Pan India-Office Property Market Overview- 3Q 2011

1. Office
PrOPerty Market Overview
iNDia
QUarterLy UPDate | OctOBer | 2011
Accelerating success.

2. 3Q 2011 | THE KNOWLEDGE
REsEARCh & fORECAsT REpORT
sYDNEY CENTRAl BusINEss DIsTRICT
RESEARCH & foRECAST REPoRT
INDIA offICE MARkET
MACRO ECONOMIC OVERVIEW
ECONOMIC INDICATORs
• The Reserve Bank of India further-reduced
the GDP growth estimate for 3Q 2011 to 8.0 Gross Domestic product at factor cost
percent as compared to previous quarter GDP 10.00%
9.00%
of 8.3 percent. This was primarily due to 8.00%
downgrade revision of GDP estimate for the 7.00%
6.00%
agriculture and industry sectors from the 5.00%
previous round of surveys. 4.00%
3.00%
2.00%
• The Reserve Bank of India (RBI) has tightened 1.00%
0.000%
monetary policy again this quarter and the
Jan - Mar 09
Apr - Jun 09
Jul - Sep 09
oct - Dec 09
Jan - Mar 10
Apr - Jun 10
Jul - Sep 10
oct - Dec 10
Jan - Mar 11
Apr - Jun 11
ECONOMIC BAROMETER repo rate increased from 7.25 percent to 8
percent by July 2011.
sep-10 sep-11
• Inflation was recorded at 8.40 percent this 16000
fDI in Real Estate
REPo RATE 6.0% 8.50% quarter as compared to 9.44 percent during 14000
2Q 2011. However, the Prime Minister 12000
REvERSE REPo RATE 5.25% 7.00% 10000
Economic Advisory Council estimate that 8000
headline WPI will remain elevated till Nov’ 11
INR Crore
CRR 6.00% 6.0% 6000
at 9 percent or even higher and will soften 4000
INfLATIoN 9.8% 8.40% only from Dec’ 11 onwards. 2000
0
2005 - 06
2006 - 07
2007 - 08
2008 - 09
2009 - 10
2010 - 11
April 2011
TREASuRy BoND RATE 7.8% 8.31% • The overall market momentum slowed down
as compared to the previous quarter. Sluggish
fIxED DEPoSIT (< 1yEAR) 7.25% 9.25%
economic conditions worldwide and increased
foREIGN ExCHANGE cost of inputs and debt are attributed as the 130
BsE sensex & Realty Index
INR - uSD
main reason. 120
46.37 47.80
110
INR- EuRo 59.63 65.11 • The higher cost of debt compelled over- 100
leveraged developers to look for options to 90
liquidate their land banks and existing
80
RETuRN ON AlTERNATIVE INVEsTMENTs projects.
70
1-Jul-11
7-Jul-11
13-Jul-11
19-Jul-11
25-Jul-11
31-Jul-11
6-Aug-11
12-Aug-11
18-Aug-11
24-Aug-11
30-Aug-11
5-Sep-11
11-Sep-11
17-Sep-11
23-Sep-11
29-Sep-11
sep-10 sep-11 YoY %
• In major development for the real estate
Change sector, draft land acquisition policy was *Rebase to 100 BSE Sensex Realty Index
finalised by the law commission this quarter.
GoLD 19,087 27,856 45.94%
This policy is an amendment to the Land Exchange Rates
115
32,592 64,550 98.05%
Acquisition Act, 1894, which will ensure
SILvER 110
owner friendly acquisition of land and will
EQuITy (BSE enable the government to frame a land 105
SENSEx) acquisition policy from time to time. 100
19,208 16,467 -14.27%
95
REALTy INDEx 3,627 1,721 -52.53% • This quarter, the Real Estate regulation bill 90
has been sent to union law ministry for its 85
1-Jul-11
8-Jul-11
15-Jul-11
22-Jul-11
29-Jul-11
5-Aug-11
12-Aug-11
19-Aug-11
26-Aug-11
2-Sep-11
9-Sep-11
16-Sep-11
23-Sep-11
30-Sep-11
comments and clearance. The new bill
excludes the subjects of land and colonisation, *Rebase to 100 uS$ Euro
as they are both state subjects. The bill is
expected to be introduced in the winter season
Source: Colliers International India Research
of parliament.
www.colliers.com

3. THE KNOWLEDGE REPORT | 3Q 2011 | Office | MUMBai
MuMBAI
supplY IN pRIME AREAs
• In Mumbai, approx 11.0 million sq ft of grade
‘A’ office space was ready for fit-out in 3Q CBD 0.5%
2011. out of this total available stock around LBS / Thane 21%
Andheri East 21%
65 percent was IT/ITES office space primarily
concentrated in kalina and Lower Parel.
BkC 5%
kalina 1%
• 0.3 million sq ft of new supply was added Goregaon /
JvLR 8%
to the city’s grade ‘A’ inventory in the SBD
this quarter. The project/part of the project Worli/Prabhdevi 1%
Lower Parel 23%
contributed this new supply was “Equinox Powai 6%
Business Park – Tower 3” developed by Navi Mumbai 9 %
Malad 5%
Equinox Realty & Infrastructure Private
Limited.
MuMBAI • This quarter oberoi Realty launched a
commercial project named “Prisma” 3Q 2011 GRADE ‘A’ AND GRADE’B’
RENTAl VAluEs
admeasuring approximately 0.7 million sq
CITY OffICE BAROMETER ft located at Jogeshwari - vikhroli Link 300
Road (JvLR). The project is expected to be 250
2Q 2011 3Q 2011 completed by 3Q 2013. Another commercial 200
project “kalpataru Synergy-2” was launched 150
INR Per Sq ft Per Month
VACANCY by kalpataru Developers in kalina. The project 100
will add about 0.2 million sq ft to the city’s 50
ABsORpTION grade ‘A’ office space by 4Q 2012. 0
Goregaon / JvLR
CBD
Andheri East
BkC
Lower Parel
Malad
Navi Mumbai
Powai
Worli/Prabhdevi
kalina
Thane / LBS
Andheri East (IT)
Lower Parel (IT)
Malad (IT)
Navi Mumbai (IT)
Powai (IT)
Thane / LBS (IT)
Goregaon / JvLR (IT)
CONsTRuCTION
• Rentals for grade ‘A’ office space remained
RENTAl VAluE stable during the quarter in almost all the
micro markets across Mumbai. Downward Grade A Grade B
pressure on rentals was witnessed in the SBD
and PBD locations as demand for corporate
leasing was impacted because of a slowdown
in the economy. Companies consolidating their
GRADE ‘A’ AVERAGE RENTAl VAluE pRIME OffICE spACE RENTAl TREND
operations are looking for discounted deals.
Availability of a large vacant stock provide an
520
265
forecast
opportunity to the companies to negotiate on 470
rentals.
420
215 370
320
270
165 • Due to the increasing cost of debt, some 220
INR per Sq ft per Month
INR per Sq ft per Month
few over-leveraged developers have started
170
120
115
looking for options to raise funds by liquidify 70
20
liquidate their land banks and selling stakes
2Q2008
4Q2008
2Q2009
4Q2009
3Q2008
3Q2009
65
2Q2010
4Q2010
1Q2008
1Q2009
3Q2010
1Q2010
2Q2011
3Q2011
1Q2011
in existing projects; HDIL has put nearly 5 CBD Andheri East Malad BkC
15
million sq ft of land on sale at virar. Similarly,
2Q2008
4Q2008
2Q2009
4Q2009
3Q2008
3Q2009
Lower Parel Navi Mumbai Powai Worli /
2Q2010
4Q2010
1Q2008
1Q2009
2Q2012
3Q2010
3Q2012
1Q2010
2Q2011
1Q2012
4Q2011
3Q2011
1Q2011
Prabhadevi
DLf was also reportedly looking for a buyer Goregaon
/ JvLR
kalina Thane / LBS
for its 17-acre Mumbai textile mill at Lower
Parel this quarter.
MARKET TRANsACTIONs
CLIENT BuILDING NAME AREA LoCATIoN TRANSACTIoN TyPE
(SQ. fT.)
Bajaj finServ Limited The Capital 74,000 BkC Sale
Dhanlaxmi Bank Chintamani Avenue 31,000 Goregoan Lease
firstRand Bank first India financial Center 35,000 BkC Lease
The Executive Centre The Capital 20,000 BkC Lease
Source: Colliers International India Research
COllIERs INTERNATIONAl | p. 3

4. THE KNOWLEDGE REPORT | 3Q 2011 | Office | DeLhi
DElhI
supplY IN pRIME AREAs
• Approximately 1 million sq ft of grade ‘A’
office space was available for lease in Delhi Nehru Place 10%
in 3Q 2011. Most of this available supply was Connaught Place 2%
concentrated in Jasola and Saket. Saket 29%
• This quarter no new supply was added in the
city’s grade ‘A’ inventory. A small commercial
building measuring approximately 0.12 million
sq. ft. developed by Ambience Group is Jasola 59%
expected to be ready by 1Q 2012.
• Rental values for grade ‘A’ properties
increased in the range of 2 to 5 percent in
location such as Connaught Place and Saket,
DELHI however rental values have seen marginal
3Q 2011 GRADE ‘A’ AND GRADE’B’
corrections in Nehru Place and Jasola. RENTAl VAluEs
CITY OffICE BAROMETER • A number of small area leases have taken place 400
in Delhi this quarter. A trend of setting a small 350
2Q 2011 3Q 2011 corporate office in Delhi and consolidation of 300
250
all other activities in peripheral locations is
INR per Sq ft per Month
200
VACANCY getting popular among large corporate. This 150
shift in trend was primarily attributed to the 100
ABsORpTION
fact that peripheral business district such 50
CONsTRuCTION as Gurgaon and Noida offer state-of-an-art 0
Jasola
Nehru Place
Connaught
Place
Netaji Subhash
place
Saket
buildings at much lower rentals than Delhi
RENTAl VAluE due to plenty of available stock.
Grade A Grade B
• In its effort to improve the infrastructure, of the
Delhi Government’s Public Works Department
has plans to construct two more bridges
GRADE ‘A’ AVERAGE RENTAl VAluE across the yamuna in North-East Delhi and pRIME OffICE spACE RENTAl TREND
from Shalimar Bagh to Azadpur in North-
280 West Delhi. Moreover, PWD will construct 500
260 forecast three flyovers — at Aurobindo Marg, Mehrauli- 450
240 Mahipalpur Road and Mehrauli-Badarpur Road 400
350
to further decongest the traffic at south Delhi
INR per Sq ft per Month
220
300
INR per Sq ft per Month
200 locations. 250
180 200
150
160
100
140
50
120 0
1Q2008
2Q2008
3Q2008
4Q2008
1Q2009
2Q2009
3Q2009
4Q2009
1Q2010
2Q2010
3Q2010
4Q2010
1Q2011
2Q2011
3Q2011
3Q2008
4Q2008
1Q2009
2Q2009
3Q2009
4Q2009
1Q2010
2Q2010
3Q2010
4Q2010
1Q2011
2Q2011
3Q2011
4Q2011
1Q2012
1Q2012
3Q2012
2Q2008
Nehru Place Jasola Cannaught Saket
place
Netaji Subhash
MARKET TRANsACTIONs
CLIENT BuILDING NAME AREA LoCATIoN TRANSACTIoN TyPE
(SQ. fT.)
Alcon India Southern Park 10,000 Saket Lease
Augusta Westland Statesman House 5,850 Barakhamba Road Lease
Bell Helicopters The Grand 10,000 New Delhi Lease
Safron Inner Circle 10,000 CP Lease
Source: Colliers International India Research
p. 4 | COllIERs INTERNATIONAl