The document provides an overview of the Indian real estate market for January to June 2014 and projections for July to December 2014 and the full year. Some key points: - Residential real estate launches and sales volumes declined significantly in the first half of 2014 compared to the same period in 2013 across major cities like Mumbai, Delhi, Bengaluru, and Pune. - Office market vacancy rates declined from 2013 to the first half of 2014 across many cities, with overall vacancy projected to drop further by the end of 2014. Both new completions and absorption are projected to increase modestly over 2013 levels. - While the real estate market has slowed from peak levels, a gradual recovery is projected in the second half of

1. India Real Estate Outlook
January – June 2014

2. Launches (units)
Absorption (units)
Jan – June 2014 142,983 -32% Y-o-Y
July – Dec 2014 (E) 169,602 5% Y-o-Y 2014 Year End (E) 312,585 -16% Y-o-Y
Jan – June 2014 119,282 -27% Y-o-Y July – Dec 2014 (E) 152,764 26% Y-o-Y
2014 Year End (E) 272,046 -4% Y-o-Y
Residential
Market Overview

3. New Completions (mn. sq.ft.)
Absorption (mn. sq.ft.)
Vacancy %
Jan - June 2014 16.4 -4% Y-o-Y July – Dec 2014 (E) 20.9 9% Y-o-Y 2014 Year End (E) 37.5 3% Y-o-Y
Jan - June 2014 17.9 -4% Y-o-Y July – Dec 2014 (E) 18.7 22%Y-o-Y
2014 Year End (E) 36.5 8% Y-o-Y
2013 Year End 20% June 2014 19% 2014 Year End (E) 18%
Office
Market Overview

4. Residential

Mumbai

Pune

NCR

Bengaluru

Chennai

Hyderabad

5. DEMAND AND SUPPLY TREND
Extreme volatility in demand and supply over the last 2 years across NCR, Mumbai, Pune, Bengaluru, Chennai and Hyderabad
Slow economic growth, rising interest rates, high inflation and weak rupee have led to negative sentiments but we see a revival in launches and absorption, which will be far less than the peak of H1 2013
Half-yearly Launches and Absorption (Top Six Cities)
100,000
120,000
140,000
160,000
180,000
200,000
220,000
Number of units
Launches
Absorption
Residential Market
H1 2014 - New launches fell by 32% compared to H1 2013
H1 2014 - Sales volume dropped by 27%
Sales volume: H1 2014 - 119,282 H1 2013 - 164,000

6. CITY-WISE LAUNCHES: H1 Trend
Residential Market
Steep fall in launches during H1 2014 across all cities in comparison to H1 2013
NCR witnessed the steepest fall of 43% in H1 2014 compared to H1 2013, followed by Mumbai at 38% while Bengaluru fell by 16%
(units)
67,948
45,326
30,537
31,458
20,332
10,704
57,007
62,252
42,155
20,720
16,832
11,266
35,512
35,767
35,545
16,883
11,377
7,899
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
Mumbai
NCR
Bengaluru
Pune
Chennai
Hyderabad
H1 2012
H1 2013
H1 2014

7. CITY-WISE ABSORPTION: H1 Trend
Residential Market
All markets witnessed shrinkage in demand with NCR at 37%, followed by Pune 30% in H1 2014 over H1 2013
Bengaluru witnessed a lowest de-growth of 14%
44,609
35,302
22,935
23,122
14,461
9,167
41,377
45,302
31,844
20,937
14,020
10,009
31,210
28,500
27,256
14,719
10,315
7,282
-
10,000
20,000
30,000
40,000
50,000
Mumbai
NCR
Bengaluru
Pune
Chennai
Hyderabad
H1 2012
H1 2013
H1 2014
(units)

8. CITY-WISE LAUNCHES: H2 Trend
Residential Market
Projection of an improved scenario in H2 2014 in comparison to H2 2013
Chennai leading by 31%,followed by Hyderabad at 25% in H2 2014 over H2 2013
Pune is the only market which is expected to witness a significant de- growth at 23%
53,667
54,804
37,236
24,513
16,747
12,022
52,222
33,516
36,145
24,652
8,015
7,376
57,333
37,000
36,568
18,960
10,488
9,252
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Mumbai
NCR
Bengaluru
Pune
Chennai
Hyderabad
H2 2012
H2 2013
H2 2014 E
(units)

9. CITY-WISE ABSORPTION: H2 Trend
Residential Market
All markets expected to improve in H2 2014 with Mumbai at 49% followed by Bengaluru at 26% over H2 2013
At 11% growth, Pune will be the lowest among the 6 cities
41,369
45,464
27,757
24,895
14,961
9,884
32,717
26,119
25,522
17,858
10,424
8,419
48,812
30,500
32,044
19,808
11,929
9,672
-
10,000
20,000
30,000
40,000
50,000
60,000
Mumbai
NCR
Bengaluru
Pune
Chennai
Hyderabad
H2 2012
H2 2013
H2 2014 E
(units)

10. WEIGHTED AVERAGE PRICE INDEX
Residential Market
Price appreciation in Bengaluru fastest at 11% followed by Hyderabad at 9% in H1 2014 compared to H1 2013
Going forward, Mumbai expected to lead in price appreciation during H2 2014 at 10% compared to H2 2013, on the back of a strong revival in absorption
90
100
110
120
130
Index value (Base:H1 2012=100)
Mumbai
NCR
Bengaluru
Pune
Chennai
Hyderabad

11. TICKET SIZE SPLIT OF LAUNCHED UNITS
January to June 2014
Residential Market
Pune emerged as the most affordable city during H1 2014 with 83% of new launches below the ticket size of `5 mn
0%
20%
40%
60%
80%
100%
Mumbai
NCR
Bengaluru
Pune
Chennai
Hyderabad
Mumbai remains the most premium market, with 34% of total launches during H1 2014 being priced above the ` 10 mn price bracket
<2.5 mn.
2.5-5 mn.
5-7.5 mn.
7.5-10 mn.
10-20 mn.
> 20 mn.
83%
34%

12. RESIDENTIAL MARKET HEALTH
Age of Inventory compared to QTS
Residential Market
Mumbai’s health is the poorest with the highest QTS and maximum number of unsold inventories from previous years
Note: Size of the bubble indicates the quantum of unsold inventory
QTS – Time period taken to liquidate the unsold inventory at the sales velocity of last 8 quarters
6
7
8
9
10
11
12
13
6
8
10
12
14
Age of unsold inventory in quarters
QTS
Mumbai
NCR
Hyderabad
Bengaluru
Pune
Chennai
Bengaluru among the healthiest

13. Office

Mumbai

Pune

NCR

Bengaluru

Chennai

Hyderabad

14. VACANCY TREND
New Completion, Absorption and Vacancy Level (Top Six Cities)
Office Market
Steady recovery over the last two years in the office markets, with vacancy levels falling from 21% in H2 2012 to 19% in H1 2014
16%
18%
20%
22%
-
5
10
15
20
25
H1 2012
H2 2012
H1 2013
H2 2013
H1 2014
H2 2014E
Mn sq ft
New Completion
Absorption
Vacancy (RHS)
H1 2014 has seen a turnaround which is expected to sustain for the next 6 months as a result vacancy levels to further drop to 18% by the end of 2014

15. NEW COMPLETION & ABSORPTION
New Completion, Absorption and Vacancy Level (Top Six Cities)
Office Market
Absorption in 2014 to touch 36.5 mn sq ft – an 8% jump from the 33.9 mn sq ft reported in 2013
New completions will grow by 3% to 37.4 mn.sq.ft in 2014, compared to 36.4 mn sq ft in 2013
20
23
17.1
19.2
16.4
20.9
17.5
14.7
18.5
15.3
17.9
18.7
-
5
10
15
20
25
H1 2012
H2 2012
H1 2013
H2 2013
H1 2014
H2 2014E
Mn sq ft
New Completion
Absorption

16. CITY-WISE NEW COMPLETION – H1 Trend
Office Market
Bengaluru witnessed new project completion growth of 76% in H1 2014 over H1 2013
All other markets witnessed de-growth with Mumbai and Hyderabad being the highest at 25%
5.9
3.6
4.1
0.9
3.1
2.4
3.8
3.5
1.7
2.4
1.7
4.0
2.9
4.0
3.0
2.0
1.5
3.0
-
1
2
3
4
5
6
7
Mumbai
NCR
Bengaluru
Pune
Chennai
Hyderabad
Mn sq ft
H1 2012
H1 2013
H1 2014

17. CITY-WISE ABSORPTION – H1 Trend
Office Market
3.4
3.4
6.0
1.4
1.2
2.1
3.8
3.4
4.7
2.8
1.2
2.6
2.5
3.5
6.0
2.1
1.8
1.9
-
1
2
3
4
5
6
7
Mumbai
NCR
Bengaluru
Pune
Chennai
Hyderabad
Mn sq ft
H1 2012
H1 2013
H1 2014
Mumbai witnessed a maximum fall of 34% in H1 2014 compared to H1 2013, followed by Pune and Hyderabad
Chennai, Bengaluru and NCR witnessed a positive growth at 47%, 29% and 3% respectively

18. CITY-WISE VACANCY – H1 Trend
Office Market
Bengaluru, Pune and Chennai witnessed fall in vacancy from H1 2013 to H1 2014
Hyderabad saw an increase, Mumbai and NCR were stagnant
21%
20%
18%
25%
23%
13%
22%
21%
14%
22%
24%
16%
22%
21%
11%
20%
22%
19%
0%
5%
10%
15%
20%
25%
30%
Mumbai
NCR
Bengaluru
Pune
Chennai
Hyderabad
H1 2012
H1 2013
H1 2014

19. CITY-WISE NEW COMPLETION – H2 Trend
Office Market
6.0
6.0
3.3
1.3
3.8
2.7
3.8
3.5
5.5
1.2
2.5
2.7
6.6
4.0
4.5
2.6
1.1
2.1
-
1
2
3
4
5
6
7
Mumbai
NCR
Bengaluru
Pune
Chennai
Hyderabad
Mn sq ft
H2 2012
H2 2013
H2 2014 E
Pune and Mumbai expected to grow the fastest at 125% and 73% respectively in H2 2014 over H2 2013
South markets projected to plunge with Chennai at 58%, followed by Hyderabad and Bengaluru

20. CITY-WISE ABSORPTION – H2 Trend
Office Market
2.6
3.0
3.4
1.6
2.1
2.0
2.4
3.2
4.9
1.2
2.5
1.2
4.2
4.0
3.8
2.2
2.2
2.3
-
1
2
3
4
5
6
Mumbai
NCR
Bengaluru
Pune
Chennai
Hyderabad
Mn sq ft
H2 2012
H2 2013
H2 2014 E
At 96%, Hyderabad will lead in absorption growth followed by Pune and Mumbai in H2 2014 over H2 2013
Bengaluru and Chennai to witness a decline

21. CITY-WISE VACANCY – H2 Trend
Office Market
Other than Mumbai and Hyderabad where vacancy levels will remain stagnant, all other markets will witness a decline in H2 2014 over H2 2013
23%
22%
17%
23%
24%
14%
23%
21%
14%
21%
23%
18%
23%
20%
11%
20%
20%
18%
0%
5%
10%
15%
20%
25%
30%
Mumbai
NCR
Bengaluru
Pune
Chennai
Hyderabad
H2 2012
H2 2013
H2 2014 E

22. SECTOR-WISE ABSORPTION SPLIT
January – June 2014
Office Market
IT/ITeS continues to hold the maximum share in total absorption across all cities, except Mumbai
The share of IT/ITeS ranges between 39-78%
The share of the other services sector (consulting, retail, eCommerce, infrastructure and real estate) has been increasing steadily over the last few years
0%
20%
40%
60%
80%
100%
Mumbai
NCR
Bengaluru
Pune
Chennai
Hyderabad
IT/ITeS
BFSI (Including support service)
Manufacturing
Other Services
IT / ITeS
Manufacturing (excl factory)
BFSI (including support services)
Other Services

23. DEAL SIZE ANALYSIS
Office Market
The total number of deals has increased from 542 in H1 2013 to 623 in H1 2014
An increase in the number of deals indicates a wider participation in transaction by occupiers
However, the average deal size has reduced in all the cities except Bengaluru
-
20,000
40,000
60,000
80,000
Sq ft
H1 2013
H1 2014

24. RENTAL INDEX MOVEMENT
Office Market
Growth in office rentals has been relatively constrained across the 6 cities, unlike residential
The weighted average rentals in Mumbai has been going down since 2012 due to PBD and SBD shares increasing steadily compared to CBD & off-CBD markets
80
100
120
140
Index value (Base:H1 2012=100)
Mumbai
NCR
Bengaluru
Pune
Chennai
Hyderabad
In contrast, Pune has higher demand of CBD and SBD markets compared to the PBD ones

25. Contact
KnightFrank.India@in.knightfrank.com
Mumbai I Bengaluru I NCR I Pune I
Hyderabad I Chennai I Kolkata