The Seven Stars of IndiaIndia’s best performing micro markets for occupiers

Confederation of Indian IndustrySince 1895

� On Point • The Seven Stars of India

On Point • The Seven Stars of India �

Through the TurnWith India’s economic recovery well under way, its commercial real estate market is beginning to stabilize. While the landscape will remain favourable for tenants in �010, landlords will have greater influence starting in 2011. This closing window of opportunity for occupiers means that they should be proactively looking to lock in attractive leases in the near term as office rents are beginning to bottom out and options for large, quality space abound.

Indeed, most cities in India have already witnessed an uptick in the volume of lease transactions in 1Q �010 with NCR-Delhi, Mumbai and Hyderabad having recorded more than a million sq ft of leases each. In �009, occupiers showed a strong preference towards operational vacant stock rather than projects under construction, a departure from �007-08.

With the forecasted growth of net completions expected to outpace that of net absorption, a significant supply overhang is expected to remain over the next one year. This will lead vacancy level across India, which was at 17.�% at end-�009 to rise to mid �0% by end-�010. Locational advantage and tenant mix will serve as key differentiators as landlords struggle to lease unoccupied space.The freefall in rental values has stopped or slowed significantly in all Indian metros with the exception of NCR-Delhi and Mumbai. While these two cities are currently feeling the affects of a large supply pipeline in the short term, they are also expected to lead the rebound in the property cycle, followed by Bangalore, Chennai, Pune, Hyderabad and Kolkata.

Figure 1: Pan India supply demand scenario 1Q �010

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Source: Real Estate Intelligence Service

Source: Real Estate Intelligence Service

� On Point • The Seven Stars of India

Source: Real Estate Intelligence Service

The Changing OccupierThe IT/ITES industry has traditionally been a major driver for Grade A office space demand throughout India. In the face of severe cost pressure during �009, both domestic and multinational players curbed real estate costs and expansion plans. The global economic recovery, along with rising software & services exports, has once again fuelled demand from the IT/ITES sector which accounted for nearly half of the absorption witnessed in 1Q10.

A similar story was observed in India’s “Sunshine Sectors” of telecom, pharmaceuticals and manufacturing which, spurred by low rents, only provided weak, opportunistic demand for office space in 2009. 1Q10 saw a surge in demand from the BFSI and telecom sectors in particular. Going forward, the IT/ITES and BFSI sectors will lead the charge as net absorption of office space is forecasted to grow at a CAGR of 29.5% from 19.6 million sq ft in �009 to ��.6 million sq ft in �01�.

Figure 3: Quarterly rental value fluctuation 1Q 2010

Figure 4: Sectoral classification of leasing activity in 2009

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Mumbai

NCR-Delhi

Kolkata

Hyderabad

Chennai

Pune

Bangalore

India

% Q-o-Q Change in Stock Weighted Rental Values

1Q10�Q09�Q09�Q091Q09

Sectoral Classification of Leasing Activity in �009

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ral c

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)

IT/ITeS BFSI Telecom Manufacturing Infrastructure Others

Source: Real Estate Intelligence Service

On Point • The Seven Stars of India �

Decision Parameters

Portfolio Rationalization

2009 2010

Consolidation of multiple office spaces within a cityValue recovery from underutilized properties through sale or subleasingOccupiers with a long term India vision and clarity on location opted to “buy” instead of “lease”

••

•

Consolidation to give way to slow expansion towards a multiple location strategy - suburban back office coupled with a CBD head officeOpportunistic sales and subleasing to continue, especially with prime city propertiesBuy vs. lease will continue to be closely scrutinized

•

•

•

Cost Reduction/Operational Efficiency

Increased focus on reducing operational costs including headcountsHalt to expansion and diversification plans

•

•

Cautious optimism leads to slow renewal of hiring and expansion in human resources and real estateExpansion options revisited

•

•

Leverage

Rather than waiting and watching markets, occupiers actively renegotiated on rent and incentives to the maximum possible extentLong lease negotiation periods – awaiting global expansion approvals

•

•

Extent of leverage reduced with demand stabilizationStill no room for large scale rental incrementsLeasing activity gains momentum – occupiers lock in as a buffer against slowly rising rents

•••

Completed V/S Under-construction Building Preference

Only operational, or ‘ready to move in’ spaces are within the consideration set

•Focus remains on operational projectsUnder-construction properties with a maximum horizon of 6-8 months might also be considered

••

LocationFocus on India’s top 7 markets (Tier I and Tier II cities)Scrutinize cost/benefit of a CBD location and actively explore options in SBD and suburbs

••

Tier I cities will continue to remain the most preferred locations, followed by Tier II marketsBetter performing Tier III cities might be considered by year end

•

•

Moving Ahead

Demand from global players, headquartered abroad, might catch up with domestic occupier demand by the year end.IT/ITeS sector will continue to lead, followed by sunshine sectors including Telecom, Pharma and BFSI. Industrial growth might spur office space demand from the manufacturing and engineering sector.Occupiers to remain flexible in option selection; focus on growth and remain operationally efficient.Uncertainty over headcount will remain a challenge for CREs as they ensure that corporate real estate strategies are in line with broader organizational objectives.Occupier focus will be on Special Economic Zones, due to the STPI sunset clause by March �011.

••

••

•

Source: Jones Lang LaSalle Meghraj Research

New Strategies for the Post-Downturn Era

Occupier Strategy

Occupier Type

2009 2010 2011 2012

1H 2H 1H 2H 1H 2H 1H 2H

A

B

C

A. Occupiers who have a global footprint, primarily operating out of Europe or the US, but are new to the Indian market. They face global cost pressures but do not want to miss the India cost arbitrage benefit. For example: Amazon, First Data, ANZ Bank.B. Occupiers who have a global footprint and have a long presence in the Indian market. These are tapping the present window of opportunity. For example: RBS, HSBC, Deutsche Bank, E&Y, Accenture.

C. Domestic occupiers who foresee brighter economic times in the near term. For example: TCS, WIPRO, Uninor, Reliance being a few.

As new market realities unfold, the real estate strategies employed by occupiers will depend in large part on the share of their operational footprint within India vs. abroad. The occupiers, whom we’ve clubbed into three types (primarily global footprint – long in India, primarily global footprint - new to India and domestic footprint), will see their strategies progress from cautious to optimistic at differing rates. Regardless of operational footprint, in �010 occupiers are adjusting their decision parameters with respect to portfolio rationalization, cost reduction and location section.

LEGEND Cautious Optimistic Growth Acceleration

6 On Point • The Seven Stars of India

The 7 Stars of IndiaA relative comparison of 16 micro-markets across India’s tier I & tier II cities was carried out in order to identify those which are most favourable for occupiers. The analysis included a wide range of real estate, infrastructure and socio-economic parameters. Micro-markets were selected based upon expected supply, occupier demand and indicator movement. Central business districts and other high priced, low supply office destinations were not included in the analysis.

The scores provided above are weighted average indices scored from an occupier point of view. This essentially enumerates that higher the rental depreciation, larger the vacancy fluctuation and more the SEZ and STPI expansion option availability in a micro-market, higher would be its scoring. Within the real estate parameters a higher focus has been provided to ‘Occupier Demand’, followed by ‘Supply’ and ‘Indicator fluctuation’ within a city. The segmentation above aims at combining quantitative parameters with qualitative assessment to identify one ‘STAR’ performer from each city. Some of the remaining nine micro-markets were a close second to the star performers with strong fundamentals. These select micro-markets might emerge as rising stars of the future.

•

••

Based on relative scores, which are weighted average indices for individual micro-markets, the best performers were collectively titled as ‘The Stars of India’. These micro-markets shall maintain top positions for occupiers, regardless of the industry type, having witnessed substantial leasing activity in the past, substantial rental correction making them affordable up to year �00�-06 levels and robust and good quality future supply.

Source: Real Estate Intelligence Service

Micro Market

Delhi – NCR Mumbai Bangalore Chennai Pune Hyderabad Kolkata

Gurg

aon

Noid

a

SBD

Cent

ral

SBD

North

Wes

tern

Sub

urbs

East

ern

Subu

rbs

Than

e-Na

vi Mu

mba

i

SBD

Bang

alore

Whi

tefie

ld

SBD

Chen

nai

Subu

rbs

SBD

Pune

Hinj

ewad

i

Hite

ch C

ity &

Ga

chib

owli

Rajar

hat

Salt

Lake

Real

Esta

te P

aram

eter

s

Demand 1.1� 0.8� 0.8� 0.90 0.90 0.8� 0.78 1.0� 0.7� 0.9� 0.88 0.90 0.8� 1.10 0.7� 0.78

Supply 1.1� 0.88 0.�� 0.�� 0.�8 0.�8 0.7� 0.7� 0.6� 0.�8 0.7� 0.80 0.�0 1.00 0.�0 0.��

Indicator Movement 0.70 0.70 0.�8 0.�� 0.�� 0.�8 0.�� 0.�0 0.�� 0.�0 0.�0 0.�0 0.�� 0.�0 0.�� 0.��

Real Estate Score 1.06* 0.8� 0.66 0.72* 0.70 0.6� 0.7� 0.84* 0.6� 0.77* 0.76 0.78* 0.68 0.94* 0.�7 0.59*

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Social & Physical

Environment�.�� �.�0 �.90 �.80 �.8� �.�� �.6� �.98 �.�� �.�� �.68 �.80 �.90 �.80 �.00 �.78

Socio-Economic &

Infrastructure Score

3.87 �.78 �.9� 4.58 �.71 �.7� �.�9 4.19 �.60 3.67 �.01 3.88 �.1� 3.58 �.10 3.77

On Point • The Seven Stars of India 7

Indicators EmployedThe scores listed are a weighted sum index for each of the seven broad parameters covered in our analysis. The sub-indicators covered under each parameter are explained below.

Supply: A weighted index inclusive of:

Existing stockFuture supply till �01�STPI options for next one yearSEZ availability for next one year (ready to move in options for occupiers till �011)

Maximum supply score is 1.5

Demand: A weighted index inclusive of:

Average annual absorption from �007 to �009Average annual absorption for �010 to �01� (forecast)Vacancy change from peak (�Q �008) and forecast for a year aheadPre-commitment status (future supply till �011)

Maximum demand score is 1.5

Indicator Movement: A weighted index inclusive of:

Rental decline from peak, and forecast for a year aheadRental overheads such as CAM charges and property tax

Maximum indicator score is 1.0

Other Externalities: A weighted index inclusive of:

Infrastructure: new infrastructure initiatives, geographical expansion, new transport and connectivity links, proximity to airport, telecom and power availabilitySocial and Physical Environment: seismic risk, international level educational, medical and social facilities, city culture and recreation options, star hotel accommodation, cost of living and cost of expatriate accommodation

Maximum externality score is 5.0

••••

•••

•

••

•

•

Market SegmentationKeeping city dynamics, historical growth and other externalities in mind, one micro-market from each city has been shortlisted to represent the star in that region. The star micro-markets represent the opportunities that occupiers have in each city to expand their base into.

Micro-market Segmentation

City Star AspirantNCR Gurgaon Noida

Mumbai SBD North SBD Central, Thane & Navi Mumbai

Bangalore SBD Bangalore WhitefieldChennai SBD Chennai OMR

Pune SBD Pune Hinjewadi

Hyderabad Hitec City & Gachibowli

Kolkata Salt Lake Rajarhat

Stars: ‘Market is moving, go lock a deal’Rents have reached their lowsLeasing activity in existing projects is high, followed by projects getting operational in next six to nine monthsOccupiers A, B and C (as defined in the occupier strategy section) hold these as their first preferences for city expansionLarge scale leases recorded in second half of 2009 and first half of �010Markets moving towards rent recovery in next six to eight months

Aspirants: Options available but not for too long. Focus on rental negotiation; opt for the best option available.

Marginal rent compression possibleLeasing activity picked up from first few months of 2010Second preference for occupier A, first preference for occupier B and CDevelopers should continue to demonstrate flexibility in pricing and offer rental incentivesRental recovery in �011, not a �010 picture

••

•

•

•

•••

•

•

A supply overhang over the next two years would imply that the Stars and the Aspirants would compete directly with each other in attracting occupier demand. While Stars have traditionally been popular amongst occupiers (especially the A and B categories), they would continue to press them against Aspirants to offer more price discounts. By doing this the occupiers would try to stretch their negotiation leverage till second half or end of 2010, which might even postpone rental increments in Stars in the near future.

Source: Real Estate Intelligence Service

8 On Point • The Seven Stars of India

The Seven Star Quadrant AnalysisStar micro-markets are a combination of high real estate development, coupled with a well developed support infrastructure and a sustainable social and business environment.

Balanced Low on S&P* High on RE** OutliersBalanced markets offer a great mix of social and physical environment along with favorable real estate indicators. With all these markets dependent on IT/ITes industry, their strategy should be to offer the best arbitrage on both fronts to remain competitive.

Although comparable to the ‘Balanced’ in terms of real estate indicators, they score low on social and physical environment. A balanced approach towards development would result in increased preference towards these locations.

Leaders among the pack in terms of real estate indicators, they compare equably to the ‘Balanced’ in social and physical environment and are preferred destinations for occupiers. They should strive for becoming a world class destination by focused efforts towards enhancing social and physical environment.

SBD North and SBD Bangalore are high on real estate activity, as well as social/physical infrastructure – an attractive combination for occupiers.Salt Lake has well established infrastructure but lags behind in real estate growth. Landlords must continue to focus on affordable rents.

SBD PuneSBD ChennaiSBD Central MumbaiNOIDAEast Suburbs MumbaiWest Suburbs MumbaiWhitefieldThane & Navi Mumbai

••••••••

RajharatHinjewadiChennai Suburbs

•••

GurgaonHitec City and Gachibowli

••

SBD NorthSBD BangaloreSalt Lake

•••

Noida

SBD North

SBD Bangalore

SBD Chennai

Gurgaon

SBD Central

WesternSuburbsEastern

SuburbsThane &

Navi MumbaiWhitefield

Chennai Suburbs

SBD Pune

Hinjewadi

Hitech City & Gachhibowli

Salt Lake

Rajharat

�.90

�.10

�.�0

�.�0

�.70

�.90

�.10

�.�0

�.�0

�.70

0.�0 0.�0 0.60 0.70 0.80 0.90 1.00 1.10Real Estate Scores

Infra

struc

ture,

Socia

l & P

hysic

al En

viron

ment

Scor

es

Source: Real Estate Intelligence Service *S&P: Infrastructure, Social and Physical Environment **RE: Real Estate

StarAspirant

On Point • The Seven Stars of India 9

Introduction to the Seven Stars of India

DELHI NCR Gurgaon Reasons for SuccessLocations of Interest

DLF-Cyber CityGolf Course RoadMG RoadSohna RoadUdyog Vihar

•••••

Gurgaon is a clear winner when it comes to occupier demand and availability of options due to sufficient quality supply, steep rental depreciation and flexible approach of developers (led by DLF). It also scores high on a fair mix of retail, residential and hospitality concentration, MRTS transportation and regional connectivity, aided by proximity to the international airport.

NOIDA comes close as a second alternative, especially for IT occupiers, boasting of an excellent infrastructure and lower rentals. Moving ahead, both Gurgaon and Noida would compete for tapping occupier demand.

However, we believe that Gurgaon will continue to maintain its leadership position in the future.

Key Developments*DLF CybercityTime TowerVatika Business ParkWelldone Tech ParkUnitech Infospace SEZDLF Silokhera

••••••

MUMBAI SBD North Reasons for SuccessLocations of Interest

AndheriAndheri-Kurla Road

•• SBD North (primarily Andheri), at the heart of Mumbai, is

closer to the city airport, has an under-construction MRTS connectivity, and boasts of more than dozen �-� star hotels, malls, social, medical and recreational facilities.

With more than � million sq ft of future supply expected in the next few months and a diverse mix of occupiers, SBD North has recorded one of the best absorption rates in Mumbai over the past two years.

Thane, Navi Mumbai, Western and Eastern suburban micro-markets shall continue to attract IT/ITeS occupiers primarily due to affordability.

Key Developments*

Kalpataru Square�1� AtriumNataraj Akruti StarLeela Business Park

•••••

BANGALORE SBD Bangalore Reasons for SuccessLocations of Interest

Outer Ring RoadInner Ring RoadCV Raman NagarBannerghatta Road

••••

Offering Grade A office space at the most affordable rental ranges (INR �8-�0 psft pm) among the secondary districts in the country, SBD Bangalore has witnessed more than � million sq ft of average annual absorption from �007-�009.

With proximity to key residential areas and availability of large land parcels, connectivity to the international airport, elevated expressways, the SBD micro-market in Bangalore is currently the largest micro-market in the country in terms of operational grade A commercial stock with highest occupancy rate.

We foresee the trend of single digit vacancy to continue in this micro-market due to controlled supply pipeline and robust occupier interest.

Key Developments*

Embassy Manyata Tech ParkVrindavan Tech VillagePri Tech ParkRMZ Ecospace

••••

*Key developments include properties that are either operational or getting operational in the next six to eight months and witnessing large active leasing.

10 On Point • The Seven Stars of India

HYDERABAD Hitec City and Gachibowli Reasons for SuccessLocations of Interest

Hitec CityNanakramguda

••

Having witnessed more than a million sq ft of leasing activity in 1Q 2010, Grade A office properties in Hitec City and Gachibowli have attracted a fair share of the resurging IT demand (TSI Waverock and K Raheja building 9 and 11). This micro-market offers good airport connectivity, well laid road and rail infrastructure, as well as solid IT infrastructure (Cyberabad). There are multiple spatial options available (particularly for IT companies), offering quality office space at affordable rentals.However, regional political sensitivity might discourage occupiers to consider Hyderabad city in the short-term. Still Hitec City and Gachibowli will clock good amount of leasing in the future primarily due to developed infrastructure, presence of quality tenants and affordable rentals.

Key Developments*

K Raheja Mindspace Building 9 and 11TSI WaverockDLF Cybercity

•

••

PUNE SBD Pune Reasons for SuccessLocations of Interest

MagarpattaKharadiKalyani NagarYerwada

••••

Nagar RoadViman NagarAundhBaner

••••

SBD Pune excels over Hinjewadi due to better infrastructure and proximity to residential locations, presence of support infrastructure such as hotels, malls, educational and medical facilities. The SBD witnessed an average annual absorption of �.� million sq ft from �007-�009 (against less than a million sq ft in Hinjewadi over the same time span), due to relatively larger rental correction. Encompassing major city locations like Magarpatta, Kharadi and Kalyani Nagar, state of the art IT infrastructure, together with a well established transportation network, and quality LEED certified office space (amidst bottomed out rentals) makes SBD Pune attractive for occupiers; notably the IT and manufacturing sectors.

Key Developments*

Magarpatta CityRaheja CommerzoneEON SEZ (Kharadi)Tech Park – I (Viman Nagar)

••••

CHENNAI SBD Chennai Reasons for SuccessLocations of Interest

DLF IT Park (SEZ)India Landtech ParkAmbit IT ParkOlympia Techpark

••••

The SBD and the suburbs of Chennai (primarily OMR) are closer in real estate scoring, as indicator movement and demand influx has been comparable in the two micro-markets (average annual absorption from �007 – �009 was about � million sq ft each, with a similar rental drop of ��-�0% from peak).

SBD Chennai has a large supply base and offers occupiers multiple options for good quality, well-maintained properties with a focus on ‘Green’ and ‘Sustainability’. Affordable rents in a well sustained market further drive occupier interest.

While SBD Chennai is currently far more attractive to occupiers as it offers strong regional connectivity, better social, institutional and residential infrastructure, suburbs are poised to give a strong competition in coming years.

Key Developments*

DLF IT Park (SEZ)India Landtech ParkAmbit IT ParkOlympia Techpark

••••

KOLKATA Salt Lake Reasons for SuccessLocations of Interest

Salt Lake Sector V•

Salt Lake is an established office destination of Kolkata, offering excellent retail and residential catchments, hotels and regional connectivity to IT/ITeS occupiers.

However, moving ahead, Rajharat will score high due to ongoing SEZ projects, quality office and residential properties, besides relative proximity to domestic and international airport.

Key Developments*

Infinity BenchmarkBengal Intelligence ParkGlobsyn CrystalSouth City PinnacleGodrej Water sideSrijan Techpark

••••••

NCR, Mumbai and Bangalore lead the leasing activity in India, followed by Hyderabad, Pune, Chennai and Kolkata*Key developments include properties that are either operational or getting operational in the next six to eight months and witnessing large active leasing.

On Point • The Seven Stars of India 11

Micro-Market Positioning:‘Stars’ have been on the lower end of the vacancy variation, while witnessing rental dips comparable to ‘Aspirants’.

Gurgaon (NCR), Thane and Navi Mumbai (Mumbai) have led all micro markets in rental depreciation, thus proving very attractive for many occupiers. However, despite a low rental correction in micro-markets such as Salt Lake (Kolkata), SBD Bangalore, SBD Chennai, Whitefield (Bangalore) and Hinjewadi (Pune), they continue to remain attractive for occupiers primarily due to low rental base, quality future supply and existing tenant profile.

•

Kick start 2010: post the downfall, where do they stand

Most of the ‘Stars’ have witnessed relatively low vacancy rise from peak, as demand has managed to arrest micro-market decline. Mostly suburbs have witnessed large vacancy fluctuations (beyond 1000 basis points), due to a supply overhang and a demand drought. This continues to exert pressures on rents in these micro-markets.

•

GurgaonNoida SBD Central

SBD - North

Western Suburbs

Eastern Suburbs

Thane-Navi Mumbai

SBD Bangalore

Whitefield

SBD Chennai

Suburbs Chennai

SBD PuneHinjewadi

Hitech City & Gachibowli

Salt Lake

Rajharat

-

�00

1,000

1,�00

�,000

�,�00

�,000

-70%-60%-�0%-�0%-�0%-�0%-10%0%

Rental Drop from Peak (�Q �008 - 1Q �010) (% in INR terms)Bubble Size: Existing Commercial Office Stock as on �010 (in sq ft; inclusive of IT, Non-IT and SEZ space)

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ise fro

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ak (�

Q �0

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Basis

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Star AspirantSource: Real Estate Intelligence Service

1� On Point • The Seven Stars of India

Circa 2011: picture of a year ahead

Micro-markets will get aligned closer to rental stability, NCR and Mumbai being exceptions. It is visible that a lead in rental appreciation would be taken by micro-markets with less future supply like SBD Bangalore, SBD Pune and Salt Lake, wherein the supply overhang is relatively less pronounced. Gurgaon is in the left half due to large supply-poor demand scenario in upcoming locations of Sohna Road, Golf Course Extension and Manesar, which together shall witness supply of more than 1� million sq ft over the next � years. Prime areas of Gurgaon such as MG Road, NH-8 and Golf Course Road are expected to witness rental price appreciation as early as 1H �011 due to forecasted strong demand recovery.Moving ahead, ‘Stars’ will witness relatively low vacancy variation as these would be the ‘most preferred destinations’ for rising occupier queries. Hence, these would either witness rental stability or positive rental appreciation. Although NOIDA is expected to witness rental pressure in the near-term, we foresee occupiers returning to the NOIDA market due to strong and improving infrastructure, emerging residential support at affordable pricing and existing population of about a million. Most micro-markets are expected to reach their rental lows within the next 2-3 quarters, if not reached as yet, which is reflected in the chart above. This indicates that the window of opportunity for occupiers, where balance of power favors them, continues to shrink with every passing quarter.

•

•

•

Gurgaon

Noida

SBD-Central

SBD-North

Western Suburbs

Eastern Suburbs

Thane-Navi Mumbai

SBD Bangalore

Whitefield

SBD Chennai

Suburbs ChennaiSBD Pune

Hinjewadi

Salt Lake Rajharat

-�00

0

�00

�00

600

800

1000

1�00

1�00

1600

-10% -8% -6% -�% -�% 0% �% �% 6%

Rental Variation (% in INR terms)Bubble Size: Future Supply of commercial office till early �011 (in sq ft; inclusive of IT, non-IT and SEZ space)

Vaca

ncy V

ariat

ion (B

asis

Point

s)

Hitech City & Gachibowli

Star AspirantSource: Real Estate Intelligence Service

On Point • The Seven Stars of India 1�

A New Map of OpportunityThe matrix below highlights the market transition from being overpriced-landlord dominated to affordable-tenant dominated destinations. Stars have been the first ones to tap the opportunistic demand resulting out of rental depreciation and ready good quality supply. Banking upon strong demand, the Stars would also lead rental appreciation and vacancy drop in 2011; Aspirants would follow suit.

Micro-MarketOVERPRICED TENANT BALANCED WINDOW OF

OPPORTUNITYLANDLORD BALANCED

PAST FUTURE1H07 �H07 1H08 �H08 1H09 �H09 1H10 �H10 1H11 �H11 1H1� �H1�

Gurgaon

Noida

SBD Central Mumbai

SBD North Mumbai

West Suburbs Mumbai

East Suburbs Mumbai

Thane - Navi Mumbai

SBD Bangalore

Whitefield

SBD Chennai

Suburbs Chennai

SBD Pune

Hinjewadi

Hitech City & Gachibowli

Salt Lake

Rajarhat

Parameters OVERPRICEDTENANT BALANCED

WINDOW OFOPPORTUNITY

LANDLORD BALANCED

(Balanced with a tenant bias)

(Balanced with a landlord bias)

Rental Trend Rents peaking Rents falling Rents bottoming at a plateau Rents risingOccupier Behaviour/

Strategy Avoid signing leases Renegotiate, consolidate, relocate Sign leases / Renegotiate Consider BTS options, Hard

options

Availability of Space Low vacancy; Less option for tenants

Vacancy rising; Increasing options

High vacancy; Large number of options

Peak or falling vacancy; Decreasing options

Bargaining Power of Buyers/ Occupiers Low bargaining power High bargaining power;

Incentives availableGood bargaining power; Incentives available but reducing

Weakening bargaining power

Supply & DemandSupply lags strong demand New projects planned in a hurry

Demand wanes and is outstripped by new supplyFocus on completion but no new launches

No or few new project launches as supply remains ahead of stagnant demand

Demand recovers and becomes strong. Limited but new project launches

Source: Real Estate Intelligence Service

1� On Point • The Seven Stars of India

Authors

Abhishek Kiran Gupta, Associate Director, Research & REISabhishekkiran.gupta@jllm.co.in+91 �� 61�1 6�00 Abhishek Kiran Gupta leads the Jones Lang LaSalle Meghraj India Research team and is based in Mumbai. He manages research operations on a Pan-India level and is responsible for the team’s outputs, including research reports such as topical white papers, property market digests and bespoke research projects based on specific client requirements. Prior to joining Jones Lang LaSalle, he had seven years of experience in market research, business analysis and market strategy consulting, servicing diversified industries including pharmaceutical, software publishing and insurance.

Abhinav Joshi, Assistant Manager, Research & REISabhinav.joshi@jllm.co.in+91 1�� �60 �100

Abhinav Joshi joined Jones Lang LaSalle Meghraj in January �007 and handles the Delhi-NCR Research and Real Estate Intelligence Services (REIS) team. Based out of Gurgaon, he contributes to topical whitepapers, property market digest and research deliverables on the industrial, commercial, retail and residential real estate markets in India. He has also worked on numerous projects encompassing market research, business location advisory, feasibility and valuation. He is a town planner by qualification and is pursuing an executive education from Indian Institute of Management (Kolkata).

Trivita Roy, Assistant Manager, Research & REIStrivita.roy@jllm.co.in+91 �0 �0�0 9100 Trivita Roy has joined Jones Lang LaSalle Meghraj Research team in �007. Based out of Hyderabad, she contributes to topical whitepapers, property market digest and research deliverables on industrial, commercial, retail and residential real estate markets in India. She is also responsible for Indian real estate intelligence service (REIS).Trivita is trained as City Planner from Indian Institute of Technology Kharagpur and has a two years experience in real estate research.

Avinash Mirchandani, Assistant Vice President, Research and REIS avinash.mirchandani@jllm.co.in +91 �� 61�1 6�00

Avinash Mirchandani supports the Jones Lang LaSalle Meghraj India Research & REIS team. Based in Mumbai, he provides guidance and oversight on all of the team’s research outputs and bespoke client projects. Avinash originally joined Jones Lang LaSalle in �007 as the programme manager for the World Winning Cities Research Programme, a multi-year research initiative conducted by our Global Research team. Prior to that, he worked in a variety of consulting and research roles across the biotech, aerospace and IT industries in the United States. Avinash holds a bachelor’s degree in Economics from UCLA and an MBA from the Indian School of Business.

On Point • The Seven Stars of India 1�

COPYRIGHT © 2010 JONES LANG LASALLE MEGHRAJ. All rights reserved. No part of this publication may be published without prior written permission from Jones Lang LaSalle Meghraj. Theinformation in this publication should be regarded solely as a general guide. While care has been taken in its preparation no representation is made or responsibility accepted for the accuracy of thewhole or any part. We stress that forecasting is a problematical exercise which at best should be regarded as an indicative assessment of possibilities rather than absolute certainties. The process ofmaking forward projections involves assumptions regarding numerous variables which are acutely sensitive to changing conditions, variations in any one of which may significantly affect the outcome,and we draw your attention to this factor.

About Jones Lang LaSalle Jones Lang LaSalle (NYSE:JLL) is a financial and professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2009 global revenue of $2.5 billion, Jones Lang LaSalle serves clients in 60 countries from 750 locations worldwide, including 180 corporate offices. The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 1.6 billion square feet worldwide. LaSalle Investment Management, the company’s investment management business, is one of the world’s largest and most diverse in real estate with more than $40 billion of assets under management. For further information, please visit our web site, www.joneslanglasalle.com.Jones Lang LaSalle has over 50 years of experience in Asia Pacific, with over 16,500 employees operating in 76 offices in 13 countries across the region.

About Jones Lang LaSalle Meghraj Jones Lang LaSalle Meghraj, the Indian operations of Jones Lang LaSalle, is the premiere and largest real estate professional services firm in India. With an extensive geographic footprint across ten cities (Delhi, Mumbai, Bangalore, Pune, Chennai, Hyderabad, Kolkata, Kochi, Chandigarh and Coimbatore) and a staff strength of over 2900, the firm provides investors, developers, local corporates and multinational companies with a comprehensive range of services including research, consultancy, transactions, project and development services, integrated facility management, property and asset management, capital markets, residential, hotels and retail advisory. For further information, please visit www.jllm.co.in

Real Estate Intelligence Service (REIS) India is a subscription based research service designed to provide you with cutting edge insights into India’s diverse and challenging real estate markets through collation, analysis and forecasts of property market indicators and trends across all major Indian markets across various real estate asset classes - office, retail, residential. REIS empowers you with consistent and complete market data and analyses for all real estate indicators by specific micro markets. It is supplemented by value added services including client briefings, presentations and rapid market updates. For more details, contact, Ananth Narayanan +91 98840 21335 N.Ananth@jllm.co.in or Abhishek Kiran Gupta +91 9820312065 Abhishekkiran.Gupta@jllm.co.in

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