on the purpose of purchasing property which is either end-use or investment. From the growth and investment perspective, zones that have high concentration of business activity at present and projections of meaningful increment in future will have a comparative advantage over others that have saturated on this. Growth of business activity will create abundant employment opportunities which in turn will lead to a rise in inward migration and high demand for residential property in these zones. Hence, we

assessed the impact of their business activity on

the kind of employment generated by such industry. We have captured the extent of employment generation by measuring the

A regression model capturing the impact of change in revenue of driver industry on change in

revenue guidance by the respective industry associations. Projections for the remaining three years were based on the moving average trend of

zones was analysed to understand the balance between the incremental employment and

on employment potential in a particular zone has been provided. The service sector has emerged as a driving force in most of the cases with the Information Technology and Information Technology enabled Services (IT/ITeS) industry emerging as a dominant employment driver.Besides the quantum of employment generation in the driver industry, the nature of jobs in


accordance with its position in the value chain in

element. For instance, employment in software development within the IT/ITeS industry has a

employees in comparison to that in the Business

diverse manner.

Besides employment, the other important factor

equipped us to assess the scope of infrastructure

development that will have an impact on

infrastructure like road, rail and airport projects

healthcare and recreation was also reviewed.

movement of employment and infrastructure.

IT Sector

Industrial Physical

Connectivity

Entertainment

The service sector hasemerged as a driving forcein most of the cases withthe InformationTechnology andInformation Technologyenabled Services (IT/ITeS)industry emerging as adominant employmentdriver

Non IT Sector

Selection of Destination

All the residential markets within the preferred

employment opportunities and infrastructure

and proposed connectivity and social and physical infrastructure facilities. The approach

discussions with various stakeholders. This primary survey coupled with our real estate

destinations from the perspective of investment.

residential locality that has attained a relatively

As mentioned earlier, our analytical focus was

market’s connectivity with important locations and social and physical infrastructure facilities

future price movements like:.

. Limited land

Besides the quantum ofemployment generation in the driver industry, thenature of jobs in accordance with its position in the value chainin the industry was takenas a tingelement

Business activity Infrastructure


construction and put an upward pressure on property prices in destinations like Chembur in Mumbai.

. Lifestyle shift: Destinations like KR Puram in Bengaluru possess the potential to provide a lifestyle shift, which is possible generally in projects developed on large land parcels that facilitate high rise premium developments with plush amenities.

. Planned development: Lack of social infrastructure remains a concern in some destinations as of now. However, on account of being in the planned development region, education, healthcare and recreation facilities will eventually come up in destinations like Ulwe in Mumbai.

While dynamics of a residential market with respect to the demand-supply scenario were considered to understand its depth, the impact of factors like quality of projects, premium or

assessed. It is of paramount importance to assess all these factors in comparison to the benchmark locality and also other localities within the zone. Further, these factors have to be viewed in the context of the prevailing property

that would outperform other locations on the investment return scale. However, continuing with our intention of undertaking a thread bare analysis and providing an unequivocal

appreciation and the resultant investor returns for investment in these destinations.

As mentioned earlier, to forecast the price movement of a destination, we have considered the price of a benchmark location as the reference point. The assumption is that the destination price will grow at a faster pace (as compared to the benchmark location price) because of its relatively higher level of increasing developmental activities. As a result of this, the current price discount of the destination will reduce, making price convergence imminent in the future.

a benchmark location. Empirical evidence indicates that price variation of established

the changes in economic activities. In line with this, we have conducted iterations to identify the

property price movement in the benchmark locations. India’s economic growth has been

explaining the price movements. Regression equations have been estimated for each of the

been forecasted till 2017.

In the second stage, the price discount of a

years. In order to achieve this, we studied the

benchmark location over the last decade. These factors include:. Incremental employment generation in the

zone.. New infrastructure projects.. Reduction in time to commute between the

benchmark location and important places in the zone.

Our analysis shows that the occurrence of one of the above mentioned factors or a combination of them accelerated the growth of residential property prices in a benchmark location before it stabilized and emerged as a relatively developed market. Assuming that the destination will have a

Over the foreseeablefuture, the preferredzones will be the biggest

theyfall in the dire ofmovement of employmentand infrastr

ontinuing with ourintention of undertaking athread bare analysis andproviding an unequivinvestment view, we havequ the alappre tion and theresultant investorreturns for investment in these destinations

TOP INVESTMENT DESTINATIONS RANKED IN ORDER OF INVESTOR RETURN DURING THE NEXT 5 YEARS

#1 Ulwe

29.0%

#2 Wadala#3 Chembur#4 Noida

Extension

27.0%25.5%22.9%

#8 Ravet

#7 Hinjewadi#6Medavakkam

#5 DwarkaExpressway

22.3%

21.2% 20.6% 20.1%

20.0%

#9 Tathawade

#10 Hebbal#11 Pallikarnai

19.3%19.1%18.7%

#12 Wakad

18.6%

#13 KR Puram

Investor returns per annum


Empirical evidence indicates that price variation of establishedresidential markets is

y explained bythe changes in economicactivities

similar impact of incremental employment generation and new infrastructure projects, the property price in the destination has been forecasted by applying an estimated discount factor on the future price movements of the benchmark location.

a resistance on price movement in many destinations. Hence, we have created an income pyramid of the employees in the driver industry. This pyramid is a distribution of all the employees according to their income. Thus, a ceiling was applied to our destination price forecast as per the change in this pyramid for the forecast horizon.

REGION-WISE TOP INVESTMENT DESTINATIONS FOR NEXT 5 YEARSForecasted Price Appreciation in Percentage

Additionally, in cases where land availability is not a concern, price growth will not breach the

group. As a result of this factor some destinations did not qualify for the projected price growth and were dropped from the top destinations list.For a typical investor in residential property what

leverage provided through the housing loan. The same has been calculated and labelled as ‘Investor Return’ arising out of investment in under construction residential property, in these

available at a destination along with select residential projects have also been provided in the report.

NORTH

Mumbai Pune

NCRChennai

Bangalore

SOUTH

WES

T#1 Noida Extension

#2 Dwarka Expressway

111%

108%

#2Hebbal

#1 Medavakkam

#3 Pallikarnai

#4 KR Puram

94%

103%

93%

91%

#4H

inje

wad

i

#5Ta

thaw

ade

#6Ra

vet

#7W

akad

100%

98%

97%

91%

#1U

lwe

#3Ch

embu

r

#2W

adal

a

145%

133%

125%

EAST


in cases where landavailability is not aconcern, price growthwill not breach the

ordability thresholdof the target consumergroup

. With property options ranging from `3,200/sq.ft. to `15,000/sq.ft. and investor returns in the range of 18.6% - 29% pa residential real estate will emerge as a

. With seven destinations, the western region has the highest number of promising residential investment options.

. The top three investment destinations, with investor returns in excess of 25% pa, are from Mumbai.

. Only Mumbai ranks ahead of the top investment destinations of the NCR, the biggest residential market in the country.

. Enhanced connectivity and the proposition of

the Dwarka Expressway, placing it in high

KEY takeaways

Risk factors for our outlook

largely on the service sector led by the IT/ITeS industry. The sector’s revenue growth during the

employment, which is one of the biggest drivers of real estate. For the IT/ITeS industry, the revenue growth estimates for the initial two years have been taken from the industry association and for the remaining three years they have been

growth rate between 10-12%.

While the Indian IT/ITeS industry is interconnected with the global economy, reputed research studies have highlighted the interlinkage between the domestic manufacturing sector and this industry. As a result, the weak global economy and a slowdown in the domestic manufacturing sector will have a direct impact on this industry. Our analysis puts a great emphasis on the fate of the IT/ITeS industry because of its

The BFSI industry has a meaningful role in the employment trend in cities like Mumbai and Delhi. We have considered a revenue growth rate

moving average growth rate for this industry.The employment generated by these industries

deviation in their revenue growth will have an

space and therefore the fate of the respective destination.

Additionally, in several cases, the fate of the destinations is linked to the delivery of

ranks on the investment return scale.. The IT/ITeS industry is the driving force behind the growth in most of the destinations.

. With four investment destinations, Pune has the maximum number of promising residential property options.

. IT/ITeS, Automobile and Engineering sectors are the primary employment drivers in Pune

. The destinations in Chennai will immensely

Automobile industries in Tamil Nadu during the

. IT/ITeS and Bio-technology sectors will be the driving forces behind the growth of destinations in Bengaluru.


BENGALURU METROPOLITAN REGION POPULATIONPopulation in Millions

Source: Census 2011, Knight Frank Research

Population Average Annual Growth

1991 2001 2011

Bengaluru (also known as Bangalore), the capital of Karnataka is located in the south-eastern part of the state. The city is located at an altitude of 950m. above the sea level, thereby making its climate very serene. Bengaluru is the third most populous city of India with a very diverse demography. It is also known as the Garden City of India. It houses the largest number of Information Technology (IT) and Information Technology Enabled Services (ITeS) companies in India for which it earned the sobriquet of the ‘Silicon Valley’. It also houses numerous public sector companies including defence, aerospace and bio-technology.

Bengaluru urban agglomeration is known as Bengaluru Metropolitan Region (BMR) comprising Bengaluru urban district, Bengaluru rural district and Ramanagara district. The Bruhat Bengaluru Mahanagara Palike (BBMP) is in charge of the civic administration of the city. The corporation is spread over an area of 741 sq. km. Bangalore Metropolitan Region Development Authority (BMRDA), an autonomous body created by the Government of Karnataka is the nodal agency looking after the overall development of the BMR. During the last two decades the population growth was phenomenal in the BMR. It rose at an annual rate of 3.9%

oyees.

BENGALURU

4.84 6.54 9.595.2% 3.1% 3.9%

CHIKKABOMMASANDRA

VARTURVARTUR

CHIKKAMMASANDRANDRAABOM ABOM AA

15000

6000

3500

Major Roads

Railway Line

Existing Metro

Under Construction

South Zone

West Zone

Central Zone

East Zone

North Zone

Price Contours (`/ sq.ft)

Proposed Metro

Nagawara

Gottigere

BENGALURU MAP


Bengaluru MetropolitanRegion (BMR) is spread over

741 sq. km.

Market Overview

ZONE MAJOR RESIDENTIALDESTINATIONS

Central MG Road, Vitthal Mallya Road, Frazer Town, Lavelle Road, Richmond Road, Langford Town

West Malleswaram, Rajajinagar, Tumkur Road, Vijayanagar, Yeshwanthpur

North Banaswadi, Hebbal, Bellary Road, Hennur, Yelahanka, Jakkur, HBR Layout

EastMadras Road, KR Puram

South Koramangala, Sarjapur Road, HSR layout, Jayanagar, JP Nagar, Bannerghatta Road, Kanakapura Road

zones: Central, West, North, East and South.

South Bengaluru, a locale which until the mid-1990s housed a strong Kannada (native language of Karnataka) speaking population now boasts of being a cosmopolitan region. This was mainly on

India. Electronic City located on Hosur Road in the

1990. Many IT giants like Infosys, HCL Technologies, HP, Wipro, Genpact and Siemens have setup their campuses in this region. With the setting up of these companies, the South Bengaluru region became a preferred commercial as well as residential destination. The availability of land, strong infrastructure and presence of the middle-income segment have contributed to the development of this zone. The residential clusters

Koramangala, Jayanagar, BTM Layout, Bannerghatta Road and Hosur Road have attracted a large number of immigrants especially the IT employees. Social infrastructure like the availability of quality hospitals, prestigious educational institutions and retail malls are some of the major reasons behind residential demand in this part of Bengaluru.

This region started losing its charm since 1998 when the Government of Karnataka announced the new international airport at Devanahalli - a town located in the north of Bengaluru. Major IT/ITeS companies started acquiring land closer to the

refrained from buying any new land in this region, hampering the overall growth of the South Bengaluru region. In this bargain North Bengaluru

emerged a better investment destination compared to the south.

The new international airport at Devanahalli commenced in 2008. By virtue of this, North Bengaluru became one of the most sought after destinations of Bengaluru. Numerous real estate and infrastructure projects were announced to enhance the connectivity between Bengaluru city centre and the airport; this included High Speed Rail Link (HSRL), monorail and Metro rail. Moreover, to generate employment in this region, the government in association with private companies

Technology Investment Region (ITIR), Devanahalli Business Park (DBP) and Global Finance District (GFD). These also attracted a lot of institutional buyers like real estate developers and hoteliers.This region is on the cusp of becoming the new commercial business district (CBD) of

region with respect to the real estate investment. Major micro-markets covered under this zone are Hebbal, Devanahalli, Yelahanka and Hennur.

Before 1990, the eastern zone was home only to some of the reputed heavy manufacturing

growth of this region. With the dawn of the IT sector some of these industries have gradually turned into

attracted major IT/ITeS companies in the eastern

residential development in this region.

destinations among the IT employees. Moreover,


2007 2008 2012*2009 2010 2011

* Till September 2012

RESIDENTIAL PROJECT LAUNCH TREND IN BENGALURU

Launches Source: Knight Frank Research

31,236

20,60814,439

31,733

54,075

24,741

9.59 mn. population in the BMR, an

increase of 98% in the

last two decades


2007 2008 2009 2010

5%

180,000160,000140,000120,000100,00080,00060,00040,00020,000

No.

of U

nits

Stock Cumulative Absorption % of Unsold Units

RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF BENGALURU

2011

Source: Knight Frank Research

2012*

Road emerged as a business district having many tech-parks, SEZs, captive campuses and business centres.

Central Bengaluru is the commercial and retail

Mallya Road, Commissariat Street, Ulsoor and

parts of the city, good physical and social infrastructure along with the presence of organized retail has ensured the highest property prices in

micro-markets of this region include MG Road,

the central locations are bungalows and independent residential units, however some

witnessing growth in multi-storey high-rise constructions as well.

renowned engineering, transformers, motors and generator companies here. Being an industrial hub,

the mid-1990s, that transformed South and East Bengaluru as one of the most sought after residential markets. However, this region gained a lot of traction with the announcement of the

layout, Mysore Road, Nagarbhavi,

received the necessary impetus for growth.

up of bio-technology units and other large national and multinational manufacturing units have Source: Knight Frank Research

East North South

ZONE-WISE SPLIT OF UNDER CONSTRUCTION UNITS

42%

27%

30%

176,832 residential

units launched since 2007in the BMR


changed the dynamics of Bengaluru real estate market. Apart from generating thousands of new

able to attract a large pool of migrants into these

the real estate market to grow at a tremendous rate

segment that witnessed the launch of over 176,832 units since 2007.

Bengaluru residential market witnessed the launch of 85,808 units in the last two years (i.e. 2010 and 2011) accounting for almost 49% of the total units

54,687 units were absorbed in the Bengaluru residential market. South and East Bengaluru

absorption during this period mainly on account of

emerged as a self-sustaining micro-market

9% 11%14%

25%

32%

Pennya industrial estate

spread over 266 acres -

one of the largestindustrial areas in Asia

85,808 units

launched and 54,687 units absorbed during 2010 and2011 in BMR

57% of under-

construction units are in North and East Bengaluru

Real Estate Drivers

Infrastructure Development

Employment Indicators

Service Sector

IT Sector

Manufacturing Sector

Biotech Sector

Rail Network

Bangalore Metro Corridor I & II

Monorail Corridor


Pheripheral Ring Road

Elevated Road / Expressway

Road Network

62 km. Outer Ring Road

connects all the major IThubs from North to South

EXISTING ARTERIAL ROAD NETWORK

DISTANCE OBSERVATIONS

Outer Ring Road (ORR) 62 km. ORR provides connectivity with all the major highways around the city. Passing across the major suburbs viz. Hebbal - KR Puram - Marathahalli - Sarjapur Rd. - Silk Board Junction

Nandi Infrastructure Corridor 42 km. Long peripheral road, connecting Jalahalli in the north with the Enterprises (NICE) Electronic City on Hosur Road in the South. The corridor connectsRing Road Mumbai and Chennai through NH-4 in the western region and NH-

7 in the southern region respectively. Initially a four-lane structure with provision for expansion upto six-lane. NICE Ring Road has

crossing downtown Bengaluru

Hosur Road (NH7) 40 km. A four to eight-lane national highway (Part of NH7) connecting Bengaluru city with Hosur, a town in Tamil Nadu. The Hosur Road passes via the Electronic City one of the largest IT industrial parks of Bengaluru

Bengaluru Elevated Toll-way 10 km. A 10 km. long elevated and tolled expressway connecting Bomanahalli to Electronic City


High Speed Rail Link

EXISTING SUBURBAN RAIL NETWORK

DISTANCE OBSERVATIONS

Metro Train Network 6.7 km. Reach I, a 6.7 km. part of the East-West corridor, connecting Phase I, Reach I Byappanahalli with MG Road is operational since October 2011

Metro rail operationalbetween Byappanahalliand MG Road since Oct 2011

ROAD NETWORK

METRO TRAIN NETWORK

A 33 km. High Speed Rail

Link proposed - willoperate between CubbonRoad and BengaluruInternational Airport

UPCOMING ARTERIAL ROAD NETWORK

CONNECTIVITY & LENGTH OBSERVATIONS CURRENT EXPECTEDSTATUS COMPLETION

Road widening from Hebbal A six-lane elevated road over the Under 2013-14to Bengaluru International Airport existing road connecting with the Construction20 km. international airport is under

construction. The elevated stretch that starts from Kodigehalli gate will be a six-lane highway extending over 4 km. The project will have a series of seven

Junction near the airport

High Speed Rail Link (HSRL) Five Post 201633 km. that will connect the city centre with consortiums

shortlisted

International Airport with two halts in

at Yelahanka.

Monorail Project Proposed Post 201541 km. proposed 31 km. monorail from JP

will function as a feeder service to metro rail as well as the international airport

Peripheral Ring Road (PRR) Pre-feasibility Post 2016116 km. will connect the entire peripheral stage

arterial road linking all the major

Bengaluru Metro Rail Phase I Under 2014-1542 km. construction

Bengaluru Metro Rail Phase 2 In-principleapproval

the north it will be extended upto received from

Karnataka.Awaitingapproval fromthe UrbanDevelopment

and Kengeri to the west. Department


A 116 km. Peripheral Ring

Road proposed - connecting Hosur Road toTumkur Road via KR Puram, Bellary Road, Old MadrasRoad and Sarjapur Road

Over 2,000 IT & ITeS

companies present in Bengaluru including more than 100 Fortune-500companies


CONNECTIVITY & LENGTH OBSERVATIONS CURRENT EXPECTEDSTATUS COMPLETION

Rashtreeya Vidyalaya (RV) Road with Bommasandra in the South, Electronics City on the Hosur road with the city centre

d) Another line will be parallel to the NS Corridor of Phase I, running between Nagawara in the north and Gottigere in the South. It will have two interchange stations, one at MG Road and another at Jayadeva hospital

Elevated corridor from Central Silk A 15 km. elevated corridor connecting Pre-Feasibility Beyond 2015Board Junction to Jayamahal Road Central Silk Board Junction to stage15 km. Jayamahal Road is envisaged to ease

South Bengaluru. This will also facilitate in reaching the new international airport in the North.

Construction of elevated corridor A 28 km. West-East elevated corridor Pre-Feasibility Beyond 2014between Jnanabharathi and along the Ring Road connecting stageOld Airport Road Tumkur (Jnanabharathi) with Old28 km. Airport Road. The corridor will pass

through Sirsi Circle, Town Hall, Hudson Circle, Vellara junction and Old Airport Road. The proposed corridor is expected to ease the East-West city

Bengaluru - Mysore Expressway A six-lane expressway connecting Land Beyond 2017140 km. Bengaluru with Mysore is under acquisitions

construction. Only peripheral part of 56 km. has been completed till date.


Bengaluru is the IT and Bio-technology capital of India. It also houses numerous Government promoted heavy industries including defence

aerospace and telecommunication companies. It also has renowned Indian educational institutions

However, Bengaluru’s economy is primarily driven by the IT/ITeS sector and bio-technology sector.

IT/ITeS SECTOR

Over 2,000 IT/ITeS companies, including more than 100 Fortune-500 companies have established their operations in Bengaluru. These companies in all, generate software exports worth `700bn. and directly employ over 650,000

professionals. Prominent Fortune-500 companies operational in Bengaluru are IBM, Dell, HP, CISCO, Sun Microsystems, Microsoft, Toyota, ING, Tesco, Citigroup, JP Morgan Chase, Goldman Sachs, Bosch and Tyco. Prominent Indian IT & ITeS companies like TCS, Infosys, Wipro and Mahindra Satyam have major operations in the city.

Bengaluru’s IT/ITeS sector accounts for almost one-third of India’s IT/ITeS revenue and almost half of the Indian Bio-Technology companies are located in Bengaluru. These sectors play a very vital role in the growth of commercial and residential real estate in Bengaluru.

IT/ITeS companies have been predominantly concentrated in South, South East Bengaluru and the Outer Ring Road (ORR) stretch from Hebbal to

Employment Indicators in Bengaluru

Bengaluru generatessoftware exports worth

`700 bn.

650,000 IT

professionals directlyemployed in Bengaluru

IT/ITeS and Bio-technologysector are the driving factors for Bengaluru'sgrowth

Silk Board junction. This region houses many renowned tech-parks, IT/ITeS SEZs and captive campuses of Fortune-500 IT companies. Micro-

into self-sustaining hubs. East Bengaluru has

large campuses of IT/ITeS companies such as

southern region is spread over 330 acres having

which one is completely dedicated to the bio-technology sector, while the other two pre-dominantly house IT/ITeS sector companies.

commencement of the Bengaluru International

as a main junction between the airport and the established IT hub of Bengaluru i.e. Electronic

tenanted IT parks. Major IT parks include Manyata

The country’s IT/ITeS sector grew at an annual `

is estimated to reach

tremendous job opportunities, generating over 11 mn. direct and indirect jobs. It is estimated that the sector would create

continue its growth trajectory in-line with the

of Karnataka proposes to increase employment

With the strengthening of the global economy, robust domestic fundamentals and easy availability of skilled human capital the IT/ITeS

the coming years.

`

IT/ITeS sector constitutes

70% of the total

space in Bengaluru

OFFICE SPACE BREAK-UP

Source:

BENGALURU OFFICE SPACE DYNAMICS

before2008

2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E


140

100

40

ZONE WISE DISTRIBUTION OF OFFICE SPACE STOCK

Source:

West South East North

Currently the totalspace stock in Bengaluruis 92 mn. sq.ft. of which79.80 mn. sq.ft. is occupied

2 mn. direct and indirect

JoBS TO BE GENERATED BY2020 IN BENGALURU

NORM DETAILS

Time line for property registration Any time until possession

Re-sale before possession Allowed

Transfer charges payable to builder `200-300 psf

Loading (as % of carpet) 33%

Remarks Investor friendly market. Gains from lower Stamp Duty are taken back by

and Pune

MARKET NORMS

BIO-TECHNOLOGY SECTOR

India is ranked among the top 12 biotechnology destinations in the world and third largest in the

is committed to establishing a Biotech corridor for the development of the biotech industry in

from the Indian Institute of Science to the

grow to USD 10 bn. by 2015 from USD 4 bn.

40% or USD 1.6 bn. of the country’s total

capital and cost advantage over peers overseas.

USD 10 bn. the size of

Indian Bio-technologysector by 2015. Current size USD 4 bn.


Bengaluru retained the top slot for the highest

despite global uncertainties looming large on the

translating into an increase of 10% over the

industry still remains the key demand driver for

by the end of 2017.

in the delivery of new projects will lower the

have forecasted an incremental demand of 44-45

end of 2017.

COST DETAILS

Stamp duty 5% (On ready reckoner rate)

Registration `

VAT 7% (on agreement value)

Service Tax (on under- 3% (on agreement value)construction property)

STATUTORY COSTSAND MARKET NORMSSTATUTORY COSTS

380 biotech companies

in India - 50% alone in Bengaluru

40% of the country's

bio-technology sectorcontributed by Bengaluru

Proposed Monorail

Major Roads

Railway Line

Benchmark location

Top destination

Employment Hubs

Major Roads

Existing Metro

Proposed Metro

Airport

Railway Line

Benchmark location

Top destination

Employment Hubs

KR PURAM

WHITEFIELD

B Halli Terminal

MG Road

KR Puram

B Narayanapura

Mahadevapura

CV Raman Nagar

Hudi

KIADB ExportPromotion Area

EPIP Zone


EAST BENGALURU MAP

HEBBAL

NORTH BENGALURU MAP

Major Roads

Proposed Metro

Airport

Railway Line

Benchmark location

Top destination

Employment Hubs

bengaluru dominance in the

BPO/KPO sectors have wonit a place in the dictionaryas ‘Bangalored’ meaning ‘Outsourced’

Bengaluru was a laid-back city till the mid-1990s when the IT boom reshaped it into a major city of India. Many large domestic IT companies as well

here giving a boost to the Bengaluru real estate market. Today, Bengaluru has become the software hub of India, commonly known as the ‘Silicon Valley of India’. Its dominance in the KPO (Knowledge Process Outsourcing) and BPO (Business Process Outsourcing) sectors have won it a place in the dictionary as ‘Bangalored’ meaning ‘Outsourced’. We believe Bengaluru’s dominance in the IT/ITeS sector will continue in the foreseeable future.

As per the fundamental economics of the real estate sector, the price appreciation depends on two factors - employment and infrastructure development (connectivity). This phenomenon has been witnessed in the South and South-East regions of Bengaluru. In the mid-1990s, since the growth of the IT/ITeS sector many large IT parks and campuses have been set-up in the Electronic

This attracted many software engineers to Bengaluru consequently leading to demand for residential real estate. Micro-markets such as Bannerghatta Road, Kanakpura, Sarjapur Road, JP

Mahadevapura, CV Raman Nagar, Uttarahalli, KR Puram and Electronic City have emerged as residential markets. However, South Bengaluru destinations lost their charm post the commencement of the Bengaluru International Airport (BIA) near Devanahalli in North Bengaluru. As a natural phenomenon for the real estate sector, all focus including government, corporates and general public at large, has now shifted northwards – a new growth corridor for real estate.

We expect North and East Bengaluru to be the

to emerge as the new Central Business Districts (CBD) of Bengaluru within the next decade. This can be further substantiated by the numerous infrastructure projects undertaken by the government such as High Speed Rail Link (HSRL), Metro Lines, monorail and the Peripheral Ring Road that are at various stages of construction. On completion, these projects will enhance the connectivity of the city centre with the BIA.

PREFERREDZONES IN BENGALURU

Availability of huge land parcels along the road between the city centre and the BIA has attracted many large corporates.

Residential end-users at large prefer residing in Northern Bengaluru as against the south; this was not the case 4-5 years back. The change in preference was mainly on account of shifting of the airport to the north near Devanahalli. We expect the stretch from Hebbal to Yelahanka in the north to gain large price appreciation in the

to the airport, connectivity with the city centre and upcoming social infrastructure.

East Bengaluru in itself is a well-developed and

micro-market has evolved over the years. It has become one of the most preferred destinations for the IT/ITeS employees, as it is close to the IT

developed social infrastructure (school, hospitals etc.) and a well-organized retail market. Moreover, this region will have smooth accessibility to the airport with the proposed 116km. Peripheral Ring Road (PRR). The PRR will link Hosur Road with Tumkur Road via KR Puram, Bellary Road, Old Madras Road and Sarjapur

Budigere Cross and Old Madras Road will see some good traction in the next 4-5 years.

Therefore, based on the above developments we believe North and East Bengaluru regions will


NORTHBENGALURUThe focus of the GOK over the last decade has clearly been North Bengaluru. By shifting the Bengaluru International Airport (BIA) near Devanahalli in the north thereby replacing old HAL Bengaluru International Airport, GOK has substantiated its intention in developing North Bengaluru. Since the new airport is 40 km. outside the city, GOK has also planned Mass Transit Systems (MTS) like monorail, Metro-Line and High Speed Rail Link (HSRL) to enable travellers to reach the airport faster. Also, commuter rail system has been planned to connect Devanahalli with Yeshvantpur via Yelahanka. Additionally, widening of the NH-7 upto BIA from the existing six-lane to eight-lane is

to airport expansion and expected real estate developments on either side of the NH-7. Further,

South Bengaluru micro-markets lost its charmpost the commencementof the BengaluruInternational Airport in North Bengaluru

We anticipate North andEast Bengaluru to be thebiggest ofthe BIA and expect them toemerge as the new CentralBusiness Districts (CBD) ofBengaluru within the nextdecade

`1,150 bn.Investment earmarked forNorth Bengaluru

the GOK is also developing the Peripheral Ring Road (PRR) as an eight‐ lane expressway along

the periphery of Bengaluru for a total road length of 116 km. that will connect all the periphery regions to the airport. Availability of vast vacant land parcels close to the airport and along the road leading to the airport has enabled GOK to plan projects worth `1,150bn., including Devanahalli Business Park (DBP), Aero SEZ, Information Technology Investment Region (ITIR), Bio-Technology, Aerotropolis and many other recreational developments.

Further, the GOK has also invited many

Bengaluru. Many large companies such as HAL, BEML, Infosys, Dynamatic Technologies Ltd, IFCI and Tata Elxsi have signed an MoU with the GOK. 55 multinational IT companies including Infosys, Wipro, TCS and Cognizant have evinced interest

people are expected to get direct employment

employment. Employment due to the ITIR in itself speaks about the growth of this region. These developments are expected to completely change

bustling self-sustaining city.

Growth of the residential market in this zone has been primarily along the Outer Ring Road (ORR)


2007 2008 2009 2010

50,000

40,000

30,000

10,000

No.

of U

nits


RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF NORTH BENGALURU

2011


2012*

witnessing residential developments. Proximity to the airport and to the commercial hub of Manayata Tech Park has made this pocket of Bengaluru the preferred residential location by the IT population.

unsold. Over the years, unsold units have risen mainly on account of low pace of absorption due to uncertain global markets. Announcement of

excess supply from the previous years has had an


2007 2008 2012*2009 2010 2011


RESIDENTIAL PROJECT LAUNCH TREND IN NORTH BENGALURU


13,355

14% 14%15%

42,329 units

launched and 28,785 units absorbed since 2007 in North Bengaluru

4 mn. direct and

indirect employment to be genereated over next 3 decade in NorthBengaluru

ExistingInfrastructure

HEBBAL TO BIA ROAD

A 3.72 km. six-lane elevated road over the existing road is under construction. The project

the Trumpet Junction near the airport. The elevated road starts from the Kodigehalli gate and connects to the international airport. This

project is expected to reduce the travel time

OUTER RING ROAD (ORR)


UpcomingInfrastructure

areas that are connected with the international

have far-reaching implications on the growth along its route.

underpasses will come up at other crucial junctions.

ELEVATED CORRIDOR FROM CENTRAL SILK BOARD JUNCTION TO JAYAMAHAL ROAD

MONORAIL

as a feeder service to the metro rail as well as to the international airport.

ORR accounts for almost

35% of the total

space of Bengaluru.

Hebbal to BIA road projectis expected to reduce thetravel time between Hebbalto BIA from 45 minutes to20-25 minutes

EMPLOYMENT HUBS IN NORTH BENGALURU

SECTOR PROJECT NAME MAJOR COMPANIES

IT/ITeS Manyata Embassy Business Park Philips, IBM, ANZ


Employment Indicators in North Bengaluru

Further, there is the aerospace SEZ that is being planned here besides three industrial parks on 3,000 acres of land. Many renowned hotels like Oberoi, JW Marriot and Fortune are also planned here. There is plenty of commercial development in the pipeline, with several developers having bought huge land parcels for development in the stretch from Hebbal to Devanahalli. With so much commercial development, we expect residential development to follow suit in this region making it the most sought after destination in the next 4-5 years.

Few builders who have planned residential projects in North Bengaluru are Brigade Group with their Gateway, Ozone Developers with their integrated project called Urbana, Prestige with their Ozone and Golfshire Projects, Hiranandani Upscale with their Chancery, Nitesh with their Columbus Square and Sobha with their Althea.

METRO-LINE

A 24 km. North-South (NS) corridor connecting Hesaraghatta circle near Nagasandra (north) with Puttenahalli (south) has been proposed. Along with this, there are also plans (under Metro Phase II) to extend the Metro line from Hesarghatta up

value to the property along this route.

The region has a demand for residential, commercial and retail spaces. With plans for the development of an aerospace Special Economic

Manyata Embassy Business Park has over 7.5 mn. sq. ft.stock and 9.4 mn. sq. ft.under construction

North Bengaluru region is expected togenerate direct andindirect employment of

over 4-4.5 mn. in

the next decade

Zone (SEZ), IT SEZ and creation of separate workspaces in the vicinity of the airport, there is also a huge supply of residential layouts.

HIGH SPEED RAIL LINK (HSRL)

A 33 km. HSRL has been proposed and will connect the city centre with the airport. The HSRL will operate between Cubbon Road and BIA with two halts between them, one at Hebbal and the other at Yelahanka. The HSRL will run parallel to the expressway.

North zone of the city has a host of civic infrastructure projects, large commercial developments and new residential options that have changed the characteristics of the localities over the last few years. Bengaluru International Airport has been the main catalyst for the change in this region. The monorail, Metro Rail and Bengaluru-Mysore Infrastructure Corridor (BMIC) project as well as the social infrastructure facilities are together set to drive Bengaluru further ahead.

The existing major employment driver in this region is the IT/ITeS sector. However, in future the incremental employment in this region will be generated from the planned commercial developments such as ITIR, Aero SEZ, Devanahalli Business Park, Aerotropolis and Global Financial District. Cumulatively the GOK has envisaged an investment of `1,150bn. in the North Bengaluru region and is expected to generate direct and indirect employment of over 4-4.5 mn. in the next decade.


before2008

2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E

NORTH BENGALURU OFFICE SPACE DYNAMICS

EAST BENGALURU


RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF EAST BENGALURU

2007 2008 2009 2010

No.

of U

nits

2011

Source:

2012*

Currently the totalspa thBengaluru is 7.7 mn. sq.ft.of . ft. is

23,689and 15,946 units absorbed

7 in EastBengaluru

Over 30 mn. sq. ft. of

IT/ITeS spa operationalas of June 2012 in EastBengaluru

We expe another 9.5mn. sq.ft. of newspa to be omeoperational by 2017


PERIPHERAL RING ROAD (PRR)

A 116 km. PRR connecting the entire peripheral arterial road linking all the major highways has been proposed. The major connecting areas would be Hosur Road (south) to Tumkur Road (west) via KR Puram (east), Bellary Road (north), Old Madras Road and Sarjapur Road (south). The PRR is expected to ease the congestion on the ORR.

METRO-LINE

A 15.5 km. metro rail line has been proposed under Phase-II of the Bengaluru Metro. This is the extension of the existing metro line which runs between Byappanahalli and MG Road. The new metro line stretch, a part of East-West corridor, will start from the

on the East. This corridor has 14 metro stations - Jyothipuram, KR Puram, Narayanapura, Mahadevapura, Garudacharpalya, Doddanakundi, Visvesvaraya Industrial Estate, Kundalahalli, Vaidehi Hospital, Satyasai Medical Institute, ITPL, Kadugodi, Ujwala

CONNECTIVITY FROM OLD MADRAS ROAD TO DEVANAHALLI

The distance between the Old Madras Road (OMR) in the East and Devanahalli in the North is over 40 km. There are two major routes that connect the city centre in the east with the airport

Baiyappanahalli – Hebbal – BIA is a 40 km. drive


before2008

2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E

60

50

40

30

20

10

EAST BENGALURU OFFICE SPACE DYNAMICS

along the ORR. The second route starts on the NH-

It then connects with the airport via NH-648 near the Hoskote Industrial area. This stretch has also witnessed a lot of residential traction post the commencement of BIA. Manyata Tech Park,

and other IT space on the ORR are the major developments fuelling demand for residential houses in this pocket.


2007 2008 2012*2009 2010 2011


RESIDENTIAL PROJECT LAUNCH TREND IN NORTH BENGALURU


4,6912,961

429

3,795

6,3995,415

A 15.5 km. metro rail

line has been proposedunder Phase-II of theBengaluru Metro

The new metro line stretch, a part of East-West corridor, will startfrom the Byappanahalliand terminate at

on the East


EMPLOYMENT HUBS IN EAST BENGALURU

SECTOR PROJECT NAME MAJOR COMPANIES

IT/ITeS Bagmane World Centre EMC2IT/ITeS Ferns Icon Lenovo, ST Micro ElectronicsIT/ITeS ITPB Zone ABB, Accenture, Amazon

Employment Indicators in East BengaluruThe IT/ITeS sector continues to be the major employment driver of this region. Over 30 mn. sq.

Major IT/ITeS hubs in this region include Salarpuria Hallmark, ITPB, RMZ Ecospace, Prestige Shantiniketan and Bagmane World

employees’ preference to stay close to their

infrastructure including organized retail market.

the industrial hubs of Bengaluru. One node of this PRR is Hoskote - an upcoming industrial and

evinced interest in setting up their plants here.

space has been constructed in Eastern

the existing inventory taking the total stock to 57

remains the single largest demand driver for

the region is vacant and this is expected to

INVESTMENTDESTINATIONS IN BENGALURUHebbal located in the northern region and KR Puram in the eastern region are the most promising residential destinations in Bengaluru. Proximity to the Manyata Tech Park near Hebbal

destinations an ideal residential location. Additionally, connectivity of the eastern region

commuting experience. Further, the upcoming

eastern region to the airport. Proposed infrastructure projects such as the monorail, Metro and High Speed Rail Link is expected to further enhance the connectivity from the city

developments.

The GOK is carrying out numerous infrastructure projects across the cities that are in various stages of construction. These projects are expected to bring about phenomenal changes in

highest appreciation compared to other zones. Based on the announced infrastructure projects,

in this zone viz. Hebbal and KR Puram. These destinations share some common characteristics among themselves making them ideal residential

Since 2008 more than 37mn. sq. ft. of acehas been constructed in East Bengaluru

ct another 24mn. sq.ft. of new

ace to becometional by 2017

We believe Hebbal and KR Puram to ovide thehighest ciation in Bengaluru market


destinations. These destinations are in close

Road and the ORR (Hebbal-KR Puram-Marathahalli stretch). Additionally, these destinations are also well connected with the Bengaluru International Airport and Bengaluru city centre. The upcoming monorail, Metro, HSRL and elevated road will enhance connectivity between the city centre and the airport. Following are the factors that will have a positive impact on the chosen destination:

. Bengaluru will witness an incremental demand

sector. More than 60% of this will be within North-East Bengaluru.

. Bio-technology industry of Karnataka is forecasted to grow at an annual average rate of 10% over the next six years from USD

170mn. in 2011 to USD 272mn. in 2017. A large number of these units are expected to be set-up in the north-east region mainly on account of favourable regulations, availability of vast land parcels, proximity to the city centre and the talent pool of the city.

. The distinct feature of these destinations will be a) proximity to the major employment hubs of Bengaluru i.e. Manyata Tech Park in the

quick and easy accessibility to the city centre

distance to the airport.

. Additionally, the upcoming metro, monorail, HSRL corridor between Hebbal and BIA will further boost the connectivity of this location.

. Proposed PRR will further enhance the connectivity from all the peripheral districts.

More than 60% of the

incremental aceto be in North and EastBengaluru

Bio-technology industry in Karnataka is estimated togrow at 10% CAGR from USD170mn. in 2011 to USD 272mn. in 2017


PRICE FORECAST* Figures in `/sq.ft

2012

HebbalRMV/Sanjay Nagar

`6,350

2017E

`8,230

`9,145

`4,250

DESTINATIONHEBBAL

Hebbal was once the end of the northern city limit of Bengaluru. However with Bengaluru’s horizontal growth, Hebbal has witnessed a complete make-over in the last decade. Hebbal, previously, endowed with a calm and serene environment has now become quite active and lively. Hebbal gained importance as a destination with the establishment of Bengaluru International Airport near Devanahalli which is 30 km. away from Hebbal. It has now emerged into one of the IT/ITeS hub, housing many tech parks and campuses of IT companies. The infrastructure of Hebbal is outstanding; it has well linked roads

further enhanced once the monorail, HSRL and Metro commence in the next 4-5 years that will connect the city-centre with the airport. This is expected to immensely increase the residential prices in Hebbal.

There was a dearth of residential projects in Hebbal before 2008. It witnessed the launch of a mere 110 residential units in 2008.

Developers got attracted to this destination post commencement of the Bengaluru International Airport near Devanahalli in 2008. On account of this, 372 new residential units were launched in 2010, which on a year-on-year basis registered a rise of 285%.

As on September 2012, 557 units out of the total 1,604 units launched were unsold, implying 34.7%of the total inventory as unsold.

We have benchmarked Hebbal to RMV/Sanjay Nagar which is an established micro-market and has characteristics similar to Hebbal. Going forward, we expect the absorption rate to increase due to the reasons stated earlier and this will positively impact prices in Hebbal. Currently, Hebbal prices are 33% lower than our benchmarked micro-market. We forecast this discount to narrow down to 10% by the end of 2017 resulting in Hebbal prices moving up from `4,250/sq.ft. to `8,230/sq.ft.


2007 2008 2009 2010

1,800

1,500

1,200

900

600

300


RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF HEBBAL

2011 2012*

1%

33%

8%

35%


Launches

2007 2008 2012*2009 2010 2011

RESIDENTIAL PROJECT LAUNCH TREND IN HEBBAL


11097

372

666

721 units launched

and 233 units absorbed in last 21 months in Hebbal

No.

of U

nits



5% 4%

We forecast prices in Hebbal to appreciate by

94% from 2012 to 2017

305

55

PRICE MOVEMENT

9,000

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

* Figures in ` per sq.ft

2013E 2014E 2015E 2016E 2017E2007 2008 2009 2010 2011 2012

Hebbal RMV/Sanjay Nagar Discount Margin

`3.6 mn. and

`5.3 mn. are the

minimum ticket size forinvestment in Hebbal for a2 BHK and 3 BHK Apartmentrespectively


Investment Options in Hebbal

INVESTMENT TICKET SIZE

Apartment Size in sq.ft. Ticket Size in ` mn.

SELECT PROJECTS

Source: Knight Frank ResearchSource: Knight Frank Research

Project Developer No. of Launch CompletionUnits Date Date

Waters Equinox 380 Sep-11 Mar-16Edge

Sobha Sobha 498 Jun-11 Mar-15City Developers

1250 - 1850 5.3 - 7.9

850 - 1100 3.6 - 4.7

3BHK

2BHK


33%

10%


Launches

2007 2008 2012*2009 2010 2011

RESIDENTIAL PROJECT LAUNCH TREND IN KR PURAM


DESTINATIONKR PURAM

enhanced the connectivity; the commute time to

minutes. Hence, KR Puram-Budigere Cross stretch has emerged as a good destination. Proximity to

Puram as there is still some supply overhang of the previous year.

impact prices in KR Puram. Currently, KR Puram

prices moving up from `3,245/sq.ft. to `


2007 2008 2009 2010

RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF KR PURAM

2011 2012*

6,095 units launched

in KR Puram since 2007, ofwhich 42% launched in last33 months

No.

of U

nits


CONNECTIVITY TO IMPORTANT LOCATIONS

13km

52mins

13km mins

881

254

1,118

414


Over the next years,we expect KR Puram tofollow in termsof price

We forecast prices in KR Puram to appreciate by

91% from 2012 to 2017

`3.1 mn. and

`4.7 mn. are the

minimum ticket size forinvestment in KR Puram fora 2 BHK and 3 BHK Apartment respectively

SELECT PROJECTS



Purva Puravankara 306 Mar-11 Sep-14Midtown

Pashmina Pashmina 250 Jan-12 Dec-14Waterfront Developers

Purple Purple 135 Jan-11 Dec-13Woods Estates




1450 - 2100 4.7 - 6.8

950 - 1220 3.1 - 4.0

3BHK

2BHK


PRICE MOVEMENT

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000


KR Puram Discount Margin


2013E 2014E 2015E 2016E 2017E2007 2008 2009 2010 2011 2012



2012

KR Puram

`5,175

2017E

`6,200

`7,370

`3,245

37%

15%

Investment Options in KR Puram


HIDDEN GEMYelahanka

CONNECTIVITY TOIMPORTANT LOCATIONSFROM YELAHANKA

* By road

Distance

18km 17

km 19km

Yelahanka located further north of Hebbal is at a distance of 19km. from the Bengaluru International Airport (BIA). It was initially envisaged as the satellite city of Bengaluru, but is now a part of the BBMP – The Municipal Corporation of Bengaluru. The NH-7 provides excellent connectivity with the airport as well as the city centre.

The destination gained prominence only after the commencement of BIA at Devanahalli. However, this was the sole reason for the swift rise in the real estate prices of Yelahanka. The current prices

announced projects, which we believe will see light only after 2017. As on date, Yelahanka is still short of social infrastructure including basic amenities like water and electricity. Moreover, the organised retail market is still non-existent in this destination.

The Government of Karnataka has proposed numerous infrastructure projects including widening of elevated road, High Speed Rail Link and Metro Rail to improve the connectivity between the airport and Bengaluru City Centre. Also, commuter rail system has been planned to connect Devanahalli with Yeshvantpur via Yelahanka.

Further, the Government of Karnataka has formed Bengaluru International Airport Area Planning Authority (BIAAPA) to ensure organized development of Bengaluru North, Devanahalli and Dodaballapur Taluka. A total investment of `1,150bn. has been earmarked in order to make North Bengaluru a self-sustaining business hub. Some of the major investments are Information

Technology Investment Region (ITIR) in Devanahalli, Aero SEZ an aviation hub in Devanahalli, Devanahalli Business Park and Aerotropolis. The Government of Karnataka is in talks with banking giants to set up a Global Financial District near Devanahalli. These developments are expected to completely change North Bengaluru from an unexciting location to a bustling self-sustaining city.

Cumulatively, the above developments have the potential to generate 4 mn. direct and indirect jobs in North Bengaluru over the next two decades. Hence, we believe that Yelahanka’s eventual evolution as a Peripheral Business District willgive birth to a thriving resiential real estate destination.

BBAE LH

Yelahanka locatedfurther north of Hebbal is at a distance of 19 km

Yelahanka is still short ofsocial infrastructure andbasic amenities

Bengaluru InternationalAirport Area Planning Authority formed byGovernment of Karnataka

Destination gainedprominence only after thecommencement ofBengaluru INTERNATIONALAIRPORT


8.701.9%6.56 2.9%

CHENNAI METROPOLITAN REGION POPULATIONPopulation in Millions



5.42 2.4%

1991 2001 2011

Chennai, the capital of Tamil Nadu, is the fourth most populous city in India and serves as a gateway to Southern India through its strategically located port. Chennai’s urban agglomeration, also known as the Chennai Metropolitan Region (CMR), is spread over 1,189 sq.km. and consists of parts of Thiruvallur and Kancheepuram districts apart from Chennai city. As per Census 2011, the total population of CMR was 8.7 mn.

The development of the CMR is entrusted to the nodal planning agency Chennai Metropolitan Development Authority (CMDA) which prepares the master plan for the region. CMDA in September 2008 prepared the Second Master Plan for Chennai Metropolitan Area, 2026 outlining the detailed development plan along with land use, transportation, housing and other important aspects of the CMR.

CHENNAI

Major Roads

Railway Line

South Zone

West Zone

Central Zone

North Zone


U/C Metro Corridor IU/C Metro Corridor II


CHENNAI MAP

Chennai MetropolitanRegion is spread over1,189 sq.km. with apopulation of

8.7 mn.

MarketOverview


Central Nungambakkam, Boat Club, AnnaNagar, Kilpauk, T Nagar,Mylapore, R.A Puram

West Sriperumbudur, Mogappair, Porur, Ambattur, Poonamallee

North Ayanavaram, Tondiarpet, Madhavaram, Perambur

South Old Mahabalipuram Road (OMR), GST Road, Adyar, Velachery,Medavakkam

Chennai is divided into four broad zones: North, Central, South and West. It may be noted that being a coastal city, Chennai does not have an eastern market and faces the Bay of Bengal.

North Chennai is primarily an industrial area dotted with various locomotive workshops and port related activities. The two major ports namely Chennai Port and Ennore Port are located in this region. Non-availability of vacant land, narrow arterial roads and lack of employment opportunities have restricted the real estate growth of this region as compared to other parts of the city. Destinations such as Tondiarpet, Madhavaram and Perambur are the primary residential locations with large under-construction projects in these areas. Residential demand is driven by the business community, traders and public sector employees here.

Central Chennai is the commercial heart of the

Central Business District (CBD) areas of Anna Salai, Nungambakkam, Egmore, Nandanam and others. Excellent connectivity with various parts of the city, good physical and social infrastructure and presence of organized retail have ensured the highest property prices in this part of the city. Locations such as Boat Club Road, Poes Garden, Nungambakkam, T Nagar, Mylapore and RA Puram are some of the prominent residential areas. Majority of the residential development in the central locations comprises bungalows and independent residential units while some pockets like Alwarpet, Kilpauk and Anna Nagar

are witnessing growth in high-rise construction as well.

The western part of the city has some of the most upcoming locations. The saturation of land banks in Central Chennai has seen westward movement of residential development. Electronic hardware corridor in Sriperumbudur and Auto & Auto Ancillary manufacturing units in Oragadam have

residential units in this region. Multinationals like Nokia, Dell, Samsung, Saint-Gobain, Renault-Nissan and Hyundai have set up their units here. However, lack of social infrastructure, absence of organized retail and distance from the city centre have restricted growth of the residential market in this zone.

South Chennai, along the Old Mahabalipuram Road (OMR) and Grand Southern Trunk (GST) road is rapidly developing as a self-sustaining hub with the presence of a large number of IT SEZs, IT Parks and manufacturing units. Nodes such as Perungudi, Sholinganallur and Siruseri on the OMR along with Tambaram and Mahindra World City on GST road have created enormous employment opportunities in this region. This has inherently led to the development of the residential market in South Chennai.

Additionally, the focus of the state government in providing excellent road connectivity along these nodes has further helped in the development of this region.

2007 2008 2012*2009 2010 2011


RESIDENTIAL PROJECT LAUNCH TREND IN CHENNAI


14,441 15,50512,702

23,803

26,152

12,633


Chennai market haswitnessed the launch of

more than 105,236units since 2007


2007 2008 2009 2010

5% 4%

7%12%

120,000

100,000

80,000

60,000

40,000

20,000

No.

of U

nits


RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF CHENNAI

2011

21%


2012*

25%

The advent of the IT sector along with the setting up of large manufacturing units by multi-national companies have changed the dynamics of Chennai real estate market. Apart from generating thousands of new jobs for the local residents, Chennai has been attracting a large pool of migrants into these sectors from across the country. This has enabled the real estate market to grow at a tremendous rate during the

which witnessed the launch of more than 105,236 units since 2007.

During 2010 and 2011, more than 49,955 units were launched in Chennai. However, only 33,938 units were absorbed during this period resulting

percentage.

nine months of 2012 has further increased despitethe number of new launches falling drastically. This is primarily because of the supply overhang of the previous years.

Chennai is land locked on the eastern side by the Bay of Bengal, thereby restricting its growth to the remaining three sides. Backed by excellent rail and road connectivity, the city has been expanding three ways over the last few decades.

However, development on the northern side is subdued as compared to West and South Chennai mainly due to the presence of various industrial pockets and port related activities here. Over the last few years, the focus of developers has been shifting from Central Chennai to the peripheral areas of South and West Chennai due to greater availability of jobs here.


Central NorthWest South


65%

23%

5%

7%

As of Q3 2012, 25% of

the total units remain unsold


33,938units were absorbedduring 2010 and 2011

65%of the under construction units arelocated in South Chennai

Most of the upcominginfrastructureprojects will be operational before

2017


CONNECTIVITY DESCRIPTION CURRENT EXPECTEDSTATUS COMPLETION

Outer Ring Road I

Outer Ring Road II

Vandalur - The six-lane highway is expected to Under 2012-13Nazarathpet - decongest the city road by connecting constructionNemilichery the GST Road (NH 45) with Chennai-

Bangalore Highway (NH 4) and NH 205

Nemilichery - Will connect NH 205 with the Chennai- Land 2016-17Nallur - Minjur Kolkata Highway (NH 5) and TPP road Acquisition

at Minjur through a six-lane highway

UPCOMING SUBURBAN RAIL NETWORK


ChennaiMonorailCorridor I

ChennaiMonorailCorridor II

ChennaiMonorailCorridor III

Chennai MetroCorridor I

Washermenpet - Will enhance connectivity between Under 2015Chennai Central Chennai Airport and central Chennai via constructionStation - Guindy Chennai Airport

Chennai Metro Chennai Central Under 2015Corridor II Station - between city centre and St. Thomas Construction

Annanagar - MountVadapalani - St. Thomas Mount

Vandalur - Better connectivity for Vandalur and Bidding 2016-17Velachery Tambaram with city centre via Valechery stage

Poonamallee - Will connect West Chennai via Porur Bidding 2016-17Kathipara stage

Poonamallee - Enhance connectivity of Poonamallee as Bidding 2016-17Vadapalani Vadapalani is also a node on Metro stage

Corridor II

Employment Indicators in Chennai

Being a port city, Chennai has historically been at an advantage compared to other metro cities of South India like Bangalore and Hyderabad. Export oriented manufacturing industries have always been attracted to Chennai due to the presence of two major ports with excellent road and rail connectivity from all the three sides of India. Auto & Auto Ancillary sector is one of the largest employers among the various manufacturing


industries present in the periphery of Chennai. Apart from the manufacturing plants of Hyundai, Renault-Nissan, Daimler and Eicher Motors, there are numerous Auto Ancillary units spread across the industrial corridor of Sriperumbudur-Oragadam. Additionally, manufacturing plants of Ford, BMW and Sundram Fasteners on GST road have also created large scale employment in the Auto sector.

IT/ITeS andAutomobilesectors to be the driving factors for Chennai’sgrowth

SouthChennai, which

will host three-fourth ofthe total ock, is expected to witnessmaximum growth in theresidential market overthe next 5 years

Although the manufacturing sector is expected to grow strongly, going forward, this zone will not be

employment in the IT/ITeS sector. Higher purchasing power and preference to reside in close proximity of their work area, makes IT/ITeS employees a dominant force in driving the residential market of any region.

South Chennai, which will host three-fourth of the

number of manufacturing units located on the

The focus of Tamil Nadu government over the last decade in promoting OMR as an IT/ITeS destination along with the setting up of Mahindra World City on GST road has created immense employment opportunities in South Chennai. Additionally, the proximity to Chennai airport, presence of arterial roads and availability of vast vacant land parcels has enabled this zone to rapidly grow into an emerging residential market. Since 2000, a large number of IT/ITeS companies have set up their operations in the numerous IT Parks and IT SEZs on OMR and GST road. The growth in IT/ITeS based employment, gradually sowed the seeds of a bustling residential market in this zone. Preference of employees in staying

compared to Central Chennai sustained the development of a healthy market in this zone.

Growth of the residential market in South Chennai has been primarily along the three arterial roads of OMR, GST road and ECR. However, in the last few years a lot of development has taken place within the destinations located between OMR and GST road. The advantage of being centrally

SOUTH CHENNAI


2007 2008 2009 2010

70,00060,00050,00040,00030,00020,00010,000

No.

of U

nits


RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF SOUTH CHENNAI

2011


2012*

9% 6%

11%13%

22%26%

located with easy access to both these roads has led to many home buyers preferring these destinations.

South Chennai has witnessed the launch of 68,914 residential units since 2007. Of these, a total of 50,666 units of this have been absorbed as of Q3 2012, with 26% remaining unsold. There has been a steady rise in the percentage of unsold units over the years, as the pace of absorption has not been able to keep up with the pace of new launches. A total of 29,245 units were launched in South Chennai during 2010 and 2011, of which only 19,550 units were absorbed.

Taking a cue from the market, developers have become cautious before launching any new project and only 61 new projects have been launched in 2012 as compared to 147 during the previous year. Although the number of new launches has reduced drastically, the excess supply from the previous years is impacting the unsold units’ percentage. Additionally,

has been abysmally low.


GST road, is expected to witness maximum

any mass rapid transport system on the IT Corridor of OMR has resulted in many employees’

area. This phenomenon is expected to continue for the next few years as no new mass rapid transport system is planned on the OMR. Hence, growth in the IT/ITeS sector of the city will directly

68,914 residential

units have been launchedin South Chennai since 2007. Of these, a total of

50,666units have been absorbedas of Q3 2012

St. ThomasMount

ChennaiAirport

Kunrathur

Paranur

Chengalpattu

AnnaInternational

Airport

B A Y

O F

B E N G A L

Ch

en

na

i Bye

pa

ss

IT C

orr

ido

r

Old

Ma

ma

lla

pu

ram

SH 121

SH 121

Gre

atSo

uth

ern

Tru

nk

Ro

ad

Great

So

uther

nTr

un

kR

oad

Chen

na

iB

ypas

s

OldM

ahab

alip

uram

Road

East

Coa

st R

oad

Ea

st C

oa

st R

oa

d

Old

Ma

ha

ba

lip

ura

m R

oa

d

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tC

oas

t Ro

ad

Vela

cher

y R

oad

East Coast Link Road

Velachery Road

Great

South

ern

Tru

nkRoad

Sardar Patel Road

NH45

NH45

NH45

NH4

NH45

ToM

amal

lap

ura

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ToM

am

all

ap

ura

m

ToC

he

ng

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u

TAMBARAM

GUDUVANCHERI

VELACHERYPALLAVARAM

CHROMEPET

THIRUPORUR

SIRUSERI

SRIPERUMBUDUR

CHENGALPATTU

SITHALAPAKKAM

MEDAVAKKAM

ADYAR

VANDALUR

PALLIKARNAI

Proposed Monorail

Major Roads

U/C Metro Corridor I

U/C Metro Corridor II

Airport

Railway Line

Benchmark location

Top destination

Employment Hubs


SOUTH CHENNAI MAP


up their campuses along this route. ELCOT SEZ

space developments in these segments.

However, lack of social infrastructure and absence of organized retail are the major drawbacks of these segments and hence preference among home buyers to reside here is low. Some of the major residential destinations located here are Thuraipakkam, Sholinganallur, Navallur, Egattur and Padur.

GST road, also known as NH-45, is one of the busiest National Highways in Southern India and starts from Kathipara junction in Guindy till Theni. It is a four-lane highway with various suburban destinations and the Chennai airport located along the road. The setting up of Ford India’s manufacturing plant at Maraimalai Nagar was one

However, commencement of the 1,550 acres Mahindra World City in 2005 at Chengelpet led to a dramatic change in the development of this corridor with huge employment opportunities being created across the IT/ITeS, Auto & Auto Ancillary and Apparel sectors. In addition to this, setting up of Shriram’s The Gateway and Estancia IT SEZ have further facilitated growth of the IT/ITeS sector on this road.

Residential development on the GST road has been centred along the hubs of Chromepet, Tambaram, Vandalur, Maraimalai Nagar and Singaperumalkoil. The seamless connectivity throughout the road leaves little variation in terms of price among the various residential destinations located on GST road, as the time taken to travel between them is very marginal.

ECR, also known as the Entertainment Corridor, is a two lane highway built along the coast of the Bay of Bengal connecting Chennai with Pondicherry. The road starts at Thiruvanmiyur in South Chennai and runs parallel to OMR and

the last ten years this road has witnessed considerable real estate development with numerous theme parks, boat houses, beaches, 5-star hotels and pubs dotted along the stretch.

residential development along this road has been restricted to second homes and villas.

GRAND SOUTHERN TRUNK (GST) ROAD

EAST COAST ROAD (ECR)

OLD MAHABALIPURAM ROAD (OMR)

OMR, also known as the IT Highway or Rajiv Gandhi Salai, starts from Madhya Kailash Junction near Adyar till Mahabalipuram. It is a six-lane highway being developed in two phases, with Phase I of 20.1 km. from Madhya Kailash Junction to Siruseri already under operation since 2008. The work on Phase II that will connect Siruseri to Mahabalipuram is still underway. Phase II is expected to be ready in another 3-4 years. Phase I of OMR is further divided into three segments based on toll plazas. The road from Kailash Junction to Perungudi toll plaza is known

Proximity to the city centre, presence of an

malls has enabled rapid development of various

segment. Some of the major IT/ITeS projects such as TIDEL Park, Ramanujan IT Park, Ascendas International Tech Park, RMZ Millenia Business Park and SP Infocity are located in this segment.

The road from Perungudi toll plaza till Egattur toll plaza is known as the second segment and the road beyond Egattur as third segment. These two segments of the OMR have also witnessed tremendous residential development over the last few years, as many IT/ITeS companies have set


Lack of socialinfrastructure andabsence of organizedretail have restricted thegrowth of residential

market on OMRbeyond tollplaza

Commencement of the 1,550

acres MahindraWorld Cityled to a dramatic changein the development of theGST Road with huge employment opportunitiesbeing created


RESIDENTIAL PROJECT LAUNCH TREND IN SOUTH CHENNAI


2007 2008 2012*2009 2010 2011

9,185

11,889 10,355

12,505

16,740

8,240


PRICE FORECAST* Figures in `/sq.ft.

2012

PallikarnaiAdyar

`12,000

2017E

`8,100

`15,858

`4,200

Pallikarnai has witnessed

the launch of 1,684units since 2007, of which

1,382 units have been

absorbed till Q3 2012

DESTINATIONPALLIKARNAI

Pallikarnai, which is located a few km. south of Velachery, is well connected by road to all the major employment hubs in south Chennai. However, absence of rail network has restricted the growth in prices of this destination. Going forward, this is about to change as the upcoming Vandalur-Velachery Monorail project will

Pallikarnai with the GST Road and the city centre.From 2007 to 2010, Pallikarnai witnessed a healthy absorption trend. However, the sudden surge in new launches during 2011 along with a

unsold units’ percentage during the year. Currently, the percentage of unsold units stands at 18%.

The dynamics of Pallikarnai are expected to change dramatically in the coming years due to the upcoming Vandalur – Velachery Monorail network. This will narrow down the current price

Currently, prices in Pallikarnai are 65% lower than Adyar, which is the most established market in

this discount rate to narrow down to 49% due to various reasons discussed before. This will result in prices increasing from `4,200/sq.ft to `8,100/sq.ft by 2017.


2007 2008 2009 2010

2,000

1,600

1,200

800

400

No.

of U

nits


RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF PALLIKARNAI

2011


2012*

2%

4%

16%


RESIDENTIAL PROJECT LAUNCH TREND IN PALLIKARNAI


2007 2008 2012*2009 2010 2011

228

94

900

181

52

230


Currently, the percentageof unsold units stands at

18%

We forecast prices in Pallikarnai to increase by

93% in the next 5 years

2% 2%

18%

PRICE MOVEMENT

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000


65%49%

Pallikarnai Adyar Discount Margin

` 3.3 mn. is the minimum

ticket size investment fora 2 BHK apartment in Pallikarnai


Investment Options in Pallikarnai




1325 - 2136 5.6 - 8.9

790 - 1766 3.3 - 7.4

3BHK

2BHK

2.4 - 2.61BHK571 - 623


Before2008

2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E

Appartment Sizes start

from 571 sq.ft. for a 1

BHK in Pallikarnai

SELECT PROJECTS



Mapleton Appaswamy 473 Jan-11 Apr-13

Akash Rajkham 87 Apr-12 Dec-13Ganga



2012

MedavakkamAdyar

`12,000

2017E

`7,700

`15,858

`3,800

Medavakkam has witnessed

the launch of 5,707units since 2007, of which

4,147 units have been

absorbed till Q3 2012

DESTINATIONMEDAVAKKAM

Medavakkam, which is around 6 km. south of Velachery, is another emerging residential hub with excellent road connectivity with Sholinganallur on the OMR and Tambaram on GST road. Sharing similar characteristics with Pallikarnai, the prices in this destination have moved in the same range as Pallikarnai over the

Medavakkam witnessed a large number of new launches during 2010 and as it lacked the capacity to absorb such a huge number, there was a sudden jump in unsold inventory. During

2011 and 2012, the percentage of unsold inventory increased further despite lesser number of new launches due to the oversupply from the previous year. As of Q3 2012, the unsold inventory in Medavakkam stands at 27%.

to follow Pallikarnai in terms of price as the

will accrue equally to this destination too. The

down from 68% in 2012 to 51% by 2017, resulting in a price rise from `3,800/sq.ft to `7,700/sq.ft.


2007 2008 2009 2010

6,000

4,500

3,000

1,500

No.

of U

nits


RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF MEDAVAKKAM

2011


2012*

3% 3%

26%27%


RESIDENTIAL PROJECT LAUNCH TREND IN MEDAVAKKAM


2007 2008 2012*2009 2010 2011

3%

22%

870

621

315

2,411

1,256

233


We forecast prices in Medavakkam to increase by

103% from 2012 to 2017

4BHK

3BHK

2BHK

1BHK

PRICE MOVEMENT

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000


68%51%

Medavakkam Adyar Discount Margin

` 3.4 mn. and

` 4.6 mn. are the

minimum ticket Sizes forinvestment in Medavakkamfor a 2 BHK and 3 BHK respectively


Investment Options in Medavakkam



SELECT PROJECTS


Purva Purvankara 756 Mar-11 Mar-14Windermere

Spring Navin 280 Oct-10 Dec-14Field Housing

Majestica Vasavi 260 Jul-10 Dec-14Housing

Indiabulls Indiabulls 900 Sep-10 May-14Greens

Source: Knight Frank Research560 - 715

902 - 1254

1220 - 2161

2450 - 2710 9.3 - 10.3

4.6 - 8.2

3.4 - 4.8

2.1 - 2.7



Before2008

2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E

Over the next years,we expect

Medavakkamto follow Pallikarnai in terms of price


47.383.1%37.10 2.5%

NATIONAL CAPITAL REGION POPULATIONPopulation in Millions



27.36 3.2%

1991 2001 2011

The National Capital Region (NCR) is spread over 33,578 sq. km. making it one of the largest urban agglomerations in the world. It was initially

with the foremost objective of creating a metropolitan area around Delhi, so as to ease out the pressure on the national capital. The NCR encompasses of the entire National Capital Territory of Delhi as well as select urban areas from its neighbouring states of Haryana, Rajasthan and Uttar Pradesh (UP). By virtue of this development, Gurgaon, Noida and Greater Noida emerged as the major sub-regions of the NCR.

DELHI-NCR

DELHI-NCR MAP


A National Capital Region Planning Board (NCRPB) was formed under the NCR Planning Board Act 1985, by the Ministry of Urban Development. The central focus of the board was to coordinate the development of the NCR with the State Governments of Haryana, Uttar Pradesh and Rajasthan. Led by Gurgaon and Noida, the NCR has witnessed substantial growth as a centre for e-commerce associated businesses including

Pharmaceuticals contribute the most towards the economy of this region.

Proximity to the national capital and enhanced connectivity due to the metro line across the NCR, has positioned it as the most preferred destination for corporate and

service industry the region witnessed huge immigration. As per Census 2011, the population of the NCR witnessed a 2.5% annual rise during the decade 2001-2011, the total population now stands at 47.38 mn.

STATE/UT REGIONS AREA (SQ. KM.)

Jhajjhar, Panipat

10,853Bulandshahr

and Baghpat

7,829

Delhi Delhi - National Capital Territory 1,483

HaryanaSonepat, Rewari, 13,413and Palwal

UP Meerut, Ghaziabad, Gautam Budha Nagar,

Rajasthan Alwar

Total 33,578

Major Roads

Metro Corridor I

Metro Corridor II

South Zone

West Zone

Central Zone

North Zone

Price Contours (`

50001200035000

FARIDABAD

GHAZIABAD

Major Roads

Railway Line

Under Construction Metro

Delhi

Gurgaon

Faridabad

Noida

Greater Noida

Ghaziabad

Price Contours (`

National Capital Region(NCR) is spread over

33,578 sq.km.

MarketOverview


Noida

Delhi Rohini, Ashok Vihar, Civil Lines, Greater Kailash, South Extension, Hauz Khas, Anand Vihar, Pashchim Vihar, Janakpuri, Raja Garden, Tagore Garden, Rajouri Garden

Gurgaon Dharuhera, Golf Course Road, Sohna Road, MG Road, NH-8, Dwarka Expressway, Manesar

Noida/Greater Noida, Noida Extension, Noida-Greater Noida Expressway

Faridabad Neharpar, Dayal Bagh Colony, Sainik Colony

Ghaziabad Crossing Republik, Indraprastha Yojna, Raj Nagar, Raj Nagar Extension

Alwar Neemrana, Bhiwadi, Behror Highway, Station Road

The NCR is divided into six broad zones: Delhi, Gurgaon, Noida/ Greater Noida, Faridabad, Ghaziabad and Alwar.

NATIONAL CAPITAL TERRITORY – DELHI

populated city in the world. It is situated in central north India and stands on the west bank of Yamuna River. It is spread over an area of 1,483 sq. km., 216 m. above sea level and has a population of around 16.75 mn. Delhi is the political hub of India comprising headquarters of all the political parties as well as important

city of royal power to the seat of bureaucratic power.

It has also transpired as one of the central hubs of North India's trading and service industry. Delhi has emerged as the major commercial centre for small, medium and large scale industries. The information technology (IT), electronic, textile and fashion industry are also the major contributors to Delhi's economy.

Based on its geographical locations the city is divided into North Delhi, East Delhi, West Delhi and South Delhi.

North Delhi houses numerous small scale industries and has emerged as one of the major markets of small industries. Low-rise condominiums and narrow streets full of chaos are the major characteristic of North Delhi. This refrains major white-collared executives from

more modern New Delhi and south Delhi areas. Chawri Bazaar, Chandini Chowk, Mori Gate, Kashmere Gate, Sadar Bazaar and Tis Hazaari are some of the major micro-markets of Old Delhi.

East Delhi is largely inhabited by the middle-income working class population. The residential real estate market comprises the independent houses and DDA apartments. The 2010 Common Wealth Games held in East Delhi completely changed its landscape and gave the necessary growth impetus to this region. Delhi Metro has enhanced the connectivity of East Delhi with major destinations like Delhi City Centre and Noida. Some of the major micro-markets of East Delhi are Akshardham, Pushpanjali Enclave, Vivek Vihar, Patparganj, Lakshmi Nagar, Mayur Vihar, and Preet Vihar.


ZONE-WISE SPILT UP OF UNDER CONSTRUCTION UNITS


Delhi

Gurgaon

Noida

Gt. Noida

Faridabad

Ghaziabad

23.6%

0.8%

2.0%

33.7%

18.8%

21.2%

Population of the NCR

increased by 20 mn. in

THE last 2 decades

55% of the residential

under-construction units in Noida and Greater Noida

West Delhi is primarily a residential hub with a cosmopolitan population. Sound infrastructure and a well-developed organized retail market

Additionally, West Delhi region gained prominence due to its proximity to the commercial hubs of Janakpuri, Rajaouri Gardens and Punjabi Bagh. Over the years, it has emerged as the most sought after destination thereby making it one of the major posh localities of Delhi. Patel Nagar, Punjabi Bagh, Pitampura, Rohini, Dwarka, Janakpuri and Rajouri Garden are some of the major micro-markets of this region.

South Delhimicro-market of Delhi. The residential real estate comprises independent houses and bungalow

including embassies and consulates are located here. By virtue of this, South Delhi has become the most sought after destination among the

executives. High residential demand and dearth of new supply has propelled the residential prices in this part of Delhi.

Its proximity to the international airport, educational institutions and to the city centre has made this region the most preferred destination. Moreover, proximity to the commercial hub of Nehru Place and Lajpat Nagar coupled with the presence of organized retail further augmented the demand for this region. Some of the major micro-markets are Greater Kailash, Chanakyapuri, Lajpat Nagar, Nehru Place, Defence Colony, Vasant Kunj, Hauz Khas and Friends Colony.

GURGAON

Gurgaon was developed to ease out the burgeoning growth of New Delhi. It is one of the four major satellite cities of the NCR, located 30

518,200 residential

units launched in DELHI NCR since 2007


km. south of New Delhi. The evolution of Gurgaon coincides with the 1990s liberalization of the Indian economy. Contemporary Gurgaon is dotted with high-rise buildings and spectacular malls. Over the years Gurgaon earned the sobriquets of the 'Millennium City' and the 'Mall City' of India.

centre of Haryana but also one of the most

hubs in the world. Further, it is also a major hub for the automobile, telecom and garment manufacturing industries. Major factors like availability of huge land parcels, quality commercial properties, proximity to the international airport, favourable government policies and access to the talent pool lured many corporates to Gurgaon.

Some of the prime residential and commercial micro-markets of Gurgaon include Mehrauli-Gurgaon Road (MG Road), Golf Course Road, Golf Course Extension Road, Sohna Road and NH-8. These locations are well-connected with New Delhi through the six-lane NH-8 and MG Road. The NH-8 also provides quick and easy access to the New Delhi International Airport. Further, a 14km. Southern Peripheral Road (SPR) covers all the major developments in this part of Gurgaon and connects MG Road and Golf Course Extension Road with NH-8. The connectivity between the adjoining markets of Delhi and Noida is further enhanced by the existing metro-rail. Further, a new residential belt has emerged along the upcoming 8 lane 18 km. Northern Peripheral Road (NPR) or Dwarka Expressway. This expressway would act as an alternative route for the existing Delhi-Gurgaon Expressway. A 135 km. Kundli-Manesar-Palwal (KMP) Expressway is under construction, once completed this expressway will provide connectivity with the major industrial

commercialization in Manesar.


2008 2009 2010

9%

600,000

500,000

400,000

300,000

200,000

100,000

No.

of U

nits

Supply Demand % of Unsold Units (RHS)

RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF NCR

2011

19.2%


2012*

23.8%

2007

9.4%7.8%

14.1%

Golf Course Road is the most sought after destination owing to its proximity to South Delhi (a posh locality) and hence boasts of the highest residential property prices in Gurgaon. MG Road is a self-sustaining micro-market with the presence of well-developed organised retail market, superior residential development and

Infospace are some of the major commercial buildings. Golf Course Extension Road is catching up with the Golf Course Road with its quality residential development.

NOIDA

situated to the south-east of Delhi and spread over 20,316 hectares. New Okhla Industrial Development Authority is the nodal agency for the overall development of this region. Noida has emerged as one of the major satellite cities of the NCR after Gurgaon. Noida is well connected with

Yamuna Expressway provides connectivity with Agra via Mathura; an eight-lane Delhi-Noida-Delhi

Ghaziabad. Noida has the Delhi Metro facility till the City Centre from Delhi and also up to Vaishali. The metro will further expand in Noida and also cover Noida Extension and Greater Noida.

Over the years, Noida has developed into an IT/ITeS hub. A number of IT/ITeS companies like

in the city. It is now swiftly emerging into a hub for automobile ancillary units with multinational

emerged as the major commercial hubs in Noida.

GREATER NOIDA

Greater Noida is a new suburb located 20 km from

part of the NCR. Greater Noida Industrial Development Authority (GNIDA) is the nodal agency for the overall development of this region.

crafted very meticulously by the GNIDA. Wide roads along with service roads for all the major arterial roads have been built. The Noida-Greater

395,650 residential

units absorbed in Delhi NCR since 2007


Noida Expressway and the Yamuna Expressway provides connectivity between Noida, Greater Noida and Agra. Greater Noida also boasts of

on the International Motor Racing Circuit. Moreover it is also emerging as a planned industrial region and an educational hub.

FARIDABAD

gained prominence due to its proximity to the National Capital Territory (NCT) of Delhi, Gurgaon

from the Ashram Crossing on Mathura Road. The Delhi-Mathura-Agra Road (NH-2) passes through

Delhi through the metro rail service which

manufacturing companies. Motorcycles, tyres, auto-ancillaries, refrigerators, tractors and switch-gears are some of the major industries in

Escorts and Castrol are some of the major

2007 2008 2012*2009 2010 2011


RESIDENTIAL PROJECT LAUNCH TREND IN NCR

Source:

145,395 residential

units launched in Noidaduring 2007-12

Reliance Energy hasproposed a 1000 hectaresmulti-product SEZ in Ghaziabad


GHAZIABAD

Ghaziabad forming one of the major constituents of the NCR is strategically located 20 km. to the east of New Delhi. It is a planned industrial city spread over 1,933 sq. km. Moreover, it also acts as a main entrance for the state of Uttar Pradesh. Ghaziabad Development Authority (GDA) is the nodal agency for the overall development of the city. The region has gained prominence due to its proximity to the National Capital Territory (NCT) of Delhi, Gurgaon, Noida and Meerut. The city's real estate market witnessed high traction with an improvement in the physical and social infrastructure.

Two major arterial roads NH-24 and NH-58 passing through Ghaziabad, provide connectivity with Lucknow and Badrinath respectively. To decongest the existing highways, the GDA has proposed the widening of the NH-24 from the existing four lanes to six lanes. Further, metro rail has enhanced the connectivity with other regions of the NCR. Further, the connectivity within Ghaziabad will improve with the expansion of the existing metro rail from Dilshad Garden to New Bus Stand located near the Meerut Road crossing. Major residential micro-markets like Vaishali, Indirapuram, Vasundhara and Raj Nagar Extension have emerged along these highways.

Being an industrial hub it has over 14,000 small-scale industries, majorly manufacturing defence products, railway wagons, heavy chains, bicycles and glassware. Besides many large multi-national companies, banks, IT and telecom services have set up their base here. Reliance Energy's proposed 1,000 hectares multi-product SEZ, existing manufacturing units of Coca-cola and ITC have further augmented demand for residential as well as commercial real estate in Ghaziabad.

ALWAR

Alwar is a district in Rajasthan (a state in India) located to the south-west of Gurgaon. It is spread over 8,380 sq.km. of which 262 sq.km. forms a part of the National Capital Region (NCR). Rajasthan State Industrial Development and Investment Corporation Ltd. (RIICO) is the major nodal agency for the development of Rajasthan. RIICO has been a catalyst for the overall industrial transformation of the state. Over the years with progressive industrial policies by the state government, the district is now able to boast of various industrial hubs. Some of the major commercial areas are Bhiwadi, Tapookara, Khushkhera and Neemrana. These commercial areas house sectors like cement, automobile,

glass & ceramics, mines & minerals, textiles and bio-tech industry. Moreover, this region is one of the nodes for the Delhi-Mumbai Industrial Corridor (DMIC) and Dedicated Freight Corridor (DFC).

Rajasthan government has signed an MOU with JETRO (Japanese External Trade Organization) for setting up units in Neemrana. This region is equidistant from Delhi and Jaipur and is also an important part of the DMIC. These factors have propped up the demand for commercial as well as residential real estate in this region.

The Bhiwadi Industrial Hub is a mere 45 km. from the Gurgaon city centre. Proximity to the city has augmented demand for the residential as well as commercial real estate in Bhiwadi. It alone houses around 2,500 small, medium and large industries including MNC industrial units. Some of the major companies having their set up in Alwar are ‐ Honda Siel Car, United Breweries, Lafarge, Jaquar, Amtek India and Shree Cement.

The landscape of the NCR market has witnessed a sea change in the last decade mainly on account of new master development plans. Moreover,

expressways and Metro Rail has enhanced connectivity with all the parts of the region. These have also changed the way people commute, especially due to the Metro Rail. New Delhi being the National Capital is perennially the most sought after destination for commercial as well as residential real estate. Further, to support the burgeoning growth of New Delhi, newer destinations like Gurgaon, Noida and Greater Noida emerged in the peripheral region. Many companies were attracted to these newer destinations which were meticulously planned and had a proper blend of residential and commercial real estate developments. The NCR

account of new jobs being created by the companies. Besides the inclination of the people to reside closer to their work-place gave a growth impetus to the residential real estate demand. Since 2007, the NCR residential real estate segment witnessed the launch of over 500,000 units.

During 2007 and 2009, the NCR residential market witnessed an average new launch of 60,000 units per year. The arithmetic of new launches changed completely in the last 2-3 years owing to numerous launches of mega townships in new destinations like Noida and Greater Noida. Since 2009, the average residential launch per year has increased two-fold to 120,000 units.

Alwar is one of the nodes for the Delhi-Mumbai Industrial Corridor (DMIC) and Dedicated FreightCorridor (DFC)


Real Estate DriversEmployment Indicators Infrastructure Development

Auto Sector

Manufacturing Sector

REGULATORY AND MARKET ASPECT

Rail Network

Metro Corridor

Monorail Corridor

Road Network

Other Manufacturing Sectors

IT/ITeS Sector

Other Service Sectors

Dwarka Expressway

Service Sectors

Yamuna Expressway

Southern Periphral Road

KMP Expressway

NATURE OF LEVY DELHI GURGAON NOIDA/ GHAZIABADGREATER NOIDA

Stamp duty 6% for Men 7% for Men 7% for Men 8% + 2% 5% for Joint 6% for Joint 6% for Joint additional charges4% for Women 5% for Women 5% for Women

Registration 1% of the sale deed `15,000 (for `22,000 1% of market properties above value or `30,000`2.5mn) whichever is less

Service Tax (on under 3.09% 3.09% 3.09% 3.09%construction property)

MARKET NORMS

Since 2009, the averageresidential launch per year has increased two-fold to 120,000 units in

ASPECTS DELHI GURGAON NOIDA/ GHAZIABADGREATER NOIDA

Time line for property Any time until Any time until Any time until Any time until registration possession possession possession possession

Re-sale before Allowed Allowed Allowed Allowedpossession

Transfer charges First transfer is `100-`150 `100-`150payable to builder sometimes free and per sq. ft. per sq. ft.

at times it is `100-`150 per sq. ft.

Loading 12-20% 33-45% 20-45% 25-33%(as % of carpet)

Remarks Speculative Market Speculative Market Speculative Market SpeculativeMarket

delhi NCR



ROAD NETWORK LENGTH OBSERVATIONS

Delhi-Gurgaon 28 km. In January-2008, an eight-lane access controlled toll expressway along the Expressway NH-8 was started between Gurgaon and Delhi. Starting at Dhaula Kaun in

Delhi the expressway terminates on the outskirts of Gurgaon in Manesar.

Delhi-Noida Direct 9 km. Started in May-2001, this eight-lane access controlled toll expressway (DND) Flyway provides connectivity between Delhi and the satellite city of Noida.

Yamuna Expressway 165 km. The six-lane expressway connecting Greater Noida with Agra started in August-2012. This access controlled toll expressway is a better alternative

rom the NCR.

Noida - Greater 25 km. A six-lane highway providing connectivity between the two satellite cities Noida Expressway of the NCR i.e. Noida and Greater Noida.

NH-1 22 km. NH-1 is over 450-km., primarily connecting Delhi with Attari in Punjab. Of this, only 22-km. form a part of Delhi. This entire stretch is an eight-lane highway. It starts from Singhu Border in the northern district of Delhi and terminates at ISBT Kashmiri Gate.

NH-2 (Delhi-Mathura 12 km. NH-2 is a 1,465 km. highway providing connectivity between Delhi and Road) West Bengal. A 12-km. stretch in Delhi forming part of the NH-2 is called the

Delhi-Mathura Road. It connects Delhi with Mathura via Ashram Chowk.

NH-10 18 km. NH-10 is a 403 km. highway providing connectivity between Delhi and Fazilka district of Punjab. Starting from the CBD of Delhi this 18 km. stretch of NH-10 terminates at Tikri Kalan, near the Haryana-Delhi border.

Mehrauli-Gurgaon 19 km. A 19 km. stretch along the NH-236 connects Mehrauli (South Delhi) with Road the Gurgaon city centre.

Old Delhi- 5 km. Starting from the Samalkha Crossing in New Delhi, this 5 km. road runs Gurgaon Road parallel to Delhi-Gurgaon Expressway (NH8) providing connectivity

between Delhi and Gurgaon.

Gurgaon-Faridabad 25 km. A 25 km. toll highway starting from Gurgaon's Mehrauli Road in Road Sikanderpur and ending at the junction of Pali Bhakri Road in Faridabad,

has been built by widening the existing two-lane road to four lanes.

Ballabhgarh- 28 km. A two-lane 28 km. toll highway connects Faridabad and Sohna, the two Sohna Road major cities of Haryana. It starts from Ballabhgarh and ends at Rewari -

Palwal.

Delhi-Faridabad 4.4 km. The tolled three-lane expressway on NH-2 provides connectivity between Skyway Delhi and Faridabad.

METRO TRAIN NETWORK LENGTH OBSERVATIONS

Delhi Metro Rail 190 km. A well-connected six-lane Mass Rapid Transit System (MRTS) is laid across the NCR.

Delhi Airport Metro22 km. It is a part of the Delhi Metro line starting from New Delhi Railway Station to

Express (DAME) the Dwarka Sector 21 connecting the city centre with the Indira Gandhi International Airport.

165 km. Yamuna Expresswayis now open to public

Completion of Gurgaon-Faridabad Road has nowenhanced connectivitybetween the two cities

EXISTING METRO RAIL NETWORK



CONNECTIVITY

Kundli-Manesar-Palwal (KMP) Expressway

DwarkaExpressway

SouthernPeripheral Road (SPR)

Faridabad-Noida-Ghaziabad (FNG) Expressway

LENGTH

136 km.

18 km.

14 km.

56 km.

OBSERVATIONS

An access controlled 4/6 lane expressway connecting Kundli with Palwal via Manesar in Haryana. It is proposed to connect important industrial centres in Haryana, and intersects four of India's busiest National Highways: NH-1 near Kundli (Sonipat), NH-10 near Bahadurgarh, NH-8 at Manesar (Gurgaon) and NH-2 near Palwal (Faridabad)

Dwarka Expressway also called the Northern Peripheral Road (NPR) is an eight-lane expressway, providing the shortest alternative between the new growth centres of Delhi and Gurgaon. The NPR starting from Dwarka will connect Palam Vihar and the forthcoming SEZs in Gurgaon to join the NH-8 near Kherki Dhaula.

A 90 m. wide SPR will connect Gurgaon and Manesar with South Delhi through the current MG Road and the Faridabad Highway. The alignment of SPR (starting from MG Road) connects NH-8 about 1 km. before the Kherki Dhaula Toll Plaza. SPR has acquired the status of national highway and has been allotted number 236.

Connecting Faridabad, Noida and Ghaziabad. A stretch of 8 km. out of 16 km., that falls under the jurisdiction of Noida authority is complete.

CURRENTSTATUS

Underconstruction

Underconstruction

Underconstruction

Underconstruction

EXPECTEDCOMPLETION

2013-14

2014-15

2013-14

Beyond 2016

METRO TRAIN NETWORK

Rapid Metro Rail Gurgaon(RMRG)–Phase I

Rapid Metro Rail Gurgaon (RMRG) – Phase II

Badarpur-Faridabad Metro Corridor

LENGTH

6.1 km.

12 km.

14 km.

OBSERVATIONS

This intra-city Metro line connects the existing Sikanderpur metro station with the NH-8. This will provide the much needed access into areas like Cyber City, Mall of India, as well as to the NH-8.

A 7 km. extension to the RMRG Phase I, has been proposed. This will provide connectivity between Sikanderpur and Sector 55-56 in South Gurgaon.Another 6 km. metro line has been planned to provide connectivity upto Dwarka in the north.

This corridor is an extension of the existing Central Secretariat-Badarpur Metro Line. The new corridor once completed will connect Delhi with its satellite city of Faridabad. Nine-stations have been planned on this corridor extending upto YMCA Chowk in Faridabad.

CURRENTSTATUS

Underconstruction

Bid invited

UnderConstruction

EXPECTEDCOMPLETION

2013-14

Beyond 2015

2016-17

136 km. KMP Expressway willconnect importantindustrial centres in Haryana

Once completed theDwarka Expressway willenhacne the connectivitybetween Delhi andGurgaon

Rapid Metro Rail Gurgaon - will connect the existing Sikanderpur Metro stationwith the NH-8

UPCOMING METRO RAIL NETWORK

NCR OFFICE SPACE DYNAMICS

Before2008

2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E

StockOccupied Stock

40

20

60

80

100

120

140

Zones (SEZs). Rapid industrialization witnessed in the NCR led to a shift from agriculture in the composition of the economy (of this region). The economy of the NCR is now skewed towards the manufacturing and service sector. The NCR manufacturing sector contributes about 30% to the total output of the region. The major manufacturing industries that fuel the NCR economy are automobile, auto ancillary, electronic, textile, switch-gear and farm equipments. The region accounts for a substantial part of the country's production of farm equipment (tractors) -20%, motor-cycles – 50% and cars - 60%. The NCR Planning Board has envisaged an infrastructure investment of around USD 25 bn. by 2021, for the comprehensive development of the region.

Constructive measures taken by the respective state governments in the NCR propelled the overall growth of manufacturing industries. Haryana State Industrial & Infrastructure Development Corporation Limited (HSIIDC), Uttar Pradesh Industrial Development Corporation (UPIDC) and Delhi State Industrial & Infrastructure Development Corporation Limited (DSIIDC) have been instituted by Haryana, UP and Delhi government respectively, to promote industrialization. Consequently, many industrial centres were created in NCR, like IMT Manesar and Udyog Vihar in Gurgaon; Okhla Industrial Complex, Wazirpur Industrial Complex, Rohtak Road Industrial Complex, Kirti Nagar Packing Complex, Bawana and Narella industrial complex in Delhi. Besides, major industries were set up in Ghaziabad and Gautam Buddha Nagar in UP. The Rajasthan Industrial Development and Investment

Corporation (RIICO) were successful in developing the Japanese zone in an expanse of 1,165 acres, in Neemrana. The major Japanese companies that have invested in Neemrana are Honda Motorcycles and Scooters India Ltd., Nissin Brakes, Mitsui Prime, TPR Autoparts and Daikin Airconditioning.

Availability of huge tracts of land coupled with favourable government policies lured many manufacturing companies to this region. Renowned manufacturing companies like Maruti, Suzuki, Hero Motors, Honda, Toyota, Honda-SIEL, Escorts and Samsung Telecommunications have set-up their base here.

By virtue of being the National Capital Region, there would be no dearth of demand for the residential real estate sector here. IT/ITeS and BFSI are the most dominant industries, moreover, being the business capital it is home to the corporate headquarters of several companies.

101.48 mn. sq.ft. of which 83 mn. sq. ft. is occupied resulting in a vacancy level of 18%. The

9 mn. sq.ft. during 2011. The IT/ ITeS industry still

the NCR. The current situation indicates that Gurgaon with 57% of the total occupied space in the region

a large proportion of employment opportunities emanating in the NCR. We estimate that the

drive the residential markets in the city.


160

2008



IT/ITeS Manufacturing

BFSI & Consulting Others

40%

15%

30%

15%

a

ao be added

2012-17

IT/ITeS BFSI &

a for 70% ofa

Major Roads

Railway Line

Proposed Metro Rail

Noida

Greater Noida

Benchmark location

Top destination

Employment Hubs


daornoisnetxeurseocfloG

Major Roads

Existing Metro

Under Construction Metro

Under Construction Dwarka Expressway

Airport

Railway Line

Benchmark location

Top destination

Employment Hubs

daoi RdautaP

daoRiduataPOld

Gur

gaon

Roa

d

GREATER NOIDA MAP

GURGAON MAP

119,404 residential

units launched in Gurgaonduring 2007-12

New Delhi being the national capital of the country has always been the most preferred destination in India. The dominance of the city in

major driver for real estate development. We believe New Delhi as a destination will continue with its dominance and be in demand perpetually. The city is land-locked and as such land is hardly available within the city limits. Hence, to support the ever burgeoning growth of the city, satellite cities like Gurgaon, Noida, Ghaziabad, Faridabad and Greater Noida emerged. However, we do not expect gains in all the residential markets to be identical. We believe residential markets of Gurgaon, Noida and Greater Noida will grow at a higher magnitude based on factors like employment opportunities and infrastructure developments. We have considered all these dynamics while selecting the investment destinations.

As a result of our analysis, we expect Gurgaon, Noida and Greater Noida to be the biggest

primarily hubs for the IT/ITeS industry and we anticipate growth momentum to accelerate in the

premise that it is a planned city and there is visibility on the development of the infrastructure

residential markets are factors that make this

Going forward, development of the Dwarka Expressway in Gurgaon, Metro connectivity in Noida and Greater Noida will only augment the cause.

PREFERREDZONES INTHE NCR


also one of the most pronounced IT/ITeS

The major prime residential and commercial micro-markets of Gurgaon include MG Road, Golf Course Road, Golf Course Extension Road, Sohna Road and NH-8. These locations are well-connected with New Delhi through the six-lane NH-8 and MG Road, thereby providing quick and easy access to the New Delhi International Airport. Moreover, a 14 km. Southern Peripheral Road (SPR) covers all the major developments in this part of Gurgaon and connects MG Road and Golf Course Extension Road with NH-8.

Golf Course Road is the most sought after destination on account of its proximity to South Delhi and hence boasts of the highest residential property prices in Gurgaon. MG Road is a self-sustaining micro-market with the presence of a well-developed orgainsed retail market, superior residential development and quality commercial

the major commercial buildings. Golf Course Extension Road is catching up with the Golf Course Road with its quality residential development.

A new residential belt has emerged along the upcoming 18 km. Northern Peripheral Road

road is expected to connect Dwarka and Palam

in Gurgaon. This belt is predominantly a residential area however a small proportion of it is developed as a commercial area. Proximity to the Dwarka Sub-city, Delhi International Airport

GURGAONGurgaon is a self-sustaining real estate market comprising all the verticals of real estate viz. residential, retail, commercial and industrial. Major factors like availability of huge land parcels, quality commercial properties, proximity to the international airport, favourable tax policies and access to the talented workforce lured many corporates to Gurgaon. It is not only


RESIDENTIAL PROJECT LAUNCH TREND IN GURGAON

2007 2008 2012*2009 2010 2011

Source:

8,939

23,439

16,492

A new residential belt hasemerged along theupcoming DwarkaExpressway

Gurgaon witnessedabsorption of 98,713 units during 2007-12



140,000

120,000

100,000

80,000

60,000

40,000

20,000

No.

of U

nits


RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF GURGAON


2007 2008 2009 2010 2011 2012*

Existing InfrastructureDELHI-GURGAON EXPRESSWAY

Delhi Gurgaon Expressway is the most breathtaking development in India's transport

the congested NH-8. Since its opening in January

2008, this 8 lane 28 km. access controlled toll expressway has enhanced the connectivity between Delhi and the commercial hub, Gurgaon. Starting from Dhaula Kaun in Delhi the expressway terminates at Manesar and has 11

four toll plazas including the 36 lane toll plaza at the Delhi-Haryana Border.

and proposed diplomatic enclave in Dwarka Phase II attracted many developers to this micro-

Gurgaon (RMRG) is proposed to link various micro-markets including Mall of India and DLF Phase II & III, thereby enhancing connectivity

demand for residential real estate in these micro-

Raheja and Mahindra Life Spaces have launched projects in this belt.

Manesar located in the south Gurgaon region is a

– a Haryana government initiative, has given a

manufacturing companies like Maruti, Suzuki,

Manesar. Moreover, Manesar has become the most preferred destination for many leading

huge employment generation thereby leading to

huge demand for residential real estate. Major developers like DLF, Godrej, Anantraj and Emaar MGF have well-perceived these developments and strategically launched their projects in Manesar. A 135 km. Kundli-Manesar-Palwal (KMP) Expressway will further augment demand for the residential real estate in Manesar.

Hence, based on the above factors we anticipate Gurgaon market to witness good appreciation over the next 4-5 years.

As on September-2012, Gurgaon residential market witnessed a total launch of 119,404 units since 2007. Moreover, owing to enhanced connectivity and infrastructure development, the zone witnessed absorption of 98,713 units during the same period resulting in 17.3% remaining unsold. Over the last four years the average annual absorption of residential units in Gurgaon was

2012, as the region witnessed the launch of

(9m 2012).

3.3%

7.7%7.3%

8.1%

11%

17.3%

IMT is a 1,750-acre ultramodern IntegratedIndustrial Park


GURGAON-FARIDABAD ROAD LINK

A 25 km. toll highway starting from Sector-54 of Gurgaon and ending at the junction of Pali Bhakri Road in Faridabad, has been built by widening the existing two-lane road to four lanes.toll expressway has enhanced the connectivity between Delhi and the commercial hub, Gurgaon. Starting from Dhaula Kaun in Delhi the expressway terminates at Manesar and has 11

four toll plazas including the 36-lane toll plaza at the Delhi-Haryana Border.

Extending further, a 13 km. Rapid Metro Rail have been planned under RMRG Phase II, of which, a 7 km. line will provide connectivity between Sikanderpur and Sector 55-56 in South Gurgaon and another 6 km. rapid metro rail will connect with Dwarka in the North.

KMP EXPRESSWAY

A 135 km. access controlled expressway connecting Kundli with Palwal via Manesar in Haryana is under construction. It will connect important industrial centres of Haryana and intersect four of India's busiest National Highways: NH-1 near Kundli (Sonipat), NH-10 near Bahadurgarh, NH-8 at Manesar (Gurgaon) and

expected to be complete by 2013-14.UpcomingInfrastructure

DWARKA EXPRESSWAY

Dwarka Expressway also called the Northern Peripheral Road (NPR) is an eight-lane 18 km. expressway, providing the shortest alternative between the new growth centres of Delhi and

Dwarka Sector-21 and end at NH-8 (Gurgaon

planned as an alternative link between Delhi and Gurgaon, thereby decongesting the Delhi-

provide connectivity with the much-touted Reliance-HSIIDC SEZ besides the Garhi Harsaru

expressway till it merges ahead of the IFFCO

new nearby residential colonies and would also

construction and is expected to be complete by 2014-15.

RAPID METRO RAIL GURGAON (RMRG)

private company in the NCR. A total of 20 km. rapid metro rail has been planned which will provide connectivity between Sikanderpur in Gurgaon with NH-8. A 6 km. rapid metro rail under Phase-I is in advanced stages of

access into areas like Cyber City, Mall of India and NH8. RMRG Phase-I is expected to commence commercial operations by 2013-14.

EmploymentIndicators in Gurgaon

Haryana. It has now emerged as one of the

to the national capital coupled with huge availability of quality commercial properties and

GURGAON OFFICE SPACE DYNAMICS

BeFORE2008

2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E

StockOccupied Stock

20

10

30

40

50

60

70

80

2008

28 km. Delhi-GurgaonExpressway and 25-km. Gurgaon-Faridabad Link Road are the major arterial roads

Upcoming eight-lane 18 km. Dwarka Expressway will aidin decongesting theexisting Delhi-GurgaonExpressway


Employment Hubs in Gurgaon

PROJECT NAME LOCATION MAJOR COMPANIES

BPTP I Park Udyog Vihar Cisco, Deloitte

DLF Cyber City DLF Cyber City BCG, Cannon, Emerson, Google, KPMG

Global Foyer Golf Course Road Ciesta Hospitality, Stryker Hospitality

Spaze I-Tech Park Sohna Road Capgemini, Aircel, Shoppers Stop, Yamaha Music

JMD IT Park Sohna Road Convergys, Global Expo

majorly around DLF Phase I-V, Sohna Road and Golf Course Road while the industrial hub is concentrated in South Gurgaon region of Manesar. Renowned manufacturing companies like Maruti, Suzuki, Hero Motors, Honda and Toyota have their base in Manesar.Major builders who have planned residential projects in Gurgaon are DLF, Anantraj, Godrej, Unitech and Emaar MGF.

space of which 40 mn. sq. ft. is occupied. We

generation happening in the service industry will feed the growth of residential markets in the zone.

Gurgaon has emerged asone of the prominentdestinations for IT/ITeSoutsourcing and -shoring hubs

Gurgaon to witnessanother 22.3 mn. sq.ft. ofnew y by 2017

Gurgaon totalspace stock is 55 mn. sq.ft.of which 40 mn. sq. ft. is occupied


DESTINATIONDWARKA EXPRESSWAY(Sec 103-106, 109-113)

A new residential belt has emerged along the upcoming Dwarka Expressway or Northern Peripheral Road (NPR). The 18 km. expressway will provide an alternative link between Delhi and the commercial hub, Gurgaon. Based on its proximity to the Dwarka Sub-city (Delhi) and to the city centre of Gurgaon, the expressway can be sub-divided into two parts viz. North and South. The northern stretch starts from Sector 103-106, 109-113 in close proximity to Dwarka and ends at Sector 99 near the turn where the NPR connects with the NH8. The southern stretch begins from Sector 37D the far end of the NPR and terminates near Manesar on the NH-8. The south stretch


2009 2010

18,00016,00014,00012,00010,0008,0006,0004,0002,000

No.

of U

nits


RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF DWARKA EXPRESSWAY (Sec 103-106, 109-113)

2011


2012*31%

comprises Sectors 37, 37C, 37D, 83, 84 and 88. This entire belt is predominantly a residential area with a small portion of commercial and industrial developments.

from the new link road between Gurgaon and Delhi, we anticipate the north region (Sec 103-

compared to the south. We base our argument primarily on account of north region's proximity to Dwarka Sub-city, Delhi International Airport and the proposed diplomatic enclave in Dwarka Phase II.


PROJECT LAUNCH TREND IN DWARKA EXPRESSWAY


2012*2007 2009 2011

7,456

694

230 2,146



2012

Dwarka ExpresswayDwarka Sec. 22-23

`10,200

2017E

`10,200

`17,300

`4,900

15.6%

0.3%

6.5%4.2%

8.4%

6,839

2008 2010

141 1,374

20082007

18,649 residential

units launched in themicro-markets along theDwarka Expressway since 2007

77%WAS launched IN

the last 21 months

OF THE RESIDENTIAL

UNITS

RESIDENTIAL


PRICE MOVEMENT

18,000

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000


2009

52%

40%

Dwarka Sec. 22-23 Dwarka Expressway Discount Margin


2010 2011 2012 2013E 2014E 2015E 2016E 2017E

Developers started taking keen interest in this locality only in 2009. Since 2009, the Northern Region of this belt has witnessed the launch of 17,815 residential units and 92% of these were launched during the last thirty-three months. The destination witnessed healthy sales primarily on account of euphoria associated with the new connectivity. However, the sale momentum has subsided for the projects launched in 2012. We believe this is just an aberration, as the

2007 2008

destination has witnessed an average absorption of 3,180 units per annum between 2009 and 2011. The rate of unsold inventory climbed to 31% as on Q3 2012, however, understanding the long term potential of this destination the developers continued launching new projects. The destination witnessed the launch of 7,456 units in

launched throughout 2011.

CONNECTIVITY TO IMPORTANT LOCATIONS FROM SEC.111* By road

Distance Travel time

17km

11mins

ROAG DM

DG AO OLF RC EO SUR

IRPA OI RTGI

EC CO ALN PNA TUGH

ESN AA RM

28km

17mins

29km

18mins13

km8

mins

9km

6mins

Annual averageabsorption rate in theDwarka Expressway 3,180 units

Selected destinationprimarily on account ofits proximity to DwarkaSub-city, IGI Airport andthe proposed diplomaticenclave in Dwarka Phase II


InvestmentOptions in DwarkaExpresswayINVESTMENT TICKET SIZE


SELECT PROJECTS

Project Sector Developer No. of Units Launch Date Completion Date

Vedas 108 Raheja Builders 250 Nov-10 Dec-13

The Residency 103 The Landmark Group 500 Dec-10 Mar-14

Centrum 103 India Bulls 750 Mar-09 Mar-13

Aura Phase III 110 Mahindra Life Spaces 110 Apr-11 Mar-14



1,900 - 3,447 9.3 - 16.9

950 - 1,460 4.7 - 7.2

3BHK

2BHK

At present, Sec 111 on the Dwaraka Expressway is connected with the important NH-8 through the Major Sushil Aima Marg, which also connects it with the Urban Extension Road II (UER-II) that goes towards the Indira Gandhi International

Course Road and MG Road are just 13 km. and9 km. from Sector 111. Going forward, the under construction 18 km. Dwarka Expressway will provide an alternative road to the existing congested Delhi-Gurgaon Expressway. Connect- -ivity between the two cities will be enhanced once this expressway is in place.

Dwarka Sec 22/23 is in close proximity to the selected destination and is also an established

at ` 10,200/sq. ft. However, the price in Dwarka Expressway Sec 103-106, 109-113 is around `4,900/sq. ft., which is a 52% discount. Based on our investment rationale as discussed above we expect prices to rise to `10,200/sq. ft. thereby reducing the discount to 40% by 2017.

MajorC oad and MG

Road and 9 y

Dw way

w wayo o `10,200/sq

`4,900/sq a

residential micro-market with prices averaging

from both Noida and Greater Noida. The CBD of Connaught Place is only 18 km. from this region. With the upcoming metro line the accessibility of this destination will improve. Moreover, unlike Gurgaon, this region has ample groundwater coupled with a continuous supply from the Ganges. Spread over 3,635 hectares, many real estate developers have launched huge townships like Amrapali Group's Leisure Park, Leisure Valley, Supertech's Eco Village-I & II, Earth Infrastructure's Earth Sapphire Court and Antriksh's Antriksh Forest.

As on September-2012, Greater Noida has witnessed a total of 127,424 residential units being launched since 2007. Of these, a total of 79,746 units have been absorbed resulting in 37.4% remaining unsold. However, in the year 2010 Greater Noida witnessed the highest number of launches and absorption owing to its connectivity with Noida

apartments. Recently the land row problem has been resolved and developers have been allowed to commence construction.

GREATERNOIDAGreater Noida is a new suburb located 20 km from Noida in Gautam Buddha Nagar district of Uttar Pradesh. Spread over 20,000 acres, it is situated about 40 km. south-east of New Delhi and forms a part of the NCR. Greater Noida Industrial Development Authority (GNIDA) is the nodal agency for the overall development of this region. Physical infrastructure of Greater Noida has been crafted very meticulously by the GNIDA. Wide roads along with service roads for all the major arterial roads have been built. It also boasts of

presence on the International Motor Racing Circuit.

Greater Noida is well connected with Noida and

Alpha Commercial belt of Greater Noida.

passes through the city providing connectivity with Agra via Mathura. A 35 km. Metro line has been approved by the Noida and Greater Noida Authority that will connect new sectors of Noida, Greater Noida, Ghaziabad and South Delhi. The metro rail would provide connectivity between Noida City Centre (sector 32) and Greater Noida.

are some of the major nodes of this metro line.

Greater Noida is emerging as a planned industrial region, an educational hub and also as an

Daewoo Motors, Yamaha Motors, Delphi Automotive, Samsung India, LG, Wipro, Videocon and TEVA Pharmaceuticals are some of the major companies that have set up their base here. It also has some of the most prestigious engineering and management colleges like Birla Institute of Management and Technology, Apeejay Institute of Technology, Noida Institute of Engineering and Technology, Noida International University and IEC College of Engineering.

Residential micro-markets have evolved along the

residential sectors are Alpha, Beta, Chi, Delta and Pi.

of Greater Noida, it is nomenclature as 'Noida



RESIDENTIAL PROJECT LAUNCH TREND IN GREATER NOIDA


2007 2008 2012*2009 2010 2011

6,121 3,035 5,638

82,150

23,619

6,860

Connaught Place (CBD) is amere 18 km. from NoidaExtension

Builders allowed toresume construction in Noida Extension

127,424 residential units launched since 2007



140,000

120,000

100,000

80,000

60,000

40,000

20,000

No.

of U

nits


RESIDENTIAL DEMAND SUPPLY ANALYSIS OF GREATER NOIDA


2007 2008 2009 2010 2011 2012*

18%

22.2%21.4%

29.8%

36.3%37.4%

Existing Infrastructure

YAMUNA EXPRESSWAY

A 165 km. six-lane expressway connecting Greater Noida with Agra started in August-2012. This access controlled toll expressway is a better alternative to NH-2 which earlier used to handle

expressway has reduced the travel time between Noida and Agra from 5 hours to less than 2

(which runs through the cities of Faridabad, Ballabgarh and Palwal) and Old Grand Trunk Road (NH-91).

NOIDA - GREATER NOIDA EXPRESSWAY

A 25 km. six-lane expressway providing connectivity between the two satellite cities of the NCR i.e. Noida and Greater Noida is operational. It starts at Sector 15A of Noida and ends at the Alpha commercial belt in Greater Noida. This expressway has reduced the travel time between the commercial centres and residential complexes of Greater Noida with the Delhi CBD.

Upcoming InfrastructureFARIDABAD-NOIDA-GHAZIABAD(FNG) EXPRESSWAY

A 56 km. expressway meant to connect Faridabad-

feasible and scrapped the idea in 1998. However, construction has begun on a stretch of 16 km. which falls under the jurisdiction of Noida Authority. As on date an 8 km. stretch has been constructed. This stretch is an important link between Noida and Ghaziabad. Currently, the congested NH-24 is the only link between the two cities and once the 16 km. stretch is complete, it will provide smooth and hassle free travel between Noida and Ghaziabad. This road will also provide speedy access to Greater Noida.

METRO LINE

The City Centre Metro line will be extended till Eco Village via Sector 71. Out of the planned four stations two will be in Noida Extension. The Metro terminal will be near Eco Village-III, which is around 3 km. from Noida Extension roundabout. In addition to Noida Extension, group housing projects are also being constructed in various areas of Noida, especially from Sectors 74 to 79, Sectors 112 and 119. The Metro extension will even cater to these areas where nearly 50 housing projects are being constructed. This would be the

Delhi-NCR.

Recently completedYamuna Expressway hasreduced the travel time toAgra to less than 2 hours

Metro Rail has been proposed for connectingEco Village via Sector 71


Employment Indicators in Greater Noida Greater Noida is emerging as one of the most remarkable models for the industrial infrastructure. It is regarded as the most favoured location for industrial development owing to its favourable government policies, huge availability of land tracts and talented workforce. The region has attracted a total industrial investment of`10,000 crore from domestic as well as multi-national companies. Honda Siel Cars, Daewoo Motors, Yamaha Motors, Delphi Automotive, Samsung India, LG, Videocon and TEVA Pharmaceuticals are some of the major companies that have set up their base here.

Greater Noida is emerging as an IT/ITeS hub, mainly due to conscious measures taken by the Greater Noida Industrial Development Authority (GNIDA). Taking cognizance of the IT industry

the infrastructure including uninterrupted power as well as water supply. The sectors in the IT industry that have witnessed remarkable growth in Greater Noida are IT services, software products, IT enabled Services and e-commerce business. Greater Noida is poised to develop as the next major IT destination with a number of planned or upcoming IT & Bio tech parks such as Wegmans Industries, Amprapali Tech park, Wipro IT Park, Globus IT Park, Habitech Tech Park and Kalika Infotech.

MNCs have got an invigorating platform as the government is encouraging their presence here. World-class infrastructure coupled with investor friendly policies have lured many MNCs to set-up base in Greater Noida. Sectors like Alpha, Beta, Gamma, Swarn Nagari, NRI City and Golf Link 1 have emerged as commercial business districts.

space of which 2.4 mn. sq.ft. is occupied. We

vacancy rate will come down from the current

employment generation happening in the service industry will feed the growth of residential markets in the zone.

GREATER NOIDA OFFICE SPACE DYNAMICS

BeFORE2008

2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E

StockOccupied Stock

2

1

4

5

6

7

8

2008

9

10

stock in Greater Noida - 4 mn. sq .ftexpect it to increase to 9 mn. sq.ft. by 2017

Greater Nodia hasattracted a totalindustrial investment of`100 bn. from domestic aswell as multinationalcompanies

EXISITING OFFICE SPACE


DESTINATIONNOIDA EXTENSION

Noida Extension comprising Sectors 1, 2, 4, 16B, 16C, 16D and Knowledge Park V have emerged as the most sought after destination. Though, Noida Extension is a part of Greater Noida, it is known as 'Noida Extension' on its close proximity with the Noida City Centre. This helps to distinguish it from both Noida and Greater Noida. It is an upcoming region for Greater Noida situated in close proximity to Noida. Noida Extension is only 7 km. from Noida City Centre and is adjacent to Noida. Sectors 18, 32 or 62 in Noida are barely 5-15 minutes from Noida Extension. Moreover, the CBD of Connaught Place is only 18 km. from this region. With the upcoming metro line the accessibility will be enhanced.

The Yamuna Expressway, F1 Car Racing Circuit and Noida-Greater Noida Expressway have completely changed the picture of this region.


2010

90,00080,00070,00060,00050,00040,00030,00020,00010,000

No.

of U

nits


RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF NOIDA EXTENSION

2011


2012*

proximity to Noida made this region the most sought after destination in the NCR. Based on the above factors, many real estate developers have launched huge townships like Amrapali Group's Leisure Park, Leisure Valley, Supertech's Eco Village and Antriksh's Antriksh Forest.Developers started taking keen interest in this locality only in 2010. Since 2010, Noida Extension has witnessed the launch of 80,246 residential units and 81% of these were launched in the year 2010. The entire region has come to a standstill due to the land acquisition problem; as a result this region witnessed very few launches of residential projects between 2011 and Q2 2012. However, in August 2012, it received the approval to continue with its construction from GNIDA. Hence, we anticipate launches in this region to regain its 2010 momentum.


RESIDENTIAL PROJECT LAUNCH TREND IN NOIDA EXTENSION


2012*2011

64,890



2012

Noida ExtensionNoida Sec. 50-52

`6,975

2017e

`6,760

`11,260

`3,200

1,271

2010

14,890

30.7%

38.4% 38.6%

80,246 residential units launched in NoidaExtension since 2010

81% of these werelaunched in the year 2010


PRICE MOVEMENT

12,000

10,000

8,000

6,000

4,000

2,000


Noida Sec. 50-52 Noida Extn. Discount Margin


2010 2011 2012 2013E 2014E 2015E 2016E 2017E

The destination witnessed healthy sales in 2010

pricing. However, the sale momentum had slowed down during 2011 and Q2 2012 for the reason

to gain traction. The rate of unsold inventory

destination has a huge potential to grow as a

percentage is anticipated to come down.

markets of Greater Noida with prices averaging at `6,975/sq. ft. However, the price in Noida Extension is around `

prices moving up to `6,760/sq. ft.

Investment Options in Noida Extn.INVESTMENT TICKET SIZE



1,995 - 3,400 6.4 - 10.94BHK

1,480 - 2,100 4.7 - 6.7

895 - 1,060 2.9 - 3.4

410 - 580 1.5 - 2.2

3BHK

2BHK

1BHK

SELECT PROJECTS

Project Sector Developer No. of Completion Units Date

Eco Village -I 1 Supertech 5,000 Apr-15

Gaur City –II

TerraceHomes Group

Eco Village 16B Supertech 8,000 Sep-14 II & III


Prices in Noida Extensionto increase to 6,760/ sq.ft.from the current levels of `3,200/sq.ft.

`

Hidden GemNeemrana

Neemrana is situated in North-Eastern Rajasthan and falls under the National Capital Region (NCR) of Delhi. It is located close to the NH-8 which forms a part of the Golden Quadrilateral. Currently, there is absolutely no mass rapid transport and as such the region has extremely poor inter zone connectivity. The NH-8 is the only major arterial road providing connectivity with important regions in the NCR. The real estate development in Neemrana is driven by the fact that it is one of the major nodes of the Dedicated Freight Corridor (DFC) and Delhi-Mumbai Industrial Corridor (DMIC). Recently, the Rajasthan government allotted 2,500 acres to the Japanese companies to set up their operations here. This region is known as the Japanese Investment Zone. Moreover, the government is also setting up an Export Promotion Industrial Park (EPIP) in an area of more than 200 acres.

The destination is at a distance of approx. 55 km., 72 km. and 93 km. from the prominent markets of the NCR Bhiwadi, Manesar and MG Road, Gurgaon respectively.

Following are the factors that make Neemrana the most sought after investment destination:-. Proximity to the Golden Quadrilateral, NH-8

and the Dedicated Freight Corridor. Proximity to Delhi International Airport (106

Neemrana. Besides, an independent airport complex is also proposed to be developed here.

.designated land for constructing 'Global City’ over 40,000 acres in the Neemrana-Behror area. Once completed this region will have a capacity of housing one million people. The Cyber City, Medi-City, Knowledge City, Entertainment City, SEZ, World Trade City and Bio-diversity Park have also been planned here.

Additionally, widening of the NH8 on this route

enhance the connectivity of Neemrana with other industrial hubs of the NCR. Owing to the above

immensely and provide superior investment returns over a 10 year time horizon.

Over 40,000 acres have for

constructing 'Global City'in Neemrana-Behror area

CONNECTIVITY TO IMPORTANT LOCATIONS* By road

Distance

55km

72km

93km

106km

117km

WAI DH IB , GUD RA GO AR OG N

M

DELHI INTERNATIONAL AIRPO

RT

TH PG LAU CA EN DN EO LC HI


80000

40000

200004000

Under Construction Metro Rail

Under Construction Monorail

Under Construction Rail Line

ProposedInternational Airport

KHARGHAR

10000

WADALAPRABHADEVI


MUMBAI MAP

AIROLI

VASHI

RANJANPADA

ULWE

BELAPUR

The MMR is spread over an

area of 4,355 sq.km.

and has a population of

23.51 mn.

MarketOverview


Island city

Western zone

Central zone

Navi Mumbai

2007 2008 2012*2009 2010 2011


RESIDENTIAL LAUNCH TREND IN MMR

Source:


44,48337,127

72,129

112,543

69,150

41,950

The residential pockets ofthe island city like Parade, Napean sea Roadand Worli are amongstthe costliest in thecountry

With the Arabian Sea onthree sides and lack ofland availability there is limited scope forhorizontal expansion in the island city, and theonly way for large scale real estate development is by going vertical

In the Western zone, whileemployment and socialinfrastructure are thedrivers until Malad, locations further northare driven by connectivity,primarily by suburban trainnetwork up to Virar


2008 2009 2010

400,000350,000300,000250,000200,000150,000100,000

50,000

No.

of U

nits


RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF MMR

2011 2012*

through suburban train network. This is because

housing options, they are not self-sustainable with respect to employment opportunities.

Developed as the planned satellite city of Mumbai, Navi Mumbai is emerging as a self-sustained real estate market on account of the presence of employment opportunities primarily in the IT/ITeS sector. While CBD Belapur has been

Thane-Belapur Road. The zone has several options

most prominent micro-market commanding the highest property price in the zone. The connectivity is mainly through the suburban rail network that also connects the zone with the island city and the central zone. Besides, the road connectivity is supported by the Thane-Belapur Road and the Palm Beach Road.


The momentum in MMR residential market is down

from 1,12,543 units

launched in 2010 to just

41,950 units in

2012 (Until September)


2007


Island city

Western zone

Central zone

Navi Mumbai

5%

20%

36%

39%


6%

8% 8%

14%

18%24%

In the Central zone, whiledistant suburbs beyondThane provide ordablehousing options, they arenot self-sustainable withrespect to employmentopportunities

Developed as the plannedsatellite city of Mumbai, Navi Mumbai is emerging asa self-sustained realestate market on accountof the presence ofemployment opportunitiesprimarily in the IT/ITeSsector

39% of the residential

supply is concentrated in the Western zone

Real Estate Drivers


Employment Infrastructure Development

Western Expressway

Road Network

The Western Expresswayand the EasternExpressway are thearteries of roadconnectivity in Mumbai


ROAD NETWORK DISTANCE OBSERVATIONS

Western Expressway 25 km.

Eastern Expressway 24 km. This 6 lane arterial road between Sion and Thane provides the south-north connectivity

Sion Panvel Highway

Extending from Bandra to Dahisar, this 8 lane arterial road has beenenhancing the south-north connectivity in the city instrumental in the city

25 km. This 8 lane road has been instrumental in providing the west-east connectivity between Mumbai and Navi Mumbai

EXISTING SUBURBAN RAIL NETWORK


Rail Network

Suburban Train network

Upcoming Metro & Monorail network

Air Network

Eastern Expressway

Upcoming Eastern Freeway

BFSI

IT/ITeS

SUBURBAN TRAIN DISTANCE OBSERVATIONSNETWORK

Churchgate - Virar 60 km.

CST - Kalyan - 121 km./115 km. This suburban rail network provides excellent south-northKasara/Khopoli connectivity of the city with the central suburbs

Thane - Panvel 49 km. This suburban rail network provides connectivity with the satellite city of Navi Mumbai

Crucial for south-north connectivity in the western zone, separate lines for suburban trains provide excellent connectivity


PROJECT

Mumbai Trans Harbour Link (MTHL)

DISTANCE

22 km.

OBSERVATIONS

This `96,300mn. six-lane sea bridge will be

and Navi Mumbai at Sewri and Nhava

been concluded. The authority has shortlisted contractors so that the work can becommissioned by 2013.

STATUS

Planned

EXPECTEDCOMPLETION

Beyond 2017

Upcoming InternationalAirport

Service Sectors

The suburban trainnetwork is considered asthe lifeline of the city andhas a bearing on the real estatedevelopment of theconnected regions

MMR OFFICE SPACE DYNAMICS

2008 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E


decline to 9% by 2017 mainly on account of

40

20

80

100

120

140

COST DETAILS

Stamp Duty

Registration 1% (up to a Maximum of `

Value Added Tax (VAT)

Service Tax (on under construction property)

STATUTORY COSTSAND MARKET NORMS

STATUTORY COSTS

NORM DETAILS

Time line for property Any time until possessionregistration

Re-sale before possession

Transfer charges payable 0.5% of Base Selling Rate to builder

Loading (as % of carpet) 55% - 80%

MARKET NORMS

The occupied ockin will increase by

63% in 5 years

a ory levies in increase c ofbuying proper by as much

as 10%

The propernorms in

or friendly

The city's real estatemarket is growing in thenorth-east direction

Mumbai has gained its fair share of glory by

PREFERREDZONES INMMR


NAVIMUMBAI


RESIDENTIAL LAUNCH TREND IN NAVI MUMBAI

Source:

2007 2008 2012*2009 2010 2011

Bandra Kurla Complex(BKC), Lower Parel andWorli continue to be preferred locations forthe BFSI and consultingcompanies

Running parallel to theEastern Expressway, theunder constructionEastern Freeway projectwill boost theconnectivity of the realestate markets in theisland city and centralzone

CENTRAL AND NAVI MUMBAI ZONE MAP

Major Roads

Under construction Monorail

Proposed Metro Rail

Proposed MTHL

Airport

Railway Line

Under Construction Rail Line

Benchmark location

Top destination

Employment Hubs

ProposedInternational Airport

AIROLI

BELAPUR

KHARGHAR

POWAI

JUHU

ANDHERI

BANDRA

DADAR

FORT

COLABA

PANVEL

JNPT

URAN


Under construction Metro RailProposed Monorail

65,403 units out of

the 87,055 residential units launched in Navi Mumbai since 2007 are already sold


Real Estate Drivers

Employment Infrastructure Development

Thane-Belapur Road

Road Network Rail Network

Suburban train network

Upcoming Metro rail network

Upcoming International Airport

Palm Beach Road

IT/ITeS

Manufacturing


90,00080,00070,00060,00050,00040,00030,00020,00010,000

No.

of U

nits

Cumulative Supply Cumulative Absorption % of Unsold Units

RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF NAVI MUMBAI


2007 2008 2009 2010 2011 2012*

3%4%

6%

11%

21%

25%

property price and interest rate was an increase in the unsold inventory to 25% as on Q3 2012. Taking cognizance, a large number of developers have exercised restrain on launching new projects in 2012.

Air Network

Existing Infrastructure

THANE-BELAPUR ROAD

The 20 km. Thane-Belapur Road is the most important road link in the zone providing both the intra-zone as well as inter-zone connectivity with Navi Mumbai. Towards the north it begins at

Thane and towards the south it connects with CBD Belapur. Going further this road connects with the Mumbai-Pune expressway that connects the MMR with Pune. The importance of this road

locations like Airoli, Rabale, Turbhe, Jui Nagar and CBD Belapur are linked on this road.

Thane-Belapur Road andPalm Beach Road are thearteries of roadconnectivity in NaviMumbai



NAVI MUMBAI METRO NETWORK

Of the six planned metro corridors in the zone that would eventually cover a length of 120 km., only one i.e. Belapur-Taloja-Khandeshwar corridor, encompassing 21.45 km., is worth considering at this point of time. This corridor will be developed in three phases and once completed it will improve the connectivity within the zone, which currently lacks mass rapid transport system on this route. It will connect the residential micro-markets of Kharghar, Khandeshwar and Kalamboli with the employment centre of CBD Belapur. The metro rail network is considered to be a convenient form of mass rapid transport system. There is a visibility on the progress of the metro rail in the Navi Mumbai Zone. The pace of development is encouraging and we expect that the Phase I will be completed by early 2014.

SUBURBAN TRAIN NETWORK

The suburban train network in the zone is fairly decent on account of the connectivity with the central zone at Thane and the island city up to Mumbai CST. However, the southern stretch from Ulwe to Uran lacked connectivity. It was connected only by the JNPT road. However, with the under construction 27 km. Nerul-Seawood-

improvement in connectivity. The network is expected to be ready by 2016. Widely referred to as the lifeline of Mumbai, the train network in the entire MMR is very crucial and to a great extent

in the network.

MUMBAI TRANS HARBOUR LINK (MTHL)

The MTHL project has the potential to become a game changer in the real estate market. It will connect the Navi Mumbai zone with the Island city zone at Sewri and Nhava respectively, thereby reducing the travel time between these

account of their connectivity with the CBD

development of Airoli is situated on this road. The

are Reliance Corporate Park and Dhirubhai Ambani Knowledge City.

PALM BEACH ROAD

The Palm Beach Road runs alongside the mangroves on the western coast of this zone. Stretching from Vashi to Belapur this stretch is widely referred to as the Marine Drive of Navi Mumbai and boasts of the most expensive properties in the zone. It is a supplementary link to the Thane-Belapur Road and connects residential markets like Vashi, Sanpada, Nerul and Belapur. The road is developing as a hub for organized retail developments.

VASHI BRIDGE

The 6-lane Vashi Bridge also referred to as the Sion- Panvel Expressway is a major inter-zone link. Providing East-West connectivity within the MMR, this road connects Navi Mumbai zone at Vashi with the central zone at Mankhurd. At

the shortest road network from the island city zone to the Navi Mumbai zone.

AIROLI BRIDGE

The Airoli Bridge serves as the inter-zone connector by connecting the Navi Mumbai zone with the central zone. It links the Eastern expressway at Mulund in the Central zone with the Thane-Belapur Road at Airoli in the Navi Mumbai zone.

SUBURBAN TRAIN NETWORK

The zone has a decent inter and intra zone connectivity by the suburban rail network. The suburban train network connects the zone with island city i.e. the CBD locations of Nariman Point, Fort and Colaba and also the central zone in Thane. Running parallel to the crucial Thane-

locations like Airoli, Rabale, Turbhe, Jui Nagar and CBD Belapur.

Vashi Bridge and AiroliBridge provide the inter zone connectivity to NaviMumbai


locations of Nariman Point, Fort, and Colaba. The

NAVI MUMBAI INTERNATIONAL AIRPORT (NMIA)

in the zone.

zone.

NAVI MUMBAI OFFICE SPACE DYNAMICS

2008 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E

The increase of airpassenger om thecurrent 29 mn. passengersto 119 mn. in 2030-31 will be supported by the city'ssecond internationalairport coming up in NaviMumbai

The occupied ockin Navi Mumbai will

increase by 105% in

the next 5 years

As industrial land givesway to more lucrative

opments,IT/ITeS industry willdominate the economiclandscape of Navi Mumbai


DESTINATIONULWE

Ulwe is a residential market located to the south of the Panvel creek. CIDCO, the planning authority of Navi Mumbai, has acquired land from the villagers and other private land owners and is developing this location as per its city development plan. Hence, it is not yet an established residential destination. Developers started taking keen interest in this locality only in 2009. Since 2009, Ulwe has witnessed a launch of 6,606 residential units and almost 83% of these were launched between 2010 and 2011. Due to the initial euphoria associated with the investor community, the projects also witnessed healthy sales. However, the rate of sale has subsided now


2009 2010

7,000

6,000

5,000

4,000

3,000

2,000

1,000

No.

of U

nits


RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF ULWE

2011


2012*

23%27%

12%

5%

on account of low end user interest, because of lack of mass rapid transport connectivity. The rate of unsold inventory climbed to 27% as on Q3 2012 and taking cognizance of the state of market, the developers have reduced the new

At present, Ulwe is connected with the important Thane-Belapur Road through the Uran Road, which also connects it with the JNPT Road that goes towards the Jawaharlal Nehru Port (Nhava

micro-market, is just 7 km. from Ulwe enroute this


RESIDENTIAL LAUNCHES IN ULWE


2012*2009 2010 2011

700

130

230

2,675

2,256


ULWE PRICE FORECAST* Figures in `/sq.ft

2012

UlweVashi

`10,000

2017E

`9,800

`15,802

`4,000

Of the 6,606 residentialunits launched in Ulwe

since 2009, 4,805units

are already sold

At present, lack of massrapid connectivity is aconcern. However, theunder constructionsuburaban rail network

will address it by 2015

Ulwe has access to the

zone's 5 major

markets within a distanceof 22 km.



Distance

22km

18km

16km

15km

7km

11km

ROLI IA HAA PEM

R EA LBA VA ISH

RBHU ET

CB RD UPB AEL

Investment Options in Ulwe



SELECT PROJECTS

Project Developer No. of Launch Completion Units Date Date

Vighnaharta ShreeComplex Siddhivinayak 126 Sep-11 Mar-14

Palacio Platinum 122 Jan-11 Nov-13 Group

Neelsiddhi Neelsidhi 120 Feb-12 Dec-13Joya Group

Swaraj Swaraj 164 Dec-10 Jul-14Kingston Builders


1600 - 1850 6.9 - 8.7

880 - 1224 3.6 - 5.8

3BHK

2BHK

2.0 - 2.91BHK500 - 700

The of CBDBelapur is at a distance of

just 7 km.

Ulwe residential propertyis forecasted to

appreciate by 145%over the next 5 years

Of the 3,518 residentialunits launched in Chembur

since 2007, 2,625 units

are sold


DESTINATIONCHEMBUR

Chembur is a residential destination in the central zone of the MMR. The stretch towards the south of Chembur railway station up to Collectors Colony is the most sought after residential catchment. Going further south of the Collectors Colony, the micro-market has the presence of industrial activity notable amongst which is Rashtriya Chemicals and Fertilizers and Bharat Petroleum

island city zone and other regions of the central zone.


2007 2008

350030002500200015001000

500

No.

of U

nits


CHEMBUR RESIDENTIAL MARKET

2010


2012*

24% 25%

19%

Since 2007, Chembur has witnessed the launch of 3,518 residential units, out of which almost 75% or 2,625 units have been sold. 2010 was an

property market for this destination. However, due to the slowdown in the overall Mumbai market, the inventory level in Chembur climbed up to 25% in Q3 2012. Taking cue from the changed consumer appetite, many developers

year.


CHEMBUR RESIDENTIAL LAUNCHES


2012*2009 2010 2011

360

125

1,601

210


CHEMBUR PRICE FORECAST* Figures in `/sq.ft

2012

ChemburPrabhadevi

`36,000

2017E

`27,000

`55,459

`12,000

2009 2011

0%3% 4%

377

20082007

On account of its startegic location in theMMR, overall growth ofemployment in the city willdrive the residentialmarket of Chembur

845

The Eastern Freewayproject and the SantacruzChembur Link Road will

y enhance theconnectivity of Chemburwith island city andwestern zone respectively


CHEMBUR PRICE FORECAST

60,000

54,000

48,000

42,000

36,000

30,000

24,000

18,000

12,000

6,000


2009

Prabhadevi Chembur Discount Margin


Being strategically located within the central zone, Chembur is not only connected with the

the island city zone, western zone and Navi

the destination has connectivity through the

zone. Besides, the mass rapid connectivity is provided by the suburban rail network that

Nariman Point through Mumbai CST.

Freeway Project is one important project that will

be operational by H2 2013.

The Santacruz Chembur Link Road is another

Chembur with the western zone. This 6.45 km.

and end up to Santacruz East thereby becoming a

to the western zone when it is ready in 2013.Connectivity through a mass rapid transport system has a particularly high bearing on the

Chembur and terminating at Wadala is in

be open to public by early 2013. Phase II will

city zone via Wadala. This project will directly link

2010 2011 2012 2013E 2014E 2015E 2016E 2017E20082007

67%

51%

The Chembur-Wadala phaseof monorail project is in an advanced stage ofconstruction and is expected to be operational by early 2013



Distance

Investment Options in Chembur


SELECT PROJECTS


of Chembur with the western zone. Work has been awarded to the contractor but is lagging behind schedule. While the project is unlikely to be

will have a positive impact on prices during this period.

residential market commanding an average price of ` `Chembur residential property sells at a 67% discount. Based on our investment rationale

A CL OR MU PK LEA XRD (BN KA CB )

DAVI OK RHR SO BLI- L

URK L- AIR RE OH AD DNA

LO LEW RE AR P

SHA IV

IW LOR

AN PM OI IR NA TN

7km

8km

km

12km

13km

18km

22km

1600 - 1750 16 - 19.34BHK

1350 - 1700 12.8 - 18.7

1000 - 1150 9.5 - 11.5

5.4 - 7.6600 - 760

3BHK

2BHK

1BHK


Views Dheeraj Jun-14 Group

Brizo Red Brick 132 Dec-14Residency

Mangal Dec-14Moorti Developer

Akshay Akshay Jun-11 Oct-14Paradise Corporation


Ticket Size in ` mn.

Limited land availabilitywill limit the scope of newconstruction in Chembur

Prominentof BKC and Lower Parel arelocated within a distanceof om Chembur

Residential property in Chembur would appreciate

by 125% over the next

5 years


DESTINATIONWADALA

Wadala is a residential market in thecentral zone. Eastern expressway is the arterial road that connects Wadala with other regions of the central zone and also the CBD in the island city zone. The destination is also connected by the suburban train network through the Wadala station. It is surrounded by dense residential developments on the south, north and western side by Parel-Sewri, Matunga and Dadar respectively. Arabian Sea on the eastern side restricts any further real estate development


2007 2008

2000

1500

1000

500

No.

of U

nits


WADALA RESIDENTIAL MARKET

2010


2012*

56%

here.The destination witnessed very limited supply, of just 167 residential units, between 2007 and 2009. However, the consumer perception about the location started improving in 2010 and 2011.During this period almost 1,704 units were launched, many of them being positioned at the high end market. These projects also witnessed healthy absorption at the very initial stage of the launch. At present, the destination has an unsold inventory of 56%, which is at a nascent stage of construction.


WADALA RESIDENTIAL LAUNCHES


2012*2009 2010 2011

72

313


WADALA PRICE FORECAST* Figures in `/sq.ft

2012

WadalaPrabhadevi

`36,000

2017E

`35,000

`55,459

`15,000

2009 2011

95

1,387

20082007

3%

41% 41%

46%

56%

Of the 1,871 residential

units launched in Wadalasince 2007, 1,387 units werelaunched in 2011 alone

Being strategicallylocated, Wadala will

from its connectivity withemployment hubs acrossthe MMR

With a slew of launches in the premium segment, theperception of Wadala as aresidential market has

y improved


WADALA PRICE FORECAST

60,000

54,000

48,000

42,000

36,000

30,000

24,000

18,000

12,000

6,000


2009

Prabhadevi Wadala Discount Margin


The most important proposition of the Wadala residential market is its strategic location in the MMR. Located to the south of the central zone, this destination is at a comfortable commuting distance from the employment centres of the island city zone, central zone, western zone as well as Navi Mumbai. On account of this strategic

market will have a bearing on this destination. Besides, the proximity of 8 km. and 10 km. from

respectively, make it a sought after residential catchment. As a result, new launches in the last two years have been positioned at the high end segment of consumers. This happened because

ultra-modern amenities. This provision enables the destination to provide a lifestyle shift and command a premium price for the residential property in comparison to the surrounding micro-markets.

At present, the arterial Eastern expressway

train network connects the destination with

the Navi Mumbai zone. This strategic location along with established road and suburban train

each zone make Wadala a promising residential market.

infrastructure projects will alter the residential landscape of this destination. The Eastern Freeway Project, which is in advanced stages of construction and is expected to be operational by 2013, will immensely improve the road

Additionally, the mass rapid connectivity through a convenient and modern means of transport will be provided by the upcoming monorail project.

monorail project will connect Wadala with the

namely Lower Parel. While Phase I connecting

2010 2011 2013E 2014E 2015E 2016E 2017E20082007 2012

Wadala residential marketwill due to its connectivity with thepremium ofBandra Kurla Complex (BKC)

The region developmentauthority's intention ofdeveloping Wadala in asimilar manner as BKC willfurther increase theappeal of this destination

Going forward, we expect this destination to follow the established market of Prabhadevi. In comparison to Prabhadevi residential property, the discount has already narrowed down from 70% in 2007 to 58% in 2012.Wadala commands a

price of `15,000/sq.ft., which is a 58% discount to Prabhadevi that commands an average price of`36,000/sq.ft. Based on our investment rationale

years (2013-2017) and come down to 37% by 2017.


Distance Travel time

Investment Options in Wadala

INVESTMENT TICKET SIZE SELECT PROJECTS


Dosti Dosti Group 288 Nov-10 Sep-14Ambrosia

Lodha Group 900 Oct-11 Nov-15Parade

Vishwachand R.K. 100 May-11 Dec-13Sky Developers

Zeon Ajmera 164 Sep-11 Dec-15


5km

8km

10km

13km

15km

18km

21km

1950 - 2700 28.3 - 45.94BHK

1500 - 1900 22.5 - 30.4

1260 -1520 18.3 - 25.1

3BHK

2BHK


B XEA LN PD MRA OCKU ARL

ORLIW

N TA NIRI OM PAN

- KUIR RE LAHD RN OA AD

DAVI OK RH SR BO LLI-

SHIAVER PW AO RL EL


Wadala has the potentialto provide a lifestyle shift, which is possible in projects developed onlarge land parcels thatfacilitate high rise premium developments with plush amenities

Wadala residentialproperty shall appreciate

by 133% during the

next 5 years


HIDDEN GEMRanjanpada

Ranjanpada is a locality in the Navi Mumbai Zone. With absolutely no mass rapid transport, the region has extremely poor inter zone connectivity. The JNPT Road is the only connectivity of Ranjapada with important regions in Navi Mumbai. Currently, the only driver for the real estate development in this destination is the port related activity in the Jawaharlal Nehru Port Trust (JNPT).

The destination is at a distance of approx. 15 km,

of CBD Belapur, Vashi and Airoli respectively. Although these employment centers are at a comfortable distance, the connectivity is a drawback both in terms of the mode of commute and the transit time. Ranjanpada only has a road connectivity to CBD Belapur, beyond which the suburban train connectivity is available. On

on the Uran Road, which connects Ranjanpada to Belapur, remains high. Beyond Belapur, the destination is connected to Vashi through the Palm Beach Road and the Thane-Belapur Road and alternatively by the suburban train network.However, the under construction rail project on Nerul-Seawood-Uran line will move the scale in


* By road

Distance

OLRI IA

V IASH

ELB AD PUB RC

28km

22km

15km

favour of this location. Being a mass rapid mode of transport this suburban train link will reduce transit time and provide last mile connectivity to this destination. The attractiveness of residential market is expected to increase with this

markets in the Navi Mumbai zone. This project is expected to be complete by 2016.

Additionally, the Mumbai Trans Harbour Link (MTHL) project will be a game changer project for this destination. This project will radically change the road connectivity and bring a drastic reduction in travel time between Ranjanpada and the Island city zone. At present, the shortest road connectivity between this destination and Mumbai is through the Vashi Bridge (Sion Panvel Highway). The destination will be amongst the

connectivity with the CBD locations of Nariman

been concluded. The authortiy has shortlistedcontractors so that the work can be commissioned by 2013.

* By road

Current Distance in km.Road Distance post MTHL in km.

55km

40mins

45km

38mins

NA PM OI IR NA TN

R PE AW REO LL


The Mumbai Trans Harbour Link (MTHL) will

y improveonne of

Ranjanpadarevered island

Suburbanonne will

ablish Ranjanpada as a in

nex 4 years

Major Roads

Railway Line

Proposed Metro Corridor I

Proposed Metro Corridor II

South Zone

West Zone

Central Zone

East Zone

North Zone


PUNE MAP


Pune Metropolitan Regionis spread over

1,340 sq.km. and has a

population of 5.05 mn.

MarketOverview


North Pimpri, Chinchwad, Nigdi, Moshi, Dighi

Central Bund Garden Road, Koregaon Park, Deccan, Model Colony, Kothrud, Swargate

South Warje, Katraj, Kondhwa, NIBM Road, Undri

East Kalyani Nagar, Yerwada, Viman Nagar, Kharadi, Wagholi Road, Hadapsar

West Aundh, Baner, Pashan, Bavdhan, Wakad, Hinjewadi, Ravet

North, West, South and East.

North Pune is primarily an industrial area with various Auto & Auto Ancillary and Engineering industries located here. The twin towns of Pimpri and Chinchwad are host to some of India’s leading auto companies manufacturing plants such as Bajaj Auto, Tata Motors, Force Motors and DaimlerChrysler. Additionally, engineering majors

manufacturing sector. Pimpri, Chinchwad, Nigdi and Moshi are some of the prominent residential destinations here.

Central Pune is the commercial heart of the city

Central Business District (CBD) areas of Bund Garden Road, M.G Road, Deccan and Shivaji Nagar. Good physical and social infrastructure,

connectivity with various parts of the city and

the highest property prices in this part of the city. Destinations such as Koregaon Park, D.P Road, Model Colony and Kothrud are some of the primary residential areas here.

Over the years South Pune has emerged as a

Central Pune. People preferring to reside in

Warje are some of the major residential destinations here.

retail market, presence of the Pune airport and proximity to the city centre have resulted in East Pune emerging as the most preferred residential

township and setting up of EON IT Park have

However, the emergence of Hinjewadi in West

setting up campuses in West Pune.

2007 2008 2012*2009 2010 2011


RESIDENTIAL LAUNCH TREND IN PUNE



42,637

33,104

20,433

38,809 40,452

24,866

Development of

Hinjewadi as an

IT/ITeS destination has ledto an unprecedentedgrowth of the westernpart

Since 2007, the city haswitnessed the launch of

200,301 units of

which 154,874 units

have been absorbed tillQ3 2012


2008 2009 2010

200,000

160,000

120,000

80,000

40,000

No.

of U

nits


RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF PUNE

2011 2012*

Development of Hinjewadi as an IT/ITeS destination has led to an unprecedented growth of the western part of the city in the last ten years. Residential locations that are in close proximity to Hinjewadi such as Aundh, Baner, Pashan and

number of IT/ITeS jobs created here. Availability

and excellent road connectivity with the city centre has led to the rapid development of this zone.

Emergence of the IT/ITeS sector along with the setting up of various manufacturing units in Pune over the last decade has resulted in the city’s real estate market expanding in all four directions. Since 2007, the city has witnessed the launch of more than 200,301 units of which 154,874 units have been absorbed till Q3 2012, resulting in 23% remaining unsold. The percentage of unsold units has witnessed an uptrend in the last few years. It has increased from 9% in 2009 to 23% in Q3 2012 as the absorption rate has not been able to match the pace of new launches. The period witnessed the launch of 124,561 units, of which only 86,854 units were absorbed.


Central NorthWest South



2007


East

33% 28%

19%

18%

2%

8%

10%9%

13%20%

23%

33% and 28% of the

under construction units are located in West andEast Pune respectively

Proximity to Mumbai has always been a positive factor for Pune and has enabled it to attract investments from various companies to set up their manufacturing plants here. Auto & Auto Ancillary and Engineering sectors are the largest employers among the various manufacturing industries present in Pune. The emergence of Chakan and Ranjangaon as the new manufacturing hubs in the periphery of Pune has led to the setting up of plants by companies such as Volkswagen, Mahindra & Mahindra, Fiat and Apollo Tyres.

Going forward, we expect the Auto & Auto Ancillary sector to be one of the driving factors for Pune’s growth. We forecast the output of Maharashtra’s Auto & Auto Ancillary industry to grow at an annual average rate of 17% over the

manufacturing plants in its vicinity will


UPCOMING SUBURBAN RAIL NETWORK


Pune Metro Rail Corridor I Station - Wanaz between East and West Pune detailed technical-

feasibility study

Pune Metro Rail Corridor II

Ramwadi - Pune Undergoing 2017-18

Pimpri Chinchwad - Will enhance connectivity between Approval stage Post 2018Shivaji Nagar - North and South PuneSwargate

Over the years, the IT/ITeS sector has emerged the largest employer in Pune and reshaped its real estate market. The setting up of Rajiv Gandhi Infotech Park in Hinjewadi resulted in companies such as Infosys, Wipro, TCS and Tech Mahindra establishing their global delivery centres here. Currently the IT/ITeS sector accounts for 74% of

operational in the coming years.

tremendous growth in the last six years with the

times, from 20.4 mn. sq.ft. in 2007 to 64.7 mn. sq.ft. in Q3 2012. However, the absorption rate has been slowing down with each passing year. This has led to a gradual rise in the vacancy level. The total occupied space as of Q3 2012 stands at 48.2 mn. sq.ft., resulting in a vacancy level of 26%. The slowdown in the IT/ITeS sector coupled with high vacancy levels in the existing stock,



26%74%

ZONE WISE DISTRIBUTION OF OFFICE SPACE STOCK


Central NorthWest South East

46% 32%

14%

5%

3%

Employment Indicators in Pune

Phase I of the metro fromRamwadi to Wanaz is expected to be completed

by 2017-18

Currently the IT/ITeSsector accounts for

74% of the total

ock

46% of Pune's

space stock is located in West Pune

PUNE OFFICE SPACE DYNAMICS

Before2008

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017E


have compelled many developers to delay the launch of new supply by 1-2 years.

Considering this, we expect an additional 25.8

Going forward, we expect the IT/ITeS companies’ preference for Pune to remain high due to the availability of a large talent pool and willingness of employees to relocate here. This will ensure a healthy rate of absorption in the coming years

COST DETAILS

Stamp Duty

Registration `

Value Added Tax (VAT)

Service Tax

STATUTORY COSTSAND MARKET NORMSSTATUTORY COSTS

NORM DETAILS

Time line for property registration

Re-sale before possession Allowed subject to payment of transfer charges

Loading

Brokerage

MARKET NORMS

26.7 mn. sq.ft.

spa ore sted to be absorbed in the next 5 years

90.5 mn. sq.ft. of

spa tobe operational by 2017

Pune residential market has historically been an end-user driven market which has ensured minimal price volatility. However, 2007 onwards investor participation has witnessed an increasing trend with local investors as well as those from Mumbai buying properties in the peripheral areas. This is despite the fact that most of the developers discourage investor participation by restricting re-sale before possession.

Employment growth and infrastructure development will be the primary drivers of the real estate market in Pune in the coming years. However, the impact of infrastructure development will be comparatively low, as most of the upcoming infrastructure projects are still at a very nascent stage and will not be operational before 2018. Growth in employment will be largely from the IT/ITeS sector followed by the manufacturing sector.

North Pune, where majority of the existing

from the growth in the Auto & Auto Ancillary sector. However, the impact of this will be limited as no new units are being set up here due to the paucity of large vacant land parcels and high cost of existing land. The attractiveness of Pimpri Chinchwad as the manufacturing hub is slowly fading out, with many companies shifting their units to alternate cheaper locations. Most of the new manufacturing plants are coming up along the periphery of Pune like Chakan and Ranjangaon which are located 32 km. and 50 km. away from the city centre respectively. Hence, no

will be felt on North Pune.

East and West Pune will accrue the maximum

space stock and 95% of the upcoming stock will be located here. However, within these two zones, the West Zone will account for majority of

Kharadi, Kalyani Nagar, Magarpatta City and Nagar Road. This distributes the demand for residential space evenly across these

PREFERREDZONE IN PUNE

destinations, thereby reducing the preference for any single location. In contrast to this, more than

Hinjewadi. This increases the importance of the destinations that are located in close proximity to Hinjewadi.

in the residential market, as it is primarily dependent on East and West Pune where most of the employment hubs are located. Additionally,

emerging destinations of East and West Pune leaving little room for further appreciation. Similar is the case with Central Pune.

The above mentioned reasons make a compelling case for the preference of West Pune over other zones. Although in terms of social infrastructure West Pune still lags; we expect this gap to be

number of educational institutes, organized retail and entertainment avenues are expected to


WEST PUNEMaharashtra government’s push to the IT/ITeS sector by setting up of the Rajiv Gandhi Infotech Park in Hinjewadi has changed the face of West Pune. Currently, Phase I, II and III of the park are operational with campuses of IT/ITeS majors such as Infosys, Wipro, TCS, Tech Mahindra and Cognizant present here. Apart from this, various companies are operating out of the Dlf Akruti IT SEZ, Blueridge SEZ, Embassy Techzone and Ascendas International Tech Park which together

for further expansion into Phase IV and V are


RESIDENTIAL PROJECT LAUNCH TREND IN WEST PUNE


2007 2008 2012*2009 2010 2011

Re-sale before

possession is not allowedin most of the projects

While 16.8 mn. sq.ft. of

incremental ockwill be added to the WestZone, the East will addonly 9 mn.sq.ft.

The attractiveness of

PimpriChinchwadas a manufacturing hub is slowly fading out, withmany companies shifting their units to alternatecheaper locations

10,513

14,947 13,850

11,150

Karve Road

Paud Road

CHIKHALI

PIRANGUT

LAVALE

AUNDH

HINJEWADI

SUS

PIMPRICHINCHWAD

DEHUROADCANTOMENT

BAVDHAN

PASHAN

BANER

BALEWADI

WAKAD

TATHAWADE

Baner Road

NH4

NH4

PIMPRI

RAVET

NH4

To Khandala

Paud Road

Mum

bai - Pune Expressway

CHINCHWAD

Major Roads

Railway Line

Benchmark location

Top destination

Employment Hubs

WEST PUNE MAP



2007 2008 2009 2010

70,00060,00050,00040,00030,00020,00010,000

No.

of U

nits


RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF WEST PUNE

2011


2012*


markets.

this zone. Destinations along the route to

the launch of 73,035 units. The absorption during

remaining unsold. The unsold units’ percentage

to 22% in Q3 2012. Developers have taken stock

launched in 2012.

EXISTINGINFRA-STRUCTURE

OUTER RING ROAD II & III

outstation vehicles onto this road.

MUMBAI-PUNE BYPASS ROAD

route for the various residential destinations

taken to various locations on this route is marginal. The road provides multiple access

Road. Residential development in West Pune has been centred along the various access points of this road.

4%5%

6%

10%

17%

22%

UPCOMINGINFRA-STRUCTURE

Over the next 5 years,

Hinjewadi is set

to become one of thelargest ace hubs in India

From 2007 to Q3 2012, WestPune has witnessed the

launch of 73,035 units

The unsold units’centage has moved

from 6% in 2009 to 22%in SEPTEMBER 2012



2012

Aundh Hinjewadi

`7,800

2017E

`11,200

`4,000

DESTINATIONHINJEWADI

The growing preference for the walk-to-work concept among the IT/ITeS employees has led to the emergence of Hinjewadi as the most sought after residential location. The presence of various integrated township projects within Hinjewadi takes care of all the necessary requirements of the residents such as education, organized retail and entertainment.

Since 2007, 15,070 units have been launched, of which 11,466 have been absorbed till Q3 2012. The launch of various township projects has ensured a steady supply of new units 2010

onwards, resulting in an increase in the percentage of unsold units with each passing year. Currently the percentage of unsold units stands at 24%.

Going forward, we expect the absorption rate to increase due to the reasons mentioned earlier and this will positively impact prices in Hinjewadi. Currently, Hinjewadi prices are 49% lower than Aundh. We forecast this discount to narrow down to 29% by the end of 2017 resulting in Hinjewadi prices moving up from `4,000/sq.ft. to `8,000/sq.ft.


2007 2008 2009 2010

20,000

15,000

10,000

5,000

No.

of U

nits


RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF HINJEWADI

2011 2012*


RESIDENTIAL PROJECT LAUNCH TREND IN HINJEWADI


2007 2008 2012*2009 2010 2011



17%

12%

14%

18%

28%24%

1,881

975

175

3,750

4,214

4,076

`8,000

We expect Hinjewadi,Wakad, Tathawade andRavet to witness themaximum amount of price appreciation

Currently the percentageof unsold units stands at

24% in Hinjewadi

PRICE MOVEMENT

12,000

10,000

8,000

6,000

4,000

2,000


2013E 2014E 2015E 2016E 2017EBEFORE2008

2008 0920 1020 1120 2012

Hinjewadi Aundh Discount Margin


Investment Options in Hinjewadi



SELECT PROJECTS


MegapolisProperties

LifeRepublic Developers

Blue Ridge ParanjapeSchemes

The Crown Greens Estate

Sovereign Saarrthi 172 Dec-07 Mar-13

Kumar 4000 Mar-08 Dec-13

and ABIL

Kolte Patil 2100 Feb-11 Dec-14

2000 Oct-07 Dec-13

TCG Real 165 Sep-11 Mar-14

Group


1220 - 1800 4.9 - 7.2

860 - 1370 3.4 - 5.5

3BHK

2BHK

2.3 - 3.71BHK571 - 930


49%

29%

We forecast prices in Hinjewadi to increase by

100% from2012 to 2017

Ticket size in Hinjewadi

starts from `3.4 mn.for a 2 BHK


PRICE FORECAST

* Figures in `/sq.ft

2012

Aundh Wakad

`7,800

2017E

`11,200

`4,500

From 2007 till Q3 2012, a

total of 15,570 units

haS been launched of

which12,864 units have

been absorbed in Wakad

DESTINATIONWAKAD

Till a few years back, Wakad was a non-descript place. However, proximity to the Rajiv Gandhi Infotech Park in Hinjewadi has led to many IT/ITeS professionals preferring to reside here as the travel time to work is hardly 10 minutes by road. Additionally, it is well connected with nearby locations such as Baner, Aundh, Pashan and Bavdhan. Despite these reasons, prices in Wakad have been historically at a discount as compared to these nearby locations.

Availability of vast tracts of vacant land attracted the attention of many developers and led to the launch of more than 100 projects in Wakad since 2007. From 2007 till Q3 2012, a total of 15,570 units have been launched of which 12,864 units have been absorbed. More than 50% of the total

units were absorbed during 2007 and 2008. Post 2008, the absorption rate has considerably reduced due to the slowdown in the IT/ITeS sector. Currently, 17% of the total units remain

2007.

Going forward, we expect the absorption rate to remain healthy, as a growing number of IT/ITeS companies have begun to prefer Hinjewadi for setting up their operations. Moreover, the drop in new launches in 2012 will help in reducing the unsold inventory of previous years. The traction expected in Wakad will reduce the price discount from 42% to 23% as compared to Aundh in the

increase from `4,500/sq.ft. to `8,600/sq.ft. by the end of 2017.


2007 2008 2009 2010

15,000

10,000

5,000No.

of U

nits


RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF WAKAD

2011 2012*


RESIDENTIAL PROJECT LAUNCH TREND IN WAKAD


2007 2008 2012*2009 2010 2011



`8,600

4%

7% 7%8%

13%17%

4,234

3,077

1,106

2,576 3,081

1,495

We forecast prices in Wakad to increase by

91% in the coming 5

years

PRICE MOVEMENT

12,000

10,000

8,000

6,000

4,000

2,000


2013E 2014E 2015E 2016E 2017EBEFORE2008

2008 0920 1020 1120 2012

Wakad Aundh Discount Margin

A drop in new launches in

2012 will help in

reducing the unsoldinventory of THE previous years


Investment Options in Wakad



SELECT PROJECTS


PristineProlife Properties

ParkTurquoise Group

KalpataruSplendour

CasaImperia

EliteHomes

Pristine 384 Sep-11 Dec-13

Pride Purple 192 Jun-11 Oct-14

Kalpataru 188 May-10 Dec-13

Aum Housing 290 Jan-11 Dec-13

DNV Builders 376 Mar-11 Feb-13



42%

23%

580 - 950 2.6 - 4.3

800 - 1500 3.6 - 6.8

1470 - 1750 6.6 - 7.9

1600 - 2700 7.2 - 12.2

Ticket sizeS in Wakad start

from `3.6 mn. for a

2 BHK


PRICE FORECAST


2012

Aundh Tathawade

`7,800

2017E

`11,200

`4,300

Tathawade can be considered as anextension of Wakad with

only 4 km. separating

them

DESTINATIONTathawade

Tathawade can be considered as an extension of Wakad with only 4 km. separating them. It is located on the eastern side of the Mumbai-Pune Bypass Road and can be accessed from Hinjewadi through the Dange Chowk Road. Tathawade has similar characteristics as Wakad except that the prices are 5% lower here.

Tathawade is a relatively new residential market with most of the projects launched only during the last three years. Of the 1,415 units launched since 2010, 1,038 units have been absorbed till Q3 2012. Although the percentage of unsold units is currently high, we expect it to fall in the

coming years as the destination will observe an increase in absorption rate and lesser number of new launches.

Tathawade will mirror that of Wakad as these two markets are closely linked together. However, the

the years and prices in Tathawade will be almost equal to that of Wakad by 2017. Similar to Wakad, the price discount in Tathawade as compared to Aundh will reduce from 45% to 24% resulting in prices moving up from `4,300/sq.ft. to `8,500/sq.ft. by 2017.


2010

1,400

1,200

1,000

800

600

400

200

No.

of U

nits


RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF TATHAWADE

2011 2012*


RESIDENTIAL PROJECT LAUNCH TREND IN TATHAWADE


2012*2010 2011



`8,500

4%

22%27%

234

876

305

In the next 5 years, theprice trend in Tathawadewill mirror that of Wakadas these two markets are

closelylinked

PRICE MOVEMENT

12,000

10,000

8,000

6,000

4,000

2,000


2013E 2014E 2015E 2016E 2017E1020 1120 2012

Tathawade Aundh Discount Margin

We forecast prices in Tathawade to increase by

98% in the coming 5

years


Investment Options in Tathawade



SELECT PROJECTS



45%

24%


Elementa AksharDevelopers

GangaAurumPark

The Nook BhojwaniHomes

Palladio VilasJavdekarGroup

850 Oct-10 Dec-14

Goel Ganga 144 Dec-11 Jun-14Deployment

282 Jun-12 Dec-14

150 Sep-11 Sep-13

1250 - 1500 5.4 - 6.5

920 - 1200 4.0 - 5.2

3BHK

2BHK

1BHK590 - 950 2.5 - 4.1


PRICE FORECAST


2012

Aundh Ravet

`7,800

2017E

`11,200

`3,950

We forecast prices in Ravet

to increase by 97% in

the coming 5 years

DESTINATIONRAVET

Ravet, which is further 5 km. north of Tathawade and located on the eastern side of the Mumbai-Pune Bypass Road is another destination that will

employment in Hinjewadi. The destination has historically remained at a discount as compared to Wakad and Tathawade, as it is located farther north of Hinjewadi.

Similar to Tathawade, residential activities in Ravet started post 2010 and a total of 1,744 units has been launched since then. Since the destination is relatively new, the absorption rate has been slow and only 1,216 units have been absorbed till date resulting in 30% of the total

units remaining unsold. However, going forward we expect the absorption rate to increase, backed by the incremental employment in Hinjewadi and lower prices compared to nearby destinations.In the coming years, the price trend in Ravet will mirror that of Wakad and Tathawade as these markets are closely linked together. However, prices in Ravet will continue to remain at a marginal discount compared to these destinations due to its farther location from Hinjewadi. Similar to Wakad and Tathawade, the discount in price of Ravet as compared to Aundh will reduce from 49% to 30% resulting in prices increasing from `3,950/sq.ft. to `7,800/sq.ft by 2017.


2,000

1,800

1,600

1,400

1,200

1,000

800

600

400

200

No.

of U

nits


RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF RAVET


RESIDENTIAL PROJECT LAUNCH TREND IN RAVET


2012*2010 2011


`7,800

2010 2011 2012*


17% 16%

30%

757

272

715

Residential activities in Ravet started post 2010

and a total of 1,744units has been launchedsince then

PRICE MOVEMENT

12,000

10,000

8,000

6,000

4,000

2,000


2013E 2014E 2015E 2016E 2017E1020 1120

Ravet Aundh Discount Margin

Ticket sizeS in Ravet start

from `3.2 mn. For

a 2 BHK


Investment Options in Ravet



SELECT PROJECTS




CelestialCity and Pharande

Spaces

SilverGardenia Construction

SereneScapes

Rama Group 1200 Mar-10 Dec-16

Rohan 240 Nov-11 Dec-13

S. D. Tapkir 138 Jun-11 Jul-13

1178 - 1360 4.7 - 5.4

820 - 1200 3.2 - 4.7

3BHK

2BHK

1BHK700 - 850 2.8 - 3.4

2012

49%

30%

DISCLAIMER

The statements made, information and opinions expressed or provided in this publication are intended only as a guide to some of the important considerations that relate to the real estate sector in India. This report is published for general information only and does not contain or purport to contain all the information that any potential investor, looking to make any investments in India may require. Neither this report nor any other information supplied in connection with the report is intended to provide the basis of any evaluation and any recipient of this report should not consider such receipt a recommendation to make investments into the matter of this report.

Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, neither Knight Frank nor any persons involved, including but not limited to their employees, representatives, advisors or agents in the preparation of this publication give or undertake any warranties (whether express or implied) as to the contents nor accept any contractual, tortuous, legal responsibility or other form of liability for any consequences, loss or damage which may arise as a result of any person acting upon or using the statements. Information or opinions in the publication cannot be accepted for any loss or damage resultant from the contents of this document.

No decision should be made based on this report and

legal, tax and other professional advisors as to the risks and investment considerations arising from an investment in real estate sector in India and should possess the appropriate resources to analyze such investment and the suitability of such investment to such an investor's particular circumstances and the recipients should independently undertake their own diligence and satisfy themselves before making any [investment] decisions. Any decision/ action of the recipient in relation to the subject matter of the report shall be the sole responsibility of the recipient. As a general report, this material does not necessarily represent the view of Knight Frank in relation to any investment in the real estate sector in India.

is not to be the subject of communication or reproduction wholly or in part. By accepting this

disclaims any liability of Knight Frank in relation to any decisions taken by the recipient with regard to matters which are the subject matter of this report, whether or not based upon this report.

All statements by Knight Frank in thisreport that are not statements of historical fact constitute “forward looking statements”. Readers can identify forward looking statements by terminology like “aim”, “anticipate”, “intend”, “believe”, “continue”, “estimate”, “expect”, “may”, “objective”, “plan”, “potential”, “project”, “pursue”, “shall”, “should”, “will”, “would” or other words or phrases of similar import. These forward looking statements and any other projection contained in this report are predictions and involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance and achievements of the

any future results, performance or achievements. There can be no assurance that the expectations will prove to be correct.

Knight Frank expressly disclaims any obligation or undertaking to release any updated information or revisions to any forward looking statements contained

assumptions with regard thereto or any change in the events, conditions or circumstances on which such statements are based. Given these uncertainties, recipients are cautioned not to place undue reliance on such forward looking statements. All subsequent written and oral forward looking statements

their entirety by reference to these cautionary statements.

Factual Data/ Industry and Market Data Factual data, market data and certain industry forecasts used throughout this report have been obtained from market research, publicly available information and industry publications which have been appropriately referenced, the veracity and authenticity of which has not been independently

generally state that the accuracy and completeness of that information is not guaranteed. Similarly, internal surveys, industry forecasts and market research while believed to be reliable, have not been independently

representation as to the accuracy of that information.


kf investment advisory report nov-2012

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