PROPERTY INSIGHTS

India Quarter 2, 2019

INDIA REAL ESTATE OVERVIEW

Introduction

Economy

Growth of the Indian economy slowed to 5.8% during the January-March quarter of 2019 due to weak domestic
demand, slower industrial production and muted growth in exports due to the vulnerable external demand conditions.
The economy was further affected by the liquidity crisis in the non-banking financial companies (NBFCs), which
accentuated the already tight credit situation. Private consumption growth declined to 7.2% in the fourth quarter,
compared to 8.4% in the previous quarter while investment demand growth slipped to 3.6%, compared to a
growth of 10.6% in the third quarter. Retail inflation moved up from 2.05% in January to 2.86% in March primarily
due to higher food and fuel prices but remained under the RBI's target rate of 4%. Growth in industrial output
slowed down sharply to 0.4% in March, compared to 5.3% in the same period of the previous year, due to declining
manufacturing production.

The RBI has revised its GDP forecasts for FY 2020 downwards from 7.2% in the April policy review to 7% at
present. Slowdown in private investments, muted industrial activity, global trade turmoil and weakness in the
global economy are expected to impact the economy over the short term. However, tax breaks for the middle class,
declining non-performing bank loans and an accommodative monetary policy of the RBI is likely to increase
disposable incomes, kickstart domestic demand and private investments over the next few quarters.
Introduction

GDP growth rate & Repo Rate

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Q3 Q4
2018 2018
GDP Growth Repo rate

Source: World Bank, RBI

Note: GDP numbers for Q4 2018 correspond to the Jan - Mar quarter

POLICY UPDATES

A common online platform for RERA is being planned

The Ministry of Housing and Urban Affairs has stated its intention to set up a common online platform across all
states and union territories for the Real Estate Regulatory Authority (RERA). The provisions of the Real Estate
(Regulation and Development) Act 2016 came into force in May 2017 with the aim of safeguarding the interests of
homebuyers and ensuring growth of the residential real estate segment in a systematic manner. As of May 2019,
22 states and 6 union territories have notified RERA rules and 19 states have functional online portals providing
details on project and agent registrations and grievance redressals. Currently, Maharashtra leads in the number
of project registrations followed by Gujarat, Uttar Pradesh and Karnataka.

The central government intends to take this real estate reform a step further by creating a common online
platform, which will enable sharing of information and views on regulations and projects between homebuyers
and developers. This initiative is also expected to improve efficiency and transparency in the industry by
facilitating better monitoring of projects across states and ensuring that projects are completed on time and
handed over to the buyers. It will also be possible for a specific state to review and learn from an order passed by
another state and also provide developers and buyers a platform to voice their opinions on the order.
Introduction

RBI REPO rate cut

The Reserve Bank of India's Monetary Policy Committee reduced the repo rate by 25 bps in the June policy review
meeting. The repo rate currently stands at 5.75% and this was the third successive rate cut over the past two
quarters with a change of stance from neutral to accommodative. The focus of the central bank has
unambiguously moved to reviving investments and economic growth given the weak GDP growth figures in Q4 FY
2019. Benign inflationary pressures have provided the flexibility to the RBI to reduce the repo rate further, though
it will continue to monitor any upward movement in retail prices going forward.

Repo rate cuts have not resulted in adequate lowering of lending rates by banks till date. Improper
transmission of rate cuts has meant that consumers have not benefited from lower home loan rates.
Transmission of the cumulative 50 bps cuts in the February and April policy reviews currently stands at 21 bps
on fresh rupee loans. Moreover, a number of banks are still following the earlier 'Base rate' regime for their
loan portfolio instead of the MCLR linked system as mandated by the central bank. This has impeded any
reduction in interest rates on older and existing loans. Implementation of the move to align banks' floating rate
retail loans to external benchmarks has also been deferred, given the concerns of banks. However, over the
next year, better implementation of the external benchmarking mechanism and gradual reduction in lending
rates will enable better transmission of rate cuts.
RBI Moves To Support Investment
And Economic Growth

The June monetary policy review by the Reserve Bank of India's Monetary Policy Committee (MPC) had a
singularly important message. The Indian economy has slowed down sharply, growth in gross fixed capital
formation (GFCF) has stalled and private consumption is sluggish. Credit disbursal to small and medium
enterprises has been tepid but retail inflation remained under control, below the target rate of 4%.

Recognizing the need to revive economic growth through monetary policy action, the MPC slashed the repo rate
by 25 bps to 5.75% and shifted its stance to accommodative from neutral. This was the third successive rate cut
since the start of the year and shows the central bank's concern about the economic slowdown.

The RBI noted the slowdown in key economic indicators in recent months. Manufacturing activity decelerated
sharply in Q4 FY 2019 compared to the previous quarter even though capacity utilization improved based on the
central bank's survey. High frequency indicators such as sales of commercial vehicles and passenger cars
contracted in April while cement production and steel consumption, which are key indicators of construction
activity, showed modest growth. Growth of services sector held up due to finance, real estate and professional
services but construction sector slowed down sharply.

Price levels remained moderate with CPI inflation stable in April, as compared to the previous month, which
afforded RBI the flexibility to reduce the repo rate. Inflation expectation of households remained muted but
manufacturers expect higher salaries and raw material costs to feed into input cost pressures.

GDP estimate for FY 2020 has been revised downward from 7.2% in the April policy review to 7% at present due to
lower industrial activity, deceleration in private investments and an uncertain global economic outlook. However,
improved transmission of lower interest rates, higher disposable incomes due to tax breaks and higher credit flows
to industry are expected to support private consumption and investments over the next few quarters. The impact
of the El Nino conditions and volatile crude oil prices on inflation will have to be monitored.

Some other important issues raised by the MPC are:

The output gap, defined as the deviation of actual output from potential output, has widened since the
April policy review and is in line with the sharp slowdown in investment rate and economic growth.

Given the benign inflationary scenario, India's real interest rates remain high and this makes the country
globally uncompetitive. Thus, there is a need to bring the real interest rates down.

Fiscal deficit has shown improvement since 2013. This has kept inflation under check and provided the
room to cut the repo rate. But, any slippage on the fiscal front needs to be monitored.
Impact On Consumers And Real Estate

While cutting the repo rate, the RBI recognized the need for better transmission mechanism so that consumers
can benefit from lower bank lending rates, especially on housing loans. Till date, consumers have not been able to
benefit completely from the accommodative monetary policy as lending rates have not fallen in line with lower
policy rates. A number of banks continue to follow the previous Bank Rate regime instead of the MCLR-linked
system, which impedes transmission. The external interest rate benchmarking system, which was expected to
come into effect from April 1, has also been deferred due to concerns raised by banks.

The transmission mechanism is expected to improve over the next year as banks gradually adjust their deposit and
lending rates and consumers get access to cheaper home loans, which will benefit the real estate sector.
Consultation will continue between the RBI and banks to arrive at a timeline to introduce the external
benchmarking regime after addressing the latter's concerns. Going forward, reduction in the GST rate for under-
construction affordable housing, coupled with lower lending rates and tax benefits for the middle class, will drive
buying sentiment in residential markets.

Some other key points on the direction of monetary policy:

Given low inflation and economic slowdown, there is no expectation of a repo rate hike in the next policy
review. In fact, there might be another rate cut to provide the necessary stimulus to the economy.

Retail inflation, excluding food and fuel, has been on a downward trend. If this trend persists, there will be
scope for further rate cuts in subsequent policy reviews.
Real Estate Market Snapshot

Residential

12% 60% 61%

Increase (q-o-q) in new unit Share of mid segment in overall Contribution of Mumbai,
launches during Q2 2019 unit launches in Q2 2019 Pune and Ahmedabad in new
launches during Q2 2019

Office

18.7 msf 15.2 msf 14.1 msf

Gross leasing in Q2 2019, New supply in Q2 2019, Net absorption in Q2 2019,
38.7% growth q-o-q 0.5% growth q-o-q 25% growth q-o-q

Retail

1.7 msf 81.5 msf 12.1%

Total retail transactions Organized retail inventory as Pan-India vacancy in malls
in Q2 2019 of Q2 2019: up by 3.9% q-o-q
Indian Residential Sector Overview

Affordable Segment Mid Segment

Ahmedabad and Mumbai contributed Mumbai, Pune and Bengaluru contributed

the maximum share nearly 71% of total launches in Q2 2019

High-end Segment Luxury Segment

Mumbai and Delhi NCR contributed Hyderabad, Pune, Bengaluru and Ahmedabad
74% of new launches in Q2 2019 witnessed launches in the luxury segment
during Q2 2019
New Launches in Q2 2019 (in units)

3%

2% 1% 3%
6% 13% 7%
15% 16% 19%
37%

74% 62% 67%

73%
83% 81%
60%

25% 23%
19%
11%
3%
Ahmedabad Bengaluru Chennai Delhi-NCR Hyderabad Mumbai Pune

Affordable Mid High-end Luxury

Key Trends

Unit launches across the top 7 cities (Delhi-NCR, Bengaluru, Mumbai, Chennai, Hyderabad, Pune, and
Ahmedabad) increased by 12% q-o-q in Q2 2019. Mumbai topped in terms of new launches with a 32% share,
followed by Pune and Ahmedabad with respective shares of 17% and 15%. Bengaluru, Hyderabad and Chennai
recorded a q-o-q drop in new unit launches in Q2 2019, Delhi NCR and Ahmedabad recorded maximum q-o-q
growth in terms of new launches.

The share of mid segment in new launches increased with the segment constituting 59% of the overall units
launched in Q2 2019, followed by the affordable segment with a 27% share. Mid segment witnessed q-o-q
growth of 28%, however affordable segment witnessed q-o-q drop of 14% in new launches. Mumbai and Pune
contributed the most towards new launches in the mid segment with shares of 34% and 19% respectively,
followed by Bengaluru with an 18% share. Ahmedabad and Mumbai witnessed the maximum share in
affordable segment launches with 44% and 29% share, respectively. High-end segment also witnessed q-o-q
growth of 41% in new launches during Q2 2019, with Mumbai and Delhi NCR contributing a combined 74% to
new launches in this segment.

Peripheral and suburban locations across all the cities are witnessing maximum new project launches, driven by
the demand in these locations. The trend will continue going forward, with these locations expected to see most
of the project launches, mainly due to availability of lands and at lower rates compared to core city areas.

Completed or nearing possession homes across all cities are seeing maximum traction from buyers as the risk
of delay in possession is minimized in such properties.

1
Ahmedabad, Bengaluru, Chennai, Delhi-NCR, Hyderabad, Mumbai and Pune.
Index

Mumbai ...................................................................................... 1

Delhi-NCR .................................................................................. 4

Bengaluru .................................................................................. 7
Mumbai
Residential Overview

Mumbai residential sector continued to witness Unit launches continued to grow

improved new launches during Q2 2019 with a
marginal increase of 2.5% q-o-q, at nearly 15,994
units. Share of launches in price segments

Thane submarket along with extended Eastern

Suburbs submarket has witnessed maximum new 1%
4% 4% 4%
launches with a share of nearly 52%. Eastern 8% 13% 14%
45%
Suburbs also contributed notably in new launches
with a share of 17% during the quarter. 69% 63% 65%

Projects in the mid and affordable segments 51%

23%
remained the most preferred among homebuyers. 19% 17%

Both categories together accounted for nearly 87% 2017 2018 Q1 2019 Q2 2019

of the new launches in Q2 2019. New launches in the

< 7,500 7,501 - 25,000 25,001 - 40,000 > 40,000
high-end category have also improved during the
quarter.

Buyers continued to prefer completed or nearing Source: Cushman & Wakefield Research
possession properties across all submarkets. The values in the legend are in INR/sf.

Average Capital Values – High-End (INR ‘000/sf)

Location 2017 2018 Q1 2019 Q2 2019

South 48.0 - 75.0 48.0 - 75.0 48.0 - 83.0 48.0 - 83.0

South Central 46.0 - 83.0 46.0 - 83.0 46.0 - 83.0 46.0 - 83.0
Central 27.0 - 61.0 27.0 - 61.0 27.0 - 61.0 27.0 - 61.0
North 28.0 - 50.0 28.0 - 50.0 30.0 - 60.0 30.0 - 60.0
Far North 12.5 - 20.0 12.5 - 20.0 12.5 - 20.0 12.5 - 20.0
North East 15.0 - 24.0 15.0 - 24.0 15.0 - 24.0 15.0 - 24.0

Average Capital Values – Mid Segment (INR '000/sf)

Location 2017 2018 Q1 2019 Q2 2019

South 40.0 - 50.0 40.0 - 50.0 40.0 - 50.0 40.0 - 50.0

South Central 45.0 - 58.0 45.0 - 58.0 45.0 - 58.0 45.0 - 58.0

Central 23.0 - 45.0 23.0 - 45.0 23.0 - 45.0 23.0 - 45.0

North 20.0 - 30.0 20.0 - 30.0 20.0 - 30.0 20.0 - 30.0

Far North 10.0 - 16.0 10.0 - 16.0 10.0 - 16.0 10.0 - 16.0

North East 10.0 - 14.0 10.0 - 14.0 10.0 - 14.0 10.0 - 14.0

Source: Cushman & Wakefield Research

1
 Launches – segment-wise across submarkets (%)
Submarkets Affordable Mid High-end Luxury Total (Number of units)

Eastern Suburbs 0% 75% 25% 0% 2,650

Western Suburbs 0% 88% 12% 0% 1,610
South Central 0% 6% 94% 0% 574
Thane 1% 89% 10% 0% 4,052
Navi Mumbai 8% 81% 11% 0% 1,596

KEY TO SUBMARKETS:

Eastern Suburbs: Sion, Wadala, Kurla, Chembur, Ghatkopar, Vikhroli, Powai, Chandivali, Kanjurmarg, Bhandup, Mulund
Western Suburbs: Andheri, Jogeshwari, Goregaon, JVLR, Malad, Kandivali, Borivali, Dahisar
South Central: Worli, Prabhadevi, Lower Parel / Parel, Dadar, Matunga
Thane: Thane, Ghodbunder Road
Navi Mumbai: Airoli, Ghansoli, Rabale, Koparkhairane, Vashi, Turbhe, Sanpada, Nerul, Belapur, Kharghar, Panvel

% indicates proportion of unit launches in different segments within a submarket.

Source: Cushman & Wakefield Research

With the Reserve Bank of India (RBI) reducing the Thane submarket, Dahisar in Western Suburbs
repo rate further from 6% to 5.75%, some of the and Chembur in Eastern Suburbs witnessed
banks have reduced the marginal cost of lending rate completion of projects during the quarter.
(MCLR) by 5 to 10 basis points. We expecta gradual
The capital and rental values have remained
improvement in demand with reduction in housing
largely unchanged in both mid and high-end
loan interest rate in the coming quarters. The trend
segments across most of the markets. Going
of home buyers preferring to buy completed or
forward, we expect capital values across majority of
nearing possession homes continued during the
the submarkets to remain stable except select
quarter. Suburban and peripheral submarkets drew
peripheral locations that might see marginal rise in
the maximum interest from home buyers.
capital values.

2
Outlook

Residential

Launches Price Buyer sentiment

To fulfill the demand for affordable and mid-segment category projects, developers shall continue to
launch projects in these categories across all submarkets in coming quarters. Peripheral submarkets of
Thane, Navi Mumbai, Extended Eastern and Western Suburbs shall continue to drive the overall
residential supply. However, within the Mumbai municipal corporation limits, select submarkets like
Eastern Suburbs and Western Suburbs are likely to see new launches in the coming quarters.

Suburban and peripheral locations are expected to witness steady demand mainly due to availability of
affordable and mid-segment projects. Select high-end projects by reputed developers are also expected
to see improved demand.
Developers across all submarkets will continue to expedite the construction activity to cater to the
demand for such projects.

Office

Absorption Vacancy Rentals

New supply of 1.7 msf was added to the city's office inventory during Q2 2019. Nearly 11.5 msf is expected
to be added by the end of 2020 in the city's office space.

Most of the new supply is coming up in suburban and peripheral locations which are preferred by and will
continue to attract demand from IT-BPM occupiers, captive centres of BFSI and professional services
firms and flexible workspace occupiers.
Select submarkets like BKC, Malad / Goregaon, Powai and Thane – Belapur Road witnessed rental
growth during the quarter on the back of improved demand and low vacancy in prominent projects
which gave an upward push to rents. On an overall basis, weighted average rents increased marginally
during the quarter.

Retail

Leasing Vacancy Rentals

The overall retail mall leasing is expected to see increased movement in near future on the back of
upcoming malls in the BKC submarket which are expected to complete during 2019-20 with healthy
leasing by retailers.

Rental growth is expected to be led by select, quality projects with superior performance on account of
lease renewals and a tenant churn with demand being restricted to such quality developments.
Upcoming quality projects shall also aid rental growth in their respective submarkets.

Select main street locations are also expected to see appreciation in rental values going forward, as they 3
are witnessing increased demand from retailers.
Delhi-NCR
Residential Overview

New unit launches at 5,962 units during Q2 Joint developments headlining new launches
increased by a multiple of 2.7 times q-o-q in Delhi
NCR. Prominent national developers headlined new Share of launches in price segments
launch activity, with three of them launching
subsequent phases of existing projects. This shows 1.7%
17% 11%
some improvement in market sentiment, especially 37.8% 37%
as customers reposed confidence in developers with
good execution track record, even though the city 52%
89%
still continues to have high unsold inventory. 60.5% 60%

31%
Noida led the new launch activity accounting for 3%
68% of the total unit launches during the quarter 2017 2018 Q1 2019 Q2 2019
with majority being in Noida Expressway in sectors
150 and 107. Dwarka Expressway and Golf Course < 3,500 3,501 - 8,000 8,001 - 20,000 > 20,000

Extension Road were among the major corridors in

Gurugram that witnessed activity during Q2. Source: Cushman & Wakefield Research
The values in the legend are in INR/sf.

Mid segment continued to garner the majority share of new unit launches, even though the share was lower at
60% compared to 89% in the last quarter. High-end segment had a 37% share of unit launches during Q2.

The city also noted launch of another 2,119 units in Gurugram under the Affordable Housing Policy,
emphasizing the thrust on this segment that is seeing traction from both demand and supply sides.

Average Capital Values – High-End (INR ‘000/sf)

Location 2017 2018 Q1 2019 Q2 2019

South-West 32.0 – 49.0 32.0 – 51.0 33.0 – 53.0 33.0 – 53.0

South-East 24.0 - 35.0 24.0 - 35.0 24.0 - 35.0 24.0 - 35.0

South-Central 25.0 - 43.0 25.0 - 45.0 28.0 - 45.0 28.0 - 45.0

Central 60.0 - 90.0 60.0 - 95.0 63.0 - 98.0 63.0 - 98.0
*
Gurugram High-End 10.0 – 16.2 10.0 – 16.2 10.0 – 16.2 10.0 – 16.2

Noida 7.0 – 9.0 7.0 – 9.0 7.0 – 9.0 7.0 – 9.0

Average Capital Values – Mid Segment (INR '000/sf)

Location 2017 2018 Q1 2019 Q2 2019

South-East 20.0 – 25.0 20.0 – 25.0 20.0 – 27.0 20.0 – 27.0

South-Central 23.8 – 33.3 23.8 – 33.3 24.0 – 35.0 24.0 – 35.0

Gurugram 4.5 - 9.0 4.5 – 9.0 4.5 – 9.0 4.5 – 9.0

*
Noida 4.0 - 6.5 4.0 - 6.5 4.0 - 6.5 4.0 - 6.5

Source: Cushman & Wakefield Research

4
 Launches – segment-wise across submarkets (%)

Submarkets Affordable Mid High-end Luxury Total (Number of units)

Delhi 0% 0% 0% 0% 0
Gurugram 0% 41% 59% 0% 1,899
Noida 0% 59% 41/% 0% 2,619

KEY TO SUBMARKETS:
Gurugram: Excludes Manesar, Sohna
Noida: Excludes Greater Noida, Noida Extension

% indicates proportion of unit launches in different segments within a submarket.

Source: Cushman & Wakefield Research

No change was witnessed in capital and rental
values for both mid and high-end segments across all
submarkets in Delhi NCR. Prices remained largely
stable in the quarter that had central government
elections, despite the gradually improving demand for
property in Delhi NCR with fence-sitters executing
their purchase decisions. The city's high unsold
inventory kept a check on property prices during the
quarter. However, transacted rates for completed
projects have shown some strengthening.
New completions were witnessed in residential
corridors including Dwarka Expressway, Sector 78,
Noida and Noida Expressway during the second
quarter of 2019. More projects are scheduled for
completion in these corridors in the upcoming
quarters as several developers continue to focus on
completion of existing projects in the city.
in Delhi NCR (especially in Noida), there have been
demand for measures like regulator/government
intervention for a financial resolution to expedite
completion of such projects. Recently, UPRERA
offered home buyers the first right to take over the
completion of a stalled project on their own accord.
There are talks of NBCC taking over completion of
select stalled projects. Some private developers
have also evinced interest in taking over such
projects and completing them. Despite interest from
private developers, considerable on-ground
progress is still missing.

With the high concern regarding stalled projects

5
Outlook

Residential

Launches Price Buyer sentiment

New unit launches are expected to remain steady in the upcoming quarter.

Sales are expected to improve gradually with an improvement in buyer sentiment.

Capital prices are likely to remain largely stable across most submarkets, especially in those which have
high unsold inventory levels.

Office

Absorption Vacancy Rentals

The second half of 2019 is likely to see infusion of ~4.7 msf of new office space in Delhi NCR in office
corridors including Golf Course Road Extension and NH8 in Gurugram as well as Noida Expressway.

Leasing is expected to remain on an upward trajectory in the upcoming quarters, with the non-CBD
region of Gurugram expected to lead the office transaction activity.

Overall market rents are likely to remain largely stable in the upcoming quarter, with slight increase
expected in core markets especially with quality project completions.

Retail

Leasing Vacancy Rentals

Apparel and lifestyle followed by F&B brands are expected to lead demand for retail spaces with
international retailers planning to foray / expand their retail footprint in the city.

The second half of 2019 is expected to see addition of 1.4 msf of mall space across Delhi and Noida in high
residential catchment areas. Pre-leasing activity in these malls is expected to result in healthy
occupancy levels once they are operational.

Stable demand and space availability (on account of retailer churn) is expected to keep rentals across
malls and main streets largely unchanged. Select malls with high occupancy levels and a retail
6
development being refurbished might see some increase in rents.
Bengaluru
Residential Overview

A marginal impact due to the general elections Unit launches increasing with positive
and the subsequent budget announcement was felt change in buyer sentiment
in the form of a slight dip of around 5% q-o-q in
Share of launches in price segments
quarterly launches. About 7,300 units were
launched this quarter across different price 2% 1% 3% 1%
categories. 5%
19%
6%

Southern part of the city (south, south-east and 64%

80% 52% 74%
south–west submarkets) together contributed more
than 50% of the total launches across categories.
North submarket continues to show steady growth 28%
33%
19%
13%
in launches and has contributed around 27% of the
2017 2018 Q1 2019 Q2 2019
total launches this quarter. With the upcoming metro
connectivity and quality office supply, the < 2,800 2,801 - 8,000 8,001 - 20,000 > 20,000
residential supply in this location is expected to
continue its momentum in the medium term. Source: Cushman & Wakefield Research
The values in the legend are in INR/sf.
Though rentals across the city were steady, these
are likely to see an appreciation in select locations

with existing or upcoming metro connectivity.

Average Capital Values – Mid-End (INR '000/sf)

Location 2017 2018 Q1 2019 Q2 2019

Central 10.0 – 12.5 10.0 – 12.5 9.5 – 13 9.5 – 14.5

East 4.3 - 6.0 4.3 - 6.0 4.5 - 6.5 4.6 - 6.6

South East 4.5 – 6.75 4.5 – 6.75 4.5 – 6.75 5.0 – 6.75

South 7.0 – 10.0 7.0 – 10.0 8.0 – 11.0 8.0 – 11.0

North 4.5 – 6.5 4.5 – 6.5 5.0 – 7.0 5.0 – 7.0

South West 5.0 – 7.0 5.0 – 7.0 5.5 – 7.5 5.5 – 7.5

Off Central I 7.0 – 11.0 7.0 – 11.0 8.0 – 11.5 8.0 – 11.5

Off Central II 6.5 – 8.5 6.5 – 8.5 7.5 – 9.5 7.5 – 9.5

North West 6.5 – 7.5 6.5 – 7.5 6.5 – 7.5 6.5 – 7.5

Average Capital Values – High-End Segment (INR '000/sf)

Location 2017 2018 Q1 2019 Q2 2019

Central 18.0 - 21.0 18.0 - 21.0 18.0 - 21.0 18.0 - 21.0

South 7.5 – 11.5 7.5 – 11.5 7.0 – 11.8 9.0 – 12.5

Off Central 8.5 - 12.0 8.5 - 12.0 9.0 - 13.0 9.0 - 13.0

East 6.5 - 10.0 6.5 - 10.0 7.5 - 11.0 7.5 - 11.0

North 7.5 - 11.5 7.5 - 11.5 8.0 - 12.0 8.0 - 12.0

7
Source: Cushman & Wakefield Research
 Launches – segment-wise across submarkets (%)

Submarkets Affordable Mid High-end Luxury Total (Number of units)

North 36% 64% 0% 0% 2,154

East 5% 53% 42% 0% 900
North East 0% 0% 0% 0% 0
North West 0% 0% 0% 0% 0
South 19% 76% 3% 2% 2,051
Central 0% 0% 0% 0% 0
South East 9% 91% 0% 0% 420
South West 8% 92% 0% 0% 1,775

KEY TO SUBMARKETS
North: Hebbal, Bellary Road, Yelahanka, Doddaballapur Road, Hennur Road, Thanisandra Road, Jakkur, Devanahalli
East: Marathahalli, Whitefield, Old Airport Road, Old Madras Road
North-west: Malleshwaram, Rajajinagar, Tumkur Road, Yeshwantpur
South: Koramangala, Jakkasandra
Central: Brunton Road, Artillery Road, Ali Askar Road, Cunningham Road, Lavelle Road, Palace Cross Road, Off Cunningham Road, Ulsoor Road, Richmond Road
South-east: Sarjapur Road, Outer Ring Road (Marathahalli- Sarjapur), HSR Layout
South-west: Jayanagar, J P Nagar, Kanakapura Road, Bannerghatta Road, BTM Layout, Banashankari
% indicates proportion of unit launches in different segments within a submarket.

Source: Cushman & Wakefield Research

While overall launches recorded a marginal dip q-
o-q, select locations like Bannerghatta Road,
Sarjapur Road, Electronic City in the south and
Thanisandra and Vidyaranyapura in the northern
submarket saw healthy traction during the quarter.
Some of the reputed developers who launched their
projects this quarter are Godrej Properties, Prestige
Group and Provident Housing.
Rapid growth of commercial office space across
the city and influx of population continues to have a
positive impact on the mid-segment residential
launches which have been witnessing steady growth
over the last few quarters; launch of around 11,000
units in the mid segment by first half of 2019
indicates the same. The segment which contributed
around 74% of the total launches in the city in Q2
2019, saw the highest proportion of launches in the
southern part of the city (south, south-west and
south-east submarkets). Affordable category
projects accounted for around 19% of the total
launches this quarter.
submarkets during the quarter. While prominent and
existing high-end residential locations like
Koramangala recorded a price appreciation on the
back of their sustained demand among buyers;
other locations like Whitefield, Kanakapura Road,
Jayanagar and J.P. Nagar have benefitted from the
existing and upcoming metro connectivity and seen
an upward movement in capital values. Further
improvement in overall market sentiment largely
driven by increased buyer traction should also allow
for some positive momentum in prices going
forward.
Due to delay in completion of many residential
projects particularly of average developers, there
have been lesser completions this quarter; while
developers like Sobha, Puravankara received
completion certificates for few of their projects.
We are likely to see developers continue to push for
early completion of ongoing projects, as buyers are
preferring ready to move in or nearing completion
projects.

Capital values across both mid and high-end

8
segments have witnessed a 5-10% increase in select
Outlook

Residential

Launches Price Buyer sentiment

Tax deduction for affordable segment is likely to have a positive impact on the target customers in this
segment, which is expected to result in rise in launches over the next few quarters.
However, the steady growth in mid segment launches is also likely to continue with developers focusing
most on launches in this segment.
Steady demand backed by timely completions and positive buyer sentiment are likely to result in an
upward movement in capital values.

Office

Absorption Vacancy Rentals

Supply pipeline for the coming years remains strong in Bengaluru with Outer Ring Road expected to
contribute the highest in terms of total Grade A office supply followed by the Peripheral East (Whitefield)
and Peripheral North submarkets.
Bengaluru is expected to have additional new supply of around 3.2 msf of office space in the remaining
quarters of the year.
Demand would also come from engineering & manufacturing and professional services firms even as IT-
BPM and captives are likely to remain as the main drivers of office demand.
Rentals are expected to remain largely stable. However, new completions are expected to exert an upward
pressure on rents going forward.

Retail

Leasing Vacancy Rentals

Vacancy is likely to remain tight in the short to medium term with lack of quality space available in malls.
The upcoming supply of around 2.6 msf by end 2020 is likely to address the tight vacancy situation
currently prevalent.
Apparel and F&B sectors shall continue to be the major demand drivers for retail with domestic and
international brands expanding their footprint in the city. Fitness and wellness centers are emerging as a
new category driving space take-up in the city.
Main streets continued to attract retailers the most and have contributed a considerable proportion of the
total space leased during the quarter.
Rentals are likely to remain largely stable. However, new completions are expected to exert an upward 9
pressure on the same going forward.
 This research report has been prepared by Cushman & Wakefield
specially for distribution to Citibank customers.

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