India Office Property Market Overview_July 2015

Office Property Market OverviewINDIAJuly - 2015

2 Research & Forecast Report | July 2015 | Colliers International

ContentsMacro Economic Overview 3

Mumbai Office Market Overview 4

Delhi Office Market Overview 6

Gurgaon Office Market Overview 8

NOIDA Office Market Overview 10

Chennai Office Market Overview 12

Bengaluru Office Market Overview 14

Kolkata Office Market Overview 16

Pune Office Market Overview 18

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Office market remained buoyant with robust absorption India’s GDP grew by to 7.5% during Jan - April 2015, up from 6.6% in the previous quarter, supported by a strong expansion in manufacturing and services sectors.

The substantial reduction in inflation in last few months paved the way for RBI to cut repo rate in recent monetary policy reviews. This is the third policy rate cut in last five months, where the central bank had cut the rates by 75 basis points cumulatively.

Office market remained buoyant with approximately 10.5 million sq ft of office absorption in 8 major cities. This was around 24% increase from last quarter figures of 8.5 million sq ft. This quarter Mumbai marched ahead of Bengaluru and Delhi NCR in terms of city with the maximum absorption. Mumbai shared 28% of the total absorption followed by Delhi NCR (24%),Bengaluru (22%), Pune (17%), Chennai (7%) and Kolkata (2%).

Colliers View

Office market recorded approximately 19 million sq ft of office absorption in first half of the year across major cities in India. With an expanding economy and introduction of the REIT regulation, the demand for office space is increasing and so is the demand from institutional investors to acquire income yielding office property. We expect the momentum in office market to continue with cities like Bengaluru, Mumbai, Pune and Gurgaon to witness maximum office uptake in coming quarters.

Return on Alternative Investments

Economic Barometer

Note: 1 Estimates as per International Monetary Fund (IMF) for Year 20152 Wholesale Price Index (WPI)3 SBI interest rate < INR 1 crore Term Deposits for ≤ 1 Year

Research & Forecast Report

India | OfficeJuly 2015

Indicators 1Q 2015 2Q 2015Gross Domestic Product Growth Rate

7.50% 7.50%1

Business Confidence Index 56.20% 56.40%

Repo Rate 7.50% 7.25%

Reverse Repo Rate 6.50% 6.25%

Cash Reserve Ratio 4.00% 4.00%

Inflation (WPI)2 -2.33% -2.36%

Prime Lending Rate 10.00% - 10.25% 9.70% - 10.00%

Deposit Rate3 8.00% - 8.75% 8.00% - 8.50%

Exchange Rates 1Q 2015 2Q 2015

INR - USD 62.24 63.47

INR - EURO 70.27 70.25

Parameters 1Q 2015 (INR)

2Q 2015 (INR)

QoQCHANGE

Gold 26,857 26,799 -0.22%

Silver 37,146 37,228 0.22%

Equity(BSE Sensex) 28,566 27,536 -3.60%

Realty Index 1,697 1,543 -9.08%

Source: Government of India, Colliers International India Research

Source: Government of India, Colliers International India Research





Mumbai records over 2.93 million sq ft, highest in the country for 2QBreaking the monotony of low absorption since 1Q 2013, Mumbai recorded an absorption of over 2.93 million sq ft in 2Q 2015. The regained trust of MNCs from BFSI, IT/ITeS, Manufacturing, Pharmaceutical, Media & Entertainment sector resulted in such phenomenal rise in office absorption. Occupiers from BFSI & IT/ITeS, alone took over 1.91 million sq ft, followed by Manufacturing & Pharma 0.61 million sq ft and Media & Entertainment 0.20 million sq ft.

The major deals in the second quarter were Home Credit taking up 0.16 million sq ft in Reliable Group’s ‘Tech Space’ located at Rabale, Bank of America leased 0.14 million sq ft in ‘ONE BKC’ by Wadhwa Group at Bandra Kurla Complex and Sutherland took 0.12 million sq ft in Reliable Tech Park located in Navi Mumbai.

This massive increase in absorption helped in confidence among investors as well as the developers and resulted in launch of new projects. City’s major developers announced many large scale projects like “Wall Street (0.78 million sq ft)” by Kanakia Group, “Skyline Icon Phase II (0.49 million sq ft)” by Skyline Group, “Rustomjee Central Park (0.24 million sq ft)” by Rustomjee Group and “Times Square IT D Wing (0.1 million sq ft)” by Ajmera Group. All of these projects are located in Andheri (East) micro market and expected to be complete between 3Q 2016 to 2Q 2017. In 2015, the city also witnessed completion of around 0.37 million sq ft in projects like “Carif (0.3 million sq ft)“ by Fairmont Constructions and “Metro Avenue (0.074 million sq ft)” by Jaynil Enterprises both located at Andheri (East).

Rental Values

*Indicative Grade A rents in INR per SF per month**Nariman Point, Ballard Estate & Fort


Mumbai | OfficeJuly 2015

MICRO MARKETS RENTALVALUE*

% CHANGEQoQ YoY

CBD** 200 - 250 0% 0%

Worli/Prabhadevi 185 - 225 0% -2%

Lower Parel 145 - 190 0% 5%

BKC 225 - 320 0% 0%

Kalina 150 - 200 0% 0%

Goregaon / JVLR 100 - 110 0% -5%

Andheri East 95 - 130 7% -7%

Malad 80 - 100 0% 0%

Powai 120 - 130 0% 4%

Navi Mumbai 60 - 100 0% 0%

Thane / LBS 60 - 75 0% 0%

City Office Barometer

INDICATORS 2Q 2015 3Q 2015 F

Vacancy

Absorption

Construction

Rental Value

Capital ValueSource: Colliers International India Research

Source: Colliers International India Research






Notes:

1. Office Market: The major business locations in Mumbai are the CBD (Nariman Point, Fort and Ballard Estate), Central Mumbai (Worli, Lower Parel and Parel), Bandra Kurla

Complex (BKC) and Andheri Kurla stretch. Powai, Malad and Vashi are the preferred IT/ ITES destinations, while Airoli at Navi Mumbai and Lal Bahadur Shastri Marg are

emerging as new office and IT/ITES submakets.

2. Rents/Capital Value: Market average of indicative asking price for Grade A office space.

3. Available Supply: Total Grade A office space being marketed for sale or lease in surveyed quarter.

4. City Barometer: Represents increase, decrease or stable scenario; as compared to previous quarter.

5. All the figures in the report is based on market information as on 25th June 2015.

Top 5 Transactions of the Quarter

Key Under Construction Projects

CLIENT BUILDING NAME AREA (SF) LOCATION LEASE / SALE

Home Credit Pvt Ltd Reliable Tech Space 160,000 Rabale Lease

Bank of America One BKC 140,000 BKC Lease

Sutherland Reliable Tech Park 120,000 Airoli Sale

Trafigura One BKC 100,000 BKC Lease

Piramal Lighthall 100,000 Powai Lease

BUILDING NAME DEVELOPER AREA (SF) LOCATION POSSESSIONSeawood Grand Central Tower I & II L & T Infrastructure 1,350,000 Navi Mumbai 2015

Godrej BKC Godrej Group 1,200,000 BKC 2015

Kohinoor Square Kohinoor Group 800,000 Dadar 2015

Quarter Wise Absorption Analysis

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As of beginning 3Q 2015, more than 11 million sq ft of Grade A supply is available in the market, primarily in Andheri (East), Goregaon/JVLR, Thane, BKC, Worli/Prabhadevi & Navi Mumbai remained flexible in lease terms due to huge inventory available in the market, the rents remained stable in most of the markets except Andheri (East) where due to an increase in absorption, the rents picked up by 7% QoQ. Occupiers preferred this location due to improved connectivity and reduced congestion on commencement of the metro rail. Announcement of the New Coastal Road linking Marine Drive to the Kandivali, also known as the Western Freeway has increased hopes of reduced traffic congestion in the City. Additionally, Metro-III from Colaba - SEEPZ, on which work is likely to begin, next year should also help in reducing the strain on the Local Suburban Train network and help in improving overall connectivity.

Colliers View

With clarity coming over IT/ITeS policy this quarter, absorption is likely to improve in near future as there are many RFPs from BFSI and IT/ITeS occupiers that are floating in the market. Rents are expected to remain stable across micro markets except for a few premium buildings, which will attract a premium due to their location and higher specifications due to their locations and high specs. Andheri (East) and BKC micro market will continue to be the most preferred office location among occupiers on the back of connectivity, infrastructure and availability of grade A stock.

0









Delhi office absorption doubles in 2Q, to reach 0.21 mn sq ft.After a weak start to the year, the Delhi office market picked up, with the city recording 0.21 million sq ft of new leasing volume. BFSI was the primary contributor of this demand with 44% share followed by Media & Entertainment (15%) and Manufacturing (13%). Locations like Aero City, Connaught Place, Saket and Okhla were the preferred one among occupiers and about 80% of the deals were concluded in these locations. In major office transactions, Amarchand Mangaldas took 45,000 sq ft in Religare House located at Saket, BTMU and BBC both took 40,000 million sq ft each in Bharti Worldmark located in Aero City.

The city witnessed about 0.3 million sq ft of new completions this quarter, including projects like NBCC Tower (0.15 million sq ft) by NBCC Ltd at Okhla Phase 1, Skipper House (0.11 million sq ft) by Government Trust of India at Connaught Place, AMP Tower (0.05 million sq ft) by AMP Infratech at Mohan Co-operative and an Individual building (0.018 million sq ft) by local developer at Okhla.

Similar to previous quarter no commercial grade A office space was launched in 2Q 2015. However, Delhi Development Authority (DDA) and National Buildings Construction Corporation Ltd. (NBCC) have jointly planned to develop 26 acres of residential cum commercial project known as “Lake View Complex” located near Trilokpuri in Delhi. The project is scheduled to be completed in 3-4 years at a cost of INR 1,500 to 1,800 crore to be borne by DDA. NBCC will be project management consultant for

Rental Values

*Indicative Grade A rents in INR per SF per month**Connaught Place***Netaji Subhash Place


% CHANGEQoQ YoY

CBD** 185 - 450 -1% 5%

Nehru Place 170 - 250 4% 12%

Saket 130 - 190 -3% 2%

Jasola 90 - 130 -2% 5%

NSP*** 70 - 120 0% 1%


Delhi | OfficeJuly 2015



Vacancy

Absorption

Construction

Rental Value








this project. Apart from this DDA has also approved a commercial project on 51 hectare land named “Dwarka Centre” near metro corridor. The project will include a 14-hectare Dwarka Business Centre, which will act as a financial hub for banks and financial institutions.

Despite increase in absorption, overall average rents had declined by 2% QoQ, barring Nehru Place which witnessed a 4% QoQ increase.

Colliers View

We foresee an increase in absorption in coming quarters, especially from BFSI, Media & Entertainment and Government sector. Micro markets like Connaught Place, Aero City, Saket and Okhla will continue to attract maximum traction. Overall rents are expected to remain at the same levels in near term; however, few micro markets like Nehru Place, Saket and Ohkla may see marginal appreciation due to limited supply.




Amarchand Mangaldas Religare House 44,000 Saket Lease

BBC Bharti Worldmark 40,000 Aero City Lease

BTMU Bharti Worldmark 40,000 Aero City Lease

SNP Lavalin DLF Tower 15,000 Shivaji Marg Lease

Tata Group Prem Dout Sadan 13,000 Connaught Place Lease

BUILDING NAME DEVELOPER AREA (SF) LOCATION POSSESSION

RPS Infinia RPS Developer 1,000,000 Mathura Road 2015

NBCC Plaza NBCC Ltd. 350,000 Okhla 2015

Caddie Commercial Tower Caddie Hotel 100,000 Aero City 2015


Average Rental And Capital Value Trend Analysis

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Notes:

1. Office Market: The commercial areas in New Delhi can be broadly classified into the CBD (Connaught Place), SBD Nehru Place, Bhikaji Cama Place, Netaji Subhash Place, Jasola

and Saket .





Forecast

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Gurgaon | OfficeJuly 2015

Rental Values

*Indicative Grade A rents in INR per SF per month


% CHANGEQoQ YoY

MG Road 110 - 150 6% 30%

DLF Cyber City (IT) 98 - 103 6% 22%

Golf Course Road 100 - 150 2% 19%

Institutional Sectors (Sec 44, 32, 18) 60 - 95 3% 24%

Golf Course Road Ext./Sohna Road 50 - 75 -7% 9%

National Highway 8 50 - 130 -10% 0%

Udyog Vihar & Industrial Sectors 28 - 40 -9% -20%

Manesar 40 - 45 0% 13%



Vacancy

Absorption

Construction

Rental Value



Snapdeal and Zomato, main contributors to office take upLed by the IT/ITeS sector, demand for office space pushes up. Approximately 1.8 million sq ft of office space was absorbed in 2Q 2015, about 60% more than the previous quarter. On a half yearly basis, the total absorption recorded was about 2.9 million sq ft which is around 19% more when compared to the last year’s same period figure of 2.45 million sq ft. IT/ITeS remained as the key driver of the office take up with 88% share followed by BSFI 10% and Others sharing just 8% of the total.

Major corporates like Snapdeal, NTT Data, Zomato, Arvato, BCG Group, SAP together took around 1.17 million sq ft which is about 66% of the total office absorption. Udyog Vihar was the most preferred location this quarter and about (0.79 million sq ft, 44%) of the deals were concluded. Apart from Udyog Vihar, occupiers also preferred office spaces on Golf Course Road and its extension and Sohna road (0.72 million sq ft, 40%).

With large under construction stock in pipeline, developers remained watchful in launching new projects and rather focused on completions. This quarter, the city witnessed an addition of 1 million sq ft of office space. The project that contributed to this new supply was Vatika City Next by Vatika Group, located along NH 8 in Sector 82. More than 17 million sq ft of Grade A commercial office space was available for fit-outs this quarter. This available supply is located in micro markets like Golf Course Road Extension/ Sohna Road (27%), Manesar (26%), Udyog Vihar (23%), NH 8 (14%), Institutional Sectors & M G Road (4%) and Golf Course Road (2%).








Snapdeal ASF Tower and ASF Center 500,000 Udyog Vihar Lease

NTT Data Spelndor Trade Tower 250,000 Golf Course Road Extension Lease

Zomato Hines One Horizon 120,000 Golf Course Road Lease

BCG DLF Cyber City Bldg 10 100,000 Cyber City Lease

Arvato Plot no 78 100,000 Udyog Vihar Lease



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Business Club AIPL Group 700,000 Golf Course Extension Road 2015

Parsvnath IT Park Technicia Parsvnath Developers 695,000 Sohna Road 2015

Unitech Infospace, Gurgaon Phase 2 Building 7 Unitech Ltd. 450,000 NH-8 2015

Notes:

1. Office Market: The prime business locations in Gurgaon are MG Road, Golf Course Road, Cyber City and Udyog Vihar. Manesar on the outskirts of Gurgaon is also emerging as

the city’s new office destination.





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Inspite of increased absorption, Grade A office rents continued to remain under pressure in most of the micro markets and recorded an average decline of about 3% QoQ. However, locations like M G Road, Golf Course Road, DLF Cyber city recorded an increase in the range of 2 to 6% QoQ due to limited available supply in these micro markets.

In a major decision the Punjab and Haryana high court removed a stay on issuing change of land use (CLU) licences. Now builders can apply for CLU on their acquired land to develop residential or commercial properties. This is expected to give a boost to Gurgaon realty market. Also the stalled work on Kundli-Manesar-Palwal (KMP) Expressway resumes this quarter. The completion of the expressway would not only provide high speed link to northern Haryana with its southern districts like Gurgaon, Faridabad and Palwal, but also de-congest National Capital Territory of Delhi.

Colliers View

IT/ITeS sector will remain the key driver for office market. Cyber City and NH 8 will continue to remain the most preferred locations among corporate occupiers due to their connectivity advantages. Developers are expected to refrain from adding new supply or launch new project, due to high vacancy levels. There are limited large floor plate options in preferred micro markets like Cyber City, MG road and NH-8 the rents are expected to strengthen further in these areas while other peripheral locations will see stable rents scenario.






Office demand gives NOIDA a missNOIDA office market failed to revive in second consecutive quarter and only 0.50 million sq ft was absorbed in 2Q 2015. Apart from few smaller deals, only few big ticket deals were concluded mostly by IT/ITeS occupiers like We Technologies, Big Basket and Cognizant together who took around 0.16 million sq ft. Most of these Non SEZ warm shell deals were in the form of expansion, where occupiers were looking to expand their operational businesses due to good availability of talent pool in the city.

Few long pending mid-scale projects saw completion this quarter including; NPX Tower (1.50 million sq ft) by Urbatech located at Sector 153, Elixir Tower (0.22 million sq ft) by Cosmic Group at Sector 127 and an independent building (0.15 million sq ft) at Sector 16A. More than 21 million sq ft of prime office space was available for fit-out in 2Q 2015, most of this supply is located in institutional Sectors like 16A, 62 and Sector 125 to 142 (50%), followed by Commercial Sector 18 (49%) and Industrial Sectors 1 to 9, 57 – 60 and 63 – 65 (1%). Considering the huge pending inventory, developers refrained from launch any new project during this quarter.

High vacancy levels put pressure on rents which remained stable across micro markets. However an increase of 3% QoQ was witnessed in Institutional Sectors (Non IT).

The New Okhla Industrial Development Authority (NOIDA) plans to construct a six-lane elevated flyover which will enable the commuters a signal-free smooth drive of 5-km-long stretch between Noida Sector-41 to Noida Special Economic Zone of Phase-II industrial area. With an investment of around INR 500 crores project is expected to be ready by 2017.


NOIDA | OfficeJuly 2015

Rental Values

*Indicative Grade A rents in INR per SF per month**Sector 18***Sector 16A, 62, 125-142****Sector 124, 57-60, 63-75


% CHANGEQoQ YoY

Commercial Sectors** 90 - 110 0% 3%

Institutional Sectors (Non IT)*** 60 - 110 3% 21%

Institutional Sectors (IT)*** 45 - 65 0% 3%

Industrial Sector (IT)**** 35 - 55 0% 10%



Vacancy

Absorption

Construction

Rental Value








This quarter, Kotak Mahindra Group and private equity fund New Vernon Capital have jointly bought Green Boulevard, an information technology (IT) park located in sector 62 at Noida for a consideration of approximately INR 270 crore from 3C Company. This was 3C’s second large transaction during this year in terms of divesting its assets. Earlier this year, it sold Oxygen, a special economic zone located in Noida to Blackstone Group.

Colliers View

The large inventory is not being absorbed due to a lack of demand. This is resulting in a downward pressure on rental values, and we expect this scenario to likely continue for a few more quarters. Developers are therefore flexible in negotiating lease terms, offering incentives to the IT/ITeS tenants who are the key demand driver in this city.




We Technologies Vardhman I Valley 70,000 KP3, G NOIDA Lease

Big Basket Plot A 11 60,000 Sector 80 Lease

Max Health Insurance Plot A 81 45,000 Sector 2 Lease

Cognizant Unitech Infospace 30,000 Sector 62 Lease

Timex Polypex Building 8,500 Sector 1 Lease


Delhi One The 3C Company 2,000,000 DND Flyway 2015

Mist Avenue Bhasin Group 1,000,000 Sector 143 2015

Assotech Business Cresterra Assotech 500,000 Sector 135 2015



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Notes:

1. Office Market: NOIDA market is comprised of sectors broadly classified as institutional, industrial and commercial sectors. Institutional sectors include sec 16A, 62 and125-142,

industrial sectors include Sec 1-9, 57-60 and 63- 65 while sector 18 is the most developed commercial sector.





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OMR takes the lead, continued to attract occupiers from IT/ITeSOnly 0.74 million sq ft was absorbed in the 2nd quarter resulting in 1st half of 2015 saw 12% less absorption compared to the same period in 2014. IT/ITeS was the primary contributor of this demand followed by BFSI. Few of the major occupiers this quarter were IT/ITeS MNCs like E4E, HCL and Solution Star and BFSI occupier like World Bank and Citi Corp Services. Rajiv Gandhi Salai (OMR), the IT corridor of Chennai continued to remain the preferred location for IT/ITES companies with 71% in total absorption this quarter, followed by Mount-Poonamallee Road 18% and CBD 7%.

New supply addition continued to remain muted in Chennai and the only major commercial project that witnessed completion in 2Q2015 was Rajkamal Pinnacle (0.07 million sq ft) by Olympia Group located at Nungambakkam High Road. About 8.6 million sq ft of grade A office space was available for fit-outs, which was located in OMR (IT Corridor) (54%), Ambattur (17%), CBD (15%), GST Road (7%), Off CBD (5%) and Mount-Poonamallee Road (2%).

Overall vacancy rates fell due to limited addition of new space. This was a prime reason for an upward revision in rents in the range of 4 to 7% QoQ in micro-markets like CBD, OMR I, GST Road and Ambattur. However, OMR (Post Toll) and Mount-Poonamallee Road were remained stable.

This quarter the long-awaited Chennai Metro Rail become operational. It runs between Alandur to Koyambedu, a 10.1 kms stretch. Apart from this two more stretches, Washermanpet to Airport (23.1 kms) and Chennai Central to St Thomas Mount (22 kms) part of Phase I, are expected to



Chennai | OfficeJuly 2015

Rental Values

*Indicative Grade A rents in INR per SF per month**OMR I (Madhya Kailash – Perungudi- Toll gate I) ***OMR II (Thoraipakkam – Sholinganallur) & OMR III (Semmencherry – Siruseri)


% CHANGEQoQ YoY

CBD 65 - 80 4% 4%

Off CBD 50 - 60 0% 4%

Ambattur 26 - 32 5% 16%

OMR I** 50 - 60 5% 4%

OMR II & III** 25 - 40 0% 0%

Mount-Poonamallee Road 50 - 60 0% 0%

GST Road 35 - 45 7% 7%


Vacancy

Absorption

Construction

Rental Value








be operational by end of next year.

This quarter SPREP Pte Ltd, a joint venture formed between Canada Pension Plan Investment Board (CPPIB) and Indian developer Shapoorji Pallonji Group bought its first commercial assets in the country with acquisition of an IT park named SP Infocity located in OMR at an enterprise value of $220 million. Through this investment by SPREP, CPPIB continues to demonstrate its long-term commitment to the Indian real estate market.

Colliers View

Office absorption is expected to grow in the second half of 2015. Primary drivers to this demand will be occupiers from IT/ITeS, BFSI and Manufacturing. Looking at the huge vacant inventory developers will remain cautious on completion and launch of new projects. Rents are expected to increase marginally in preferred micro markets like OMR (pre-toll), however rest other micro markets will remain under pressure until office demand improves.




HCL Alpha City 100,000 OMR Lease

Citi Corp Services TRIL 96,000 OMR Lease

World Bank SP Infocity 65,000 OMR Lease

E4E(Healthcare BPO) Tecci Park 58,000 OMR Lease

Solution Star DLF SEZ 55,000 Mount - Poonamallee Road Lease

Notes:

1. Office Market: Prime office properties in Chennai are located in seven principal sub markets: CBD, Off CBD, Ambattur, OMR I, OMR II & III, Mount - Poonamallee Road, GST

Road.







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Chennai One SEZ – South Block IG3 infra Ltd. 1,200,000 Pallavaram Thoraipakkam Road 2015

Doshi High Street Doshi Housing 160,000 Anna Salai 2015

Rajkamal Pinnacle Olympia Group 70,000 Nungambakkam High Road 2015






Short pause in large deals leads to 26% decline in quarterly absorptionBengaluru recorded only 2.30 million sq ft of office absorption in 2Q 2015 which is about 26% less than the total office absorption of 1Q 2015. The primary reason of this decrease is fall in average deal size from 50,000 sq ft in first quarter to 38,000 sq ft in 2Q 2015. Most of the lease transactions can be attributed to expansion by companies from IT/ITeS sector like Concentrix, Danske IT and Support Services, SAP etc., took over 0.1 million sq ft each. Also occupiers from BFSI sectors like Axis Bank, RBS Bank also took more than 0.1 million sq ft this quarter.

2Q 2015 witnessed new supply of 1.3 million sq ft. Projects accounting for this new supply were 0.8 million sq ft “Global Technology Park (Maple tree – Phase 1)” by Adamas Builder along Outer Ring Road, RMZ developer completed two projects “RMZ Galleria” (0.3 million sq ft) at Yelahanka and “RMZ Latitude” (0.23 million sq ft) at Bellary Road.

The total ready stock available for lease stood at 6.4 million sq ft. Micro markets with the highest available supply were EPIP Zone/ Whitefield (44%), Electronic City (22%), Outer Ring Road (11%). Backed-up with consistent demand, developers continued to launch new projects during the quarter including; “Prestige VST Tower” (0.1 million sq ft) by Prestige Group at MG Road, “Adarsh Techpark” (0.08 million sq ft) by Adarsh Group at Outer Ring Road and an Individual developer launch “Tapasviji Tech Park” (0.05 million sq ft) at Whitefield. These projects are expected to complete by end



Bengaluru | OfficeJuly 2015

Rental Values

*Indicative Grade A rents in INR per SF per month**Northern part of ORR - KR Puram till Hebbal


% CHANGEQoQ YoY

CBD 90 - 130 0% 16%

Outer Ring Road (Marathalli - Sarjapur)

55 - 65 2% 4%

Bannerghatta Road 55 - 65 9% 9%

Outer Ring Road (North)** 53 - 60 0% 0%

Hosur Road 25 - 40 0% 8%

EPIP Zone/ Whitefield 28 - 36 0% 0%

Electronic City 28 - 36 8% 14%


Vacancy

Absorption

Construction

Rental Value

Capital Value








of 2016.

In select micro markets like Electronic City, Bannerghatta Road and Outer Ring Road (Marthalli - Sarjapur) rents increased averagely in the range of 2 – 9% QoQ, this is because of demand from IT/ITeS companies. Rest other micro markets remained stable.

With an investment of over INR 18,500 crores under PPP (Pubic Private Partnership) the BDA (Bangalore Development Authority) has planned approximately 75 kms of elevated roads network on the north - south corridor connecting Central Silk Board with Hebbal; east - west corridor - 1 connecting K R Puram with Yeshwantpur ; and east - west corridor - 2 connecting Janabharathi with Varthur.

Colliers View

Many RFPs are floating in the market; especially from IT/ITeS sector and we forecast an increase in office absorption in the coming quarters too. The EPIP Zone/ Whitefield, Electronic City and Outer Ring Road will continue to remain the most preferred office locations due to location advantages and competitive rents. Rents may rise marginally in demand led micro markets while other locations will have stable rental scenarios. In the long term developers will continue to add more new supply and will launch projects along with Outer Ring Road and Whitefield.



CLIENT BUILDING NAME AREA (SF) LOCATION LEASE / SALEDanske IT and Support Services RMZ Eco World 136,890 Outer Ring Road Lease

Axis Bank Prestige Shantiniketan 126,000 Whitefield Lease

RBS RMZ Eco World 105,345 Outer Ring Road Lease

Concentrix Karle Town Centre 100,000 Outer Ring Road Lease

SAP RMZ Eco World 98,880 Outer Ring Road Lease


Maple Tree - 1 Phase Adamas Builder 900,000 Outer Ring Road 2015

Bagmane Constellation Business Park - Virgo Block Bagmane Developers 800,000 Outer Ring Road 2015

RGA Tech Park Primal Realty 800,000 Sarjapur Road 2015



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10,000

12,000

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0

70

60

50

40

30

10

20

0

2

1

3

4

5

6

7

0

1Q 2

013

2Q 2

013

3Q 2

013

4Q 2

013

1Q 2

014

2Q 2

014

3Q 2

014

4Q 2

014

2Q 2

015

1Q 2

015

Notes:

1. Office Market: Prime office properties in Bengaluru can be divided into three principal sub-market— CBD/Off CBD (MG Road, Millers Road, Vittal Mallya Road etc.) the SBD

(Banerghatta Road & Outer Ring Road (ORR)) and PBD (Hosur Road, EPIP Zone, Electronic City and Whitefield).





Forecast

2Q 2

008

2Q 2

009

2Q 2

010

2Q 2

011

2Q 2

012

2Q 2

013

2Q 2

014

2Q 2

015

2Q 2

016F

2Q 2

017F


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Office absorption shrunk by 18% QoQOffice transactions in Kolkata shrink to 0.25 million sq. ft. in 2Q 2015, down by about 18% from previous quarter. IT/ITeS remained as the key occupiers with 70% share of the total absorption. Most of these transactions were concluded in Sector V & New Town micro market in the form of relocation due to cost streamlining approach of occupiers. The most significant leasing transactions for 2Q 2015 were British Telecom leasing 0.1 million sq. ft. in DLF SEZ at New Town and Reliance Geo leasing 0.05 million sq. ft. of space in Globsyn Crystal at Sector V. Developers remained cautious this quarter as well due to diminishing demand.

The city did not witness any major new project launch or completion during the surveyed quarter. Although construction works of few large scale projects like “PS Srijan Tech Park-Phase II” at Sector V (0.05 million sq. ft.) are in advance stages of completion which will bring more new supply in coming quarters. Due to weak demand rents and capital values remained stable across all micro markets in Kolkata.

In order to promote the IT/ITeS investment in and around Kolkata, the state government is developing two IT parks of about 0.25 million sq. ft. and 0.20 million sq. ft. in Santiniketan and Durgapur respectively, which are expected to be completed by 2017. Apart from these, two more IT parks are planned in the outskirts of Kolkata in Siliguri and Bankura locations.

On the infrastructure front the metro work is in its advance stages, especially East West Metro corridor which will connect the IT hub of Salt Lake to the central part of the city, Sealdah. Also post government allocation of another INR 264 crores to acquire and clear the land hurdle for



Kolkata | OfficeJuly 2015

Rental Values

*Indicative Grade A rents in INR per SF per month**Park Street, Camac Street, Chowranghee Road, AJC Bose Road***EM Bypass, Topsia, Ruby****Salt Lake, New Town, Rajarhat


% CHANGEQoQ YoY

CBD** 85 - 115 0% -5%

SBD*** 65 - 75 0% -7%

Sector V 40 - 45 0% -9%

PBD**** 34 - 35 0% -1%


Vacancy

Absorption

Construction

Rental Value








New Garia-Kolkata Airport Metro project, swift-paced construction activities were witnessed on this corridor.

In a significant private equity transaction Milestone Capital Advisors exited from “Millennium Tower-I”, an IT commercial property located in Rajarhat New Town. The building fully occupied by IBM. According to VCCircle Market reports, the company exited its investment of INR 57 crore made in March 2008 for over INR 91 crores, which includes rental income of around INR 34 crore earned over

a period of 7 years.

Colliers View

In the short term, we anticipate that the rents will remain on the same levels in CBD and SBD locations however select micro markets like Salt Lake and New Town may witness a decline on account of piled up inventory. Supply will remain restricted as developers will refrain from completing the under construction projects and will add speculative supply until demand strengthens.




British Telecom DLF SEZ 108,000 New Town Lease

Reliance Geo Globsyn Crystal 55,000 Sector V Sale

Abhiska Enterprise (TIL) Godrej Water Side 24,985 Sector V Sale

Canon PS Arcadia Central 14,000 Camac Street Lease

SGS Eco Space 13,180 New Town Sale


Mani Twin Mani Group 1,800,000 Rajarhat 2015

Technopolis 2 Forum Projects 1,200,000 Bantala 2015

Magnacon Infinity Group 740,000 Salt Lake 2015

Notes:

1. Office Market: The major business locations in Kolkata are CBD (Park Street, Camac Street, Chowranghee Rd, AJC Bose Rd), East Kolkata (EM Bypass, Topsia, Ruby), Salt Lake/

Sector V and New Town / Rajarhat.







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120

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0.40

0.30

0.20

0.10

0.60

0.70

0.80

0.90

1.00

0.00

1Q 2

013

2Q 2

013

3Q 2

013

4Q 2

013

1Q 2

014

2Q 2

014

3Q 2

014

4Q 2

014

2Q 2

015

1Q 2

015

Forecast

2Q 2

008

2Q 2

009

2Q 2

010

2Q 2

011

2Q 2

012

2Q 2

013

2Q 2

014

2Q 2

015

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016F

2Q 2

017F


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Pune office absorption reports an upswing, recorded at 1.84 million sq ftPune’s office property market saw a robust office space absorption in 2Q 2015. The city witnessed 1.84 million sq. ft. of office absorption in 2Q 2015 as compared to 0.89 million sq. ft. in first quarter. On a half yearly basis, 2.74 million sq. ft. office space was absorbed which is about 38% more as compared to the last year take-up for the same period. IT/ITeS occupiers were the primary demand drivers and leased approximately 70% of the total absorption in various grade ‘A’ office establishments located in Hinjewadi, Nagar Road, Airport Road/Pune Station and Baner. Apart from this BFSI sector also remains active with 17% share of total absorption. Most of these leases were for expansion and only few companies relocated from their existing offices to new locations in order to rationalize their rental outflows.

This quarter no new grade A office project were launched. Few small projects totalling 0.24 million sq ft of grade B office space were launched this quarter which are expected to complete by 2017.

About 4.8 million sq. ft. of grade A office supply was available for fit-outs as of 2Q 2015, most of which was located in micro markets like, Airport Road/Pune Station, Hinjewadi, Nagar Road, Kalyani Nagar and Senapati Bapat Road. Also about 0.22 million was added to the Pune’s total inventory this quarter; projects adding these supply were “Cello Platina” by Cello Group at F C Road and “Manara IT Block A” by MTPL at Hinjewadi.



Pune | OfficeJuly 2015

Rental Values

*Indicative Grade A rents in INR per SF per month


% CHANGEQoQ YoY

Baner 45 - 55 0% 0%

Bund Garden 50 - 65 0% 0%

Airport road/pune station 48 - 80 7% 7%

Aundh 45 - 60 0% 0%

Senapati Bapat Road 55 - 85 0% 0%

Bavdhan 35 - 45 0% 0%

Kalyani Nagar 45 - 62 2% 2%

Nagar Road 45 - 60 5% 5%

Hinjewadi 36 - 50 9% 12%

Hadapsar/Fursungi 38 - 65 0% 0%

Kharadi 38 - 75 14% 16%


Vacancy

Absorption

Construction

Rental Value








Rents reinforced in few micro markets like Airport road/Pune station, Kalyani Nagar, Nagar Road, Hinjewadi and Kharadi during 2Q 2015, due to which overall Grade A office rents increased by 3% QoQ. In a major policy change this quarter, Maharashtra Government came out with revision of 2009 IT/ITeS policy which aimed at making the state an animation and gaming industry hub. The policy offered various incentives like increase in FSI and stamp duty being waived off. This is aimed at attracting INR 50,000 cr of investment and 1 million new jobs being created in the next 5 years.

Colliers View

With the new IT/ITeS policy offering various incentives, we anticipate demand momentum to continue from IT/ITeS occupiers in near to medium term. Companies looking for office space of 20,000 sq. ft. or above prefer Hinjewadi, Airport Road/Pune Station and Nagar Road micro markets due to decent grade A available supply, thus rents in these micro markets are expected to strengthen further. On the whole, vacancy levels are unlikely to change due to the overall demand supply equilibrium.




Amazon Inorbit IT 195,500 Nagar Road Lease

UBS Commerzone-B8 110,000 Yerwada Lease

BNY Mellon Commerzone-B8 100,000 Yerwada Lease

Concentrix Corporation Tech Park One Tower-D 100,000 Yerwada Lease

L&T Blue Ridge IT Tower-8 100,000 Hinjewadi Lease


SP Infocity Building 5 Shapoorji Pallonji Group 800,000 Phursungi 2016

World Trade Centre (WTC) Tower 2 Panchshil Realty 750,000 Kharadi 2015

Acendas Phase II Acendas 615,000 Hinjewadi 2016

Notes:

1. Office Market: The prime office sub-markets of Pune include CBD (Deccan Gymkhana, Bund Garden Road, Senapati Bapat Road & Camp), Off CBD (Aundh, Airport Road and

Kalyani Nagar) and the eastern corridor, along with Nagar Road and Kharadi, which have emerged as a preferred location for financial and IT/ITES companies.







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2.00

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1Q 2

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2Q 2

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3Q 2

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013

1Q 2

014

2Q 2

014

4Q 2

014

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015

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015

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2Q 2

008

2Q 2

009

2Q 2

010

2Q 2

011

2Q 2

012

2Q 2

013

2Q 2

014

2Q 2

015

2Q 2

016F

2Q 2

017F








About Colliers International

colliers.com

67 countries on 6 continentsUnited States: 140 Canada: 31 Latin America: 24

199 EMEA: 108

$2.3billion in annual revenue

1.7billion square feet under management

16,300professionals

Primary Authors:

Surabhi Arora Associate Director | Research +91 124 456 [email protected]

Sachin Sharma Manager | Research

Amit Oberoi I National DirectorValuation & Advisory Services & Research

For Office Services:

Mumbai: George Mckay I South Asia [email protected]

Delhi / NCR: Vikas Kalia | National [email protected]

Bengaluru: Goutam Chakraborty I [email protected]

Pune: Rishav Vij I Senior Associate [email protected]

Chennai: Shaju Thomas | Senior Associate Director [email protected]

Kolkata: Swapan Dutta I Senior Associate [email protected]

Colliers InternationalTechnopolis Building, 1st Floor, DLF Golf Course Road, Sector 54, Gurgaon - 122 002TEL +91 124 456 7500

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2015




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India Office Property Market Overview_July 2015

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