Colliers Quarterly Q3 216 India Residential Property Market Overview 2 November 216 www.colliers.com/india
Contents India Transaction volume set to improve... 3 Mumbai QOQ increase in launches indicate a positive outlook... 4 Gurgaon Sentiment to remain cautious... 6 NOIDA Developers seeking alternative funding options... 8 Bengaluru Steady demand amidst cautious buyer sentiment... 1 Chennai End-user demand revival in the offing... 12 Pune Residential market aims to comeback... 14 [Type here]
Colliers Quarterly Q3 216 INDIA RESIDENTIAL 2 November 216 Transaction volume set to improve Surabhi Arora Senior Associate Director India The residential market appears to be coming out of the cycle of low confidence, low investment. Several factors such as the strong office market that indicate robust employment scenario, the festive season and lowering interest rates are likely to support housing market in coming months. We expect residential market to witness growth in most cities. Forecast at a glance Demand Demand shall continue to veer towards the affordable and mid-end segment establishments Supply Supply infusion expected in the form of new launches due to the upcoming festive season Should largely remain stable across major cities in India Rental Rate Likely to remain stable across micro markets in most cities Construction Government initiatives shall start taking effect and speed up the delayed projects Marginal increase in new launches; select cities witness revival Number of new residential launches recorded for Q3 216 in the top six cities in India (Bengaluru, Chennai, Pune, Mumbai, Noida and Gurgaon) were a little less than 25, units making it about 67, so far for the year 216. Residential market in the western cities bounced back and recorded maximum number of launches in Mumbai and Pune with 28% and 23% share of the total unit launches in Q3 216, respectively. They were followed by Bengaluru (17%), Noida (16%), Chennai (9%) and Gurgaon (7%). After almost three quarters, the Gurgaon and Noida residential market witnessed several new launches this quarter in the wake of upcoming festive season. As we entered into the festive season, developers continued to offer discounts, flexible payment plans and other incentives such as free parking and gold coins to promote sales. Although buyers have maintained a cautious approach, the number of enquiries have increased amidst improved sentiments owing to RERA and the upcoming festive season. However, buyer interest remained towards affordable and mid-end housing projects and we expect the trend to continue in subsequent quarters as well. We are approaching a favourable period for the residential market in India as the government and developers are working together to solve the prolonged issue of inventory overhang. The governments in most cities are expediting the implemention of RERA. Several courts have passed rulings in the favour of buyers enforcing accountability on developers with respect to delayed possessions in cities like Noida, Gurgaon and Mumbai. Developers experiencing cash crunch are looking for alternative methods of funding and private equity investments to complete delayed developments or refund buyers. As per our opinion, the India residential market, which is currently, end user driven has caught an eye of several institutional investors that are looking to buy stakes in cities like Noida, Pune and Mumbai. We can see signs of recovery in the residential market leading to an assertive scenario for buyers and developers alike going forward.
Colliers Quarterly Q3 216 MUMBAI RESIDENTIAL 2 November 216 QOQ increase in launches indicate a positive outlook Uttara Nilawar Manager Mumbai A marked increase in the number of new launches denotes a favourable outlook for the Mumbai residential market. With several redevelopment projects on the cards, we expect upcoming launches to fill in the gaps in mid-end housing demand. Forecast at a glance Demand High demand for mid-end affordable housing should prevail Supply Developers who have held off to take advantage of the festive season shall launch new projects soon Overall stable outlook; however, large ticket sized apartments may witness a marginal decline Rental Rate Rentals for high end properties shall decline marginally due to restricted budget of corporates and MNCs Construction Several construction projects may get stalled due to delay in approvals Number of new launches almost doubled since last quarter The Mumbai market witnessed improved sentiments and increase in the number of new unit launches this quarter. A quarter-on-quarter (QOQ) increase of around 7% was observed with a little less than 7, units launched, increasing the total number of units to 17,3 for 216. High end and luxury residential developments constituted almost 7% of the unit launches in suburban Mumbai. Mid end developments mostly prevailed in Navi Mumbai where homes are comparatively affordable. Almost 5-6% of the resale inventory in South Mumbai remains unsold this quarter despite the decrease in sale prices. The Thane market dominated with 41% of share in unit launches, followed by Western and Central suburbs with 19% of units launched in Goregaon, Andheri, Ghatkopar, Chembur, and Powai. These locations were followed by Navi Mumbai (12%), Central Mumbai (7%) and South Mumbai (2%) Market Trends Micro Markets (INR Per Sq Ft) QOQ% YOY% South Mumbai 47,5-68,5 % -1% Worli 46,6-58, % % Prabhadevi 46, - 55, % -1% Bandra 29, - 52,4-1% 1% Khar 26, - 356-1% 1% Santacruz 24,5-29,5 % 3% Juhu 27, - 32, % 2% Andheri 19, - 22, % -2% Powai 2, - 27,8 % 4% Thane 7, - 12, -5% - Navi Mumbai Prime Areas Navi Mumbai Emerging Areas 9, - 2, % - 5,5-1,5 7% - Note: Above values represent indicative selling price for premium properties in secondary market
Analogous to the trends across other main cities in India, the Mumbai market was also plagued with the issue of unsold inventory. Hence, prices have remained relatively stable in the Mumbai micro markets since the last few quarters. However, emerging areas in Navi Mumbai such as Kharghar, Ulwe, Kamothe and Dronagiri witnessed appreciation of around 7%. Buyer sentiment is skewing towards these locations due to their affordability quotient. Average Capital Value Trends INR per sq ft Note: Dotted lines in the chart above represent forecasted values Average Rental Values INR per sq ft per month 18 16 14 12 1 8 6 4 2 7, 6, 5, 4, 3, 2, 1, Q3 21 Q3 211 Q3 212 South Mumbai Prabhadevi Khar Juhu Powai Navi Mumbai - Prime Areas South Mumbai Worli Prabhadevi Bandra Khar Q3 213 Santacruz Q3 214 Juhu Q3 215 Q3 216 Q3 217F Q3 218F Worli Bandra Santacruz Andheri Thane Navi Mumbai - Emerging Areas Andheri Powai Thane Navi Mumbai - Prime Areas Navi Mumbai - Emerging As land is a scarce resource in suburban Mumbai, the Maharashtra government has veered its focus towards redevelopment projects. The Brihanmumbai Municipal Corporation s (BMC) Development plan department has so far sanctioned 7 redevelopment projects in South Mumbai and 17 projects in Mahim and Dadar. There has also been talk of opening up no development zones (NDZ s) for residential developments by the state government. In addition, the housing policy recently approved by the state government brings forward several lucrative opportunities for developers, primarily increased Floor Space Index (FSI) and development of lots instead of individual buildings. However, it is still uncertain if prices will be lowered by developers as several costs are yet to be factored in with respect to redevelopment projects. Although the Mumbai market is currently user driven, investor activities are also picking up. Sun AREA Property Partners, had invested about INR 135 crore (INR 1.35 billion) in Ekta Tripolis in Goregaon between 211 and 213. As per market sources, Sun AREA recently exited Ekta World s luxury residential project. Colliers View In the wake of the festive season, we are expecting several new launches by the end of October in Thane and Central suburbs (Powai and Kanjurmarg). Secondary sales will be affected as many developers are offering attractive discounts and flexible payment plans for under construction projects. Developers have started implementing norms set by the Real Estate (Regulation and Development) Act, 216 such as calculation of the carpet area as per these norms. Construction work has finally begun for the much awaited Navi Mumbai International Airport. However, in our opinion if the Navi Mumbai International Airport is stalled further, realty prices may witness a negative impact in the Navi Mumbai micro markets. The Mumbai market outlook looks optimistic as a mix of developments are expected in subsequent quarters. For more information: Sumit Jain National Director Sumit.jain@colliers.com Kunal Madhani Deputy General Manager Kunal.madhani@colliers.com Authors: Surabhi Arora Senior Associate Director Reseach Surabhi.arora@colliers.com Uttara Nilawar Manager Uttara.nilawar@colliers.com Copyright 216 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.
Colliers Quarterly Q3 216 GURGAON RESIDENTIAL 2 November 216 Sentiment to remain cautious Parul Bhargawa Senior Analyst Gurgaon Residential sales activities continue to sputter, with a handful of new launches even during the festive season. We expect demand should continue to be driven by end users and remain skewed towards completed projects at least in the short term. Mid-end luxury segment products are likely to see more demand from the growing number of working executives in the city. Forecast at a glance Demand Demand should remain concentrated in micro markets with ready supply Supply Number of new launches should remain restricted as developers will focus on completion of existing projects Should remain stable across micro markets due to reduced transaction volumes Rental Rate Should remain stable in most of the micro markets Construction Construction should pick up pace as heightened consumer activism and litigation is putting pressure on developers to deliver projects on time Investors remain at bay; few new launches in mid-end segment In the third quarter of 216, sales in the primary market remained weak, despite the start of the festive season. In view of the reduced demand, the city has witnessed the launch of about 1,7 new units this quarter, taking the YTD total to a little over 3,28 units. Most of the new projects were located in new sectors developing along Sohna Road and catering to the mid-luxury segment. These projects include Azalia by Supertech Developers and Siera 68 by M3M developers both located in sector 68, Sohna Road. AIPL Developers launched its mixeduse development project in Sector 66 with serviced apartments on the upper floors. Apart from this, Sobha Developers also launched the first phase of Sobha City Dwarka Expressway, which offered 2 and 3 BHK at a basic selling price in the range of INR 7,955 to 8,4 per sq ft. The secondary market gained some traction for ready to occupy properties. Tulip Infratech offered possession of Phase 1 of Tulip Violet project located in Sector 69, Sohna Road. This quarter, a few high value sale transactions, and corporate lease deals were concluded in super luxury projects such as DLF Aralias and Magnolias, which are located along Golf Course Road. Market Trends Micro Markets (INR Per Sq Ft) QOQ% YOY% Golf Course Road 11, 36, % % Sohna Road & Golf Course Extension 6,-14, 5% 9% DLF Phase 1 11,-13, % % Sushant Lok 14,-18, -2% 7% NH-8 1,5-18, 2% % Note: Above values represent indicative selling price for premium properties in secondary market
With the festive season round the corner, most developers were offering lucrative payment plans, cash discounts, and guaranteed possession plans. However, we noticed that buyer demand is skewed towards ready properties available at good prices. Average Capital Value Trends INR per sq ft 36, 3, 24, 18, 12, 6, Note: Dotted lines in the chart above represent forecasted values Average Rental Values INR per sq ft per month 6 5 4 3 2 1 Q3 21 Q3 211 Q3 212 Q3 213 Q3 214 Q3 215 Q3 216 Q3 217F Golf Course Road Sohna Road & Ext DLF Phase I Sushant Lok NH-8 Golf Course Road Sohna Road & Ext DLF Phase I Sushant Lok NH-8 Q3 218F remained largely stagnant in the quarter in most of the micro markets except Sohna Road, which has recorded a marginal QOQ escalation of 5%. However, this significant rise was primarly due to an increase in the prices of a few recently completed luxury projects such as Central Park Resorts in this vicinity, which are demanding above market prices. Rents remained stable on a QOQ basis in in most of the micro markets. This quarter, the Haryana government approved the new building code which allows purchasable FAR over the existing limits for residential plots. Apart from this,the development authority commenced work on the 37C- 37D road by demolishing seven buildings coming in its way. This move will augment connectivity of this area with other parts of Gurgaon via Gurgaon Pataudi Road and will be a huge relief to many residential projects in the area. Colliers View The festive season and attractive payment plans remained ineffective in bringing any cheer to Gurgaon residential market and new project launches have declined significantly. Considering the lesser number of projects in the pre-launch stage, new unit launches are likely to further decline in the next quarter. Capital values will remain under pressure in emerging locations like New Gurgaon, SPR and Dwarka Expressway while Golf Course Road, DLF Phase I, Sohna Road and other micro markets are likely to remain stable in short term. Going forward, we expect the concept of mixed-use developments and serviced apartments to gain traction, as there is high demand for such residences from executives working in multinational corporations and expatriates. For more information: Sumit Jain National Director Sumit.jain@colliers.com Avnish Yadav Deputy General Manager Avnish.yadav@colliers.com Authors: Surabhi Arora Senior Associate Director Surabhi.arora@colliers.com Parul Bhargava Senior Analyst Parul.bhargava@colliers.com Copyright 216 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.
Colliers Quarterly Q3 216 NOIDA RESIDENTIAL 2 November 216 Developers seeking alternative funding options Parul Bhargawa Senior Analyst Gurgaon We expect sales in secondary market in Noida to pick up in the coming quarters as a number of projects are on the verge of completion in the next six months. In the primary market, demand shall remain skewed towards projects of reputed developers with track record of delivering projects on time. Forecast at a glance Demand Should pick up in the upcoming festive season underpinned by lucrative offers and innovative payment plans Supply Number of new launches should come up primarily in mid and luxury segment by a few national level builders Shall remain stagnant in most of the micro markets in the short term Rental Rate Shall remain stable in most of the micro markets due to increase in supply Construction Should pick up pace as consumer activism and government intervention are pushing developers to seek alternative financing modes and deliver delayed projects. New launches remain concentrated at Expressway and greater Noida The residential market showed early signs of revival with approximately 4, new unit launches in Q3 216. Most of these projects were launched in newly developing sectors along Noida Expressway and greater NOIDA. Despite the fact that most of the demand is in mid-end segment, this quarter we witnessed launch of a luxury project in Sector 124 located along Noida-Greater Noida Expressway. The project was launched by ATS and Logix Developers that offer 4 and 6 BHK apartments at a basic selling price of INR 12, per sq ft. This makes it the most expensive project launched in this year so far. Besides this, Antriksh Group launched a residential project in Sector 15 offering villas, 2, 3 and 4 BHK units. Beside this, a couple of projects were launched in greater Noida West and Yamuna Expressway. In order to lure buyers during the festive season developers offered attractive subvention schemes, discounts, payment plans such as no EMI until possession, free parking, and gold coins. However, buyers remained cautious in their approach and were selecting projects from developers with proven track record of project deliveries and quality. Market Trends Micro Markets (INR Per Sq Ft) QOQ% YOY% Sector 44 7,4-9,5 % -16% Sector 92,93 6,5 9,5-6% 3% Sector 5 65-8 % -1% Sector 61,62 5,8 6,2 % -3% Sector 28,29,37 7,5 9,5 % % Sector 7 to 79 4,3-5,5-1% 8% Note: Above values represent indicative selling price for premium properties in secondary market
Rental and have remained largely stagnant in the quarter in most of the micro markets. Established sectors along Noida expressway witnessed about 6% decline due to increased supply of completed units in nearby vicinity. This has also put a pressure on rents in these sectors. Average Capital Value Trends INR per sq ft 14, 12, 1, 8, 6, 4, 2, Q3 21 Q3 211 Q3 212 Q3 213 Note: Dotted lines in the chart above represent forecasted values Average Rental Values INR per sq ft per month Q3 214 Q3 215 Q3 216 Q3 217F Sector 44 Sector 5 Sector 61,62 Sector 92/93 Sector 28,29,37 Sector 1 to 11 Sector 7 to 79 Q3 218F Amid heightened consumer activism on the issue of delay in possession of apartments, a lot of builders were seeking alternative source of funds from Non Banking Finance Companies (NBFCs) and private equity players and entered into strategic alliances with them. This quarter, Logix Group reported to raise about INR 4 crore (INR 4 billion) from Apollo Global Management in a structured finance transaction to complete the construction of its residential projects. Piramal Fund invested INR 2 crore (INR 2 billion) in already delayed luxurious residential project Prateek Edifice in Sector 17. Also, Saha Group raised INR 16 crore (INR 1.6 billion) from Kautilya Finance to expedite the construction of its ongoing projects and buy a land parcel in Noida. On the infrastructure front, NH-24 underpass connecting Noida Sector 62, 63 with Indirapuram got completed. This will ease traffic movement and enhance connectivity of areas in Noida, Delhi and Ghaziabad. This quarter, Greater Noida Development Authority asked the developers to open project escrow accounts to keep a check on diversion of funds. Noida Authority and Yamuna Expressway Authority are working on a comprehensive policy aimed at reviving stalled and sick projects. The UP government plans to form the Real Estate Regulatory Authority for the state by the end of November. Government intervention and court orders in favor of buyers will restore the much needed faith in the sector reeling under a slowdown since last three years. 3 25 Colliers View 2 15 1 5 Sector 44 Sector 5 Sector 61,62 Sector 92/93 Sector 28,29,37 We expect bulk of new launches to remain concentrated in the newly developing sectors along Noida- Greater Noida Expressway. Noida Expressway will continue to be dominated by luxury and mid luxury residential projects. Huge pile up of inventory both in primary and secondary markets should provide plenty of options and discounts in the festive season for buyers. We expect more private equity funding into the sector especially in distressed projects as developers are in a rush to complete stalled projects to avoid punitive clauses of Real Estate (Regulation and Development) Act. For more information: Sumit Jain National Director Sumit.jain@colliers.com Avnish Yadav Deputy General Manager Avnish.yadav@colliers.com Authors: Surabhi Arora Senior Associate Director Surabhi.arora@colliers.com Parul Bhargava Senior Analyst Parul.bhargava@colliers.com Copyright 216 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.
Colliers Quarterly Q3 216 BENGALURU RESIDENTIAL 2 November 216 Steady demand amidst cautious buyer sentiment Divya Grover Senior Manager Bengaluru Despite momentary civil unrest and the municipal corporation s drive to regularise construction, we are hopeful that the mid-end segment should continue to drive sales as the festive season approaches with developers offering various freebies and attractive payment plans amidst a soft home loan interest rates environment. Forecast at a glance Demand Should improve as builders are introducing lucrative deals to lure fence sitters Supply Oversupply situation in the primary market to continue in the upcoming quarter Should rationalize across micro markets barring far off northern peripherals which may see slight appreciation Rental Rate Likely to hold steady across micro markets New project launches plunge During Q3 216, Bengaluru noted nearly 4,3 new unit launches, totalling to about 21,8 new units YTD. The city witnessed about 63% QOQ decrease in new launches. This dip in the new launches was primarily attributed to the momentary civil unrest over Kaveri water issue between the state of Karnataka and Tamil Nadu. Also, many projects could not initiate construction and remained in the pre-launch stage due to delays in getting necessary approvals from government departments in the wake of Bruhat Bengaluru Mahanagar Palike s (BBMP) recent city wide initiative to tackle the encroachment of storm water drains (rajkaluves) and the lake beds. With end user affordablity being the prime criteria, almost 96% new unit launches were restricted to the mid-end segment barring the launch of a high-end apartment complex in the residential neighbourhood of J.P. Nagar. Of the total new units launched, Hope Farm Junction (25%), Whitefield (2%) and Hennur Road (15%) emerged as the top three locations garnering maximum launches. Other peripheral locations such as Banashankari 6th stage, Kanakpura Road and Bannerghatta Road together accounted for rest of the share. Market Trends Micro Markets (INR Per Sq Ft) QOQ% YOY% Central 21,-31, 4% 8% Cooke Town 7,7-15, 6% 6% Jayanagar 8,7-1,7 2% 2% Sadashivanagar 9,2-15,2 2% 2% Airport Road 8,8-11,2 3% 11% Indiranagar 8,2-13, 1% 6% Bannerghatta Road 4,7-8,7-1% 3% Kormangala 6,8-1,7-3% 3% Whitefield 4,4-8,7-3% 3% Yelahanka 4,2-1,2 3% -4% Note: Above values represent indicative selling price for premium properties in secondary market
Average Capital Value Trends INR per sq ft 32, 28, 24, 2, 16, 12, 8, 4, Note: Dotted lines in the chart above represent forecasted values Average Rental Values INR per sq ft per month 8 7 6 5 4 3 2 1 Central Q3 21 Q3 211 Q3 212 Central Jayanagar Airport Road Bannerghatta Road Whitefield Cooke Town Jayanagar Sadashivanagar Q3 213 Airport Road Q3 214 Indiranagar Q3 215 Q3 216 Q3 217F Cooke Town Sadashivanagar Indiranagar Koramangala Yelahanka Bannerghatta Road Koramangala Whitefield Q3 218F Yelahanka The festive season has triggered a slew of soft launches in the market and developers were offering freebies such as gold coins, lucky draw for car, no pre EMI for first two years (as part of 2:8 schemes) and buyback plans to gain traction among prospective buyers. Demand remained concentrated in locations near employment hubs for mid-segment products ranging in the price bracket of INR 6 lakhs 65 lakhs. Capital values appreciated in the range of 1 to 6% across micro markets barring a few locations such as Whitefield and Bannerghatta Road, which witnessed slight correction in prices. In the coming quarter, we expect, capital values to remain stable due to continuous addition of new supply in the market. The city continued to witness completion of new projects in Northern and north-western suburbs of Hennur Main Road and Rajaji Nagar along with southern favourites such as Bannerghatta Road and Electronic City Phase-I. The completion of new projects kept the rents stable across micro markets. Completion of a few office IT park provided an impetus to the rental market in the Sarjapur Main Road belt. Colliers View We expect the next quarter to bring the much needed vitality back in Bengaluru s residential sector as sales should revive in the upcoming festival season. There is a sizeable pipeline of new projects that are likely to get launched in the coming quarters. Projects launched in proximity to employment hubs at right price points should continue to attract buyers. However, delay in reaching consensus over the implementation of Real Estate (Regulation and Development) Act, 216 in Karnataka and objections raised by the Governor may inevitably affect buyers sentiments negatively in shortterm. For more information: Sumit Jain National Director Sumit.jain@colliers.com Aakanksha Anand Senior Manager Aakanksha.anand@colliers.com Authors: Surabhi Arora Senior Associate Director Surabhi.arora@colliers.com Divya Grover Senior Manager Divya.grover@colliers.com Copyright 216 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.
Colliers Quarterly Q3 216 CHENNAI RESIDENTIAL 2 November 216 End-user demand revival in the offing Divya Grover Senior Manager Bengaluru Given a sizeable number of new launches and stable end-user demand for residential products in the 2 and 2.5 BHK configurations for the affordable and midsegment, we expect the primary residential market to continue its revival as the festive season approaches. Forecast at a glance Demand Shall revive for mid-segment products with above mentioned ticket sizes Supply Steady inflow of new launches shall continue albeit at a slow pace May remain steady across micro markets. However, some high-end locations may witness marginal price dip Rental Rate Likely to remain stable till the end of the year due to current availabilities Construction Developers to remain focused on current completions New launches remain stable In Q3 216, nearly 2,3 new residential units were launched in the primary market; a marginal uptick of 2% over the previous quarter which took the YTD total to about 5,5 units. As the end-user preference is skewed towards mid-segment products, we noted more than 62% units being launched in this segment in the current quarter. The central government s efforts to promote and incentivize construction of affordable housing has spurred the supply in this segment and Chennai witnessed about 31% new launches in this segment in this quarterly review. However, due to a lull in demand for high-end segment products where current price points are largely outside the affordability bracket of buyers, only 7% new units were launched in this segment. Avadi (31%), Anna Nagar (15%), Vanagaram (14%), Egattur (11%) and Singaperumalkoil (9%) witnessed the maximum number of new launches. Other locations such as GST Road, Mount Road, Medavakkam and Vengaivasal together constituted the remaining 2% of new unit launches as some small projects with less than 1 units were launched at these locations. Market Trends Micro Markets (INR Per Sq Ft) QQ% YOY% Boat Club 26,-35, % % Nungambakkam 19,-26, % -2% Alwarpet 18,5-26, % -3% Besant Nagar 13,5-17,5 % -2% Adyar 13,-17, % % Anna Nagar 13,5-17, % 3% T. Nagar 13,5-2,5 % 5% Velachery 7,-1, % 3% Sholinganallur 4,8-5,95 % -4% Siruseri 3,99-5,5 % -1% Note: Above values represent indicative selling price for premium properties in secondary market
In the primary market, the weighted average price for all units noted a marginal quarterly dip of 5% and stood at INR 5,3 per sq ft indicating price rationalization and further reducing the gap between price points in primary and secondary markets. Whereas, prices in secondary market remained stable in most of the micro markets. Average Capital Value Trends INR per sq ft 32, 28, 24, 2, 16, 12, 8, 4, Note: Dotted lines in the chart above represent forecasted values Average Rental Values INR per sq ft per month 8 7 6 5 4 3 2 1 Q3 21 Q3 211 Q3 212 Q3 213 Q3 214 Q3 215 Q3 216 Q3 217F Q3 218F Boat Club Nungambakkam Anna Nagar Adyar Besant Nagar T. Nagar Alwarpet Velcachery Sholinganallur Siruseri Boat Club Nungambakkam Anna Nagar Adyar Besant Nagar T. Nagar Alwarpet Velachery Sholinganallur Siruseri Rents remained largely steady in all micro-markets except R.A. Puram/Alwarpet where a quarterly 8% rental dip was noted due to low demand from senior corporate executives and guest workers.capital values remained stable during this quarter as the prevailing end-user sentiment remains muted. However, on an annual basis, Nungambakkam, Besant Nagar, Alwarpet/R.A. Puram noted 2-4% capital value correction in high-end segment due to weak demand scenario. Velachery, T. Nagar and Anna Nagar, on the other hand noted 3-5% price appreciation in the same period due to limited supply in secondary market. To safeguard consumers interests, The Madras High Court issued a blanket ban against registration of plots and houses in unapproved housing layouts and conversion of agricultural land for any non-agricultural purpose across the state. Only approved plots by Directorate of Town and Country Planning (DTCP) with certificates can now be used for registration of sale deeds of such plots. Colliers View Going foward, the outlook remains positive for the residential sector as several developers have started planning townships in far off peripherals such as Perambur which will infuse quality supply in the north Chennai belt. Additionally, upcoming Special Economic Zone near the 2 feet Thoraipakkam-Pallavaram Road coupled with the ongoing residential construction on this belt will help provide a fillip to this location and also raise its profile as a destination for both mid and high-end products. Capital values and rents are expected to remain stable across micro markets. However, erstwhile high-end locations such as Alwarpet, R.A. Puram may note some price correction in secondary market due to prevailing high prices which has resulted in a lull in enduser demand. We anticipate that the recent regulations regarding registration of DTCP approved authorized plots should be beneficial for end-users in the long run. This may temporarily impact some projects in the soft launch stage and put a break on new launches in the next quarter. On an overall basis, improved market sentiments and this policy change will curtail launches. For more information: Sumit Jain National Director Sumit.jain@colliers.com Authors: Surabhi Arora Senior Associate Director Surabhi.arora@colliers.com Divya Grover Senior Manager Divya.grover@colliers.com Copyright 216 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.
Colliers Quarterly Q3 216 PUNE RESIDENTIAL 2 November 216 Residential market aims to comeback Uttara Nilawar Manager Mumbai In spite of the decrease in the number of launches this quarter, prospects look favourable for the Pune residential market. Developers are moving their focus towards mid-end and affordable segment projects to tap into the existing demand among buyers. Inquiries from investors and homebuyers alike are on the rise, signalling a recovery across the Pune micromarkets Forecast at a glance Demand Healthy demand for ready to move in and near possession properties shall continue Supply New launches on the slowdown due to unsold stock but substantial new supply is expected in the mid-end segment Overall stable outlook but capital values may rise for select micro markets in the short term Rental Rate Rents set to remain stable despite robust demand due to continual supply addition Construction Increase in input costs may push prices upwards and cause constraints resulting in construction delays Healthy demand among end users kept market active Pune remained one of the better performing residential markets in the country in terms of residential sales and new launches. Information Technology, education, and manufacturing companies offering significant employment opportunities kept the end user demand active in the city. There was about 2% quarter-onquarter (QOQ) increase in the number of units launched this quarter with little over 5,7 units, making it about 12,9 so far in 216. Most projects launched were in the range of INR 5-7 lakhs (INR 5-7 million) catering to mid-end segment offering spacious configurations to match the widespread demand dynamics. More than half of the unit launches were in Northwest Pune (57%) primarily at Hinjewadi and Baner locations. Peripheral locations such as Bavdhan and Bhugaon in the west comprised 25% of the unit launches, while 16% of the launches were concentrated in Keshavnagar, Wagholi, and 2% in Kharadi. Baner, Hinjewadi and Kharadi have emerged as favoured residential catchments due to the adjoining employment hubs. Market Trends Micro Markets Kalyani Nagar/Viman Nagar/Kharadi Deccan/Camp/ Boat Club Magarpatta/ Hadapsar Baner/Hinjewadi/Wa kad/pashan Kothrud/Bavdhan/W ajre NIBM/Undri/ Kondhwa Pimpri/Chinchwad/C hakan (INR Per Sq Ft) QOQ% YOY% 5,8-14,5-9% -13% 7, - 15, % -4% 4,8-8, 2% 2% 5, - 9,5 1% 1% 7, - 12, 4% 4% 4,4-6,25 % -5% 4,7-5,8 % -4% The above values represent indicative selling price for premium properties in secondary market
Pune witnessed stability in terms of both rental and capital values in most of the vicinities barring a few outliers. For example, a few locations such as Bavdhan experienced appreciation of 4% and 8% respectively in capital as well as rental rate. On the other hand, QOQ decline was observed in Viman Nagar, Wadgaon Sheri and Kharadi as several developers are offering discounts in the primary markets putting a downward pressure on the secondary markets as well. Average Capital Value Trends INR per sq ft 14, 12, 1, 8, 6, 4, 2, Note: Dotted lines in the chart above represent forecasted values Average Rental Values INR per sq ft per month 3 25 2 15 1 5 Q3 21 Kalyani Nagar/Viman Nagar/Kharadi Q3 211 Deccan/Camp/ Boat Club Q3 212 Q3 213 Q3 214 Q3 215 Q3 216 Kalyani Nagar/Viman Nagar/Kharadi Deccan/Camp/Boat Club Magarpatta/Hadapsar Baner/Hinjewadi/Wakad/Pashan Kothrud/Bavdhan/Wajre NIBM/Undri/Kondhwa Pimpri/Chinchwad/Chakan Magarpatta/Had apsar Baner/Hinjewad i/wakad/pasha n Kothrud/Bavdha n/wajre NIBM/Undri/Kon dhwa Q3 217F Q3 218F Pimpri/Chinchw ad/chakan At one point, the Pune real estate market witnessed a balance between the investor and end user demand but the balance has been skewed towards the end user since the last few quarters. However, the current market undercurrent has piqued an interest among several international investors. Altico Capital, a non banking financial company (NBFC) recently closed a deal worth INR 3 crore (INR 3 billion) with Kumar Urban Ltd (KUL) that involves funding for a residential township, KUL Ecoloch located near Hinjewadi. As per market sources, US based Portman Holdings recently exited Kolte Patil s project Margosa Heights in Pune. Infrastructure developments are on a priority for Pune authorities with approval of high capacity mass transit route (HCMTR) connecting 6 arterial roads, upcoming metro rail project and the proposed international airport at Purandar. Residential and commercial districts both should benefit from numerous initiatives to minimize traffic congestion in the city. Colliers View The Pune market shall continue to be dominated by the mid-end and affordable housing units equipped with basic modern amenities like club house, swimming pool, landscaped garden and open space. We expect to see some demand in the luxury segment at Kharadi and Baner locations. Prices are expected to remain stable in the short term. However, there might be appreciation in the long run owing to increasing input costs to developers coupled with increasing demand from buyers outside the city and NRI investors. Pune has all the favourable economic and demand drivers firmly set in place due to the combined effect of automobile manufacturing, technology, services and hospitality sectors. The integrated township culture of Pune offering a wide bandwidth of budget categories has also generated tremendous interest among investors. As buyer interest is also rejuvenating, developers should gear up for the upcoming favourable climate. Pune residential market is on a path to recovery and its future outlook looks promising. For more information: Sumit Jain National Director Sumit.jain@colliers.com Hiren Bulsara Assistant Manager Hiren.bulsara@colliers.com Authors: Surabhi Arora Senior Associate Director Surabhi.arora@colliers.com Uttara Nilawar Manager Uttara.nilawar@colliers.com Copyright 216 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.
554 66 countries on 6 continents United States: 153 Canada: 34 Latin America: 24 Asia : 39 ANZ: 192 EMEA: 112 $2.5 billion in annual revenue 2 billion square feet under management 16, professionals Primary Authors: Surabhi Arora Senior Associate Director +91 124 456 75 surabhi.arora@colliers.com Divya Grover Senior Manager divya.grover@colliers.com Uttara Nilawar Manager uttara.nilawar@colliers.com Parul Bhargava Senior Analyst parul.bhargava@colliers.com Amit Oberoi National Director Knowledge Systems amit.oberoi@colliers.com For : Sumit Jain National Director sumit.jain@colliers.com Colliers International Technopolis Building, 1st Floor, DLF Golf Course Road, Sector 54, Gurgaon - 122 2 TEL +91 124 456 75 About Colliers International Group Inc. Colliers International Group Inc. (NASDAQ: CIGI; TSX: CIG) is an industry leading global real estate services company with more than 16, skilled professionals operating in 66 countries. With an enterprising culture occupiers, owners and investors worldwide. Services include strategic advice and execution for property solutions; appraisal, valuation and tax consulting; customized research; and thought leadership consulting. help clients accelerate their success. Colliers has been ranked among the t International Association of Outsourcing Professionals Global Outsourcing for 11 consecutive years, more colliers.com Copyright 216 Colliers International. ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.