4qcy10 india office market view

8/3/2019 4QCY10 India Office Market View

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www.cbre.co.in Fourth Quarter 2010

© 2010, CB Richard Ellis, Inc.

India Office

Economic Overview

The economy continues to ride the high

growth curve, with the Central Statistical

Organization (CSO) pinning the GDP

growth rate for quarter end September at

8.9%, compared to 8.9% in the previous

quarter and 8.6% in quarter ending

March. The GDP is expected to rise to

more than 9% in 2010-11, largely on

the back of accelerating consumption,investments and healthy growth in

services, manufacturing and agriculture

sectors.

Demand

Economic recovery rejuvenated expansion

plans of corporates across various

industry sectors in 2010. New economy

sectors like IT/ITeS, Telecommunications,

Pharmaceuticals, Manufacturing, Biotech,besides Banking and Financial Services

were the most active across the country.

Healthy pre-commitments and large

scale transaction activity contributed

to developers launching new projects

in suburban locations. The National

Capital Region, Bangalore, Hyderabad

and Mumbai led the country in spatial

absorption, with a total of more than 32

million sq ft being absorbed across thetop 7 cities in the year 2010. The fourth

quarter witnessed further reduction in

vacancy in the CBDs in all major cities,

as occupiers (largely non-IT) preferred

central location for Grade A as well as

Grade B spaces. However, vacancy levels

increased in suburban destinations (led

by Gurgaon, Noida, GST Road, Ambattur,

Thane and Navi Mumbai, amongst others)

largely due to a huge supply pipeline

amidst a gradually recovering demand.

Supply

Rising demand levels, positive economic

outlook and prospects for strata sale led

many debt ridden developers to launch

new projects in the suburban and emerging

locations across major cities like NCR,

Mumbai, Bangalore and Chennai in 2010.

The momentum picked pace particularly

in NCR and Mumbai, consequently there

was a huge supply influx in these twomajor cities. The year 2010 witnessed

addition of more than 55 million sq ft of

office space in the top 7 cities, across

IT, commercial and SEZ segments, with

pan India office stock rising to more than

280 million sq ft. It is anticipated that an

estimated 55-60 million sq ft is lined up to

become complete in the next two years.

More than 60% of the upcoming supply

is concentrated in the three big marketsof NCR, Mumbai and Bangalore, almost

70% of which is IT dominated (STPI / IT

Parks/ SEZs). However, it is also expected

that some developers might postpone

or pull back from their plans of bringing

supply into the market in the next few

quarters, as existing supply (with high

vacancy levels) provides a strong

competition to their projects.

Indicator Trends

Rental values have been rising steadily in

the CBDs in 2010, banking on resurgent

demand and declining vacancy levels,

amidst negligible supply additions. The

demand for quality CBD space continues

to rise in major cities like Delhi and

Mumbai, which is escalating developer

expectations. However, absence of

adequate levels of Grade A space in CBD is

also making few occupiers move towards

Quick Stats

Rental Movement from last

Quarter

National Capital Region

CBD

Secondary Market

Mumbai

CBD

Alternate Business District

Bangalore

CBD

Peripheral Business District

Chennai

CBD


Hyderabad

CBD

Surburban Areas

Pune

CBD


Kolkata

CBD




© 2010, CB Richard Ellis, Inc. F o u r t h Q u a r t e

r 2 0 1 0

the suburb locations, resulting in rental stagnation

in the fourth quarter. Rental values across suburbs

have largely been suppressed due to large supply

and increasing vacancy levels. However, suburbs like

Gurgaon have witnessed rental appreciation in 2010 in

certain pockets like MG Road and Golf Course Road

due to high demand and low supply of quality space.

While yields have shrunk and capital values haverisen in 2010, it is anticipated that the suburban rental

spectrum would continue to remain under supply

pressures in the coming few quarters as well.

NCR

MARKET SUMMARY

Leasing activity remained active in the Central

Business District (CBD) during this quarter. As

occupiers continued to evolve strategies to locate

in a centralized location like Connaught Place, the

lack of Grade A office space led to an increased

demand for Grade B space. This resulted into an

upward movement in the lease rentals in Grade

B buildings. The increase in rentals was further

accelerated by the ‘bullish’ sentiment of small

strata owners who demonstrated little flexibility

during commercial negotiations.

Office space in the Secondary Business District

(SBD) of Nehru Place continued to witness increase

in demand due to improved connectivity and

corrected rental values. Whilst no major transaction

was reported in the present quarter, some of the

existing tenants are under negotiation for expanding

space within Grade A developments such as IFCI

Tower and Eros Corporate Tower.

The Saket District Centre witnessed negligible

transaction activity due to low demand for office

space in this retail dominated destination. Lack of

leasing activity resulted into a negligible change in the

rental values in the fourth quarter. With commercial

demand being dominated by Nehru Place and Jasola,

landlords in this location are expected to be flexible

during commercial negotiations.

As anticipated, Jasola District Center emerged as

the ‘Corporate Destination’ with increased demand for

both small and large office space. Though the present

quarter did not contribute much to the total absorption

of almost 80,000 sq ft in the year 2010, the average

rental values moved up by almost 15% over the last

quarter.

Whilst year 2010 illustrated positive signs of revival in

terms of increased velocity of transactions, demand

in the peripheral market of Gurgaon remained under

constant pressure due to oversupply situation. The

fourth quarter witnessed some rental increments

in corporate office space on MG Road and Golf

Course Road. These are locations with low supply

and increasing demand, which is propelling rental

values northwards. However, oversupplied locations

such as Sohna Road, parts of NH-8 and the Extended

Golf Course Road witnessed vacancy and rental

pressures. This variation in rental movement across

micro markets in Gurgaon led to a muted average

rental increment across the suburb.

Noida is increasingly attracting interest of prospective

office space occupiers (predominantly in the IT/ITeS

segments) and witnessed absorption of 0.2 million

sq ft and 0.3 million sq ft in the IT/ITES and SEZ

segments in Q4 2010. The micro market is still fraughtwith excess supply and therefore no significant rental

movement is expected in the near future.

Market Outlook

India office market will continue to be dictated by the

demand-supply dynamics in different micro markets

of the city, each inching on a different trajectory,

whilst being governed by economic growth and

corporate expansion plans. Transaction volumesand consequently absorption levels are expected to

increase. Further rental appreciation in CBD (prime

city) in a short to medium term cannot be ruled out;

rest of the region, especially suburbs could witness

over supply, hence, rents might remain stable or even

witness marginal correction in a short to medium term.

However, this rental correction would be largely supply

driven and might not be as steep as witnessed post

the downturn in 2009.

RENTAL MARKET INDICATORS

Sub-market Average Rentin Dec 10 (INR/

sq ft/month)

Average Rentin Sept 10 (INR/

sq ft/month)

CBD (ConnaughtPlace) Grade A

250 250

CBD (Connaught

Place) Grade B

145 135



F o ut h Q u ar t er 2 0 1 0


I n d i a Of f i c e

MAJOR LEASING TRANSACTIONS

Tenant Building, Location Approx. Size(sq.ft.)

Barclays Advant Business Park, Noida 30,000

Sapient Green Boulevard, Noida 30,000

Canara-HSBC

Unitech Trade Centre,Gurgaon

34,000

I Yogi DLF Building 6, Gurgaon(SEZ)

48,000

John Keils DLF Building 6 , Gurgaon(SEZ)

48,000

AkzoNobel DLF Building 5, Gurgaon 50,000

Steria Unitech Infospace , Noida(SEZ)

250,000

RENTAL VALUE TRENDS

0

50

100

150

200

250

300

Q1

2009

Q2

2009

Q3

2009

Q4

2009

Q1

2010

Q2

2010

Q3

2010

Q4

2010

R e n t ( I N R p e r s q . f t . p e r m o n t h )

Timeline

CBD (Connaught Place) Secondary market (Nehru Place) Secondary market (Jasola / Saket) Gurgaon Noida

CAPITAL VALUE TRENDS

0

5000

10000

15000

20000

25000

30000

35000

40000

Q1

2009

Q2

2009

Q3

2009

Q4

2009

Q1

2010

Q2

2010

Q3

2010

Q4

2010

C a p i t a l V a l u e s ( I N R p e r s q . f t .

)

Timeline

CBD (Connaught Place) Secondary market (Nehru Place) Secondary market (Jasola / Saket) Gurgaon Noida

Market Outlook

Revival of corporate expansion plans resulted

in 2010 enhanced transaction volume across

various micro markets. In the coming few

months, supply is expected to see a significant

increase on account of renewed construction

activitiy and rental movement would be dictated

by the supply – demand dynamics in each

specific micro market.

MUMBAI

Market Summary

The Central Business District (CBD) of Nariman

Point witnessed limited activity in comparison to

other micro markets. The year 2011 is likely to witness

a few more occupiers moving from this micro market

towards the Alternate Business District (ABD) and

Extended Business District (EBD). This move would

be on account of presence of quality office space

and improving infrastructure support in these micro

markets. Meanwhile, Express Tower, undergoing

refurbishment to absorb demand for Grade A space,

has been witnessing occupier interest. However,

substantial Grade A demand continue to move

towards the Bandra Kurla Complex or Lower Parel,

Worli.

The Extended Business District (EBD) of Lower

Parel saw rental values dipping by almost 3 - 4%

in the fourth quarter. This was largely because of a

voluminous supply pipeline (almost 3.43 million sq ft

of ready supply lined up in Lower Parel) in 2011. In

anticipation of this, developers have reduced rental

quotes to lease out the existing stock and reduce

vacancy pressures. On the other hand, the EBD of Worli witnessed an increase in the average rental

values by almost 2 - 3% due to limited supply in this

micro market.

The Alternate Business District (ABD) of Bandra

Kurla Complex (BKC) witnessed limited activity, due

to limited supply this quarter; however, demand for

corporate space in this micro market remains high.

More than 2 million sq ft of fresh supply is slated to

hit the market in 2011, which is likely to result into

Secondary market(Nehru Place)Grade A

150 150

Secondary market(Jasola) Grade A

115 100

Secondary market(Saket) Grade A

133 133

Gurgaon Grade ACommercial

70 65

GurgaonGrade A IT

48 45

NOIDA Grade A IT 30 30




r 2 0 1 0

a further increase in transaction activity compared to

2010. Rental valuess appreciated by 4%, q-o-q.

The Secondary Business District (SBD) continued

to attract companies that prefer main city location at

affordable rental pricing. Due to the traffic congestion

on the main Andheri Kurla Road and construction

of the metro, tenants are increasingly showing

preference for options located close to the Western

Express Highway.

The Peripheral Business District (PBD) of Powai

witnessed healthy absorption this quarter, due to an

almost 0.3 million sq ft lease finalized by JP Morgan.

Ready supply is limited in this micro market and

majority of the stock is IT driven. Supreme Business

Park, a Grade A IT park in Powai, which has already

witnessed a high degree of pre-commitments, would

add approximately 0.5 million of supply to this market

in 2011.

The Navi Mumbai and Thane micro markets

witnessed an increase in queries and occupier

interest in the IT/ ITES space. The Mindspace SEZ

in Navi Mumbai continued to attract corporates as it

is currently the only operational SEZ in the city with

space coming online in the next 6 months.



sq ft/month)


sq ft/month)

CBD (NarimanPoint, Fort, CuffeParade) Grade A

300 300

CBD (NarimanPoint, Fort, CuffeParade) Grade B

200 200

EBD ( Lower Parel)Grade A

160 165

EBD (Worli,Prabhadevi)Grade A

265 260

ABD (Bandra KurlaComplex, Kalina)Grade A

285 275

ABD (Bandra KurlaComplex, Kalina)Grade B

190 180

SBD (Andheri, VileParle, Jogeshwari)Grade A

120 115


Tenant Building, Location Approx. Size(sq.ft.)

Religare Bandra Kurla Complex 24,000

FLSmidth iThink, Thane 38,133

Tata MotorsFinance Limited

iThink, Thane 43,245

ANZ Grindlays Prabhadevi 50,000

HDFC Standard

Life Insurance

Lodha Excelus,

Mahalaxmi,Lower Parel

95,013

Tata Capital iThink, Thane 128,394

JP Morgan Powai 350,000

RENTAL VALUE TRENDS

0

50

100

150

200

250

300

350

400

Q1

2009

Q2

2009

Q3

2009

Q4

2009

Q1

2010

Q2

2010

Q3

2010

Q4

2010

R e n t ( I N R p e r s q

. f t . p e r m o n t h )

Timeline

C BD (N ar im an Poi nt, For t, Cu ff e Par ad e) EBD ( Lo we r Pa rel )

EBD (Worli, Prabhadevi) ABD (Bandra Kurla Complex, Kalina)

SBD (Andheri, Vile Parle, Jogeshwari) PBD (Malad)

PBD (Powai, Vikhroli) PBD (Thane, New Mumbai)

SBD (Andheri, VileParle, Jogeshwari)Grade B

85 80

PBD (Malad)Grade A

65 65

PBD (Powai,Vikhroli) Grade A

85 85

PBD (Thane, NewMumbai) Grade A

45 40


0

5000

10000

15000

20000

25000

30000

35000

Q12009

Q22009

Q32009

Q42009

Q12010

Q22010

Q32010

Q42010


)

Timeline

CBD (Nariman Point, Fort, Cuffe Parade) EBD (Lower Parel) EBD (Worli, Prabhadevi) ABD (Bandra Kurla Complex, Kalina)

SBD (Andheri, Vile Parle, Jogeshwari) PBD (Malad) PBD (Powai, Vikhroli) PBD (Thane, New Mumbai)






Market Outlook

Transaction activity and absorption levels are

expected to continue to improve across micro

markets in 2011 as well. Rental values should

firm up in central locations, however might

face some vacancy pressure in suburbs which

could potentially get alleviated by the expected

accelerated leasing velocity.

BANGALORE

Market Summary

The Central Business District (CBD) of MG Road,

Richmond Road, Residency Road and Lavelle

Road witnessed an increase in level of enquiries and

closure of some mid-sized transactions. Absorption

was estimated at 0.28 million sq ft. Further, with

corporates pre-committing office spaces in the under

construction projects, the vacancy dropped to 3-4%

during the end of year 2010.

On account of increase in demand, low vacancy

levels and absence of any new projects getting

commissioned, rental values for second generation

space are expected to move northward in the coming

months. Overall 0.82 million sq ft was absorbedduring the year in this micro market.

The Extended Business District (EBD) of Indira

Nagar, Koramangala, Old Madras Road and CV

Raman Nagar witnessed no significant activity due

to non availability of commercial space for most part

of the year. During Q4 2010, around 25,000 sq ft of

space became available in the non IT segment and

absorption has been recorded at 0.29 million sq ft

predominantly in second generation space. Due to

scarcity of quality space, rentals increased by 15%,q-o-q. Vacancy level was estimated at around 3-4%.

This micro market witnessed an overall absorption

of almost 0.6 million sq ft in 2010. Due to the non

availability of large and contiguous spaces, build-to-

suit pre-commitments to the extent of 850,000 sq ft

were made in this micro market.

The South Bangalore micro market of Bannerghetta

Road, JP Nagar, Jayanagar and Mysore Road

witnessed quite a few significant transactions owing

to an expanding occupier base and educational

institutes expanding their spread across the city.

Limited supply in CBD and EBD markets and

attractive commercial terms also contributed to rise

in transaction activity. Total office space absorption

in 2010 has been estimated at 0.84 million sq ft,

with the rentals showing no significant variation.

Approximately 0.50 million sq ft has been pre-

committed as a built-to-suit by a large occupier in this

micro market.

The Outer Ring Road (ORR) stretch between KR

Puram Junction and Sarjapur Road witnessed closure

of a large number of leasing transactions. The micro

market witnessed the absorption of almost 0.14 million

sq ft of STPI space and another 0.80 million sq ft of

SEZ space during the fourth quarter. With vacancy

levels (4 – 5%) witnessing a sharp decline, rentalvalues are expected to continue to remain buoyant

over the coming few months. The rentals in ORR

increased by almost 4 - 5%, q-o-q. New supply is only

expected to be available around the end of 2011 or

early 2012. Proposed enhancement of infrastructure

and favorable commercial terms has ensured that

this market is high on the radar of corporate houses.

During the year, this micro market saw an overall

uptake of almost 2.2 million sq ft of SEZ and STPI

space.

The Whitefield micro market also witnessed an

increase in absorption, which stood at almost 0.50

million sq ft, due to the attractive rental offering

coupled with non availability of ready space along

the ORR stretch. Despite encouraging market activity,

with some existing corporates expanding their

presence in the market, rentals continued to remain

stable due to supply pressures.

Whitefield witnessed an overall absorption of almost2 million sq ft in 2010. In addition there was a pre-

commitment for built-to-suit of 0.50 million sq ft which

is quite significant for this micro market. Electronic

City witnessed existing occupiers leasing almost

0.12 million sq ft of office space during this quarter.

Completion of the elevated highway eased the

accessibility of this micro market significantly. This

micro market witnessed the lowest absorption in the




r 2 0 1 0

city for the year at 0.50 million sq ft, primarily due to

lack of new entrants evaluating this region.

The North Bangalore micro market did not see

any major leasing activity due to the non availability

of ready to move in space. However, interest levels

have remained robust with corporates evaluating this

micro market for their expansion/consolidation and

long term growth plans. Corporate occupiers have

pre-committed to large built-to-suit space in excess

of a million sq ft in this micro market.



sq ft/month)


sq ft/month)

CBD (MG Road,

Residency Road)Grade A

74 74

CBD (MG Road,Residency Road)Grade B

60 57

EBD (Koramangala,Indiranagar) Grade A

55 48

EBD (Koramangala,Indiranagar) Grade B

42 42

Outer Ring RoadGrade A

42 40

Outer Ring Road

Grade B

36 32

Whitefield, ElectronicCity Grade A

24 24

South BangaloreGrade A

37 37

North BangaloreGrade A

44 42

Industrial Grade 20 20


Tenant Building, Location Approx. size

(sq.ft.)Repucom Prestige Omega,

Whitefield24,000

C-Bay Systems AKR Tech,Park,Off Hosur Road

36,000

Intuit Pritech Park,ORR 41,000

Hinduja Global Village, MysoreRoad

45,000

Wells Fargo Bagmane WTC, ORR 55,000

First Source Pritech Park, ORR 63,000

Swiss RE Vaswani Centrapolis,CBD

110,000

RENTAL VALUE TRENDS

0

10

20

30

40

50

60

70

80

Q1

2009

Q2

2009

Q3

2009

Q4

2009

Q1

2010

Q2

2010

Q3

2010

Q4

2010


Timeline

CBD (M G Ro ad , Ri ch mo nd Ro ad , Resi den cy Ro ad ) EBD (Ko ra ma ng ala , I nd ira nag ar ) O ut er Ri ng Ro ad

PBD (Whitefield, Electronic City) South Bangalore North Bangalore


0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Q1

2009

Q2

2009

Q3

2009

Q4

2009

Q1

2010

Q2

2010

Q3

2010

Q4

2010


)

Timeline

CBD (MG Ro ad , Ri ch mo nd Ro ad , Resi den cy Ro ad ) EBD (Ko ra ma ng al a, I nd ira nag ar ) O ut er Rin g Ro ad

PBD (Whitefield, Electronic City) South Bangalore North Bangalore

-

-

-

-

-

Market Outlook

Overall absorption for the year 2010 across micro

markets has been an approximate 9 million sq

ft, which was an increase of almost 40% year-

on-year. Some of the major corporate occupiers

who have committed to large spaces during the

year are HP, IBM, Accenture, Capgemini, TCS,

SwissRE, JP Morgan, Schneider, Wells Fargo,Deloitte, Siemens and Volvo. There has been a

significant improvement in market activity and it

is expected that micro markets like Whitefield,

Outer Ring Road and North Bangalore will

continue to witness sustained interest by

corporate occupiers in 2011 as well.

Infrastructure initiatives like the MRTS, signal

free Outer Ring Road are likely to further propel

the market.

Siemens Prestige Alecto,Electronic City

120,000

Wipro Pritech Park, ORR 135,000






CHENNAI

Market Summary

The Central Business District (CBD)

encompassing areas of Anna Salai, T Nagar,

RK Salai, Alwarpet, Nungambakkam witnessed

notable improvement in demand predominantly for

small and medium size office spaces. Almost 84,000

sq ft of fresh supply was released into this micro

market, while absorption of close to 0.15 million sq

ft was witnessed in Q4 2010. The overall vacancy

level in this micro market continued to remain in a

range of 5 - 6%. Rental values have also remained

stable as compared to the previous quarter.

The Off / Non CBD micro market of MRC Nagar,

Guindy and Taramani witnessed absorption of

almost 0.12 million sq ft this quarter. This micro

market has seen some level of rationalization in

rental values in a range of 1- 2%, primarily due to

limited activity levels as compared to the immediate

suburban micro markets. On the supply side,

around 125,000 sq ft was introduced into the market.

Vacancy level remained constant at 3 - 4%.

During this review period, the Suburban Business

District (SBD) including areas such as Velachery,Perungudi, Mount Poonamallee Road witnessed

maximum leasing activity. Occupier interest in SEZ

developments have contributed to a significant

rise in absorption level which was recorded at 0.95

million sq ft. In the SEZ segment, approximately

0.70 million sq ft was added to the stock. Currently,

vacancy has been estimated in the range of 5 - 7%.

The oversupply situation in the Peripheral Business

District (PBD) of Perungalathur, Sholinganallur,

Siruseri, Ambattur and GST Road kept rental

values under pressure. During this quarter, an

additional 1.07 million sq ft of fresh supply was

introduced into this micro market. Low demand

levels kept the absorption at 85,000 sq ft, even as

vacancy level touched a high of 18 - 20%.



sq ft/month)


sq ft/month)

CBD (Anna Salai,Nungambakkam,RK Salai, T Nagar,Egmore, Alwarpet)Grade A

62 62

CBD (Anna Salai,Nungambakkam,RK Salai, T Nagar,Egmore, Alwarpet)Grade B

46 46

Off CBD (Guindy,Kiplauk, Taramani,Adyar, Anna Nagar)Grade A

43 44

Suburban BusinessDistrict (Velachery,Perungudi, MountPoonamallee Road)

Grade A

35 35

PeripheralBusiness District(Perungalathur,Sholinganallur,Siruseri, Ambattur,GST Road) Grade A

24 24


Tenant Building, Location Approx. size(sq.ft.)

Bank OfTokyo Seshachalam Building 12,800

Prodapt Prince Infocity ll 33,000

WNS DLF IT Park, Manapakkam 110,000

L&T Infotech DLF IT Park, Manapakkam 150,000

Zoho DLF IT Park, Manapakkam 180,000

CTS DLF IT Park, Manapakkam 200,000

RENTAL VALUE TRENDS

0

10

20

30

40

50

60

70

80

Q1

2009

Q2

2009

Q3

2009

Q4

2009

Q1

2010

Q2

2010

Q3

2010

Q4

2010

R e n t ( I N R p e r s q . f t . p e r m o

n t h )

Timeline

CBD (AnnaSala i, Nungambakkam, RKSala i, TNagar, Egmore, A lwarpet) Of f CBD (Guindy, Kip lauk, Taramani, Adyar , Anna Nagar)

SuburbanBusinessDistrict(Velachery, Perungudi, MountPoonamallee Road) PeripheralBusinessDistrict(Perungalathur, Sholinganallur, Siruseri, Ambattur, GSTRoad)




r 2 0 1 0

Market Outlook

Market sentiment does seem rejuvenated in

view of the absorption trend and given the

existing enquiry levels and demand pipeline,2011 could witness a further increase in

transaction velocity. However, a large supply

pipeline (especially in the suburban markets)

requires developers to act with caution on any

proposed rental increments.

HYDERABAD

Market Summary

The Central Business District (CBD) comprising

areas of Begumpet, Somajiguda and parts of

Banjara Hills, continued to witness demand for

fully fitted out office spaces. Rental values for this

micro market were observed to be marginally higher

as observed in early 2010, with limited supply of

furnished spaces and no addition of fresh supply to

the commercial stock. Vacancy level was observed to

be at approximately 4 - 5%.

Office leasing activity remained largely inactive inthe non-CBD micro market of Himayatnagar and

Ameerpet.

The IT Corridor consisting of Madhapur, Kondapur,

Gachibowli and Nanakramguda remained the most

dynamic and preferred micro market in the city, the

enhanced level of enquiries for office space in both

SEZ and non SEZ segments leading to gradual

exhaustion of all available supply. Vacancy currently

stands at 6-7%. Fresh supply expected to supplement


0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

Q1

2009

Q2

2009

Q3

2009

Q4

2009

Q1

2010

Q2

2010

Q3

2010

Q4

2010


)

Timeline

C BD ( An na Sa la i, N u ng am ba kk am , R K Sa la i, T N ag ar , Eg m or e, A l wa rp et ) O f f CB D ( G ui nd y, K i pl au k, T a ra m an i, A d ya r, A n na N ag ar )

Suburban Bus inessDist ric t (Ve lachery, Perungudi , MountPoonamal lee Road) Per iphera lBusinessDis tr ict (Perungalathur , Shol inganallur, S iruser i, Ambat tur , GSTRoad)

-

-

-

the existing stock by the first quarter of 2011 stands at

almost 0.53 million sq ft.

The Peripheral Business District (PBD) of Uppal,

Pocharam and Shamshabad witnessed lack of

demand owing to absence of infrastructure initiatives

in this micro market. Rental values in Pocharam

and Shamshabad remained stable compared to the

previous quarter. There has been an addition of fresh

supply of SEZ space by the NSL Group (NSL Arena

- approximately 0.67 million sq ft) in Uppal which has

initiated fresh enquiries for SEZ space within the micro

market.



sq ft/month)


sq ft/month)

CBD (Begumpet/ Rajbhavan Road,Banjara Hills)Grade A

46 45

CBD (Begumpet/ Rajbhavan Road,Banjara Hills) Grade B

46 45

Secondary market(Jubilee Hills, parts ofBanjara Hills) Grade A

45 44

Secondary market(Jubilee Hills, parts ofBanjara Hills) Grade B

44 42

Secondary market(Ameerpet,Himayatnagar, SarojiniDevi Road) Grade A

25 25

Secondary market(Ameerpet,Himayatnagar, SarojiniDevi Road) Grade B

25 25

IT Corridor (HITEC City,Madhapur, Kondapur,Gachibowli) Grade A

32 32

IT Corridor (HITEC City,Madhapur, Kondapur,Gachibowli)Grade B

26 26

PBD (Shamshabad,Pocharam) Grade A

22 22



Avineon Cyber Gateway,Madhapur

38,000






Conjoin Group DLF Cyber City,Gachibowli

47,000

Napier Healthcare(Formerly KarishmaSoftware)

The ‘V’ IT Park,Madhapur

48,000

Ivy Comptech Divyashree Omega,Kondapur

62,000

Kony Labs Phoenix Infocity,Madhapur

66,000

Applabs DLF Cyber City,Gachibowli

75,000

RENTAL VALUE TRENDS

0

10

20

30

40

50

60

Q1

2009

Q2

2009

Q3

2009

Q4

2009

Q1

2010

Q2

2010

Q3

2010

Q4

2010


Timeline

C BD (Beg um pet / Ra jb ha va n Ro ad, Ba nj ara Hi ll s) Seco nd ar ym ar ket (Ju bi lee Hi ll s, pa rts of Ba nj ar a H il ls)

Se co n da r ym a rk et ( Am ee rp et , Hima ya tn a ga r, Sa r oj in iDev iRo a d) I TCo r rido r ( HI TECCit y, M ad h ap u r, Kon d ap ur , Ga ch ibo wl i)

PBD(Shamshabad, Pocharam)


0

1000

2000

3000

4000

5000

6000

7000

8000

9000

Q1

2009

Q2

2009

Q3

2009

Q4

2009

Q1

2010

Q2

2010

Q3

2010

Q4

2010

C a p i t a l V a l u e s ( I N R p

e r s q . f t .

)

Timeline

C BD (Beg um pet / Ra jb ha va n Ro ad, Ba nj ara Hi ll s) Seco nd ar ym ar ket (Ju bi lee Hil ls, pa rts of Ba nj ar a Hi ll s)

Se co n da r ym a rk et (Ame er pe t, Him ay atn a ga r, Sa r oj in iDev iRo a d) I TCo r rido r (H ITEC Ci ty, Ma d ha p ur , Ko n da pu r, Ga ch ibo wl i)

Market Outlook

The anticipated supply crunch in the coming

months, specifically in the IT Corridor is

expected to trigger a rental revision mechanism,

propelling rental values to breach levels that

were observed in 2010. With the fresh stock

of SEZ space being added in peripheral areas

such as Uppal at more rational values, the

region is expected to witness a rise in leasing

activity.

PUNE

Market Summary

The Central Business District (CBD) of MG Road,

Koregaon Park, Bund Garden, Kalyani Nagar,

Dhole Patil, FC Road and JM Road witnessed

steady demand and enquiry level during this review

period. The CBD continued to remain the preferred

location for small format office spaces. No fresh

supply was released in the market, while majority

of the absorption was on account of relocation of

companies within the CBD. Vacancy level remained

constant at around 15%.

Approximately 0.25 million sq ft of fresh supply hit the

Off CBD micro market of Viman Nagar, Magarpatta,

Aundh, Baner, Shanker Seth Road, S.B Road &

Nagar Road. Due to low absorption levels recorded

at approximately 0.12 million sq ft, vacancy level

increased to 25% from 18% observed in the previous

quarter.

The Peripheral Business District (PBD) of

Hinjewadi, Kharadi, Hadapsar, Talawade and

Kharadi continued to observe maximum level of

enquiry as well as absorption in the SEZ space.

Approximately 0.50 million sq ft of new supply was

added to the office stock and total absorption also

stood at the same level. Vacancy dropped from 24%

in Q3 2010 to 20% in Q4 2010, whilst rental valuesremained constant. Approximately 3.55 million sq ft

of SEZ space; 0.52 million sq ft of IT space and 0.30

million sq ft of non IT space is expected be released

into this micro market in 2011.



sq ft/month)


sq ft/month)

CBD (Shivaji Nagar,Bund Garden Road,Koregaon Park)Grade A

57 57

CBD (Shivaji Nagar,Bund Garden Road,Koregaon Park)Grade B

50 50

Off CBD (KalyaniNagar, ShankarshethRoad, F.C. Road)Grade A

45 45

Off CBD (KalyaniNagar, Viman Nagar,Nagar Road)

Grade B

36 36




r 2 0 1 0



Sasken Blue Ridge SEZ,Hinjewadi

20,000

Aker Solutions Blue Ridge SEZ,Hinjewadi

25,000

Sear Consulting Blue Ridge SEZ,Hinjewadi

25,000

Lupin Pharma GO Square 30,000

PersistentTechnologies

Blue Ridge SEZ,Hinjewadi

36,000

HCL Technologies Magarpatta SEZ 44,000

L & T Infotech ICC DGTP , Kasarwadi 45,000

KPIT Cummins Blue Ridge SEZ,Hinjewadi

50,000

L & T Infotech Blue Ridge SEZ ,Hinjewadi

60,000

Syntel SP Infocity , Fursungi 115,000

RENTAL VALUE TRENDS

0

10

20

30

40

50

60

70

80

Q1

2009

Q2

2009

Q3

2009

Q4

2009

Q1

2010

Q2

2010

Q3

2010

Q4

2010


Timeline

CBD(Sh iva j iNagar, Bund GardenRoad, KoregaonPark ) Off CBD(Ka lyan iNagar, ShankarshethRoad, F .C. Road) PBD(Hin jewad i, Kharad i, Hadapsar)


0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Q1

2009

Q2

2009

Q3

2009

Q4

2009

Q1

2010

Q2

2010

Q3

2010

Q4

2010


)

Timeline

CBD(ShivajiNagar , Bund GardenRoad, KoregaonPark) Of f CBD(KalyaniNagar , ShankarshethRoad, FCRoad) PBD(Hinjewadi, Kharadi, Hadapsar )

- -

-

Market Outlook

Pune witnessed an increase in the number

of enquiries and absorption in the last few

months of 2010. Due to limited supply of small

floor plate sized offices in the CBD, vis-à-vis a

high demand for similar formats, rentals are

expected to increase marginally in the coming

few months. Peripheral markets are expected

to witness a surging demand, amidst an

equally robust supply, which is expected to

keep the rental values stable in the short to

medium term.

PBD (Hinjewadi,Kharadi, Hadapsar)Grade A

30 30

PBD (Hinjewadi,Kharadi, Hadapsar)Grade B

24 24

KOLKATA

Market Summary

During this review period, the Central Business

District (CBD) of Chowringhee, B.B.D Bag, Park

Street and Camac Street witnessed steady enquiries;

however no major transaction was reported in this

micro market. Total supply (new and existing) has

been estimated at approximately 0.38 million sq ft;

whilst the absorption stood at 20,000 sq ft. Many

corporates have been moving to more cost effective

and quality spaces in the PBD, which led to a slight

increment in vacancy level from 8 -10% in Q3, toalmost 12-14% in Q4 2010. Enhanced demand from

NBFCs and a few old economy companies, looking

for office space in a central location of the city, led to

an increase in quoted rental values by almost 8 - 9%.

Leasing activity in the Secondary micro market

of EM Bypass, Kasba-Gariahat and Sarat Bose

Road remained steady. There are also a few BTS

model projects underway in the Kasba area, thereby

highlighting the prominence of the region as an

upcoming SBD. Total supply added in Q4 2010 was

almost 60,000 sq ft, while absorption of 10,000 sq ft

was witnessed. Vacancy in Topsia was recorded at

around 12-13%, while an oversupply in Kasba led

to a vacancy rate in a range of 25-30% in Q4 2010.

Rental values have scaled up by 8 -9% on a quarter-

on quarter basis.

Demand levels in the Peripheral micro markets

of Salt Lake and Rajarhat continued to witness

steady upward movement. Despite high vacancy rate






(30 - 35%), most developers have either rolled out new

projects or are constructing additional pre-approved

capacity in existing complexes. This could be due to

an anticipation of a major revival in demand expected

in 2011- 2012. Total supply added in the micro market

stood at almost 0.85 million sq ft, while rising occupier

interest resulted into a rental increment of almost

10 - 11%, q-o-q.


Sub-market Average Rent inDec 10 (INR/ sq ft/month)

Average Rent inSept 10 (INR/ sq ft/month)

CBD (Park Street,Camac Street,Theatre Road)Grade A

120 110

SecondaryBusiness District

Grade A

65 60

Peripheral BusinessDistrict (Salt Lake,Rajarhat)Grade A

50 45



CMC Vishnu Tower, Sec-V,Saltlake

4,800

AN Capital Infinity Think Tank,Sec-V, Saltlake 4,890

Lef te Sof tware Infinity Think Tank,Sec-V, Saltlake

4,890

Hyundai Infinity Benchmark,Sec-V, Saltlake

8,000

Honeywell PS Srijan TechPark,Sec-V, Saltlake

11,000

RENTAL VALUE TRENDS

0

20

40

60

80

100

120

140

Q1

2009

Q2

2009

Q3

2009

Q4

2009

Q1

2010

Q2

2010

Q3

2010

Q4

2010

R e n t ( I N R p e r s f t . p e r m o n t h )

Timeline

C BD ( Pa r k St r ee t, C am a c St r ee t, T he at r e Ro a d) Se co nd a ry Bu si ne ss D i st r ic t Pe ri p he ra l B us in es s Di st r ic t ( Sa lt L ak e, Ra ja r ha t )


0

2000

4000

6000

8000

10000

12000

14000

16000

Q1

2009

Q2

2009

Q3

2009

Q4

2009

Q1

2010

Q2

2010

Q3

2010

Q4

2010

C a p i t a l V a l u e s ( I N R p e r s f t . )

Timeline

C BD (Pa rk St ree t, Ca m ac St ree t, Th ea t re Ro a d) Se co n da ryB us in es s Di st r ic t Pe r ip h era l Bu si ne ss D ist r ic t (Sa lt La ke , Ra ja rha t )

Market Outlook

In spite of elevated levels of enquiry,

transaction velocity still remains low. Leasing

activity is expected to remain on cautiousfooting except for projects that are based on

capacity expansion for long term business

objectives. Rental and capital values across

most micro markets could inch up post state

elections.



Copyright 2010 CB Richard Ellis (CBRE).The information contained herein has been obtained from independent sources believed to bereliable and has not been verified for the possibility of errors, omissions, price change, rentalor other conditions, prior sale, lease or financing or withdrawal without notice. Any projections,opinions, assumptions or estimates included herein are solely for the purpose of illustration anddo not represent current or future performance or forecast of the property.CBRE does not make any representation, warranty including as to accuracy or completeness of theinformation and shall not be subject to any liability resulting from the use there from by any party.No one should proceed to act on such information without appropriate professional advice and afterconducting an independent and thorough investigation/diligence of the property and transaction. F

o u r t h Q u a r t e

r 2 0 1 0

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