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Asia Pacific Equity Research

09 August 2010

Realty Check India
Residential volumes are stabilizing, office absorption
is gaining traction

• Divergent YTD performance in a beta sector –source of opportunity?- India
YTD stock returns within the property space have been fairly disparate, a India Property
trend that is new in the relatively short history of the listed sector. Against AC
Saurabh Kumar
the aggregate index BSE Realty that is YTD down 10%, UT is up 3.3% (91-22) 6157-3590
whereas DLF is down 15%. Mumbai developers, HDIL/IBREL, are down saurabh.s.kumar@jpmorgan.com
~25% each whereas Bangalore developers, Sobha/Puravankara are up Gunjan Prithyani
38%/25%. Looking at this performance, while an overweight Bangalore (91-22) 6157-3593
real estate strategy has largely worked, a buy commercial exposure gunjan.x.prithyani@jpmorgan.com
(DLF/IBREL/Brigade) is as yet not yielding results. Going ahead we would J.P. Morgan India Private Limited
expect catch up in underperformance on some of these names vs. the better
performing ones. BSE Realty vs. Sensex
• Key trends in the physical market: 110
o 2QCY10 residential volumes move up by 5% Q/Q – This is quite
105
encouraging post a 10-15% volume decline in 1QCY10. While
Gurgaon continued to witness healthy absorption (up 13% Q/Q), 100
volumes in Mumbai/Bangalore remained largely stable. However, 6/9/2010 6/23/2010 7/7/2010
anecdotal evidence suggests that volumes in Mumbai have come off by
Sensex BSE Realty
15-20% in July due to uncertainty over imposition of sales tax/VAT.
Prices across key markets (with the exception of Mumbai suburbs)
strengthened during the quarter driven by positive absorption trends. Source: Bloomberg.
o Office absorption +16% up Q/Q to 7.3 msf an encouraging trend
Overall JLL expects office absorption to grow at 30% CAGR over
2009-12. Recently, there has been a noticeable shift in lease enquiries
towards SEZ projects vs. IT Parks given imminent expiry of STPI tax
benefits by Mar-11; however, conversions remain low due to prevailing
uncertainty on SEZ regulations in the proposed DTC. Clarity on these
regulations could provide a boost to SEZ absorption in the near term.
o Retail leasing is improving at the margin– Underlying fundamental
for retailing seems to be turning positive with most retailers reporting
positive sales trends and looking favorably at space expansion.
However, supply remains a challenge. Against a total 13.9 msf of
expected completions, demand this year is likely to be only 7 msf,
which should push vacancies up to 24-25% levels.
o Please see the report for a detailed outlook and movement in
physical real estate trends across key markets and overview of
recent land deals.
Indian developer valuations
Market Cap P/E P/B ROE
US$MM FY11E FY12E FY11E FY12E FY11E FY12E
DLF 11,255 25.7 19.2 1.9 1.7 8% 10%
Unitech 4,487 20.8 14.3 1.8 1.6 10% 12%
IBREL 1,464 22.9 11.3 0.7 0.8 3% 7%
HDIL 2,091 11.8 6.4 1.2 1.0 11% 18%
Puravankara 533 15.5 11.7 1.5 1.3 10% 12%
Sobha 750 19.9 12.5 1.7 1.5 9% 13%
Brigade 319 12.6 9.4 1.3 1.2 11% 13%
AIT 532 15.7 13.0 1.1 1.1 9% 9%
Source: Bloomberg, J.P. Morgan estimates. Prices as of Aug 5, 2010

See page 24 for analyst certification and important disclosures, including non-US analyst disclosures.
J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may
have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their
investment decision.

Saurabh Kumar Asia Pacific Equity Research
(91-22) 6157-3590 09 August 2010
saurabh.s.kumar@jpmorgan.com

Share price performance
Over the past month (July 6 – Aug 6), the BSE Realty Index gained by 11% over the
last month outperforming Sensex by meaningful 7%. Key outperformers over the
month include Ansal Housing (+18% M/M), Unitech (+14% M/M) and Sobha
(+12% M/M). AIM listed developer UCP too was up 15% M/M after Unitech
proposed to make an offer to buy out the company from existing shareholders.

Table 1: Stock price performance
US$MM Absolute (%) Relative (%)
Mcap 1 week 1 month 3 month 1 week 1 month 3 month
DLF 11,225 1 10 4 (0) 6 (2)
Unitech 4,487 2 14 9 1 10 3
HDIL 2,091 2 11 7 1 7 1
Indiabulls Real Estate 1,464 3 9 5 2 5 (1)
Akruti 792 2 8 1 1 3 (6)
Annat Raj 750 2 - (3) 1 (4) (9)
Sobha 697 1 12 13 (0) 8 7
Parsvnath 550 1 7 9 (0) 2 3
Puravankara 533 6 7 12 5 3 5
Mahindra Lifespaces 421 3 1 11 2 (3) 4
Peninsula Land 407 (1) (7) (5) (2) (11) (11)
Brigade 319 (0) 0 (4) (1) (4) (10)
Orbit 293 (1) (5) (14) (2) (9) (20)
Ansal Properties 227 12 12 5 11 8 (1)
Ansal Housing 28 13 18 2 12 14 (4)
SENSEX Index NA 1 4 6 - - -
BSEREAL Index NA 1.24 11 4 0 7 (2)
AIM Developers
Trinity 221 1 15 8 0 11 2
Unitech Corporate Parks 165 1 15 (3) (0) 10 (10)
Ishaan 146 (2) (1) 1 (3) (5) (6)
Hirco 129 (6) (15) (20) (7) (19) (27)
Source: Bloomberg, Prices as of Aug 5, 2010.

Figure 1: BSE Realty vs. Sensex
114
112
110
108
106
104
102
100
7/7/10 7/10/10 7/13/10 7/16/10 7/19/10 7/22/10 7/25/10 7/28/10 7/31/10 8/3/10

Sensex BSE Realty

Source: Bloomberg. Prices as of August 5, 2010

2

4.2 1.4 1.1 9% 9% Source: Company reports and J.000 standstill. norms for dev elopers adopt w ait and 12. Morgan estimates 3 .9 11.P. ex tends Lending contraction Home loan rate cuts announced.4% rising sharply .9 12.6 9.4 1.7 19.7 8% 10% Unitech 4.5 1.Incidence of serv ice tax reduced - M 8 No 8 M 09 No 9 M 10 Fe 8 08 Fe 9 09 Fe 0 10 Au 8 Au 9 Au 0 Ja 7 M 8 8 Se 8 Oc 8 Ja 8 M 9 Ap 9 Se 9 Oc 9 Ja 9 M 0 Ap 0 10 De 8 De 9 8 9 0 r-0 t-0 t-0 0 0 1 l-0 l-0 l-1 c-0 0 -0 0 0 c-0 0 -0 0 0 c-0 1 -1 v-0 v-0 -0 -0 -1 r- r- n- n- n- n- n- n- b- g- p- b- g- p- b- g- ar ar ar ay ay ay Ju Ju Ju Ap De Ju Ju Ju Source: Bloomberg.8 14. J.P.000 Volumes pick up in the mass residential launces (at 20-25% Prov isioning Volumes keep dry ing up discunt to peak).5 9% 13% Brigade 319 12.3 10% 12% Sobha 750 19. Asset liability mismatch Lev erage concerns allay Introduction of serv ice on balance sheet w orsens Prices & v olumes tax on residential sales Policy breather.8 6.RBI permitted real estate SBI.Saurabh Kumar Asia Pacific Equity Research (91-22) 6157-3590 09 August 2010 saurabh.0 1. Morgan estimates.3 1.7 1. Prices as of Aug 5.6 10% 12% IBREL 1. HDFC 6.000 Stocks fell 50-70% ev en from these esp in Mumbai as prices increase.9 1. lev els ev en as they traded on discounts Signs of rev iv al in office market .0 11% 18% Puravankara 533 15.8 3% 7% HDIL 2.kumar@jpmorgan.000 commercial real w atch attitude Price show ing signs of estate raised to Financing costs start stabilization and ev en start to 1% from 0.3 0. .8 1.000 continue to fall. 10.5 11.Pick up in transactions in land market to NAVs estimated at that point w ith lease enquiries picking up.1 1.7 1.com Table 2: India: Comparative Valuations Market Cap P/E P/B ROE US$MM FY11E FY12E FY11E FY12E FY11E FY12E DLF 11.5 1.3 1.7 13.000 Financing costs loans start rising .091 11. teaser home begins. 2010 Sector performance 14.Residential v olumes start to taper off 2. Incremental sales at a Equity raisings start 8.2 11% 13% AIT 532 15.000 increase in Mumbai/NCR RBI disallow ed Dev eloper financing completely resttructuring of loans halts.s. loan restructuring comes as a breather.487 20.255 25.2 1.464 22.7 0.

Morgan estimates Source: Residex. Affordability in other cities (ex Mumbai). Figure 2: NCR Affordability (EMI/Monthly Income) Figure 3: Mumbai Affordability (EMI/Monthly Income) 100% 70% 65% 80% 60% 55% 60% 50% 45% 40% 40% 99 Y 00 Y 01 Y 02 Y 03 Y 04 Y 05 Y 06 Y 07 Y 08 Y 09 Y 10 11E E 99 01 03 05 07 09 FY 11 F F F F F F F F F F F FY FY FY FY FY FY FY FY Source: Residex.P. Morgan estimates 4 .P. J. This has started to constrain the affordability thereby adversely impacting the volumes in the market. J.P. J.Saurabh Kumar Asia Pacific Equity Research (91-22) 6157-3590 09 August 2010 saurabh.s. remains sound given prices in these markets have remained flat or have witnessed marginal increase of 5-10%. Morgan estimates Source: Residex.com Affordability levels remain healthy across markets ex Mumbai Residential prices in Mumbai have increased by 30-50% over the last few quarters and are now even above their peak levels of 2007-08.kumar@jpmorgan. J. however.P. Morgan estimates Figure 4: Bangalore Affordability (EMI/Monthly Income) Figure 5: Chennai Affordability (EMI/Monthly income) 70% 70% 65% 65% 60% 60% 55% 55% 50% 50% 45% 40% 45% 35% 40% 30% 35% E 99 01 03 05 07 09 E 99 01 03 05 07 09 11 11 FY FY FY FY FY FY FY FY FY FY FY FY FY FY Source: Residex.

How are developers going to finance it? While most of these acquisitions require substantial initial outlay (over US$100MM). the acquisition price seems to be at a significant premium to the transactions concluded in 2HFY09. MMRDA. 5 .3x of last year’s absorption levels of 16 msf. Typically land financing is done from non-banking sources at a 15-20% interest rate (bridge loan for a year) which is then taken out by a lower cost bank loan for construction (11-13% rate) which is secured once the approvals come through.com Land market in Mumbai is heating up… Land market in Mumbai has started to heat up with US$2B of land deals being concluded over the last one year. Vile Parle) or Central Mumbai. upcoming land auctions coupled with recently concluded land transactions should augment the supply in the suburbs by over 20msf (almost 15-20K units on an average). in our view.Saurabh Kumar Asia Pacific Equity Research (91-22) 6157-3590 09 August 2010 saurabh. further supply is expected to come from other government agencies (MMRDA/Railways) in BKC over the next few months. We note that the increase in land prices is not in sharp contrast to increase in end unit prices. Is the pricing reasonable? While the FSI details on these transactions are not available. While NTC mill auctions in Central Mumbai concluded recently.5—4x). RCF. The new planned supply is 1. While these transactions are not strictly comparable. various other government agencies and private companies (RLDA. Assuming the developers are able to avail high FSI (2. the acquisitions made under the recent public auctions have been done at 100% premium to the reserve price. Clearly. which are now back to their 2008 peak levels. all new supply will take 4-5 years to build out and may not put a very huge immediate pressure on built up asset pricing. Further. Further. it seems developers in most cases are looking to avail higher FSI under the parking scheme.s. Land prices playing a catch up… Looking at the most recent transactions. Based on our estimates. the land prices seem have appreciated by over 50% over the last one year. Further. NTC) have revived their land auction plans for the city. developers' appetite for land has increased significantly over the last one year on the back of sharp revival in residential demand and improved financing. developers seem to be confident of getting financing from non-banking sources (banks in India do not lend for land financing) to secure these projects. most of these transactions seem to make economic sense (for 30-40% margin) if the pricing continues to hold at current levels in Mumbai. most of these land parcels are fairly prime in nature either located in Western Mumbai suburbs (Andheri.kumar@jpmorgan. Oversupply risks building up? Following the success of recent land auctions.

4 acre 15.050 750 100% Aug-10 Indiabulls Real estate Upper Worli.Saurabh Kumar Asia Pacific Equity Research (91-22) 6157-3590 09 August 2010 saurabh.500 19.kumar@jpmorgan.9 421 GTC Private developer Feb-10 Goregaon. Mumbai 6 acre 40. Mumbai 4740 2500 90% May-10 Private developer Wadala.4 acre 4. Mumbai 18 acre 5.100 7.com Table 3: Key Land deals in Mumbai over the last one year Buyer Date Location Area (acre) Price (Rs B) Price per Seller acre (Rs MM) Indiabulls Real Estate Aug-10 Upper Worli.3 acre 7100 689 NTC Source: News reports (Economic Times) Table 4: Bid price vs. Munbai 6 acre 1.080 0% Source: News reports (Economic Times) 6 .7 540 Lupin Wadhwa developer Dec-09 LBS Marg.5 250 NA Private developer May-10 Wadala.750 MMRDA Sheth developer Feb-10 Vile Parle.800 105% Jul-09 Private developer Finlay Mills. reserve price in auction deals concluded over the last one year Date Developer Location Bid Price (Rs MM) Reserve price (Rs MM) % premium Aug-10 Indiabulls Real estate Upper Worli.800 NTC Indiabulls Real estate Aug-10 Upper Worli.74 1. Composite Private developer Jul-09 Lower.7 317 Hind. Lower Parel 7. Mumbai 8. Mumbai 5 acre 2. Mumbai 2.1 1. Mumbai 14 acre 5.983 NTC Sheth developer Aug-10 Andheri (E).8 489 Borosil Glass works Sunteck July-10 Goregaon.s. Mumbai 15. Mumbai 40. Mumbai 18 acre 8. Parel 10.5 6.

volumes in Mumbai (MMR) and Bangalore remained largely stable over the last quarter. Unsold inventory across markets has been declining over the last one year with Mumbai/NCR reaching their two year lows over the last quarter. While Gurgaon continues to witness healthy volume growth with 2Q10 units sales increasing by 13% Q/Q. Bangalore) has increased by 6% in 2QCY10 after witnessing a 10-15% volume decline in 1Q10. This was driven by strong offtake in few big launches. Mumbai/NCR had been leading the launch activity over the last one year accounting for over 75% of the new launches. Figure 6: Pan India Residential absorption trends Source: JLL 7 .Saurabh Kumar Asia Pacific Equity Research (91-22) 6157-3590 09 August 2010 saurabh.com Residential: Volumes remain healthy.s.kumar@jpmorgan. This in part explains the muted price increase in Bangalore/Chennai markets as yet. while it is still high at 12-15 months of inventory in South India markets (Chennai and Bangalore). NCR. the peak in terms of residential bookings now seems to be behind us as volumes stabilize across markets. These include Supertech’s Ecovillage in Greater Noida and Jaypee’s Kensington project in Noida. however. however peak maybe behind us 2009 was a year of record volumes for a number of developers. unit absorption across key markets (Gurgaon. Capital values took a breather in Mumbai given sharp appreciation witnessed over the last one year. Overall. Months of unsold inventory in Mumbai / NCR is at 8-10 months. Anecdotal evidence suggests that volumes in Mumbai have come off by 15-20% in July due to uncertainty over imposition of sales tax (came into effect in July) and VAT. Going ahead. Prices in other markets (Gurgaon/Chennai/Bangalore) however strengthened further driven by positive absorption trends. new launches are expected to gain traction in Bangalore with number of key players firming up their plans for big launches in FY11 on the back of positive hiring/salary trends in the IT sector. Noida/Greater Noida market stood out over the last quarter registering a twofold increase in absorption run rate.

Number of projects across all segments were launched in 2Q including Melody and Purva Atria Platina by Salarpuria Group and Purvankara.784 10. both launch as well as construction activity has picked up meaningfully over the last quarter.092 1% 2.296 276% 12. Capital values too have started to increase in select locations with limited supply.536 180% Source: Prop Equity. Prabhadevi. Kumar Cortue by Kumar Builders. Note that 2QCY10 data for Chennai is available for Apr/May only Residential market update: Key market trends as of 2Q 2010 Cushman Comments NCR . Chennai . investor demand has also started to come back in peripheral locations. . Oberoi Exquiite by Oberoi Builders.626 2. Price increase was registered primarily in ready to move/near completion premium properties. volumes have now started to moderate in the market.Bangalore market continues to witness healthy pick up in absorption. Bangalore . Driven by improved absorption trends. capital values too took a breather over the last quarter.Residential market in NCR continued to witness robust transaction activity for both mid income as well as high end properties. Kasa Isles. Aqua Marine & Hill Roof by Kamla Group.700 2% Gurgaon 2.723 2% 1. Most of these projects were concentrated in Lower Parel.062 23% Total (ex Noida/G Noida) 9.090 9.725 1. Goregaon and Bandra.160 1.133 -3% 10.197 -3% 1.Chennai residential market has witnessed a noticeable pick up in sales over the last 6 months.121 -7% 4.779 -3% Chennai 1.758 5. Tulip Purple by Tulip Infratech Pvt. Ltd.307 1. Further. This led to further strengthening of capital values especially in prime Gurgaon. While the end users continue to dominate the overall demand. and Knight’s Court by Jaypee Developers.kumar@jpmorgan.752 1.NCR continues to witness heightened launch activity with number of mid range projects being launched in Gurgaon and Noida.000 mid segment units are likely to be added in Bangalore in 2010. As per C&W. However with prices surpassing the 2008 peaks.816 4.s.com Table 5: Average monthly absorption trends across key markets YTD CY10 2QCY10 Units/month average CY09 average % ch average 1QCY10 average % ch Q/Q MMR (including Thane and Navi Mumbai) 4..Mumbai has witnessed strong pick up in demand from both investors as well as end users over the last one year. Prices in Noida however remained stable at last Q levels. . Majority of the launches were concentrated in the affordable/mid income segment. Source: Cushman and Wakefield 8 .242 1. Key projects launched in 2Q include Victory Valley by IREO.Saurabh Kumar Asia Pacific Equity Research (91-22) 6157-3590 09 August 2010 saurabh. Mumbai .. ~ 15.A number of premium projects were launched this quarter in Mumbai including Ahuja Towers by Ahuja Builders.Launch activity in the city has picked up over the last quarter given improving demand trends. Harmony Nirvana Country by Unitech Ltd. -Capital values across markets too have started to appreciate over the last quarter.985 13% Bangalore 1.526 6% Noida/Greater Noida 8. Jaypee Kensington Boulevard.715 4. . however appreciation in mid income segment was marginal. respectively.114 2.

kumar@jpmorgan.816 units/month) in Mumbai (including Navi Mumbai and 10. J.s. Morgan Absorption pick up in Figure 8: Noida/G Noida: Absorption trends and months of inventory Noida/Greater Noida has been astonishing as run rate over 15.000 20 months) continued to decline in 500 10 the market and is currently at its . 5.P.com Supply and Absorption trends Figure 7: Gurgaon: Absorption trends and months of inventory Gurgaon recorded average monthly absorption of 2. 1.000 Infratech and local developers 20 have contributed a lot to this.000 60 units/months in 2Q10. 0 Jaypee’s Kensington project in Noida. 0 year low of 9 months.500 30 Months of unsold inventory (~6 1. 00 00 00 01 20 20 20 20 c-2 -2 c-2 -2 n- n- p- p- ar ar De De Ju Ju Se Se M M Absorption Months of inv entory Source: Prop Equity.000 40 Apr/May tripled from 1Q levels. J.P. New launches by Jaypee 30 10.000 25 Thane) in 2Q stabilized (up 2% 8.000 15 4.000 20 Q/Q) after witnessing a 13% volume decline in 4Q10. Saurabh Kumar Asia Pacific Equity Research (91-22) 6157-3590 09 August 2010 saurabh.500 50 13% higher than 1Q average and 2.000 10 Key launches Supertech’s Ecovillage in Greater Noida and .000 40 largely stable at CY09 average.242 3. 0 two year low thereby keeping 09 10 08 8 9 09 9 0 pricing relatively strong.000 5 market and is currently at its two . 09 10 08 8 9 09 9 0 00 00 00 01 20 20 20 20 c-2 -2 c-2 -2 n- n- p- p- ar ar De De Ju Ju Se Se M M Absorption Months of inv entory Source: Prop Equity.000 10 Months of unsold inventory continued to decline in the 2. Morgan Figure 9: Mumbai (including Thane & Navi Mumbai): Absorption trends and months of inventory Average monthly sale run rate (4. 09 10 9 08 9 09 0 8 9 9 0 00 00 01 00 00 00 01 20 20 20 20 l-2 -2 -2 v-2 v-2 -2 -2 n- n- p- p- ar ar ay ay Ju Ja Ja Se Se No No M M M M Absorption Months of inv entory Source: Prop Equity. This is 2. 6. JP Morgan 9 .

500 35 Chennai is witnessing steady 30 pick up in absorption with 2. 0 one year. Morgan Figure 11: Chennai: Absorption trends and months of inventory 2.000 30 witnessing 13% decline in 1Q.000 15 Months of unsold inventory has 10 been declining over the last one 500 5 year. J.com Figure 10: Bangalore: Absorption trends and months of inventory Average monthly sales run rate (1. Saurabh Kumar Asia Pacific Equity Research (91-22) 6157-3590 09 August 2010 saurabh. 1.500 20 units) over Apr/May increasing by 23% from 1Q10 levels.307 1.P.500 Decline in 1Q was primarily on 20 account of seasonal weakness.kumar@jpmorgan.P.s.500 40 Bangalore were largely flat after 2.000 25 average sales run rate (1.000 500 10 Months of unsold inventory has been coming down over the last . 1. 0 Sep-2008 Dec-2008 Mar-2009 Jun-2009 Sep-2009 Dec-2009 Mar-2010 Absorption Months of inv entory Source: Prop Equity. 1. Morgan 10 . however it still 09 10 08 8 9 09 9 0 00 00 00 01 remains high at 15 months 20 20 20 20 c-2 -2 c-2 -2 n- n- p- p- ar ar thereby keeping the prices under De De Ju Ju Se Se M M check.725 units) over 2QCY10 in 2. Absorption Months of inv entory Source: Prop Equity. J. .

750 3. Goregaon) 6.000 0% 38% Far North (Andheri (W).750 35% 48% Nungambakkam 7.000 20.000 3% 5% Gurgaon 4.650 2. Panchsheel) 19.000 0% 0% T Nagar 5.350 4.s.500 5.000 19.250 5. Artillery Road. Richmond Town.650 2.000 12. Rajajinagar) 4.000 41. Airport Road) 2.500 2% 18% South Central (Safdarjung Enclave.250 22.250 28% 37% Anna Nagar 6.400 5. Indiranagar) 4.750 4% 8% Source: Cushman and Wakefield 11 .250 8% 14% Off Central (Vasanth Nagar.450 4.000 20.500 10.250 6.900 5% 34% Noida 3.250 5.000 10.500 18.500 7.450 7.900 3% 7% East (Marathalli.250 5.400 4.750 3% 8% North West (Malleshwaram. Ishwar Nagar) 14.850 8% 12% South East (Koramangala.100 7.Saurabh Kumar Asia Pacific Equity Research (91-22) 6157-3590 09 August 2010 saurabh.850 3.500 8.550 2.650 2. Kalindi Colony.800 4. Jakkasandra) 3.350 4.700 4. Whitefield. Santacruz (W).500 19.000 15.500 4.450 0% 19% Source: Cushman & Wakefield Table 7: Mumbai capital value trends Rs psf % ch % ch from Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 (Q/Q) bottom South Central (Altamount Rd.600 7% 7% Source: Cushman and Wakefield Table 9: Chennai Mid Income Residential Capital Values Rs psf % ch % ch from Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 (Q/Q) bottom Rajiv Gandhi Salai 2. Malad.300 4.500 6.875 3.500 8.com Capital value trends Table 6: NCR Capital value trends Rs psf Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 % ch (Q/Q) % ch (Y/Y) South East (New Friends Colony.kumar@jpmorgan.600 4. Ali Askar Road.250 16.000 12.500 5. Napeansea etc) 38.000 12.000 20. Lower Parel / Parel) 18.400 4.000 4.500 16.550 2.000 3.000 20.500 7.250 5.000 2. Prabhadevi.500 7. Juhu) 14.750 7.550 2.950 2.600 5.800 5.000 44.500 10.000 10..250 5.650 2.750 4.500 40.250 6. Malabar Hill.750 5.000 7% 14% Central (Worli. Sarvapriya Vihar. Cunningham Road) 5.750 7% 26% North (Bandra (W).000 15.250 6.500 22% 32% Velachery 3.900 3.000 19.750 4.500 21.250 6% 13% Poes Garden 12.500 0% 67% Source: Cushman and Wakefield Table 8: Bangalore Mid income capital value trends Rs psf % ch % ch from Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 (Q/Q) bottom Central (Brunton Road. Khar (W).350 4.500 20.500 7.500 38.000 19.000 12.500 0% 62% North East (Powai) 4.

Incidence on service tax on home purchase reduced to 2.RBI reduced risk weightings on banks' exposures to commercial real estate to 100% from 150% earlier May-08 -Lower risk weight (50%) on home loans upto 30L (20L earlier) May-07 -Ban on ECB's for township projects.ECB norms for overseas lending relaxed Dec-08 .Home loan rates on below Rs 20L segment to be cut by about 200bps Dec-08 . Now followed by other private sector banks Apr-10 .Rs40B credit line to National Housing Bank to to kick start lending in the Rs 2MM category (priority sector lending) Dec-08 .RBI asks banks to treat loans to SEZs as real estate loans May-06 . Morgan 12 .RBI eases lending norms for SEZs (classified as infrastructure lending) Jul 09 -Extension of 80IB(B) scheme by one year and interest subsidy of 1 % Jul 09 -Norms relaxation for SEZ development Jan-09 .SBI has extended its offer on teaser rate schemes till end June (by 2 months).Increase in provisioning requirements for commercial real estate loans from 0.P.5% from 3.com Figure 12: Regulatory/Policy action over the last three years Date Comments Jul-10 .4% Nov-08 . Feb-10 -RBI disallowed restructuring of loans for real estate developers.4% to 1% Sep 09 . Likely to hit the development plans of large developers Jan-07 -Increase in provisioning requirements for real estate loans Sep-06 . HDFC. BOI etc Feb-10 -Budget proposes imposition of service tax on sales/rentals and increases input costs (excise hike). Additionally for low cost housing projects funded under special govt initiatives (JNUURM / RYA) have been exempted from imposition of these taxes Feb-10 -Withdrawal of teaser home loan rates by a number of banks ICICI.HDFC extends the teaser home loan scheme to Mar-11 May-10 .s.Saurabh Kumar Asia Pacific Equity Research (91-22) 6157-3590 09 August 2010 saurabh.kumar@jpmorgan.RBI increases risk weightings on banks' exposures to commercial real estate to 150% from 125% May-06 .HFCs allowed to raise short term foreign currency borrowings under the approval route Nov-08 .Reduction in provisioning requirements on advances to the commercial real estate sector and home loans beyond Rs 2MM to 0.FII entry into real estate IPOs comes under scanner with RBI trying to classify it as FDI Source: RBI.Increase risk weightings and general provisioning of residential housing/commercial loans above Rs 2MM Apr-06 . Oct-09 .Permitted real estate loan restructuring upto Jun-09 as standard loans without requiring banks to classify these as NPAs Nov-08 .5% earlier (proposed on the budget). J.

we expect that Bangalore market to outperform on the back of encouraging results (increased hiring activity) posted by most IT companies and improving offhsoring outlook. Capital values.3msf against 6. Overall for 2010. Further. Number of companies that had earlier put their expansion plans on hold are now looking to take up space given affordable rentals (post 30-35% decline from peak levels). Chennai however has been underperforming with current vacancies at ~24%. This will further push the vacancy levels higher to >20% by 2010 end from ~18% currently. might start to increase given the decline in yields. However. however. Going ahead. construction activity too seems to be gaining momentum as demand has shown visible signs of improvement. CBD rental values increased marginally by 3-5% during the quarter.kumar@jpmorgan. Clarity on these proposed regulations can likely boost the SEZ demand in the near term. flexible lease terms and improving economic outlook. rentals to remain under pressure given sizeable supply pipeline Demand for office segment continues to improve with most micro markets witnessing increased transaction activity over the last quarter. IT parks over the last quarter as STPI tax benefits are set to expire by Mar-11. Leasing activity has picked up primarily for projects nearing completion.3msf absorption in 1Q10. improving demand trends auger well for the overall office market in 2010.s. while demand for under construction projects still remains low. rentals have remained largely stable and are likely to remain under check in the near term as supply continues to outpace the demand across most markets. Despite improving absorption trends. the SEZ lease decisions are being deferred due to prevailing uncertainty over SEZ regulations in the proposed DTC code (all SEZ units set up after 31 March 2011 would not be eligible for any tax breaks). There has been a noticeable shift in lease enquiries towards SEZ projects vs. Investment yields across markets have declined by 50-100bps over the last year and the trend is expected to continue on the back improving demand environment and of reduced risk aversion. Mumbai and NCR have been leading the demand revival on the back of improving demand financial institutions and IT companies. Overall absorption for 2Q10 stood at 7.Saurabh Kumar Asia Pacific Equity Research (91-22) 6157-3590 09 August 2010 saurabh. JLL expects office supply of 52msf against the estimated absorption of 29msf. Even while a large amount of supply is expected across most micro markets. Further. overall sentiment is not as buoyant as other metros.com Office recovery gaining traction. CBDs however will be an exception to this trend given limited supply addition in these micro markets. In terms of markets. the market has healthy pre lease commitments in place. This is quite encouraging given construction on most of the office projects had been on hold in 2008/09 on account of slowdown in leasing demand. however. 13 . While there has been some pick up in demand in Chennai.

Source: JLL State of nation 2Q Figure 15: Construction status of future supply Majority of the supply expected to be added in 2010/2011 is at advanced stages of construction. 6.kumar@jpmorgan.s. This will further push the vacancy levels higher to over 20% from 18% currently. Source: JLLM State of nation 2Q 14 . Saurabh Kumar Asia Pacific Equity Research (91-22) 6157-3590 09 August 2010 saurabh.3msf in 1Q10.3msf of office space being absorbed in 2Q10 vs.com Figure 13: Office absorption trends Leasing activity picked up during the quarter with 7. Source: JLL State of nation 2Q Figure 14: Pan India Demand Supply Trends 2010 is expected to witness 52msf of office supply as against estimates absorption of 29msf.

P.0 6. J.0% 9.5% 7 8 9 0 07 7 08 8 09 9 r-0 r-0 r-0 r-1 c-0 c-0 c-0 g- g- g- Ap Ap Ap Ap De De De Au Au Au NCR Mumbai Bangalore Chennai Source: JLL.P.0 . Morgan estimates 15 . Morgan estimates Source: JLL.0 30% 10.0% 11.Saurabh Kumar Asia Pacific Equity Research (91-22) 6157-3590 09 August 2010 saurabh.0) 0% 2005 2006 2007 2008 2009 2010E 2011E 2005 2006 2007 2008 2009 2010E 2011E Absorption (msf) Supply (msf) Vacancy (%) Absorption (msf) Supply (msf) Vacancy (%) Source: JLL.kumar@jpmorgan.P. J.0 20% 10.P.0 8. J.0 15% 25% 6.5% 11.0 15% 2.s.0 4. Morgan Figure 18: NCR Office: Supply Absorption trends Figure 19: Mumbai Office: Supply Absorption trends 20 35% 16. 0% (2. J.5% 10.P.0 15% 10 15% 10% 5 10% 4.0% 10.0 10% 5% 2. 5% .0 30% 30% 25% 15 12. Morgan estimates Figure 20: Bangalore office: Supply Absorption trends (msf) Figure 21: Chennai Office: Supply Absorption trends (msf) 14.0 8.com Figure 16: Relative position of key micro markets Figure 17: Office Investment yield trends in key cities 12.0 5% 5% 0 0% .0 20% 10% 4. 0% 2005 2006 2007 2008 2009 2010E 2011E 2005 2006 2007 2008 2009 2010E 2011E Absorption (msf) Supply (msf) Vacancy (%) Absorption (msf) Supply (msf) Vacancy (%) Source: JLL. Morgan estimates Source: JLL.0 25% 20% 20% 8.0 35% 12. J.

The entire supply was concentrated in the suburban locations.Overall vacancy levels for the city increased marginally to 16% (vs. the sentiment is not as buoyant as in other metros. Accenture.Rentals remained largely stable across most micro markets and the trend is likely to continue given sizeable supply addition expected in suburban Mumbai (7msf primarily coming in Andheri. Gurgaon (12. Rentals remained largely stable across most markets.2msf of office supply.Siruseri. 3.Overall vacancy rate remained stable at 14-15% in 2Q 2010 as supply continues to outstrip demand especially in the Andheri. . . however. Chennai .While the overall market vacancy levels remained stable at 13-14%.com Office market update: 2Q10 Market Comments NCR . This coupled with existing high vacancy levels and expiry of STPI tax benefits has led to deferment of supply substantially. L&T Infotech.2%) witnessed marginal decline in vacancy rates over the quarter. Key projects including DLF IT Park and RMZ Millennia witnessing strong leasing interest saw some rental appreciation. 3Q is expected to witness 4. Sholinganallur. C&W expects rentals across majority of the markets to strengthen in the medium term. Lower Parel). Syntel.Peripheral Business District (PBD) of Perungalathur. have committed large quantum of space in the Raheja Mindspace project in Airoli.Overall vacancy levels remain high at ~22% and rentals remained largely stable despite improving demand trends. . Mumbai .000sq ft) as compared to last quarter. Ambattur and GST Road continue to remain under pressure even as rentals seem to have bottomed out.5msf (vs.kumar@jpmorgan. Companies like Wipro. etc.2%) and CBD (2. .2msf of completion in 2Q10 with Whitefield accounting for ~77% of the total supply. .0.2msf in 2Q10).7msf in 2Q10 with fresh leasing picking up meaningfully during the quarter.s. Overall 2Q10 absorption stood at 2.Mumbai witnessed absorption of 1. Bangalore .2Q10 witnessed absorption of 2.2Q10 witnessed increased level of transaction activity especially in Gurgaon & Noida given availability of quality supply at affordable rentals and flexible lease terms. Vacancy rate in Whitefield currently stands at 35%. . C&W expects the rentals to start strengthening in select micro markets over the next 2-3 quarters.Navi Mumbai has emerged as a preferred location for tenants looking for SEZ space. Landlords are offering preferential rent pricing. .8msf in 4Q) on account of completion of significant projects during the quarter. transaction sizes also increased (>70. SEZs in Thane Belapur accounted for >20% of total absorption for the quarter. . CBD vacancy levels however increased on account of tenant movement to new buildings in suburban locations (Lower Parel/BKC). Avg. higher rent free period to secure big leases. .4msf primarily coming from earlier pre-commitments in buildings which were delivered during the quarter.Saurabh Kumar Asia Pacific Equity Research (91-22) 6157-3590 09 August 2010 saurabh. Vacancy level continued to remain high at 18% – 20%.Demand has started to pick up in the market (1. Malad and Thane Belapur micro markets. . Source: Cushman and Wakefield 16 .Supply for 2Q10 stood at 1.3msf of supply is expected to be added in 3Q.Rentals have largely remained stable over the last quarter with the exception of CBD/off CBD location given limited supply addition in the micro market.Bangalore witnessed 6. 15% in 1Q) primarily on account of significant space additions in Whitefield.2msf (up 126% Q/Q) with SEZ accounting for 50% of the total.

Morgan Table 13: Chennai Grade A Office rental trends Rs psf pm % ch from Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 % ch (Q/Q) bottom CBD (Anna Salai. Morgan 17 .Saurabh Kumar Asia Pacific Equity Research (91-22) 6157-3590 09 August 2010 saurabh.P. J. Fort.Siruseri etc) 25 25 24 24 24 0% 0% Source: CBRE.Egmore.Adyar) 49 47 45 45 44 -2% 0% SBD (Valachery. electronic city 25 25 25 24 24 0% 0% South Bangalore 35 35 35 35 35 0% 0% North Bangalore 42 42 42 42 42 0% 0% Source: CBRE. Cuff Parade 300 300 290 290 290 0% 0% Worli.kumar@jpmorgan.P.Prabhadevi 225 225 250 250 250 0% 11% Bandra Kurla Complex 250 250 265 275 275 0% 10% Andheri 125 125 115 115 115 0% 0% Malad 70 70 65 65 65 0% 0% Thane.com Rental trends in key cities Table 10: NCR Grade A Office rental trends % ch from Rs psf pm Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 % ch (Q/Q) bottom Connaught Place 220 230 230 240 240 0% 9% Nehru Place 160 160 160 150 150 0% 0% Jasola 110 105 105 100 100 0% 0% Saket 140 135 135 133 133 0% 0% Gurgaon 60 65 65 65 65 0% 8% Noida 30 30 30 30 30 0% 0% Source: CBRE.Guindy. Taramani.P. Lower Parel. Perungudi) 38 37 35 35 35 0% 0% SBD (Ambattur.P. J. J. Residency Road) 73 73 73 70 72 3% 3% Koramangala. Indira Nagar 48 48 48 48 48 0% 0% Outer ring road 40 40 40 38 38 0% 0% Whitefield.Nungambakkam. Morgan Table 12: Bangalore Grade A office rental trends Rs psf pm % ch from Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 % ch (Q/Q) bottom CBD (MG Road. Navi Mumbai 37 37 40 40 40 0% 8% Source: CBRE. J.s. Morgan Table 11: Mumbai Grade A Office rental trends Rs psf pm % ch from Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 % ch (Q/Q) bottom Nariman Point. RK Salai) 68 64 62 62 62 0% 0% Off CBD (Alwarpet.

000 HOV Services Source: CBRE.000 Flextronics Independent building Guindy 65.500 Canon Bangalore Kalyani Platina Whitefield 110000 Mu Sigma Vrindavan Tech Village Outer ring road 100000 Altisource Vrindavan Tech Village Outer ring road 90000 Brocade Salarpuria Supreme Outer ring road 56891 Deloitte JP Techno Park Miller Road 100000 Samsung Kalyani Magna Whitefield 100000 MU Sigma Embassy Golf Links Domlur 120.000 3Q10 Techno Touch Noida 240.000 Net Ambit DLF Building 5 Gurgaon 50.000 EXL DLF Building 10C Gurgaon 50.000 Accenture Express Tradw Towers II Noida 200.000 3Q10 Mumbai Indiabulls Finance Center Lower Parel 540000 3Q10 Kaledonia Andheri 565.kumar@jpmorgan.000 3Q10 Ascendas ITPC Taramani 750. Cushman and Wakefield Table 15: Key projects under construction – 2Q10 Property Location Area Leased (sq ft) Completion Date NCR Orient Bestech Business Park Gurgaon 540.000 Bharti Infra Mumbai Mindspace Airoli 300.000 Initto Vatika Business Park Gurgaon 100.000 3Q10 Nirlon Knowledge Center Malad 325.com Table 14: Significant recent office lease transaction – 2Q10 Project Location Area sq ft Tenant NCR Oxygen Noida 250.000 Fullerton The Ruby Dadar 27.000 Lister Technologies RMZ Millenia Perungudi 60.429 3Q10 Divyasree Technopark Whitefield 625.000 CTS.000 3Q10 Source: Cushman and Wakefield 18 .000 3Q10 Leela IT Park Santhome 250.000 Daksh IBM SP Infocity Perungudi 20. TCS Alpha City Navallur 25.000 3Q10 Chennai ASV Chandilya Thoraipakkam 500.000 L&T Infotech Supreme Business Park Powai 70.000 Schneider Kalyani Platina Whitefield 110000 Mu Sigma Chennai DLF IT Park Mannapakkam 423.000 NetApp RMZ NXT Whitefield 65.000 Stryker India Unitech Infospace Noida 250.s.Saurabh Kumar Asia Pacific Equity Research (91-22) 6157-3590 09 August 2010 saurabh.000 ARCIL Natraj Andheri Kurla 22.000 4Q10 Vasawani Centropolis Langford road 144.000 BMR Advisors Park Centra Gurgaon 50.000 4Q10 Bangalore Prestige Exora Outer Ring Road 674.

com Retail segment showing signs of improvement as rentals bottom out Retail market has witnessed meaningful improvement in lease enquiries over the last quarter as developers become more accommodative in terms of asking rents and lease terms to ensure higher occupancy. an estimated absorption of ~7msf. Minimum guarantee coupled with revenue sharing has emerged as a favored model amongst the retailers over the past one year. Most retailers (Pantaloons. Source: JLL REIS Figure 23: Status of construction of future retail supply All of the expected future supply in 2010 is at advanced stages of construction with more than 50% of the structure ready. Saurabh Kumar Asia Pacific Equity Research (91-22) 6157-3590 09 August 2010 saurabh. Figure 22: Pan India Retail Demand Supply Trends 2010 is expected to witness completion of 14msf of retail space vs. This has resulted in appreciation in rentals in select markets. Shoppers Stop) have reported healthy sales trends over the last 6 months driven by improved consumer spending and now seem to have resumed back their expansion plans. Of the total expected supply. Source: JLL REIS 19 . This will keep the vacancy levels elevated across markets.kumar@jpmorgan. High street seems to be leading the demand recovery with domestic players resuming their expansion plans and entry of new international brands. while non prime developments continue to witness corrections. Rentals across markets have corrected by 30-40% from their peak levels. There has been a visible shift in demand towards prime high street locations or quality mall developments. Nearly 4. While there has been a noticeable increase in leasing activity. an estimated absorption of ~7msf (Source: JLL). over 50% is at advanced stage of construction and is therefore certain to become operational by 2010 end. This would keep the vacancy levels elevated (currently at 24%) and rentals under check. retailers have become cautious in their choice of micro markets. 2010 is expected to witness completion of 14msf of retail space vs.4 million sq ft of retail space in 2010 is already ready for fit-outs.s.

000 Croma Standalone Koramangala. Mumbai 45000 Landmark.kumar@jpmorgan.000 3Q10 Magnet Bhandup. Mumbai 650.000 4Q10 Kohinoor Mall Kurla. Mumbai 550.000 Croma Palladium Lower Parel. Delhi 18.000 Zara Standalone Connaught Place 8.Mumbai 500.000 Westside.0% 11.0% 8.0% 5 6 7 8 9 6 7 8 9 0 5 6 7 8 9 l-0 l-0 l-0 l-0 l-0 -0 -0 -0 -0 -1 v-0 v-0 v-0 v-0 v-0 ar ar ar ar ar Ju Ju Ju Ju Ju No No No No No M M M M M NCR Mumbai Bangalore Chennai Source: JLL Table 17: Key Mall Lease Transactions: 2Q10 Project Location Area (sq ft) Rent psf pm DLF Place Saket.000 3Q10 South Court District Center.5% Health and Beauty 10%-12% Food 15%-20% Entertainment 8%-10% Source: ET Figure 24: Retail Investment Yields in key cities (%) 12. Saket 400.000 3Q10 Gopalan Innovation Bannerghatta Road 180. Bangalore 14.0% 9. Deisel Express Avenue Whites Road.s.000 3Q10 Ramee Mall Mount Road 200. Chennai 51.000 3Q10 Infinity 2 Malad.0% 10. Odyssey Source: Cushman and Wakefield Table 18: Key projects under construction – 2Q10 Property Location Area (sq ft) Completion Date Metropolis MG Road.com Table 16: Revenue sharing model Percentage of revenue as rent (%) Hypermarket 3%-4% Departmental Stores 7%-8% Apparel 12%-18% Footwear 15%-18% Jewellery 2%-2. Gurgaon 800.000 1Q11 Source: Cushman and Wakefield 20 .000 4Q10 Coromandel Mall Rajiv Gandhi Salai 250.Saurabh Kumar Asia Pacific Equity Research (91-22) 6157-3590 09 August 2010 saurabh.

Morgan estimates Source: JLL.0 15% 1.0 0% 2005 2006 2007 2008 2009 2010E 2011E 2005 2006 2007 2008 2009 2010E 2011E Absorption (msf) Supply (msf) Vacancy (%) Absorption (msf) Supply (msf) Vacancy (%) Source: JLL.0 4 0.P.5 5% 0.0 0.0 0. 0 0% 2005 2006 2007 2008 2009 2010E 2011E 2005 2006 2007 2008 2009 2010E 2011E Absorption (msf) Supply (msf) Vacancy (%) Absorption (msf) Supply (msf) Vacancy (%) Source: JLL.5 25% 2. J. .5 25% 2.com Figure 25: NCR Retail: Supply Absorption trends Figure 26: Mumbai Retail: Supply Absorption trends 6.0 0.0 2.0 3 20% 0.Saurabh Kumar Asia Pacific Equity Research (91-22) 6157-3590 09 August 2010 saurabh. Morgan estimates Figure 27: Bangalore Retail: Supply Absorption trends Figure 28: Chennai Retail: Supply Absorption trends 3.1 1 .0 30% 20% 2.P.5 35% 3.4 6 40% 5.2 2. Morgan estimates 21 .P.0 0% 0.5 20% 1.3 5 0.0 10% 5% 0.kumar@jpmorgan. J.0 15% 1.0 2 0.5 10% 1.3 30% 4.s.P. Morgan estimates Source: JLL. J. J.5 0.2 3.1 10% 1.

Chennai has witnessed a visible pick up in absorption post the sharp decline in rentals. Madura.Saurabh Kumar Asia Pacific Equity Research (91-22) 6157-3590 09 August 2010 saurabh.kumar@jpmorgan. Barista etc.2Q10 witnessed resumption of expansion plans by domestic retailers as well as arrival of new retailers in NCR. no new supply was added during the quarter.On the organized retail front. etc) and hyper markets (Bharti. . . Royal Meenakshi Mall (expected to be operational by Oct) on Bannerghatta road has witnessed heightened activity. Men and Boys and Howards Storage world.8msf) in OMR. However. while there was no supply addition during the quarter. Mumbai . Further. Kurla. Rentals improved marginally over the quarter especially in prime Gurgaon malls and prime high street locations.High streets seem to be leading the recovery with F&B players (like Mc Donalds. Star Bazaar.While huge supply is expected to come up in 2010.Leasing activity picked up in the city during the quarter with number of new retailers entering the market like Reliance Living. Chennai . . CCD. developers are now looking to revive their projects that had been stalled in 2008/09 due to slowdown in leasing demand. . high streets continue to witness healthy leasing and rentals in select micro markets have witnessed marginal appreciation due to lack of supply in these locations. Westside.Vacancy is expected to increase marginally as under construction malls (in West Delhi and South Delhi) become operational.s. .Rentals remained largely stable across micro markets with the exception of Thane and high street of Linking road which witnessed marginal rent appreciation on account of improved leasing and low vacancy levels. This is evident from the high occupancy in the recently opened mall . while non prime markets continue to witness rental corrections. Costa Coffee. Other large developments in the city include Phoenix market city (1msf in Valanchery) and Junction mall (0. Star Bazaar) dominating the incremental demand. Further.2Q10 witnessed improved leasing activity across markets in Mumbai.com Retail market update: 2Q10 Market Comments NCR . majority of this is expected to be concentrated in new emerging locations like Bhandup. Rental values in existing retail locations could see some appreciation in coming quarters given the demand improvement and restrained supply. Source: Cushman and Wakefield 22 . . This led to a marginal decline in vacancy levels. This has led to increased pace of construction in these peripheries. Landmark.Enquiries by retailers for malls along Rajiv Gandhi Salai and GST Road are witnessing significant revival. Key tenants include Cinepolis. Over 85% of the mall is already occupied and the enquiries are picking up steadily. Bangalore .Express Avenue (which is the largest mall in Chennai).

kumar@jpmorgan.s.Saurabh Kumar Asia Pacific Equity Research (91-22) 6157-3590 09 August 2010 saurabh.com Table 19: NCR Prime Mall Rental trends Rs psf pm Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 % ch (Q/Q) % ch from bottom South Delhi 475 450 450 425 430 1% 1% West Delhi 240 225 225 225 233 4% 4% Noida 310 300 275 275 275 0% 0% Gurgaon 230 225 225 215 225 5% 5% Source: Cushman & Wakefield Table 20: Mumbai Prime Mall Rental trends Rs psf pm Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 % ch (Q/Q) % ch from bottom Malad 525 510 480 480 480 0% 0% Lower Parel 480 480 480 480 480 0% 0% Link Road Andheri (W) 400 400 400 400 400 0% 0% Mulund 260 260 260 260 260 0% 0% Goregaon 275 280 280 280 280 0% 2% Vashi 185 185 185 185 185 0% 0% Ghatkopar 220 220 220 220 220 0% 2% Source: Cushman and Wakefield Table 21: Bangalore Prime Mall Rental Trends Rs psf pm % ch from Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 % ch (Q/Q) bottom Koramangala 400 400 400 400 400 0% 0% Magrath Road 315 315 315 315 315 0% 0% Cunnigham Road 200 200 200 200 200 0% 0% Mysore Road 150 150 150 150 140 -7% 0% Source: Cushman and Wakefield Table 22: Chennai Prime Mall Rental trends Rs psf pm Mar-09 Jun-09 Sep-09 Dec-09 Jun-10 % ch (Q/Q) % ch from bottom Chennai CBD 220 180 180 180 140 0% 0% Chennai Suburbs 145 140 140 140 180 0% 0% Source: Cushman and Wakefield 23 .

Important Disclosures • Lead or Co-manager: JPMSI or its affiliates acted as lead or co-manager in a public offering of equity and/or debt securities for Housing Development and Infrastructure Ltd. compensation for investment banking services in the next three months from DLF Limited. Ishaan Real Estate Plc (ISH. JPMSI provided to the company investment banking services and non-investment banking securities-related services. A list of these analysts is available on request.] Neutral [Over the next six to twelve months. (HDIL) (HDIL. Housing Development and Infrastructure Ltd. we expect this stock will perform in line with the average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe. • Investment Banking (past 12 months): JPMSI or its affiliates received in the past 12 months compensation for investment banking services from DLF Limited. the research analyst denoted by an “AC” on the cover or within the document individually certifies. Brigade Enterprises is or was in the past 12 months a client of JPMSI. The following analysts (and/or their associates or household members) own a long position in the shares of Sobha Developers: Bijay Kumar. Housing Development and Infrastructure Ltd. • Beneficial Ownership (1% or more): JPMSI or its affiliates beneficially own 1% or more of a class of common equity securities of Housing Development and Infrastructure Ltd. or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst(s) in this report.S.kumar@jpmorgan.Saurabh Kumar Asia Pacific Equity Research (91-22) 6157-3590 09 August 2010 saurabh.BO/Rs85. we expect this stock will underperform the average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe. • Client of the Firm: Ascendas India Trust is or was in the past 12 months a client of JPMSI.00/Overweight) Analyst Certification: The research analyst(s) denoted by an “AC” on the cover of this report certifies (or.P. Coverage Universe: Saurabh Kumar: Ascendas India Trust (AINT.BO).BO). (HDIL).s. during the past 12 months.BO/Rs169.BO). each stock’s expected total return is compared to the expected total return of the FTSE All Share Index.SI). DLF Limited (DLF. Housing Development and Infrastructure Ltd. Indian Hotels (IHTL. during the past 12 months. we expect this stock will outperform the average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe. Puravankara Projects Ltd (PPRO.BO/Rs132. Morgan uses the following rating system: Overweight [Over the next six to twelve months.BO/Rs340. are available through the search function on J. including price charts for all companies under coverage for at least one year.60/Neutral).L). Unitech Ltd. not to those analysts’ coverage universe. Puravankara Projects Ltd (PPRO.BO).] Underweight [Over the next six to twelve months.com Companies Recommended in This Report (all prices in this report as of market close on 06 August 2010) Ascendas India Trust (AINT. is.jpmorgan.10/Overweight). Sobha Developers (SOBH.P. Brigade Enterprises (BRIG.75/Overweight). • Analyst Position: The following analysts (and/or their associates or household members) own a long position in the shares of Indiabulls Real Estate: Bijay Kumar. Housing Development and Infrastructure Ltd. • Non-Investment Banking Compensation: JPMSI has received compensation in the past 12 months for products or services other than investment banking from DLF Limited.BO).70/Overweight). See below for the specific stocks in the certifying analyst(s) coverage universe. Unitech Ltd (UNTE. where multiple research analysts are primarily responsible for this report. (HDIL) is or was in the past 12 months a client of JPMSI. Unitech Ltd is or was in the past 12 months a client of JPMSI. • Investment Banking (next 3 months): JPMSI or its affiliates expect to receive. toll-free number (1-800-477-0406) Explanation of Equity Research Ratings and Analyst(s) Coverage Universe: J.BO) 24 .SI/S$0. with respect to each security or issuer that the research analyst covers in this research) that: (1) all of the views expressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers. Sobha Developers (SOBH. (HDIL) (HDIL. Indiabulls Real Estate (INRL. Housing Development and Infrastructure Ltd. however.70/Overweight).BO). Unitech Ltd (UNTE. Important Disclosures for Equity Research Compendium Reports: Important disclosures.BO/Rs115.15/Overweight). The analyst or analyst’s team’s coverage universe is the sector and/or country shown on the cover of each publication. (HDIL) within the past 12 months. (HDIL). 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