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RESEARCH

INDIA REAL ESTATE

INDIA REAL ESTATE


RESIDENTIAL AND OFFICE -
JANUARY - JUNE 2017

AHMEDABAD | BENGALURU | CHENNAI | HYDERABAD | KOLKATA | MUMBAI | NCR | PUNE


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RESEARCH INDIA REAL ESTATE

Connecting
TABLE OF CONTENTS
ALL INDIA 18

People AHMEDABAD 28
BENGALURU 38

& Property,
CHENNAI 52
HYDERABAD 68

Perfectly.
KOLKATA 80
MUMBAI 94
NCR 110
PUNE 128
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RESEARCH INDIA REAL ESTATE

FOREWORD

CHURNING POINT it would trigger some momentary sector is an undeniable reality. Indian Rupee has been a top performing
disturbances but augur well for the industry currency among its market peers over the
There is ample heartburn across the in the long term. Among the various The regulation is set to bring a sea change past couple of years.
industry in the wake of the new regulatory economic policies of the Narendra Modi- in the realty landscape of the country by
environment. Widespread anxiety whipped led government, this will be one of the most attracting new investors and customers. The strong fundamentals, robust economic
up by the implementation of the Real important milestones. growth, political stability, controlled
Estate (Regulations and Development) Act, It will give long pending protection to inflation and the lower interest rate regime
2016 and the recently rolled out Goods GST would be extremely beneficial for the interests of the end-consumers and have improved Indias chances of a
and Services Act (GST) reflects in the the logistics sector. With a wave of new give a substantial fillip to the confidence sovereign ratings upgrade within the next 2
transaction books. infrastructure taking shape in the forms of of various stakeholders including fund years. Albeit, the recent loan wave-offs can
ports, roads and rail networks, the new tax providers such as banks, other financial be a cause of concern.
SHISHIR BAIJAL New launches have dried up, home sales regime would draw massive investments institutions and private equity funds.
CHAIRMAN AND MANAGING DIRECTOR have slipped and piles of unsold stock are Considering the benign inflation numbers
which would potentially transform the look
evident. But at the same time there have The sector would also transform into a we hope that the Reserve Bank of India
and feel of the warehousing industry.
been some positive takeaways which will more organised and transparent place (RBI) to adopt a growth-inducing dovish
augur well for the sector in the long-term. The impact of GST on real estate would under this regime. We have seen in the monetary policy.
There is an indisputable switch towards be primarily tax neutral but loaded with past that regulators have brought in more
efficiency and transparency in telecom, A growing economy would signal healthy

A
building affordable homes. Co-working gains for the affordable housing sector. The
n overhaul entrenched deep insurance and financial sectors. The consumption across all genres of the
space providers are emerging as the new finance ministry has made it very clear that
beneath the usual look and feel of information pertaining to the real estate Indian real estate. With tamed inflation,
big ticket players in the occupier market. there should be no additional tax burden
imagination is taking shape in the sector will be available in a systematic uptick in industry sentiments and a good
And, the logistic sector is attracting million- on consumers. It would also add another
Indian real estate sector. manner leading to easy accessibility and monsoon forecast the need of the hour is
dollar investments. strategic push to affordable housing
which in turn will drive the recovery of the transparency. to embrace a monetary policy that propels
Metro cities are bustling with massive
In a nutshell, the Indian real estate residential sector. growth.
beehive-like infrastructure work, affordable The governments push towards affordable
sector is probably grappling with the
homes shaping a new skyline, investments housing, banks cutting down home
fear of the unknown. We experienced a The intention of GST is to bring in
worth millions of dollars pouring in loan interest rates and uptick in buyers
similar dilemma in the recent past when efficiency in the entire tax system, the
from sovereign funds and a significant sentiments would collectively revive the
demonetisation crippled growth. But implementation of which will see lot of
section of fringe players are on the edge much-ailing sector.
six months on, the sector is looking up teething issues. But eventually it will pave
engulfed by a new order of reforms driving
towards a bright future. the way for an extremely efficient tax
consolidation in the industry.
system for the country.
Meanwhile the initial concerns from GOING FORWARD
Secondly, the RERA Act has drummed
geopolitical uncertainties such as the US TRUMP CARDS up buyers confidence back in the sector. India is perhaps the only bright spots
polls, BREXIT and other crucial elections in
We have already seen the spontaneous among emerging markets in the world
Europe have also faded away. First, the much awaited roll out of the
action by the Maharashtra regulator or the today. The International Monetary Funds
Goods and Services Tax (GST) would
With all economic indicators in the pink of MahaRERA. Even as other states struggle recent World Economic Outlook has
be the single largest tax reform post-
health the need of the hour is to embrace a to bring out their respective versions of the predicted an envious growth rate of more
independence. Much like the initial
monetary policy that propels growth. central act the new order in the housing than 7% for the country. In addition the
heartburns caused by demonetisation
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RESEARCH INDIA REAL ESTATE

assets like bonds, commercial assets of the currency has appreciated against the investors to invest in this sector.
private developers and REITs in emerging U.S. dollar; which further substantiates
markets. The increase in interest rates in the the strong macros. In addition to the
developed markets has also caused their improving macros, a slew of policy reforms ARE INVESTORS RESPONDING?
domestic currency to strengthen and assets taking place in the country have wooed
The governments emphasis on housing
in emerging markets have started becoming foreign investors back to its shores. The
and its efforts to mitigate the risks in
cheaper from the investment perspective. new government has implemented several
the real estate sector by introduction
As these emerging markets develop and reforms to streamline and formalise the
of RERA has not gone unnoticed by
grow, over a period of 10-15 years their economy across all sectors. The recent
foreign institutional investors and also
currency would strengthen against the roll out of the Goods and Services Tax
the sovereign and pension funds. A large
currencies of developed markets and hence (GST) Act could be the corner stone in this
number of these investors and funds have
at the time of exit, the long term investors endeavour.
made changes to the portfolio allocation
would not only gain from appreciation in
strategy allowing investment exposure to
assets but also gain from movement in
Indian real estate. The pension and private
exchange rate. The strong fundamentals, robust economic
equity funds are investing in commercial
growth, political stability, controlled inflation
assets (office spaces and malls) and also in
and the lower interest rate regime have
under-construction residential properties.
INDIA: RESURGENCE OF THE GEM OF improved Indias chances of a sovereign
Players such as Qatar Holdings, CPPIB,
EMERGING MARKETS ratings upgrade within the next 2 years
Blackstone, Ivanhoe Cambridge, APG and
However, the recent loan wave-offs can be
Post the financial crisis in 2008 developing Xander are readying blueprints for long-
major cause of concern for deferring the
countries like Brazil, Russia, India, China term investments in the realty segment. Not
upgrade.
and South Africa (BRICS) among others just foreign investors even the domestic

INDIAN REALTY:
played a crucial role in driving the global investors are raising funds to invest in this
economy forward. But over the period of sector.
INDIAN REAL ESTATE:
time unaddressed structural problems
A NEW PARADIGM ON ANVIL

AN UNDERRATED
coupled with high currency volatility in
these markets forced investors to move Real estate has been a key driver for the
their money back to developed markets. economy. However, poor transparency

GOLDMINE. While Brazil, Russia and South Africa were


seriously affected by collapse in commodity
prices and political instability, weak
in the sector and dwindling consumer
confidence had put the industry under strain
in the past 3 to 4 years.
government, policy paralysis and worsening
The recent introduction of the Real Estate
fiscal metrics crippled Indias growth story.
(Regulation and Development) Act, 2016
- BY NIBODH SHETTY As these emerging
has pumped in a new lease of life into
markets develop and
the sector. The is expected to weed out
FLASHBACK The unemployment rate in major But the tables have turned. With a stable grow, over a period of
unorganised players from the industry
economies, particularly the US, has come government having comfortable majority in
After nearly a decade-long era crippled and whip up buyers confidence bringing 10-15 years their
below to its pre-recession levels and wage parliament, the confidence has returned.
with economic and political uncertainty the buoyancy back into the sector. currency would
growth has finally started picking up. The India has now become one of the fastest
global economy has stabilised and showing
improving job prospects accompanied growing economies in the world and would strengthen against the
healthy signs of recuperation. A reflection currencies of developed
with higher wage growth poses a threat of retain that status for the foreseeable future.
of the resurrected economic environment The subsequent stride in re-engineering
inflation rising rapidly. Since the nominal Although China was the only performing
momentum back into the sector was the
markets and hence at the
came across in the International Monetary
domestic returns on savings instruments emerging market until recently, today time of exit, the long term
Funds latest World Economic Outlook governments push towards affordable
in these economies are low, the inflation it faces imminent threat from high debt
(WEO). housing. By giving it infrastructure status investors would not only
adjusted real returns would be lower and and excess capacities. It has also been
the government would attract private gain from appreciation in
in many cases negligible possibly even downgraded by Moodys.
developers towards these projects. At the assets but also gain from
sub-zero. This is making their pension
The projections indicate that the global same time home loan sops and interest
and sovereign funds as well as domestic movement in exchange
GDP would grow above 3.5% per annum subsidies under the Pradhan Mantri
investors look for assets abroad which India on the other hand is projected to grow
Awas Yojna would fire up the demand for
rate.
over the next 5 years. In the wake of the
can deliver higher inflation adjusted real at the rate of more than 7% according
changing scenario the era of low interest these homes. The expected increase in
returns. A large number of such investors to the IMFs world economic outlook
rates and loose monetary policies in transparency due to implementation of
have modified their portfolio allocation forecast. Its economic robustness is also
developed economies is fading away with RERA and formalisation of sector with the
strategies to allow increase in exposures substantiated by the performance of its
Central Banks increasing interest rates in implementation of GST, the sector would
to emerging markets which give potential currency. The Indian Rupee has been a top
anticipation of higher inflation in developed aid the sector in getting access to variety of
for higher returns despite subjecting the performing currency amongst its emerging
countries such as U.S and Canada. formal sources of finance.These reforms will
portfolio to higher risk. The pension funds market peers over the past 2 years. The
go a long way in enticing the institutional
prefer to invest in regular income generating volatility in the currency has reduced and
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RESEARCH INDIA REAL ESTATE

SUMMARY OF RECENT SELECT INVESTMENTS BY GLOBAL INVESTORS INTO INDIA REAL ESTATE SOME OF THE RECENT FUND RAISES/INVESTMENTS INCLUDE-

DATE INVESTOR INVESTMENT FUND/ DEAL DETAILS DATE INVESTOR INVESTMENT FUND/ DEAL DETAILS
COMPANY (TARGET) COMPANY (TARGET)

June 2017 KKR Lodha Group $100 million equity investment 2017 Piramal Finance Ltd. Piramal Enterprise Piramal Finance plans to invest $171 million into real estate develop-
er Embassy Groups projects
June 2017 Qatar Holding Affordable Housing Fund Invested $250 million in Arthveda Fund Management
Pvt. Ltds new Affordable Housing Fund 2017 Kotak Realty Fund Kotak Mahindra Bank Raising $250 million ($100 million in latest tranche and $150 million
in earlier tranche) to invest in affordable housing projects across the
May 2017 Xander and APG IT SEZ in Chennai Bought an information technology (IT) special
country
economic zone (SEZ) in south Chennai for
around $350 million 2016 Motilal Oswal Real Motilal Oswal Group ` 800 crore in tranche III
Estate ` 500 crore in tranche II
May 2017 GIC DLF Cyber City Developers Ltd (DCCDL) 40% stake in DLF Cyber City Developers Ltd (DCCDL)
Plans to invest in projects of reputed developers across major metros
the commercial arm of DLF for `12,000 crore

2016 Indiabulls Real Estate Indiabulls Asset Manage- Raised `1,400 crore in its third commercial real estate private equity
Apr 2017 Canada Pension Plan Phoenix Mills subsidiary $250 million in multiple tranches into the Island Star
Fund ment Company fund
Investment Board Mall a subsidiary of Phoenix Mills

2016 Milestone Capital Advi- Milestone Capital Advisors Plans to raise INR 1,400 crore in its third commercial real estate
Feb 2017 Dalian Wanda Industrial park in Haryana Plans to invest $12 billion to develop an industrial
sors Ltd Ltd private equity fund
township project in Haryana

2016 IDFC Alternatives IDFC Ltd Plans to raise $300 million to invest in Indian real estate sector
Feb 2017 Ivanhoe Cambridge Private equity fund jointly floated by $250 million fund to invest in metro cities- metro cities
them and Piramal Enterprises Ltd - Mumbai Metropolitan Region, Delhi-National Capital Source: http://economictimes.indiatimes.com/industry/banking/finance/idfc-alternatives-to-raise-rs-2000-crore-real-estate-fund/articleshow/52825410.cms
http://www.dnaindia.com/business/report-ivca-successfully-hosted-its-second-real-estate-and-infrastructure-2477120
Region, Bangalore, Pune, and Chennai.
http://economictimes.indiatimes.com/industry/banking/finance/idfc-alternatives-to-raise-rs-2000-crore-real-estate-fund/articleshow/52825410.cms

Nov 2016 APG Asset Management Joint venture formed $450 million to buy retail real estate in India
GREEN SHOOTS OF RECOVERY next wave of growth. Right from buying of generally the leading indicator of how the
and Virtuous Retail (VR) land, funding of projects to delivery of the sector is going to perform in the near future.
The past 3-4 years have been an extremely
final product to the buyer, the entire process The reality index has outperformed the
Jan 2017 Abu Dhabi Investment Lake Shore India Tie up with Lake Shore India to pump capital into their stressful period for the Indian real estate
is going to witness a drastic change. market over the past year. The government
with markets being subdued in terms of
Authority (ADIA) retail properties has realized the potential of this sector to
launches and sales across major metros. Despite subdued financial performance
create jobs and also drive the GDP growth
May 2016 GIC Viviana Mall Bought 50% stake in Viviana Mall in Thane, on the However, this year is expected to be the of the realty companies over the past few
of the country. Hence it has been trying its
year of inflection with new regulations years, the share price of the companies and
outskirts of Mumbai, for over `1,000 crore best to revive the sector. It would be just
coming into place. These regulations and also the BSE Realty index has outperformed
a matter of time before this sector realizes
Source: http://www.business-standard.com/article/specials/global-pension-funds-chase-indian-infra-for-better-returns-117040600014_1.html reforms would herald the industry into its the market. The share performance is
and starts delivering on its full potential.
http://www.thehindubusinessline.com/news/real-estate/sovereign-pension-funds-look-to-build-on-indian-realty/article9567895.ece

TABLE: PERFORMANCE OF BSE REALITY INDEX BSE SENSEX

155.1

152.7
180

160
126.8

123.1

122.3

127
122.3
122

119.5
112.8

113.5
140
100.7

105.1

105.2
100

Source: Knight Frank Research


120

123.2
118.4

118.4
112.5

114.7
111.8

111.4
110.3
110.8

100
107.4
105.7

104.2
100.6

100.2
100

80

60

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SENSEX REALITY INDEX
20

0
01/04/2016 01/05/2016 01/06/2016 01/07/2016 01/08/2016 01/09/2016 01/10/2016 01/11/2016 01/12/2016 01/01/2017 01/02/2017 01/03/2017 01/04/2017 01/05/2017 01/06/2017
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RESEARCH INDIA REAL ESTATE

According to estimates,
the shortage in urban
housing is around 1.9
crore (19 million) units
and 95% of this shortage

PUSH TO is in the affordable


housing segment. In a

AFFORDABLE
bid to bridge this huge
gap between demand
and supply of housing,

HOUSING the Government of India


launched the Housing
for All by 2022 initiative
in June 2015.
- BY PANKAJ ANUP TOPPO

S 1
ince the turn of this century, the country has been through a couple housing projects. To make these projects cities while for the rest of the country,
attractive 100% deduction for profits was including the peripheral areas of metros,
of cycles of bust and boom in the real estate sector. During these
allowed. These projects needed to be 60 square metres will apply. Under the
cycles there have been many who have been able to realise their CREATING A CONDUCIVE approved between June 2016 and March revised guidelines, the project needs to
dream of having a roof over their head but still there is a huge section ENVIRONMENT. 2019 and had to be completed within three be completed within a period of five years
The Housing for All by 2022 initiative years of approval. Minimum Alternate Tax from the date of getting the approval. The
of the population who is not that fortunate. According to estimates, the
by the Government of India has been one will be applicable on such projects. In period of getting the approval however,
shortage in urban housing is around 1.9 crore (19 million) units and 95% the Union Budget 201718 proposals, the stands unchanged, i.e. approvals need to
of its major focus areas. The first major
of this shortage is in the affordable housing segment. In a bid to bridge push by the government to the affordable guidelines for affordable housing projects be received between June 2016 and March
housing sector came in the Union Budget were further sharpened and were made 2019. The most important boost that the
this huge gap between demand and supply of housing, the Government of
201617 proposals, where it laid down the more practical. The dimensions of the Union Budget 201718 proposals gave to
India launched the Housing for All by 2022 initiative in June 2015. Among

95%
guidelines that housing projects need to housing units were changed. Instead of a the affordable housing segment was that it
other objectives to fulfil this initiative was to provide affordable housing qualify to be categorised as an affordable built-up area of 30 and 60 square metres, granted it an infrastructure status. This had
housing project. As per the budget the carpet area of 30 and 60 square metres been one of the long-standing demands
in partnership with public and private developers. Since the launch of
proposals, housing projects in which flats will be considered for a housing project to of the sector. This initiative would give
the housing for all initiative, the government has come up with various qualify as an affordable housing project. banks more elbow room to provide loans
with built-up area of up to 30 square metres
policies that would help to create a conducive environment so that private Shortage is in the affordable in the four metro cities and 60 sq metres Also, the 30 square meters will apply only for houses in this segment at a much more
in other cities will qualify as affordable in case of municipal limits of the four metro competitive rate.
developers can make their foray in this field. housing segment.
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RESEARCH INDIA REAL ESTATE

In affordable housing projects two The Goods and Services Tax (GST), which
parameters play a very important role in came into effect from 1 July 2017 has also
the success of a projectthe pricing of the been giving nightmares to the players from
project and second its timely completion. the supply side as well as to homebuyers.
At present even in affordable housing The general perception was that under
projects there have been instances of GST, the tax would go up from 5.50%
projects not being completed on time. To (service tax plus VAT) up to 12%. To dispel
ensure that this anomaly (of delay in timely such fears, the government has made it
completion) in the real estate sector is clear that the tax incidence is likely to go
removed, the government implemented the down rather than up under GST and that Response from the
Real Estate (Regulation and Development) the developer should pass on the benefits developers. During our
Act (RERA), 2016 in full letter and spirit to the consumer. This in turn means that field surveys in the Mumbai
from 1 May 2017. Among other things, prices could further decrease under GST, Metropolitan Region
as per the provisions of this Act, players or in other words affordable housing could
(MMR), Delhi NCR and
from the supply side will have to complete become just more affordable.
their projects within the time they specify,
Bengaluru, it was observed
to the relevant Authority, when applying that the affordable housing
scheme has received a

2
for registration of their housing project.
Since housing projects where more than very good response. In the
eight apartments are developed, for the MMR, affordable housing
purposes of selling, will be covered under RESPONSE FROM THE BANKING projects have already
RERA, affordable housing projects will SECTOR.
automatically come under the purview of
started taking shape.
the new legislation as they are typically In a move that will give further fillip to the XRBIA Chembur Central
large-scale projects. This will further affordable housing segment, banks and by XRBIA and Crystal
financial institutions have started to cut
ensure that the players operating in the Group, in Mumbai, is one
affordable housing space complete their the interest rate on home loans. The public
such example. Ruparel
projects within the stipulated time. To sector giant, State Bank of India, cut the
interest rate on its home loan by 25 basis Realtys affordable housing
ensure that developers can do this in an
efficient manner, the government needs to points for loans up to `30 lakh for new project in Kandivali West is
further make sure that there are processes homebuyers. As a result of this rate cut, the another example.
in place that will provide approvals in an applicable rate for new home borrowers for
a loan up to `30 lakh is 8.35%. Following

3
efficient manner. like the ones mentioned above, are yet to a structural shift from the supply side. We
the rate cut by the State Bank of India,
be visible on the ground in markets like can expect affordable housing projects to
other leading players in the home loan
Delhi NCR and Bengaluru but during our come up within metro cities and in urban
The Pradhan Mantri Awas Yojyna (PMAY) space like ICICI Bank and HDFC too RESPONSE FROM THE field visits, it was noted that a number of agglomerations like Thane in the MMR
introduced in June 2015 is another initiative followed suit. ICICI Bank reduced its home DEVELOPERS. leading developers have plans to realign and in Gurugam and Noida in Delhi NCR.
by the government that will give a boost to loan rates by 30 basis points for loans
During our field surveys in the Mumbai their business objectives and build more However, an affordable housing project is
affordable housing. It is an interest subsidy up to `30 lakh. After this rate reduction,
Metropolitan Region (MMR), Delhi NCR modest, affordable apartments. The plans a volume game, the major challenge for
scheme called Credit Linked Subsidy the effective rate for a salaried woman
and Bengaluru, it was observed that the are still in the initial stages and a few the Government of India will be to facilitate
Scheme (CLSS) for purchase/construction/ is 8.30% and 8.40% for others. Housing
affordable housing scheme has received affordable housing projects are expected in providing suitable land parcels and that
extension/improvement of house catering Finance major, HDFC, too reduced its We can expect affordable
a very good response. In the MMR, to be launched in the forthcoming months. too at a competitive price for the project to
to the economically weaker sections, interest rates on home loans up to housing projcts to come
affordable housing projects have already be financially viable. It also goes without
`30 lakh to 8.35% for women and 8.40%

4
lower income groups and the middle up within metro cities and started taking shape. XRBIA Chembur saying, the importance of having systems
income group. Under this scheme housing for others. With banking giving the
necessary push to the affordable housing
urban agglomerations like Central by XRBIA and Crystal Group, in in place that will help in getting approvals
loans of up to Rs 9 lakh and Rs 12 lakh
Thane in the MMR and in Mumbai, is one such example. Ruparel in an efficient manner.
segment, others players in this space
will now get interest subvention of 4% and CONCLUSION.
should take a cue and reduce their rates Gurugram and Noida in Realtys affordable housing project
3%. This scheme should give a boost to
in Kandivali West is another example. As result of the above mentioned push
housing projects in the peripheral as well. Delhi NCR.
Instances of affordable housing schemes, towards affordable housing, we will witness
areas of metros.
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RESEARCH INDIA REAL ESTATE

CO-WORKING
SPACES IN INDIA
THE DAWN OF A NEW ERA

- BY SANGEETA SHARMA DUTTA

India is at the cusp of a co-working revolution employee, most of which pointed towards a address in a commercial district located of start-ups and SMEs, buoyed by
better work environment to achieve greater 1520 km away. Like most commodities the governments concerted efforts to
with several large players spread across
heights. The past few decades, therefore, in present times, workplaces, too, have create a sustainable eco-system for
the country. Some of the major co-working were devoted to an evolution in the come to be redefined as space that could entrepreneurs in the country. On their part,
spaces are run by firms like WeWork, workplace, observing significant structural be accessed anytime and from anywhere, the entrepreneursa large number of them
change in office space, right from space providing Just-In-Time services with the being millennialsbelieve in harbouring
Office Pass, Awfis, myHQ, Altf Coworking,
utilisation to placement of equipment help of technology. While this forms just global aspirations and the mantra adopted
CoWrks, Bangalore Alpha Lab, Garge, BHIVE and automation. With newer business one aspect of co-working, the concept of by their start-ups reflect their staggeringly
Workspace, Bombay Connect, Co Life, avenues opening up, office space design co-working spaces essentially involves ambitious mindset that was not prevalent
continued to evolve at an incessant pace, groups of start-ups, creative consultants, till a few years back. This provides a
91 Springboard, Investopad and Innov8,
covering not only its structural facet but freelancers and small and medium perfect platform for co-working business
amongst others. also involving aspects such as recreation enterprises (SMEs) who share workspace centres to cater to the office space needs
facilities and digitalisation of the office. and breakthrough ideas, enhance of these growth-seeking start-ups. Thus,
their business horizon and gain a fresh with the increasing number of start-ups
In the age of millennials where disruption is the order of
standpoint on their own businesses by the and freelance professionals in the country,
the day, office space has come a long way since it was It comes as no surprise that with the dint of sharing workspaces. there is a palpable demand for co-working
conceptualised as a place of work, with ungainly desks quantum of ground covered in office space spaces in metro cities that had hitherto
and chairs comprising the set up. Over the years, various design and development, a workplace been lying untapped.
researches endeavoured to map the productivity of an today has ceased to be a single, fixed India, today, is witnessing a proliferation
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RESEARCH INDIA REAL ESTATE

lease out their entire area, or a large part of


it, to companies that can act somewhat as
anchor tenants, thereby helping them get
START-UPS AND SMES STAND TO SAVE
a fixed-income stream.

15-20%
by working in a co-working space,
Going forward, with the advent of major co-
working players in India and an increasing
number of such facilities coming up across
cities to cater to the demand of start-
while enjoying the benefits of a fully ups and SMEs, the co-working sector is
functional, plug-and-play modern expected to thrive and could prove to be a
workplace.
significant disruptor on Indias commercial
real estate market. Currently, NCR and
Mumbai figure prominently on the seat
availability front, followed by cities such as
Bangalore and Kolkata. Mumbai accounts
for a substantial amount of trasactions as
well. However, at present, the segment is at
a nascent stage and not all the co-working
operators are likely to be able to hold their
of seats, based on business needs. Awfis is the first company in this space to seat per month in a co-working centre
own in the long run, owing to their inability
Companies can also base their key project have introduced a mobile app that enables in a region like NCR is in the range of
Besides companies, people such as to mitigate the risks in their business
teams out of co-working places in order to users to find and book office and meeting `10,00015,000 in central business district
business nomads, expats or those models or have enough stronghold in
let them be located close to their clients. spaces on a real time basis in its centres (CBD) Delhi and `12,50015,000 in CBD
travelling to the country for a limited period non-prime markets. This would expectedly
While co-working business centres provide across the country. Besides its own Gurugram. With prime rentals in Gurugram
are amongst those preferring to work out result in consolidation among co-working
a viable model for corporates looking for managed co-working spaces, Awfis also averaging `250 per sq ft per month, an
of co-working spaces. Till a few years ago, operators and the market would be divided
flexibility in work locations, companies offers a large repository of listed third-party office space of 700 sq ft, housing 10
they would have opted to work from coffee amongst a handful of large players.
are slowly realising that collaborative work meeting rooms in hotels in various cities. employees, would amount to a whopping
shops.
spaces where conversation and ideas can Another co-working player, myHQ, offers a `75,000 per month. In contrast, 10 seats in
flow freely and encourage an environment mobile app that lets one book a corner in a co-working centre would cost `150,000
of gainful ideas can improve employee cafes, restaurants and hotels. As opposed per month. Besides, the tenant opting
There are several benefits to be had
productivity as well. to a conventional co-working model, myHQ for co-working space does not have to
from working in co-working set-ups.
converts unused spaces into work areas. worry about heavy overhead expenditures
For one, start-ups get flexible working India is at the cusp of a co-working
Recently, Sequoia India options at affordable rents, as they offer revolution with several large players spread
Additionally, one could even avail discounts or comply towards formalities such as
invested ` 130 crore seats at cheaper rentals in an office- across the country. Some of the major
on food and beverages at the pub or caf providing security deposits, payment of Of late, several developers,
chosen. Meanwhile, WeWork plans to brokerage and even furnishing the office. too, are planning on
in co-working space like environment. The companies are co-working spaces are run by firms like
expand through an operating agreement Thus, ease of working in such pocket-
start-up, Awfis, while offered an organised and synergised WeWork, Office Pass, Awfis, myHQ, Altf starting their own co-
with Embassy Group, who will be providing friendly and hassle-free set-ups has
WeWork, the US-based working environment along with business Coworking, CoWrks, Bangalore Alpha
the capital and will handle the real estate increased the popularity of co-working
working offices to provide
networking opportunities with the other Lab, Garge, BHIVE Workspace, Bombay
shared office space and construction aspects of the American space amongst start-ups and small incubation spaces, or
members. Start-ups and SMEs stand to Connect, Co Life, 91 Springboard,
leader, entered India company. Approximately 6 mn sq ft is businesses. divide large floor plates
save as much as 1520% by working in Investopad and Innov8, amongst others.
last year and signed a co-working space, while enjoying the
planned to be built over the next five years
Despite the demand for co-working space,
for smaller occupants. On
in Bangalore, Mumbai and the National an average, the cost per
an agreement with benefits of a fully functional, plug-and- there are several challenges that have to
Capital Region (NCR).
the Embassy Group play modern workplace. Moreover, the Recently, Sequoia India invested ` 130 be tackled; for instance changing the seat per month in a region
to develop a facility co-working business model also provides crore in co-working space start-up, Awfis, conventional mindset of a client who would like NCR is in the range of
access to a number of shared amenities while WeWork, the US-based shared office want to book a meeting room based on
in Bengaluru at an Of late, several developers, too, are `10,00015,000 in central
and services such as conference rooms, space leader, entered India last year and the touch and feel factor rather than an
estimated investment of planning on starting their own co-working business district (CBD)
Wi-Fi connection, refreshments and signed an agreement with the Embassy app. Further, owing to the inherent risks
$100 million. recreational space, as well as the flexibility Group to develop a facility in Bengaluru at
offices to provide incubation spaces,
involved in the sector, a few operators
Delhi and ` 12,50015,000
or divide large floor plates for smaller in CBD Gurugram.
to scale up or decrease the number an estimated investment of $100 million. strive to mitigate the risk by preferring to
occupants. On an average, the cost per
16

17
RESEARCH INDIA REAL ESTATE

FIGURE -2
HALF-YEARLY LAUNCHES IN THE TOP EIGHT CITIES

H1 2016 H2 2016 H1 2017

30000

25000

Number of units
20000

15000

10000

5000 After the initial


dilemma regarding
0
MUMBAI NCR BENGALURU PUNE CHENNAI HYDERABAD KOLKATA AHMEDABAD
the implementation
of the RERA, largely
Source: Knight Frank Research
all stakeholders have
reconciled to the fact that
FIGURE -3
HALF-YEARLY SALES IN THE TOP EIGHT CITIES RERA will be a reality

ALL INDIA H1 2016

40000
H2 2016 H1 2017
sooner than later. With
developers re-directing
FIGURE -1
efforts from launches to
HALF-YEARLY LAUNCHES AND SALES TREND
IN THE TOP EIGHT CITIES 35000
RERA compliance, pace of
RESIDENTIAL launches was lower in
LAUNCHES SALES
30000
180,000
H1 2017

Number of units
25000

160,000
20000

140,000 15000

After the tumultuous H2 2016 when all stakeholders have reconciled to


10000
Number of units

the demonetisation needle punctured the fact that RERA will be a reality 120,000

the market pulling down residential sooner than later. With developers 5000
sales and launches by 46% and 23% re-directing efforts from launches to 100,000

respectively, H1 2017 has ushered as RERA compliance, pace of launches 0


MUMBAI NCR BENGALURU PUNE CHENNAI HYDERABAD KOLKATA AHMEDABAD
an eventful period. was lower in H1 2017. 80,000
Source: Knight Frank Research
The first two months of H1 2017 In the backdrop of these landmark
60,000
saw consumers and the industry as events this performance has also
a whole grapple with the aftermath been dictated by the developers particularly the residential market latest set of numbers indicate that the country declined by 41% to 62,738
of demonetisation. While activity baggage of unsold inventory, which 40,000 has come with governments focused share of less than `2.5 mn ticket size units in H1 2017 compared to 1,07,120
encouragingly picked up in March and until a year ago was mainly in the under attention to the affordable housing housing that had risen from 17% in H1 units in H1 2016. The decline was 9%
April, May 1 earmarked the dawn of construction category. However, now 20,000 segment. Over the last year the 2016 to 20% in H2 2016, has further compared to the demonetisation period
the single largest change in history of ready for possession apartments government has announced a series of jumped in the latest H1 2017 period of H2 2016 when 68,702 units were
Indian real estate industry through are also available across markets. 0 measures to revive a fresh lease of life to 36%. The category of housing launched. Ahmedabad and NCR wore
H1 2014

H2 2014

H1 2015

H2 2015

H1 2016

H2 2016

H1 2017

the implementation of the Real Estate With ready projects kept outside the into this segment of market. valued at less than INR 5 mn is now as the worst hit with launches falling by
(Regulation and Development) Act ambit of RERA, developers have been much as 71% across the top 8 cities, 79% and 73% respectively.
We believe that the focus on affordable
2016. focusing heavily on sales of their ready substantially higher than the 52% share
Source: Knight Frank Research housing is a structural change and With consumers opening up to the
possession stock. in H1 2016.
After the initial dilemma regarding the Note: The top eight cities are Mumbai, NCR, the supply side response to this focus confidence infused by RERA and
implementation of the RERA, largely The impetus to the realty market Bengaluru, Pune, Chennai, Hyderabad, area implies that it is going to be a With this backdrop, residential a slew of government measures
Kolkata and Ahmedabad sustainable theme going forward. The launches in the top eight cities of the towards affordable housing, sales
18

19
RESEARCH INDIA REAL ESTATE

decline was not as severe as noticed to its peak of in H2 2014. However, the TICKET-SIZE SPLIT OF LAUNCHED
in launches. Sales during H1 2017 numbers are lower mainly on account of UNITS IN THE TOP EIGHT CITIES OFFICE MARKET
declined by 11% to 1,20,756 units in the shrinking market size.
H1 2017 compared to 1,35,016 units H1 2016 H2 2016 H1 2017
With the baggage of unsold inventory Office market fundamentals across the
in H1 2016. Sequentially, however, the FIGURE -2
and the state of the residential property <2.5 mn 17% 20% 36% country remain tight with vacancy levels
sales are 11% better compared to the OFFICE SPACE STOCK AND OCCUPIED
market, weighted average property 2.5-5 mn 35% 39% 35% hitting new lows for the 11th straight STOCK AS OF JUNE 2017
demonetisation period of H2 2016 when
price has stagnated. Developers in period as the supply crunch shows little STOCK OCCUPIED STOCK
1,09,159 units were sold. 5-7.5 mn 22% 20% 15%
most markets have been forthcoming in sign of abating with any meaningful 160
Unsold inventory levels at 5,96,044 offering freebies and discount for sales 7.5-10 mn 10% 11% 6% impact.
units in H1 2017 are 10% lower than closure.
10-20 mn 10% 6% 8% The supply crunch that has hamstrung 140
6,60,239 units in H1 2016 and are
consistently trending lower compared >20 mn 5% 4% 1% the market and macro headwinds in
the form of the slowdown in the IT/
120
FIGURE -6 FIGURE -4 ITeS spending by Europe and USA has
COMPARISON OF CITY-WISE PRICE LEVELS TICKET-SIZE SPLIT OF LAUNCHED UNITS IN H1 2017
(WT. AVG. PRICE TREND) weighed down office space demand
and caused a 10% decline YoY in 100
>`20
The abject lack of fresh

mn sq ft
<`2.5mn `2.5-5mn `5-7.5mn `7.5-10mn `10-20mn
10000
transaction levels during H1 2017 com-
100% pared to a 13% growth in the previous 80 office space is most
reference period.
90% visible in the IT/ITeS sector
9000
80% The 10% decline in transaction levels 60 dominated markets of
translates to 18.1 mn sq ft of office
70%
space being taken up across the six
Bengaluru, Pune and
Number of units

60% office space markets during H1 2017.


40
Hyderabad that currently
8000
50%
A similar 5% decline in supply saw have single digit vacancy
17.9 mn sq ft come online in the same 20
40%
period.
levels at 4%, 8% and 9%
7000 30%
0
respectively.

MUMBAI

NCR

BENGALURU

PUNE

CHENNAI

HYDERABAD
20%

10% FIGURE -1
HALF-YEARLY NEW COMPLETION, TRANSACTIONS
6000
0% AND VACANCY LEVEL (TOP SIX CITIES) Source: Knight Frank Research
` per sq ft

MUMBAI NCR BENGALURU PUNE CHENNAI HYDERABAD KOLKATA AHMEDABAD


NEW COMPLETION TRANSACTIONS
FIGURE -3
VACANCY (RHS)
Source: Knight Frank Research CITY-WISE NEW COMPLETION, TRANSACTIONS AND
VACANCY LEVEL DURING H1 2017
5000 25 20%
NEW COMPLETION TRANSACTIONS
VACANCY (RHS)

18.5%
FIGURE -5
10 25%
CITY-WISE QTS VS AGE OF UNSOLD INVENTORY ANALYSIS

22%
20 9

17.5%
4000
MUMBAI NCR BENGALURU PUNE CHENNAI HYDERABAD KOLKATA AHMEDABAD
18%
20 8 20%

18%
16.7%
mn sq ft
AGE OF UNSOLD INVENTORY IN QUARTERS

15 7
3000

15.6%

mn sq ft
16% 6 15%

15.1%
15

11%
10 5
2000

9%
8%
4 10%

13.3%
14%
10 5 3

4%
12.4%
1000
2 5%

1
0 12%
H1 2014

H2 2014

H1 2015

H2 2015

H1 2016

H1 2017

H1 2014

H2 2014

H1 2015

H2 2015

H1 2016

H2 2016

H1 2017
H2 2016

0 5
5 10 15 20 0 0%

MUMBAI

NCR

BENGALURU

PUNE

CHENNAI

HYDERABAD
QTS
MUMBAI NCR BENGALURU PUNE Source: Knight Frank Research
Source: Knight Frank Research
CHENNAI HYDERABAD
Source: Knight Frank Research Note: The size of the bubble indicates the quantum of unsold inventory. QTS is the quarter to Note: The top six cities are Mumbai, NCR, Source: Knight Frank Research
sell unsold inventory Bengaluru, Pune, Chennai and Hyderabad
20

21
RESEARCH INDIA REAL ESTATE

FIGURE -4
SECTOR-WISE TRANSACTION
SECTOR-WISE TRANSACTION SPLIT DURING H1 2017
SPLIT (TOP SIX CITIES)
IT/ITeS BFSI (Including support service) MANUFACTURING OTHER SERVICES
H1 H2 H1
100%
INDUSTRY
2016 2016 2017
90%
BFSI 12% 13% 12%
80%
IT/ITeS 43% 49% 39%
70%
Manufacturing 16% 17% 18%
60%
Other Services 30% 21% 31%
50%

40%

30%

20%

10%

0%
MUMBAI NCR BENGALURU PUNE CHENNAI HYDERABAD

Source: Knight Frank Research

Consistently falling since H1 2012, the


vacancy level now stands at 12% that
0.5 mn sq ft of office space during H1
2017.
A WAVE OF INSTITUTIONAL
is the lowest level in recent recorded
history. The abject lack of fresh office
space is most visible in the IT/ITeS
In terms of deal size, Pune recorded
the largest deals, marginally edging out
FUNDS EYE INDIAN SHORES
Bengaluru, with the average deal size in
sector dominated markets of Bengaluru,
the city amounting to nearly 48,000 sq
FIGURE -5 Pune and Hyderabad that currently have - BY YASHWIN BANGERA
ft in H1 2017. Chennai and Hyderabad
DEAL SIZE ANALYSIS single digit vacancy levels at 4%, 8%
witnessed the smallest average deal
and 9% respectively.
H1 2016 H1 2017
sizes at 23,000 sq ft and 18,500 sq ft,

D
60000
The IT/ITeS sector share in transactions respectively. eveloped markets in the West have and productive economies. Asia has thus trade and commerce. Similarly, RERA will
has been showing signs of weakening been progressively becoming been attracting increasing capital from help investors and end users navigate the
Average rental values across these
in recent periods but it continues to de-globalised as they experienced investment banks, private equity funds and traditionally dark annals of the real estate
six cities grew at 7% YOY during H2
be the largest driver of office space increasing competition from the developing other financial institutions. Recognising industry.
2016. While Mumbai saw flat YoY rental
in India, accounting for nearly 40% of world. This is a clearly observable the structural shift in Indias economic and
growth, Hyderabad and Bengaluru
the transactions during H1 2017. This phenomenon as the world watches political landscape, foreign capital has
experienced the strongest rental growth
was followed by Other Services sector, Great being taken out of Britain and the been vying to find avenues to invest in this Massive infrastructure projects such as the
40000 at 14% and 8% YoY respectively.
which includes sectors such as consult- hawkish Trump regime policy on work countrys potential growth. Dedicated Freight Corridor (DFC) and the
ing, media, telecom and infrastructure, visas for immigrants.. The protectionist Delhi-Mumbai Industrial Corridor (DMIC)
sq ft

at 28%. measures are purely symptomatic of hold the promise of seamlessly connecting
a much broader economic malaise Sweeping structural reforms such as the the thus far remote corners of the country
Co-working spaces as a trend is emerg-
characterised by the fact that products introduction of the Goods and Services to its existing and future manufacturing and
ing as we see firms taking up space in
and services from developed economies Tax (GST) Act 2017 and the implementation distribution hubs, much like the coast-to-
Bengaluru, Pune and NCR. The concept
20000 are continuously losing ground to those of the Real Estate (Regulation and coast highways and inter-city railroads
of co-working spaces essentially
originating in competitive Asian economies. Development) Act, 2016 (RERA) showcase on which America built the foundation
involves groups of start-ups, creative
the political will of the current regime to of its economy. The DFC and DMIC will
consultants, freelancers and Small and
promote the ease of doing business and involve the construction of almost 9,500
Medium Enterprises (SMEs) who share
As developed economies struggle to hold increase transparency in the massive km of railroads crisscrossing the length
workspace and break through ideas,
their ground in this post-Global Financial Indian real estate sector. The erstwhile and breadth of the country and the
expand their business horizon and gain
0 Crisis (GFC) structural shift, their Asian cumbersome tax web that the GST creation of eight investment regions that
a fresh standpoint on their own busi-
MUMBAI

NCR

BENGALURU

PUNE

CHENNAI

HYDERABAD

counterparts have been flourishing as would replace, created huge compliance will easily prove to be among the largest
nesses by dint of sharing workspaces.
economic realities slowly and surely direct complications and proved to be needless infrastructure initiatives in the world today.
Across the top 6 cities, such co-working
global capital toward the more efficient hindrances to the smooth functioning of Their creation would spawn the need for
space providers have taken up around
Source: Knight Frank Research
22

23
RESEARCH INDIA REAL ESTATE

$
3.41bn
In The first quarter of 2017 saw a massive
USD3.41 bn enter the market.

massive real estate development as Residential and commercial office spaces


factories, office spaces, residential A few notable mentions of have been the staple for institutional
units, malls and warehouses will need recently concluded deals and equity entering the real estate market and
to come up to house the working
investment pledges made in recent forays into alternative real estate
populations of these cities. These property types, such as warehousing, by
infrastructure projects along with the
the Indian real estate space
players such as Embassy, CPPIB and DP
Massive infrastructure Make in India and the Invest in India include: World showcase the increasing appetite
projects such as the initiatives of the government will set the of institutional investors. The Indian real

$1
Dedicated Freight Indian economy on course to become a estate sector attracted $5.7 bn of global
manufacturing powerhouse and enable capital flows in 2016 and just the first
Corridor (DFC) and bn
it to attract global investments to fast- quarter of 2017 saw a massive $3.41 bn
the Delhi-Mumbai 1 bn investment by KKR Asset Finance
track its economic evolution. enter the market. Such aggressive capital
Pvt. Ltd in residential projects in
Industrial Corridor Investment banks and
Bengaluru, Gurugram and Chennai commitments and the propagation of
(DMIC) hold the investment structures Such aggressive private equity funds
promise of seamlessly Investment banks and private equity
DP Worlds $1 bn pledge to tap into capital commitments and the propagation such as Blackstone,
connecting the thus funds such as Blackstone, KKR, JP
opportunities arising in the Indian of investment structures such as REITs KKR, JP Morgan
Morgan and Morgan Stanley, pension and InvITs in tandem with the relaxation of
far remote corners logistics infrastructure space and Morgan Stanley,
funds such as the Canada Pension the FDI policy, will greatly increase market

$0.75
of the country to its Plan Investment Board and logistics pension funds such as
depth and attract further investments in the
existing and future moguls such as DP World, have already bn the Canada Pension
Indian economy in times to come.
manufacturing and forayed into the commercial, residential $0.75 bn Infrastructure Investment Trust Plan Investment Board
distribution hubs, and warehousing space in India. (InvIT) public issue by IRB Infrastructure and logistics moguls

$2
much like the coast- The opportunity and need for further
such as DP World,
development is immense, as just the bn
to-coast highways have already forayed
city of New York has more office space GICs nearly $2 bn acquisition of DLFs
and inter-city railroads than the whole of India and according into the commercial,
40% stake in DLF Cybercity Developers
on which America to various estimates, we currently face residential and
Ltd., which owns and operates its
built the foundation of a shortfall of 18 mn to 23 mn housing leased commercial office spaces warehousing space in
its economy. units. India.
24

25
RESEARCH INDIA REAL ESTATE

A LOOK AT THE PAST. COMING TO THE PRESENT DAY.


Despite the staid nature of the city, it has Moving further west, on the SG Highway
been gradually expanding over the years. is ISCON Crossroad, which presently
As regards the modern beginnings of the is considered to be the city centre of
city, Ahmedabad got its first textile mill in Ahmedabad. To further add value to
1859 courtesy Shri Ranchhodlal Chhotalal. this landmark in Ahmedabad, the top
Since then, many textile mills have sprung residential locations of Bodakdev,
up in Ahmedabad and the city was often Vastrapur, Prahlad Nagar and Thaltej
being referred to as the Manchester of the are close by. The capital values in these
East. Giants like Reliance industries and regions hover around `50006,000 per
Arvind Limited too established their bases sq ft. Most of the micro markets are on
in Ahmedabad. Most of these mills came either side of the SG Highway. While
up in the eastern part of the city. Even micro markets along the SG highway have
today there are mills belonging to Arvind become prime area for offices, residential
that are functional in Ahmedabad. This to developments are mostly coming up in
a great extent defines the character of the the area between the SG Highway and
residential development in this part of the Outer Ring Road. In some cases, like in
city. Even today, this part of the city caters the case of Bopal developments have also

SHIFTING POWER largely to the affordable segment where


capital values hover around `1,800`2,200
spilled beyond the Outer Ring Road on the
western side of Ahmedabad.

CENTRES IN
per sq ft. Most of these affordable housing
units are coming up in the micro markets
of Ramol, Vastral, Narol, Vatva, Nikol and THE OUTLOOK.

AHMEDABADS REAL
along the Naroda Dehgam Road.
While micro markets in the north such
as the Airport Road, Anand Nagar,

ESTATE MARKET
Chanakyapuri, Chand Kheda, Chandlodia,
The western part of the city however,
Gota, Hansol, Vaishnodevi Circle too will
catered to a very different class of gentry.
continue to grow courtesy their locations
The city originally came up around the
sandwiched between Ahmedabad and
banks of the Sabarmati River and around
Gandhinagar the city growth on the
- BY PANKAJ ANUP TOPPO Kalupur, which also houses the citys main
western will remain unabated for a while.
railway station. The main business centres
The real estate market in Ahmedabad before demonetisation, new launches in the The prime reason for this is that the
in this part of the town came up around
is very boring, quipped one of the past six months have nose-dived. Due to Sanand GIDC has been promoted by the
Ashram Road and CG Road, which later
stakeholders of the Ahmedabad real estate lack of clarity on policies like RERA, new State Government of Gujarat for a while
started moving towards the 132-ft Ring
and has received good response from the
market. Another prominent developer launches have considerably slowed down While micro markets Road. As Ahmedabad began to grow, the
explained this very point further. Unlike since January, opined one developer. At a corporate sector. Most experts to whom
along the SG highway Indian Space and Research Organisation
bigger real estate markets like Delhi macro level however, the real estate market we spoke were of the view that Sanand will
have become prime area (ISRO) set up its Space Applications Centre
continue to be the pull factor for the city.
NCR and Mumbai, the Ahmedabad real in Ahmedabad has been slowly spreading in the city, in 1972. A road was made
for offices, residential The areas to look for going forward are
estate market is very stable. There are its wings across the city, more so towards which even in the present day is called
not too many ups and downs, stated its western side. developments are the micro markets between SG Highway
Satellite Road that provided connectivity
the developer. The real estate market in mostly coming up in the to the 132-ft Ring Road. People employed
and Outer Highway and micro markets like
Bopal beyond Outer Ring Road. The capital
Ahmedabad maybe dull and boring but area between the SG at the Space Applications Centre and
it too was exposed to the vagaries of values in Bopal are still around `2,800
Highway and Outer Ring especially those who were not from
policy interventions. Like other real estate 3,000 per sq ft.
Road. In some cases, Ahmedabad started residing along the
markets of the country, the impact of ISRO establishment. Thus, this area
like in the case of Bopal
demonetisation was visible even in the real inherited a cosmopolitan character.
estate market of Ahmedabad but things developments have also
Named Satellite this neihourhood was the
have started to return to the days before spilled beyond the Outer first development to have come up outside
demonetisation happened in India. While Ring Road on the western the 132-ft Ring Road.
sales have certainly moved to the levels side of Ahmedabad.
26

27
RESEARCH INDIA REAL ESTATE

launched has been the lowest


FIGURE -2
in Ahmedabad developers have MICRO-MARKET SPLIT OF LAUNCHED UNITS
responded in a strong manner to
the governments initiative towards H1 2016 H2 2016 H1 2017

affordable housing. Of the total units


launched in H1 2017, 57% were 60%
launched in the sub ` 2.5 mn price
55%

51%
category. If the price bar is raised
8,809 5,200 1,874
to sub ` 5 mn, then of the total units 50%

46%
launched, 75% were launched in this UNITS UNITS UNITS
45%
price category.

40%
40% H1 2016 H2 2016 H1 2017
After hitting a low of 7,400 units in the
demonetisation-induced H2 2016 sales 35%

30%
picked up in H1 2017. This was possible

27%
30%
because of availability of ready to move

23%
25%
in homes as developers were in a rush

18%
to complete their under construction

17%

17%
20%
projects before RERA came into force
15%
from May 1. Sales went up by 7% in

10%

10%
H1 2017 compared to H2 2016 but it is 10%

still lower by 7% than the same period

4%
5%

2%

2%
2%
last year.
0%

CENTRAL EAST NORTH SOUTH WEST

AHMEDABAD 2. MARKET SPLIT OF


RESIDENTIAL LAUNCHES
Source: Knight Frank Research

The lack of available spaces in south


and high capital values In central
The lions share of new launches in Ahmedabad did not infuse much
the last six months happened in North confidence in developers to come up
RESIDENTIAL Ahmedabad which has locations with new projects in these two micro
such as Chandkheda, Gota, Motera markets.
1. AHMEDABAD RESIDENTIAL FIGURE -1
and Ognaj. With prices in west and
MARKET LAUNCHES, SALES AHMEDABAD MARKET TRENDS - HALF-YEARLY
central Ahmedabad breaching the
AND PRICE TRENDS
LAUNCHES SALES WT. AVG. PRICE (RHS) homebuyers affordability level, north TICKET-SIZE SPLIT ANALYSIS
12000 3000
Ahmedabad has emerged as the most OF LAUNCHED UNITS
New launches in Ahmedabad hit a preferred destination for mid-segment
new low in H1 2017. Between January 11000
housing. During H1 2017, more than H1 2016 H2 2016 H1 2017
and June 2017 only 1,874 new
2770
2770

70% of the new launches in this market


2758

10000 <2.5 mn 28.94% 29.78% 56.51%


2730

housing units were launched. Lack of 2800


were below the ticket size of `5 mn.
9000 2.5-5 mn 41.73% 42.72% 22.15%
With prices in west and
clarity, especially on The Real Estate
2645

2635

(Regulation & Development) Act, 2016 8000


After north, east Ahmedabad central Ahmedabad
5-7.5 mn 15.32% 18.50% 15.26%
2551

witnessed the maximum launches. At


Number of units

(RERA) was the single most important 2600 breaching the homebuyers
factor which held back developers from
7000 least 41% of the new launches that 7.5-10 mn 5.45% 6.32% 3.68%
happened in the last six months were affordability level, north
` \sq ft

launching new projects. 6000


10-20 mn 7.54% 2.41% 2.40%
in east Ahmedabad. Most of these Ahmedabad has emerged
Compared to H1 2016, new launches 5000
2400 launches happened in Naroda and >20 mn 1.02% 0.28%
were down by 79% in H1 2017. When as the most preferred
4000 along the Naroda-Dehgam Road.
compared to H2 2016 new launches Source: Knight Frank Research destination for mid-
were down by 64% between January 3000 Of the total units launched between
2200 January and June 2017 the percentage Developers have responded positively
segment housing. During
and June 2017. Going forward, once 2000
there is clarity on RERA and systems share of units launched in south, west to the governments focus on H1 2017, more than 70%
1000 and central Ahmedabad came down to affordable housing in Ahmedabad.
are put in place for its efficient of the new launches in this
implementation launches should pick 0 2000
single digits. While west is a promising
Between January and June 2017, market were below the
H1 2014

H2 2014

H1 2015

H2 2015

H1 2016

H2 2016

H1 2017

up. The interim head for the RERA in market, the prevaing lull in this part of
Ahmedabad had largely been
Gujarat was appointed on 1 June 2017. the market is transient in nature. ticket size of `5 mn.
an affordable market, especially
Even though the number of units Source: Knight Frank Research with regards to new launches that
28

29
RESEARCH INDIA REAL ESTATE

happened in the city. Of the total units


FIGURE -3 MICRO-MARKET LOCATIONS
that were launched in Ahmedabad MICRO-MARKET SPLIT OF SALES
between January and June 2017, close
Central Paldi, Vasna, Navrangpura, Maninagar, Dudheshwar, Ambawadi
to 79% happened in the sub ` 5 mn H1 2016 H2 2016 H1 2017
ticket size. East Naroda, Vastral, Nikol, Kathwada Road, Odhav
35%
What sets H1 2017 apart from the North Gota, New Ranip, Tragad, Chandkheda, Motera

32%

32%
previous six months is the fact that
South Narol, Vatva, Vinzol, Hathijan

30%
30%
housing units launched in the sub `

28%
30%

27%
2.5 mn almost doubled. Also, in H1 West S. G. Highway, Prahlad Nagar, Bopal, Thaltej, Science City Road

25%
2017 the lions share of new launches
25%
happened in the sub ` 2.5 mn price
AHMEDABAD MICRO-MARKET MAP

22%

SA BA
bracket. Ganpatpura Jamiatpura
20% Shantigram Gujarat International

RM
17%
Pore Raysan ATI Finance Tec-City
Adalaj R
Karoli

IV
3. MICRO-MARKET WISE Vadsar Jaspur
Pirojpur

ER
15%

13%
RESIDENTIAL SALES

12%
Khoraj Ambapur
Dantali Na Valad
rm
Khodiyar ad

9%
9%
Thol aM
From the new launches From the new launches between Jan-
10%
Lilapur ain

8%
Khatraj Zundal Ca Karai

7%
uary and June 2017 the definite move nal
between January and June Thol
n al Lapkaman
Ca Tragad Limbadia
towards affordable housing is crystal 5% h Amiyapur
2017 the definite move c
an Sughad
clear but the same is not apparent in Sanawad Br Medra
towards affordable housing sales during the same period. The silver o lka CHANDKHEDA
0% Adhana Nasmed Dh Nigam Nagar Kotarpur Raip
lining however, is that the homebuyers Rakanpur Ognaj
is crystal clear but the same CENTRAL EAST NORTH SOUTH WEST Ranasan
too have started showing their affinity Santeja Gujarat Science City Cinema

WAY
is not apparent in sales towards affordable housing projects. GOTA Bhat Enasan

HIGH
Source: Knight Frank Research Vayana Motera Stadium
Gidc Naroda
during the same period. The micro markets of east and north LEGEND Noble Nagar

GAR
CHANDLODIA Sabarmati

OAD
Major Landmark Bilasiya
which are largely affordable compared Hansol
The silver lining however,

HINA
Sabarmati

NG R
Hospital
to other parts of the city contributed to Unali Sardar Vallabhbhai Patel
Gujarat

GAND
Hotel CHANAKYAPURI Vijay Nagar
is that the homebuyers too

I
InternationalAirport

EL R
a little over 50% of the total sales. RanchardaCinema
Science City Nava Naroda
Sola Village

PAT
Sabarmati RS

HEJ -
Chekhla
have started showing their Educational Institute Sardar Patel Meghani
Calico Museum

DAR
Sales activity continued to remain Naranpura Stadium

SARK
Airport
Sabarmatiof Textiles Nagar Auto World
affinity towards affordable Palodia Krishnanagar

SAR
robust in west Ahmedabad. This micro Bus Stand Memnagar Ashram Museum

M ROAD
Railway Station Thaltej Dubeshwar

ING
housing projects. markets proximity to GIDC Sanand has
City Boundary Thaltej Gam Nikol Kathwada

TR
Navrangpur Kirti Stambh

ASHRA
increased its attractiveness. Its share in

2F
Expressway

13
the total sales, increased from 22% in 8,556 7,400 7,941 Manipur Highway
Bopal
Bodakdev Ashram
Shahpur
Bapunagar
H2 2016 to 27% in H1 2017. Compared Ring Road Road Shahpur
Ghuma Odhav Bhuvald
Major Road
to H1 2016 the share of west Ahmed- UNITS UNITS UNITS Sidi Saiyyed Mosque Gidc Industrial
Godhavi Dh Spring Valley
Industrial Odhav
Rail Line Khadia
abad increased to 27% in H1 2017 from o Niyojan Nagar Madalpur Swaminarayan Mandir Estate
lk Shapath 5
17%. H1 2016 H2 2016 H1 2017 a Br
Metro/Station
BRTS Phase 1 (West) Bagodara Sherkotda Area Kanb
an Rabari
ch Shela
BRTS Phase 1 (East) Paldi Colony
Kaneti Ca Vasna Vastral K
n BRTS Phase 2 Vejalpur-2 Anjall Amraiwadi
al Vastral Gam
River Vasna Mahadev
Lakes/Ponds
Makaraba Juhapura APMC Nagar
Vegetation
Cadila AD
Ramol
Sarkhej Gam Isanpur RO Memadpur
Sanand Healthcare DA
- NARO
Chaloda NARO
L
Gidc Bakrol Bu
Singarva
Vatva Geratnagar
Sanathal Vatva
Piplaj AH
Narolgam ME
Kolat DA
B
Vinzol AD
- V Dhamatvana
Vanzar AD

D
OD

OA
GR Vanch AR
AE
Pipan RIN XP
Laxmipur TEL Hathijan Y
AR PA
SARD
Dholka Branch
Visalpur Badodra
Moraiya Hirapur
Aslali
Changadar
Gamdi
ER Nandej
Canal

Tajpur RIV Devdi


TI
A

Modasar Chosar Raska


RM
SABA

Sari Kasindra Barejadi


Jetalpur
30

31
Matoda Giramtha
RESEARCH INDIA REAL ESTATE

4. AHMEDABAD MARKET 5. PRICE MOVEMENT


HEALTH IN H1 2017 The market has just
about started to pick up
easy access to the major employment The market has just about started to
The quarters to sell (QTS) unsold FIGURE -4
QUARTERS TO SELL (QTS) UNSOLD hubs and integrated development have pick after demonetisation had pulled after demonetisation.
inventory is the number of quarters INVENTORY ANALYSIS
required to exhaust the existing unsold helped these markets in attracting things back. At the macro level prices At the macro level
AHMEDABAD
homebuyers over the last few years. remained at the same level as it was
inventory in the market. The existing 20
prices remained at the
19 in H2 2016. Capital values of both
unsold inventory is divided by the
18 Even though West Ahmedabad has
premium and budget projects saw a same level as it was in
average sales velocity of the preceding the highest QTS and age of inventory
eight quarters in order to arrive at the
17
tepid growth of only 2%. Once clarity H2 2017. Capital values
16 among micro markets, off late it has
comes on issues like RERA and GST
QTS number for that particular quarter. 15 witnessed a lot of traction. The city of both premium and
the market should pick in Ahmedabad
A lower QTS indicates a healthier 14
13
too is expanding towards the west,
which should give some fillip to prices budget projects
market. which augurs well for this micro market.
NO OF QUARTERS

12 as well. saw a tepid growth of


The new low in number of new 11
The growing importance of Sanand
GIDC should work in favour of West only 2%.
launches and a healthy growth rate 10

in sales have had a bearing on the 9 Ahmedabad.


8
quarters to sell (QTS) the existing
7
unsold inventory. As a result the QTS
6
has come down from 8.6 in H2 2016 to 5
7.7 in H1 2017. At present the city has 4
PRICE MOVEMENT IN SELECT LOCATIONS
more than 32,000 units in various stages 3
of construction that remain unsold. The 2

unsold inventory in Ahmedabad is less 1


0 LOCATION MICRO-MARKET PRICE RANGE IN H1 2017 12-MONTH 6-MONTH
than two years old which just about
Sep-14
Dec-14

Sep-15
Dec-15

Sep-16
Dec-16
Mar-15

Mar-16

Mar-17
Jun-14

Jun-15

Jun-16

Jun-17

manages to catch up with the average (`/SQ FT) CHANGE CHANGE


construction time.
Source: Knight Frank Research Ambawadi Central 5,500 - 7,500 0% 0%
Central Ahmedabad is the best
Navrangpura Central 5,500 - 7,500 0% 0%
performing market. It has the lowest
QTS and the age of inventory. East Mani Nagar Central 3,500 - 6,000 3% 0%
Ahmedabad remains a consistent
Paldi Central 4,500 - 6,200 3% 0%
performing market in the city with the
lowest level of quarters to sell of unsold Naroda East 2,000 - 3,000 0% 0%
inventory and this is closely followed by Vastral East 1,900 - 2,500 1% 0%
north Ahmedabad. Affordable pricing,
Nikol East 1,850 - 2,500 1% 2%
FIGURE -5 Prahlad Nagar West 5,000 - 6,500 0% 0%
MICRO-MARKET-WISE QTS VS AGE OF INVENTORY
Satellite West 5,500 - 7,200 0% 0%
CENTRAL EAST WEST NORTH SOUTH
Thaltej West 5,000 - 6,000 0% 0%
14
Vastrapur West 5,000 - 6,200 0% 0%
AGE OF UNSOLD INVENTORY IN QUARTERS

Bopal West 3,500 - 4,800 0% 0%

11 Chandkheda North 2,500 - 3,200 1% 0%

Motera North 2,800 - 3,600 0% 0%


UNSOLD
MICRO-MARKET
INVENTORY Gota North 2,800 - 3,600 0% 0%
8
Central 2,380 Source: Knight Frank Research

East 8,275
5
North 10,158

South 2,366

2 West 9,756
5 8 11 14 17 20
QTS Ahmedabad 32,934
Source: Knight Frank Research

Note: The size of the bubble indicates the quantum of unsold inventory Source: Knight Frank Research
32

33
RESEARCH INDIA REAL ESTATE

BANGALORE METRO this year the much awaited north-south


corridor was rolled out. It would now be
possible to traverse a distance of 24 km
Ring Road (ORR) Metro and is proposed
to have 13 stations encompassing major
stations such as Silk Board, HSR Layout,

AN INFRASTRUCTURE from the north-west part of the city to the Bellandur, Kadubeesanahalli, Marathahalli, This concluding
southern region in 45 minutes, a boon for Mahadevapura and K.R. Puram. As per the section of Phase 1
both regions as the roadways between timeline set by BMRCL, the second phase added 12 km to the

BEHEMOTH IN THE WAITING


them are riddled with severe traffic shall be completed by December 2020.
operational network
bottlenecks. The line towards the southern It is estimated that after its completion,
with the new line
part of the city passes through some of Bangalore Metro would transport an
the preferred residential neighbourhoods average of 10 lakh commuters per day. now connecting the
- BY SANGEETA SHARMA DUTTA
of Bengaluru housing large population and southern part of the
would expectedly account for a higher city with seamless
ridership. As per Bangalore Metro Rail The impact of an infrastructure project access to Chickpet,
Corporations (BMRCL) estimates, the such as the metro rail is enormously
KR Market, National
daily ridership is expected to reach 5 lakhs powerful and comprehensive, affecting not
only a citys real estate and commercial
College, Lalbagh,
from the current 1.8 lakhs along the entire
stretch of Bangalore Metro Phase 1. proposition but also its population density South End Circle,
and employment generation. Accessibility Jayanagar, RV Road,
through the metro leads to creating Banashankari,
With the first phase of the metro office hubs and producing jobs, which JP Nagar and
completed, the second phase has become in turn aids in improving the demand for
Yelachenahalli
the cynosure of all eyes today. Phase 2 residential property of select residential
spans a length of 72 km and is expected neighbourhoods, while providing a boost
(erstwhile Puttenahalli).
to add 61 stations to the network. It to the commercial sector of the region
includes the extension of the four Phase simultaneously. Also, reduced commuting
1 corridors, as well as the construction time owing to the metro has been observed
of two new lines. Further, a new 18-km- to enhance the potential of a micro market
long line connecting Silk Board with K.R. exponentially. As a result, micro markets
Puram has been included, categorised as along the metro line witness steep rise in
Phase 2A. The line will be called the Outer real estate values, coupled with hectic new

I
t was on June 17, 2017 that a long South End Circle, Jayanagar, RV Road,
awaited milestone was achieved in Banashankari, JP Nagar and Yelachenahalli
Bengalurus timeline. The city witnessed (erstwhile Puttenahalli).
the completion of the 42.3-km-long first

42.3km
phase of the Bangalore Metro, as the
last leg of its Green Line was flagged off As an overview, Bangalore Metro Phase 1
by the President of India, thus closing a stretches from Mysore Road in the west to

10Lakh
chapter that was scheduled to have been Baiyappanahalli in the east a distance of
completed six years ago in 2011. This 18.2 km and from Nagasandra on Tumkur
concluding section of Phase 1 added 12 Road in the north-west to Yelachenahalli on
Completion of the first phase of the
km to the operational network with the new Kanakapura Road in the south, a 24-km-
Bangalore Metro
line now connecting the southern part of long stretch While last year witnessed the
the city with seamless access to Chickpet, launch of the east-west corridor, garnering After its completion, Bangalore
much recognition in the western suburbs, Metro would transport an average
KR Market, National College, Lalbagh,
of 10 lakh commuters per day.
34

35
RESEARCH INDIA REAL ESTATE

developments in the adjacent vacant land in residential real estate. Already these
parcels, as developers strive to capitalise TO DODDABALLAPUR micro-markets have been witnessing a
on the profit implications of large-scale proliferation of mid-end and affordable
developments resulting from additional TO NELAMANGALA housing projects, adding to the residential

TO
TO CHIKKABALLAPUR
FSI, if applicable. For investors, the return stock on a yearly basis. It is expected that

TU
BANGALORE INTERNATIONAL METRO PHASE I
EXHIBITION CENTRE

M
on investment is sizeable, given that metro connectivity would aid in easing

K
U
R
homebuyers are willing to pay a premium METRO PHASE II the unsold inventory situation in such
KEMPEGOWDA
for residential properties located close to INTERNATIONAL AIRPORT NICE ROAD
locations, particularly in South Bengaluru,
NAGASANDRA
public transit systems like the metro. which had witnessed a glut in supply in the
OUTER RING ROAD recent years but was facing a low sales
NAGWARA SOUTHERN RAILWAY LINE traction owing to lack of infrastructure.
For many, Bangalore Metro is the beacon On the other hand, Phase 2A is expected
of hope. It is envisaged as a key player to smoothen out the traffic issues faced
that would inter-connect different parts by office occupiers along the ORR. At
of the city seamlessly and decongest the present, work along the Bangalore Metro
citys choked road network. While Phase Phase 2 has been going on unobstructed;
1 of the metro largely covers the city WHITEFIELD the extensions of Phase 1 observing more
centre and the suburban neighbourhoods, traction. While there is still a long way
NICE ROAD

BAIYAPPANAHALLI
the four extension lines under Phase 2 TO BANGARPET to go, an infrastructure behemoth such
are expected to optimise the operations as the Bangalore Metro, which harbours
of Phase 1. Work from Mysore Road to enormous advantages, the wait for its
Kengeri and Yelachenahalli to Anjanapura completion is expected to be worth the
Township up to the NICE Road Crossing is pain.
going on at a rapid pace and BMRCL plans CITY RLY STATION
to open these two sections by the end of

OUTER RING ROAD


2018. The line between Baiyappanahalli
and Whitefield, eagerly awaited by the IT
community, is expected to be ready for
operations by the end of 2020. Further,
the two new lines under Phase 2 (north-
south corridor of NagwaraGottigere and
southern line of RV RoadBommasandra)
traverse through some of the densest and
traffic-congested areas of the city, housing
key IT hubs, and will seek to unclog the
bottlenecks in order to support the growth MYSORE ROAD
of the IT sector.

With Phase 2 of the Bangalore Metro Going forward,


covering fast-growing micro markets PUTTENAHALLI
peripheral micro markets
like Bommasandra and Electronics City such as Chandapura,
KENGERI
in the south and Nagawara towards the Hosa Road and Hulimavu
north, there is immense scope to unlock TO MYSORE
in the south, Kengeri
the potential of these locations as well
and Nayandahalli in the
as other neighbouring ones. Going
forward, peripheral micro markets such west, and Thanisandra
as Chandapura, Hosa Road and Hulimavu in the north are likely
in the south, Kengeri and Nayandahalli in GOTTIGERE to witness substantial
ANJANAPURA
NICE ROAD
the west, and Thanisandra in the north
BOMMASANDRA TO ANEKAL
growth in residential real
are likely to witness substantial growth
estate.
36

37
RESEARCH INDIA REAL ESTATE

sales. H1 2017 witnessed an increase FIGURE -2


of 5% in new launches and 4% in sales MICRO-MARKET SPLIT OF LAUNCHED UNITS
over the figures in H2 2016.
H1 2016 H2 2016 H1 2017
On a Year-Over-Year (YOY) basis, the 60%
city is still far behind the numbers
55%
observed in H1 2016. The number of
new launches in H1 2017 lagged behind

47%
50%
those of H1 2016 by a significant 42%, 24,281 13,395 14,026

44%
42%
45%
while for sales it was 19%, during the
same period. 40% UNITS UNITS UNITS

While the tightening of new launches 35% H1 2016 H2 2016 H1 2017

31%
28%
is partly attributable to the quantum of

27%
30%
unsold inventory build-up in the market,

22%
25%
factors such as insecurity regarding

18%
the RERA policy implementation and 20%
demonetisation, to some extent, played

14%

14%
15%
major roles in the slowdown.

9%
10%
On the other hand, the citys sales

4%
volume continues to be in a relatively 5%

0%
0%
0%
better position although it has failed 0%
to recover the momentum it had CENTRAL EAST NORTH SOUTH WEST
achieved in H1 2016. Buyers interest
Source: Knight Frank Research
has been gradually picking up post-

BENGALURU
demonetisation and while the actual
purchase rate has been low, enquiries
have risen positively. 2. MARKET SPLIT OF
In a bid to offload their unsold inventory
RESIDENTIAL LAUNCHES
and cash in on GST that permits credit
for taxes paid on input costs such as
RESIDENTIAL MARKET cement and steel, which would bring
As in the previous periods, the
southern zone of the city accounted
down prices, city developers have
1. BENGALURU RESIDENTIAL FIGURE -1 for the largest share in the total Bengaluru till recently was
launched several schemes to attract
MARKET LAUNCHES, SALES BENGALURU MARKET TRENDS - HALF-YEARLY
number of new launches in H1 2017,
AND PRICE TRENDS
maximum buyers. While some of recognized as one of the
primarily in peripheral locations such
them have reduced the prices of their
LAUNCHES SALES WT. AVG. PRICE (RHS)
as Electronics City, Chandapura and most resilient residential
projects, others are offering freebies
4850

40000 4900
markets in the country.
4831

The residential market of Bengaluru Sarjapur. The region continues to be


such as free modular kitchens and
4805

has seen a drastic change in its favoured by both the local populace
Today, the market is
4780

35000
electrical fittings worth lakhs.
dynamics in the past two and half 4800 as well as the expatriate population
years. Until recently recognized as Meanwhile, weighted average prices employed with the IT sector. reeling under pressure
one of the most resilient residential 30000 remained by and large stagnant, and is striving to keep
4650

4700 North Bengaluru, which in recent years


markets in the country, today, the witnessing a mere increase of 1% in H1
has been characterised by factors afloat amidst constricting
4585

2017 compared to H1 2016.


Number of units

market is reeling under pressure 25000


such as high land cost, low social conditions. However,
and is striving to keep afloat amidst 4600
The inclusion of Bengaluru in the infrastructure and relatively expensive
things have started looking
` \sq ft

constricting conditions. 20000


Smart City list is expected to have a
4473

property prices, strove to bounce back


The second half of last year 2016 (H2 4500 far reaching impact on the residential on the developers radar with a number up slightly in 2017 and
15000 market in the forthcoming years,
2016) was a particularly trying period of office projects becoming operational although the figures are
for the citys residential market with the as that would lead to improved in the region. It saw the share of new
10000
4400
infrastructure in the city. This would, in launches increase to 28% in H1 2017
still restrained, marginal
announcement of the demonetisation
measure that brought real estate turn, add to the overall attractiveness from 22% in H1 2016, although, as improvements were
4300 and brand image of Bengaluru as a
activities almost to a halt. 5000 compared to H2 2016, the share of new observed in the number of
residential market. launches was less.
However, things have started looking
0 4200
new launches and sales in
up slightly for Bengaluru this year and From accounting for a substantial share
H1 2017.
H2 2014

H1 2015

H2 2015

H1 2016

H2 2016

H1 2017
H1 2014

although the figures are still restrained, of 27% in H1 2016, East Bengalurus
marginal improvements were observed share in the total number of new
in the number of new launches and Source: Knight Frank Research launches almost halved to 14% in H1
38

39
RESEARCH INDIA REAL ESTATE

observed a significant chunk of new


FIGURE -3
BENGALURU MICRO-MARKET MAP
The southern zone of the launches taking place in the bracket MICRO-MARKET SPLIT OF SALES
` 2.5-5 Mn, a trend that was noted in Lingarajapura Byappanahalli

city accounted for the BSF CAMPUS


Bilijaji Sathnur
Madhugirihalli Dasanayakanahalli
Dwarka Nagar Chagaletty

H2 2016 as well. Till H1 2016, majority


Vasudevapura

H1 2016 H2 2016 H1 2017


Mavallipura Srinivasa
Kodagi Baba Nagar Chagalahatti
Thammarasanahalli Ramagondanahalli Vinayak Nagar Challamakunte
Thirumalapura Marenahalli

largest share in the total


Nagar

of the new launches were in the higher 60% Gurunath


Silvepura Jarakbandekaval

Puttanahalli Venkatala Chokkanahalli


Lake

number of new launches TORENAGASANDRA


Layout

ticket size bracket of ` 5-7.5 Mn.


Dodda
Byalakere Attur
Lake Yelahanka Maruthi
Kere Nagar
Puttanahalli

55%
Kasghattapura Kempanahalli Mittaganahalli Mitganahalli
Byalakere
YELAHANKA Srinivaspur

in H1 2017, primarily Notably, most of the new launches in Veersandra


Shringaripur

48%
Kumbharhalli Kalatammanahalli Nagenahalli

50%
Shamarajpura Bellahalli Kattugollahalli

47%
H1 2017 are in peripheral locations of
Bellahalli

in peripheral locations
Prakruthi Markandhaiha
Alur Nagar Kadusonnappanahalli
Medi Nagar
Lake Gandhi Doddenahalli Chikkasandra
Kempapura Agrahara
Nagar

the city with promise of infrastructure 45% Guniagrahara


Voderahalli

such as Electronics City,

40%
Aditya Nagar
Nehru

development in the near future.


Thirumenahalli
Soma Allalasandra Nagar Kannuru
Sasiveghatta Nagar Lake SDS Prakru
Gunduru
Marthi
40%
Lake

Chandapura and Sarjapur.


Nagar Ganigarahalli Vinayak
Lakshmipura
Nagar Vidyaranyapura Jakkur
Lake Chokkanahalli Gundur

This development comes as a Alur Soladevanahalli Chikkabanavara Vignana


Allalasandra

35%
The region continues to
Lake Hazrath Kendra Kammasandra

welcome trend, given the recent slew


Abbigere Shafi Colony Sampigehalli Chikkagubbi Kada
Lake Jakkuru
Agrahara
Chikkabanavara

29%
NTI
Layout
Abbigere Yashoda

be favoured by both the of governments initiatives to boost


Kuduregere Jakkur
30%
Nagar

27%
Airfield
RK HEGDE
Singapura
Thammenahalli Shirdi Sai

24%
NAGAR
KVP Nagar

the affordable housing sector, such as


Dodda
Nagar Maruthi
Gubbi

local populace as well as


Nagar Sivagiri

22%
Myadarahalli Kodigehalli Shabhari
25%
Jalahalli Township
Settihallikere East Rajiv Gandhi Nagar
Soundarya Phase 1
Athmavidya

according infrastructure status to this


Kuduregere Layout Nagar Srirampura
Colony Amrutahalli Nagar

19%
Lovedale
Chikkasandra Sneha

SAHAKARA

18%
Doddabommasandra Nagar Kothnur

the expatriate population


Chamundeswari Lake Narayanapura Narayanapura Bidrahalli

sector in the Union Budget with a host NAGAR


Jalahalli
20% Visveshwaraiah Layout
West
Layout Virupakshapura
Amrutahalli
Lake
Mesthri
Palya Bileshivale Vaderahalli
Kyalasanahalli
Rachenahalli
Lake

employed with the IT of tax incentives, provisioning buyer-


Aduru
Anchepalya Thanisandra
Ravetha BEL
Lake Kothanur
15% Nagar Tatanagar
Koti Mariyannapalya
Rampura

JALAHALLIHMT
Ravindra Sanjeevini

friendly clauses like on-time-delivery


Defence Hosahalli Sanchar
Nagar Khata Nagar
Colony Fortune Saraipalya Nagar

sector.
Nagar

9%
Estate Valley

9%
Anchepalya Santosh Geddalahalli
Hebbal

8%
Lake
10%
Bharath

in the RERA Act, lower home loan


Madavara Maheswari Nagar Maragondanahalli
Maruti
Rukmini
Nagar
Prashanth
Kempapura
Nagar
ASHWATH Kalkere
Lake
Hirandahalli
H

NAGARByrathikhane
Layout Nagar Hebbal Amani Lake
Nagar Jalahalli Lottegollahalli Lake Nagavara
Village Bahubali Lake Manayata

rates, as well as commissioning the Vidya Nagar Bhoopasandra Tech Park


Nagasandra Nagar Sundara
Shakti
5%
Margondanahalli
Farm Gokula Nagar Horamavu
Dasarahalli Extension Veerannapalya Agara K Channasandra
Tank Guddadahalli

nationwide scheme of Pradhan Mantri


Shivaganga Kithaganur

HEBBAL
Layout

0%
0%
0%
Chokkasandra MSR Sizzle Sai
Nagar Lake Habitat
Laxmi Pura Doddabidarakull Wipro Brindavan Sanjaynagar Hormavu Kanaka
0%
Lake Nagar

Awas Yojana (PMAY).


Layout Govindapura HBR Agara Lake Nagar
Vivekananda Layout Hennur
Doddabidrakallu Nagar Muniswara Kanaka Hallehalli
KG Nagar Nagar Bande
Lakshmipura Gopal Chola Chamundi
Srikantapura Nagar Nagar
Geddalahalli Kundamalli Nagar Hormavu Padmeshwari
Central East North South West Shivapura YESHWANTHPUR Rashad
Nagar
Kalkere
Jinkethimmanahalli Nagar
Narayanapura Peenya
Ganganagar
Shampura
KALYAN
Pampanagar Nanjappa
Reddy Devasandra
Dinnur
Ranka
Nagar NAGAR Varanasi
BATTARAHALLI
Colony Anandapura
Source: Knight Frank Research Tippenahalli
Yele Mallappa

2017. Locations such as Whitefield and


Hediyat Raghavendra
Shakthi Nagar Akshya Shetty Lake
Jal Vayu

3. MICRO-MARKET WISE
Nagar Nagar
Vihar Nagar
Ganapathy
Sena
Nagar Subedarpalya Ganga Nagar RT
Jenakal Ashok Vihar
Extension Nagar Kallumantapa Thambu

Gunjur witnessed a number of new


Siddeswara Dr. Ambedkar Ashwath Hosabasavanapura
Kaveri Nagar Muneshwara K R Puram Chetty Palya
Nagar Nagar

RESIDENTIAL SALES
Nagar Munisvara Hoysalanagar Lake
Nagar Mahalakshmi Dodda Nagar Dr. Ambedkar
Kanteerava Nagar Kacharakanahalli
Tigalarapalya Chamundi Nagar Shankar Layout Banaswadi Nagar
Nagar Nagar

launches.
Indira Venkateshpuram
Nandini Kodandarampura Puram Basavanapura

RAGAVENDRA Kalika Nagar


Sreenivas
Layout
Devara BANASWADI
NAGAR Rajarajeswari Sadashiva Jeevanahalli
Nagar Lingarajapuram Bhuvanagiri
Milk Sankey Nagar Munireddypalya Kariyana Palya Subbannaiah Govindpura ITI
Nagar Dooravani
Colony Tank Palya Colony
Jai Jawan Nagar

Similar to new launches scenario, South


Andrahalli Sagayapura

In contrast, West Bengaluru saw


Jai Maruthi
Nagar Nagar Gurijiya
Bovipalya Gutta Kasturi
Nagar
Lava Kusha JC Nagar Sriram Benson Town Duravani
Vivekananda Krishnarajapura

Bengaluru continued to dominate on


Vijinapura

its share of new launches increase


Nagar
Sanjeevini
Nagar
Nagar Nagar
Nagapura MALLESWARAM Guttahalli Bangalore
Palace Lake
Nagar Roshan
Nagar Ayyappa
Nagar
Kachohalli Nagaravale
Nagar Shri Jayamahal Jyothi Puram Singayyanapalya

the sales front as well. The region saw


Chowdesh Mahatma Nagayana

significantly from a mere 4% in H2


Gajanana Rampura Benniganahalli Kaveri
Nagar Gandhi KB Nagar Pulkeshi Palya
Nagara Jeevanhalli Lake Nagar
Nagar Nagar
KHB Badavala
Prem Manjunatha Mariappanapalya Cox Colony Sadanandanagar

its share increase from 40% in H1


A Narayanapura Nagar Hoodi

2016 to 14% in H1 2017. The regions


Venkateswara Nagar Nagar Town Maheswari
Nagar Lakshminarayanapuram Nagar
Shivanagar
Sunkadakatte BEML Sulthangunta
Byadarahalli Vrishabha Layout
MAHADEVAPURA
2016 to a substantial 48% of the total 26,220 20,309 21,210 BASAVESHWARA RAJAJINAGAR Doddigunta

share of new launches in H1 2017 was


Nagar Nagavarapalya
Herohalli
Lake

Hanumatha Kottigepalya
NAGAR Mahaganapathi
Nagar Jai Bheema
Nagar
Madhava
Swamy
Shivanandapuram
Bharati
Nagar
Kallahalli
Sarvagnanagar
Vishwa Vihar
Garudachar
Palya Seetharampalya
Hoodi
Lake

sales in H1 2017. While the region has


Nagar

also an improvement over the share in


Nagar
Bedarahalli Anjana Okalipuram
Lakshmanpuri Ulsoor Ulsoor
CV RAMAN
Nagar
Kaveri
Lake Suddaguntapalya
NAGAR Kaggadasapura
UNITS UNITS UNITS
Cauvery Agrahara Michael

always attracted buyers, courtesy its


Pura Jedara r
ive
H1 2016 and majority of the launches
Nagar Prashant Dasarahalli Palaya Doddanakundi
Halli Bhuvaneswari Lake Vignana
Nagar
at h i

R
Gandhi Laksmipuram Nagar Kaggadasapura Nagar
Gidada aw
WHI
Pattegarhpalya ab Nagar
Bharat Konnenahalli Krishnappa Kartik Nagar

h
Vris
Nagar Garden

took place in micro-markets such as healthy congregation of large IT hubs, Malagala Malleshpalya

H2 2016 H1 2017
Amarajyothi Doddanekundi

H1 2016
Kodigehalli
Nagar Jogupalya GM Palya Lake
Yadava Doddanekundi
Annapurneshwari Upanagara

VIJAYANAGAR NEW
Cholur Chinnapanahalli

the launch of a number of affordable


Nagar Srigandada

Rajarajeshwari Nagar and Kengeri. Kaval

Adarsh
Palya Kempapura
Agrahara
Nagamma
Nagar Manivartapete
Gowthamapuram
Doopanahalli
THIPPASANDRA Nelluru
Jagadish
Nagar
Vibhutipura
Kundalahalli
Lake
Vishveshwaraya Nagar Madava Binny Pete Puram Lake

projects in its peripheral markets has


Hosahalli
Nagar Anubhav Upanagara
Extension Dodpete
Malathalli Nagar Padarayanapura
Lake Cottonpete
Kengunte Kodihalli Ananda
Bhyraveshwara Vinayaka Elagondanpalya Vinayaka Aswath
Puram
Nagar Nagar

increased the demand over the recent


Nagar Shamana Tipu Nagar
Ullal Annasandrapalya
Lake Mallathahalli Nagar Nagar
Ullal
Uppanagar Kala Ramesh
Attiguppe Thubarahalli
Grama Nagarbhavi

TICKET-SIZE SPLIT ANALYSIS


Kilkodungalur Guddadahalli Nagar Lake

past. For instance, micro-markets such


Ullalu Kalasipalayam Muniswamy Krishna
Jyothi Nagar Bapuji
Nagar
Garden
Viveka
Reddy Layout
Murugeshpalya
HAL Bangalore
MARATHAHALLI
CHAMRAJPET VILLAGE
Vijay Adarsha HAL
Manganahalli Srinagar Nagar Nagar Vinayaka Airport

OF LAUNCHED UNITS
Nagar

as Electronics City and Bommasandra Shankarapura Army Nagar


Vinayaka Nagar Neelasandra Area
Ahmed
Sir M. Nagar Kempambudhi Rajendra
Muneshwara Gajendra Munnekollal
Vishveshwaraiah Kere Nagar

are scheduled to be connected to the


Nagar Avalahalli Lalbagh Nagar
Layout
Lake
Kannikanagar Gandhi Bazaar
Vinayaka
Ambedkar
Extension Dasarhalli
Lakkasandra Nagar

H1 2016 H2 2016 H1 2017


Gavipura Challaghatta

other parts of the city through the metro


Yemalur Bellandur
Kempapura Amanikere
Gnana Hanumantha Ejipura
Jagajyothi
Layout
Bharathi
Nayanda BANASHANKARI
Nagar
Jaya
Someshwara
Nagar ADUGODI Belur
Nagasandra
Dodda Nayandanahalli Nagar Laljinagar CV Raman

rail in the next three years, thereby KADUBEESANAHALLI


Halli Sriranganagar
Basti Kere East Nagar
Sonnenahalli Mutharayana Girinagar

<`2.5 mn 8% 2% 3%
Balagere
Nagar Veerabhadra Hombegowda
Ramasandra Nagar Srinivasa Nagar
Upadhya

creating a favourable impact on the Layout Nagar Bellandur


Yediyur Lake
Komghatta SMV RBI JCR
Lake
Lake Layout Extension Layout

29% 64% 59%


Jawaban Doddi

`2.`5-5 mn
Thyagaraja Byrasandra Sadduguntepalya

potential buyers mind. KORAMANGALA


Dubasipalya Kenchenhalli Nagar Yediyur
Kathreguppe Lake
Subash Kere
Hoskere Nagar Balaji
Lake Dubasi
Dattatreya Nagar
Gnanabharathi Palya Jakkasandra Iblur
Hosakerehalli Nagar Banagiri Maruthi
Extension Village
KENGERI Duvasapalya Lake Nagar Nagar

`5-`7.5 mn 41% 18% 22% On the other hand, most other regions Kommaghatta SATELLITE TOWN
Gandhi
BHEL Layout
Bangarappanagar

Rajeev
JAYANAGAR
Krishnappa
Garden
Madivala
Bhoganhalli

ITTAMADU
Madiwala Agara
Nagar Nagar Lake Gunjur
Gattigere
BTM LAYOUT Venkatapura Palya
Gu

of the city saw a decline in their share


Kengeri Hosakerehalli DK Naik

11% 6% 5%
Lake Saul

`7.5-`10 mn
Nagar
Kere
Mailasandra Kadarenahalli
RT
BSM Nagar

of sales in H1 2017. Although West


Extension Suncity Vijayashree Vanganahalli
Sri Krishna Sachidananda
Layout
Garden Layout Nagar Srinivasa Sarakki Kaikondrahalli
Govinakanahalli MCHS
Nagar Nagar Lake

`10-`20 mn 8% 6% 10% J.P NAGAR Colony Roopena


HSR
Bengaluru witnessed a consistent
Kodipur Chikkalasandra Gangadhar Agrahara
Gowdanapalya Nagar Rajiv Gandhi
Nagar

iver
Fort
Kengeri Concord
Garden City
Vaddara Madivala
LAYOUT Kasavanahalli
Sunkalpalya Palya Uttarahalli Ilyas Lake

demand, the north and the east regions


R

KUMARASWAMY
3% 4% 1%
Virat

>`20 mn
Nagar
Vri s abawathi

Dorai Amalodbhavi Nagar


Kere
LAYOUT Kanakanagar JP Nagar
Phase 5
Nagar
Kaveri
Mangammanapalya
h

saw their shares reduce noticeably in


Chandra Nagar
Nagar Kashi Halanayakanahalli
DODDAKANNELLI
Sarakki Bilekahalli
KENGERI
Junnasandra
Subramanyapura Nagar Lake Lake
Prasanti Jarganahalli Harlur
Kodipalya Somasundarapalya
Ganakal Nagar Muneshwara

H1 2017 as compared to H1 2016.


Subramanya Panduranga
Kere Kodichikkanahalli Nagar

Source: Knight Frank Research


Puttenahalli Nagar

Konasandra Yadalam
Vasanthapura
Sharadhanagar HONGASANDRA
Lake Nagar Bikasipura Hosapalya
Garebhavipalya
Jettigana
Halli Sundar Ram Chamundeshwari Mico
Kuvempu Santrupthi Layout
Hemmigepura Shetty Nagar Nagar
Doddabele Gubbalala Nagar Nagar Parappana Hosa
Lake

On the ticket size front, H1 2017


Agrahara
Konanakunte
Kudlu
40

41
RESEARCH INDIA REAL ESTATE

new launches that take place annually On the other hand, West Bengaluru still 5. PRICE MOVEMENT
MICRO-MARKET LOCATIONS in the region. With the sales velocity does not have a sufficient inventory and IN H1 2017
of the region improving in the past sales volume compared to the other
Central M.G. Road, Lavelle Road, Langford Town, Vittal Mallya Road, Richmond Road
few quarters and with infrastructure zones of the city. It has the highest QTS Price appreciation across most
East Whitefield, Old Airport Road, Old Madras Road, K.R. Puram, Marathahalli development in the offing, the situation and the second highest age of inventory locations in Bengaluru has remained
is expected to amend further in the as North Bengaluru. Despite its smaller stagnant during the last 12 months.
West Malleswaram, Rajajinagar, Yeshwanthpur, Tumkur Road, Vijayanagar
forthcoming periods. size at present, the region holds The range of price appreciation during
North Hebbal, Bellary Road, Hennur, Jakkur, Yelahanka, Banaswadi promise and the metro rail connectivity the period has been a mere 1-2% in
Meanwhile, North Bengaluru accounted
Koramangala, Sarjapur Road, Jayanagar, J.P. Nagar, HSR Layout, Kanakapura Road, is expected to be one of the prime select markets.
for QTS higher than East and South
South factors for this potential.
Bannerghatta Road Bengaluru, and a high age of inventory There has been no noticeable growth
as well. The unsold inventory in the The premium residential market of observed in the citys residential market
region can be attributed primarily to Central Bengaluru, catering to a niche in the last six months, primarily due to
relatively higher property prices and the clientele, does not have a sufficient part the sluggish movement in sales as well
4. MARKET HEALTH FIGURE -4 dearth of adequate social infrastructure to play in the citys residential market as owing to the huge unsold inventory
QUARTERS TO SELL (QTS) UNSOLD in place, amongst other factors. We dynamics owing to its minimal unsold
INVENTORY ANALYSIS
present in the market.
The quarters to sell unsold inventory East Bengaluru is currently the best expect this market to gain momentum inventory size.
BENGALURU
12 once the office sector gains prominence
(QTS) is the number of quarters required performing market of the city, with
to exhaust the existing unsold inventory the lowest QTS and a low age of 11
in the near future.
in the market. The existing unsold inventory. While traction has been
10
inventory is divided by the average sales slightly weakening in the past one PRICE MOVEMENT IN SELECT LOCATIONS
velocity of the preceding eight quarters year, the presence of several large 9

in order to arrive at the QTS number employment hubs, good social


8
for that particular quarter. A lower QTS infrastructure, substantial availability
NO OF QUARTERS 7
indicates a healthier market. Also, size of housing in various budget sizes and LOCATION MICRO-MARKET PRICE RANGE IN H1 2017 12-MONTH 6-MONTH
of the bubble indicates relative size of metro connectivity with the central and 6 (`/SQ FT) CHANGE CHANGE
unsold inventory in terms of number of western parts of the city are some of the
units. prime factors that has led the eastern 5 Langford Town Central 15,00021,000 0% 0%
region to perform well on an eight- 4 Lavelle Road Central 22,00030,000 0% 0%
The QTS for Bengaluru has been
quarter sales basis.
increasing gradually since September 3 K.R. Puram East 4,0006,750 0% 0%
2013, and currently stands at 10 South Bengaluru follows East Bengaluru
2 Whitefield East 4,5008,500 1% 0%
quarters. The unsold inventory of the as the second best performing market,
city is recorded at around 114,064 owing to low QTS and the lowest age 1 Marathahalli East 4,5007,100 0% 0%
units in various stages of construction, of inventory. However, the southern part
0 Indiranagar East 9,00012,500 0% 0%
leading to a matter of concern. of the city is faced with a glut of unsold
Sep-14
Dec-14

Sep-15
Dec-15

Sep-16
Dec-16
Mar-15

Mar-16

Mar-17
Jun-14

Jun-15

Jun-16

Jun-17 Yeshwanthpur West 6,50010,800 0% 0%


inventory, based on the number of

Source: Knight Frank Research


Malleshwaram West 9,00013,300 0% 0%
FIGURE -5
MICRO-MARKET-WISE QTS VS AGE Rajajinagar West 8,50014,000 0% 0%
OF INVENTORY

CENTRAL EAST NORTH SOUTH WEST


Tumkur Road West 4,0005,100 2% 0%

15
Yelahanka North 4,5007,500 2% 1%
AGE OF UNSOLD INVENTORY IN QUARTERS

Hebbal North 5,0009,800 0% 0%


14
Hennur North 4,5007,500 1% 0%
13
Thanisandra North 4,1007,500 0% 0%
UNSOLD
12 MICRO-MARKET
INVENTORY Sarjapur Road South 4,5007,500 0% 1%

11 Central 243 Electronics City South 4,0006,500 2% 1%

East 24,096 Kanakapura Road South 4,3006,000 0% 0%


10

North 25,596 Bannerghatta Road South 4,2007,500 0% 0%


9
South 54,075 Source: Knight Frank Research
8
6 7 8 9 10 11 12 13 14 West 10,054
QTS
Source: Knight Frank Research BENGALURU CITY 114,064
Note: The size of the bubble indicates the quantum of unsold inventory Source: Knight Frank Research
42

43
RESEARCH INDIA REAL ESTATE

preferred destination for people related to


the sector to reside in the region.

Prospective buyers
The period 201113 was marked by hectic
seeking ready-to-
construction activity and it observed the
move-in properties
launch of approximately 13,210 units on
a stretch of 16.5 km starting from the stand to gain as well
Sarjapur ORR junction till Sarjapur village. as speedy progress
The region soon became a cornucopia of in construction has
residential real estate, offering different brought in confidence
types of projects that ranged from
among buyers who
apartments to villa projects and plotted
were indecisive
developments, catering mostly to mid-end
and premium segment housing budgets. in booking under-
Significantly, the residential projects here construction projects
are relatively smaller in scale to the ones primarily due to timely
observed in the adjacent neighbourhood of delivery issue.
Haralur Road.

a number of older projects were still under


construction at a slow pace. However,
Until recently, Sarjapur Road was
things have changed in the recent few
characterised by rows of under-
quarters. Today, the first 7 km on Sarjapur

SARJAPUR ROAD
construction projects, barring the initial
Road from the ORR junction till the new
FIGURE -1
2 km from the ORR junction. The slew
Wipro SEZ is choc-a-bloc with newly
RESIDENTIAL LAUNCHES ON of project launches observed in the past

A CORNUCOPIA OF
SARJAPUR ROAD (201116) operational residential projects, undergoing
years had led to a glut in supply and not
possession. Where until only a year back
surprisingly, a general slowdown in the
6000 there were grey concrete blocks with
market was observed. Chart 1 depicts the

SOCIAL LIVING

5411
cranes overhead, today there stand brightly
number of new launches in the region on a
coloured residential towers with imposing
Year-Over-Year (YOY) basis.
gateways. Most of the residential projects
5000
- BY SANGEETA SHARMA DUTTA are undergoing a handover process, while

4229
Although the number of new launches have a few of them are putting on the finishing
reduced in the past few years, the region touches to their second phases. While
4000

E
this fast-paced completion of projects by

3570
is still witnessing project launches in the
very city has its own dynamics, One of the main regions that emerged as a
developers are seen by most as efforts

3300
latter part of the stretch leading to Sarjapur
and there is always a catalyst that favoured residential market was Sarjapur
village, albeit with small project sizes to comply with the timely completion
transforms the citys character. In Road towards the south-eastern part of Number of Units clause of the Real Estate (Regulation and

2675
3000 and mostly by local developers. The area
the case of Bengaluru, the advent of the IT the city. Once a distant, dusty, jagged road
around Sarjapur village is primarily marked Development) Act, 2016 (RERA), it has
industry was one such phenomenon that that lead to Sarjapur village garnered much
by villa projects and plotted developments. come as a boon for home owners who
turned the staid, pensioners paradise into significance with the development of the 1885 are looking for early completion of their

1800
2000 At present, the average price for a
a bustling cosmopolitan city, stirring up its Outer Ring Road (ORR) as a key office hub
residential apartment in the region ranges projects. Prospective buyers seeking
real estate composition. Within the realm of of the city housing large multi-tenanted
between ` 4,2007,000/sq ft. ready-to-move-in properties stand to
a decade and a half, Bengaluru developed office projects, the major occupiers being
gain as speedy progress in construction
into one of the major office destinations the IT/ITeS companies. Besides ORR, 1000 has brought in confidence among buyers
of the country. Soon, newer residential Sarjapur Roads proximity to other major
Despite the slowdown in number of who were indecisive in booking under-
neighbourhoods emerged and there were IT hubs and business centres in South and
launches, the Sarjapur residential market construction projects primarily due to
more options to look forward to for the East Bengaluru such as Electronics City,
is by no means inactive. Till early last year, timely delivery issue.
0
discerning homebuyer. Whitefield and Koramangala, made it a 2010 2011 2012 2013 2014 2015 2016
44

45
RESEARCH INDIA REAL ESTATE

OFFICE MARKET

1. BENGALURU OFFICE
FIGURE -2
MARKET STOCK, NEW OFFICE SPACE STOCK AND VACANCY LEVELS
COMPLETIONS, TRANSACTION HALF-YEARLY TREND

AND VACANCY TRENDS STOCK OCCUPIED STOCK VACANCY (RHS)

160

11%
12%
Bengaluru, known for its buoyant

5411
Vacancy rates, which had been

10%
office market led by IT/ITeS demand, declining steadily over the years 140
observed a somewhat moderate owing to consistent transactions and 10%
activity in office space traction in the restrained new completions, continued
units

8%
120

8%
first half of 2017 (H1 2017) as compared on its downward movement and are
to the same period in the recent past. presently at 4%. 8%

7%
Highest number of new launches on 100
Sarjapur Road in 2013 The transaction quantum of Going forward, the inclusion of

6%
5.8 mn sq ft in H1 2017 reflected a Bengaluru in the Smart City list bodes 80 6%
decline of 5% over the transactions well, as that would lead to improved
in H1 2016. While this decline could

4%
infrastructure in the city and attract
60
mainly be attributed to dearth of ready more investors and office occupiers. 4%
office spaces that forestalled potential Smart solutions will be taken up to
40
occupiers looking to expand, stiff bridge service delivery gaps, thereby
competition from other cities, primarily enabling the use of technology in these 2%
Over the years, social infrastructure has availability of more options in that range. Hyderabad, could also be a key factor 20
sectors.
improved substantially and has become Further, the planned Peripheral Ring Road behind the growth constraint.
a major driver for growth in the region, once operational will give an alternative 0
FIGURE -1 0%
besides the IT corporate offices. Proximity route to commuters to reach north of the Another reason that explains the rather

H1 2014

H2 2014

H1 2015

H2 2015

H1 2016

H2 2016

H1 2017
NEW COMPLETIONS AND TRANSACTIONS
to a host of reputed educational institutes city from Electronics City, Sarjapur Road restrained behavior of the office market HALF-YEARLY TREND

and hospitals has lent to its overall via Bellary Road and KR Puram, thereby of the city is the tepid growth the IT/ NEW COMPLETIONS TRANSACTIONS Source: Knight Frank Research
attractiveness. In addition, Sarjapur Road improving the regions connectivity issues ITeS sector - the key demand driver of
8
also benefitted from widening of roads and further and would serve to decongest the the office market in Bengaluru. Having
the announcement of the ORR Metro has traffic bottlenecks. Besides, with more matured over the years the sector
lured residents to region. Today, with most people moving into their ready apartments, stands on a bigger base today thereby 7

projects being handed over on time, the it would aid in creating a cosmopolitan limiting the scope for remarkable
expansion that was witnessed earlier.
region is well up the social attractiveness environment and a self-sustainable eco- 6 Bengaluru, known for its
ladder. It is expected that by the year end, system. Thus, Sarjapur Road is set to see On the new completions front, the city buoyant office market led by
majority of the newly completed projects better days ahead, taking the social living witnessed the infusion of 3.7 mn sq
would see occupancy with families moving factor notches higher. ft of office space in H1 2017, which
5
IT/ITeS demand, observed a
Techies from the

mn sq ft
neighbouring
in and creating a more sociable setting in is slightly better than the quantum of somewhat moderate activity
the region. new completions in H2 2016. However, 4
Whitefield and in office space traction in the
this new office space infusion is
Electronic City, who considerably less in proportion to
first half of 2017 (H1 2017),
3
generally opt for Sarjapur Road will continue to be one of the demand observed in the recent as compared to the same
housing options within the preferred residential destinations in periods.
Bengaluru, primarily owing to its location 2
period in the recent past. It
the range of
advantage of being situated in proximity The inadequacy of ready to occupy clocked 5.8 mn sq ft in total
` 5075 lakh, are likely to the key IT hubs of the city. Techies from space has resulted in lending a
1 transactions in H1 2017 - a
to choose Sarjapur the neighbouring Whitefield and Electronic downward pressure on vacancies while
Road due to the City, who generally opt for housing options creating an upward pressure on office decline of 5% over H1 2016,
availability of more within the range of ` 5075 lakh, are rents in key office markets of the city in 0
which can be primarily

H1 2014

H2 2014

H1 2015

H2 2015

H1 2016

H2 2016

H1 2017
likely to choose Sarjapur Road due to the H1 2017. The increase in rental values
options in that range. attributed to the dearth of
observed on a Year-Over-Year (YOY)
basis was recorded at 9% during the
Source: Knight Frank Research ready office spaces that
period. deterred the expansion plans
of potential occupiers.
46

47
RESEARCH INDIA REAL ESTATE

2. SECTOR ANALYSIS sector in H1 2017. The sector an increase over its share of 4% in H1
accounted for a share of 8% of the total 2016. Notable transactions in the sector
SELECT TRANSACTIONS
Bengaluru continued to attract office space transactions, showing a during H1 2017 include deals inked by
substantial occupier interest from nominal increase over its share of 7% in companies such as State Street Global
the IT/ITeS sector in H1 2017. The H1 2016 and a tad better than its share Services, Morgan Stanley, Western
sector accounted for 57% of the total of 4% in H2 2016. Union and Oben Insurance. OCCUPIER BUILDING LOCATION APPROX AREA (SQ FT)
transactions in H1 2017, albeit with
The BFSI sector remained consistent in
a drop in share as compared to H1 Deloitte Prestige Trade Towers Golf Road 159,000
its share of transactions and accounted
2016. The share of the sector was a 3. DEAL SIZE ANALYSIS
for a 9% share of the transactions in Microsoft Prestige Ferns Galaxy Sarjapur Outer Ring Road 588,784
staggering 62% in the second half of
H2 2016 as well as H1 2017, reflecting Lowes Manyata Embassy Business Park (Block L 2) Hebbal Outer Ring Road 450,000
2016. Of late, the IT/ITeS share has The average deal size in H1 2017 was
been gradually witnessing a decline recorded at 46,728 sq ft, which is lower
TCS Brigade Bhuwalka Icon Whitefield 375,000
courtesy the emergence of newer FIGURE -3
than the average deal size observed in
H1 2016 at 53,515 sq ft. This is primarily State Street Global Services RMZ Ecoworld (Block 6B) Sarjpur Outer Ring Road 225,000
service sectors in the city. SECTOR-WISE SPLIT OF TRANSACTIONS
due to the non-availability of substantial Rambus IBC Knowledge Park (Tower D) Bannerghatta Road 75,000
The share of the Other Services Sector H1 2016 H2 2016 H1 2017
large sized office space in the city as
which includes businesses such as 70% Mitel Communications Madhuvan North Avenue (Block M2) Hebbal Outer Ring Road 48,650
well as the preference of smaller office
e-commerce has slightly decreased
spaces by medium-sized IT companies
62%

from 30% in H1 2016 to 26% in H1 Source: Knight Frank Research


and other service sector companies.
58%

2017. While the build-up over the


57%

60%
e-commerce sectors large scale The number of deals, however,
improved by 9% in H1 2017 as 4. BUSINESS DISTRICT ANALYSIS
transactions in the past seems to have
cooled down presently, other services 50%
compared to the corresponding period
The Outer Ring Road (ORR) office
sector companies like consulting firms, in the previous year. FIGURE -5
market, which has been struggling BUSINESS DISTRICT-WISE TRANSACTION SPLIT
telecommunications and media houses
in the past few quarters on account
accounted for considerable office space 40%
FIGURE -4
AVERAGE DEAL SIZE AND NUMBER OF DEALS of dearth of ready to occupy space, H1 2016 H1 2017
offtake during H1 2017. A prominent
saw its share increase in H1 2017 50%
development observed during this
30%

AVERAGE DEAL SIZE (SQ FT) compared to H1 2016. Its share in the
period is the quantum of office

44%
30%
total transactions in H1 2017 improved
26%

45%
25%

NUMBER OF DEALS (RHS)


space taken up by co-working space
to 44%, as opposed to 33% in H1
operators, such as Awfis, Indiqube 80000 140
2016, owing to a slew of big ticket 40%
and 91 Springboard. Altogether, these
companies accounted for an offtake of
20% transactions led by companies such as 6.1 5.8

33%
70000 Microsoft, Lowes and Sandisk. Majority 35%
120
around 213,000 sq ft of office space in
of the transactions took place along the mn sq ft mn sq ft
9%
9%

H1 2017. 30%
8%

10% 60000 Sarjapur ORR. The region still accounts


7%

Meanwhile, a few major transactions


100
for a large quantum of pre-committed H1 2016 H1 2017

24%
4%

4%

Number

23%
25%
were recorded in the manufacturing 50000 space, which is scheduled to become
0% operational in the forthcoming months.
sq ft

80

18%
OTHER SERVICES
SECTOR
IT/ITEs

BFSI

MANUFACTURING

20%

16%
40000 On the other hand, the other prominent
Bengaluru continued to attract employment hubs of the city - PBD 15%

12%
60

11%
substantial occupier interest Source: Knight Frank Research 30000 East, comprising Whitefield, and
10%
from the IT/ITeS sector in H1 PBD South office markets observed

7%
7%
40
Note: BFSI includes BFSI support services their shares in the total number of
2017. However, of late, the IT/

4%
20000
5%
transactions to decrease significantly

1%

1%
ITeS share has seen a gradual

0%
20 in H1 2017 compared to their shares in
10000 0%
drop in its share courtesy H1 2016. Factors such as fewer grade

CBD &
OFF CBD

SBD

ORR

PBD
EAST

PBD
SOUTH

PBD
NORTH

PBD
WEST
A office projects becoming operational
the advent of newer service 0 0
and infrastructure bottlenecks have led
H1 2014

H2 2014

H1 2015

H2 2015

H1 2016

H2 2016

H1 2017

sectors in the city. A prominent their shares to drop in H1 2017. Source: Knight Frank Research

development observed during Meanwhile, the share of the CBD/


Source: Knight Frank Research
this period is the quantum 6.1 5.3 5.8 off-CBD markets and SBD markets
increased substantially in H1 2017 over
of office space taken up co-
mn sq ft mn sq ft mn sq ft the share in H1 2016, largely owing
working office space operators. to companies looking for smaller and
H1 2016 H2 2016 H1 2017
medium sized office spaces in centrally
connected areas with good social
infrastructure.
48

49
RESEARCH INDIA REAL ESTATE

BENGALURU BUSINESS DISTRICT MAP


BUSINESS DISTRICT MICRO MARKETS
Lingarajapura Byappanahalli

Central business district


Sathnur
Dasanayakanahalli
BSF CAMPUS Dwarka Nagar Chagaletty

Vasudevapura
Srinivasa
Handarahalli
M. G. Road, Residency Road, Cunningham Road, Lavelle Road, Richmond Road, Infantry Road
(CBD) and off-CBD
Baba Nagar Chagalahatti
Ramagondanahalli Vinayak Nagar Challamakunte Vabasandra
Marenahalli
Nagar

Jarakbandekaval

Puttanahalli Venkatala Chokkanahalli

Attur
Lake
Suburban business district
Indiranagar, Koramangala, Airport Road, Old Madras Road
Lake Yelahanka Maruthi
Kere Nagar
Puttanahalli

(SBD)
Kempanahalli Mittaganahalli Mitganahalli
Srinivaspur
YELAHANKA
Shringaripura
Veersandra
Nagenahalli

Peripheral business district


Shamarajpura Bellahalli Kattugollahalli Jyothipura
Shnakanipura
Bellahalli
Prakruthi
Nagar
Markandhaiha
Nagar Kadusonnappanahalli
Whitefield
(PBD) East
Gandhi Doddenahalli Chikkasandra
Nagar Chikka
Voderahalli Amanikere
Hancharahalli
Aditya Nagar
Nehru Thirumenahalli
Soma
Nagar
Allalasandra
Lake
Nagar Kannuru
Gunduru
SDS Prakruthi
Peripheral business district
Electronics City, Bannerghatta Road
Raghuvanahalli
Lake Kodigehalli
a Vinayak

(PBD) South
Nagar Vidyaranyapura Jakkur
Lake Chokkanahalli Gundur Upparahalli
BEML LAYOUT
Allalasandra
Vignana
Hazrath Kendra Kammasandra

Peripheral business district


Shafi Colony Sampigehalli Chikkagubbi Kada
Jakkuru
Agrahara

Thanisandra, Yelahanka, Devanahalli


NTI
Layout
Yashoda

Singapura
Nagar Jakkur
Airfield
RK HEGDE Shirdi Sai Bommanahalli
(PBD) North
KVP NAGAR Nagar
Dodda Bendiganahalli
Nagar Maruthi Hoskote Lake
Gubbi
Nagar Sivagiri

Outer Ring Road (ORR) Hebbal ORR, Marathahalli ORR, Sarjapur Road ORR
Jalahalli Kodigehalli Shabhari
Nagar Township
East Rajiv Gandhi Phase 1
Nagar Athmavidya
Srirampura
Amrutahalli Nagar
Lovedale
Sneha
Doddabommasandra Nagar Kothnur
Chamundeswari Lake SAHAKARA Narayanapura Narayanapura Bidrahalli
Layout Virupakshapura NAGAR
Amrutahalli Mesthri Huskur
Lake Palya Bileshivale Vaderahalli
Kyalasanahalli
Rachenahalli
Lake Aduru
Thanisandra
BEL

5. RENTAL TREND
Lake Kothanur
Tatanagar Rampura
Koti Mariyannapalya
Sanjeevini
Khata JALAHALLI Hosahalli
Nagar
Sanchar
Katamnallur FIGURE -6
The Outer Ring Road (ORR)
Nagar Fortune Saraipalya Nagar
HMT
Valley Kattanallur
Estate
Hebbal
Kempapura
Bharath
Nagar
Geddalahalli
Maragondanahalli Harichitta
KR Defense
Colony
WEIGHTED AVERAGE RENTAL MOVEMENT
ASHWATH Kalkere
Lake
Donna

Rental values have been on a steady


Hirandahalli
NAGAR Lake

office market, which has


Hebbal Amani Goravigrere Amanikere
Jalahalli Lottegollahalli Lake Nagavara
Village Bahubali Manayata Byrathikhane Virgonagar
Lake
Nagar Bhoopasandra Tech Park
Sundara Margondanahalli

rise as demand continues to surpass


Gokula Nagar Horamavu
K Channasandra
Extension Veerannapalya Agara
70
been struggling in the past
Guddadahalli
Kithaganur
MSR
HEBBAL Sizzle Sai

new completions. Currently, the weight-


Nagar Lake Habitat
Brindavan Sanjaynagar Hormavu Kanaka
Nagar HBR Agara Lake
Govindapura Nagar

few quarters on account of


Muniswara Kanaka Layout Hennur Hallehalli

ed average rent in Bengaluru is around


Nagar Nagar Bande Bidare Agraha
Chola Chamundi
Geddalahalli Kundamalli Nagar Nagar Padmeshwari
Hormavu Kalkere
Rashad Nagar
WANTHPUR Shampura
Nagar
Jinkethimmanahalli

KALYAN
`60 per sq ft per month 9% higher dearth of ready to occupy
Ganganagar
60
Pampanagar Dinnur
Nanjappa
Reddy Devasandra
Ranka NAGAR BATTARAHALLI Doddabanahalli
Kannamangala

Colony
Nagar Varanasi
Anandapura JAYBHAMNAGAR

than in H1 2016.
Raghavendra Yele Mallappa Chikkabana
Hediyat Akshya Shetty Lake
Jal Vayu Shakthi Nagar Halli
Nagar

space, saw its share increase


Nagar Nagar
Vihar
Sena
Subedarpalya Ganga Nagar RT
kal
wara Ashwath Extension Nagar Ashok Vihar
Kallumantapa Thambu
Hosabasavanapura
SHIVA NAGAR
Dr. Ambedkar Nagar K R Puram Chetty Palya
ar Nagar Muneshwara
Nagar Munisvara Hoysalanagar Lake

The CBD and ORR office markets


Mahalakshmi Dodda Nagar Dr. Ambedkar
Kanteerava Nagar Kacharakanahalli

in H1 2017 compared to
Nagar Shankar Layout Banaswadi Nagar

50
Nagar Indira Venkateshpuram Sonnenahalli
Nandini Kodandarampura Puram Basavanapura

witnessed the maximum rise in rentals

(INR/sq.ft./month)
Layout
Sreenivas Sadashiva
Devara
Jeevanahalli
BANASWADI
Lingarajapuram

H1 2016, owing to a slew


Nagar Nagar Munireddypalya Kariyana Palya Subbannaiah Bhuvanagiri
Milk Sankey Govindpura Dooravani ITI Dommasandra
Colony Tank Palya Colony

in H1 2017, primarily due to the strong


Jai Maruthi Sagayapura Jai Jawan Nagar
Nagar Gurijiya Chaitanya
Nagar Bovipalya Belathur Ananya
Gutta Kasturi
Nagar

of big ticket transactions


Benson Town Duravani

corporate demand for office space in


JC Nagar Sriram Vivekananda Krishnarajapura
Vijinapura Nagar
Nagar Guttahalli Bangalore Nagar Roshan
Nagapura MALLESWARAM Palace Lake Ayyappa
40
Nagar Kumbena
Nagar
Agrahara
Shri Jyothi Puram

these regions, coupled with declining


Mahatma Jayamahal Singayyanapalya
h Rampura Nagayana Kaveri

led by companies such


Gandhi KB Nagar Pulkeshi Palya Benniganahalli
Nagar Jeevanhalli Lake Nagar
Nagar
KHB Badavala

new completions and vacancies in key


Manjunatha Mariappanapalya Cox Colony Sadanandanagar

CBD/off-CBD
Town A Narayanapura Nagar Hoodi
Nagar Maheswari
Lakshminarayanapuram Nagar

as Microsoft, Lowes and


Shivanagar
BEML Sulthangunta VS Reddy

office markets of the city.


Layout
RAJAJINAGAR
Doddigunta MAHADEVAPURA Colony
BASAVESHWARA Nagavarapalya
NAGAR Mahaganapathi
Nagar Jai Bheema Swamy Bharati Kallahalli Vishwa Vihar
Garudachar
Palya Seetharampalya
Hoodi
Lake
30
Sandisk. Majority of the
Madhava Shivanandapuram Nagar Sarvagnanagar

PBD EAST
Nagar
Nagar

Agrahara
Okalipuram
Lakshmanpuri
SBD Ulsoor
Lake
Ulsoor
Michael
Suddaguntapalya
CV RAMAN
NAGAR
Jedara r Kaggadasapura
Prashant ive

transactions took place


Dasarahalli Palaya Bhuvaneswari Vignana Doddanakundi
Nagar Halli Lake
at h i
R

Gandhi Laksmipuram Nagar Kaggadasapura Nagar Happy Valley Chansandra


aw Nagar
ab
Krishnappa Kartik Nagar WHITEFIELD
h
Vris

Garden
Malleshpalya Prithvi Layout
Doddanekundi
20
along the Sarjapur ORR.
Jogupalya GM Palya Lake
Doddanekundi Vijay Nagar
Cholur Chinnapanahalli
AR Palya Kempapura
Nagamma
NEW Jagadish Gandhipuram Nagondanahalli
Agrahara Nagar Manivartapete Doopanahalli THIPPASANDRA Nagar
Kundalahalli
Lake
Gowthamapuram Nelluru Vibhutipura
Madava Binny Pete Puram Lake
Hosahalli
Upanagara
Extension Dodpete
Padarayanapura Palm Meadows Hagadur
Cottonpete
Kodihalli Ananda
Vinayaka Elagondanpalya Vinayaka Aswath

ORR
Puram
Nagar Nagar
VARTHUR KODI
10
Shamana Tipu Nagar
Nagar Nagar Annasandrapalya
Ajjagondahalli

H12014

H22014

H12015