FOREWORD. Sudhir Pai CEO, Magicbricks.com

Transcription

1 Bengaluru

2 FOREWORD The Indian real estate sector is at crossroads today. The real estate markets across all the major cities have been stagnant with low transaction activity. The market is saddled with large unsold inventory which at current rate of sales velocity will take more than four years to clear. Amidst this environment, there have been repeated calls for reduction in the prices of residential assets. Market watchers believe that only rationalization in prices can break this logjam and lead to more transaction activity. But what are the current price levels? And how much room does a developer have to reduce prices? In our current edition of PropIndex (Jul-Sep 2015), we look at the price trends across major cities. As different budget segments have unique demand-supply scenario, we ve divided the capital value (Rs/sq ft) range in each city into eight budget segments. The trend analysis has been done on a Q-on-Q basis for a two year period between Jul-Sep 2013 and Jul-Sep Our analysis shows that prices across different budget segments in each city have remained stagnant over the evaluation period. Comparing the cities basis their weighted average price movement over the two year period shows that except for Pune and Chennai, none of the cities have even managed to get a double digit growth. Even in case of these two cities, the price increment has been 11.8% and 10.8%, respectively. Delhi was the worst performer with a net decline of 14.8%. Big mid-segment real estate markets like Bengaluru and Noida saw 7.6% and 3.2% price increment. However, when these marginal increments in prices are adjusted for inflation, we find that the net movement in prices is either zero or even negative. This stagnation in the market is reflected in the Jul-Sep 2015 National PropIndex which remained at the same level as the previous quarter. In case of individual cities, Bengaluru again witnessed the maximum appreciation of 4% while Delhi declined further by 5%. Western cities of Pune, Mumbai and Ahmedabad all witnessed positive movement in their city indices. Today, the developers understand the requirement of easing acquisition cost for consumers. Towards this end, they have come up with various attractive payment plans like subvention schemes where EMI till possession is paid by the developer or possession linked payment plans. Apart from this, they are also offering freebies and discounts. When the financial saving from these payment plans or freebies/discounts are factored, it translates into 5%-15% saving to the consumer. With RBI easing policy rates and attendant reduction in home loan rates, the developer community expects that the combination of lower interest rates and freebies/discounts will get the fence sitters to take the leap. Therefore, in short to medium term, we do not expect developers to take the drastic step of upfront reduction in capital values. They are more likely to persist with discount and freebies to pass lower cost to consumers. An upfront reduction in prices may send strong negative signals and have a domino effect. Consumers may start to hold their purchase decision expecting prices to fall further. These are changing times and we would love to hear from you. Do write to us at Sudhir.pai@timesgroup.com and share yours views on this report and how we could make PropIndex even better. Sudhir Pai CEO, Magicbricks.com

3 METHODOLOGY Magicbricks PropIndex Magicbricks PropIndex is a tool which empowers property seekers and investors with detailed information on the movement of residential apartment prices and supply of properties in India. No credible property index can be a function of direct values as the changes are governed by multiple factors. Magicbricks PropIndex has taken this reality into account and produced an index based on listing of apartments and their capital and rental values on the website. Magicbricks has over 12,00,000 active properties posted by more than 2.5 Lac active users in 600+ cities and 17,000+ localities. Our users include owners, agents and developers. Methodology Apartment values are based on listings on Magicbricks. These include multi-storey apartments and single units on plotted developments, referred to as builder floors on Magicbricks.com. The Index is structured in such a way that individual properties are aggregated into their respective cities and then to the National Index. Weightages for PropIndex are based on the supply of properties within the locality/city. Based on this structure, PropIndex gives a realistic picture of trends in price/supply across different property markets in each city. We have used different weightages for Listed Price Monitor/Rent Monitor. Therefore, read as a whole, PropIndex along with tables provided for Listed Price Monitor, Rent Monitor, Yield Monitor and Capital Values, gives an excellent perspective of the property market performance in the quarter. While listing and its values/supply provide a level of understanding of the market, there are meticulous data checks to prevent aberrations creeping in the Index. These are based on statistical calculations, industry inputs and logical interpretations. The National Property Index (NPI) is indicative of the extent of activity as well as price movements across cities and localities in the major cities active on Magicbricks.com. The index includes the top 11 cities (these have been chosen based on their activity levels) and has an individual city report for each of these cities. While the NPI and its movements are of interest to the expert community of bankers, builders and investors, the PropIndex has also taken care to explain the nuances of index movements at the locality level that would help the huge base of Magicbricks.com consumers. Insights into consumer demand have been gathered through analysis of search information on the site. This helps understand the best localities by demand, the type and configuration of units as well as the budget-wise preferences. The PropIndex is the result of meticulous research at the locality level and through detailed discussions with experts at Magicbricks.com s offline and online initiatives. The Indian real estate market is dynamic and the PropIndex reflects those changes. Since it is derived from a dynamic database, additions and deletions of localities happen as a function of market dynamics.

4 GLOSSARY & DEFINITIONS There is a wealth of information within these pages. For better readability, we have presented some data as tables and others as graphs. Between them, you will find how property markets have performed in the Apr-Jun 2015 quarter from different perspectives from that of capital appreciation, from a rental/yield realisation perspective and from a supply standpoint. Demand Analysis section also explains what consumers look for. We recommend that you evaluate the city report in its entirety and that will provide a rounded perspective of the performance of the property market within each city. Here are the details of what you will find in each of the city reports enclosed within: 1. City Property Index This is a composite index which is a function of supply of properties as well as the average capital appreciation/drop in various localities of the city in the quarter. The City Index is the weighted average of the average rate per square foot in that locality and the supply of properties from that locality. Premium localities (with higher average rate per square foot) as well as localities with higher supply of properties will have a bigger impact on the Index. For example, if the supply of properties from a premium locality drops, that locality will end up having a lower weightage in the Index which in turn will push the Index downwards (and vice-versa). On the other hand, supply of properties remaining unchanged, the Index will be influenced by capital appreciation within the locality. 2. Listed Price Monitor This metric shows the capital appreciation/drop within a locality and is calculated on the basis of movement in the average rate per square foot within that locality. By and large, the movement in the average rate per square foot reflects capital appreciation/drop. However, in a few select cases, we have observed that the average rate per square foot moves due to a change in the mix of apartments within that locality (e.g. if the ratio of premium apartments, which command a higher per square foot rate, changes over the quarter). In these few circumstances, the Listed Price Monitor will, in turn, reflect this input. Such changes have been explained in the text of the City Reports. 3. Rent Monitor This reflects the rental appreciation/drop within a locality. It is calculated on the basis of movement in the average rent per square foot within that locality. By and large, the movement in the average rent per square foot reflects rental appreciation/drop. However, in a few select cases, we have observed that the average rent per square foot moves due to a change in the mix of apartments within that locality (e.g. if the ratio of premium apartments, which command a higher per square foot rent, changes over the quarter). In these few circumstances, the Rent Monitor will, in turn, reflect this input. Such changes have been explained in the text of the City Reports. 4. Yield Meter Yield is the annual rate of return earned on property. The Yield Meter depicts the gross yield percentages across various localities. Gross yield is a ratio of average annual rental value to the average capital value of the property. 5. Capital Value Tables (given in Annexures) This shows the actual range of prices within which properties were available in each locality in the quarter. Prices are shown in Rupees per square foot basis, these are the prevailing rates for properties in each locality. 6. Price Trend Analysis This analysis of looks at distribution of real estate assets on the basis of capital value (Rs/sq ft). We have grouped the city localities into various budget segments on the basis of their capital values. We then evaluate the historic price trend for these budget segments over a two year period from Jul-Sep Jul-Sep Editorial Speak PropIndex has gone from strength to strength adding more analytics, insights and diverse views in every edition. To enhance the insights provided by our data, PropIndex now includes city perspectives from editors of the Times Property.

5 NOTES

6 VOL 5, ISSUE 2; JUL-SEP, FY propindex.magicbricks.com [National Property Index (NPI)] JFM 11 AMJ 11 JAS 11 OND 11 JFM 12 AMJ 12 JAS 12 OND 12 JFM 13 AMJ 13 JAS 13 OND 13 JFM 14 AMJ 14 JAS 14 OND 14 JFM 15 AMJ JAS 15 JUL-SEP 2015 In line with the general lack of activity in the residential real estate market, the National Property Index has also remained stagnant over the previous quarter. This is in continuation of the general trend of inactivity observed in the market over the last many quarters (including the current period between Jul-Aug 2015). NPI is the weighted average of supply and capital values across 11 cities in India. Regionally, North India comprising of Delhi, Noida/Greater Noida, Ghaziabad and Gurgaon, saw an average drop in the Index values. Compared to this, while the Index in the South Indian cities on an average remained at the same level as in the last quarter, West India saw an average rise of 2% in the Index values. Kolkata in the east also saw the Index values remaining at the same level as the previous quarter. The movement in Index in the quarter can be attributed to an average 13% increase in supply and partly due to six out of the eleven cities having more than 50% localities with price increment. However, only one city saw some positive movement in the Price Monitor while others either stayed at the same level or witnessed an overall dip in the price levels. Bengaluru again emerged as the city with maximum increase with the Index having grown by 4% in the evaluation quarter. This was followed by Mumbai with 3% increase and Gurgaon with 2% increase. The largest drop in the City Index was again witnessed in Delhi with the Index value falling by 5%. Except for Gurgaon, cities in the North either witnessed a drop in Index values or remained at the same level as in the last quarter. Ahmedabad City Index grew by 1% as compared to the last quarter. While the Reserve Bank of India (RBI) lowered the interest rates, leading to banks passing on the benefit to consumers in terms of lower home loan rates, the same might not be sufficient enough to address the issue of low transaction volumes and large inventory pile-up. The festive season and the associated discounts and freebies given by developers, along with lower interest rates may have some positive impact on the transaction activity on the ground. Today, the biggest concern which the consumer has in respect to the real estate market is lack of confidence in the developer community. With many projects having been delayed and lack of clarity on their completion timelines, the consumer is vary of investing his money in the market, especially in new launches or underconstruction projects. Therefore, it is imperative on the part of the developer community to bring transparency and take the consumers into confidence. While payment schemes like possession linked payment plan have been offered by several developers to allay consumer fears of non-delivery and credit getting stuck, more efforts are required to increase the transaction momentum. IN THIS REPORT: National Property Index...1 Bengaluru...4 Annexures...13

7 propindex.magicbricks.com 02 VOL5, ISSUE 2; JUL-SEP, FY NATIONAL PROPERTY INDEX The City Index for Ahmedabad experienced an increment of 1% as compared to the previous quarter. An increase in supply across all localities of the city was observed. While some localities witnessed a double digit growth in supply, it is important to add, that most of them had low base numbers initially. Of the localities in the city, a substantial 43% of them witnessed an increase in prices. More than 65% localities in the Bengaluru real estate market witnessed an increase in the average capital values and the overall supply also increased by 10%. Bengaluru City Index again saw maximum appreciation of 4% in the last quarter. The Eastern and South-East parts of Bengaluru comprising of Whitefield, Sarjapur Road and Electronic City, remainrd the largest contributors to the supply in the city. The Chennai City Index saw a marginal increment of 1% in the Index values in this quarter. There was an 11% increase in active listings in the city with 57% of the localities witnessing positive movement in capital values. Overall, the Price Monitor for the city fell by 5% as drop in values was more than what could be compensated by the price increment. Delhi again witnessed a decline in the City Index while the Listed Price Monitor remained at the same level. The Delhi City -1% Index fell by 5% for the Jul-Sep 2015 quarter. As observed in the other cities, Delhi also saw an overall increase in the active listings but only 30% of the localities saw any positive movement in the price points. Except for a few localities remaining at the same price level as the previous quarter, most of the 69% of the balance localities saw a decline in capital values. Ghaziabad saw a 2% decline in the Index values accompanied by 2% decline in the City Price Monitor as well. This was on account of 73% localities witnessing a drop in values. Indirapuram and Raj Nagar Extension continued to be the dominant localities in terms of supply in the Ghaziabad real estate market. Both these together contributed more than 50% of the total supply in the market. In Gurgaon, the supply of active listings in the market increased marginally by 3%. A drop in the average capital values arrested the growth of the City Index. More than 60% of the tracked localities witnessed a drop in the average capital values. Sohna Road area remained the most preferred locality in the city. Unlike the previous quarter where Hyderabad had the second highest increment in the Index Value, the city recorded a drop of 4% in the City Index Values during this quarter. The western part of Hyderabad centered on Gachibowli and comprised of other localities such as Manikonda and Kondapur which continued to be the top localities in terms of active listings. On an average the localities witnessed less than 1% increase in property values. The city also saw an increase in the overall number of active property listings. The City Index for Kolkata remained stable over the past quarter. More than 55% of the localities saw a drop in capital values while the remaining 39% of them saw some increment. The localities on an average witnessed a 1% drop in capital values. However, the City Price Index remained stable over the quarter. Localites such as Rajarhat, EM Bypass and Garia continued to be the top localities in terms of availability of actively listed properties. Mumbai noted the second highest increment in the City Index after Bengaluru. While the City Index improved by 3%, the Listed Price Monitor remained at the same level as the previous quarter. The localities saw an average increase of less than 1% in capital values with 62% localities having a positive movement. Most localities along the Western Expressway had an increment in capital values. The City Index as well as the Listed Price Monitor for Noida remained stable in the previous quarter. While 53% of the localities witnessed a positive movement in capital values, the overall increment in the city was very low. Noida Extension and sectors situated along the Noida-Greater Noida Expressway continued to be a source of the most active listings. With 63% localities experiencing positive growth in capital values and an overall increase in the number of active listings, Pune saw a 1% increase in the City Index. However, the Listed Price Monitor decreased by 1%. Kharadi and Vimang Nagar in the North of the city together accounted for most of the listed properties. Apart from them, Wakad and Wagholi also contributed greatly to the supply of the actively listed properties in the Pune real estate market.

8 VOL5, ISSUE 2; JUL-SEP, FY propindex.magicbricks.com INDIAN REAL ESTATE MARKET FUTURE SCENARIO The Indian real estate market has been stagnant in terms of transaction and capital value of real estate assets. The number of new project launches has tapered drastically in most cities compared to the earlier years. With small exceptions, sale of units has fallen further from the decline of the previous year. The fall in unit sales over the last few years has translated into a large inventory of unsold stock. By one estimate, the total number of unsold inventory exceeds 700,000 units and the market will require more than four years to clear this. One of the main reasons for the fall in new project launches is the level of unsold inventory in the market. Consequent to this logjam, the prices have also remained stagnant over the last couple of years. To understand the price trends, Magicbricks analyzed the weighted average price for 11 cities in the PropIndex. The weighted average price for a city takes into account the average price of its localities and the weights assigned to each is the supply in that locality. The analysis has been done for a two year period from Jul-Sep 2013 to Jul-Sep For ease of comparison, cities have been divided into segments having weighted average price greater than Rs 6,000 per sq ft and with prices lower than Rs 6,000 per sq ft. As the graphs shows, the prices in the cities have either seen very low rise or outright drop. In case of the four cities with weighted average price greater than Rs 6,000 per sq ft, Pune with 11.8% increase is the only city with any visible price movement. Mumbai and Delhi have seen a drop in values. In fact, Delhi witnessed the largest drop amongst all cities. Gurgaon also remained stagnant with negligent growth. Even in case of Pune, when inflation is taken into account, the price increase is nullified. In case of the other seven cities with a weighted average of less than Rs 6,000 per sq ft, the story repeats itself. With 10.8% increase during the evaluation period, Chennai saw the highest increment. With the exception of Ghaziabad, other cities also saw a marginal price increase. The prices in Ghaziabad city actually dropped by 6.6%. Given the high inventory level and low sales volume, the market needs to correct the prices. Our analysis shows the prices have been stagnant for over two years now. When this is indexed to inflation, the values have dropped. Short of announcing a cut in prices, developers have used innovative schemes to lower the acquisition cost. These vary from attractive payment schemes to giving freebies like modular kitchen and other white goods to offering discounts or waiver on charges like car parking, club house etc. The developers are also ready to offer up to 25% discount on the total cost in case it is a one time payment. The impact of the schemes is such that prices have already come down by 10%-20%. This is demonstrated with an example. Let s assume a 1400 sq ft property costs Rs 60 lakh, Rs 4,286 per sq ft in capital values. This comes with a subvention scheme where the developer pays the EMI on the loan amount during the construction period. The EMI is transferred to the consumer on possession. Assuming a loan amount of Rs 48 lakh (80% of the unit value), interest rate of 9.5% and a loan tenure of 25 years, the EMI is Rs 41,937 per month. The developer pays this EMI for the construction period of 24 months. The total amount paid is slightly more than Rs 10 lakh. Simply put, the actual cost to the buyer is Rs 50 lakh, translating into a rate of Rs 3,567 per sq ft, a discount of almost 17%. Developers are expecting that freebies and attractive payment plans combined with the recent drop in home loan rates will help in reviving sales. Therefore, in short to medium terms, developers are unlikely to have any incentive in dropping the prices upfront.

9 BENGALURU propindex.magicbricks.com 04 VOL5, ISSUE 2; JUL-SEP, FY [CITY INDEX] The Bangalore City Index witnessed the maximum increment amongst all cities JFM 11 AMJ 11 JAS 11 OND 11 JFM 12 AMJ 12 JAS 12 OND 12 JFM 13 AMJ 13 JAS 13 OND 13 JFM 14 AMJ 14 JAS 14 The City Index increased by 4% while the Listed Price Monitor saw an appreciation of 3% over last quarter OND 14 JFM 15 AMJ JAS 15 4% BENGALURU REAL ESTATE IN PERSPECTIVE Q BENGALURU As it happened Bengaluru emerges as second largest property market in terms of apartment sales, surpassing Delhi NCR in the first half of 2015: Report State govt levies a 5% Metro cess on residential and commercial properties to raise funds for Namma Metro HOT RBI lowers the key lending rates by 50 basis points making the banks reduce their home loan rates Register properties anywhere in Bengaluru now as govt brings 43 sub-regional offices under one umbrella Lower rentals, larger land parcels and accessibility is making peripheries of Bengaluru grow, a report says The Guidance Value in Bengaluru rises in October 2015 triggering a minor increase in property rates NOT Centre includes real estate agents in the Central Advisory Council through an amendment Bengaluru has the second-highest unsold inventory in India in the second quarter of 2015, a report says Bruhat Bengaluru Mahanagara Palike increases property tax by 15% in September 2015 Construction of Hennur Flyover and three railway overbridges get stalled due to lack of land

10 VOL5, ISSUE 2; JUL-SEP, FY propindex.magicbricks.com BENGALURU [PROPINDEX - BENGALURU] The City Index witnessed 4% gain for Jul-Sep 2015 quarter. There is an overall increase in the average capital values for 68% of localities across the city. This propelled Listed Price Monitor to increase by 3 % as compared to last quarter [Key Takeaways] l The Bengaluru real estate market is known to cater primarily to the mid and the affordable segments. These segments together account for almost 68% of the active listings witnessed in the market. These segments consist of two price ranges, which are the Rs 4,000 4,999 per sq ft and the Rs 3,000 3,999 per sq ft, respectively l The consumer base in these price segments is very sensitive to the economic scenario and the price movements in the market. Consequently, the transaction volume over the last two years has declined, leading to a large pileup of unsold stock l The premium and luxury segments together constitutes 32%+ share of the market, with the premium segment having about 27% of the overall share. The luxury segment has a very small 5%+ presence in the Bengaluru market. These are located in a few prime localities in the heart of the city l Overall, the weighted average price for Bengaluru has seen only 7% increment over the last two year period, between Jul-Sep 2013 to Jul-Sep 2015 l Though the market did witness a 10.7% price increment during the Jul-Sep 2015 quarter as compared to the same period in This indicates a slight movement in the market condition l Amongst the different price brackets in the city, the Rs 9,000 10,000 per sq ft bracket witnessed the maximum price increment of 44% over the last two years. On the other hand, the Rs 3,000 3,999 per sq ft segment saw a decline of 0.3% in prices in the same time period l The largest price segment by supply and which also has the highest consumer preference is the Rs 4,000 4,999 per sq ft range, which registered only 8.3% price increment. This is indicative of a sluggish market and low demand Bengaluru housing market blows Hot and Cold EDITORIAL Bengaluru real estate market is a classic case of high supply of residential units and moderate consumer demand. Buyer sentiments seem to have fallen in this Jul-Sep2015 quarter due to a number of reasons. Crumbling capacity of existing infrastructure to accommodate the people s needs, water problem prevalent across the city and poor connectivity are some of the top reasons behind the low buyer sentiments. The city s realty sector also received some growth triggers. The reduction of bank loan rates could uplift the buyer s outlook. However, it is too early to say whether it will boost buyer demand for residential units and therefore transactions. The government enabled app which will facilitate easy access to information on land and plot number could be a game changer. This mobile application is presently with officials at the survey, settlement and land records department. When opened to the buyers, during transactions, it will help conclude sale or purchase faster. The number of new festive launches has dropped as in the rest of the country. Though it is still greater than in most cities of the country. Developers have been actively constructing new projects despite slowing consumer demand. As a result, buyers have a wide gamut of housing options. The market contains readyto-move-in and under-construction units. Properties within Rs 60 lakh topped the consumer preference. The mid-segment and premium properties did not fare too well. Sarjapur Road, Whitefield, Electronic City, Marathalli and Koramangala are some localities which saw good demand. Most of these localities have IT and commercial hubs driving the demand. Start-up companies have been the other major trigger to the moderate demand the city has witnessed. However, it is uncertain whether the demand will remain constant or not in the future. The Karnataka government has recently accepted a proposal for a hike in property tax. This means that the building and plot owners in Bengaluru will feel the pinch from the next financial year. Sources say that the hike is about 20% for residential and 25% for non-residential properties. Considering the phase the market is in now, the developer s approach has become cautious. There is a mood of reserved optimism about the next quarter among the builders. As of now, consumers are in the driver s seat. Namrata Ekka, Magicbricks Bureau

11 BENGALURU propindex.magicbricks.com 06 VOL5, ISSUE 2; JUL-SEP, FY [PRICE TREND ANALYSIS] [Residential distribution by capital value ] Market caters to budget and mid-segment l The graph shows the distribution of residential assets by capital values. As can be seen, with 68% of supply in the Rs 3,000-4,999 per sq ft range, the Bengaluru market caters majorly to the budget and mid segments l In addition to the dominance of relatively lower capital values, the 2BHK is the dominant format from both consumer preference and the supply perspective. It s relatively smaller saleable area helps to keep the overall acquisition cost low l Given the income profile of consumers in the budget to mid segments, it is very sensitive to any movement in values l The premium segment in the Rs 5,000-8,999 per sq ft range has a market share of 27.3%. Most options in this budget range are the 3BHK format with large saleable area. This increases the overall acquisition cost l The Rs 9,000 per sq ft and above luxury segment has a very small presence in the Bengalur market. It constitutes a shade above 5% of the market l Analysis of the two year distribution trend of residential assets by capital values show that percentage distribution has more or less been in the same proportion as for Jul-Sep 2015 quarter [Major price segments - Q-on-Q trend] Premium and luxury segment have seen the maximum price movement l To analyse the price trends, localities are clubbed into segments basis the value at the end of Jul-Sep 2015 quarter. The change over a 2-year period beginning with Jul-Sep 2013 is then tracked l Capital value for each segment is a weighted average in different localities l Analysis shows that localities in the premium and luxury segments have seen maximum volatility and the most appreciation over the study period l The budget and mid segments remained stable with minimum movement

12 VOL5, ISSUE 2; JUL-SEP, FY propindex.magicbricks.com BENGALURU [Major price segments - price increment] Budget and mid-segment have remained flat l The graph shows the increment in weighted average capital values in each price segment over a two year period from Jul-Sep 2013 to Jul-Sep 2015 l The premium and luxury segments have seen maximum price appreciation over the last two year period. In comparison, the dominant affordable to midsegments saw minimal to few percentage point appreciation in capital values l The minimal movement in the lower budget segments is indicative of very less transaction activity in the market because of which prices have remained flat over the last two years l From an investor s perspective, who might have bought an asset two years or even earlier, return on investment is actually negative when the inflation is taken into account l While the premium segment has witnessed a price appreciation in the 12% to 15% range, in real terms, this price movement is low l The luxury segment has witnessed the maximum price movement with 44% increase in values over the last two years. However, given the very small percentage share of this asset class in the Bengaluru market, it has remained a niche area having very little impact on the real estate market l The adjacent heat map shows the localities of Bengaluru in different colour shades depending upon the prevalent capital value in the locality. A bright coloured locality indicates higher capital value while one with lesser shade indicates relatively lower capital value l The more expensive localities are located in the center and suburban areas while peripheral areas have options in the budget to mid-segments. Whitefield and Sarjapur Road micro-markets in East and Electronic City in the South-East are amongst the most preferred localities by consumers in the budget to mid-segments l Localities in the premium and luxury segments are already developed and have limited land supply for new projects. This automatically makes the projects expensive. Given the relative lack of new options in these localities, such projects still manage to generate demand. However, provided the asking price is at not too steep a premium to the prevalent capital values l It is likely that due to limited fresh supply in premium localities, this segment has seen price increment l Most of the new supply is in the budget to midsegments across localities. A drastic drop in transactions means there is large unsold inventory. Consequently, the prices in this segment have remained flat

13 BENGALURU propindex.magicbricks.com 08 VOL5, ISSUE 2; JUL-SEP, FY [City - weighted average price trend] Bengalur city witnesses minimal price movement l The graphs show movement in weighted average price for the city. This considers the price points across all segments. While the first graph shows Year-on-Year movement, the second gives Quarter-on- Quarter movement of the same l The weighted average price increased only by 7.1% over the last two year period. However, after seeing a decline of 2.7% in the Jul-Sep 2013 and 2014 period, the price has increased by 10.7% over the previous year indicating some transaction movement in the market l Considering the average annual inflation of over 8% in the last three years, a net decrease is seen in the period [PRICE MOVEMENT - KEY LOCALITIES] [Segment 1: Rs 10,000 per sq ft & above] Luxury segment witnesses marginal increment l The Q-on-Q trend in prices shows an average increase of 3% over the last four quarters after a 2% decline witnessed in the Jul-Sep 2014 period l Flat capital values in the Bengaluru market and incentives for buyers by the developers are leading to some traction in the market l The localities in this segment have witnessed a weighted average price of 16% over the last two year period. These are old and established prime areas of Bengaluru and continue to remain in demand by the local population l Apart from secondary sales of independent houses, another main reason for the price increase in these localities, even in this market, is limited to the new supply l The density of development in these areas is high and land for new projects is very limited. Even when such projects do come up, the scale of the project and the number of units is much smaller when compared to the development in the suburban and peripheral areas of the city

14 VOL5, ISSUE 2; JUL-SEP, FY propindex.magicbricks.com BENGALURU [Segment 2: Rs 9,000 Rs 10,000 per sq ft] Segment with largest price increment in Bangalore l This segment has witnessed maximum weighted average price increment of 44% in the Bengaluru market over the last two years. These localities are sandwiched between the suburban and core areas of the city and this aspect has benefited them a lot lthe localities in this segment had higher scope for fresh development and therefore, absorbed demand for prime addresses close to the core areas. But at a relatively lower price l On the other side, some localities like Koramangala benefited from the IT/ITeS related office development in the suburban and peripheral areas. The overall profile of the area increased tremendously and it became a prime address in the city for these outlying areas [Segment 3: Rs 8,000 Rs 8,999 per sq ft ] Performance in line with general trend in premium category l Localities in this range are again some of the old and established residential areas of Bengaluru. And some like Indira Nagar have also evolved as prime retail high streets over the last 7-8 years l The nature of development in these areas is primarily horizontal consisting of independent multi-storey houses with some apartment development as well. The segment witnessed weighted price increase of 15% over the study period indicating that market has remained flat l Frazer Town locality started with relatively lower base and hence, has witnessed the maximum increment. Further, most price increment is because of the ripple effect than large transaction volume in this locality. [Segment 4: Rs 7,000 Rs 7,999 per sq ft ] Moderate price increment l Except for Cox Town which lies close to the Central Business District (CBD) of Bengaluru, other localities are situated in the suburban and extended suburban areas of the city l With Bengaluru expanding outwards, these areas have witnessed considerable residential development over the last decade. With 14% weighted average price increase, the market has overall remained flat in this segment as well l Anand Nagar in Hebbal has witnessed such a dramatic increment because it started with low base value of Rs 3,475 per sq ft two years ago. With the advent of IT/ITeS development and general improvement in infrastructure, the area has seen rapid development leading to sharp increase in the prices

15 BENGALURU propindex.magicbricks.com 10 VOL5, ISSUE 2; JUL-SEP, FY [Segment 5: Rs 6,000 Rs 6,999 per sq ft ] Lowest increment in the premium category l This is the fourth largest price segment by the number of listings. In line with the overall market trend, this segment has also remained subdued, witnessing 10% increment over the last two years l Except for HRBR Layout, other major localities have seen only marginal year-on-year increment. These localities have evolved along the ORR of the city with the IT/ITeS being the catalysts l Except for HRBR Layout, these localities have also seen significant commercial development which attracted considerable residential demand. These are prime suburban areas and command high prices due to accessibility and connectivity to the office belt. However, the prices have peaked and in the absence of transaction volume, are likely to remain stagnant. [Segment 6: Rs 5,000 Rs 5,999 per sq ft] Biggest segment in premium category l There are 32 localities in Bengaluru with prices within this budget range. Hennur Main Road is the biggest market in this price bracket accounting for 16% of the supply, followed by Marathahalli with a miniscule 1% share l Overall, the weighted average price of the localities in this budget segment exhibited a 12% increase over the last two years with an average increase per locality being 19% l Most of these localities are adjacent to the prime suburban areas of the previous category and exist between the peripheral and suburban belt. They have also witnessed tremendous growth as the city evolved and developed radially with eastern and south-eastern areas capturing most of the development [Segment 7: Rs 4,000 -Rs 5,000 sq ft] Price trend reflects poor demand and inventory pile-up l This is the biggest price segment of the Bengalur market and accounts for most development activity with 53% share. Over 60 localities, primarily in the peripheral areas, fall under this segment l Localities like Whitefield and Sarjapur are the biggest residential markets in Bengalur. Their relatively lower prices, access to major office space clusters and availability of support infrastructure makes them the preferred destinations l The volume of development is also large and the customer base is price conscious. Given the market conditions, transactions have been low leading to inventory pile up and consequently, the prices have been stagnant for a long while. The market witnessed very low 8.3% price increment over the last two years

16 VOL5, ISSUE 2; JUL-SEP, FY propindex.magicbricks.com BENGALURU [Segment 8: Rs 3,000 Rs 3,999 per sq ft] Only segment to witness decrease in price l This is the second largest price segment in Bengaluru after the last Rs 4,000 4,999 per sq ft price bracket. The localities in this segment lie adjacent but at slight disadvantage to localities of the previous price bracket or further out along the cardinal direction l Electronic City in South-East Bengalur is the biggest and most established locality in this price segment. The residential development here is interspersed with large scale office clusters and this proximity to work place is driving the development l The customer base here is very price conscious and given the overall economic scenario, has stayed away from the real estate market. Large supply and low transaction volume has meant that prices have remained stagnant [Price increment: top & bottom five localities ] Premium localities with limited supply see increase in price s l The graph shows localities with maximum price increase over the last two year period l In case of Anand Nagar, the base price for Jul-Sepr 2013 quarter was low and hence, we see a 117% increase in values. Further, the area has seen tremendous growth over the years which coupled with limited supply has led to such dramatic increase in value l The other four localities were in the higher price bracket wherein increase in prices is because of limited opportunity for development. It is important to note that this increase is not always supported by transactions. It is more of a ripple effect of the overall increase l The graph shows localities with maximum drop in priced over the last two year period l Except for KR Puram, all other localities were in the Rs 6,000 per sq ft and above range. KR Puram witnessed considerable development over the last few years and it is likely that the locality has an oversupply situation. Further, not all areas have government connection. This could have had a negative impact on the prices l Other localities in the graph are prime areas and decrease in the prices is most likely an adjustment for higher price increase rather than the locality average

17 BENGALURU propindex.magicbricks.com 12 VOL5, ISSUE 2; JUL-SEP, FY LISTED PRICE MONITOR RENT MONITOR 3% l Hebbal and Marathahalli are the two localities that witnessed the highest increase in prices up to 8% since the past quarter. Hebbal saw a sharp rise due to the number of luxury project launches which pushed the price monitor upwards l Thanisandra is the only locality which saw a drop in prices by 2%. This was mainly a price stabilization as the locality recorded 10% appreciation in the last-to-last quarter due to spill over demand from the nearby localities l Property prices in Sarjapur Road, Bannerghatta Main Road and Electronic City grew by 5 per cent due to demand from investors as well as end-users. Projects are available here in varied budget ranges that catch the buyer s preference l Rental values in Marathahalli have been stablised as the area witnessed a drop in values in the Apr-Jun 2015 quarter. There has been a rise of 3% in the Jul-Sep 2015 quarter against a drop of 6% in the last to last quarter. Koramangala saw a rise in rental values by 2% as the overall rental stock increased in this market. This stock is primarily of high value than prevailing rates. l The rising congestion at Kundalahalli junction has contributed to a 5% fall in the rental values during the past quarter. Sarjapur Road is another area which recorded marginal drop in values. l ITPL and HSR Layout saw no change in the rental values as the market remained stabled due to ensured demand and supply from home seekers Y I E L D M E T E R Locality Average Rental Average Capital Gross Value (Rs/sqft/mth) Value (Rs/sqft) Yield Bannerghatta Main Road , % Whitefield , % Sarjapur Road , % Marathahalli , % Electronic City , % Yelahanka , % Kanakapura Road , % Old Madras Road , % Hennur Main Road , % Thanisandra , % l Old Madras Road, Electronic City, Sarjapur Road and Marathahalli are offering maximum rental returns of over 4%. Each of these have high rental demand due to its proximity to the IT hubs l Investing in Kanakpura Road can be wise for end-users as leasing is not profitable. Returns are lowest across the city, close to 2.98%. Similarly, Yelahanka fetches a gross yield close to 3.09% l Availability of new units in Whitefield has kept the investors delighted as rental returns are close to 3.70%. Similarly, Thanisandra and Bannerghatta Main Road have kept their gross yields close to the best scorers at 3.66% and 3.96%,respectively l Hennur Main Road, close to the IT Park and airport has attracted investors here to earn rental returns up to 3.28%

18 VOL5, ISSUE 2; JUL-SEP, FY propindex.magicbricks.com BENGALURU Capital Values Locality Wise Average Listed Residential Apartment Prices BENGALURU Locality Capital Values (Rs/Sq feet) Locality Capital Values (Rs/Sq feet) Banashankari 5270 to 7430 Banaswadi 4080 to 5120 Bannerghatta Main Road 4060 to 5430 Begur Road 3930 to 4960 Bellandur 4700 to 5880 Benson Town 7920 to Bommanahalli 3440 to 4440 Brookefield 5080 to 6080 BTM Layout 4820 to 6060 Chandapura 2670 to 3500 Cooke Town 7820 to CV Raman Nagar 4030 to 5310 Devanahalli 4020 to 5070 Devarachikannahalli 2600 to 3570 Doddakannelli 3880 to 5270 Electronic City Phase to 5010 Electronic City Phase to 4040 Frazer Town 7150 to 9650 Gunjur 3470 to 4290 Harlur 5270 to 6530 Hebbal 5610 to 7320 Hennur 4510 to 5830 Hennur Main Road 4780 to 5980 Hoodi 3660 to 4910 Hoodi Circle 3240 to 4550 Horamavu 3850 to 4810 Hosa Road 3720 to 4860 Hosur Road 3930 to 5270 HSR Layout 4930 to 6460 Indira Nagar 7810 to ITPL 3840 to 5050 Jakkur 4290 to 5360 Jalahalli 4670 to 5960 JP Nagar Phase to 6530 Kadugodi 3330 to 4230 Kaggadasapura 3630 to 4560 Kanakapura Road 4370 to 5690 Kasavanahalli 4120 to 5410 Kengeri 3350 to 4030 Koramangala 8310 to KR Puram 3180 to 4040 Kudlu Gate 4900 to 6020 Kundalahalli 4060 to 5180 Mahadevapura 3930 to 4920 Malleshwaram to Marathahalli 4610 to 6090 Mysore Road 4200 to 5290 Nagarbhavi 3800 to 4600 Neeladri Nagar 3370 to 4690 Old Airport Road 4790 to 6500 Old Madras Road 4460 to 5450 Outer Ring Road 5680 to 7140 Panathur 4080 to 5220 Rajaji Nagar 9560 to Rajarajeshwari Nagar 3630 to 4460 Ramamurthy Nagar 3630 to 4470 RT Nagar 4280 to 5490 Sahakara Nagar 4810 to 6210 Sarjapur 3690 to 4920 Sarjapur Road 4440 to 5940 Seegehalli-KR Puram 2680 to 3580 Singasandra 3340 to 4270 Thanisandra 4370 to 5430 Thanisandra Main Road 4510 to 5730 Uttarahalli 3570 to 4320 Varthur 3670 to 4680 Vidyaranyapura 3180 to 4090 Whitefield 4330 to 5830 Yelahanka 4230 to 5420 Yeshwantpur 6350 to 7980

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25 propindex.magicbricks.com VOL5, ISSUE 2; JUL-SEP, FY CONTACT US l Post your feedback to - l Join our discussion forum at - openhouse.magicbricks.com l For business enquiries - sales@magicbricks.com l You may also share your opinion with #PropIndex on our Twitter or connect with us on Facebook at PROPINDEX TEAM l Content & Research: E Jayashree Kurup, Dipti Tandon, Subodh Kumar, Rohit Vats, Bhawna Mongia, Devendra Lohmor, Namrata Ekka, Preeti Sharma, Renu Arya, Pushpa Rawat, Surbhi Gupta, Namrata Hazarika, Puneet Kukreja & Bikash Kumar l Layout Design: Harsha Khattar D I S C L A I M E R Every effort has been made to make this Index as complete and as accurate as possible. MagicBricks accepts no responsibility for inaccuracies in the information/data contained in this book. It shall have neither liability nor responsibility to any person or entity with respect to any loss or damage caused, or alleged to have been caused, directly or indirectly, by the information contained in this book. The information/data in this book is subject to change from time to time due to market condition.

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