Residential Property Research and Forecast Report - April 2016

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Residential Property Researchand Forecast Report

April 2016

Going forward, steady enquiries, mainly in the affordable and mid-segment is likely to bring back fence sitters. Capital and rental values are expected to be rationalized in the near term as residential markets across all major cities witness developers’ focus on clearing unsold inventory. Falling interest rates coupled with the introduction of Real Estate (Regulation and Development) Act, 2016 are expected to stimulate end user demand and lead to market recovery.

INDICATORS Q4 2015 Q1 2016 QoQ % CHANGE

Gold 25,014 29,080 16.25%

Silver 32,984 36,651 11.12%

Fixed Deposit² 7.75% 7.50% -3.23%

Equity – BSE 26,117 25,341 -2.97%

S&P BSE Realty Index³ 1,344 1,228 -8.63%

Return on Alternative Investments

Research & Forecast Report

INDIA | RESIDENTIALApril 2016

¹SBI home loan rate for loan up to INR 30 lakhs²SBI fixed deposit rate for a period of more than one year & amount below INR 1 crore³S& P BSE Realty index is a free float weighted index, comprised of real estate development companies in BSE – 500 Index *Mumbai, Pune, Bengaluru, Chennai, Gurgaon and Noida

Source: Government of India, Colliers International India Research

Moderate in�ux of new launches in major citiesIn the first quarter of 2016, the top six* cities witnessed the infusion of nearly 19,000 new residential units. Of the total, maximum launches were concentrated in Mumbai (34%), Bengaluru (32%) and Pune (12%). Whilst developers across all major cities steered clear of inundating the primary residential segment with too many new products, recovering market confidence prompted them to lure buyers with cash discounts and freebies. As per Reserve Bank of India (RBI)’s new directive, interest rates will have to be reviewed every month on the basis of MCLR (marginal cost of lending rate) which is expected to bode well for the buyers seeking home loans.

Source: Government of India, MOSPI, RBI Colliers International India Research

INDICATORS Q4 2015 Q1 2016

Repo Rate 6.75% 6.75%

Cash Reserve Ratio 4.00% 4.00%

CPI Based In�ation 5.61% 4.83%

Home Loan Rate¹ 9.70% - 10.00% 9.30% - 9.60%

Economic Barometers

Economic Indicators

Source: Government of India, Colliers International India Research

Colliers View

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The first quarter of 2016 witnessed an increased traction in the primary residential sales market specially in the projects where developers were offering flexi payment plans and competitive pricing. About 6,500 new residential units were launched in this quarter. Interestingly, a number of projects were launched in Central and Western suburb locations such as Chembur, Byculla, BKC, Goregaon, Malad in Q1 2016. Most of these projects were launched in the price range of INR 15,000 per sq ft to 25,000 per sq ft. Beside this, a few mid segment projects in the price range of INR 7,500 to 8,000 per sq ft were also launched in Thane.

Secondary residential market maintained a status quo and not many transactions were concluded during the quarter.

Whilst, a marginal appreciation of 1 to 2% in capital values was witnessed in select locations such as Santa Cruz, Powai, Khar and Bandra, capital values in almost all other micro markets remained stable. Rental values in the luxury segment remained stable. However, micro

Residential sector witnessed improved sentiments in Q1 2016About 6,500 new residential units launched in Q1 2016

Market Indicators

Relative to prior period 2015 2015 2016 2016F

Capital Rate

New Projects

Construction

Rental Rate

MICRO MARKETS CAPITAL VALUES(INR PSF)

% CHANGE

QoQ YoY

South Mumbai 48,000-69,000 0% 3%

Worli 48,000-58,000 0% 3%

Prabhadevi 46,000-55,000 -1% -2%

Bandra 34,000-47,000 1% 1%

Khar 27,000-34,000 2% 2%

Juhu 27,000-31,000 0% 4%

Santa Cruz 24,500-28,500 2% 4%

Powai 21,000-27,000 2% 12%

Andheri 19,000-23,000 0% 5%

Market Trends

Note: Above values represents indicative asking price for premium propertiesOnly secondary market products capital values mentioned *Represents base selling price


MUMBAI | RESIDENTIALApril 2016

Source: Colliers International India Research


Market Q3 Market Q4 Market Q1 Market Q2





markets such as Powai and Worli witnessed an increased demand from expatriates for serviced apartments.

This quarter, the state government has finally implemented the increased ready reckoner rates w.e.ffrom 1st April 2016 which was postponed in Dec 2015. The rates were increased moderately to the tune of 7% on average keeping in view that the residential market is reeling under pressure due to high price points and increase in ready reckoner rates may further impact the sentiments adversely. The ready reckoner rates were earlier increased by 27% in 2013 followed by another hike of 22% in 2014.

Beside this at the policy level, Municipal Corporation of Greater Mumbai (MCGM) revised the draft development plan which recommended hike in the floor space index (FSI) from the present 1.33 to 2 and in some cases even up to 5. If implemented, this may help addressing unaffordability issue by creation of more housing.

Colliers View

Q1 2016 witnessed an increased traction in the primary market and we expect the momentum to continue in the coming quarters. However, huge available inventory and new upcoming supply is undermining the short term appreciation in capital values both in primary and secondary market. Rents are expected to remain stable across the market. Mid-segment projects will continue to remain the most preferred assets class and, location and price points will remain the predominant factors driving the demand.

Average Capital Value Trends


Average Rental Values


FOR RESIDENTIAL SERVICES AUTHORSSumit JainNational DirectorResidential [email protected]

Arvind KapoorDirector Residential Services| [email protected]

Surabhi AroraSenior Associate DirectorResearch [email protected] OberoiNational DirectorValuation & Advisory Services and [email protected]

Colliers International (India) Property Services Pvt. Ltd. Indiabulls Finance Centre, 17th Floor, Unit No. 1701, Tower 3Senapati Bapat Marg, Elphinstone (W)TEL +91 22 4050 4500

Copyright © 2016 Colliers International.The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.





Gurgaon’s residential market continued to maintain status quo in terms of demand. Sales in the primary market remained weak from the last six consecutive quarters. The tepid response for the soft launch projects resulted in minimal new project launch in the market in Q1 2016. The new project that came or sale in the market includes high end project ‘La Vida’ in sector 113 by Tata Housing at a basic selling price of INR 8,500 per sq ft and mid segment projects like Bestech Park View Altura in sector 79 by The Bestech ParkView Altura Company; The Turning Point in sector 88B by Vatika at base selling price of 5,130 per sq ft.

In the secondary market, the demand was primarily driven by end users. The number of enquiries have increased for ready to move in properties in micro markets such as Golf Course Extension Road and Sohna Road, however, it has not translated in increase in transaction volumes from the previous quarter. Dwarka Expressway and New Gurgaon sectors continued to receive lukewarm response from end users even for the completed projects due to lack of social amenities and connectivity.

Capital values remained stagnant in almost all the micro markets, however, project specific discounts were available

Residential market maintained status quo Minimal new launches; gap betweenprimary and secondary market prices all time low

Market Indicators

Relative to prior period 2015 2015 2016 2016FMarket Q3 Market Q4 Market Q1 Market Q2

Capital Value

New Projects

ProjectsCompletion


% CHANGE

QoQ YoY

Golf Course Road 11,000 - 36,000 0% 2%

Sushant Lok 12,000 - 18,000 -8% -3%

DLF Phase I 11,000 - 13,000 0% 4%

NH-8 10,500 - 18,000 2% 10%

Sohna Road & Ext 6,000 - 11,000 -3% 0%

Market Trends

Note: Above values represents indicative asking price for premium properties


Gurgaon | RESIDENTIALApril 2016



Rental Value





in both primary and secondary markets on deal to dealbasis.

Rents remained stable in almost all the micro marketsdue to limited addition of new supply. However, therents in the newly developing areas are far below ascompared to mature markets, as tenants remainedconscious in leasing in these emerging markets due tolack of social amenities and security concerns.

Several infrastructure initiatives were started in thisquarter in the city, such as street light improvement onvarious sectors and construction of sector roads..Additionally, the construction work of metro rail on GolfCourse Road has also picked up pace. Oncecompleted, this will boost the connectivity of the sectorsalong the Golf Course Road tremendously.

Colliers View





The gap between primary and secondary market rates for residential units has narrowed down significantly. Looking at the increase in enquiries for ready-to-move in projects, the sales volume in secondary markets is likely to improve in the coming quarters. In the primary market, projects launched in the mid-segment and affordable category will continue to remain in buyers preference. As of now investors choose to remain at bay from investing in residential properties but with the lower interest regime in place we expect the investors will relook at the residential real estate sector. Going forward, capital and rental values are expected to remain stable in almost all the micro markets.

FOR RESIDENTIAL SERVICESSumit JainNational DirectorResidential [email protected]

Avnish YadavDeputy General ManagerResidential Services| [email protected]


AUTHORSSurabhi AroraSenior Associate DirectorResearch [email protected] OberoiNational DirectorValuation & Advisory Services and [email protected]

Colliers International (India) Property Services Pvt. Ltd. Technopolis Building, 1st Floor,DLF Golf Course Road, Sector 54TEL +91 124 456 7500






NOIDA’s residential market remained stagnant in Q1 2016 with minimal new launches. The focus of the developers remained on completion of under-construction projects. A number of projects witnessed phase wise completion along NOIDA – Greater NOIDA expressway and sector 72 to 78. In the last two quarters, the NOIDA Authority has issued completion certificates for more than 35 projects. For these projects, there was a massive drive to register the property by 31 March ,2016 due to expected increase in stamp duty value.

Although much delayed projects are being delivered in a trickle, only those that have been delivered with decent construction quality have seen significant occupancy by owner-occupiers or by tenants. Such developments were commanding a premium of nearly 20% over comparable under construction developments in the vicinity.

The supply of new deliveries has put downward pressureon rental values in existing mature markets such assector 61 to 63 and sector 92 – 93 cluster. The averagecapital values remained stable both in primary andsecondary sales market during the quarter..

NOIDA witnessed a number of completions in Q1 2016New launches continue to shrink to rock bottom level

Market Indicators

Relative to prior period 2015 2015 2016 2016FMarket Q3 Market Q4 Market Q1 Market Q2

Capital Value

New Projects

ProjectsCompletion


% CHANGE

QoQ YoY

Sector 44 9,400 – 10,000 -3% -3%

Sector 92,93 7,700 – 8,300 -11% -7%

Sector 50 7,000 – 7,600 -1% -1%

Sector 61,62,63 5,900 – 6,400 -1% -1%

Sector 28,29,30 5,500 – 5,900 -1% 0%

Sector 100 to 110 5,000 – 7,000 0% 2%

Sector 70 to 79 3,600 – 5,500 0% 2%

Market Trends



NOIDA | RESIDENTIALApril 2016



Rental Value





NOIDA authority has also taken a couple of steps thisquarter to provide relief to the homebuyers struggling withdelay in delivery of apartments, for example, the authorityhas decided to upload details of all defaulter builders onits website. Besides this, an investigation has beeninitiated by the authority in a few projects in last quarterwhich will help the market to regain the buyersconfidence. However, the impact on primary sale is notexpected to be seen immediately.

On the infrastructure side, the Noida Metro Rail extensionto sector 62 continues to be built at a war footing, alongwith the extension to Greater Noida, via sector 78 andExpressway. Besides this, infra developments projects tobuild a number of flyovers on the MP-2 road, making theroute from sec-18 to sec-61 signal free is likely to befunctional by Q1 CY17. These road and rail projects,once completed shall connect vast swathes of the NCRand may prove to be the cornerstone of futuredevelopment, public or private.

Colliers View

Primary sales market is expected to remain under pressure while looking at the number of enquiries in recently completed projects, secondary sale volume may pick up marginally in the coming quarters. Completed projects in locations such as Greater Noida West (Noida Extension), sector 70 to 78 will continue to garner end user interest due to affordable prices as well as developers' willingness to reduce the headline prices along with offers of easy finance schemes and other freebies. Capital values are likely to remain stable in the coming quarters across micro markets, while there will be marginal downward pressure on rental values.


Colliers International (India) Property Services Pvt. Ltd.






Avnish YadavDeputy General ManagerResidential Services| [email protected]


AUTHORSSurabhi AroraSenior Associate DirectorResearch [email protected] OberoiNational DirectorValuation & Advisory Services and [email protected]

Colliers International (India) Property Services Pvt. Ltd. Technopolis Building, 1st Floor,DLF Golf Course Road, Sector 54TEL +91 124 456 7500






During the first quarter of 2016, Chennai’s residential property market witnessed a 9% dip in new launches over the previous quarter. Nearly 1,100 new units were launched during this period, out of which 10% were in soft launch stage. This dip is attributed to both low recovery in property markets in the aftermath of floods from a few months back, as well as delay in approvals owing to model code of conduct in the wake of upcoming state elections. Developers maintained a wait and watch approach as they focused on completion of stalled projects amidst low sales velocity.

Of the total units launched, mid segment dominated the launches with an 84% share whilst the rest were concentrated between high-end and luxury segments. Perumbakkam, a prominent suburb in the southern part of the city witnessed the launch of nearly 68% units, followed by Santhome with a 16% share. Other locations which witnessed new launches included T. Nagar and Thiruvanmiyur. Prominent builders that launched projects during this period included Radiance Developers, Ceebros, Olympia Group and Shanthi Builders in locations such as Thiruvanmiyur and Teynampet.

New launches remain muted in Chennai Chennai grapples with low residential demand during the �rst quarter of 2016

Market Indicators


Capital Rate

New Projects

Construction

Rental Rate


% CHANGE

QoQ YoY

Boat Club 26,000–35,000 0% 0%

Nungambakkam 19,000-26,000 0% -15%

Alwarpet / R A Puram 18,500-26,000 0% -3%

Beasant Nagar 13,500-17,500 0% -2%

Adyar 13,000-17,000 0% -9%

Anna Nagar 13,500-17,000 0% 3%

T Nagar 12,500-20,000 0% 0%

Velachery 7,000-10,000 0% 10%

Sholinganallur 4,800-5,950 0% -3%

Siruseri/ Kazipattur 4,000-6,500 0% 0%

Market Trends



CHENNAI | RESIDENTIALApril 2016








New supply of ready-to-move in units remained low as very few projects in central areas such as Kotturpuram, Nungambakkam and Mylapore became available for possession this quarter. All the new supply belonged to high-end segment with price range varying from INR 15,500 – 21,000 per sq ft.

Capital values across micro markets remained stable mainly due to low demand. Rental values dipped by 6-8% over the previous quarter in Anna Nagar and Velachery as both were heavily affected by floods in the last quarter. Nungambakkam and Alwarpet/R.A. Puram too witnessed 12-16% rental dip as a result of low demand at higher rentals forcing landlords for price correction.

Colliers View

Residential real estate market may remain stagnant due to the upcoming Tamil Nadu Assembly elections in May 2016. However, new launches may decline further as end-user demand remains subdued and the state government is yet to implement the regulations as per Real Estate (Regulation and Development) Act, 2016. Micro markets such as Anna Salai, Teynampet and Kilpauk may witness an uptick in supply as some projects are currently in soft launch stages. The inauguration of the country’s first rail auto hub in Walajabad will give a boost to the realty sector in nearby micro markets such as Oragadam and Sriperumbudur. Rental values and capital values may further correct as developers may rationalize prices to increase sales velocity.




Source: Colliers International India ResearchNote: Rental Values in INR per sq ft per month


A. VelumuniDeputy General ManagerResidential Services | [email protected]


Surabhi AroraSenior Associate DirectorResearch [email protected]

Amit OberoiNational DirectorValuation & Advisory Services and [email protected]

Divya GroverSenior ManagerResearch [email protected]

Colliers International (India) Property Services Pvt. Ltd. Heavitree Complex, Unit 1C, 1st Floor, 23 Spurtank Road, ChetpetTEL +91 44 2836 1064






Bengaluru’s residential property market witnessed the launch of nearly 6,000 new residential units in the first quarter of 2016. This represents a quarterly increase of 26% over the previous quarter, even though developers are concentrating efforts on completing under construction projects in an oversupplied market.

Of the total launches in this quarter, nearly 18% were currently in the soft launch stages. Eastern (52%) and northern (34%) regions witnessed the maximum number of new launches, mainly in locations such as Devanahalli, Yelhanka-Doddaballapur Road and Harlur. Other emerging locations such as Varthur and Off YemalurRoad in the eastern quadrant witnessed the launch of high rise projects in apartment formats by reputed builders such as Prestige Developers and SobhaDevelopers, amongst others.

Almost all units launched in this quarter catered to the mid segment category signaling developers’ focus on introducing products keeping in mind end-users’ affordability and preferences. Similarly, this quarter did not witness the launch of villa projects and the entire new launches were in high-rise apartment complexes format.

Uptrend in new launches in Q1 2016

Northern and Eastern quadrant remain hotspots for future supply

Market Indicators


Capital Rate

New Projects

Construction

Rental Rate


% CHANGE

QoQ YoY

Central 20,000-30,000 0% 4%

Cooke Town 7,500-14,000 0% -7%

Jayanagar 8,500-10,500 0% 6%

Sadashivanagar (PalaceOrchards) 9,000-15,000 0% 0%

Airport Road 8,500-11,000 0% 8%

Indiranagar 8,000-12,000 0% 0%

Bannerghatta Road 4,500-8,500 0% 0%

Koramangala 6,500-10,500 0% 3%

White�eld 4,200-8,500 0% 0%

Yelahanka 4,000-10,000 0% -3%

Market Trends



BENGALURU | RESIDENTIALApril 2016








Prominent project completions included MahaveerRiviera in J.P. Nagar Phase V and Vaswani Reserve on Outer Ring Road amongst others.

Capital and rental values remained stable across micro markets.

Bangalore Metro Rail Corporation (BMRCL) has received a green signal from the Commission of Railway Safety (CRS) for the inauguration of the 4.8 kms underground stretch of East-West corridor of the Bengaluru Metro. This will help in decongesting inner city areas near central business district.

Colliers View

As the real estate sector is at the cusp of major regulatory reforms with the introduction of Real Estate (Regulation and Development) Act, 2016, new construction and launches are expected to witness a downward trend whilst capital and rental values, supported by end-user demand that is expected to hold steady. Towards the end of this quarter, guidance values along with property taxes have been revised across the city which may give a fillip to capital values in the short term for certain locations going forward. Certain emerging corridors such as Varthur-PanathurRoad and locations in north and south such as Devanahalli and Sarjapur Road will continue to witness momentum in new launches due to end-user demand for self occupancy and investment purposes both.






Aakanksha AnandSenior ManagerResidential Services| Bengaluru [email protected]


Surabhi AroraSenior Associate DirectorResearch [email protected]



Colliers International (India) Property Services Pvt. Ltd. Prestige Garnet, Level 2, Unit No. 201/202, 36 Ulsoor RoadTEL +91 80 4079 5500






Pune’s residential property market witnessed the launch of more than 2,200 new units during this quarter. All the new units launched catered primarily to the mid segment and were concentrated in eastern and western quadrants of the city due to consistent demand from IT-ITeSworkforce and the city’s manufacturing sector base. Proximity to other IT-ITeS hubs in the vicinity and future capital value appreciation is also an added advantage for developers to introduce launch in these micro markets.

Developers such as Godrej Properties, PurvankaraProjects Ltd. and Kotle Patil Developers were amongst those who introduced new products in the market. Prominent completions included projects from builders such as Mittal Brothers, Nyati Developers and Mantra Properties. All the new project completions were attributed to the mid segment and augmented supply in locations such as Balewadi, Tathawade, NIBM and Wagholi.

Capital values maintained status quo during this quarter, however, rental values in some micro markets such as Magarpatta, Hadapsar, Deccan and Camp registered a

High inventory in residential segment curtails new launchesSteady demand in a�ordable segment in eastern and western suburbs

Market Indicators


Capital Rate

New Projects

Construction

Rental Rate

MICRO MARKETS CAPITAL VALUES*(INR PSF)

% CHANGE

QoQ YoY

Deccan/Camp/Boat Club 7,000-15,000 0% -8%

Kalyani Nagar/VimanNagar/Kharadi 5,800-16,500 0% -2%

Baner/Hinjewadi/Wakad/Pashan 4,800-9,500 0% 0%

Magarpatta/Hadapsar 4,800-7,800 0% 0%

Kothrud/Bavdhan/Wajre 6,200-12,000 0% 0%

NIBM/Undri/Kondhwa 4,400-6,250 0% -8%

Pimpri/Chinchwad/Chakan 4,700-5,800 0% -4%

Market Trends



PUNE | RESIDENTIALApril 2016








4-5% quarterly dip due to low demand coupled with ample options.

Even though high levels of unsold stock deterred developers from launching new products, high income levels and falling interest rates kept end-user demand in affordable segment steady.

Pune has also been selected in the list of top 20 Smart Cities in the first phase for which strategies are being formulated by civic administration bodies to implement the INR 3,840 crore plan for the city’s upgrade over the next five years.

Colliers View

Strong macro economic fundamentals coupled with positive outlook from multinationals for expansion in Pune as a choiced location is expected to work in favor of the residential sector even as the countrywide market sentiment remains muted. New launches may remain stable in the next quarter as developers’ focus efforts on completion of under construction projects and sales of piled up inventory. Capital values, on the other hand, may witness marginal appreciation in some suburban areas near EON Free Zone and IT-ITeShubs such as Kharadi, Wagholi and Wakad.

Infrastructure upgrades such as the much awaited Bus Rapid Transit System (BRTS) on Nagar Road will help improve connectivity across Wagholi, Kothrud, Swargate amongst others and give a fillip to their residential segment.






AUTHORSSurabhi AroraSenior Associate DirectorResearch [email protected]




Colliers International (India) Property Services Pvt. Ltd. 5th Floor, Suyog Platinum Towers, Naylor Road, Off Mangaldas RoadTEL +91 20 4011 1356






Copyright © 2016 Colliers International.

ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.

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Primary Authors:

Surabhi Arora Senior Associate Director | Research +91 124 456 [email protected]

Divya Grover Senior Manager | [email protected]

Amit OberoiNational DirectorValuation & Advisory Services & [email protected]

Colliers InternationalTechnopolis Building, 1st Floor, DLF Golf Course Road, Sector 54, Gurgaon - 122 002TEL +91 124 456 7500

Sumit JainNational Director | Residential Services [email protected]

Arvind KapoorDirector | India Operations, Residential [email protected]

For Residential Services:



