NCR INDIA REAL ESTATE OUTLOOK REPORT (January – June 2014)

For queries on data, contact Ankita Sood / Ankita Nimbekar, Research

For any other query, contact Bertilda Fernandes, Marketing

Launches (units)

Absorption (units)

Weighted Avg Price (` per sq.ft.)

Jan - June 2014 35, 767 -43% Y-o-Y

July – Dec 2014 (E) 37,000 10% Y-o-Y

2014 Year End (E) 72,767 -24% Y-o-Y

Jan-June 2014 28,500 -37% Y-o-Y

July – Dec 2014 (E) 30,500 17% Y-o-Y

2014 Year End (E) 59,000 -17% Y-o-Y

Jan-June 2014 4,400 5% Y-o-Y

2014 Year End (E) 4,500 4% Y-o-Y

Residential

Market Overview

New Completions (mn. sq.ft.)

Absorption (mn. sq.ft.)

Vacancy %

Jan - June 2014 4 14% Y-o-Y

July – Dec 2014 (E) 4 14% Y-o-Y

2014 Year End (E) 8 14% Y-o-Y

Jan-June 2014 3.5 3% Y-o-Y

July – Dec 2014 (E) 4 25% Y-o-Y

2014 Year End (E) 7.5 14% Y-o-Y

June 2014 21%

2014 Year End (E) 20% Office

Weighted Average Rent (` per sq.ft. per month)

Jan-June 2014 56 8% Y-o-Y

2014 Year End (E) 58 9% Y-o-Y

Market Overview

Residential

Launches

Absorption

Demand & Supply Trend - 2014

The NCR residential market has a

downward trend in demand since

2013, and this has continued in

2014 as well with demand

expected to fall further by 17% in

2014

Fall in absorption is expected to

be complemented by a sharper

drop of 24% in the number of new

launches

The total number of units to be absorbed is expected to fall from 71,400 in

2013 to 59,000 in 2014

New launches are estimated to decrease from 95,700 units in 2013 to

72,700 units in 2014

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

No

. o

f u

nit

s

Residential Market

Unsold Inventory Level - QTS

Term

The QTS ratio has been inching

upwards since June 2012

167,000 units equivalent to 9 quarters

of inventory remain unsold as of

June 2014

New launches reduced by 43% during

H1 2014 compared to H1 2013

Such a course correction has not directly resulted in bringing down the QTS

ratio as the sales volume declined further by 37% during the same period

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00

No

. o

f Q

ua

rte

rs

Residential Market

H2 2014 Forecast

Half-yearly Launches and Absorption Trend

New launches are estimated to increase

by 10% during H2 2014

45

,32

6

54

,80

4

62,2

52

33,5

16

35

,76

7

37

,00

0

35

,30

2

45

,46

4

45,3

02

26,1

19

28

,50

0

30

,50

0

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

H1 2012 H2 2012 H1 2013 H2 2013 H1 2014 H2 2014E

Launches Absorption

Compared to H2 2013, absorption is

forecasted to increase by 17%

Sales volume expected to recover

from H2 2014 onwards

Supply-side stakeholders are quite bullish about the residential sector and

expect increase in number of launches and absorption in H2 2014

Residential Market

Weighted Average Price Trend

Half-yearly Weighted Average Trend

Growth in weighted average prices

has been receding since H2 2012

Despite showing signs of weakening,

the NCR market has been able to hold

residential prices

3,500

4,000

4,500

5,000

INR

/Sq

ft

The prices are forecasted to increase by 4% in H2 2014 to ` 4,500 per

sq.ft. from ` 4,330 per sq.ft. in H2 2013

Residential Market

New Launch Analysis

Micro-Market Split of Units Launched

Greater Noida, positioned as the most

affordable market in NCR, contributed to

about 40% of the units launched in H1 2014,

showing de-growth compared to H1 2013

Greater Noida and Noida combined is 56%

of the total NCR launches

3%

24%

44%

20%

9%

H1 2013

1% 20%

40%

23%

16%

H1 2014

Gurgaon Greater Noida

Ghaziabad Noida

Faridabad

Preferred locations for project launches

in H1 2014 were along the Yamuna

Expressway and Tech Zone IV, in the

price range of `3500–5000 per sq ft

Residential Market

62,200 35,700

Ticket Size Analysis

Noida is the only micro-market

that offers an array of products

across all ticket sizes

More than 75% of the new

launches in Gurgaon are above

the ticket size of `10 mn,

positioning it as a premium

market

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

<2.5 Mn 2.5-5 5-7.5 7.5-10 10-20 20-40 40-80

Gurgaon Greater Noida

Ghaziabad Noida

Faridabad

Residential Market

Absorption Analysis

Micro Market Split of Units Absorbed

Ghaziabad continues to show traction in terms of sales in H1 2014

Faridabad has witnessed the highest fall in absorption by 75%,

followed by Gurgaon at 51%

0%

22%

15%

41%

17%

5%

H1 2013

0% 17%

13%

43%

25%

2%

H1 2014

Residential Market

Gurgaon Greater Noida

Ghaziabad Noida

Faridabad 45,300 28,500

Micro Market Health

Age of Inventory compared to QTS Greater Noida has an unsold inventory of

10 quarters, with an average age of 10

quarters, making it the most unhealthy

micro-market

At 28,000 units Gurgaon market’s unsold

inventory levels are comparable to those of

Noida and Ghaziabad, but it’s performance

is worst in terms of age of inventory

0

5

10

15

20

25

0 5 10 15

Ag

e o

f U

ns

old

In

ve

nto

ry

QTS

Residential Market

Gurgaon Greater Noida

Ghaziabad Noida

Faridabad

Price Movement

Location Price range in H1 2014

(`/sq ft) 12-month change 6-month change

GREATER NOIDA

Tech Zone IV 3,300 - 3,500 8% 1%

Yamuna Expressway 2,800–3,000 3% 1%

Sector Pi 3,500–3,650 1% 0%

Sector 16B 3,500–3,650 4% 1%

NOIDA

Sector 93 A 5,650–5,800 0% 0%

Sector 74 6,500–6,600 1% 1%

Sector 143 B 5,600–5,800 2% 1%

Sector 128 9,000–9,100 2% 0%

GURGAON

Sector 66 11,000–12,000 1% 0%

Sector 49 11,000–12,000 5% 0%

Sector 37D 6,350–6,400 0% 0%

Sohna (Sector 5) 4,000–4,1000 0% 0%

Residential Market

Price Movement

Location Price range in H1 2014

(`/sq ft) 12-month change 6-month change

GHAZIABAD

Indirapuram 3,600–4,200 2% 1%

NH 24 3,050–3,200 8% 0%

Raj Nagar Extension 2,800–3,000 10% 6%

FARIDABAD

Mathura Road 6,600–6,800 3% 0%

Suraj Kund 8,000–8,500 1% 0%

Sector 82 4,250–4,400 1% 0%

Residential Market

Key Takeaways

In June 2014, nearly 167,000 residential units remained unsold in the NCR market

The absorption levels witnessed a 37% drop during the first half of 2014

In June 2014 the QTS stood at 9, indicating the current unsold inventory would

take more than two years to be fully absorbed

NCR market to gain momentum in H2 2014 post the incentives announced in the

Union Budget

As per our forecast, new launches will increase by 10% to 37,000 units in H2

2014, compared to H2 2013

Residential Market

Office

Vacancy Trend

Office Space Stock and Vacancy Level

Total office stock

122 mn.sq.ft. Occupied

96.5 mn.sq.ft

Peaking in 2012 at 22%, the

vacancy levels in H1 2014

went down to 20.5%

15%

16%

17%

18%

19%

20%

21%

22%

23%

0

20

40

60

80

100

120

140

H1 2012 H2 2012 H1 2013 H2 2013 H1 2014 H2 2014(E)

Mn

Sq

ft

Stock Occupied Stock Vacancy (RHS)

Office Market

New Completion and Absorption

H1 2014 saw an absorption of

3.5 mn sq.ft. out-performing the

corresponding periods of the

previous years

4 mn sq ft of office space forecasted

to be absorbed during H2 2014, a

25% increase compared to

H2 2013

Year 2014, absorption is

expected to be 7.5 mn sq ft – an

increase of 14% from 6.6 mn sq ft in

2013

0

1

2

3

4

5

6

7

H1 2012 H2 2012 H1 2013 H2 2013 H1 2014 H2 2014 (E)

Mn

. S

q.f

t.

New Office Completions Absorption

Office Market

Weighted Average Rents

Markets will continue to show an uptick in rents ,expected to close at

INR 57.5 per sq ft at the end of H2 2014

NCR’s weighted average rents stood at

` 56 per sq ft as compared to ` 52

per sq ft in H1 2013

Weighted Average Rental Movement

49

50

51

52

53

54

55

56

57

58

H1 2012 H2 2012 H1 2013 H2 2013 H1 2014 H2 2014E

Sq

.ft.

/mo

nth

H1 2014 sees rental appreciation of 8%

over the preceding quarters of 2013

Office Market

Sectoral Analysis of Demand

IT/ITeS BFSI Manufacturing Other Services

H1 2013 14% 26% 38% 22%

H2 2013 3% 53% 19% 25%

H1 2014 4% 54% 19% 23%

IT/ITeS has improved to

54% in H1 2014, which

had bottomed to 26% in

H1 2013

Manufacturing sector

maintains a slow absorption

rate clocking 19% share

Other services sector

maintained a demand with e-

retail companies such as

Myntra, Zomato, Snapdeal,

Shopclues taking up sizable

space in H1 2014

Office Market

Deal Analysis

Average Deal Size and Number of Deals

The average deal size compressed to

25,000 sq ft in H1 2014 from 30,000

sq ft in H1 2013, indicating strong

demand for small office spaces

Office market saw a 20% rise in the

number of deals in H1 2014, moving to

137 deals from 114 deals in H1 2013

0

50

100

150

22,000

24,000

26,000

28,000

30,000

32,000

H12012 H22012 H12013 H22013 H12014

Nu

mb

er

Sq

ft

Avg Deal size (Sq.ft.) No of Deals (RHS)

Office Market

Business District-wise Analysis

Micro Market Split of Absorption

3% 6%

63%

27%

1%

H1 2013

CBD - Delhi PBD - Faridabad

PBD - Noida SBD - Delhi

PBD - Gurgaon

1% 8%

66%

24%

1%

H1 2014

PBD Gurgaon accounted for

66% of the total absorption

volumes of NCR in H1 2014

CBD Delhi remains inactive in

the overall business environment

due to unavailability of quality

space

Office Market

3.4 mn.

Sq.ft.

3.5 mn.

Sq.ft.

Business District-wise Rents

Business District

Rental Value Range in H1

2014

(per sq.ft. per month)

12 month change 6 month change

CBD - Delhi 200 - 350 2% 1%

SBD - Delhi 90 - 140 5% 1%

PBD Gurgaon Zone A 90 - 130 6% 2%

PBD - Gurgaon Zone B 55 -80 4% 1%

PBD - Gurgaon Zone C 25 - 35 - -

PBD - Noida 40 - 60 4% 1%

PBD - Faridabad 45 - 55 - -

NCR across micro markets witnesses rental appreciation, with maximum seen in PBD

Gurgaon

Rents forecasted to appreciate by 2 – 3% in the coming quarters of 2014 due to rise in

office space demand and limited new office completions

Office Market

Key Takeaways

NCR currently has a total office stock of 122 mn sq. ft. of which 96.5 mn sq. ft. is

occupied

Going forward, limited new completions and an increase in demand for office

space are likely to push the vacancy levels down to 20% in H2 2014

Having indexed 3.5 mn sq. ft. of office space in H1 2014, the estimated overall

absorption levels will plug at 7.5 mn sq. ft. over the next 6 months

Of the total absorption in H1 2014, IT/ITeS, has been the primary driver with an

absorption of 54% of the overall NCR market

Office Market

NCR INDIA REAL ESTATE OUTLOOK REPORT (January – June 2014)

For queries on data, contact Ankita Sood / Ankita Nimbekar, Research

For any other query, contact Bertilda Fernandes, Marketing