Housing Sentiment Index (HSI)

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2 An IIMB Magicbricks Initiative Housing Sentiment Index (HSI) Q (April June 2014) EXECUTIVE SUMMARY l Home buyers across nine of the ten cities surveyed expect real estate prices to rise over the next six months with aggregate HSI at 118. Most cities witnessed a marginal increase in HSI this quarter. This guarded optimism is in line with the new government stepping in at the centre with a clear majority during the quarter. People seem to be waiting to understand the effects of this new government before taking any major decision. l Sellers continue to be bullish about prices with their sentiment index valued at 161. Bangalore remains the first choice for sellers looking to invest their proceeds in property. A HSI of 100 suggests that buyers expect prices to remain at current levels, while values lower (greater) than 100 suggest that buyers expect prices to fall (rise). l Barring Ahmedabad, all other cities posted an upward trend. Hyderabad gained by 22% after witnessing a 4% drop last quarter with HSI at 118 this quarter. Ahmedabad dropped 13% (HSI 86) and Bangalore rose by a further 2% to once again achieve an all time high HSI score of 143. Delhi was the only other city to witness a double digit gain of 13% (HSI 119) this quarter. l The survey recorded 44% buyers prefering to buy within the next six months. Average wait time increased to 8.9 months as compared to 8.2 months last quarter. Of the respondents, 25% said that prices will increase by not more than 5% while 9% thought prices will decrease by 5% with 44% bullish about a market increase of up to 10%.

3 HOUSING SENTIMENT INDEX (HSI) l The Housing Sentiment Index (HSI) is jointly developed by IIM-Bangalore & Magicbricks. The index is based on an online survey of prospective home buyers after careful screening by MB and IIMB. In the last quarter, two more cities, Ahmedabad and Kolkata were added to the buyer index. A seller survey was also launched across the nation to track buyer and seller preferences and sentiments from the last quarter. Results of both surveys are documented in this report. Every quarter, we monitor survey responses closely to ensure data credibility is high. We also plan to verify the online survey data collected with samples collected from property shows across cities periodically to ensure the convenient sample data collected is representative of the true population. l The survey questionnaire has been constructed to specifically capture buyer sentiment on house prices, the degree to which he/she thinks house prices will move, micro market preferences within each city and basic demographic information including buyer preferences for type of property and financing methods. l The HSI is one of the premier sentiment indices in the Indian real estate market that aims to capture buyer sentiment and serve as a lead indicator to the residential real estate markets. The index is based on the Diffusion Index methodology that is widely used to capture market sentiments globally. HSI is calculated by taking the difference of total positive and negative sentiments after adjusting the magnitude of neutral responses and other biases inherent in survey based work. l The value of HSI can range from 0 to 200. A score of 100 represents neutrality, meaning people do not expect house prices to either increase or decrease. A score of 200 indicates that all respondents expect house prices to increase. A score of 0 indicates that all respondents expect house prices to decrease. BUYER AND SELLER SURVEY HIGHLIGHTS l Buyer HSI Score: An aggregate HSI score of 118 for the 10 cities surveyed indicates expectation of a price rise over the next six months. Among cities, Bangalore, with an HSI of 143, leads the list followed by Kolkata with an HSI of 133. Ahmedabad experienced a 13% drop in HSI this quarter (HSI 86). l Across cities, 73% are looking to buy property as a place of residence for their family, 62% plan to finance their purchase with a home loan and 65% want to buy a flat in a multi-storey apartment. Of the respondents, 49% earn less than Rs 10 lakh per annum with Rs lakh budget being preferred by 29%. Of the respondents 27% are from the IT sector and 15% are self-employed. Average wait time increased to 8.9 months as compared to 8.2 months last quarter. l Seller HSI Score: Seller HSI in all three quarters was 30-40% above buyer HSI. Of the sellers, 70% are individual owners, 13% are agents and the remaining are builders/developers. Of the surveyed, 35% want to book profits while 30% want to move to a bigger accommodation. Of the respondents, 24% have owned the property they hold for less than three years while another 24% have held it for less than one year. Of these, 19% own property in the Rs lakh range followed by another 17% in the Rs lakh range. Almost 60% want to sell flats followed by 21% who want to sell land/plots. 01

4 MACROECONOMIC VIEW MARKET CONDITIONS l Global Markets: The S&P Index ended the quarter with a 5.23% gain with stocks initially falling in April 2014 but regaining momentum throughout the rest of the quarter, inspite of Russia seizure of Crimea and the slowing growth in China. The Federal Reserve has been steadily scaling back its quantitative easing program since the beginning of the year and the Commerce department sharply lowered its assessment of growth to -2.9%. The European Central Bank (ECB) set a negative rate for bank funds held on deposit with the ECB as an attempt to revive the economy. The MSCI World Index rose by 5.04% in the second quarter of Interestingly, Real Estate Investment Trusts (REITs) have been the strongest performers with the US REITs up 10.1% this year. l Domestic Economy: The Bharatiya Janata Party (BJP), the main opposition party, marched in to form the government at the centre after a clear majority at the General Elections held in Apr-May Following this victory, Foreign Institutional Investments (FII) into the Indian equities and debt markets have seen a surge with an additional USD 4 billion inflow in June 2014 taking the total FII inflow to USD 19.6 billion this year. With the International Monetary Fund (IMF) retaining its forecast of 5.4% growth in Indian economy in 2015 and the Reserve Bank of India (RBI) expected to leave rates unchanged, the Indian markets are well poised for a healthy growth in the coming quarters. This positive sentiment is bound to reflect on real estate as well. l Real Estate: The much-awaited clarity on taxation of REITs was provided in the recently presented Union Budget 2014 raising hopes of soon introducing REITs as an asset class in India. Private Equity and other investors have invested $675 million into the Indian Real Estate markets in the first half of this year which is more than double the investments made during the first half of In May 2014, a consortium of investors led by Dutch pension fund asset manager APG Asset Management NV said it was working with investment firm Xander Group Inc to invest $300 million in income generating commercial properties in India. In June 2014, Canada s Brookfield Asset Management Inc launched a bid of $580 million to buy a portfolio of office properties called Unitec Corporate Parks comprising 17 million square feet of existing space and development projects in India. Although the recent Supertech case in Noida dampened sentiment in the NCR, it is a welcome sign of the increasing awareness among buyers and bodes well for the increasing transparency in the real estate markets. l Overall, given a strong government at the centre has raised expectations with most investors believing in a strong performance in the next couple of years. Focus on infrastructure projects and reducing subsidies has been a good start for the real estate sector. 02

5 SENTIMENT BY BUYER REGION lbangalore once again topped the list of cities with an HSI of 143, increasing marginally by 2% this quarter. This steady increase since the last three quarters reflects the growing demand, manageable levels of unsold inventory and affordable house prices as compared to other cities. l Hyderabad witnessed a 22% increase in HSI this quarter (HSI 118) reflecting the positive sentiment after the division of the state. Every quarter, Hyderabad has witnessed conflicting sentiments with HSI swinging wildly by close to 20% either ways. We will have to wait and watch if this positive sentiment is here to stay. l Ahmedabad was the only city to witness a drop in sentiment by 13% (HSI 86). Since the last three quarters, HSI for Ahemedabad has remained below

6 SENTIMENT BY AGE l Among the 10 cities surveyed, Delhi, with 10% buyers in the year age group (HSI 100), tops the list with youngest buyers while Kolkata with 21% buyers in the 50 years and above age group (HSI 138) has oldest buyers. l Overall, 11% of respondents are females (HSI 134). Female buyers on an average displayed 10% more HSI than their male counterparts over the last few quarters. Delhi had maximum female respondents (15%) with an HSI of 127. SENTIMENT BY INCOME AND PROFESSION l Among buyers 49% earn below Rs 10 lakh per annum (HSI 126) while 79% buyers earn less than Rs 20 lakh. HSI for those earning above Rs 1 cr rose by 13% to 120. l Those earning less than Rs 10 lakh per annum (HSI 117), 57% look to buy in Hyderabad while only 33% plan to buy in Gurgaon (HSI 129). Nearly 8% earn over Rs 50 lakh in Gurgaon. l Of the respondents, 26% are in the IT sector (HSI 128), followed by 12% in Manufacturing (HSI 132). 04

7 SENTIMENT BY TIME HORIZON l Interestingly, the HSI numbers for buyers who are waiting to buy due to their own personal financial constraints is positive across all three groups (Within 6 months: 131, between 6m-1 yr: 129, wait a year: 137) while those waiting due to current market conditions are not as optimistic (Within 6 months: 120, between 6m-1 yr: 111, wait a year: 89). There is a jump of 36% in HSI for those willing to buy within the next six months and are basing their decisions on market conditions. l Of the respondents, 44% want to buy within the next six months. Nearly 25% of them opine that prices will increase by 0-5% while 19% think prices will rise between 5-10%. Only 7% think property prices will decrease by 15-20%. l Of the respondents, 55% in Pune prefer to buy within the next six months (HSI 121) while 36% respondents in Delhi are willing to wait a year or more (HSI 112). 05

8 SENTIMENT BY PROPERTY PREFERENCE l Almost 65% prospective buyers prefer apartments (HSI 121) while 17% prefer villas (HSI 126) and 15% prefer land/plot (HSI 126). Compared to the previous quarter, HSI for apartments rose over 5%, while HSI for villas has risen over 20%. l Nearly 77% of those who prefer flats intend to purchase for the purpose of residence while 73% of villa buyers intend to purchase with the intention of staying with family. Of the land owners 51% intend to purchase with the idea of residing with their families in the land after construction of property. l Almost 91% of residents in Mumbai intend to purchase flats (HSI 105), 25% of residents in Bangalore intend to purchase land (HSI 149) and 37% of Hyderabad residents intend to purchase villas (HSI 112). l Of the prospective buyers 53% live in a rented accommodation (HSI 121), 32% live in their own house (HSI 128) and 15% live with parents/relatives (HSI 116). l Over 51% of those who live in their own house intend to buy property with the purpose of residing in it, implying a move to a bigger/better residence. l Nearly 66% of respondents in Bangalore live in a rented household (HSI 139), the maximum among the 10 cities surveyed. 38% of Kolkata respondents live in their own house, the city with maximum ownership (HSI 137). 06

9 SENTIMENT BY PRICE RANGE l HSI for properties above Rs 1 crore increased by 14% (HSI 119). However, only 8% of respondents were looking for property above Rs 1 crore. HSI for properties above Rs 5 crore dipped by 15% (HSI 92). However, this segment comprises less than 1% of the total respondents. l With over 44% of respondents preferring housing below Rs 40 lakh, it is time for states to focus on making houses affordable and cater to this growing need across the country. l In Gurgaon, 23% are looking for property above Rs 1 crore, the highest among all cities surveyed, with HSI for property in the Rs 1-2 crore range shooting up by 30% this quarter (HSI 130). In Mumbai, 18% of respondents are looking for property above Rs 1 crore with HSI for the Rs 1-2 crore properties at 98. In Kolkata, 26% of respondents are looking for property below Rs 20 lakh (HSI 133) followed by 20% in Delhi (HSI 110). In Bangalore, out of the 12% of female respondents, 25% are looking for property in the Rs lakh range (HSI 126). l Hyderabad, Chennai and Bangalore are preferred destinations for villas although only Bangalore has shown an increase in HSI of 12% (HSI 144) in this segment. 07

10 HSI AND OTHER PROPERTY PRICE INDICES l Analysing the last four quarters of sentiment data and comparing this with RESIDEX, the index put out by National Housing Bank (NHB), buyer sentiment is expectedly a lot more volatile as compared to RESIDEX. The graphs above depict the % change Q/Q for the HSI, RESIDEX and PropIndex which tracks residential apartment prices. While the HSI captures sentiment typically six months into the future, the RESIDEX tracks actual property transactions during the quarter and the PropIndex is based on the listings data. This time-lag should be kept in mind while comparing the three indices. l Specifically, if we compare RESIDEX with HSI and PropIndex and apply suitable time-lags as mentioned above, there is a significant relationship between the three indices. As can be seen, both the PropIndex and HSI are a lot more volatile compared to the RESIDEX. This could be explained partially due to high expectations of sellers (PropIndex is based on listing price) who tend to mark up their listing price significantly but don t necessarily realize that kind of increase in property prices. It can also be attributed to the fact that not all survey participants necessarily transact within three quarters. l It is however, too early to conclude based on the limited data we have as of now. We will closely watch the relationship and share interesting details at an appropriate time. 08

11 SELLER SURVEY l Overall seller HSI decreased marginally by 1% to 161 Q/Q. Nearly 32% sellers fall in the year bracket (HSI 171). l Almost 70% sellers are individual owners (HSI 166), 13% are agents or brokers (HSI 151) and 16% are builders/developers (HSI 152). Nearly 10% sellers are female (HSI 167) while HSI for male sellers is 161. l Of the selllers 65% earn below Rs 10 lakh per annum (HSI 160). In this group, 69% of them are individual owners while 17% are agents/brokers and the remaining are builders/developers. Nearly 58% want to sell a flat/multi-storey apartment while 22% want to sell land. l Almost 60% sellers are looking to sell flats (HSI 157), 21% want to sell land (HSI 172) and 12% want to sell villas (HSI 162). Of the sellers 35% would like to sell to book profits (HSI 163) followed by 30% who want to purchase a bigger accommodation (HSI 157). Nearly 17% want to sell as they are moving out of the city (HSI 167), 9% want to move closer to work (HSI 158), 4% cite job uncertainty (HSI 177) and 5% want to sell as they are unable to service home loans (HSI 156). l Of those wanting to sell (24%) have owned the property for less than a year (HSI 160), while another 24% have owned the property for less than three years (HSI 169), 26% less than eight years (HSI 162), 14% less than 15 years (HSI 169) and 13% greater than 15 years (HSI 143). l Nearly 19% of sellers are looking to sell property in the Rs lakh range (HSI 151), another 19% in the Rs 60 lakh to Rs 1 crore range (HSI 155). Of sellers in Bangalore 72% are looking for property within Bangalore. l Of sellers 31% are in the real estate sector (HSI 161), 12% belong to the IT sector (HSI 172), and 4% belong to the manufacturing/engineering sector (HSI 159) and the remaining are spread across other sectors of the economy. 09

12 MICRO MARKET SUMMARY - DELHI l HSI rose by 13% when compared to an increase of 10% in the previous quarter (HSI 119). l Of the respondents 32% are from West Delhi which witnessed a 30% surge (HSI 106). Sentiment by Buyer Age Group l year old are the most optimistic with an HSI of 136 and comprise 29% of the survey population. l HSI for 50 year old and above, who are the most pessimistic rose by 41% compared to the previous quarter (HSI 107). Sentiment by Buyer Constraint l HSI of 123 for those who cite financial constraint (58%) is a lot higher than HSI of 113 for those who cite market constraints. l HSI for those who cite market constraint has risen by 28% Q/Q as compared to a rise of 8% for those who cite financial constraint. Sentiment by Buyer Horizon l Nearly 35% want to buy within the next six months (HSI 118) while 36% are prepared to wait a year or more (HSI 112). l Almost 66% of those who can wait for a year or more cite financial constraints as the reason for the wait. Sentiment by Buyer Property Preference l Of the respondents 72% are end users (HSI 117) while the rest are looking to enter as investors (HSI 124). l Flat in a multi-storey apartment is most preferred property type (55%; HSI 124) followed by single floor units (18%; HSI 96) l Of those who already live in their own house (HSI 138) 26% are looking to buy while 53% of respondents currently live in rented accommodation (HSI 117). Almost 20% live with parents-relatives (HSI 97). Sentiment by Buyer Budget l Of the buyers 32% are looking at properties within Rs lakh range (HSI 128) followed by 17% in the Rs 60 lakh to Rs 1 crore range (HSI 128). l Buyers working in IT/ITES/BPO profession comprise 12% of respondents (HSI 126) while the self-employed comprise 21% (HSI 114). 10

13 MICRO MARKET SUMMARY - NOIDA l HSI rose by 7% when compared to a fall of 4% in the previous quarter (HSI 132). l Old Noida, comprising 19% of respondents, witnessed a 38% increase in HSI when compared to the previous quarter (HSI 128). Sentiment by Buyer Age Group: l year old comprise 39% of the respondents (HSI 115) followed by year old (30%; HSI 133). l HSI for 50 year old and above who comprise 11% of respondents rose by over 25% to 149 compared to the previous quarter. Sentiment by Buyer Constraint l Of the respondents 53% cite financial reasons (HSI 144) while the rest (HSI 119) cite market conditions for their property purchase decisions. Sentiment by Buyer Horizon l Almost 30% want to wait for a year or more (HSI 114) while 40% want to buy within the next six months (HSI 151). Sentiment by Buyer Property Preference l Nearly 77% are end users (HSI 134) while the rest are looking to enter as investors (HSI 125). l Almost 83% prefer flats (HSI 134) followed by 14% who prefer villas (HSI 115). The percentage of people preferring land in Noida dropped sharply by 75%. l Of those who already live in their own house (HSI 161) 30% are looking to buy while 66% of respondents currently live in rented accommodation (HSI 127). Sentiment by Buyer Budget l Of the buyers 44% are looking at properties within Rs lakh range (HSI 148) while another 22% are looking to buy property within Rs lakh range (HSI 120). l Buyers working in government (3%; HSI 100), pharma (2%, HSI 100) and the self-employed (5%, HSI 100) are neutral about property prices in Noida. l Nearly 27% from the IT sector are optimistic about house prices (HSI 147). 11

14 MICRO MARKET SUMMARY - GURGAON l HSI rose by 7% when compared to a rise of 3% in the previous quarter (HSI 120). l New Gurgaon, comprising 21% of respondents, witnessed a decrease of 45% in HSI (96) while Old Gurgaon, comprising 5% of respondents, witnessed a 120% increase in HSI (88). Sentiment by Buyer Age Group: l year old comprise 44% of the respondents (HSI 111) followed by year old (20%; HSI 157). l year old are the most pessimistic (95) while the year old are the most optimistic (157). Sentiment by Buyer Constraint l Nearly 57% cite financial reasons (HSI 125) while the rest (HSI 113) cite market conditions for their property purchase decisions. Sentiment by Buyer Horizon l Almost 25% want to wait for a year or more (HSI 100) while 53% want to buy within the next six months (HSI 133). Sentiment by Buyer Property Preference l HSI of 133 for those who are planning to buy property as an investment is 13% more than those who plan to buy as a place of residence for their own family. l Almost 72% are end users (HSI 115) while the rest are looking to enter as investors (HSI 133). l Nearly 64% prefer flats (HSI 124) followed by 18% who prefer villas (HSI 121). Those looking to buy land (12%) are pessimistic (HSI 93). l Of those who already live in their own house (HSI 120) 26% are looking to buy while 60% of respondents currently live in rented accommodation (HSI 114). Nearly 37% of those who live in their own house are looking for property for residential purposes. Sentiment by Buyer Budget l Nearly 42% buyers are looking at properties within Rs 60 lakh to Rs 1 crore range (HSI 121) while 17% look to buy property within Rs 1-2 crore (HSI 130). Almost 23% respondents are looking for property priced over Rs 1 crore, the highest among all cities surveyed. l Buyers working in IT sector comprise 15% of respondents with an HSI of 106 while 15% are self-employed with an HSI of

15 MICRO MARKET SUMMARY - MUMBAI l HSI rose by 1% when compared to a rise of 24% in the previous quarter (HSI 107) l Of the respondents 34% are from Western Suburbs of Mumbai (HSI 89) that witnessed a 7% decrease in HSI Q/Q. Central Line Mumbai, comprising 19% of respondents, witnessed a further 19% increase in HSI this quarter (114). Navi Mumbai witnessed a 5% decrease in HSI (115) and is the second most sought after area after Western Suburbs with 23% respondents preferring to buy a house in this location. Sentiment by Buyer Age Group: l year old comprise 38% of the respondents (HSI 105) followed by year old (26%; HSI 134). l Those over 50 years (12%) continue to be pessimistic with an HSI of 60. Sentiment by Buyer Constraint l Nearly 53% cite financial reasons (HSI 127) while the rest (HSI 84) cite market conditions for their property purchase decisions. As can be seen, there is a 33% variation in HSI between those citing financial reasons as against those citing market reasons for their home purchase decisions. Sentiment by Buyer Horizon l Almost 27% want to wait for a year or more (HSI 105) while 41% want to buy within the next six months (HIS 102). Sentiment by Buyer Property Preference l HSI for those who are planning to buy property as an investment is 124 while HSI for those who plan to buy as a place of residence (77%) is 102. l Almost 91% prefer flats (HSI 105) followed by 6% who prefer villas/row-houses (HSI 112) l Of those who already live in their own house (HSI 105) 36% are looking to buy while 44% of respondents currently live in rented accommodation (HSI 109). Sentiment by Buyer Budget l Of the buyers 22% are looking at properties within Rs lakh range (HSI 100) while 24% are looking to buy property within Rs 60 lakh to Rs 1 crore (HSI 98). l The self-employed (11%) are cautiously optimistic with an HSI of 105. IT sector which makes up 8% clocks an HSI of

16 MICRO MARKET SUMMARY - PUNE l HSI rose by 3% when compared to an increase of 9% in the previous quarter (HSI 125). l Of the respondents 41% are from West Pune (HSI 120) that increased by 9% Q/Q, 25% are from East Pune with an HSI of 116 while North Pune comprising 17% of the respondents witnessed a 3% decrease in HSI (146). Sentiment by Buyer Age Group: l year old comprise 46% of the respondents (HSI 131) followed by year old (23%; HSI 139). l Female respondents comprising 10% of total respondents are 31% more optimistic than their male counterparts (HSI 175). Sentiment by Buyer Constraint l Almost 55% cite financial reasons (HSI 139) while the rest (HSI 106) cite market conditions for their property purchase decisions. Sentiment by Buyer Horizon l Nearly 55% want to buy within the next six months (HSI 122) while 22% can wait for a year or more (HSI 110). Sentiment by Buyer Property Preference l HSI for those who are planning to buy property as an investment (29%) is 124 while HSI for those who plan to buy as a place of residence is 126. l Of the respondents 70% prefer flats (HSI 131) followed by 17% who prefer land (HSI 107) l Almost 35% already live in their own house (HSI 126) and are looking to buy while 53% of respondents currently live in rented accommodation (HSI 133). Sentiment by Buyer Budget l Of the buyers 30% are looking at properties within Rs lakh range (HSI 137) while another 30% are looking to buy property within Rs lakh range (HSI 125). l Of the respondents 35% belong to the IT sector (HSI 124) while 15% are from the manufacturing sector (HSI 152). 14

17 MICRO MARKET SUMMARY - BANGALORE l Bangalore continues to rise for the third quarter in a row, this time up by 2% (HSI 143), the highest among the 10 cities surveyed. l Nearly 37% respondents are from South Bangalore which saw a 13% increase in HSI (150) while 23% are from East and South- East Bangalore which witnessed a 6% drop in HSI (136). Bangalore North, comprising 28% of respondents also witnessed a slight drop of 2% in HSI (139). Sentiment by Buyer Age Group: l year old comprise 44% of the respondents (HSI 148) followed by year old (20%; HSI 122). l Of the respondents 13% are females with an HSI of 146. Sentiment by Buyer Constraint l Nearly 55% cite financial reasons (HSI 152) while the rest (HSI 132) cite market conditions for their property purchase decisions. l Almost 45% want to buy within the next six months (HSI 156) while 27% can wait for a year or more (HSI 146). Sentiment by Buyer Property Preference l HSI for those who are planning to buy property as an investment (30%) is 154 while HSI for those who plan to buy as a place of residence is 139. l Of the respondents 52% prefer flats (HSI 140) followed by 25% who prefer land (HSI 149). The remaining 23% prefer villas (HSI 144). l Of those who already live in their own house (HSI 149) 26% are looking to buy while 66% of respondents currently live in rented accommodation (HSI 139) and 8% live with parents/relatives (HSI 157). Sentiment by Buyer Budget l Of the buyers 28% are looking at properties within Rs lakh range (HSI 148) while 31% are looking to buy property within Rs lakh range (HSI 146). l Of the respondents 37% belong to the IT sector (HSI 144) while12% are from the manufacturing sector (HSI 159) 15

18 MICRO MARKET SUMMARY - CHENNAI l HSI rose by 7% when compared to a rise of 4% in the previous quarter (HSI 124). l Of the respondents 66% are from South Chennai (HSI 122) while 17% are North Chennai (HSI 113). Central Chennai, comprising of 10% of respondents saw an increase of 55% in HSI (146) this quarter. Sentiment by Buyer Age Group: l year old comprise 39% of the respondents (HSI 122) followed by year old (21%; HSI 120). Sentiment by Buyer Constraint l Nearly 61% cite financial reasons (HSI 129) while the rest (HSI 115) cite market conditions for their property purchase decisions. Sentiment by Buyer Horizon l Almost 31% are ready to wait for a year or more (HSI 130) while 45% want to buy within six months (HSI 113). Sentiment by Buyer Property Preference l HSI for those who are planning to buy property as an investment (29%) is 142 while HSI for those who plan to buy as a place of residence is 116. l Of the respondents 41% prefer flats (HSI 115) followed by 28% who prefer villas (HSI 143) while 23% prefer land (HSI 125). l Of those who already live in their own house (HSI 145) 33% are looking to buy while 55% of respondents currently live in rented accommodation (HSI 102) and 12% live with parents/relatives (HSI 164). Sentiment by Buyer Budget l Of the buyers 42% are looking at properties that are withing Rs lakh range (HSI 133) while 21% are looking to buy property within Rs lakh range (HSI 106). l Respondents belonging to the IT sector (HSI 90) are 20% while 14% belong to the manufacturing sector (HSI 105). 16

19 MICRO MARKET SUMMARY - HYDERABAD l HSI increased by 22% when compared to a decrease of 4% in the previous quarter (HSI 118). l Of the respondents 22% are from Central Hyderabad which witnessed a 54% increase in HSI (133) while 34% are from South Hyderabad which witnessed a 39% increase in HSI (124). North Hyderabad was the only pocket that witnessed a decrease of 13% in HSI this quarter (105). Sentiment by Buyer Age Group: l year old comprise 40% of the respondents (HSI 116) followed by year old (22%; HSI 116). Sentiment by Buyer Constraint l Almost 41% cite financial reasons (HSI 116) while the rest (HSI 120) cite market conditions for their property purchase decisions. Sentiment by Buyer Horizon l Nearly 42% want to purchase property within the next six months (HSI 128) while 30% are ready to wait a year or more (HSI 110). Sentiment by Buyer Property Preference l HSI for those who are planning to buy property as an investment (25%) is 118 while HSI for those who plan to buy as a place of residence is also 118. l Of the respondents 42% prefer flats (HSI 132) followed by 37% who prefer villas (HSI 112). l Of those who already live in their own house (HSI 125) 32% are looking to buy while 56% of respondents currently live in rented accommodation (HSI 119) and 12% live with parents/relatives (HSI 100). Sentiment by Buyer Budget l Of the buyers 32% are looking at properties that are less than Rs lakh range (HSI 113) while 29% are looking to buy property within Rs lakh range (HSI 113). Properties below Rs 20 lakh (HSI 113) comprise 19% of total respondents. l Of the respondents 23% belong to the IT sector (HSI 107) while 9% are self-employed (HSI 106). 17

20 MICRO MARKET SUMMARY - KOLKATA l HSI increased by 1% this quarter to 133 l Of the respondents (HSI 135) 40% followed by year old (22%; HSI 124). l 50 year and above who comprise 21% of respondents, the highest % to fall into this age group among all cities (HSI 138). Sentiment by Buyer Constraint l Almost 61% cite financial reasons (HSI 140) while the rest (HSI 122) cite market conditions for their property purchase decisions. Sentiment by Buyer Horizon l Nearly 40% want to purchase property within the next six months (HSI 134) while 29% are ready to wait a year or more (HSI 145). Sentiment by Buyer Property Preference l HSI for those who are planning to buy property as an investment (32%) is 139 while HSI for those who plan to buy as a place of residence is 130. l Of the respondents 74% prefer flats (HSI 135) followed by 12% who prefer villas (HSI 123). l Of those who already live in their own house (HSI 137) 38% are looking to buy while 39% of respondents currently live in rented accommodation (HSI 126). 22% live with parents/relatives (HSI 137). Sentiment by Buyer Budget l Of the buyers 40% are looking at properties that are less than Rs lakh range (HSI 138) while 18% are looking to buy property within Rs lakh range (HSI 128). Properties below Rs 20 lakh (HSI 133) comprise 26% of total respondents, the highest per cent among surveyed cities that falls in this property range. l Of the respondents 13% belong to the IT sector (HSI 107) while 12% are self employed (HSI 106). 18

21 MICRO MARKET SUMMARY - AHMEDABAD l HSI decreased by 13% to 86 as compared to an increase of 22% last quarter. Sentiment by Buyer Age Group: l year old comprise 50% of the respondents (HSI 86) followed by year old (16%; HSI 62). Sentiment by Buyer Constraint l Nearly 59% cite financial reasons (HSI 95) while the rest (HSI 73) cite market conditions for their property purchase decisions. Sentiment by Buyer Horizon l Almost 50% want to purchase property within the next six months (HSI 90) while 33% are ready to wait a year or more (HSI 76). Sentiment by Buyer Property Preference l HSI for those who are planning to buy property as an investment (26%) is 91 while HSI for those who plan to buy as a place of residence is 85. l Of the respondents 65% prefer flats (HSI 88) followed by 15% who prefer villas (HSI 86). l Of those who already live in their own house (HSI 97) 36% are looking to buy while 50% of respondents currently live in rented accommodation (HSI 90) and 14% live with parents/relatives (HSI 48). Sentiment by Buyer Budget l Of the buyers 32% are looking at properties that are within Rs lakh range (HSI 111) while 33% are looking to buy property between Rs lakh (HSI 73). 19

22 EXPLANATORY NOTE ON SURVEY l A total of approximately 2,000 buyers are surveyed every quarter in an online survey across 10 cities Mumbai, Delhi, Hyderabad, Pune, Noida, Gurgaon, Bangalore, Chennai, Ahmedabad and Kolkata (Last two cities added in Q3 2013). The aggregate HSI includes Ahmedabad and Kolkata beginning last quarter. The survey was conducted online in the months of July, Oct, Dec of 2013 and Mar and June of Fiscal year calendar is being followed for quarterly notations. We expect to conduct this survey regularly going forward. We will track respondent survey rates closely and document our findings with every survey. l We also rolled out a seller survey across the country to track seller sentiments and compare these with buyer sentiments beginning Q The questionnaire is similar to the buyer survey and tries to capture movement patterns across the country apart from basic demographics and housing sentiment. We plan to roll out the Seller survey along with the buyer survey each quarter. l A standard questionnaire was mailed out electronically to select members of Magicbricks portal based on rigorous criteria. Respondents include people from different backgrounds, income levels and have shown their intent about purchasing a house in the next 12 months. The survey is thus representative of the overall Indian residential real estate industry. l Respondents assess relative market conditions based on common knowledge and form price expectations for the next six months. l Sampling differences, difference in question wording and differences in response scaling make measuring based on surveys an inexact science, particularly when ordinal scales are used. Nevertheless, it appears that results, in general, fairly track other key results over the period observed. As more data is expected to be collected, we will also explore whether some of the survey s key metrics might serve as predictors of consumer behavior and as leading indicators of housing market conditions. INDEX METHODOLOGY l The IIMB-CRERI Magicbricks Index fills the critical gap in identifying and measuring changes in potential home owners expectations and decision making in the residential housing sector by quantifying their sentiments and tracking the results on a quarterly basis. The credibility of the study is enhanced given that it is being conducted by an independent third party research unit. l Diffusion Index methodology is used to compute the index. A score of 100 denotes neutral sentiment. A score above 100 denotes optimism and a score below 100 denotes pessimism. The scores can range from 0 to 200. l This quarterly barometer is expected to capture changing opinions of potential home buyers regarding housing prices. The index provides early information on potential homebuyers expectations and views regarding near term home price movements and their decision to buy property. 20

23 FUTURE AGENDA l Given the encouraging response rates so far, we plan to introduce buyer surveys to additional cities in the future quarters. The increased interest in the real estate sector is evident in the launch of some very innovative indices recently, case in point being the Housing Start-up Index recently launched by RBI and the Ministry of Housing and Urban Poverty Alleviation (MHUPA). We plan to study the correlation among the various housing indices and derive interesting insights in this sector that is on the path to attaining structure and logic. l Home buying not only involves the buyer and seller but also a host of other forces including financial institutions, local governments, central banks and global macro movements. The process of quantifying sentiments using diffusion index methodology leads to quick comparison across markets and buyer demography. The ultimate aim is the hope that this study will lead to optimal policy making that will aid home buyers and sellers and ensure a smooth transaction process in the residential real estate space. ABOUT IIMB-CRERI l Indian Institute of Management Bangalore-Century Real Estate Research Initiative (IIMB-CRERI) was set up through a grant from Century Real Estate who is one of the oldest and most respected companies in the real estate space in India. It is a dedicated research initiative to pursue scientific research on Indian real estate industry. It partners with industry/government organizations to collect data and develop research projects that are aimed to improve understanding of this vital sector of the economy. The initiative complements work at IIMB's other leading centres such as the Centre for Public Policy. As a leading international management school in India, IIMB has strong linkages to the corporate sector, CSOs and the government and its rigorous research projects are defined by structured analytical processes and constant engagement with market participants. IIMB CRERI Team Dr Venkatesh Panchapagesan (Chief Faculty Coordinator) Dr Madalasa Venkataraman (Lead Researcher) Ms Uma Sitaraman (Senior Research Associate) ABOUT MAGICBRICKS l Magicbricks.com is India's No 1 Property portal. With monthly traffic exceeding 6 million visits and with an active base of over 5 lakh property listings, Magicbricks provides the biggest platform for buyers and sellers of property to connect with each other in a clear and transparent manner. Our vision is to be a one-stop shop for property buyers and sellers. With this in mind, we have innovated on launching several product features, content and research services and in building of the largest audience pool. We are part of the Times of India Group, India's biggest Media Conglomerate. HSI Team Sudhir Pai, Business Head, Magicbricks.com E Jayashree Kurup, Head Content & Research, Magicbricks.com Rishab Jain, Manager, Content & Research, Magicbricks.com Layout Design: Harsha Khattar 21

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