kf investment advisory report nov-2012

INDIA’S TOP RESIDENTIAL DESTINATIONS TO INVEST INInvestment Advisory Report November 2012

This report identifies thetop residentialdestinations in thecountry from theinvestment point of viewover the next fiveyears (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 classes. However, the tradeoff between return and risk in both these asset classes is strikingly different. While equity as an asset class is 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, offers the best combination of returns and risk. 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

INVESTMENT advisory 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 underlying business like profitability, leverage 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 The urban region as defined by the regional development authority

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 zones that are labeled as Central, South, North, West and East

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

Benchmark location Identified based on the nearest price contour, a benchmark location is an established residential 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 zone. With respect to price forecasting for the destination, a benchmark location, preferably 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 property price. Residential markets falling within a contour line command price identified

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 of the five mostpromising cities and zoneswithin them and ‘bottom-up approach’ in theselection of topinvestment destinations

From the perspective of risk, property investment fares better because asset price 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 diversified portfolio. In most cases, investment in 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.

The global financial crisis of 2008-09 has broughtabout 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 estatecannot be a unified one. The dominant factorsthat drive investment returns for both these arediverse to a great extent. Hence, the investmentopinion should take into account each of thesefactors.


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 countryfrom the investment point of view for the next fiveyears (2013-2017). The destinations areresidential markets that we expect willoutperform in terms of the investor returns onaccount of the appreciation in property prices. Wehave developed a framework built on ‘top-downapproach’ in the selection of the five mostpromising cities and zones within them and‘bottom-up approach’ in the selection of topinvestment 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 withparameters that determine an urban centre’sgrowth equips us to develop the framework forthis pioneering report.

While selection of the top residential investmentdestinations remains the core of this report, wealso present five locations, where we expect thereal estate drivers to gather momentum albeitduring the elongated time horizon beyond 2017.These locations have been identified as ‘hiddengems’ in the report.

In most cases, investment in 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


Regional 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

APPROACH FOR IDENTIFICATION OF THE TOP RESIDENTIAL INVESTMENT DESTINATIONS

India

Urban centres

Top 100 cities

Business activity: Banking penetration, hotel room demand, air passenger traffic

Infrastructure development: Current and proposed infrastructure expenditure

Top 100 cities based on population

Employment: Occupied office space, industrial activity

Social & physical infrastructure: Analysis of development plan of respective

authorities and extensive field survey

Connectivity with important locations

Access to social infrastructure

Special factors: Proximity to

premium office space, land availability,

lifestyle shift, planned

development

Top 5 cities

Zone

Destination

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 the cause and effect relationship of such parameters with the growth of residential development in the city.

The population base of a city is a crucial indicator of the potential of its housing market. In the first stage of selection, top 100 cities were identified based on their population. The extent of business activity and thrust on infrastructure development are critical factors affecting the housing market and accordingly these selected 100 cities were studied. Banking penetration, hotel room demand and air passenger traffic were considered as surrogates for business activities and current and proposed infrastructure


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

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 five cities.

With the fundamental prerequisite already in place, these five cities are well prepared to participate in the growth trajectory for the foreseeable future. While a framework was prepared and top cities were identified, our endeavour was even more specific. We have striven to provide a crystal clear view on investment destinations for a typical investor in a residential property. This objective meant identification of residential destinations that 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 direction of such growth. This spilt into different 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 perspective of such selection, which differs 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 identified the driver industries in each zone and 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 quantum of occupied office space at present and for the next five years.

A regression model capturing the impact of change in revenue of driver industry on change in occupied office space was developed. Revenue projections for first two years were based on the revenue guidance by the respective industry associations. Projections for the remaining three years were based on the moving average trend of the preceding five years. Also, the upcoming supply of office space in next five years in all the zones was analysed to understand the balance between the incremental employment and upcoming office space. Thus a crystal clear view 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 the industry was taken as a differentiating element. For instance, employment in software development within the IT/ITeS industry has a different impact on the income profile of employees in comparison to that in the Business Process Outsourcing (BPO) role. This difference in income profile will impact affordability in a diverse manner.

Besides employment, the other important factor from the growth and investment perspective is infrastructure development. Regional development plans and field visits to the zones equipped us to assess the scope of infrastructure

development that will have an impact on residential markets within a zone. We assessed the impact of existing and upcoming physical infrastructure like road, rail and airport projects on the residential markets of each zone. Presence of social infrastructure comprising education, healthcare and recreation was also reviewed.

We selected 1-2 zones having the most promising future on account of the growth in the quantum of occupied office space and incremental infrastructure development. Over the foreseeable future, these preferred zones will be the biggest beneficiaries because they fall in the direction of movement of employment and infrastructure.

Commercial Office Space

IT Sector

Industrial Physical

Connectivity

Basic utilities: Water & Power

Education & Healthcare

Entertainment

Social

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

Non IT Sector

Selection of Destination within zoneAll the residential markets within the preferred zone will benefit on account of the growth in employment opportunities and infrastructure development. However, a few of these will have a comparative advantage over others. A bottom-up approach was adopted to analyse the existing and proposed connectivity and social and physical infrastructure facilities. The approach was modelled based on our field visits to each of the residential markets in the preferred zone and discussions with various stakeholders. This primary survey coupled with our real estate expertise helped us to arrive at the best destinations from the perspective of investment.The destinations have been analysed vis-à-vis a benchmark location which is an established residential locality that has attained a relatively higher saturation level in terms of real estate growth and infrastructure development and is considered to be one of the most sought after residential markets within the zone. The

benchmark location for each destination has been identified based on the nearest price contour. With respect to price forecasting for a destination, a benchmark location, preferably in the same zone, becomes the reference point.

As mentioned earlier, our analytical focus was primarily to understand the state of the subject market’s connectivity with important locations and social and physical infrastructure facilities available currently and also in the foreseeable future. However, in certain destinations there were variations with respect to factors impacting future price movements like:. Proximity to premium office markets: Wadala,

one of the selected destinations in Mumbai, will benefit due to its connectivity with the premium business district of the Bandra Kurla Complex (BKC).

. Limited land availability: Limited land availability will limit the scope of new

Besides the quantum of employment generation in the driver industry, the nature of jobs in accordance with its position in the value chain in the industry was taken as a differentiating element

REAL ESTATE DRIVERS

Business activity Infrastructure

Manufacturing


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 affordable category, on property price was also 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 price. Destinations chosen are definitely the ones 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 investment view, we have quantified the capital 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.

In the first stage, we have forecasted the price of a benchmark location. Empirical evidence indicates that price variation of established residential markets is significantly explained by the changes in economic activities. In line with this, we have conducted iterations to identify the explanatory variables that strongly influenced property price movement in the benchmark locations. India’s economic growth has been identified as the most significant factor explaining the price movements. Regression equations have been estimated for each of the identified benchmark locations and price has been forecasted till 2017.

In the second stage, the price discount of a destination has been forecasted for the next five years. In order to achieve this, we studied the impact of different factors on prices of 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 foreseeable future, the preferred zones will be the biggest beneficiaries because they fall in the direction of movement of employment and infrastructure

continuing with our intention of undertaking a thread bare analysis and providing an unequivocal investment view, we have quantified the capital appreciation and the resultant investor returns 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#6 Medavakkam

#5 Dwarka Expressway

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 established residential markets is significantly explained by the changes in economic activities

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.

Our research indicates that affordability will keep 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 affordability threshold of the target consumer 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 matters is the effective return resulting from the 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 top destinations over a period of the next five years. Property specification and investment size 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%

#2 Hebbal

#1 Medavakkam

#3 Pallikarnai

#4 KR Puram

94%

103%

93%

91%

#4 H

inje

wad

i

#5 T

atha

wad

e

#6 R

avet

#7 W

akad

100%

98%

97%

91%

#1 U

lwe

#3 C

hem

bur

#2 W

adal

a

145%

133%

125%

EAST


in cases where land availability is not a concern, price growth will not breach the affordability threshold of the target consumer group

. 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 promising asset class for the next five years.

. 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 diplomatic enclave will significantly benefit the Dwarka Expressway, placing it in high

KEY takeaways

Risk factors for our outlook

Our forecast for occupied office space relies largely on the service sector led by the IT/ITeS industry. The sector’s revenue growth during the next five years will have an impact on 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 taken as the preceding five year moving average 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

emergence as a significant employment provider in three of the top five cities.

The BFSI industry has a meaningful role in the employment trend in cities like Mumbai and Delhi. We have considered a revenue growth rate of 17-21% based on the preceding five year moving average growth rate for this industry.The employment generated by these industries has a significant impact on our forecast for occupied office space. Hence, any major deviation in their revenue growth will have an adverse impact on our forecast for occupied office space and therefore the fate of the respective destination.

Additionally, in several cases, the fate of the destinations is linked to the delivery of infrastructure projects, which makes our analysis vulnerable to any significant deviation from the progress timeline of such projects.

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 benefit from the growth of the IT/ITeS and Automobile industries in Tamil Nadu during the next five years.

. 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% during 2001-2011, primarily due to a huge influx of IT/ITeS employees.

BENGALURU

4.84 6.54 9.595.2% 3.1% 3.9%

CHIKKABOMMASANDRA

VARTUR

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

Whitefield

B Halli Terminal

MG Road

Gottigere

Boomasandra

Anjanapura/NICE Junction

Nagasandra

Bangalore International Exhibition Centre

Puttenahalli

Mysore Road

Kengri

BENGALURU MAP


Bengaluru Metropolitan Region (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

East Whitefield, Old Airport Road, Old Madras Road, KR Puram

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

The BMR market can be divided into five broad 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 account of a huge influx of population from all over India. Electronic City located on Hosur Road in the south emerged as the first IT hub of Bengaluru in 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 in proximity to the Electronic City like Sarjapur, 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 airport in the north for their expansion. They 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 earmarked large investments; such as KIADB Park, Airport Township - Aerotropolis, Information 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 Bengaluru. Hence it is worthwhile to explore this 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 industries like Hindustan Aeronautics Limited (HAL), BEML and ITI that were instrumental in the growth of this region. With the dawn of the IT sector some of these industries have gradually turned into tech-parks. Proximity to the Outer Ring Road (ORR) coupled with the availability of graded office space attracted major IT/ITeS companies in the eastern zone. This fuelled the expansion of commercial and residential development in this region. Consequently, Whitefield, CV Raman Nagar, Brooke Field, Old Madras Road, Indiranagar, KR Puram, Old Airport Road, Mahadevapura, Hoodi Circle and Sai Baba Ashram emerged as the preferred residential 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*

Old Madras Road, Whitefield Road, ITPL and Varthur Road emerged as a business district having many tech-parks, SEZs, captive campuses and business centres.

Central Bengaluru is the commercial and retail heart of the city with various corporate offices located in micro-markets like the MG Road, Vitthal Mallya Road, Commissariat Street, Ulsoor and Lavelle Road. Excellent connectivity with various parts of the city, good physical and social infrastructure along with the presence of organized retail has ensured the highest property prices in this part of the city. The prominent residential micro-markets of this region include MG Road, Langford Road, Richmond Town, Lalbagh Road, Vitthal Mallya Road, Residency Road and Fraser Town. Majority of the residential developments in the central locations are bungalows and independent residential units, however some pockets like Richmond Town, Richmond Road, Malleshwaram Pipeline Road and MG Road are witnessing growth in multi-storey high-rise constructions as well.

Primarily an industrial hub, West Bengaluru houses one of the largest industrial areas of Asia – ‘Peenya Industrial Area’. There are huge setups of several renowned engineering, transformers, motors and generator companies here. Being an industrial hub, this region was not caught in the IT/ITeS wave of 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 upcoming infrastructure projects viz. elevated expressway, metro and the road connectivity along the Tumkur Road. Micro-markets such as Malleswaram, Yeshwantpur, Rajajinagar, BEML layout, Mysore Road, Nagarbhavi, Basaveshwarnagar, Tumkur Road and Jalhalli West received the necessary impetus for growth.

Growth of the IT/ITeS sector along with the setting 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 2007 in the BMR


changed the dynamics of Bengaluru real estate market. Apart from generating thousands of new jobs for the local residents, Bengaluru has been able to attract 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 in the last five years especially the residential 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 launched since 2007. During the same period 54,687 units were absorbed in the Bengaluru residential market. South and East Bengaluru witnessed a major chunk of launches and absorption during this period mainly on account of their proximity to the IT hub of Electronic City and Whitefield Road. Over the period this region has emerged as a self-sustaining micro-market attracting many IT employees.

9% 11%14%

25%

32%

Pennya industrial estate

spread over 266 acres -

one of the largest industrial areas in Asia

85,808 units

launched and 54,687 units absorbed during 2010 and 2011 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 IT hubs 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 enabled traffic from Mumbai to move directly to Chennai without 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 operational between Byappanahalli and MG Road since Oct 2011

ROAD NETWORK

METRO TRAIN NETWORK

A 33 km. High Speed Rail

Link proposed - will operate between Cubbon Road and Bengaluru International Airport

UPCOMING ARTERIAL ROAD NETWORK

CONNECTIVITY & LENGTH OBSERVATIONS CURRENT EXPECTED STATUS 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 flyovers from Hebbal to the Trumpet Junction near the airport

High Speed Rail Link (HSRL) A 33 km. HSRL has been proposed, Five Post 201633 km. that will connect the city centre with consortiums

the airport. The HSRL will operate shortlistedbetween Cubbon Road and Bengaluru International Airport with two halts in between, one at Hebbal and another at Yelahanka.

Monorail Project Bengaluru Air Rail Link Ltd. (BARL) has Proposed Post 201541 km. proposed 31 km. monorail from JP

Nagar (south) to Hebbal (north) and 10 km. between Peripheral Ring Road (PRR) and Magadi Road. This project will function as a feeder service to metro rail as well as the international airport

Peripheral Ring Road (PRR) A 116 km. PRR has been proposed, it Pre-feasibility Post 2016116 km. will connect the entire peripheral stage

arterial road linking all the major highways and the district roads. Major connecting area would be Hosur Road to Tumkur Road via KR Puram, Bellary Road, Old Madras Road and Sarjapur Road. The PRR is expected to ease the congestion on the ORR

Bengaluru Metro Rail Phase I a) A 24 km. North-South (NS) metro Under 2014-1542 km. corridor has been proposed, it will construction

connect Hesaraghatta circle (in north) with Puttenahalli (in south)

b) An 18 km. East-West (EW) metro corridor has been proposed, it will connect Byappanahalli with Mysore Road (Reach I, a 6.7 km. part of the EW corridor, connecting Byappanahalli with MG Road is operational since October 2011.)

Bengaluru Metro Rail Phase 2 a) Phase II envisages extension of the In-principle Beyond 201672 km. Metro Phase I, on the NS corridor. To approval

the north it will be extended upto received from Bengaluru International Exhibition the Govt. ofCentre (BIEC) and to the south it will be Karnataka. extended upto NICE Junction Awaiting

approval fromb) EW corridor is planned to be the Urbanextended upto Whitefield to the east Development and Kengeri to the west. Department

Ministryc) Further, two new lines have been planned in Phase II, one connecting


A 116 km. Peripheral Ring

Road proposed - connecting Hosur Road to Tumkur Road via KR Puram, Bellary Road, Old Madras Road and Sarjapur Road

Over 2,000 IT & ITeS

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


CONNECTIVITY & LENGTH OBSERVATIONS CURRENT EXPECTED STATUS 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

the traffic flow between North and 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 traffic flow

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 organizations, scientific establishments, aerospace and telecommunication companies. It also has renowned Indian educational institutions offering a plethora of job opportunities. 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 generates software exports worth `700 bn.

650,000 IT

professionals directly employed in Bengaluru

IT/ITeS and Bio-technology sector are the driving factors for Bengaluru's growth

Silk Board junction. This region houses many renowned tech-parks, IT/ITeS SEZs and captive campuses of Fortune-500 IT companies. Micro-markets along Whitefield, Electronic City, ORR, Sarjapur and Bannerghatta Road have developed into self-sustaining hubs. East Bengaluru has over 37 mn. sq.ft. of office space. Apart from the large campuses of IT/ITeS companies such as Dell, TCS, L&T Infotech, GE, HP and iGate, there are numerous standalone commercial office buildings like Brigade Metropolis, Prestige Shantiniketan, Embassy Crest, ITPB, GVR Tech Park, SJR iPark and Salarpuria Tech Park across the IT hub of Whitefield in East Bengaluru.

Electronic City Industrial Park located in the southern region is spread over 330 acres having over 45 mn. sq ft. of office space including the captive offices. It is divided into three phases, of which one is completely dedicated to the bio-technology sector, while the other two pre-dominantly house IT/ITeS sector companies. Major companies having offices here are Infosys, Wipro, HCL, Genpact, Siemens, TCS and Mahindra Satyam. Non-captive commercial office spaces include SJR Equinox, Harita IT Park, Global Tech Park, SVR Fortunae and Hiranandani Upscale.

The ORR stretch between Hebbal to Silk Board Junction acquired importance with the commencement of the Bengaluru International Airport in 2008 in Devanahalli. This stretch serves as a main junction between the airport and the established IT hub of Bengaluru i.e. Electronic City and Whitefield. This stretch has large multi-tenanted IT parks. Major IT parks include Manyata Embassy Business Park, Salarpuria Supreme, Cessna Business Park and Prestige Tech Park.

The country’s IT/ITeS sector grew at an annual rate of 22.5% to `1,474bn. during 2004-2011 and is estimated to reach 3,000bn. by 2017. As per NASSCOM, the IT/ITeS sector has created tremendous job opportunities, generating over 11 mn. direct and indirect jobs. It is estimated that the sector would create over 14 mn. by 2015 and close to 30 mn. jobs by 2030. Bengaluru forms one-third of the country’s total IT/ITeS revenues. We expect Bengaluru to continue its growth trajectory in-line with the country’s IT/ITeS growth. Further, the Government of Karnataka proposes to increase employment opportunities in the software export field to about 2 mn. by 2020 from 0.65 mn. at present.

With the strengthening of the global economy, robust domestic fundamentals and easy availability of skilled human capital the IT/ITeS industry here is expected to grow significantly in the coming years.

`

IT/ITeS sector constitutes 70% of the total office

space in Bengaluru

OFFICE SPACE BREAK-UP


BENGALURU OFFICE SPACE DYNAMICS

before2008

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


70% 30%

160

140

120

100

80

60

40

20

ZONE WISE DISTRIBUTION OF OFFICE SPACE STOCK

27%

12%

36%

15%

11%


Central West South East North

Currently the total office space stock in Bengaluru is 92 mn. sq.ft. of which 79.80 mn. sq.ft. is occupied

2 mn. direct and indirect

JoBS TO BE GENERATED BY 2020 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 higher VAT rate. Effectively, taxes are higher in comparison to Mumbai and Pune

MARKET NORMS

BIO-TECHNOLOGY SECTOR

India is ranked among the top 12 biotechnology destinations in the world and third largest in the Asia-Pacific region. The Government of Karnataka is committed to establishing a Biotech corridor for the development of the biotech industry in Karnataka. The corridor in Bengaluru shall extend from the Indian Institute of Science to the University of Agricultural Sciences. Karnataka has a large number of biotech companies, such as AstraZeneca India, Biocon India, Cadilla, SmithKline Beecham and Wockhardt.

The Indian Bio-technology Sector is expected to grow to USD 10 bn. by 2015 from USD 4 bn. posted in fiscal 2010-11. Bengaluru has emerged as a Biotech capital of India, accounting over 40% or USD 1.6 bn. of the country’s total revenues. Of the 380 biotech firms across the country, 52% or 198 are located in Karnataka and 50% or 191, are in Bengaluru owing to rich human capital and cost advantage over peers overseas. Currently the total office space stock in Bengaluru is about 92 mn. sq. ft. of which 80 mn. sq. ft. is

USD 10 bn. the size of

Indian Bio-technology sector by 2015. Current size USD 4 bn.


occupied, resulting in a vacancy level of 13%. Bengaluru retained the top slot for the highest office space absorption in the country in FY 2012, despite global uncertainties looming large on the horizon. The city’s office market clocked absorption of almost 12 mn. sq. ft. during FY 2012, translating into an increase of 10% over the absorption witnessed in FY 2011. The IT/ITeS industry still remains the key demand driver for office space in Bengaluru. Going forward, we expect another 50 mn. sq. ft. of new office space to be added to the existing inventory in the next five years, taking the total stock to 141 mn. sq. ft. by the end of 2017.

The recent slowdown witnessed by the IT/ITeS sector globally, is expected to impact the incremental absorption of office space in Bengaluru in the ensuing years. However, a delay in the delivery of new projects will lower the vacancy levels to 12% by the end of 2017. We have forecasted an incremental demand of 44-45 mn. sq. ft. over the next five years taking the total occupied space in the city to 124 mn. sq. ft. by the end of 2017.

COST DETAILS

Stamp duty 5% (On ready reckoner rate)

Registration 1% (upto a maximum of `30,000)

VAT 7% (on agreement value)

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

STATUTORY COSTS AND MARKET NORMSSTATUTORY COSTS

380 biotech companies

in India - 50% alone in Bengaluru

40% of the country's

bio-technology sector contributed 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

Whitefield

B Narayanapura

Mahadevapura

CV Raman Nagar

Brookefield

Hudi

KIADB ExportPromotion Area International Technology

Park Bangalore (ITPB)

EPIP Zone


EAST BENGALURU MAP

HEBBAL

Yelahanka Satellite Town

NORTH BENGALURU MAP

Major Roads

Proposed Metro

Airport

Railway Line

Benchmark location

Top destination

Employment Hubs

bengaluru dominance in the

BPO/KPO sectors have won it a place in the dictionary as ‘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 as the Fortune-500 companies set-up their offices 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 City (south) and Whitefield (south-east) region. 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 Nagar, Jaya Nagar, Whitefield, Varthur, 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 biggest beneficiaries of the BIA and expect them 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.

PREFERRED ZONES 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 next five years mainly on account of its proximity to the airport, connectivity with the city centre and upcoming social infrastructure.

East Bengaluru in itself is a well-developed and self-sustaining zone. At its core, Whitefield as a 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 corridor of Whitefield and ITPB. It also has a well-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 Road. Hence markets like KR Puram, Whitefield, 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 witness good traction over the next five years.


NORTH BENGALURUThe 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 under process. This can sustain higher traffic due to airport expansion and expected real estate developments on either side of the NH-7. Further,

South Bengaluru micro-markets lost its charm post the commencement of the Bengaluru International Airport in North Bengaluru

We anticipate North and East Bengaluru to be the biggest beneficiaries of the BIA and expect them to emerge as the new Central Business Districts (CBD) of Bengaluru within the next decade

`1,150 bn. Investment earmarked for North 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 corporates to set-up their units/offices in North 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 in setting up their offices in the ITIR. Over 1.2 mn. people are expected to get direct employment from the ITIR and over 2.8 mn. indirect employment. Employment due to the ITIR in itself speaks about the growth of this region. These developments are expected to completely change North Bengaluru from an unexciting location to a bustling self-sustaining city.

Growth of the residential market in this zone has been primarily along the Outer Ring Road (ORR) such as Hebbal, Sahakara Nagar, Dollar’s Colony, RT Nagar, Banaswadi, Mahadevapura and Nagwara. However, post commencement of the BIA in 2008, the stretch from Hebbal to BIA is


2007 2008 2009 2010

50,000

40,000

30,000

20,000

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.

As on September 2012, North Bengaluru has witnessed a total of 42,329 residential units being launched since 2007. Of this a total of 28,785 units have been absorbed resulting in 32% remaining unsold. Over the years, unsold units have risen mainly on account of low pace of absorption due to uncertain global markets. Announcement of new projects has come down in the first 9m of 2012, as only 5,075 units have been launched against the 13,355 units launched in 2011. The excess supply from the previous years has had an adverse impact on the unsold units’ percentage.


2007 2008 2012*2009 2010 2011


RESIDENTIAL PROJECT LAUNCH TREND IN NORTH BENGALURU


7,0695,608

3,953

13,355

5,075

7,269

12%14% 14%

15%

27%

32%

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 North Bengaluru

Existing Infrastructure

HEBBAL TO BIA ROAD

A 3.72 km. six-lane elevated road over the existing road is under construction. The project will have a series of seven flyovers from Hebbal to the Trumpet Junction near the airport. The elevated road starts from the Kodigehalli gate and connects to the international airport. This project by the National Highway Authority of India (NHAI) is at various stages of construction from Hebbal to the Yelahanka railway-under-bridge. It will also have flyovers and underpasses. Once the project is completed it will enhance connectivity with the city centre and the drive to the airport will become seamless and signal-free. This project is expected to reduce the travel time between Hebbal to BIA from 45 minutes to 20-25 minutes.The project is expected to be ready by 2013. The Doddaballapur Road, Hennur Road, Yelahanka and Hebbal areas that are connected with the International Airport Road are now hotspots for property development.As per the project plan, the 3.72 km. stretch from the Hebbal flyover to the beginning of Yelahanka Bypass (near GKVK) will be an elevated stretch. From the Yelahanka Bypass to the Trumpet inter-change (the gateway to BIA), all the major

OUTER RING ROAD (ORR)

Outer Ring Road popularly referred to as the ORR is a stretch connecting Hebbal in the North and Silk Board Junction in the South. This 62 km. stretch has been developed as an IT growth corridor in the last ten years. The ORR stretch can be further classified into four parts based on its respective characteristics as a) Hebbal - KR Puram b) KR Puram - Marathahalli c) Marathahalli – Sarjapur Road and d) Sarjapur Road – Silk Board Junction. Of these (a) and (b) form part of north-east Bengaluru and (c) and (d) form part of south-east Bengaluru. The new growth corridor for IT development opened up in Bengaluru only in 2002 after the completion of the ORR. The ORR now accounts for almost 35% of the total office space of Bengaluru. Proximity to the airport and


Upcoming Infrastructure

to the commercial hub such as Manyata Tech Park, RMZ Ecospace, RMZ Ecozen, Salarpuria Supreme, Cessna Business Park, Ferns Icon, and Bagmane World Technology Centre has made this pocket the most sought after destination. Growth of the residential market in this zone has been primarily along the ORR such as Hebbal, Sahakara Nagar, KR Puram, Whitefield, CV Raman Nagar, Indiranagar, Marathahalli, Bellandur, Varthur Road, Dollar’s Colony, RT Nagar, Banaswadi, Mahadevapura and Nagwara. The Doddaballapur Road, Hennur Road and Hebbal areas that are connected with the international airport road are now hotspots for property development.The plan to make the Outer Ring Road (ORR) a signal-free, seamless corridor will have far-reaching implications on the growth along its route.

junctions will be made signal-free. Towards the end, two flyovers will come up at the Kogilu Cross and Vidyanagar junctions, while four underpasses will come up at other crucial junctions.

ELEVATED CORRIDOR FROM CENTRAL SILK BOARD JUNCTION TO JAYAMAHAL ROAD

A 15 km. elevated corridor connecting Central Silk Board Junction with Jayamahal Road is envisaged to ease the traffic flow between North and South Bengaluru. This will also facilitate in reaching the new international airport in the North.

MONORAIL

A 31 km. monorail has been proposed by the Bengaluru Air Rail Link Ltd. (BARL) that will connect JP Nagar (in south) with Hebbal (in the north). After completion, this project will function as a feeder service to the metro rail as well as to the international airport.

ORR accounts for almost 35% of the total office

space of Bengaluru.

Hebbal to BIA road project is expected to reduce the travel time between Hebbal to BIA from 45 minutes to 20-25 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.

Since 2008 over 7.5 mn. sq. ft. of office space including captive offices has been constructed in

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 to the BIA. These significant projects will add 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 to generate direct and indirect 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.

North Bengaluru. Over the next five years 9.6 mn. sq. ft. of office space is expected to be added to the existing inventory thereby taking it to 17.1 mn. sq. ft. by the end of 2017. However, demand is expected not only from the IT/ITeS sector but also from the aerospace sector, logistic companies and financial sectors. Excessive demand for quality office space has kept vacancy levels in lower single digits in 2011 and we expect it to remain at that level till 2017. We forecast an incremental 7.3 mn. sq. ft. of office space to be absorbed over the next five years.

Preference of the companies to be in close proximity of the airport, and employees’ preference to stay closer to their workplace will overall drive the demand for commercial as well as residential real estate in this location.


before2008

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

20

18

16

14

12

10

8

6

4

2

NORTH BENGALURU OFFICE SPACE DYNAMICS

EAST BENGALURUEast Bengaluru had similar characteristics as that of Bengaluru city. Being a nondescript zone until the mid 1990s, the region gained prominence only after the IT boom of the 1990s. Proximity to the city centre and huge availability of land attracted many IT/ITeS companies here. Over 30 mn. sq. ft. of IT/ITeS space is operational as of June 2012. Major IT/ITeS hubs like Salarpuria Hallmark, ITPB, RMZ Ecospace, Prestige Shantiniketan and Bagmane World Centre have made this pocket of Bengaluru the preferred residential location by IT population. Further, with the growth of population, this region had a great deal of social infrastructure to provide entertainment options to the residents. Growth of the residential market in this zone has been primarily along the Whitefield Road, KR Puram, Old Madras Road, Old Airport

Road, ITPL, CV Raman Nagar, Mahadevapura, Hoodi Circle and Indira Nagar.

As on September 2012, East Bengaluru has witnessed a total of 23,689 residential units being launched since 2007. Of this a total of 15,946 units have been absorbed resulting in 33% remaining unsold. Over the years, unsold units have risen mainly on account of low pace of absorption due to high number of launches. Announcement of new projects has continued with its high momentum and 9m 2012 witnessed the launch of 5,415 units as compared to 6,400 units launched throughout 2011. Excess supply from the previous years has an adverse impact on the unsold units’ percentage.


RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF EAST BENGALURU

2007 2008 2009 2010

25,000

20,000

15,000

10,000

5,000

No.

of U

nits


2011


2012*

0%4% 4%

10%

21%

33%

Currently the total office space stock in North Bengaluru is 7.7 mn. sq.ft. of which 6.26 mn. sq. ft. is occupied

23,689 units launched

and 15,946 units absorbed since 2007 in East Bengaluru

Over 30 mn. sq. ft. of

IT/ITeS space is operational as of June 2012 in East Bengaluru

We expect another 9.5

mn. sq.ft. of new office space to become operational 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 Byappanahalli and terminate at Whitefield 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 Vidyalaya and Whitefield.

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 near Devanahalli in the north. The first route - 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-75 near Baiyappanahalli off the Old Madras Road. 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, Whitefield Road, ITPB, Hoskote Industrial 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 proposed under Phase-II of the Bengaluru Metro

The new metro line stretch, a part of East-West corridor, will start from the Byappanahalli and terminate at Whitefield on the East


EMPLOYMENT HUBS IN EAST BENGALURU


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. ft. office space was occupied as of June 2012. Major IT/ITeS hubs in this region include Salarpuria Hallmark, ITPB, RMZ Ecospace, Prestige Shantiniketan and Bagmane World Centre. The overall demand for this location will be driven by two major characteristics, a) IT/ITeS employees’ preference to stay close to their workplace and b) well established social infrastructure including organized retail market. The proposed PRR will enhance connectivity of all the industrial hubs of Bengaluru. One node of this PRR is Hoskote - an upcoming industrial and

automobile hub. Many Japanese companies have evinced interest in setting up their plants here. Since 2008 more than 37 mn. sq. ft. of office space has been constructed in Eastern Bengaluru. Over the next five years we expect over 24 mn. sq. ft. of office space to be added to the existing inventory taking the total stock to 57 mn. sq. ft. by the end of 2017. IT/ITeS sector remains the single largest demand driver for these spaces. Currently 20% of the office space in the region is vacant and this is expected to reduce to 16% by 2017. We forecast an incremental 20 mn. sq. ft. of office space to be absorbed over the next five years.

INVESTMENT DESTINATIONS 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 and Whitefield Road near KR Puram makes these destinations an ideal residential location. Additionally, connectivity of the eastern region with the northern region through ORR and that of the city centre with the airport in the north through NH-7 (Bellary Road) have improved the commuting experience. Further, the upcoming PRR which is expected to connect all the peripheral districts will ease connectivity from the 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 centre to the airport. These destinations will benefit immensely from the above mentioned 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 terms of connectivity among different locations within the city and reduce the commuting time. These factors will have a considerable impact on the real estate prices across the city. However, the price appreciation will not be uniform across the city and will vary based upon various themes.

We believe that over a period of the next five years North-East Bengaluru will provide the highest appreciation compared to other zones. Based on the announced infrastructure projects, coupled with proximity to the IT corridor, we have short-listed two destinations that look promising in this zone viz. Hebbal and KR Puram. These destinations share some common characteristics among themselves making them ideal residential

Since 2008 more than 37

mn. sq. ft. of office space has been constructed in East Bengaluru

We expect another 24 mn. sq.ft. of new office space to become operational by 2017

We believe Hebbal and KR Puram to provide the highest appreciation in Bengaluru market


destinations. These destinations are in close proximity to the IT corridor of Hebbal, Whitefield 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 of 44.4 mn. sq. ft. of office space over the next five years, primarily driven by the IT/ITeS 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 North and Whitefield and ITPL in the East; b) quick and easy accessibility to the city centre and retail hubs for daily requirements; and c) 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 office space to be in North and East Bengaluru

Bio-technology industry in Karnataka is estimated to grow at 10% CAGR from USD 170mn. 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

DESTINATION HEBBAL

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 connecting different parts of the city. This will be 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 for investment in Hebbal for a 2 BHK and 3 BHK Apartment respectively


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


DESTINATION KR PURAM

KR Puram located on NH-75 off the Old Madras Road is 3.1 km. from Baiyappanahalli Metro station and is just 8.2 km from MG Road. Its proximity to the IT corridor of Whitefield as well as of Manyata Tech Park has made it the most sought after destination among the IT employees. The proposed Peripheral Ring Road (PRR) will connect Eastern Bengaluru with Hoskote which is 18 km. from the KR Puram. Widening of the Old Madras Road Highway to eight-lane has enhanced the connectivity; the commute time to ITPL near Whitefield has reduced to 15-20 minutes. Hence, KR Puram-Budigere Cross stretch has emerged as a good destination. Proximity to the IT hub of Whitefield, improved connectivity with the airport and proximity to the Byappanahalli metro rail hub have generated interest among prospective buyers.

Over 3,600 units were launched since 2008 in KR Puram micro-market. This led to an increase in unsold units, which as a percentage to total inventory kept on rising since 2009. As on September-2012, 28.6% of the total units stood unsold in KR Puram as there is still some supply overhang of the previous year.

We have benchmarked KR Puram with Whitefield which is one of the most established micro-markets of East Bengaluru. Going forward, we expect the absorption rate to increase due to the factors stated earlier and this will positively impact prices in KR Puram. Currently, KR Puram prices are 37% lower than the established market. We forecast this discount to narrow down to 15% by the end of 2017 resulting in KR Puram prices moving up from `3,245/sq.ft. to `6,200/sq.ft.


2007 2008 2009 2010

7,0006,0005,0004,0003,0002,0001,000


RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF KR PURAM

2011 2012*

6,095 units launched

in KR Puram since 2007, of which 42% launched in last 33 months

No.

of U

nits


CONNECTIVITY TO IMPORTANT LOCATIONS

Distance Travel time

By Road (Existing) By Metro Rail (Proposed)

Whitefield Whitefield

13km

52mins

13km

26mins

1,290

881

254

1,1181,019

414


17% 17%16%

22%

25%

29%

Over the next five years, we expect KR Puram to follow Whitefield in terms of 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 for investment in KR Puram for a 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 Whitefield Discount Margin


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



2012

KR PuramWhitefield

`5,175

2017E

`6,200

`7,370

`3,245

37%

15%

Investment Options in KR Puram


HIDDEN GEM Yelahanka

CONNECTIVITY TO IMPORTANT LOCATIONS FROM 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 have already built-in the benefit arising out of the 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 located further north of Hebbal is at a distance of 19 km

Yelahanka is still short of social infrastructure and basic amenities

Bengaluru International Airport Area Planning Authority formed by Government of Karnataka

Destination gained prominence only after the commencement of Bengaluru 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 Metropolitan Region is spread over 1,189 sq.km. with a population of

8.7 mn.

Market Overview


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 city with various corporate offices located in 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 resulted in increased demand for affordable 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 has witnessed the launch of

more than 105,236 units 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 last five years, especially the residential segment 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 in a significant jump in the unsold units’ percentage.

The percentage of unsold units during the firstnine 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


33,938 units were absorbed during 2010 and 2011

65% of the under construction units are located in South Chennai

Real Estate Drivers



Service Sector

IT Sector


Auto & Auto Ancillaries

Rail Network

Chennai Metro Corridor I & II

Monorail Corridor I, II & III


Outer Ring Road

Road Network

IT/ITeS sector constitutes 71% of the total office

space in Chennai


CONNECTIVITY DESCRIPTION

Chennai-Kolkata

Anna Salai

Old Mahabalipuram

Road (OMR)

Chennai-Bangalore

East Coast Road

Starts at Basin Bridge till Kottur Connects Chennai Port with North Chennai

Highway (NH 5)

Starts at Fort St. George towards the Provides easy access from the city centre to

GST Road (NH 45) south west via airport till Mahindra suburbs in the south such as Tambaram,

World City Vandalur, Maraimalai Nagar and

Singaperumalkoil

Starts at Madhya Kailash junction Also known as the IT corridor, connects the

towards the south via Sholinganallur city centre with southern suburbs such as

till Mahabalipuram Perungudi, Siruseri and Kelambakkam

Starts from Chennai Central Station Connects western markets such as

Highway (NH 4) via Sriperumbudur till Bangalore and Sriperumbudur with the city centre

Sholinganallur till Mahabalipuram Running parallel to the OMR, connects the

till Mahabalipuram coastal locations of South Chennai



MRTS

South West

Line

North Line

West Line

Chennai Beach - Tambaram - Running parallel to GST road, connects city

Chengalpet centre with Mahindra World City via Tambaram

and Maraimalai Nagar

Chennai Beach - Thiruvanmiyur Provides easy connectivity from Velachery via

- Velachery Tidel Park and Taramani to city centre

Chennai Central - Ennore - Connects the northern part of Chennai with

Gummidipoondi Central Chennai via Tondiarpet

Chennai Central - Avadi - Tiruvallur Connects North Western markets of Ambatur

and Avadi with city centre


Currently Chennai is

connected through

5 major arterial roads and

4 suburban rail networks

Most of the upcoming infrastructure projects will be operational before

2017


CONNECTIVITY DESCRIPTION CURRENT EXPECTED STATUS 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


Chennai Monorail Corridor I

Chennai Monorail Corridor II

Chennai Monorail Corridor 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 Will connect the heavy traffic route Under 2015Corridor II Station - between city centre and St. Thomas Construction

Annanagar - MountVadapalani - St. Thomas Mount

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

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

Poonamallee - Enhance connectivity of Poonamallee as Bidding 2016-17 Vadapalani 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 and Automobile sectors to be the driving factors for Chennai’s growth



Central West South

18%

76%

6%

Apart from Auto & Auto Ancillary, there are

various other manufacturing industries like

Electronic Hardware, Apparels, Engineering and

Chemicals that have a significant presence in

Chennai’s periphery. Companies such as Nokia,

Samsung, Motorola, Flextronics, Dell, Asian

Paints and Saint Gobain have their production

units located in West and South Chennai.

Going forward, we expect the Auto & Auto

Ancillary sector to be one of the driving factors for

Chennai’s growth. We expect the output of Tamil

Nadu’s Auto & Auto Ancillary industry to grow at

an annual average rate of 24% over the next five

years. Since a large number of manufacturing

plants are located within the vicinity of the city,

Chennai will immensely benefit from this.

respite

and eventually reduce the vacancy levels to 20%

by 2017. We have forecasted an incremental

demand of 21.1 mn.sq.ft. over the next five years

taking the total occupied space in the city to 66

mn.sq.ft. by 2017 end.

Since 2000, the IT/ITeS sector has emerged as

one of the most important drivers of employment

and has significantly contributed towards the

growth of the city.

Unlike manufacturing, IT/ITeS sector creates large

scale white collar employment with higher

purchasing power. Blue chip companies like TCS,

Infosys, Wipro, Capgemini, HCL and Cognizant

have established their centres in the city.

Currently the IT/ITeS sector forms more than 70%

of the total office stock and this share is expected

to go up further as new IT/ITeS offices become

operational in the coming years.

Currently the total office space stock in Chennai

is 60.7 mn.sq.ft. of which 67% or 40.4 mn.sq.ft.

has become operational post 2008. However, the

total occupied space stands at 44.8 mn.sq.ft.

resulting in a vacancy level of 26%. Although the

absorption trend witnessed over the previous five

years has been quite healthy, excess supply of

new space has led to a significant jump in

vacancy levels. The high vacancy level in the

existing stock has compelled many developers to

strategically delay the delivery period of the on-

going under construction projects and postpone

the launch of any new projects. Considering this,

we expect another 22 mn.sq.ft. of new office

space to become operational in the next five

years taking the total stock to 82.6 mn.sq.ft. by

the end of 2017.

The recent slowdown witnessed by the IT/ITeS

sector globally is expected to impact the

incremental absorption of office space in Chennai

in the coming five years. However, the delay in

delivery of new projects will bring some

Currently the total office

space stock in Chennai is 60.7 mn. sq.ft. of which

44.8 mn. sq.ft. is occupied



CHENNAI OFFICE SPACE DYNAMICS

Before2008

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


* Figures in mn. sq.ft76% of the total office

space stock is located in

South Chennai

We expect another

22 mn. sq.ft. of new office

space to be operational in

the next 5 years

COST DETAILS

Stamp Duty 8% on Undivided Share (UDS) of land based on Guidance Value (GV). GV is the

rate of land fixed by the state government based on its market

value. The effective rate of stamp duty is 1-2% of property value

Registration 1% upto a Maximum of `30,000

Value Added Tax (VAT) Nil

Service Tax 3% on agreement value. Levied on under construction properties


NORM DETAILS

Time line for property

registration

Re-sale before Allowed subject to payment of transfer chargers to developer ranging

possession `100-200 psf

Loading 30% on carpet area

Brokerage 1-2% of property value

Any time until possession

MARKET NORMS

Historically Chennai’s residential market has

been dominated by end-users with very little

presence of investors, resulting in lower price

volatility as compared to the markets of Mumbai,

the NCR and Bangalore. However with the advent

of IT/ITeS sector and rising income levels, the

perception towards real estate as an investment

has changed drastically in the city over the last

few years. Although end-users still form a

majority of property buyers even today, there has

been a considerable rise in investor interest in the

recent period.

However, certain zones will grow faster than the

others as the benefit of these factors will accrue

more to these zones. Incremental employment

Employment growth and

infrastructure development will primarily drive the

real estate market of Chennai in the coming

years.

Preferred Zone in Chennai

over the next five years will be largely created in

South and West Chennai as the majority of the

new office space and manufacturing units is

being set up here. Although Central Chennai will

also witness increase in office space, the

quantum of it will be marginal in comparison to

the South and West. Similarly, absence of any

significant incremental employment generation in

North Chennai over the next few years will restrict

the growth of real estate in this zone.

West Chennai is expected to immensely benefit

from the large number of existing and upcoming

manufacturing units on the Sriperumbudur-

Oragadam industrial corridor. However, absence

of any significant IT/ITeS offices apart from the

DLF IT SEZ makes this zone depend largely on the

growth in the manufacturing sector.


Although

Central

Chennai will also witness increase

in office space, the quantum

of it will be marginal in

comparison to the South

Absence of any significant

incremental employment

generation in

North

Chennai

over the next few years

will restrict the growth

of real estate in this zone

South Chennai, which

will host three-fourth of the total office stock, is expected to witness maximum growth in the residential market over the next 5 years

Although the manufacturing sector is expected to grow strongly, going forward, this zone will not be able to reap the benefit of large scale 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 total office stock in Chennai along with the large 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 close to their work place and affordable pricing as 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, absorption during the first nine months of 2012 has been abysmally low.


GST road, is expected to witness maximum growth in the residential market over the next five years. Heavy traffic congestions and absence of any mass rapid transport system on the IT Corridor of OMR has resulted in many employees’ preferring to stay close to their offices in this 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 benefit the residential market of South Chennai.

68,914 residential

units have been launched in South Chennai since 2007. Of these, a total of 50,666

units have been absorbed as 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

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Old

Ma

ma

lla

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SH 121

SH 121

Gre

at

Sou

the

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Tru

nk

Ro

ad

Great

So

uther

n

Tru

nk

Ro

ad

Chen

na

iB

ypas

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Old

Mah

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ipur

amRo

ad

East

Coa

st R

oad

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st R

oa

d

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Ma

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lip

ura

m R

oa

d

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tC

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t Ro

ad

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cher

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oad

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Road

Velachery Road

Great

South

ern

Tru

nkRoad

Sardar Patel Road

NH45

NH45

NH45

NH4

NH45

To M

amal

lap

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m

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all

ap

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To C

he

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TAMBARAM

GUDUVANCHERI

VELACHERY PALLAVARAM

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 and SIPCOT IT Park are the two landmark office 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 of the first major developments on this road. 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 finally merges with OMR at Mahabalipuram. Since 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. With the absence of any significant office space, 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 as the first segment.

Proximity to the city centre, presence of an established office market and access to retail malls has enabled rapid development of various residential markets located along the first 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 social infrastructure and absence of organized retail have restricted the growth of residential

market on OMR beyond the first toll plaza

Commencement of the 1,550

acres Mahindra World City led to a dramatic change in the development of the GST Road with huge employment opportunities being 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

CHENNAI BEACH- VELACHERY

MASS RAPID TRANSIT SYSTEM

(MRTS)

SOUTH WEST SUBURBAN

RAILWAY NETWORK

The Chennai Beach – Velachery MRTS is a mass

rapid transit system that currently runs within the

city from Chennai Beach to Velachery, covering a

distance of 20 km with 17 stations. The network

till Velachery became fully operational in 2007

and currently work on the extension of this line

from Velachery to St. Thomas Mount is underway.

Work on the extended line is expected to be

completed by the end of 2013. MRTS forms a vital

part of infrastructure in South Chennai as it

connects Central Chennai with major IT/ITeS hubs

on OMR like Taramani and Perungudi.

The South West Suburban rail network is

operated by the Southern Railways of the Indian

Railway which plies from Chennai Beach to

Chengalpet via Tambaram. The route is divided

into two points with Tambaram located in the

centre. Trains between Chennai Beach and

Tambaram run every 5-10 minutes which is

considerably higher than the frequency of 15-25

minutes between Tambaram and Chengalpet. It is

a vital mode of transport for employees working

in Mahindra World City which has a dedicated rail

station on this network known as Paranur. Since

the rail network runs parallel to GST road, it also

serves as an important mode of transport for

other employment hubs located on this route

such as Estancia IT SEZ and Ford India plant.

CHENNAI BEACH

CHENNAI FORTPARK TOWN

CHINTADRIPET

CHEPAUK

TIRUVELLIKENI

LIGHT HOUSE

THIRUMAYILAI

MANDAVELI

GREENWAYS ROAD

KOTTURPURAM

KASTURBA NAGAR

INDIRA NAGAR

THIRUVANMIYUR

TARAMANI

PERUNGUDI

VELACHERY

PUZHUTHIVAKKAM

ADAMBAKKAM

ST. THOMAS

MOUNT


VANDALUR-VELACHERY MONORAIL

VANDALUR

PERUNGALATHUR

IRUMBULIYUR

TAMBARAM

EAST

CAMP

ROAD

SEMBAKKAM

GOWRIWAKKAM

MEDAVAKKAM

PALLIKARANAI

NARAYANAPURAM

VELACHERY

TOWARDS CHENNAI

BEACH VIA MRTS

The Chennai Monorail that was first announced in

2006, is finally being pursued by the Tamil Nadu

government on a fast track basis and is currently

at the bidding stage. In Phase I, three corridors

will be constructed, out of which two will enhance

the connectivity of West with East Chennai and

one will improve the connectivity of South with

North Chennai.

The corridor connecting Vandalur with Velachery

will immensely benefit South Chennai by

providing the much needed link to the city. Since

Velachery is already connected with Chennai

Beach via the Chennai Beach-Thiruvanmiyur-

Velachery MRTS route, it is expected to become

an important transport hub between South and

Central Chennai. The 23 km. monorail route is

expected to take anywhere between 4-5 years to

become fully operational from the time it is

awarded to the winning bidder.

However, we expect the benefits will start getting

reflected in the residential prices of all the

destinations that are located on the route, once

construction commences. We expect work to

begin anywhere between the next 8-12 months.


MRTS forms a vital

part of the infrastructure

in South Chennai as it

connects Central Chennai

with major IT/ITeS hubs on

the OMR like Taramani and

Perungudi

Vandalur-

Velacher

Monorail

corridor will immensely

benefit South Chennai by

providing the much needed

link to the city centre

Employment Indicators in South Chennai

The major employment drivers in South Chennai

are the IT/ITeS sector and Auto & Auto Ancillary

industry. Since 2008, more than 30 mn sq.ft of

office space has been constructed on the OMR

and GST road including the captive offices of

companies like Infosys, Wipro, HCL, TCS and

Capgemini. However, a lot of this space is still

unoccupied as many IT/ITeS companies have

delayed their expansion plans due to the recent

slowdown in the sector.

Over the next five years, another 19.6 mn sq.ft of

office space is expected to become operational in

South Chennai which will take the total stock to

59.8 mn.sq.ft. by the end of 2017. Currently 28%

of the total office space in South Chennai is lying

vacant and is expected to increase to 35% by

2013 as additional space gets constructed.

However, 2014 onwards we expect the vacancy

levels to drop down as delivery of new office

space will be lower compared to 2012 and 2013.

Additionally, we forecast 18.8 mn.sq.ft. of

incremental office space to be absorbed over the

next five years, which will help in bringing down

the vacancy level to 20% by the end of 2017.

EMPLOYMENT HUBS IN SOUTH CHENNAI


OMR

IT/ITeS TIDEL Park TCS, Cognizant, QuScient Technologies

IT/ITeS Ramanujan IT Park HP, Infosys, Mindtree

IT/ITeS Ascendas International Tech Park Amazon, Catepillar

IT/ITeS RMZ Millenia Business Park Capgemini, Flextronics, Sasken

IT/ITeS SP Infocity Verizon, HSBC, Saksoft

IT/ITeS ELCOT SEZ Wipro, Cognizant, HCL

IT/ITeS SIPCOT IT Park TCS, Cognizant, Patni

GST ROAD

IT/ITeS Shriram The Gateway Accenture, Take Solutions, Redington

IT/ITeS Estancia IT SEZ Maveric Systems

IT/ITeS Mahindra World City Infosys, Capgemini, MindTree

Manufacturing Mahindra World City BMW, Sundram Fasteners, Brakes India

Manufacturing Ford India Ford India

The traction expected in South Chennai’s office

space is bound to create additional employment

in the zone. Since the preference among IT/ITeS

employees for residing closer to their workplace

is high, its impact will be positively felt on the

demand for residential units here.


Since 2008, more than 30 mn. sq.ft. of office space

has been constructed on

the OMR and GST road

including the captive

offices of companies like

Infosys, Wipro, HCL, TCS and

Capgemini

We forecast 18.8 mn.

sq.ft. of incremental

office space to be

absorbed in South Chennai

over the next 5 years

Before2008

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017E

70

60

50

40

30

20

10

SOUTH CHENNAI OFFICE SPACE DYNAMICS

* Figures in mn. sq.ft.

Incremental employment in the IT/ITeS sector and

enhanced connectivity due to the monorail will

drive the residential market of South Chennai in

the coming five years. Although prices will rise in

majority of the destinations located in this zone,

there will be certain destinations that will

outperform others. Between the two arterial

roads- OMR and GST road, we expect OMR to

witness higher price growth due to the

concentration of office space here. Out of the

total office space stock of 59.8 mn.sq.ft. which is

expected to be operational in South Chennai by

2017, 82% will be located on the OMR.

Along the OMR, the preference for locations

closer to the city centre is high due to the lack of

social infrastructure and organized retail in the

distant suburbs. This makes destinations located

beyond the first and second toll plaza less

attractive to home buyers in comparison to

destinations before the first toll plaza.

The above mentioned limitations have led to the

unprecedented development of destinations such

as Pallikarnai and Medavakkam as they are

located not only closer to the city centre but also

have easy access to OMR and GST road. The route

Investment Destinations in SOUTH Chennai

from Velachery to Medavakkam via Pallikarnai is

located between the OMR and GST road and runs

parallel to them. It is well connected by road to all

the employment hubs of South Chennai.

Additionally, the Vandalur-Velachery Monorail

project will further enhance the connectivity of

these destinations with the city centre in the

north and GST road in the south as it passes

through each of these locations. These

destinations are also well connected with the

Chennai International Airport and central

locations such as Adyar and Anna Salai through

Madhya Kailash Junction. We expect the

destinations of Pallikarnai and Medavakkam to

witness the maximum amount of price

appreciation in Chennai’s residential market over

the next five years.

The primary reasons in brief for these

destinations to outperform others in Chennai over

the next five years are:

§ Tamil Nadu’s Auto & Auto Ancillary industry is

forecasted to grow at an annual average rate of

24% over the next five years. A large number of

these units are located on GST road and within

Mahindra World City in South Chennai

§ Chennai will witness an incremental demand of

21.1 mn sq.ft of office space over the next five

years primarily driven by the IT/ITeS sector.

88% of this will be within South Chennai.

§ Accessibility to major employment hubs on

OMR and GST road, proximity to the city centre

and distance from Chennai airport will be the

key differentiating factors among the various

destinations located in South Chennai.

§ Pallikarnai and Medavakkam address all the

above factors due to their favorable location.


Out of the total office

space stock of

59.8 mn.sq.ft. which is

expected to be

operational in South

Chennai by 2017,

82% will be located on

the OMR

Destinations like

Pallikarnai and

Medavakkam

are located not only

closer to the city centre

but also have easy access

to OMR and GST road CONNECTIVITY TO IMPORTANT LOCATIONS FROM PALLIKARNAI AND MEDAVAKKAM

* By road


6-12km

10-20mins 15-20

km23-30mins

4-10km

10-18mins

15-21km

25-35mins

36-42km

40-50mins

10-15km

15-18mins

6-12km

8-25mins

Kk, T o a an r W rli g a l i y lo a a dr a an hh P r a C sa dS m dL i h l at, l E n y u a i JZ D M, ur n I hE C n T i a S h c T M te i O n o g nC L a E l p e t m ta S r r h ob r p ai S r r i I m a P AC a mi lC T hr aO T ,e e ns h Z nT oE u ne iI r tT S ai G i aP y S I na , a a n rterk tew


Additionally, the upcoming monorail corridor

between Vandalur and Velachery will further

boost the connectivity of these locations with the

city centre and GST road.

Most of the factors that will drive the residential

prices in South Chennai will be common for all

the destinations located here. However, the

degree of influence will be different for each of

them depending on the location of the respective

destination within this zone. Adyar, which is the

most established destination in South Chennai,

has been considered as the benchmark for

comparing prices in this zone and going forward

we expect all the other destinations located here

to follow the price trend of Adyar.

Currently the residential prices in Pallikarnai and

Medavakkam are at a significant discount

compared to Adyar. We believe that over the next

five years, this discount will narrow down due to

the reasons listed earlier. However, the price

difference among each of these destinations will

persist since the factors influencing price are

identical for all of them.

We expect the destinations

of Pallikarnai and

Medavakkam to witness

the maximum amount of

price

appreciation

in Chennai’s residential

market over the next 5

years

Adyar, which is the

most established

destination in South

Chennai, has been

considered as the

benchmark for comparing

prices in this zone


PRICE FORECAST* Figures in `/sq.ft.

2012

PallikarnaiAdyar

`12,000

2017E

`8,100

`15,858

`4,200

Pallikarnai has witnessed

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

1,382 units have been

absorbed till Q3 2012

DESTINATION PALLIKARNAI

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 significantly enhance the rail connectivity of 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 price rise of 10% led to a significant increase in 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 differential between Pallikarnai and Adyar. Currently, prices in Pallikarnai are 65% lower than Adyar, which is the most established market in South Chennai. In the next five years, we expect 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 percentage of 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 for a 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 5,707

units since 2007, of which

4,147 units have been

absorbed till Q3 2012

DESTINATION MEDAVAKKAM

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 last five years.

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%.

Over the next five years, we expect Medavakkam to follow Pallikarnai in terms of price as the benefit of Vandalur – Velachery Monorail network will accrue equally to this destination too. The price differential with Adyar will similarly narrow 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 for investment in Medavakkam for 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 five years, we expect

Medavakkam

to 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 conceived under the first Master Plan of Delhi in 1962 and conceptualized 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 outsourcing and off-shoring activities. Major industries like IT/ITeS, Automobile and 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 MNCs to set up their offices. The prime ones include Microsoft, IBM, Amdocs, Norte, Dell, Nokia, SAP, Accenture, Motorola and Ericsson. Hence, it is believed that the NCR is on the brink of emerging as the 'knowledge' hub of India. Along the growth of the 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

Haryana Faridabad, Gurgaon, Mewat, Rohtak, Sonepat, Rewari, 13,413and Palwal

UP Meerut, Ghaziabad, Gautam Budha Nagar,

Rajasthan Alwar

Total 33,578

Major Roads

Railway Line

Metro Corridor I

Metro Corridor II

South Zone

West Zone

Central Zone

East Zone

North Zone


50001200035000

GREATER NOIDANOIDA

FARIDABAD

GHAZIABAD

Major Roads

Railway Line

Existing Metro

Under Construction Metro

Delhi

Gurgaon

Faridabad

Noida

Greater Noida

Ghaziabad


DELHI

GURGAON

National Capital Region (NCR) is spread over

33,578 sq.km.

Market Overview


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

Delhi, the capital of India is the fifth most 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 administrative offices. It has evolved from being a 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 living here. It looks entirely different from the 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 offered the necessary boost to this region. 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 Delhi is considered to be the most affluent micro-market of Delhi. The residential real estate comprises independent houses and bungalow style developments. Major administrative offices including embassies and consulates are located here. By virtue of this, South Delhi has become the most sought after destination among the high-profile bureaucrats and the top corporate 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.Gurgaon is not only an industrial and financial centre of Haryana but also one of the most pronounced IT/ITeS outsourcing and off-shoring 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 hubs of Haryana. This has given a fillip to 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 quality commercial offices. DLF Cybercity, Udyog Vihar, Signature Towers, DLF Corporate Park, Spaze IT Park, Vatika Business Park and Unitech 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

Noida city is located in the Gautam Buddha Nagar district of Uttar Pradesh. Geographically it is 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 Delhi, Agra, Faridabad and Ghaziabad. A 165 km. Yamuna Expressway provides connectivity with Agra via Mathura; an eight-lane Delhi-Noida-Delhi (DND) Flyover connects Noida and Delhi and a Faridabad-Noida-Ghaziabad (FNG) highway provides connectivity with Faridabad and 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 HCL, Dell, Adobe Systems, ATC Labs, Interra, CSC, Fiserv, IBM and AON Hewitt have set up their base in the city. It is now swiftly emerging into a hub for automobile ancillary units with multinational companies like Honda-SIEL, Escorts and Daewoo setting up offices here. Noida-Greater Noida Expressway and Sector 58, 62, 63 and 64 have emerged as the major commercial hubs in Noida.

GREATER NOIDA

Greater 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. 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 India's first 'Grand Prix' which marked it presence on the International Motor Racing Circuit. Moreover it is also emerging as a planned industrial region and an educational hub.

FARIDABAD

Faridabad is the south-eastern district of Haryana and the largest city of the state. Being an industrial hub it has over 25,000 small-scale industries. The Faridabad-Ballabgarh complex employs over 500,000 people in approximately 15,000 manufacturing units. The region has gained prominence due to its proximity to the National Capital Territory (NCT) of Delhi, Gurgaon and Greater Noida. For the ease of administration, Faridabad district is divided into two sub divisions viz. Faridabad and Ballabgarh.

The city is 25 km. from ISBT, Delhi and only 10 km. from the Ashram Crossing on Mathura Road. The Delhi-Mathura-Agra Road (NH-2) passes through the city via Faridabad, Ballabgarh and Palwal. Moreover, Faridabad is connected with Delhi through the metro rail service which currently terminates at the Delhi-Faridabad border in Badarpur.

Faridabad houses several Indian and MNC manufacturing companies. Motorcycles, tyres, auto-ancillaries, refrigerators, tractors and switch-gears are some of the major industries in Faridabad. Larsen & Turbo (L&T), ABB, Goodyear, Whirlpool, Eicher, JCB, Orient Fans, Bharat Gears, Lakhani Shoes, Lafarge, Yamaha, Havell's, Escorts and Castrol are some of the major companies having their base in Faridabad.

2007 2008 2012*2009 2010 2011


RESIDENTIAL PROJECT LAUNCH TREND IN NCR


59,17646,605

78,222

171,261

111,649

51,288

145,395 residential

units launched in Noida during 2007-12

Reliance Energy has proposed a 1000 hectares multi-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, construction of various flyovers, underpasses, 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 witnessed a huge influx of people mainly on 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 Freight Corridor (DFC)


Real Estate DriversEmployment Indicators Infrastructure Development

Auto 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 average residential 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-`150 payable 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 Speculative Market

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 to NH-2 which earlier used to handle all the Agra bound traffic from 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 Metro

22 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 Expressway is now open to public

Completion of Gurgaon-Faridabad Road has now enhanced connectivity between the two cities

EXISTING METRO RAIL NETWORK



CONNECTIVITY

Kundli-Manesar-Palwal (KMP) Expressway

Dwarka Expressway

Southern Peripheral 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.

CURRENT STATUS

Under construction

Under construction

Under construction

Under construction

EXPECTED COMPLETION

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.

CURRENT STATUS

Under construction

Bid invited

Under Construction

EXPECTED COMPLETION

2013-14

Beyond 2015

2016-17

136 km. KMP Expressway will connect important industrial centres in Haryana

Once completed the Dwarka Expressway will enhacne the connectivity between Delhi and Gurgaon

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

UPCOMING METRO RAIL NETWORK

Employment Indicators in the National Capital Region

The economy of the NCR is driven by multiple

industries primarily by manufacturing, IT/ITeS,

small and medium enterprises, banking and

financial services and consulting. Delhi being the

national capital houses numerous administrative

offices of the Government of India. Recently,

Gurgaon and Noida have emerged as a

manufacturing and IT/ITeS hub.

IT/ITeS SECTOR

Over the past decade, Gurgaon, Noida and

Greater Noida have emerged as major IT/ITeS

centres of India. Proximity to Delhi, sound

infrastructure, cosmopolitan culture, availability

of skilled workforce and industry-friendly

government policies made it a favourable

destination among the IT/ITeS companies. The

thriving outsourcing industry provides direct and

indirect employment to over 500,000 people.

Prominent companies having operation in this

region are Genpact, Dell, Amdocs, Norte, HP,

Motorola, TCS, Alcatel, Siemens, HCL, Patni and

CSC.

A good number of IT/ITeS SEZs have been

developed in Gurgaon, Noida & Greater Noida.

Over 22 major IT/ITeS companies are operational

in this region spread over 600 hectares of land. In

terms of geographical spread, nearly 60% of

these developments are concentrated around

Gurgaon, 35% around Noida, including Greater

Noida and merely 5% in Delhi.

Gurgaon has evolved as the major Peripheral

Business District of the NCR. It has over 55 mn.

sq.ft. of office stock which is primarily

concentrated in the DLF Cyber City (Phase I-V) and

micro-markets along the Golf Course Road. This

region houses many renowned tech-parks and

IT/ITeS SEZ. Micro-markets along the MG Road,

Golf Course Road, DLF Phase I–V and Golf Course

Extension have evolved into self-sustaining hubs.

This is mainly on account of quality commercial

offices, superior residential developments and

well-developed organised retail markets.

Signature Towers, DLF Cyber City, Unitech

Infospace, Vatika Business Park and Global

Business Park are some of the notable

commercial buildings in Gurgaon.

Owing to its proximity to New Delhi, favourable

industrial policies and huge availability of land,

Noida has emerged as the preferred destination

for IT/ITeS companies. Over the last decade,




Delhi NoidaGt. Noida Gurgaon

57.1%

19.8%

3.4%

19.6%

Noida has become a hub for BPOs (Business

Process Outsourcing) and KPOs (Knowledge

Process Outsourcing) services. It has over 21 mn.

sq. ft. of office stock which is predominantly

present in Sectors 29, 57 to 60, 62 and 63.

Moreover, many commercial offices and IT Parks

have been planned along the Noida Expressway

and Yamuna Expressway. This will further

augment the employment opportunities in this

region. A number of IT/ITeS companies like HCL,

Dell, Adobe Systems, IBM and AON Hewitt have

set up their base here.

The country's IT-ITeS sector during 2004-2011 has

grown at an annual rate of 22.5% to `1,474bn.

and is estimated to reach 3,000bn. by 2017. As

per NASSCOM, the IT/ITeS sector has created

tremendous job opportunities, generating direct

and indirect employment of nearly 2.8 mn. and

around 8.9 mn. respectively. It is estimated that

employment growth would be more than 14 mn.

(directly and indirectly) by 2015 and around 30

mn. by 2030. We expect the NCR to continue its

growth trajectory in-line with the country's IT/ITeS

growth. With the strengthening of global

economy, robust domestic fundamentals and

easy availability of skilled human capital the

IT/ITeS industry here is expected to grow

significantly in the coming years.

MANUFACTURING SECTOR

The manufacturing activity in the NCR is

concentrated in the sub-regions of Haryana, Uttar

Pradesh and Rajasthan. The manufacturing

industry in this region was boosted through the

creation of Industrial Zones and Special Economic

`

Gurgaon accounts for 57%

of the office space stock

of NCR

Office space stock in

Noida 21 mn.sq.ft.

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.

Currently the total office stock in the NCR is about 101.48 mn. sq.ft. of which 83 mn. sq. ft. is occupied resulting in a vacancy level of 18%. The city's office market clocked absorption of almost 9 mn. sq.ft. during 2011. The IT/ ITeS industry still remains the key demand driver for office space in the NCR. The current situation indicates that Gurgaon with 57% of the total occupied space in the region has the highest density of office space, implying a large proportion of employment opportunities emanating in the NCR. We estimate that the occupied office space in the region will go up by

47% during 2011-17. This growth in effect will drive the residential markets in the city.


160

2008



IT/ITeS Manufacturing

BFSI & Consulting Others

40%

15%

30%

15%

Office space stock in NCR 101 mn. sq.ft.

48 mn. sq.ft. office space stock to be added during 2012-17

IT/ITeS and BFSI & Consulting together account for 70% of the office space in the NCR

Major Roads

Railway Line

Proposed Metro Rail

Noida

Greater Noida

Benchmark location

Top destination

Employment Hubs


daor noisnetx eurseoc floG

Major Roads

Existing Metro

Under Construction Metro

Under Construction Dwarka Expressway

Airport

Railway Line

Benchmark location

Top destination

Employment Hubs

daoi RdautaP

daoR iduataP

Iffco Chowk

Old G

urga

on R

oad

GREATER NOIDA MAP

GURGAON MAP

119,404 residential

units launched in Gurgaon during 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 business and bureaucratic offices has been the 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 beneficiaries in the next 5 years. These zones are primarily hubs for the IT/ITeS industry and we anticipate growth momentum to accelerate in the next five years. This expectation is built on the premise that it is a planned city and there is visibility on the development of the infrastructure projects. Relatively lower office rentals, large office space options and well-developed residential markets are factors that make this zone a preferred place for setting up offices. Going forward, development of the Dwarka Expressway in Gurgaon, Metro connectivity in Noida and Greater Noida will only augment the cause.

PREFERRED ZONES IN THE NCR


also one of the most pronounced IT/ITeS outsourcing and off-shoring hubs in the world.

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 offices. DLF Cybercity, Udyog Vihar, Signature Towers, DLF Corporate Park, Spaze IT Park, Vatika Business Park and Unitech 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.

A new residential belt has emerged along the upcoming 18 km. Northern Peripheral Road (NPR) or Dwarka Expressway. This 150 m. wide road is expected to connect Dwarka and Palam Vihar in New Delhi with NH-8 near Kherki Dhaula 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 an industrial and financial centre of Haryana but


RESIDENTIAL PROJECT LAUNCH TREND IN GURGAON

2007 2008 2012*2009 2010 2011


8,939

19,870

23,439 24,307

26,356

16,492

A new residential belt has emerged along the upcoming Dwarka Expressway

Gurgaon witnessed absorption of 98,713 units during 2007-12



140,000

120,000

100,000

80,000

60,000

40,000

20,000

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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 history. It provides a free-flowing alternative to 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 flyovers and underpasses. The expressway has 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-market. The under-construction Rapid Metro Rail Gurgaon (RMRG) is proposed to link various micro-markets including Mall of India and DLF Phase II & III, thereby enhancing connectivity within Gurgaon. This is expected to augment demand for residential real estate in these micro-markets. Developers like Sobha, BPTP, Indiabulls, Raheja and Mahindra Life Spaces have launched projects in this belt.

Manesar located in the south Gurgaon region is a major industrial hub. Industrial Model Town (IMT) – a Haryana government initiative, has given a fillip to commercialization in Manesar. Renowned manufacturing companies like Maruti, Suzuki, Hero Motors, Honda, Toyota and Samsung Telecommunications are already present in Manesar. Moreover, Manesar has become the most preferred destination for many leading companies including major IT/ITeS companies. This, coupled with the Reliance SEZ will lead to 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 20,700. The launch momentum continued in 2012, as the region witnessed the launch of 16,492 units during the first nine months of 2012(9m 2012).

3.3%

7.7%7.3%

8.1%

11%

17.3%

IMT is a 1,750-acre ultra modern Integrated Industrial 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 flyovers and underpasses. The expressway has 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 NH-2 near Palwal (Faridabad). The project is expected to be complete by 2013-14.Upcoming

Infrastructure

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 Gurgaon. This 150m. wide road will start from Dwarka Sector-21 and end at NH-8 (Gurgaon Expressway) near Haldiram. This stretch has been planned as an alternative link between Delhi and Gurgaon, thereby decongesting the Delhi-Gurgaon Expressway (NH-8). The road will also provide connectivity with the much-touted Reliance-HSIIDC SEZ besides the Garhi Harsaru Dry Depot. The new link would be parallel to the expressway till it merges ahead of the IFFCO Chowk. The proposed expressway will touch 16 new nearby residential colonies and would also touch a commercial corridor. The project is under-construction and is expected to be complete by 2014-15.

RAPID METRO RAIL GURGAON (RMRG)

Promoted by DLF, this is the first metro by any 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 construction. This will provide the much needed access into areas like Cyber City, Mall of India and NH8. RMRG Phase-I is expected to commence commercial operations by 2013-14.

Employment Indicators in GurgaonGurgaon is an industrial and financial centre of Haryana. It has now emerged as one of the prominent destinations for IT/ITeS outsourcing and off-shoring hubs, mainly due to its proximity to the national capital coupled with huge availability of quality commercial properties and favourable government policies. The commercial office space is concentrated in North Gurgaon,

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-Gurgaon Expressway and 25-km. Gurgaon-Faridabad Link Road are the major arterial roads

Upcoming eight-lane 18 km. Dwarka Expressway will aid in decongesting the existing Delhi-Gurgaon Expressway


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.

Currently Gurgaon has 55 mn. sq. ft. of office space of which 40 mn. sq. ft. is occupied. We expect Gurgaon office space to post an encouraging growth for the next five years until 2017. While the office stock will increase by 33%, the occupied office space will go up by a stellar 39% by 2017. Consequently the vacancy rate will come down from the current level of 26.5% to 22.1%. We foresee that the employment generation happening in the service industry will feed the growth of residential markets in the zone.

Gurgaon has emerged as one of the prominent destinations for IT/ITeS outsourcing and off-shoring hubs

Gurgaon to witness another 22.3 mn. sq.ft. of new office supply by 2017

Gurgaon total office space stock is 55 mn. sq.ft. of which 40 mn. sq. ft. is occupied


DESTINATION DWARKA 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

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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.

Though the entire belt will immensely benefit from the new link road between Gurgaon and Delhi, we anticipate the north region (Sec 103-106, 109-113) of the expressway to benefit more 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 the micro-markets along the Dwarka 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 the first nine months of 2012 as against 6,839 units launched throughout 2011.

CONNECTIVITY TO IMPORTANT LOCATIONS FROM SEC.111* By road


17km

11mins

ROAG DM

DG AO OLF R C EO SUR

IRPA O I RTGI

EC CO ALN PN A TUGH

ESN AA RM

28km

17mins

29km

18mins13

km8

mins

9km

6mins

Annual average absorption rate in the Dwarka Expressway 3,180 units

Selected destination primarily on account of its proximity to Dwarka Sub-city, IGI Airport and the proposed diplomatic enclave in Dwarka Phase II


Investment Options 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 Airport. Major office micro-markets like Golf Course Road and MG Road are just 13 km. and 9 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.

Major office markets like Golf Course Road and MG Road are just 13 km. and 9 km. respectively from Sec.111 of Dwarka Expressway

Price in Dwarka Expressway to increase to `10,200/sq.ft. from the current levels of `4,900/sq.ft. - a 108% price appreciation in 5 years

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 City Centre and affordable pricing of the apartments. Recently the land row problem has been resolved and developers have been allowed to commence construction.

GREATER NOIDAGreater 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 India's first 'Grand Prix' which marked its presence on the International Motor Racing Circuit.

Greater Noida is well connected with Noida and Agra. A 25 km. six-lane Noida-Greater Noida Expressway connects Sector 15 of Noida with the Alpha Commercial belt of Greater Noida. Moreover, a 165 km. Yamuna Expressway also 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. Noida Extension, Noida Sectors 71, 72, 78 and 62 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 affordable housing option. Honda Siel Cars, 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 Yamuna Expressway and some of the prime residential sectors are Alpha, Beta, Chi, Delta and Pi.

Recently, Noida Extension has emerged as an affordable housing hub of the NCR. Though part of Greater Noida, it is nomenclature as 'Noida Extension' as it is in close proximity with the Noida City Centre. This helps to differentiate it



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 a mere 18 km. from Noida Extension

Builders allowed to resume 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

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RESIDENTIAL DEMAND SUPPLY ANALYSIS OF GREATER NOIDA


2007 2008 2009 2010 2011 2012*

18%

22.2%21.4%

29.8%

36.3%37.4%


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 all the Agra bound traffic from the NCR. The expressway has reduced the travel time between Noida and Agra from 5 hours to less than 2 hours.It will relieve traffic congestion on the NH-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-Noida-Ghaziabad had been floated way back in 1993 the Haryana government did not find this 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 first Metro Rail connecting Noida Extension with Delhi-NCR.

Recently completed Yamuna Expressway has reduced the travel time to Agra to less than 2 hours

Metro Rail has been proposed for connecting Eco 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 growth traction, the GNIDA is offering the best of 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.Currently Greater Noida has 4 mn. sq. ft. of office space of which 2.4 mn. sq.ft. is occupied. We expect Greater Noida office space to witness an encouraging growth for the next five years until 2017. While the office stock will increase by 122%, the occupied office space will go up by a spectacular 141% by 2017. Consequently the vacancy rate will come down from the current level of 40.5% to 35.4%. We foresee that the employment generation happening in the service industry will feed the growth of residential markets in the zone.

GREATER NOIDA OFFICE SPACE DYNAMICS

BeFORE 2008

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

StockOccupied Stock

2

1

3

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 has attracted a total industrial investment of `100 bn. from domestic as well as multinational companies

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

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RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF NOIDA EXTENSION

2011


2012*

Sound infrastructure, affordable pricing and 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 Noida Extension since 2010

81% of these were launched 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 primarily due to proximity to Noida and affordable pricing. However, the sale momentum had slowed down during 2011 and Q2 2012 for the reason mentioned above. With a solution to the land acquisition problem we believe this destination to gain traction. The rate of unsold inventory climbed to 38% as on Q3 2012. However, taking cognizance of the situation we believe this destination has a huge potential to grow as a

residential hub and the unsold inventory percentage is anticipated to come down.

Noida Sectors 50-52 are the established micro-markets of Greater Noida with prices averaging at `6,975/sq. ft. However, the price in Noida Extension is around `3,200/sq. ft., which is a 54% discount. We expect this discount to narrow down to 40% by the end of 2017 resulting in 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 16C Gaursons 3,000 Dec-14

Terrace 1 Amarpali 3,000 Oct-14Homes Group

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


40%54%

Prices in Noida Extension to 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

km.) also offers good connectivity with Neemrana. Besides, an independent airport complex is also proposed to be developed here.

. The government has already identified and 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 coupled with construction of flyovers will enhance the connectivity of Neemrana with other industrial hubs of the NCR. Owing to the above factors we anticipate Neemrana should benefit immensely and provide superior investment returns over a 10 year time horizon.

Over 40,000 acres have identified 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 O G N M

DELHI INTERNATIONAL AIRPO

RT

T H PG LAU CA EN DN EO LC HI


Hidden GemNarela

Narela is situated in North-West Delhi and forms

the border of Delhi state with Haryana. The

'Narela Industrial Area', started developing in

early 1980s and today is one of the important

industrial complexes in Delhi. Moreover, Narela

spread over 7,464 hectares was planned as a

Sub-city by Delhi Development Authority (DDA) in

1990s, after Rohini Sub-city and Dwarka Sub-city.

Currently, there is no mass rapid transport and as

such the region has extremely poor inter zone

connectivity. The NH-1 is the only major arterial

road providing connectivity of Narela with Delhi

city centre. However, Delhi Metro Rail Corporation

(DMRC) under Phase IV has planned to extend the

existing Yellow Line (currently running between

HUDA and Jahangirpuri) up to Narela. Further,

Narela is located 10 km. from the Kundli node of

the KMP Expressway (135 km. expressway), once

completed this will provide access to the major

industrial hubs like Manesar and Palwal.

The destination is at a distance of approx. 10 km.,

30 km. and 44 km. from the prominent markets of

Kundli, Connaught Place and Delhi Airport

respectively.

Following are the factors that make Narela the

most sought after investment destination:-

Ÿ An Integrated Freight Complex covering an area

of 392 hectares has been planned. It will

accommodate the wholesale trade, district

centre, metropolitan transport centre and ISBT.

Ÿ Another major industrial area has been

proposed at Bawana accommodating 20,000

industrial plots.

Ÿ A Metro line has been planned under DMRC

Phase IV. This will be an extension of the

existing Yellow Line from Jahangirpuri.

We anticipate Narela to benefit immensely based

on the above mentioned factors. We expect it to

provide a good return on investment over a 10

year time horizon.

An Integrated Freight

Complex covering an area

of 392 hectares has been

planned in Narela

A Metro line has been

planned under DMRC Phase

IV connecting Narela to

Jahangirpuri


* By road

Distance

5km

8km

10km

13km

KU

ND

LI

CO

NN

AU

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LAC

E,

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LHI

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LHI

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IRP

OR

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Hidden GemMANESAR

given a fillip to commercialization in Manesar. It

has been divided into four phases. In Phase I,

HSIDC developed 1,750 acres of land; the

development of Phase II and Phase IV are in

progress. HSIDC has allotted around 600 acres in

Phase III to Maruti Udyog for their expansion

project.

Renowned manufacturing companies like Maruti,

Suzuki, Hero Motors, Honda, Toyota and

Samsung Telecommunications are already

present in Manesar. Moreover, Manesar has

become the most preferred destination for many

leading companies including major IT/ITeS

companies. This, coupled with the Reliance SEZ

will lead to huge employment generation thereby

leading to a huge demand for residential real

estate. A 135 km. Kundli-Manesar-Palwal (KMP)

Expressway will further augment demand for the

residential real estate in Manesar.

However, distance to the CBD continues to remain

a major concern along with the slow development

of arterial roads. Further, the bottleneck at the

second toll plaza at Kherki Dhaula impacts the

travel time to and from Manesar. Uninterrupted

power supply continues to be a challenge and

with the irregular electric supply, companies are

forced to invest hugely in power back-up

arrangements.

Time to travel to and from Manesar will reduce

considerably post commencement of the KMP and

Dwarka Expressway. All these elements are

expected to spur investments, primarily in the

automobile and ancillaries sector in Manesar.

Hence, we anticipate Manesar to emerge as the

most sought after destination providing a good

return on investment over a 10 year time horizon.

600 acres allotted to

Maruti Udyog by HSIDC for

their expansion plan

A 135 km. KMP Expressway

will augment demand for

the residential real estate

in Manesar


* By road

Distance

26km

48km26

km

Manesar is situated on NH-8, the Delhi-Jaipur

Road, in south Gurgaon. It is emerging as one of

the biggest industrial belts of the NCR. This

industrial belt comprises Gurgaon’s industrial

corridor, Industrial Model Town (IMT) Manesar

and Gurgaon’s SEZ belt. Currently the region does

not have any mass rapid transport raising

concerns regarding inter zone connectivity.

Availability of vast tracts of land, wide roads and

favourable government policies are the major

drivers for real estate developments in this

destination.

Manesar has tremendous opportunities to grow

as an industrial hub and the Haryana State

Industrial Development Corporation (HSIDC) is

not leaving any stone unturned in making it a

destination worth reckoning. Industrial Model

Town (IMT) – a Haryana government initiative, has

URSO E C R F OL AO DG

D T

E RL OH PI RI IN A T LER AN NA OTI

PLT AH CG EU , A D

N ELN HO IC



23.512.85%17.81 2.82%

MUMBAI METROPOLITAN REGION POPULATION

Population in Millions



13.45 3.38%

1991 2001 2011

The Mumbai Metropolitan Region (MMR) is spread over an area of 4,355

sq. km. that comprises 468 sq. km. of Mumbai city along with certain

parts of Thane and Raigad district, which constitute the remaining 3,887

sq. km. The Mumbai Metropolitan Region Development Authority

(MMRDA) is the apex body for the planning and development of the MMR.

The region has been witnessing a high population growth as high as 32%

during the last two decades. Although the growth rate is lower in

comparison to 39% witnessed during 1981-1991, the population base

increased significantly to 23.51 mn. in 2011.

Mumbai

80000

40000

200004000

Under Construction Metro Rail

Under Construction Monorail

Under Construction Rail Line

Proposed International 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.

Market Overview


Island city Colaba, Cuffe Parade, Tardeo, Mahalakshmi, Parel, Worli, Dadar, Mahim, Sewri

Western zone Bandra, Andheri, Goregaon, Malad, Borivali, Dahisar, MiraRoad, Bhayandar, Vasai, Virar

Central zone Wadala, Chembur, Ghatkopar, Powai, Bhandup, Mulund, Thane, Kalyan, Dombivili, Kasara, Ambernath, Karjat

Navi Mumbai Airoli, Vashi, Nerul, CBD Belapur, Panvel, Taloja, Ulwe

The real estate market of the MMR can be divided in to four zones i.e. Island City, Western Zone, Central Zone and Navi Mumbai.

The island city is the southern section of Mumbai and also referred to as old city. The zone houses the Central Business district (CBD) comprising Nariman Point, Colaba, Cuffe Parade, Fort and Ballard Estate. Mumbai is the business capital of the country and as such the CBD is home to a large number of corporate headquarters. The Bombay Stock Exchange (BSE) is the oldest stock exchange in Asia and some of the biggest Indian companies like Reliance Industries, Tata Consultancy Services, State Bank of India and Larsen & Toubro operate from their headquarters here. Worli, Prabhadevi and Lower Parel are other major office locations. The residential pockets of this zone like Cuffe Parade, Napeansea Road and Worli are amongst the costliest in the country. With the Arabian Sea on three sides and lack of land availability there is limited scope for horizontal expansion in this zone, and the only way for large scale real estate development is by going vertical.

The geography beginning from Bandra towards the north in the MMR is identified as the western zone. It is home to the planned commercial hub of the Bandra Kurla Complex (BKC), that has the country’s largest stock exchange the - National Stock Exchange (NSE) and important offices like American Consulate and British High Commission. Other significant office stock is on

the Andheri Kurla Road and some alongside Western Expressway up to Malad. With respect to residential development, Bandra and Juhu are the most sought after locations and hence command the highest property prices in this zone. The western zone has a vibrant social infrastructure with the presence of quality retail, education, entertainment and healthcare options. The property prices decline as one goes northwards from the city centre. While employment and social infrastructure are the drivers until Malad, locations further north are driven by connectivity primarily by suburban train network up to Virar.

The central zone covers the northern region stretching from Sion to Karjat. We have witnessed a phenomenon of shift in office space developments, north of the MMR and as a result high quantum of office buildings have come up on the LBS road, Powai and Thane localities of this zone. The stretch up to Thane has decent social and physical infrastructure, and the presence of several organized retail options on the LBS road in the last five years has added to the appeal of the residential developments in the region. The connectivity in this zone is mainly through the Eastern Expressway and the suburban train network. From real estate development perspective the most critical factor beyond Thane is the connectivity primarily

2007 2008 2012*2009 2010 2011


RESIDENTIAL LAUNCH TREND IN MMR



44,483 37,127

72,129

112,543

69,150

41,950

The residential pockets of the island city like Cuffe Parade, Napean sea Road and Worli are amongst the costliest in the country

With the Arabian Sea on three sides and lack of land availability there is limited scope for horizontal expansion in the island city, and the only way for large scale real estate development is by going vertical

In the Western zone, while employment and social infrastructure are the drivers until Malad, locations further north are driven by connectivity, primarily by suburban train network 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 while these distant suburbs provide affordable 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 planned as the office development hub, other significant office micro-markets are Vashi and the Thane-Belapur Road. The zone has several options for quality education and retail with Vashi being the 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, while distant suburbs beyond Thane provide affordable 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

39% of the residential

supply is concentrated in the Western zone

Real Estate Drivers


Employment Infrastructure Development

Western Expressway

Road Network

The Western Expressway and the Eastern Expressway are the arteries of road connectivity 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 been enhancing 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



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-north Kasara/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 the most significant link between Mumbai and Navi Mumbai at Sewri and Nhava respectively. The financial feasibility has been concluded. The authority has shortlisted contractors so that the work can becommissioned by 2013.

STATUS

Planned

EXPECTED COMPLETION

Beyond 2017

Upcoming InternationalAirport

Service Sectors

The suburban train network is considered as the lifeline of the city and has a significant bearing on the real estate development of the connected regions

The upcoming metro rail

network will address the

much needed west-east

connectivity in the city

through a mass rapid

transport system



PROJECT

Eastern Freeway

Multi-modal

Corridor (Virar -

Alibaug)

DISTANCE

16.8 km.

140 km.

OBSERVATIONS

This project will enhance the connectivity of

South Mumbai with eastern suburbs and

serve as an important link road running

parallel to the Eastern Expressway. This

freeway will begin at CST and go upto Anik

and further to Panjarpol and Ghatkopar. The

real estate markets of Chembur and Wadala

will be the biggest beneficiaries on account

of this enhanced connectivity with the

Central Business District (CBD) of South

Mumbai

This `100 bn. project is basically broadening

of the existing route of Virar-Bhiwandi-

Panvel-Pen-Alibaug. This corridor will

primarily enhance the connectivity at the

periphery of the MMR and also with other

cities by serving as a link to important

national highways that link Mumbai to cities

like Ahmedabad, Delhi, Chennai and

Bangalore. The land survey work is in

progress and Phase I Virar-Chirner (Near

JNPT) is expected to be complete by 2017

STATUS

Under

Construction

Planned

EXPECTED

COMPLETION

2013

Beyond 2017

PROJECT

Metro Rail Phase

I (Versova -

Andheri-

Ghatkopar)

Metro Rail Phase-

II (Charkop -

Bandra-

Mankhurd)

Monorail Phase I

(Wadala-

Chembur)

Monorail Phase II

(Jacob Circle-

Wadala)

Navi Mumbai

suburban train

network

extension (Nerul-

Seawood-Uran)

Navi Mumbai

Metro Rail Phase

I (Belapur to

Pendhar)

DISTANCE

11.40 km.

31.90 km.

8.2 km.

12 km.

32 km.

11.10 km.

OBSERVATIONS

The much needed west-east connectivity

through the MRTS will be addressed. This

link will enhance the connectivity with office

locations of Andheri like MIDC and SEEPZ.

Construction work is in the advanced stage

on this phase with 12 stations on route.

The west-east connectivity through this MRTS

will benefit residential pockets like Charkop

and Oshiwara in the western suburbs and

Chembur and Mankhurd in the central

suburbs

This route will have 7 stations on route and

provide connectivity with locations like

Bhakti Park, BPCL colony and Chembur

With 11 stations on route this project will

enhance connectivity in otherwise congested

locations of Lower Parel and Dadar. Although

the financial feasibility is completed, the

project work will be commissioned only after

a successful run of the Phase I

Currently the region is connected through the

JNPT road. However, this suburban train

network will enhance connectivity and prove

beneficial to residential markets like Ulwe.

The construction work is in progress from the

Seawood end and will extend up to Uran

The 11 elevated stations enroute this metro

rail network will enhance connectivity within

the Navi Mumbai zone. Residential pockets

of Kharghar will realise the maximum benefit

on account of the enhanced connectivity with

the commercial hubs of CBD Belapur and

Taloja

STATUS

Under

construction

Planned

Under

Construction

Planned

Under

Construction

Under

construction

EXPECTED

COMPLETION

2013

Beyond 2017

2013

2016-17

2016

2014

Suburban rail network in

Navi Mumbai will be

extended on the 32 km.

stretch from Nerul to

Uran

Western zone contributes

33% of the occupied

office space in the city

UPCOMING MAJOR INFRASTRUCTURE PROJECT

Employment Indicators in MMR

Mumbai is the financial capital of the country and

as such the high pace of employment generation

here will drive the growth of the residential

markets. BFSI and IT/ITeS are the most dominant

industries and being the business capital it is

also home to the corporate headquarters of

several companies.

The current situation indicates that the western

zone with 33% of the total occupied office space

in the city has the highest density of office space

implying a large proportion of employment

opportunities emanating in the zone. The central

zone contributes 30% of the employment. The


PROJECT

Navi Mumbai

Metro Rail Phase

II & III (Pendhar

to Khandeshwar)

Western Elevated

Rail Corridor

(Oval Maidan -

Virar)

DISTANCE

10.35 km.

62.27 km.

OBSERVATIONS

This section with 7 stations will link Phase I

at Pendhar and stretch upto Khandeshwar.

On completion of this phase, the residential

micro-markets of Kalamboli, Kamothe and

Khandeshwar will benefit by the connectivity

with CBD Belapur.

This `210 bn. two track elevated corridor will

enhance the connectivity on the Churchgate -

Virar section in the western zone. While

being a mass rapid commute option this

train corridor will also provide comfortable

travelling by employing air conditioned train

service. This project will immensely benefit

the residential markets of peripheral western

suburbs beyond Borivali by enhancing their

connectivity with the CBD of South Mumbai

and cross section of the Mumbai Metro

Phase I. The Rail Board has approved the

project and is currently at the bidding stage

which is expected to be complete by early

2013.

STATUS

Planned

Bidding

stage

EXPECTED

COMPLETION

2016

Beyond 2017

PROJECT

Navi Mumbai

International

Airport

OBSERVATIONS

In wake of the air travel demand from MMR

increasing from 29 mn. passengers in 2010-

11 to an estimated 119 mn. in 2030-31, this

second international airport is being

developed in Navi Mumbai. While the

residential market has witnessed an

enormous growth in anticipation of this

project, it will provide a major boost to the

economy of the Navi Mumbai region with a

host of commercial activities that will come

up. The project has secured the

Environmental Clearance in November 2010.

Phase I will have an annual capacity of 10

mn. passengers

STATUS

Planned

EXPECTED COMPLETION

Phase I by 2015



Island city Western zone

Central zone Navi Mumbai

16%

21%

33%

30%

Besides BFSI and IT/ITeS

industries as dominant

office space occupiers, the

city is home to corporate

headquarters of several

Indian and multinational

companies

MMR OFFICE SPACE DYNAMICS

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


impact of the global financial crisis on the employment scenario still prevails and therefore the MMR office market is witnessing a vacancy of 15%. However, we estimate that this vacancy will decline to 9% by 2017 mainly on account of improved business scenario and muted office supply. We estimate that the occupied office space in the city will go up by 63% between 2011 – 2017. This growth in effect will drive the residential markets in the city.

StockOccupied Stock

40

20

60

80

100

120

140

COST DETAILS

Stamp Duty 5% (Levied on higher of agreement value or ready reckoner rate)

Registration 1% (up to a Maximum of `30,000)

Value Added Tax (VAT) 1% (on agreement value)

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

STATUTORY COSTS AND MARKET NORMS

STATUTORY COSTS

NORM DETAILS

Time line for property Any time until possessionregistration

Re-sale before Allowed possession

Transfer charges payable 0.5% of Base Selling Rate to builder

Loading (as % of carpet) 55% - 80% (Developers market the property at 55% loading on usable carpet, which includes free of FSI and non-live-able areas like flower bed, drying area, etc. Implying an effective loading of 55-80%.)

MARKET NORMS

The occupied office stock in the city will increase by

63% in the next 5 years

Statutory levies in the city increase the cost of buying property by as much

as 10%

The property market norms in the city make it an investor friendly market

The city's real estate market is growing in the north-east direction

Mumbai has gained its fair share of glory by being the financial capital of the country. The dominance of the city in the business landscape of the country has been driving the real estate development. We expect this trend to continue in the foreseeable future. However, we do not expect all residential markets to reap the benefits on the same scale. The city is surrounded by the Arabian Sea on three sides and as such land is extremely scarce in the Mumbai city limits. Hence, the region will grow towards the north and the eastern territory, predominantly Navi Mumbai. However, the magnitude of growth will vary across these emerging markets depending on factors like employment opportunities, infrastructure development and connectivity. We have factored in these dynamics in selecting the investment destinations.

As a result of this thought process, we expect Navi Mumbai zone and the Central zone to be the biggest beneficiaries in the next five years. Navi Mumbai region is primarily a hub for the IT/ITeS industry and we estimate this momentum to accelerate in the next five years. This estimate is based on the fact that it is a planned city and there is visibility on the development of the infrastructure projects. Relatively lower office rentals and large office space options are factors that make this zone a preferred place for the IT industry. Strategic location on the Mumbai Pune Expressway, that connects the Hinjewadi IT belt of Pune, will be beneficial to Navi Mumbai. Going forward, the development of MMR's second international airport in this zone will only augment the cause.

Our other promising region in the MMR is the central zone. The relocation of office occupiers towards the north is a trend that we expect to continue and the central zone is expected to emerge as a significant beneficiary of this. While office markets like the Bandra Kurla Complex (BKC), Lower Parel and Worli continue to be preferred locations for the BFSI and consulting companies, office developments on the LBS Road will further fuel the growth of the residential market in this zone. On the connectivity front, while the Eastern Expressway has been the lifeline of road connectivity in this zone, the under construction Eastern Freeway project will be a great supplement. Its connectivity with the

PREFERRED ZONES IN MMR

promising IT/ITeS hub of Navi Mumbai is in place through the Vashi bridge and the Airoli bridge and this will be enhanced by the Mumbai Trans Harbour Link (MTHL).With respect to the connectivity with the western zone, the upcoming Mumbai Metro and the Mono Rail project will be a shot in the armour for this zone.


Developed as a planned satellite city of Mumbai, Navi Mumbai has emerged as a self-sustaining zone within the MMR. This zone has the presence of industrial activity in the regions of Mahape and Taloja. However, the last decade has witnessed a stellar growth of the IT/ITeS industry in this zone. Navi Mumbai provides a better quality of living at a relatively lower price than Mumbai and hence 20% of the under construction residential property in the MMR is contributed by this zone.City and Industrial Development Corporation (CIDCO) is the development body for the zone entrusted by the state to carry out the planned development. Besides the government's land holding, CIDCO acquires land from farmers and other private land owners and then auctions it as per its city's development plan. The Navi Mumbai zone has witnessed high growth of residential development in the last five years. Since 2007, 87,055 residential units have been launched here, of which almost 65,403 units have been absorbed. However, the consumer appetite was hit with the soaring property prices putting a dent on affordability since 2010. The fallout of high

NAVI MUMBAI


RESIDENTIAL LAUNCH TREND IN NAVI MUMBAI


2007 2008 2012*2009 2010 2011

7,1419,585

14,011

28,247

20,220

7,850

Bandra Kurla Complex (BKC), Lower Parel and Worli continue to be preferred locations for the BFSI and consulting companies

Running parallel to the Eastern Expressway, the under construction Eastern Freeway project will boost the connectivity of the real estate markets in the island city and central zone

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


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 can be gauged by the fact that major office space locations like Airoli, Rabale, Turbhe, Jui Nagar and CBD Belapur are linked on this road.

Thane-Belapur Road and Palm Beach Road are the arteries of road connectivity in Navi Mumbai



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-Uran line this stretch will witness significant 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 influences the growth of real estate development 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 zones significantly. The southern stretch from Ulwe to Uran will be the biggest beneficiaries on account of their connectivity with the CBD

Mindspace IT SEZ, the 4 mn.sq.ft. office development of Airoli is situated on this road. The other prominent office developments on the road 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 present this link is the first entry point and also 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- Belapur Road it connects the major office space locations like Airoli, Rabale, Turbhe, Jui Nagar and CBD Belapur.

Vashi Bridge and Airoli Bridge provide the inter zone connectivity to Navi Mumbai


locations of Nariman Point, Fort, and Colaba. The financial feasibility has been concluded. Theauthority has shortlisted contractors so that the work can be commissioned by 2013.

NAVI MUMBAI INTERNATIONAL AIRPORT (NMIA)

Air traffic in the MMR is expected to increasing from 29 mn. passengers in 2010-11 to an

estimated 119 mn. in 2030-31, which cannot be handled by the existing airport in the western zone. Paucity of land for further expansion in the existing airport has paved way for the second international airport of MMR that will come up in the Navi Mumbai zone. This upcoming international airport, Environmental Clearance for which has already been secured, is expected to witness its Phase I to be operational by 2015. Besides providing a boost to the economy of Navi Mumbai zone with a host of commercial activities in the allied industry, it will increase the attractiveness of office and residential properties in the zone.

Employment Indicators in Navi MumbaiThe zone has the presence of manufacturing activity in the state owned industrial estates. MIDC areas in Mahape along the Thane- Belapur Road and Taloja have the presence of several small and medium enterprises (SMEs). Taloja has the presence of companies like Exide Batteries, Asian Paints and Asahi Glass. However, with the growth of the city, the industrial land is giving way to more economically feasible, commercial office and residential development. In the foreseeable future we expect the service industry primarily IT/ITeS to dominate the economic landscape of the zone.

Within the zone, most of the employment generation is on the 20 km. stretch of the Thane-Belapur road. Locations like Airoli, Rabale, Mahape towards the north and Vashi, Turbhe, Jui Nagar and Belapur towards the south are promising office space locations where ample employment opportunities are available. Currently the zone has 18 mn.sq.ft. office space of which about 13.58 mn.sq.ft. is occupied. We expect an encouraging growth in the development of office space for the next five years until 2017. While the office space stock will increase by 80%, the occupied office space will

go up by a stellar 105% by 2017 as the vacancy rate will come down from the current level of 24% to 6%. We anticipate that the employment generation happening in the service industry will feed the growth of residential markets in the zone.

NAVI MUMBAI OFFICE SPACE DYNAMICS

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

StockOccupied Stock

10

5

15

20

25

30

The increase of air passenger traffic from the current 29 mn. passengers to 119 mn. in 2030-31 will be supported by the city's second international airport coming up in Navi Mumbai

The occupied office stock in Navi Mumbai will

increase by 105% in

the next 5 years

As industrial land gives way to more lucrative office developments, IT/ITeS industry will dominate the economic landscape of Navi Mumbai


DESTINATION ULWE

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 launches significantly.

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 Sheva).CBD Belapur, the CIDCO notified office micro-market, is just 7 km. from Ulwe enroute this Uran Road. Besides, CBD Belapur, five other


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 6,6 06 residential units launched in Ulwe

since 2009, 4,805 units

are already sold

At present, lack of mass rapid connectivity is a concern. However, the under construction suburaban rail network

will address it by 2015


ULWE PRICE FORECAST

18,000

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000


2009

60%

38%

Vashi Ulwe Discount Margin


prominent office locations within the zone are at

a maximum distance of just 22 km. Going

forward, the under construction 27 km. Nerul-

Seawood-Uran rail line will connect Ulwe with the

suburban rail network. This will happen through a

railway station called Bamandongri which is

expected to be operational by 2015. Once this

connectivity is in place, Ulwe will be connected

with all these major office markets though the

mass rapid transport system.

The planning of this destination is undertaken by

CIDCO and hence although there is a dearth of

social infrastructure at present, the same will be

addressed through the auction of earmarked

plots for hospitals, schools and other real estate

developments. Proximity to the Navi Mumbai

International Airport (NMIA) will help Ulwe on

account of the corollary commercial activities.

Towards the south of the international airport was

the planned Navi Mumbai Special Economic Zone

(NMSEZ). Although plans for the SEZ have been

shelved, we expect large scale commercial

developments to come up on this land parcel that

will immensely benefit Ulwe. Navi Mumbai Zone

has emerged as a self-sustaining zone; however,

the connectivity with the island through the

proposed Mumbai Trans Harbour Link (MTHL) will

increase the attractiveness of this destination.

Once completed, the MTHL will be the most

significant link between island city zone and Navi

Mumbai in Sewri and Nhava respectively.

At present, Vashi is the established residential

micro-market in the zone with prices averaging at

`10,000/sq.ft. However, the price in Ulwe is

around `4,000/sq.ft., which is a 60% discount.

Based on our investment rationale as discussed

above we expect this discount to narrow down to

38% by 2017.

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

Dearth of social

infrastructure is a

concern. However,

planned development will

address the same in the

foreseeable future

Ulwe will benefit on

account of the corollary

commercial acivity arising

from the upcoming

international airport and

the SEZ land

The discount factor of

residential capital values

in Ulwe in comparison to

Vashi will reduce to 38% by

2017

Ulwe has access to the

zone's 5 major office

markets within a distance of 22 km.



Distance

22km

18km

16km

15km

7km

11km

ROLI IA HAA PEM

R EA LBA VA ISH

RBHU ET

CB RD U PB AEL

Investment Options in Ulwe



SELECT PROJECTS

Project Developer No. of Launch Completion Units Date Date

Vighnaharta Shree Complex 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 office market of CBD Belapur is at a distance of

just 7 km.

Ulwe residential property is forecasted to

appreciate by 145% over the next 5 years

Of the 3,518 residential units launched in Chembur

since 2007, 2,625 units

are sold


DESTINATION CHEMBUR

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 Refinery. The Eastern Expressway is the most significant project that connects the region with 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 exceptionally good period for the residential 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 have refrained from launching new projects this 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 the MMR, overall growth of employment in the city will drive the residential market of Chembur

845

The Eastern Freeway project and the Santacruz Chembur Link Road will significantly enhance the connectivity of Chembur with island city and western 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 major office markets of the central zone but also the island city zone, western zone and Navi Mumbai zone. Hence, the overall growth of employment in the MMR will feed the residential market of this destination. Due to its proximity to the revered office market of the Bandra Kurla Complex (BKC) and increasing concentration of office developments in the central zone, we expect the attractiveness of residential property in this destination to go up in future. At present, the destination has connectivity through the Eastern Expressway, which connects it with the prominent office space locations in the central zone. Besides, the mass rapid connectivity is provided by the suburban rail network that connects it with the CBD locations of Fort and Nariman Point through Mumbai CST.

Going forward, scale of upcoming infrastructure projects will significantly boost the connectivity of Chembur in the foreseeable future. The Eastern Freeway Project is one important project that will link Chembur with the CBD of South Mumbai. This link, running parallel to the Eastern Expressway,

is in advanced stages of construction and shall be operational by H2 2013.

The Santacruz Chembur Link Road is another pivotal infrastructure project that will connect Chembur with the western zone. This 6.45 km. road will start at Amar Mahal Junction in Chembur and end up to Santacruz East thereby becoming a connecting link between the Eastern Expressway and the Western Expressway. This link will significantly reduce the travel time from Chembur to the western zone when it is ready in 2013.Connectivity through a mass rapid transport system has a particularly high bearing on the growth of real estate development in the MMR. The upcoming 20.2 km. Chembur –Wadala- Jacob Circle monorail project is the first monorail project in the MMR. Phase I beginning from Chembur and terminating at Wadala is in advanced stages of construction and expected to be open to public by early 2013. Phase II will connect Chembur with Jacob Circle in the island city zone via Wadala. This project will directly link Chembur with the office market of Lower Parel.The Metro Rail Phase II (Charkop - Bandra- Mankhurd) will further enhance the connectivity

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

67%

51%

The Chembur-Wadala phase of monorail project is in an advanced stage of construction 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 complete in our forecast horizon of five years, it will have a positive impact on prices during this period.

At present, Prabhadevi is an established residential market commanding an average price of `36,000/sq.ft. At an average of `12,000/sq.ft. Chembur residential property sells at a 67% discount. Based on our investment rationale discussed above, we forecast this discount to narrow down to 51% by 2017.

A CL OR MU PK LEA XR D (BN KA CB )

DAVI OK RH R 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

10km

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 308 May-10 Jun-14 Group

Brizo Red Brick 132 Dec-10 Dec-14Residency

Mangal Mangal Moorti 250 Jan-10 Dec-14Moorti Developer

Akshay Akshay 70 Jun-11 Oct-14 Paradise Corporation



Limited land availability will limit the scope of new construction in Chembur

Prominent office markets of BKC and Lower Parel are located within a distance of 12 km. from Chembur

Residential property in Chembur would appreciate

by 125% over the next

5 years


DESTINATION WADALA

Wadala is a residential market in the central 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 Wadala since 2007, 1,387 units were launched in 2011 alone

Being strategically located, Wadala will benefit from its connectivity with employment hubs across the MMR

With a slew of launches in the premium segment, the perception of Wadala as a residential market has significantly 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 location, the overall growth in the MMR office market will have a bearing on this destination. Besides, the proximity of 8 km. and 10 km. from prominent office markets of BKC and Worli 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 Wadala offers large land parcels to develop residential projects with sky scrapers offering 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 connects this destination with the CBD of Nariman Point, Fort and Colaba. The suburban

train network connects the destination with Mumbai CST in the island city zone, Andheri in the western zone and Vashi and CBD Belapur in the Navi Mumbai zone. This strategic location along with established road and suburban train connectivity with the important office markets in each zone make Wadala a promising residential market.

During the next five years (2013-2017), two major 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 connectivity with the CBD in the island city zone. Additionally, the mass rapid connectivity through a convenient and modern means of transport will be provided by the upcoming monorail project. The 20.2 km. Chembur –Wadala- Jacob Circle monorail project will connect Wadala with the upcoming office developments in Central Mumbai namely Lower Parel. While Phase I connecting Chembur with Wadala will be ready by 2013, the work for Phase II, connecting Wadala with Jacob Circle, is yet to be commissioned.

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

37%

58%

2012

Wadala residential market will benefit due to its connectivity with the premium office market of Bandra Kurla Complex (BKC)

The region development authority's intention of developing Wadala in a similar manner as BKC will further increase the appeal 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 this discount will narrow down in the next five years (2013-2017) and come down to 37% by 2017.



Investment Options in Wadala

INVESTMENT TICKET SIZE SELECT PROJECTS


Dosti Dosti Group 288 Nov-10 Sep-14Ambrosia

New Cuffe Lodha Group 900 Oct-11 Nov-15Parade

Vishwachand R.K. 100 May-11 Dec-13 Sky 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 O CK U ARL

ORLIW

N TA NIRI OM P AN

- KUIR RE LAH D RN OA AD

DAVI OK R H SR BO LLI-

SHIAVER PW AO RL EL


Wadala has the potential to provide a lifestyle shift, which is possible in projects developed on large land parcels that facilitate high rise premium developments with plush amenities

Wadala residential property 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, 22 km and 28 km from prominent office markets 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 account of container traffic from JNPT, the traffic 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 A D 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 enhanced connectivity with the important office 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 biggest beneficiaries on account of this connectivity with the CBD locations of Nariman Point, Fort, Colaba. The financial feasibility has 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 significantly improve the connectivity of Ranjanpada with the revered island city

Suburban train connectivity will establish Ranjanpada as a residential market in the

next 4 years


5.054.0%3.76 3.0%

PUNE METROPOLITAN REGION POPULATION

Population in Millions



2.49 4.0%

1991 2001 2011

Pune, also referred to as the ‘Oxford of India’ due to the presence of

numerous educational institutes, is the seventh most populous city in India

and the second largest city in Maharashtra. Pune’s urban agglomeration,

also known as the Pune Metropolitan Region (PMR), is spread over 1,340

sq.km. and consists of Pune Municipal Corporation (PMC), Pimpri

Chinchwad Municipal Corporation (PCMC), Pune Cantonment and Khadki

Cantonment. As per Census 2011, the total population of PMR was 5.05 mn.

Development of the PMR is undertaken by various agencies such as the

PMC, PCMC, Public Works Department (PWD) and others. Absence of a

single planning authority for the metropolitan region has led to an

inordinate delay in the execution of various infrastructure projects. Although

the idea to set up the Pune Metropolitan Regional Development Authority

(PMRDA) was first initiated in 2008, it is still at the proposal stage.

PUNE

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 Region is spread over

1,340 sq.km. and has a

population of 5.05 mn.

Market Overview


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

Pune is divided into five broad zones: Central, 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 like Thermax, Forbes-Marshall, ThyssenKrupp and Alfa Laval also have their manufacturing base here. Historically, North Pune has been a self-sufficient zone with the residential market thriving on the employment generated by the manufacturing sector. Pimpri, Chinchwad, Nigdi and Moshi are some of the prominent residential destinations here.

Central Pune is the commercial heart of the city with various corporate offices located in the Central Business District (CBD) areas of Bund Garden Road, M.G Road, Deccan and Shivaji Nagar. Good physical and social infrastructure, presence of organized retail, excellent connectivity with various parts of the city and limited availability of vacant land have ensured 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

cheaper alternate residential zone compared to Central Pune. People preferring to reside in proximity to the city centre but unable to afford a house there, favor these locations. Absence of any significant employment opportunities has restricted the growth of this zone as compared to other zones. Katraj, Kondhwa, NIBM Road and Warje are some of the major residential destinations here.

Large number of IT/ITeS offices, robust physical and social infrastructure, established organized retail market, presence of the Pune airport and proximity to the city centre have resulted in East Pune emerging as the most preferred residential zone in the last ten years. Development of Magarpatta City as a self-sustaining integrated township and setting up of EON IT Park have further boosted the residential market here.

However, the emergence of Hinjewadi in West Pune as an alternate IT/ITeS destination has been giving a tough competition to the offices located here. A lot of blue chip IT/ITeS companies prefer Hinjewadi over East Pune due to the availability of vast vacant land on which built-to-suit offices can be constructed for captive use. Although East Pune continues to attract small and mid-sized IT/ITeS companies, most of the larger players are 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 led to an unprecedented growth of the western part

Since 2007, the city has witnessed the launch of

200,301 units of

which 154,874 units

have been absorbed till Q3 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 Wakad have immensely benefited from the large number of IT/ITeS jobs created here. Availability of large tracts of vacant land at affordable prices 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 and East Pune respectively

Real Estate Drivers




Old Mumbai-

Pune Highway via Pimpri Chinchwad Central Pune

Mumbai-Pune

Bypass Road (NH-4) Mumbai-Pune Expressway and Pimpri

Chinchwad in the North and Pune-Bangalore Highway in the South

Pune Nashik

Highway (NH-50) the North via Chakan Moshi with the city center

Pune Solapur

Highway (NH-9) towards Solapur in the East East Pune from the city centre

Starts at Shivaji Nagar towards Mumbai A vital road connecting Pimpri Chinchwad with

Connects Katraj in the South Pune with Provides seamless connectivity with Hinjewadi

in West, Mumbai-Pune Expressway in North

Starts at Kasarwadi towards Nashik in Connects North Pune markets like Bhosari and

Starts from Camp in the city centre Provides easy connectivity with Hadapsar in




Service Sector

IT/ITeS Sector


Auto & Auto Ancillaries

Engineering

Rail Network

Pune Metro Rail Corridor I & II


Ring Road

Road Network

CONNECTIVITY DESCRIPTION CURRENT EXPECTED

STATUS COMPLETION

Outer Ring

Road I (NH-9) - Wagholi -

in North Pune

Outer Ring

Road II (NH-50) - NH-4 -

Pirangut a detailed project

Outer Ring

Road III Sinhagad - Pune-

Outer Ring

Road IV Theur Phata

(NH-9)

Theur Phata This road will provide direct Feasibility study 2017-18

connectivity between NH- 9 in and preparation of

Chimbli (NH-50) East Pune and NH-50 a detailed project

report

Chimbali Phata Easy access between North and Feasibility study 2017-18

West Pune and preparation of

report

Pirangut - Will connect West Pune with Feasibility study Post 2018

Sinhagad and Pune-Bangalore and preparation of

Bangalore Highway in South Pune a detailed project

Highway (NH-4) report

Katraj (NH-4) - Will directly connect NH- 4 in the Feasibility study Post 2018

South and NH- 9 in East Pune and preparation of

a detailed project

report

IT/ITeS, Auto

and

Engineering

sectors are the

primary employment

drivers

Pune is connected

through 4 major arterial

roads

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 next five years. The presence of a large number of manufacturing plants in its vicinity will immensely benefit Pune.




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

feasibility study

Pune Metro Rail Corridor II

Ramwadi - Pune Will connect the heavy traffic route 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 the total office stock and this share is expected to go up further as new IT/ITeS offices become operational in the coming years.

The office space market in the city has witnessed tremendous growth in the last six years with the total office stock increasing more than three 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%



Central NorthWest South East

46% 32%

14%

5%

3%

Employment Indicators in Pune

Phase I of the metro from Ramwadi to Wanaz is expected to be completed

by 2017-18

Currently the IT/ITeS sector accounts for

74% of the total

office stock

46% of Pune's office

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 mn. sq.ft. of office space to become operational in the next five years taking the total stock to 90.5 mn. sq.ft. by the end of 2017.

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 and eventually reduce the vacancy levels to 17% by the end of 2017. We have forecasted an incremental demand of 26.7 mn. sq.ft. in the next five years taking the total occupied space in the city to 74.9 mn. sq.ft. by 2017.

COST DETAILS

Stamp Duty 5% (Higher of agreement value or ready reckoner rate)

Registration 1% upto a maximum of `30,000

Value Added Tax (VAT) 1% on agreement value

Service Tax 3% on agreement value. Levied on under construction properties.


NORM DETAILS

Time line for property registration Within 15 days of booking

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

Loading 30% on carpet area

Brokerage 1-2% of property value

MARKET NORMS

100

90

80

70

60

50

40

30

20

10

26.7 mn. sq.ft. office

space is forecasted to be absorbed in the next 5 years

90.5 mn. sq.ft. of office

space stock is expected to be 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 manufacturing plants are located, will benefit 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 significant benefit of incremental employment will be felt on North Pune.

East and West Pune will accrue the maximum benefit of incremental employment in Pune, as more than three-fourth of the existing office 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 the upcoming office space. While 16.8 mn.sq.ft. of incremental office stock will be added to West Zone, the East will add only 9 mn.sq.ft. In addition to this, offices in East Pune are spread across different destinations such as Hadapsar, 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 80% of the offices in West Pune are located in Hinjewadi. This increases the importance of the destinations that are located in close proximity to Hinjewadi.

South Pune will not witness any significant gain in the residential market, as it is primarily dependent on East and West Pune where most of the employment hubs are located. Additionally, the prices here are equivalent to most of the 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 filled up rapidly in the coming years. A large number of educational institutes, organized retail and entertainment avenues are expected to become operational here in the next five years.


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 account for over 5 mn.sq.ft. of office stock. Plans for further expansion into Phase IV and V are underway and land acquisition is already in


RESIDENTIAL PROJECT LAUNCH TREND IN WEST PUNE


2007 2008 2012*2009 2010 2011

Re-sale before

possession is not allowed in most of the projects

While 16.8 mn. sq.ft. of

incremental office stock will be added to the West Zone, the East will add only 9 mn.sq.ft.

The attractiveness of Pimpri Chinchwad

as a manufacturing hub is slowly fading out, with many companies shifting their units to alternate cheaper locations

16,710

10,513

5,865

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*


process. Over the next five years, Hinjewadi is set to become one of the largest office space hubs in India, which will benefit the adjoining residential markets.

Preference of employees in staying close to their work place and affordable pricing as compared to Central Pune will drive the demand for housing in this zone. Destinations along the route to Hinjewadi such as Baner, Pashan, Bavdhan and Wakad have already emerged as preferred residential locations for employees working here. Going forward, destinations located within Hinjewadi and along the Mumbai-Pune Bypass

Road will also witness similar phenomena. From 2007 to Q3 2012, West Pune has witnessed the launch of 73,035 units. The absorption during the same period has been 57,150 units with 22% remaining unsold. The unsold units’ percentage increased considerably post 2009; 28,797 units were launched during 2010 and 2011. The unsold units’ percentage has moved up from 6% in 2009 to 22% in Q3 2012. Developers have taken stock of this oversupply situation and hence reduced the number of new launches. Only 41 new projects consisting of 5,655 units have been launched in 2012.

EXISTING INFRA-STRUCTURE

OUTER RING ROAD II & III

The Outer Ring Road, first proposed in 2007, will be a 170 km. long ring road in the periphery of Pune and Pimpri Chinchwad which will be developed by the Maharashtra State Road Development Corporation (MSRDC) in four phases. The objective of this road is to reduce traffic congestion within the city by diverting outstation vehicles onto this road.

Phase II of the Outer Ring Road will start from Chimbali Phata on the Pune-Nashik Highway (NH-50) in the north and connect Pirangut in the west via Mumbai-Pune Highway and Rihe. Phase III will connect Pirangut with the Pune-Bangalore Highway (NH-4) in the south via Sinhagad. These roads will pass through the western side of

MUMBAI-PUNE BYPASS ROAD

The Mumbai-Pune Bypass Road is an arterial road in West Pune that starts at the Mumbai-Pune Expressway in the north and connects with the Pune-Bangalore highway near Katraj in the south. The road passes through the entry point of Hinjewadi at Wakad and acts as a vital transit route for the various residential destinations located in the West Zone. Since it is a four-lane highway with two-lane service roads, the time taken to various locations on this route is marginal. The road provides multiple access points towards the city centre through the Kalewadi Road, Baner Road and Pashan-Sus 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 the largest office space hubs in India

From 2007 to Q3 2012, West Pune has witnessed the

launch of 73,035 units

The unsold units’ percentage has moved up

from 6% in 2009 to 22%

in SEPTEMBER 2012

feasibility study and prepare a detailed project

report. The construction of Phase II and III will

take a significantly longer time as a large number

of natural bodies and defence land are located on

this route. We expect Phase II to be ready by 2018

and Phase III post 2018. Other than the Outer

Ring Roads, there are no major infrastructure

projects planned in West Pune.

Hinjewadi and directly connect with the Mumbai-

Pune Expressway in north the and Pune-

Bangalore Highway (NH-4) in the south thereby

reducing the strain on the existing Mumbai-Pune

Bypass Road.

MSRDC in June 2012 invited global bids for

appointment of consultants to carry out the


The major employment driver in West Pune is the

IT/ITeS sector. Since 2008, more than 22 mn.

sq.ft. of office space has been constructed in this

zone including the captive offices of companies

like TCS, Infosys, Wipro and Cognizant. In the

next five years, an additional 16.8 mn. sq.ft. of

office space will become operational taking the

total office stock in West Pune to 47.3 mn. sq.ft.

by the end of 2017.

Currently 28% of the total office stock in West

Pune is lying vacant as the slowdown in the

IT/ITeS sector has compelled many companies to

delay their expansion plans. However, the slow

pace of delivery in new projects and improvement

in absorption rate in the coming years will bring

down the vacancy levels to 16% by 2017. We

forecast an incremental absorption of 17.6 mn.

sq.ft. in the next five years taking the total

occupied space to 39.5 mn. sq.ft. by 2017.

The traction expected in West Pune’s office space

is bound to create additional employment in the

zone. Since the preference among IT/ITeS

EMPLOYMENT INDICATORS IN WEST PUNE

employees for residing closer to their workplace

is high, its impact will be positively felt on the

demand for residential units here.

INVESTMENT DESTINATIONS IN WEST PUNEEmployment opportunities in the IT/ITeS sector

will be the primary driver of the residential market

in West Pune. Although prices will rise in majority

of the destinations located in this zone, there will

be certain destinations that will outperform

others. Destinations that are in close proximity to

Hinjewadi or located along the Mumbai-Pune

Bypass Road will witness higher price

appreciation as compared to farther locations

due to the concentration of office space here.

In the last ten years, locations such as Baner,

Balewadi, Pashan and Bavdhan have witnessed

considerable price appreciation, as they are not

only located close to the city centre but also are

easily accessible from Hinjewadi. Rapid

development of physical infrastructure, organized

retail, social infrastructure and entertainment

avenues over the last couple of years have

resulted in West Pune becoming a self-sufficient

zone. This has reduced the need for staying

closer to the city centre. Instead, proximity to the

workplace has become a key factor when buying

Residential development in

West Pune has been

centred along the various

access points of the

Mumbai-

Pune Bypass

Road

The Outer Ring Road will

be 170 km. long, along

the periphery of Pune and

Pimpri Chinchwad

50

40

30

20

10

WEST PUNE OFFICE SPACE DYNAMICS

Before2008

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017E


a house. These factors have led to the emergence

of newer residential destinations like Hinjewadi,

Wakad, Tathawade and Ravet. Apart from being in

close proximity to Hinjewadi, prices in these

destinations are also significantly lower as

compared to Baner, Balewadi, Pashan and

Bavdhan. The difference in price will eventually

narrow down resulting in higher appreciation for

these locations.

Going forward, we expect Hinjewadi, Wakad,

Tathawade and Ravet to witness the maximum

amount of price appreciation in Pune’s residential

market. While Hinjewadi is located within the

Rajiv Gandhi Infotech Park, the other three are

situated along the Mumbai-Pune Bypass Road.

The primary reasons in brief for these four

destinations to outperform others in Pune over

the next five years are:

Ÿ Pune will witness an incremental demand of

26.7 mn.sq.ft. of office space over the next five

years primarily driven by the IT/ITeS sector.

66% of this will be within West Pune.

Ÿ Unlike East Pune, 80% of offices in the west

are concentrated in Hinjewadi. This increases

the importance of residential markets located

in close proximity to Hinjewadi.

Ÿ With West Pune emerging a self-sufficient zone

over the years, the need for residing closer to

the city centre has reduced. Instead, proximity

to the workplace has gained paramount

importance for buying a house.

Ÿ Hinjewadi, Wakad, Tathawade and Ravet

address all the above factors due to their

favourable location

Additionally, prices in these destinations are still

at a significant discount compared to nearby

locations of Baner, Balewadi, Pashan and

Bavdhan. This discount will narrow down in the

coming five years.

Most of the factors that will drive the residential

prices in West Pune will be common for all the

destinations located here. However, the degree of

influence of these factors on each of the

destinations will be different depending on their

location in West Pune. Aundh, which is the most

established destination in West Pune, has been

considered as the benchmark for comparing

prices in this zone and going forward we expect

all the other destinations located here to follow

the price trend of Aundh.

Currently the residential prices in Hinjewadi,

Wakad, Tathawade and Ravet are significantly

lower as compared to Aundh. We believe that

over the next five years, this discount will narrow

down due to the reasons listed earlier.

We forecast an

incremental absorption of

17.6 mn. sq.ft. of office

space in West Pune in the

next 5 years



2012

Aundh Hinjewadi

`7,800

2017E

`11,200

`4,000

DESTINATION HINJEWADI

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 and Ravet to witness the maximum amount of price appreciation

Currently the percentage of 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


Megapolis Properties

Life Republic Developers

Blue Ridge Paranjape Schemes

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% from 2012 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

which 12,864 units have

been absorbed in Wakad

DESTINATION WAKAD

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 unsold which is significantly higher than 4% in 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 coming five years. We forecast the prices to 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

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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 unsold inventory of THE previous years


Investment Options in Wakad



SELECT PROJECTS


Pristine Prolife Properties

Park Turquoise Group

Kalpataru Splendour

Casa Imperia

Elite Homes

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 an extension of Wakad with

only 4 km. separating

them

DESTINATION Tathawade

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.

In the next five years, the price trend in Tathawade will mirror that of Wakad as these two markets are closely linked together. However, the difference in price between them will reduce over 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, the price trend in Tathawade will mirror that of Wakad as these two markets are

closely linked

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 Akshar Developers

Ganga Aurum Park

The Nook Bhojwani Homes

Palladio Vilas Javdekar Group

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

DESTINATION RAVET

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 immensely benefit from the growth in 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 1,744

units has been launched since 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




Celestial City and Pharande

Spaces

Silver Gardenia Construction

Serene Scapes

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 potential investors should consult their own financial, 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.

This publication is confidential to the addressee and is not to be the subject of communication or reproduction wholly or in part. By accepting this report, the recipient specifically acknowledges and 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.

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kf investment advisory report nov-2012

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