Residential Property Research and Forecast Report

Transcription

1 Residential Property Research and Forecast Report February

2 INDIA RESIDENTIAL Economic Barometers INDICATORS The general residential buyer has maintained a cautious approach in 2015, however, an increase in enquires has been witnessed towards the end of the year in select cities. We recorded launch of nearly 120,000 units across seven major cities. Despite, decrease in home loan interest rates and various incentives being offered by developers, the transaction volumes in residential real estate continued to remain on lower side across cities. One of the primary reasons of this restraint is increasing delay in the existing under construction projects, quality issues, and higher price points etc. ¹ Source: Government of India, Colliers International India Research Return on Alternative Investments INDICATORS QoQ % CHANGE Colliers View In 2016, overall property markets are expected to edge further into recovery. There are several factors that can be considered as key drivers for the sector in 2016, such as decreasing interest rates and boosted employment scenario due to increase office absorption. Capital values across cities are expected to remain stable due to huge supply pipeline. Economic Indicators ³ ² Source: Government of India, Colliers International India Research ¹SBI home loan rate for loan up to INR 30 lakhs ²SBI fixed deposit rate for a period of more than one year & amount below INR 1 crore ³Realty index is a free float weighted index, comprised of real estate development companies in BSE 500 Index Source: Government of India, Colliers International India Research

3 MUMBAI RESIDENTIAL Market Indicators Relative to prior period F 2017F Capital Value Rental Value New Projects Project Completions Overall the residential market in Mumbai has seen a slight recovery towards the end of the year, which is evident in the increased number of enquiries. However, the transaction volume has not picked up much. In the primary market, the sales were majorly driven by the mid-range and affordable projects located in Western Suburbs and peripheral areas of Mumbai. In the secondary market, a few premium residential apartments were bought by celebrities and industrialists in South Mumbai and Western Suburbs. Market Trends MICRO MARKETS CAPITAL VALUES* (INR Per sq ft) QoQ % CHANGE YoY On the supply side, due to high unsold inventory levels and overall lower transaction volumes, developers remained cautious in launching new projects. Moreover, an uncertainty loomed over the Mumbai development plan We recorded, the launch of approximately 35,000 new units this year, which was about 40% less than the last year s new launches. In the premium residential category, majority of the projects were launched in micro markets such as Worli, Prabhadevi, Bandra West and BKC Annexe, in the price range of INR 23,500-27,300 per sq ft. ; in the mid-segment projects were launched in locations such as Kandivali (E), Kanjurmarg (E), Goregaon (E), Thane, Borivali, Vikhroli, Bhandup and Chunabhatti, in the price range of INR 10,500 15,000 per sq ft; peripheral markets of Thane and Navi Mumbai witnessed project launches in the range of INR 4,000 to 7,000 per sq ft. * Indicative asking price for premium properties in secondary market

4 During 2015, only a few premium projects were completed in Bandra East and Prabhadevi locations during the year. Average Capital Value Trends Despite lower transaction volumes, the capital values in secondary market increased by 6% YoY across major micro markets, barring few locations such as Breach Candy, Napeansea Road, Peddar Road, where capital values remained stable during the year. In 2015, the city witnessed various private equity transactions such as Altico Capital, IIFL Real Estate Fund and Primal Fund have invested in premium residential projects located in Mazgaon, Chandivali and BKC micro markets respectively. Apart from this, in major land deals, Wadhwa Group bought 6.5 acres from Gopal Narang and Rajan Raheja and Tata Housing Development acquired a 7 acre plot from KEC International located in Pokharan Road 2, Thane. Average Rental Values Colliers View In primary market, while absorption in the luxury segment is expected to remain under pressure due to high price points, the pre-launches in the mid and lowend segments will continue to witness traction at the induction prices. In the secondary market, premium locations continued to remain in demand including, South Mumbai, Prabhadevi, Lower Parel, Parel, Juhu Andheri and Bandra. Overall capital values are expected to increase marginally in select micro markets in the mid term. Select New Projects Launched in 2015 Project Name Location Developer Name Tentative Possession* Rate (INR Per Sq ft)** Notes: * As mentioned by developer or secondary market sources ** Base Selling price as quoted by developer s website or secondary market sources ^ Base Selling price varies for different configurations Research & Forecast Report February 2016 <<India>> Colliers International

5 Delhi RESIDENTIAL Market Indicators Relative to prior period F 2017F Capital Value Rental Value New Projects Projects Completed Following the last year s trend, prime residential market in Delhi remained lack luster in 2015, transaction volumes for prime residential properties remained low in both primary and secondary market. In the primary market, only a few small-scale projects were launched by local level developers in premium locations such as Vasant Vihar, Westend, Jorbagh and Anand Niketan. These projects are currently in the range of INR 45,000 65,000 per sq ft. Apart from this, we have seen initial level of activities in newly developing L- Zone under land pooling policy. This area has started developing high interest levels among buyers due to the affordability and address of Delhi. Market Trends MICRO MARKETS CAPITAL VALUES* (INR per sq ft ) QoQ % CHANGE YoY On the supply side, the city witnessed completion of a few small-scale residential redevelopment projects such as Metro Buildtech, Windshield, Uppals, Salcon and Sanskar Homes were ready for possession in Shanti Niketan and Vasant Vihar micro markets. The preference of top executive of embassies and large MNCs to stay near their offices located in secretariat zone, kept the leasing market upbeat. The micro markets such as Defence Colony, Vasant Vihar, Chhatarpur, Diplomatic Enclave, Malcha Marg, Jorbagh, Safdurjung Enclave, Westend and Shanti Niketan were the most preferred micro markets this year. * indicative asking price for premium properties in secondary market

6 On a yearly basis, capital values for prime residential properties declined in most of the micro-markets barring few premium micro markets such as Prithviraj Road, Aurangzeb Road, Chanakya Puri, Golf Links, Jor Bagh, Sunder Nagar, Shanti Niketan and Westend, where capital value increased on an average by 7% YoY. Also rents remained under pressure this year and posted a average 2% YoY decline. Average Capital Value Trends In a major policy level change, under review of Master Plan of Delhi 2021, the Ministry of Urban Development has approved a proposal to allow building residences in hotels in Delhi. After this change get approved by the Development Control Regulations for Commercial Centers, Hotels will be allowed to use up to 40% of the floor area ratio for commercial offices, retail and residential purposes. However residential units, can be built only on 20% of the FAR. Average Rental Values Colliers View In 2016, we anticipate a stable scenario in Delhi, with less new prime projects expected to launch. Capital values are expected to remain stable in most of the micro markets, except Vasant Vihar, Greater Kailash, Westend where few redevelopment projects will command a premium over the prevailing market rates due to their newly build configuration and amenities, like car parking and open area. Rents will remain under pressure and landlords will be more accommodating in lease terms in order to retain current tenants and secure new ones. Select Ongoing Projects of 2015 Project Name Location Developer Name Tentative Possession* Rate (INR Per Sq ft)** Notes: * As mentioned by developer or secondary market sources ** Base Selling price as quoted by developer or secondary market sources ^ Base Selling price varies for different configurations Research & Forecast Report February 2016 <<India>> Colliers International

7 Gurgaon RESIDENTIAL Market Indicators Relative to prior period F 2017F Capital Value Rental Value New Projects Project Completions 2015 remained a dull year for Gurgaon residential market. Transaction volumes and number of new launches both have declined, as the investors choose to remain at bay in anticipation of further decrease in prices. In view of the reduced demand, the city has witnessed launch of a little over 10,000 new units this year, which was about 45% less than the last year. A majority of these projects were launched in micro markets such as Sector 53, Sector 79, Sector 88A & B and Sector 68, in the price range of INR 6,000 6,600 per sq ft. ; in Sector 85 and Sector 92 in New Gurgaon, the projects were launched in the price range of INR 4,400 5,500 per sq ft. A few projects were also launched in Sohna Region, a newly developing sector, in the affordable range of INR 2,600 to 3,600 per sq ft. Market Trends MICRO MARKETS CAPITAL VALUES* (INR Per sq ft) QoQ % CHANGE YoY In the primary market, the sales were primarily concentrated in New Gurgaon Sectors such as Sector towards south and Sectors 81 to 95 in west, also some traction was observed in upcoming Sohna region. Apart from this, the projects launched under affordable housing projects scheme in the last two years have observed decent absorption. * Indicative asking price for premium properties in secondary market There are a number of projects lying ready at Dwarka Expressway and New Gurgaon Sectors. Due to connectivity issues the area still has to see proper habitation. However, we noticed, end-users started living in few sectors adjoining NH-8 in new Gurgaon.

8 On the leasing side, Golf Course Road and M G road remained as the most preferred locations by expats of various MNCs and large corporates, mainly due to better connectivity and availability of premium residential space at best prices. Average Capital Value Trends This year, the State government has come up with the New Integrated Licensing Policy (NILP). In this policy, the government introduced the concept of Transferable Development Rights (TDR) for the first time in Haryana. This policy is expected to unlock land in the existing sectors in Gurgaon and will allow farmers or land owners with small piece of land to voluntarily monetise their land at current market price. The capital values on an average posted a decline of 1% on yearly basis, however, a few locations such as Golf Course Road and NH 8 increased by 2 7% YoY. Colliers View In 2016, we expect investors and occupiers will relook at the residential real estate sector and transaction volumes to grow from the current levels. This will be backed by various infrastructural upgrades happening across the city and the Government initiatives like Haryana Global Investment Summit, which is further expected to infuse foreign investment in the city. Segment wise, mid-range and affordable schemes projects will continue to see traction. Capital values are expected to remain under pressure in emerging locations like New Gurgaon, SPR and Dwarka Expressway, due to huge supply pipeline; while Golf Course Road, DLF phase micro market, Sohna Road and other micro markets are likely to remain stable in mid term. Average Rental Values Select New Projects Launched in 2015 Project Name Location Developer Name Tentative Possession* Rate (INR Per Sq ft)** Notes: * As mentioned by developer or secondary market sources ** Base Selling price as quoted by developer s website or secondary market sources ^ Base Selling price varies for different configurations Research & Forecast Report February 2016 <<India>> Colliers International

9 NOIDA RESIDENTIAL Market Indicators Relative to prior period F 2017F Capital Value Rental Value New Projects Project Completions 2015 started on a cautious note when due to National Green Tribunal s (NGT) order several completed projects which were awaiting possession could not get occupation certificate from the authority within the eco-sensitive zone around the Okhla Bird Sanctuary. The investor sentiment has abated towards the end of the year where the NGT issue got resolved. The decision has put a ray of hope for buyers as well as developers whose projects were stuck along the Noida Expressway. Despite the resolution of the NGT issue in the later half of 2015, only a handful of new projects were launched towards the end of Noida Expressway. The city witnessed launch of only 6,300 units this year, which was about 36% less than the last year s new launches. Market Trends MICRO MARKETS CAPITAL VALUES* (INR Per sq ft) QoQ % CHANGE YoY Micro market wise, a few premium projects were launched in sector 128 and 132, in the price range of INR 8,650 9,090 per sq ft. In the mid range category, projects were launched in newly developing Sector 150 which is located on NOIDA Expressway and in Sector 79. These projects were priced in the range of INR 4,000 4,600 per sq ft. All of these projects are expected to complete in * Indicative asking price for premium properties in secondary market During 2015, various mid segment projects were completed in micro markets like Sector 74, 75, 76, 78 and 137. These were priced in the range of INR 4,400-6,000 per sq ft in the secondary market.

10 Low sales transaction volumes has impacted the capital values in the secondary market for under construction projects and deals were available on discount in select projects. However, sectors such as Sector 100 to 110 and Sector 70 to 79 witnessed an average increase of 4% YoY due to completion of a few residential projects. Average Capital Value Trends In 2015, NOIDA authority has hiked the circle rates by 5 10%. With this, Sector 15A and Sector 44 have become the costliest sectors with a circle rate of INR 90,500/Sq.mtr., which was earlier INR 86,000/ Sq.mtr. This year private equity fund ICICI Prudential made an exit from Logix Blossom Green for about INR 62 crores and invested INR 130 crore in ATS Infrastructure villas based projects located in Sector 150. Apart from this, Supertech Ltd. has raised INR 100 crore from Indiabulls Real Estate Fund to develop its various projects located in Delhi NCR region. Average Rental Values Colliers View The market is likely to regain momentum only if, it sees completion of projects as expected; falling interest rates, coupled with an upbeat economic backdrop, which will support the overall sentiments. We expect the completion of a number of projects along NOIDA Expressway and Sector 70 to 79. Huge upcoming inventory will continue to put pressure on capital values. Rents are also likely to come under pressure due to increased supply in the market. Select New Projects Launched in 2015 Project Name Location Developer Name Tentative Possession* Rate (INR Per Sq ft)** Notes: * As mentioned by developer or secondary market sources ** Base Selling price as quoted by developer s website or secondary market sources ^ Base Selling price varies for different configurations Research & Forecast Report February 2016 <<India>> Colliers International

11 CHENNAI RESIDENTIAL Market Indicators Relative to prior period F 2017F Capital Rate Rental Rate New Projects Construction In 2015, Chennai s residential property market showed signs of demand revival as enquiries for micro markets such as Velachery, Sholinganallur and Mount-Poonamallee High Road (MPR) gained momentum. Demand from endusers concentrated primarily for projects nearing completion or available for immediate possession. However, developers refrained from introducing any new schemes as they waited for fence-sitters to rethink home purchasing decisions with the arrival of the new year. Select micro markets faced a momentary dip in capital values in the aftermath of recent floods. Market Trends MICRO MARKETS CAPITAL VALUES* (INR Per sq ft ) QoQ % CHANGE YoY Nearly 12,000 new units were launched in 2015 as several locations along Old Mahabalipuram Road (OMR) witnessed launches in mid segment. Almost 40% of total units launched in 2015 were concentrated in the post- Sholinganallur toll plaza belt consisting of locations such as Kelambakkam, Navalur and Padur. Most projects launched in this belt were in the price range of INR 3,500 5,000 per sq ft. More than 95% of total units launched in 2015 catered to the mid-end segment indicating the change in developer s product segmentation owing to the demand in this category. Nungambakkam and Kotturpuram witnessed limited launches in high-end segment in the price range of INR 14,500 21,000 per sq ft.* * Indicative asking price for premium properties in secondary market

12 Limited number of ready to move in units came to the market as only a handful of projects witnessed completion in locations such as GST Road, Porur, Navalur and Thoraipakkam amongst others. Prominent high-end completions included Atlantic by Ceebros (Egmore) and Luz Amor by Appaswamy Real Estates Limited (Mylapore) both of which offered units in the price range of INR 14,000-16,000 per sq ft. Average Capital Value Trends Capital values in Nungambakkam and Adyar dropped by 9-15% as landlords/developers reduced pricing to attract buyers for these premium locations. Capital values in Sholinganallur, Besant Nagar and Alwarpet, too, witnessed an annual 2-3% downtick due to dwindling demand and low enquiries. Rental values in Adyar and Besant Nagar dipped by 17% annually from peak values. Corporation of Chennai has finalized T Nagar for Smart City Challenge Mission Proposal. This may push capital values upwards as the project aims to decongest and resolve traffic and parking woes for residents. Colliers View Demand for residential real estate is expected to remain stable during the first half of 2015 due to the upcoming Tamil Nadu Assembly elections. However, the second half of 2016 may witness demand revival owing to the impending budget and positive macro economic indicators. Expansion by corporate occupiers and strengthening office leasing coupled with fast-tracking of Metro Rail Phase II construction may give a fillip to residential pockets along these corridors. Micro markets such as Nungambakkam and Alwarpet/R A Puram may witness moderate capital value appreciation due to steady demand over the year. Rental values are expected to remain stable in Average Rental Values Select Ongoing Projects of 2015 Project Name Location Developer Name Tentative Possession* Rate (INR Per Sq ft)** Notes: * As mentioned by developer or secondary market sources ** Base Selling price as quoted by developer or secondary market sources ^ Base Selling price varies for different configurations Research & Forecast Report February 2016 <<India>> Colliers International

13 BENGALURU RESIDENTIAL Market Indicators Relative to prior period F 2017F Capital Rate Rental Rate New Projects Construction During 2015, Bengaluru s residential property market witnessed the launch of nearly 22,000 new residential units. Nearly one third of the total units launched were concentrated in the southern and south-eastern belt comprising locations such as Sarjapur Road, Electronic City and Bannerghatta Road. All launches in these locations catered to the mid segment category as developers launched new projects due to increased enquiries from both end-users and investors. Additionally, the high office absorption by IT-ITeS sector is another factor which boosted the demand for new residential supply near these prime commercial hubs. Market Trends MICRO MARKETS CAPITAL VALUES* (INR Per sq ft) QoQ % CHANGE YoY Locations in North Bengaluru, such as Hebbal, Hennur Road and Thanisandra Road accounted for 15% of total launched this year, out of which 70% belonged to the mid segment category. Hebbal witnessed the launch of a high-end township from a reputed developer comprising more than 1000 units in totality. Projects in mid segment were launched in the range of INR 3,900 6,500 per sq ft and are expected to complete by Prominent project completions in 2015 included, Nitesh Ceasers Palace on Kanakpura Road and Purva Midtown Residences on Old Madras Road. Both these projects cater to mid segment apartment formats. * Indicative asking price for premium properties in secondary market

14 Capital values in Sadashivnagar appreciated annually by 14% annually due to lack of land parcels for future development. Kormangala and Bannereghatta Road too witnessed an uptick of 3-4% in capital values due to availability of good social infrastructure and connectivity to various IT parks. Rental values remained stable across micro markets. Average Capital Value Trends Bangalore Metro Rail Corporation (BMRCL) is planning to raise INR 12,000 crore from domestic and foreign financial institutions to fund the second phase of Metro project. Phase II will include both extension of current route as well as two new lines between RV Road - Bommasandra and between Gottigere - Nagawara. For the second phase, the corporation has also started land acquisition on Mysore Road, Kanakpura Road and Whitefield for extension of east-west and north-south corridors.. Average Rental Values Colliers View Availability of quality residential products coupled with steady demand from end-users and investors, will auger well for the residential sector in Emerging micro markets in North Bengaluru such as Hebbal, and Thanisandra Road coupled with Panathur-Varthur Road in eastern quadrant of the city are expected to lead the influx of new residential supply. Whitefield, Outer Ring Road and Sarjapur Road will continue to witness high residential demand. Capital values in these locations may appreciate marginally over the year. However, capital values in other micro markets may remain stable due to availability of abundant supply in both primary and secondary markets. Select Ongoing Projects of 2015 Project Name Location Developer Name Tentative Possession* Rate (INR Per Sq ft)** Notes: * As mentioned by developer or secondary market sources ** Base Selling price as quoted by developer or secondary market sources Research & Forecast Report February 2016 <<India>> Colliers International

15 PUNE RESIDENTIAL Market Indicators Relative to prior period F 2017F Capital Value Rental Value New Projects Project Completions Year 2015 concluded on a cautious note in Pune, especially from the sales side. The transaction volumes declined, and there was a marginal decline in new launches as well. Premium projects were unable to attract buyers this year and large share of overall transaction volume was contributed by mid range and affordable category projects. Micro markets such as Baner, Hinjewadi and Wakad have witnessed good traction. An increased office uptake from IT/ITeS occupiers and improved connectivity via Mumbai Pune expressway made a strong case for West Pune micro markets for residential properties. Capital Values MICRO MARKETS CAPITAL VALUES* (INR Per sq ft) QoQ % CHANGE YoY This year about 32,000 new units were launched, which was about 4% less than the last year s new launches. In the premium residential category, majority of the projects were launched in micro markets such as Koregaon Park, Sopan Baug, Baner and Kothrud in the price range of INR 9,000-16,000 per sq ft. ; in the mid-segment projects were launched in locations such as Kharadi, Hinjewadi, Viman Nagar, Wakad, Tathawade, NIBM and Mundhwa, in the price range of INR 5,000 8,000 per sq ft. Emerging locations such as, Dhanori, Undri and Tingere Nagar witnessed project launches in the range of INR 4,000 to 4,700 per sq ft. * Indicative asking price for premium properties in secondary market

16 This year a number of mid range projects saw completion located in Hadapsar, Kondhwa, Balewadi, Baner, Pisoli, Wakad, Sus, Undri, Handewadi, Mohammadwadi, Wanwarie, Pimple Nilakh and Pimple Saudagar micro markets. Average Capital Value Trends The capital values on an average posted a decline of 3% on a yearly basis, however, a few micro markets like Magarpatta, Hadapsar, Baner, Hinjewadi, Wakad, Pashan, Kothrud, Bavdhan and Wajre were remained stable. In 2016, Pune witnessed various private equity investments and exits such as, HDFC PMS exited from seven projects; various projects of Marvel Realtors and ASK Property Investment Advisors exited from two residential projects in Pune, namely Serano by Amit Enterprises at Baner and Skyone by Paranjape Scheme's at Model Colony. Apart from this, in an another transaction, Xander Advisors India has invested around INR 280 crore in Kumar Urban Development s residential proposed project at Karve Road in central Pune. Average Rental Values Colliers View We expect, increased demand in residential market in The strong office uptake from IT/ITeS sector in 2015 is expected to bring more employment to the city and will result in demand creation for the residential properties. Developers will continue to supplement demand via launching more new projects and completing their existing ventures. Capital values are likely to remain stable in almost all the micro markets, due to huge supply in the pipeline. Select New Projects Launched in 2015 Project Name Location Developer Name Tentative Possession* Rate (INR Per Sq ft)** Notes: * As mentioned by developer or secondary market sources ** Base Selling price as quoted by developer s website or secondary market sources ^ Base Selling price varies for different configurations Research & Forecast Report February 2016 <<India>> Colliers International

17 countries on 6 continents United States: 140 Canada: 31 Latin America: EMEA: 108 Primary Authors: Surabhi Arora Associate Director Research surabhi.arora@colliers.com Sachin Sharma Manager Research sachin.sharma@colliers.com Divya Grover Senior Manager Research divya.grover@colliers.com Amit Oberoi National Director Valuation & Advisory Services & Research amit.oberoi@colliers.com $2.3 billion in annual revenue 1.7 billion square feet under management 16,300 professionals For Residential Services: Sumit Jain National Director Residential Services & Corporate Finance sumit.jain@colliers.com Arvind Kapoor Director India Operations, Residential Services arvind.kapoor@colliers.com Colliers International Technopolis Building, 1st Floor, DLF Golf Course Road, Sector 54, Gurgaon TEL About Colliers International colliers.com 2016