Pune INDIA REAL ESTATE OUTLOOK REPORT (January – June 2014)

For queries on data, contact Hetal Bachkaniwala, Research

For any other query, contact Bertilda Fernandes, Marketing

Launches (units)

Absorption (units)

Weighted Avg Price (` per sq.ft.)

Jan - June 2014 16,883 -19% Y-o-Y

July – Dec 2014 (E) 18,960 -23% Y-o-Y

2014 Year End (E) 35,840 -21% Y-o-Y

Jan-June 2014 14,719 -30% Y-o-Y

July – Dec 2014 (E) 19,808 11% Y-o-Y

2014 Year End (E) 34,527 -11% Y-o-Y

Jan - June 2014 4,614 6% Y-o-Y

2014 Year End (E) 4,713 4% Y-o-Y

Residential

Market Overview

New Completions (mn.sq.ft.)

Absorption (sq.ft.)

Vacancy %

Jan-June 2014 2 -15% Y-o-Y

July to Dec 2014 (E) 2.6 125% Y-o-Y

2014 Year End 4.7 31% Y-o-Y

Jan-June 2014 2.1 -26% Y-o-Y

July to Dec 2014 (E) 2.2 85% Y-o-Y

2014 Year End 4.3 7% Y-o-Y

June 2014 20%

2014 Year End (E) 20% Office

Weighted Average Rent (` per sq.ft. per month)

Jan-June 2014 43 10% Y-o-Y

2014 Year End (E) 47 15% Y-o-Y

Market Overview

Residential

8,000

9,000

10,000

11,000

12,000

13,000

14,000

15,000

No

. o

f u

nit

s

Demand & Supply Trend- 2014

Downward trend in demand since 2013, and this has continued in 2014 as

well

Fall in absorption expected to be complemented by a sharper drop in the

number of new launches

8,000

9,000

10,000

11,000

12,000

13,000

14,000

15,000

Demand dropped by over 19% in

2013 and is expected to fall by

11% in 2014

Total number of units to be

absorbed expected to fall from

38,800 in 2013 to 34,500 in 2014

New launches estimated to

decrease by 21% from 45,370

units in 2013 to 35,840 units in

2014

Launches

Absorption

Unsold Inventory Level - QTS

The QTS ratio has been inching upwards since

Sept 2013, signifying weakness in the market

Developers have reduced new launches by 19% during H1 2014, compared to H1

2013

This has not resulted in lowering the QTS ratio, as the sales volume declined further

by 30% during the same period

3

4

5

6

7

8

9

No

. o

f Q

uart

ers

71,000 units remain unsold as

of June 2014 and will take 7

quarters to absorb

H2 2014 Forecast

The conversion time of an actual sale from a sales inquiry has reduced

drastically in the past 2 months, indicating some sort of revival in demand

However, new launches are

estimated to fall by 23% during

the same period

Half-yearly Launches and Absorption Trend

31,4

58

24

,51

3

20,7

20

24,6

52

16,8

83

18,9

60

23,1

22

24,8

95

20

,93

7

17,8

58

14,7

19

19,8

08

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

No

. o

f u

nit

s

Launches Absorption

Sales volume expected to

recover from H2 2014

onwards

Forecasted to increase by

11%, compared to H2 2013

Weighted Average Price Trend

Half-yearly Weighted Average Trend

The bumpy ride in demand and supply does not seem to have

any significant impact on prices as it continues to move

upwards

Prices forecasted to increase by 4%

in H2 2014 on the back of a

moderate recovery in sales volume

3,500

4,000

4,500

5,000

`/S

q f

t

The weighted average price

increased by 6% in H1 2014

` 4,350/ sq ft

` 4,600/ sq ft ` 4,700/ sq ft

New Launch Analysis

3%

24%

29%

23%

21%

H1 2013

1%

23%

20%

20%

36%

H1 2014 Central

Koregaon Park, Boat Club Road, Erandwane,

Deccan, Kothrud, Model Colony

East Viman Nagar, Kharadi, Wagholi, Hadapsar,

Dhanori

West Aundh, Baner, Wakad, Hinjewadi, Bavdhan,

Pashan

North Pimpri, Chinchwad, Moshi, Chikhali, Chakan,

Talegaon

South Kondhwa, Ambegaon, Undri, Dhayari, Warje,

Sinhgad Road

Micro-Market Split of Units Launched

Central East West North South

South witnessed a phenomenal jump in

new launches during H1 2014

Located between 2 major IT hubs of

Hinjewadi and Kharadi, it is slowly

emerging as a preferred destination for

buyers

West Pune observed the sharpest fall

in new launches

West Pune is facing price resistance

from buyers

Ticket Size Analysis

Ticket Size of Launched Units by Micro Markets

96% of new units launched in the South were

below the ticket size of `5 mn while West and

East were at 66% and 73% respectively

0%

20%

40%

60%

80%

100%

<2.5 mn. 2.5-5 mn. 5-7.5 mn. 7.5-10 mn. 10-20 mn. >20 mn.

Central East

West North

South

Majority of the locations in East and West

have already breached ` 5,000/sq.ft

Absorption Analysis

Micro Market Split of Units Absorbed

West has observed the steepest fall in absorption because the ticket size is gradually

going up

2%

27%

30%

20%

21%

H1 2013

3%

26%

26%

24%

21%

H1 2014

Central Koregaon Park, Boat Club Road, Erandwane,

Deccan, Kothrud, Model Colony

East Viman Nagar, Kharadi, Wagholi, Hadapsar,

Dhanori

West Aundh, Baner, Wakad, Hinjewadi, Bavdhan,

Pashan

North Pimpri, Chinchwad, Moshi, Chikhali, Chakan,

Talegaon

South Kondhwa, Ambegaon, Undri, Dhayari, Warje,

Sinhgad Road

Micro Market Health

Age of Inventory compared to QTS

South is the poorest in health with an

excess of unsold inventory of the

projects launched more than two years

ago

Central East West North South

West is the healthiest with the lowest

QTS and minimum age of unsold

inventory

5

6

7

8

9

10

5 6 7 8 9 10

QTS

Despite the West witnessing the

sharpest fall in absorption, its health

is relatively better because the drop

in absorption was matched by a

similar fall in new launches

Price Movement

Price range in H1 2014 (per sq.ft.) 12-month change 6-month change

Central

Koregaon Park 13,000 - 17,000 8% 5%

Kothrud 7,500 - 12,500 10% 3%

Erandwane 13,500 - 18,000 17% 4%

Boat Club Road 14,000 - 19,000 1% 0%

East

Kharadi 5,200 - 6,200 11% 0%

Wagholi 3,400 - 4,500 4% 2%

Dhanori 3,800 - 4,700 1% 0%

Hadapsar 4,500 - 5,800 10% 3%

West

Aundh 7,500 - 9,500 14% 1%

Baner 5,500 - 8,000 10% 1%

Hinjewadi 4,800 - 5,800 9% 1%

Wakad 5,200 - 6,000 8% 3%

Price Movement

Price range in H1 2014 (per sq.ft.) 12-month change 6-month change

North

Moshi 3,600 - 4,200 6% 2%

Chikhali 3,400 - 4,000 4% 3%

Chakan 2,800 - 3,200 8% 2%

South

Ambegaon 4,200 - 5,200 7% 2%

Undri 3,800 - 4,800 12% 3%

Kondhwa 4,500 - 5,600 11% 2%

Key Takeaways

Demand is expected to decrease from 38,800 units in 2013 to 34,500

units in 2014

Pune will take more than 7 quarters to offload its unsold inventory

South Pune is emerging as a preferred destination for home buyers

due to its strategic location

After a lull of 2 years, absorption to increase by 11% in H2 2014

Office

Vacancy Trend

Office Space Stock and Vacancy Level

Vacancy levels have been falling

since 2012 on the back of a steady

rise in absorption and a slower pace

of completion of new projects

0%

5%

10%

15%

20%

25%

30%

0

10

20

30

40

50

60

Mn

S

q f

t

Stock Occupied Stock Vacancy (RHS)

The vacancy level observed

during H1 2014 was 20%,

down from 22% in H1 2013

22% 20%

Total office stock

54.3 mn.sq.ft. Occupied

43.4 mn.sq.ft

New Completion and Absorption

While 2.1 mn sq ft of office

space was absorbed in H1

2014, only 2 mn sq ft of new

projects were completed

Absorption during H1 2014 was better than expected due to improved

sentiments in the IT/ITeS and BFSI sectors (including support services)

-

0.5

1.0

1.5

2.0

2.5

3.0

Mn

Sq

ft

New Completion Absorption

H2 2014 Forecasts

Office Space Stock and Vacancy Level

2.16 mn sq ft of space projected to be

absorbed during H2 2014 which is a

significant increase over H2 2013

For 2014, absorption is expected to

touch 4.26 mn sq ft - an increase of

7% from 4 mn sq ft in 2013

Demand will be matched by a higher increase in new completions of 4.68 mn sq ft

for 2014

2.64 mn sq ft of new projects are expected to be completed in the remaining

6 months

0%

5%

10%

15%

20%

25%

30%

0

10

20

30

40

50

60

Mn

S

q f

t

Stock Occupied Stock Vacancy (RHS)

Weighted Average Rents

Office Space Stock and Vacancy Level

Rental value increased by 5% over

the last 6 months

The weighted average rental value is forecasted to increase from

` 43 per sq ft per month in H1 2014 to

` 47 per sq ft per month in H2 2014

A strong pipeline of new supply

is expected to restrict the upside

movement of rentals to single

digits in H2 2014 30

35

40

45

50

55

60

`/s

q.f

t./m

on

th

Sectoral Analysis of Demand

Sector- wise Absorption Split

Share of the IT/ITeS

sector has fallen during

H1 2014

Other services sector has

increased to 20% from <5% in

H1 2013 due to demand from

consulting, media, healthcare

and retail companies

IT/ITeS Financial Services Manufacturing Other Services

H1 2013 65% 20% 10% 5%

H2 2013 51% 8% 29% 12%

H1 2014 39% 33% 9% 20%

A few big-ticket deals by

HSBC, Barclays and Citibank

including support services

have skewed the share

towards the BFSI sector

Deal Size Analysis

Average Deal Size and Number of Deals

Average deal size has reduced

considerably during H1 2014, though

the market has seen a substantial

jump in the number of deals

The average size of transactions has

reduced to 21,400 sq ft in H1 2014 from

42,700 in H1 2013

0

40

80

120

-

10,000

20,000

30,000

40,000

50,000

Nu

mb

er

Sq

ft

Average Deal Size (Sq ft) Number of Deals (RHS)

42,700

21,400

Business District-wise Analysis

Business District-wise Absorption Split

Decline in share of PBD markets is

attributed to the fall in IT/ITeS sectors

With an increase in share from 28% in

H1 2013 to 42% in H1 2014, SBD East

has emerged as most preferred by

BFSI sector including support services

The SBD markets have regained their

share, which they had been losing out

to PBD markets over the last few years

5%

28%

6%

35%

26%

H1 2013

8%

42%

14%

22%

13% 1%

H1 2014

CBD & Off CBD

SBD East

SBD West

PBD East

PBD West

SBD North & South

Business District-wise Rents

Limited number of new project completions, low supply pipeline and steady demand

have helped the rents in SBD West to soar by 14% over the last year

Business

District

Rental Value Range in

H1 2014

(per sq ft per month)

12 month change 6 month change

CBD & off CBD 55-85 6% 2%

SBD East 40-60 12% 6%

SBD West 40-55 14% 4%

PBD East 35-60 13% 5%

PBD West 32-45 9% 3%

PBD East has seen a faster rental growth compared to PBD West due to proximity

to the Pune airport and the presence of a developed retail infrastructure

Key Takeaways

The absorption of office space, is expected to touch 4.26mn sq. ft. an

increase of 7% over 2013

SBD East has emerged as the most preferred market during H1 2014

with its share in absorption increasing to 42%

PBD East has seen a faster rental growth owing to its proximity to the

Pune airport & the presence of a developed retail infrastructure

Pune INDIA REAL ESTATE OUTLOOK REPORT (January – June 2014)

For queries on data, contact Hetal Bachkaniwala, Research

For any other query, contact Bertilda Fernandes, Marketing