26th May, 2015

BENGALURU OFFICE SPACE OVERVIEW

WHAT IS OFFICE SPACE?

“(business) office space is a room or rooms in a building that provide a suitable

environment for office operations”

Grade A - Highest quality space - Newly Constructed - Top-of-the-line amenities - High rises - Highest rent - Centrally Located - Professionally Managed

Grade B - Good quality space - Generally little older - Average Market rent - Centrally Located - Good quality management - Can be renovated and upgraded

Grade C - Poorest quality structures - Very old buildings (over 20 years) - Lowest rent - Outdated Infrastructure &

Technology - Targeted for re-development

GRADES IN OFFICE SPACE

FACTORS: OFFICE SPACE UPTAKE

Government Policies Monetary Policies GDP Growth Demographics Macroeconomic factors Microeconomic factors

From Pensioners Paradise to the India’s Silicon Valley. Developed over the years into a industrial and technological hub of India. Home to well-recognized educational and research institutions. Fashion Capital & Pub City of India Metropolitan Demographics $83 Bn – City’s GDP

BENGALURU

1980s – Electronic City Born (Infosys, Wipro)

2011 – Namma Metro First Stretch Inaugurated

2002 – Outer Ring Road becomes reality

2006 – India’s First International Tech Park

2010 – E-Commerce brings the next wave of IT

companies

2014 – 100 mil sq. ft. Grade A office spaces

leased

BENGALURU – The Hottest Business Destination in India!*

* IPC Consultants DTZ

BENGALURU Central Business District - MG Road - Residency Road - Richmond Road - Cunningham Road

Secondary Business District - Airport Road - Indiranagar - Domlur - Hebbal - Outer Ring Road - Koramangala

Periphery Business District - Electronic City - Mysore Road - Whitefield

3.3 mil sq ft in net absorption was recorded in Grade A developments during the first quarter of 2015, a 7% increase from the previous quarter Micro markets along ORR (Marthalli - Sarjapur) and EPIP Zone / Whitefield will continue to remain preferred micro markets among occupiers due to their strategic locations. E-Commerce drives space absorption while the erstwhile IT domination is being challenged Grade A weighted average rentals in the Outer Ring Road, Peripheral East and Peripheral North submarkets increased by 6.7%, 4.2% and 6%

KEY STATISTICS: BENGALURU

INDICATORS 1Q 2015 2Q 2015 F

Vacancy

Absorption

Construction

Rental Value

Capital Value

KEY BAROMETERS: BENGALURU CITY OFFICE SPACE

Source: Colliers International

All the barometers (actual and forecast) reflect a upward trend

MICRO MARKETS RENTAL VALUE* YoY (% change)

CBD 90 - 130 16% ORR 55 - 63 7% ORR (North) 53 - 60 0% Bannerghatta Road 50 – 60 0% Whitefield/ EPIP Zone 28 - 36 0% Hosur Road 25 - 40 8% Electronic City 26 - 33 7%

ANALYSIS: DEMAND BY GEOGRAPHY

* /Sq Ft

CBD and ORR command highest rental value, with steep increase

ANALYSIS: DEMAND BY SECTOR

IT/ITeS

Financial Services Manufacturing

Other Services

H2 2013 71% 3% 12% 14%

H1 2014 54% 6% 15% 24%

H2 2014 53% 13% 4% 29%

Share of IT/ITeS has fallen from 71% in 2013 to 53% in 2014

E-commerce sector is contributing heavily to the steady growth in Other Services sector

The financial Services sector is growing at a steady space owing to increased investing

ANALYSIS: COMPARISON WITH OTHER METROS

For 2014 Market

Absorption * Grade A Rents ^ Supply *

Bengaluru 6.3 57.71 6.93 NCR 3.7 74.85 7.80 Pune 3.0 56.82 3.18 Hyderabad 2.5 47.70 4.56 Chennai 1.2 54.62 0.67 Ahmedabad 0.6 38.38 2.85 Mumbai 0.5 44.10 1.50 * Million sq. ft. ^ Rupees per sq. ft.

Source: Cushman & Wakefield

Bengaluru leads market absorption and rent

Flipkart leases 2M sq. ft. office in Bengaluru to house 20,000 employees Government has widened the net for FDI in Construction (reduced minimum built up area to 20000 sq. ft. and halved the minimum capital investment to $5 mil) Bengaluru likely to top country’s office space demand this year due to the expansion of IT, ITeS and multinational companies : Cushman & Wakefield India is likely to witness the second highest demand for office space in 2014 among the top 30 cities in the Asia-Pacific region : Cushman & Wakefield

BRIGHT FUTURE: BENGALURU OFFICE SPACE

OUTLOOK: BENGALURU Healthy transaction activities in first quarter of 2015 – 1/3rd of absorption in ORR and 68.4% accounted from IT-ITeS alone. Increased rentals in ORR, Peripheral East and Peripheral North due to sustained demand and limited availability of quality office spaces. Due to healthy demand, Grade A vacancy levels have declined to 8% Positive Impact of improvement in business sentiment, political stability and macro-economic scenario on office market absorptions E-commerce & IT/ITeS will drive rise in rentals in the next 6 months

Approximately 7.28 mil sq ft of office space is likely to be added in the next quarter, 94.6% of which will be Grade A.

THANK YOU! Prakhya NS Bhat