H1 2016, a recap

- A recovery predictedINDIA

REAL ESTATEJULY – DECEMBER 2016

BENGALURU

BENGALURUREAL ESTATE

H1 recap

LAUNCHES RECUPERATED, SALES STRENGTHENED BY 18% YoY IN H1 2016

We predicted 4% growth in launches and 5% de-growth in sales for H2

2016, but the usually resilient Bengaluru suffers a setback as

launches & sales tumble in H2 2016

New launches plunge by 45%; Sales decline by 27%

Half yearly trend in launches and sales

H2 2011 H2 2012 H2 2013 H2 2014 H2 2015 H2 2016 -

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

29,

509

37,

236

36,

145

32,

589

24,

190

13,

395

LAUNCHES

-45%

H2 2011 H2 2012 H2 2013 H2 2014 H2 2015 H2 2016 -

5,000

10,000

15,000

20,000

25,000

30,000

22,

271

27,

757

25,

522

28,

445

27,

849

20,

309

SALES

-27%

Drastic fall in H2 2016 has pulled the annual numbers to below 2015 performance

New launches dip by 17%; Sales witness a relatively restrained decline of 7%

Yearly trend in launches and sales

2010 2011 2012 2013 2014 2015 20160

10000

20000

30000

40000

50000

60000

70000

80000

3443

8 6326

1

6777

3

7830

0

6813

4

4559

0

3767

6

No.

of u

nits

2010 2011 2012 2013 2014 2015 20160

10000

20000

30000

40000

50000

60000

2831

8 4194

4

5069

2

5736

6

5570

1

5008

3

4652

9

No.

of u

nits

LAUNCHES

-17%

-7%

SALES

Overall, the city witnessed a fall in new launches

South accounts for almost half of the launches and North also sees growth

Micro-market wise half yearly share of launches

Central East North South West0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0%

26% 25%

38%

11%

0%

18%

31%

47%

4%

H2 2015 H2 2016

While demand slackens in the city, South leads

the share in sales

Affordable supply, employment hubs and the upcoming metro drive the demand in South

Central East North South West0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0%

26% 25%

39%

10%

0%

27%

18%

47%

8%

H2 2015 H2 2016

Zone-wise split of sales during H2 2016

QTS on a gradual incline;2.3 years to offload the unsold inventory

Bengaluru market health – Quarters to sell and unsold inventory

Jun-1

4

Aug-14

Oct-14

Dec-14

Feb-15

Apr-15

Jun-1

5

Aug-15

Oct-15

Dec-15

Feb-16

Apr-16

Jun-1

6

Aug-16

Oct-16

Dec-16

2.0

4.0

6.0

8.0

10.0

7.0 7.17.9 7.9 8.0 7.9 7.9

8.4 8.48.9

9.3

QTS

Unsold inventory at 121,248 units

Demonetisation – Short term challenges

Bengaluru hit hard - New launches plunge by 65% in Q4 2016 YoY; Sales decline by 45%

Quarterly trend of new launches and sales

Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 20160

5000

10000

15000

20000

25000

22875

12670

20563.5

12025.5

14438.5

6961.5

9818

1558314374.5

9906.57940.88

5454.05

1406213194

14817.513627.5

11750.510483.5

13910.3513045 13403.0812817.0813134

7174.75

Launches Sales

No.

of u

nits

Demonetisation impact in Q4

Average # units sold in Q4 2014 & Q4 2015 13,336

# Units sold in Q4 2016 7,175

46% fall in sales

Notional REVENUE LOSS to real estate industry

INR 4,800 cr

State government notional LOSS ON STAMP DUTY

INR 250 cr

Key takeawaysLaunches go downhill, sales weaken YoY in H2 2016

Affordable prices attracting buyers in its peripheral markets such as Electronics City & Kammasandra in South and Mandur in East

Demonetization brings residential market to a standstill

Uncertainty likely to continue for the next quarter

Reduction in home loan interest rates, RERA, GST and ‘possible’ tax benefits in the upcoming budget likely to bring in a ‘feel good factor’

among buyers

Office market

BENGALURU OFFICE MARKET SEES STEADY

PERFORMANCE IN H2 2016

H2 2016 witnesses transactions at four-year high; new completions see a dip

Half yearly transactions & new completion

H2 2012 H2 2013 H2 2014 H2 2015 H2 2016 0.0

1.0

2.0

3.0

4.0

5.0

6.0

3.3

5.5

4.5 4.5

3.53.4

4.94.4

5.0 5.3

NEW COMPLETION TRANSACTIONS

Mn.

sq.ft

Vacancy on a steady decline with ORR at 2-4% & Whitefield at 8-10%;

Transactions consistent and new completions restrained

Half yearly vacancy rate

H2 2013 H2 2014 H2 2015 H2 2016 0%

2%

4%

6%

8%

10%

12%

14%

16%

14%

10%8%

6%

Rentals gain momentum owing to space crunch

H2 2013 H2 2014 H2 2015 H2 2016 -

10.0

20.0

30.0

40.0

50.0

60.0

70.0

47.5 48.5 51.5 57.8 2% 6%

12%

Half yearly weighted average rental trend

IT/ITeS sector continues to hold the fort in H2 2016

IT/ITeS leads with big ticket transactions Sector wise transactions

IT/ITeS BFSI Manufacturing Other Service Sectors0%

10%

20%

30%

40%

50%

60%

70%

80%70%

4%10%

16%

62%

9%4%

25%

H2 2015 H2 2016

ORR struggles on account of space crunch, high rentals & traffic congestion;

Whitefield office market gainMicromarket-wise transactions

CBD & Off CBD

SBD ORR PBD East PBD South PBD North PBD West0%

5%

10%

15%

20%

25%

30%

35%

6%

14%

33%

6%

31%

10%

1%

8%

18%

29%32%

5%8%

0%

H2 2015 H2 2016

Key takeaways

H2 2016 witnesses transactions at four-year high

New completions dip, leading to rise in rentals in key markets

ORR struggling due to space crunch and high rentals; Whitefield office market gains in H2 2016

Download the complete report from the link below:bit.ly/IREH216-SS