H1 2016, a recap

- A recovery predictedINDIA

REAL ESTATEJULY – DECEMBER 2016

HYDERABAD

HYDERABADREAL ESTATE

H1 residential market recap

LAUNCHES PICKED UP; HOME SALES CONTINUED TO GROW

We predicted 4% growth in launches and 6% growth in sales

for H2 2016

But, sales declined marginally in H2 2016; new launches remain more or less steady

Half yearly trend in launches and sales (units)

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

2,000

4,000

6,000

8,000

10,000

12,000

14,000

7,7

51

12,

022

7,3

76

5,1

51

5,7

40

5,9

00

Launches

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

2,000

4,000

6,000

8,000

10,000

12,000

7,1

14

9,8

84

8,4

19

7,8

29

7,7

80

7,2

89

Sales

- 6%

H2 2016 would have surpassed H2 2015 had demonetization not happened

Fall in H2 2016 has restrained the annual numbers to the same level as 2015

Market remains stagnant in 2016Annual trend in launches and sales (units)

2010 2011 2012 2013 2014 2015 2016 -

5,000

10,000

15,000

20,000

25,000

14,

828

19,

919

22,

726

18,

643

13,

050

11,

197

11,

600

Launches

2010 2011 2012 2013 2014 2015 2016 -

5,000

10,000

15,000

20,000

25,000

15,

021

16,

902

19,

050

18,

428

15,

111

14,

903

14,

989

Sales

Close to employment hubs, West Hyderabad takes the lion’s share

in new launches and sales

West Hyderabad attracts most of the development interest

Micro-market trend in share of launches

Central East North South West0%

10%

20%

30%

40%

50%

60%

70%

80%

11%1%

15% 3%

70%

6%2%

8%4%

80%

H2 2015 H2 2016

Wide range of options to choose from drives the demand in the WestMicro-market trend in share of sales

Central East North South West0%

10%

20%

30%

40%

50%

60%

70%

10% 8%

17%

5%

59%

11% 10%13%

6%

60%

H2 2015 H2 2016

QTS coming down since Q2 2016 – 2 years to offload the unsold inventory

QTS trend

Unsold inventory at 28,088 units at 2016 vis-à-vis 37,209 units in 2012

Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 6.50

7.00

7.50

8.00

8.50

9.00

9.50

8.23

8.51 8.63

8.39

8.69 8.75

9.14

8.39

7.71

8.00 8.00

7.70

Impact of Demonetisation

Q4 2016 hit hard - New launches plunge by 25% YoY; Sales decline by 67%

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 2016 -

1,000

2,000

3,000

4,000

5,000

6,000

3,399

4,500

2,060

3,090

1,884

3,573

2,296

3,444

2,565 3,135 3,150

2,750 3,332

3,950

3,212

4,617

3,073

4,050

2,723

5,057

4,235

3,465

4,255

3,034

Launches Absorption

Q4 revenue loss for both State exchequer and industry

Average # units sold in Q4 2014 & Q4 2015 4,837

# Units sold in Q4 2016 3,545

27% fall in sales

Notional REVENUE LOSS to real estate industry

INR 800 cr

State government notional LOSS ON STAMP DUTY

INR 40 cr

Key takeaways

Least impacted city by demonetisation – Marginal slowdown in sales

Unsold inventory at a 4 year low

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

at a new high

Hyderabad witnessed the highest ever yearly absorption in 2016

Yearly transactions

2012 2013 2014 2015 2016 -

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2.3

3.7

4.7 4.6

6.0

H2 2016 witnesses transactions at a five-year high

Half yearly trend of new completions and transactions

H2 2012 H2 2013 H2 2014 H2 2015 H2 20160.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2.72 2.70

1.95

2.40 2.40

2.00

1.15

2.76 3.10 3.20

New completions Absorption

Vacancy in prime office markets of Hitech City and Madhapur

as low as 2-4%

H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

10.56%

8.41% 8.22%

6.46%

9.55% 9.85%

Consistent office space absorption against limited supply resulted in rental appreciation of 12% YoY

Half yearly weighted average rental trend

H2 2013 H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H22016 35

37

39

41

43

45

47

49

37 3739

4042

43

47

INR

/sq

ft/m

onth

Share of IT/ITeS sector witnessed a big leap in H2 2016

IT/ITeS sector outshines all the other industries

Sector wise transactions

BFSI IT/ITES Other Service sectors Manufacturing0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

9%

35% 39%

17%

7%

87%

5%1%

H2 2015 H2 2016

PBD West increases its share in the total absorption: Gachibowli and Nanakramguda the preferred markets

Zone wise transactions

SBD PBD West CBD & Off CBD PBD East0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

76%

12% 11%

1%

64%

20%14%

3%

H2 2015 H2 2016

Key takeaways

Highest yearly office space absorption: 6 mn sq ft SBD and PBD West the preferred office markets

Share of IT/ITeS sector witnessed a big leap in H2 2016; New IT/ITeS companies are now entering the Hyderabad market

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