Date post: | 07-Nov-2014 |
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Pune INDIA REAL ESTATE OUTLOOK REPORT (January – June 2014)
For queries on data, contact Hetal Bachkaniwala, Research
For any other query, contact Bertilda Fernandes, Marketing
Launches (units)
Absorption (units)
Weighted Avg Price (` per sq.ft.)
Jan - June 2014 16,883 -19% Y-o-Y
July – Dec 2014 (E) 18,960 -23% Y-o-Y
2014 Year End (E) 35,840 -21% Y-o-Y
Jan-June 2014 14,719 -30% Y-o-Y
July – Dec 2014 (E) 19,808 11% Y-o-Y
2014 Year End (E) 34,527 -11% Y-o-Y
Jan - June 2014 4,614 6% Y-o-Y
2014 Year End (E) 4,713 4% Y-o-Y
Residential
Market Overview
New Completions (mn.sq.ft.)
Absorption (sq.ft.)
Vacancy %
Jan-June 2014 2 -15% Y-o-Y
July to Dec 2014 (E) 2.6 125% Y-o-Y
2014 Year End 4.7 31% Y-o-Y
Jan-June 2014 2.1 -26% Y-o-Y
July to Dec 2014 (E) 2.2 85% Y-o-Y
2014 Year End 4.3 7% Y-o-Y
June 2014 20%
2014 Year End (E) 20% Office
Weighted Average Rent (` per sq.ft. per month)
Jan-June 2014 43 10% Y-o-Y
2014 Year End (E) 47 15% Y-o-Y
Market Overview
Residential
8,000
9,000
10,000
11,000
12,000
13,000
14,000
15,000
No
. o
f u
nit
s
Demand & Supply Trend- 2014
Downward trend in demand since 2013, and this has continued in 2014 as
well
Fall in absorption expected to be complemented by a sharper drop in the
number of new launches
8,000
9,000
10,000
11,000
12,000
13,000
14,000
15,000
Demand dropped by over 19% in
2013 and is expected to fall by
11% in 2014
Total number of units to be
absorbed expected to fall from
38,800 in 2013 to 34,500 in 2014
New launches estimated to
decrease by 21% from 45,370
units in 2013 to 35,840 units in
2014
Launches
Absorption
Unsold Inventory Level - QTS
The QTS ratio has been inching upwards since
Sept 2013, signifying weakness in the market
Developers have reduced new launches by 19% during H1 2014, compared to H1
2013
This has not resulted in lowering the QTS ratio, as the sales volume declined further
by 30% during the same period
3
4
5
6
7
8
9
No
. o
f Q
uart
ers
71,000 units remain unsold as
of June 2014 and will take 7
quarters to absorb
H2 2014 Forecast
The conversion time of an actual sale from a sales inquiry has reduced
drastically in the past 2 months, indicating some sort of revival in demand
However, new launches are
estimated to fall by 23% during
the same period
Half-yearly Launches and Absorption Trend
31,4
58
24
,51
3
20,7
20
24,6
52
16,8
83
18,9
60
23,1
22
24,8
95
20
,93
7
17,8
58
14,7
19
19,8
08
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
No
. o
f u
nit
s
Launches Absorption
Sales volume expected to
recover from H2 2014
onwards
Forecasted to increase by
11%, compared to H2 2013
Weighted Average Price Trend
Half-yearly Weighted Average Trend
The bumpy ride in demand and supply does not seem to have
any significant impact on prices as it continues to move
upwards
Prices forecasted to increase by 4%
in H2 2014 on the back of a
moderate recovery in sales volume
3,500
4,000
4,500
5,000
`/S
q f
t
The weighted average price
increased by 6% in H1 2014
` 4,350/ sq ft
` 4,600/ sq ft ` 4,700/ sq ft
New Launch Analysis
3%
24%
29%
23%
21%
H1 2013
1%
23%
20%
20%
36%
H1 2014 Central
Koregaon Park, Boat Club Road, Erandwane,
Deccan, Kothrud, Model Colony
East Viman Nagar, Kharadi, Wagholi, Hadapsar,
Dhanori
West Aundh, Baner, Wakad, Hinjewadi, Bavdhan,
Pashan
North Pimpri, Chinchwad, Moshi, Chikhali, Chakan,
Talegaon
South Kondhwa, Ambegaon, Undri, Dhayari, Warje,
Sinhgad Road
Micro-Market Split of Units Launched
Central East West North South
South witnessed a phenomenal jump in
new launches during H1 2014
Located between 2 major IT hubs of
Hinjewadi and Kharadi, it is slowly
emerging as a preferred destination for
buyers
West Pune observed the sharpest fall
in new launches
West Pune is facing price resistance
from buyers
Ticket Size Analysis
Ticket Size of Launched Units by Micro Markets
96% of new units launched in the South were
below the ticket size of `5 mn while West and
East were at 66% and 73% respectively
0%
20%
40%
60%
80%
100%
<2.5 mn. 2.5-5 mn. 5-7.5 mn. 7.5-10 mn. 10-20 mn. >20 mn.
Central East
West North
South
Majority of the locations in East and West
have already breached ` 5,000/sq.ft
Absorption Analysis
Micro Market Split of Units Absorbed
West has observed the steepest fall in absorption because the ticket size is gradually
going up
2%
27%
30%
20%
21%
H1 2013
3%
26%
26%
24%
21%
H1 2014
Central Koregaon Park, Boat Club Road, Erandwane,
Deccan, Kothrud, Model Colony
East Viman Nagar, Kharadi, Wagholi, Hadapsar,
Dhanori
West Aundh, Baner, Wakad, Hinjewadi, Bavdhan,
Pashan
North Pimpri, Chinchwad, Moshi, Chikhali, Chakan,
Talegaon
South Kondhwa, Ambegaon, Undri, Dhayari, Warje,
Sinhgad Road
Micro Market Health
Age of Inventory compared to QTS
South is the poorest in health with an
excess of unsold inventory of the
projects launched more than two years
ago
Central East West North South
West is the healthiest with the lowest
QTS and minimum age of unsold
inventory
5
6
7
8
9
10
5 6 7 8 9 10
QTS
Despite the West witnessing the
sharpest fall in absorption, its health
is relatively better because the drop
in absorption was matched by a
similar fall in new launches
Price Movement
Price range in H1 2014 (per sq.ft.) 12-month change 6-month change
Central
Koregaon Park 13,000 - 17,000 8% 5%
Kothrud 7,500 - 12,500 10% 3%
Erandwane 13,500 - 18,000 17% 4%
Boat Club Road 14,000 - 19,000 1% 0%
East
Kharadi 5,200 - 6,200 11% 0%
Wagholi 3,400 - 4,500 4% 2%
Dhanori 3,800 - 4,700 1% 0%
Hadapsar 4,500 - 5,800 10% 3%
West
Aundh 7,500 - 9,500 14% 1%
Baner 5,500 - 8,000 10% 1%
Hinjewadi 4,800 - 5,800 9% 1%
Wakad 5,200 - 6,000 8% 3%
Price Movement
Price range in H1 2014 (per sq.ft.) 12-month change 6-month change
North
Moshi 3,600 - 4,200 6% 2%
Chikhali 3,400 - 4,000 4% 3%
Chakan 2,800 - 3,200 8% 2%
South
Ambegaon 4,200 - 5,200 7% 2%
Undri 3,800 - 4,800 12% 3%
Kondhwa 4,500 - 5,600 11% 2%
Key Takeaways
Demand is expected to decrease from 38,800 units in 2013 to 34,500
units in 2014
Pune will take more than 7 quarters to offload its unsold inventory
South Pune is emerging as a preferred destination for home buyers
due to its strategic location
After a lull of 2 years, absorption to increase by 11% in H2 2014
Office
Vacancy Trend
Office Space Stock and Vacancy Level
Vacancy levels have been falling
since 2012 on the back of a steady
rise in absorption and a slower pace
of completion of new projects
0%
5%
10%
15%
20%
25%
30%
0
10
20
30
40
50
60
Mn
S
q f
t
Stock Occupied Stock Vacancy (RHS)
The vacancy level observed
during H1 2014 was 20%,
down from 22% in H1 2013
22% 20%
Total office stock
54.3 mn.sq.ft. Occupied
43.4 mn.sq.ft
New Completion and Absorption
While 2.1 mn sq ft of office
space was absorbed in H1
2014, only 2 mn sq ft of new
projects were completed
Absorption during H1 2014 was better than expected due to improved
sentiments in the IT/ITeS and BFSI sectors (including support services)
-
0.5
1.0
1.5
2.0
2.5
3.0
Mn
Sq
ft
New Completion Absorption
H2 2014 Forecasts
Office Space Stock and Vacancy Level
2.16 mn sq ft of space projected to be
absorbed during H2 2014 which is a
significant increase over H2 2013
For 2014, absorption is expected to
touch 4.26 mn sq ft - an increase of
7% from 4 mn sq ft in 2013
Demand will be matched by a higher increase in new completions of 4.68 mn sq ft
for 2014
2.64 mn sq ft of new projects are expected to be completed in the remaining
6 months
0%
5%
10%
15%
20%
25%
30%
0
10
20
30
40
50
60
Mn
S
q f
t
Stock Occupied Stock Vacancy (RHS)
Weighted Average Rents
Office Space Stock and Vacancy Level
Rental value increased by 5% over
the last 6 months
The weighted average rental value is forecasted to increase from
` 43 per sq ft per month in H1 2014 to
` 47 per sq ft per month in H2 2014
A strong pipeline of new supply
is expected to restrict the upside
movement of rentals to single
digits in H2 2014 30
35
40
45
50
55
60
`/s
q.f
t./m
on
th
Sectoral Analysis of Demand
Sector- wise Absorption Split
Share of the IT/ITeS
sector has fallen during
H1 2014
Other services sector has
increased to 20% from <5% in
H1 2013 due to demand from
consulting, media, healthcare
and retail companies
IT/ITeS Financial Services Manufacturing Other Services
H1 2013 65% 20% 10% 5%
H2 2013 51% 8% 29% 12%
H1 2014 39% 33% 9% 20%
A few big-ticket deals by
HSBC, Barclays and Citibank
including support services
have skewed the share
towards the BFSI sector
Deal Size Analysis
Average Deal Size and Number of Deals
Average deal size has reduced
considerably during H1 2014, though
the market has seen a substantial
jump in the number of deals
The average size of transactions has
reduced to 21,400 sq ft in H1 2014 from
42,700 in H1 2013
0
40
80
120
-
10,000
20,000
30,000
40,000
50,000
Nu
mb
er
Sq
ft
Average Deal Size (Sq ft) Number of Deals (RHS)
42,700
21,400
Business District-wise Analysis
Business District-wise Absorption Split
Decline in share of PBD markets is
attributed to the fall in IT/ITeS sectors
With an increase in share from 28% in
H1 2013 to 42% in H1 2014, SBD East
has emerged as most preferred by
BFSI sector including support services
The SBD markets have regained their
share, which they had been losing out
to PBD markets over the last few years
5%
28%
6%
35%
26%
H1 2013
8%
42%
14%
22%
13% 1%
H1 2014
CBD & Off CBD
SBD East
SBD West
PBD East
PBD West
SBD North & South
Business District-wise Rents
Limited number of new project completions, low supply pipeline and steady demand
have helped the rents in SBD West to soar by 14% over the last year
Business
District
Rental Value Range in
H1 2014
(per sq ft per month)
12 month change 6 month change
CBD & off CBD 55-85 6% 2%
SBD East 40-60 12% 6%
SBD West 40-55 14% 4%
PBD East 35-60 13% 5%
PBD West 32-45 9% 3%
PBD East has seen a faster rental growth compared to PBD West due to proximity
to the Pune airport and the presence of a developed retail infrastructure
Key Takeaways
The absorption of office space, is expected to touch 4.26mn sq. ft. an
increase of 7% over 2013
SBD East has emerged as the most preferred market during H1 2014
with its share in absorption increasing to 42%
PBD East has seen a faster rental growth owing to its proximity to the
Pune airport & the presence of a developed retail infrastructure
Pune INDIA REAL ESTATE OUTLOOK REPORT (January – June 2014)
For queries on data, contact Hetal Bachkaniwala, Research
For any other query, contact Bertilda Fernandes, Marketing