Q3 2009
residentialmarket
KnightFrank.comReview RESEARCH
HIGHLIGHTS! 367,000 units, equating to roughly 533 mn.sq.ft. of residential space, are
expected to come up across the 7 major cities by the end of 2011
! 75% of this supply will be accounted for by 2 and 3 BHK units, indicating a shift
by developers to smaller units
! The prevailing trend of rising prices, which is largely down to the improving
economic climate and resurgent middle income end-user demand, is as of now
more developer and project specific as opposed to a general market trend
! Developers are now more cognizant of affordability, and are reducing unit sizes
and the scale of amenities in order to reach out to the sizeable middle income
consumer segment
ResidentialMarketReview
Knight Frank
Q3 2009
Q3 2009
residentialmarket
KnightFrank.comReview
02
EDITORIAL
03
India's real estate industry is only just
recovering from a torrid examination. The
excesses of the realty boom are a distant
memory in the backdrop of the past year's
realty crisis, of which the residential market
slump was a significant symptom. As
residential demand evaporated, developers
were forced to implement innovative coping
strategies in order to combat accumulating
inventory and a severe lack of liquidity. The
start of the current financial year ushered in a
wave of optimism that has permeated
through different sectors of the economy and
revived demand sentiments. While residential
prices are once again on the rise, the jolts of
the past year have altered the dynamics of
India's residential market. The days of
plentiful luxury projects and exorbitant prices
might have been consigned to history as
developers are now wise to the market
potential of middle class housing, or as it is
fashionably branded today, affordable
housing. Low cost housing is the key to
addressing the housing shortage of
approximately 24 million units across India,
and if “affordable housing for all” becomes a
reality, we might just have the realty slump to
thank.
Chronology of the Residential
Slump
Q2 2008- Point of Inflection
Q3 2008- Start of the Decline
Just as in Mumbai, where transactions during
this quarter declined by 15-20%, residential
transaction volumes across India declined
during Q2 2008. Despite this, many builders
managed to hold onto prices largely due to
the inclusion of freebies and incentives like
free parking, reduced interest rates for
specific projects and the deferment of the
payment of EMI till possession. While the
mid-market segment witnessed a marginal
decline in property prices, largely due to
spiraling interest rates, the prime residential
market largely maintained price levels due to
continued interest from HNIs and NRIs.
Certain developers, even prominent ones,
began to feel the pinch of relatively tighter
liqudiity and delayed possession of
apartments.
Transactions across India declined
significantly during this quarter. While this
can be partially attributed to the traditionally
lean monsoon period, during which
construction activity slows down, the effect of
the financial crisis was evident in the
reduction in building proposals during this
period. The funding shortfalls that had
started to surface in the previous quarter
intensified due to declining sales and greater
caution by funding institutions. Due to high
interest rates and spiraling construction
costs, buying a house became a financially
unviable prospect for the majority of end
users across India who were facing career
and financial uncertainties. In the face of the
mid-market housing decline, developers
intensified efforts to lure high-end customers
who mostly buy cash down or with minimal
debt. Additionally, developers began to
realize the importance of the volume game in
a depressed market. Consequently, Mumbai-
based developer Matheran Realty launched
3,000 low cost homes at a township 80 km
from Mumbai. India's premium housing
market, which held sway during the previous
quarter, began to witness declining prices,
particularly in Mumbai, where prices in South
Mumbai's Grade A residential market
declined by an average of 10%.
Price declines continued, but on a larger
scale, as funding shortfalls brought
construction activity to a virtual standstill
across the country. An example of the
relatively greater magnitude of price declines
that occurred during this quarter is Central
Mumbai, where prices in locations like Parel
and Sewri declined by an average of 30%
relative to the previous quarter's rates.
Although developers continued to attempt to
hold prices by offering incentives to potential
buyers, transactions were scarce as end
users and investors sat on the fence
anticipating further price decreases. Even the
festive season of Diwali failed to revive a
housing market in which prices had become
too misaligned with prevailing consumer
sentiments and market conditions. Price
declines were particularly steep in suburban
micro markets where supply was plentiful.
The number of project proposals received by
state governments was lower than what was
witnessed during the previous quarter. With a
view to stimulate buyers as well as to
encourage construction of relatively more
affordable housing, public sector banks
announced interest rate cuts for loans up to
Rs.2 Mn. Although well intentioned, this
measure was relatively meaningless in an
expensive housing market like Mumbai's. The
government, in its endeavor to give India's
economy a liquidity boost, slashed key policy
rates over the course of two stimulus
packages.
The stimulus packages offered the following
incentives to the sector:
• Designation of Housing Finance Company
(HFC) loans up to Rs.2 million under the
priority sector lending provision.
Q4 2008- Eye of the Storm
• Refinance of Rs.40 billion to National
Housing Bank aimed to increase the
capability of HFCs to lend to the housing
sector.
• The permission to classify the restructured
commercial real estate loans as 'standard
assets', although for a limited period,
provided great relief to the industry.
• To enhance the accessibility of funds to the
sector, External Commercial Borrowing (ECB)
was allowed to fund the development of
integrated townships.
Again, these measures failed to augment
demand. Faced with precarious market
conditions, developers continued to rely on
innovation, an example being the
reconfiguration of large unit sizes to make
such units more affordable. This strategy
resulted in the advent of 'semi-luxury'
apartments, which although smaller in size
offer amenities on par with the demands of
modern lifestyles.
The price declines witnessed this quarter
mirrored the events of the previous quarter.
The steep price declines witnessed around
India during the first quarter of 2009
highlighted the fact that incentives offered by
developers, examples being reduced down
payments and rebates on stamp duty, did
little to boost sales. End users continued to
drive a hard bargain in the knowledge that
with the financial year coming to a close,
developers would be more inclined to
compromise on price. Consequently,
developers began to launch previously
deferred projects as scaled down semi-luxury
projects at reduced rates. Mumbai's housing
market, due to its exorbitant prices that were
fuelled by raging end user and investor
demand, witnessed the most significant price
decline across India during this period. Prices
in the prominent Mumbai micro-market of
Bandra, for example, declined by an average
of 16% during Q1 2009.
Q1 2009- Decline Continues
Q2 2009- Stabilisation
During the second quarter of 2009, the Indian
residential market exhibited a general trend
of price stabilisation, and in isolated cases
even price appreciation. Prices for Grade A
properties in the Mumbai micro-market of
Worli, for example, remained stagnant during
this quarter after declining by 11% during the
previous quarter. Similarly, in the NCR micro-
market of New Friends Colony, residential
prices remained stable during this quarter
after declining by 16% during the previous
quarter. This stabilisation was largely
triggered by an upswing in the sentiments of
consumers who had been sitting on the fence
anticipating further price declines. The push
for affordable housing gathered momentum,
and while some developers remarketed
luxury projects as affordable projects by
reducing the price and unit size, other
developers commenced construction of
genuine affordable projects devoid of various
frills and amenities. This affordable housing
initiative instigated the residential market's
recovery by drawing the interest of the
average middle income buyer. The benefit of
re-marketing luxury projects was significant
because in the current climate, funding
institutions are far more comfortable
financing semi-luxury and affordable projects.
Consequently, the theme of project stalling,
so prominent during the previous two
quarters, was not so prevalent during Q2
2009. Demand during this quarter was also
boosted by ICICI Bank's interest rate
reduction during March by 25-50 basis points.
As opposed to the previous quarter, during
which the consolidation process began and
prices largely stabilized, Q3'09 witnessed
price increases in several micro markets
around India. Moreover, this price increase
was evident across premium and relatively
lower end micro markets. For example, prices
in the posh South Mumbai micro market
increased by an average of 15% during Q3
2009. During the same period, in the
significantly less expensive micro market of
Andheri, prices increased by an average of
20%. Such price increases were fuelled by
improved demand, particularly from the mid-
income segment. End user demand improved
for a variety of reasons. The formation of a
stable central government back in May
instigated a sense of calm that was
supplemented by an improving job market,
cheaper home loans and continued
infrastructure initiatives. The affordable
housing initiative, which came to prominence
as a consequence of the property slump,
continued to gather momentum during Q3'09
on the back of Central Government initiatives,
namely time bound income tax exemptions to
developers of affordable projects and a 1%
interest subsidy on loans up to Rs.1 million
for properties costing up to Rs.2 million.
Luxury housing demand, which obviously was
adversely impacted by the realty slump, is
slowly picking up again.
Q3 2009- Green Shoots of Recovery
Although
developers
attempted to
hold prices by
offering
incentives to
potential
buyers, end
users and
investors sat
on the fence
anticipating
further price
decreases
Supply Cumulative Supply
No
. o
f re
sid
en
tia
l un
its
0
400000
20
09
20
10
20
11
250000
50000
Source: Knight Frank Research
Figure 1
Pan India Estimated Supply 2009-11
350000
300000
200000
100000
Year
150000
88039
138054 140744
226093
366837
Q3 2009
residentialmarket
KnightFrank.comReview
02
EDITORIAL
03
India's real estate industry is only just
recovering from a torrid examination. The
excesses of the realty boom are a distant
memory in the backdrop of the past year's
realty crisis, of which the residential market
slump was a significant symptom. As
residential demand evaporated, developers
were forced to implement innovative coping
strategies in order to combat accumulating
inventory and a severe lack of liquidity. The
start of the current financial year ushered in a
wave of optimism that has permeated
through different sectors of the economy and
revived demand sentiments. While residential
prices are once again on the rise, the jolts of
the past year have altered the dynamics of
India's residential market. The days of
plentiful luxury projects and exorbitant prices
might have been consigned to history as
developers are now wise to the market
potential of middle class housing, or as it is
fashionably branded today, affordable
housing. Low cost housing is the key to
addressing the housing shortage of
approximately 24 million units across India,
and if “affordable housing for all” becomes a
reality, we might just have the realty slump to
thank.
Chronology of the Residential
Slump
Q2 2008- Point of Inflection
Q3 2008- Start of the Decline
Just as in Mumbai, where transactions during
this quarter declined by 15-20%, residential
transaction volumes across India declined
during Q2 2008. Despite this, many builders
managed to hold onto prices largely due to
the inclusion of freebies and incentives like
free parking, reduced interest rates for
specific projects and the deferment of the
payment of EMI till possession. While the
mid-market segment witnessed a marginal
decline in property prices, largely due to
spiraling interest rates, the prime residential
market largely maintained price levels due to
continued interest from HNIs and NRIs.
Certain developers, even prominent ones,
began to feel the pinch of relatively tighter
liqudiity and delayed possession of
apartments.
Transactions across India declined
significantly during this quarter. While this
can be partially attributed to the traditionally
lean monsoon period, during which
construction activity slows down, the effect of
the financial crisis was evident in the
reduction in building proposals during this
period. The funding shortfalls that had
started to surface in the previous quarter
intensified due to declining sales and greater
caution by funding institutions. Due to high
interest rates and spiraling construction
costs, buying a house became a financially
unviable prospect for the majority of end
users across India who were facing career
and financial uncertainties. In the face of the
mid-market housing decline, developers
intensified efforts to lure high-end customers
who mostly buy cash down or with minimal
debt. Additionally, developers began to
realize the importance of the volume game in
a depressed market. Consequently, Mumbai-
based developer Matheran Realty launched
3,000 low cost homes at a township 80 km
from Mumbai. India's premium housing
market, which held sway during the previous
quarter, began to witness declining prices,
particularly in Mumbai, where prices in South
Mumbai's Grade A residential market
declined by an average of 10%.
Price declines continued, but on a larger
scale, as funding shortfalls brought
construction activity to a virtual standstill
across the country. An example of the
relatively greater magnitude of price declines
that occurred during this quarter is Central
Mumbai, where prices in locations like Parel
and Sewri declined by an average of 30%
relative to the previous quarter's rates.
Although developers continued to attempt to
hold prices by offering incentives to potential
buyers, transactions were scarce as end
users and investors sat on the fence
anticipating further price decreases. Even the
festive season of Diwali failed to revive a
housing market in which prices had become
too misaligned with prevailing consumer
sentiments and market conditions. Price
declines were particularly steep in suburban
micro markets where supply was plentiful.
The number of project proposals received by
state governments was lower than what was
witnessed during the previous quarter. With a
view to stimulate buyers as well as to
encourage construction of relatively more
affordable housing, public sector banks
announced interest rate cuts for loans up to
Rs.2 Mn. Although well intentioned, this
measure was relatively meaningless in an
expensive housing market like Mumbai's. The
government, in its endeavor to give India's
economy a liquidity boost, slashed key policy
rates over the course of two stimulus
packages.
The stimulus packages offered the following
incentives to the sector:
• Designation of Housing Finance Company
(HFC) loans up to Rs.2 million under the
priority sector lending provision.
Q4 2008- Eye of the Storm
• Refinance of Rs.40 billion to National
Housing Bank aimed to increase the
capability of HFCs to lend to the housing
sector.
• The permission to classify the restructured
commercial real estate loans as 'standard
assets', although for a limited period,
provided great relief to the industry.
• To enhance the accessibility of funds to the
sector, External Commercial Borrowing (ECB)
was allowed to fund the development of
integrated townships.
Again, these measures failed to augment
demand. Faced with precarious market
conditions, developers continued to rely on
innovation, an example being the
reconfiguration of large unit sizes to make
such units more affordable. This strategy
resulted in the advent of 'semi-luxury'
apartments, which although smaller in size
offer amenities on par with the demands of
modern lifestyles.
The price declines witnessed this quarter
mirrored the events of the previous quarter.
The steep price declines witnessed around
India during the first quarter of 2009
highlighted the fact that incentives offered by
developers, examples being reduced down
payments and rebates on stamp duty, did
little to boost sales. End users continued to
drive a hard bargain in the knowledge that
with the financial year coming to a close,
developers would be more inclined to
compromise on price. Consequently,
developers began to launch previously
deferred projects as scaled down semi-luxury
projects at reduced rates. Mumbai's housing
market, due to its exorbitant prices that were
fuelled by raging end user and investor
demand, witnessed the most significant price
decline across India during this period. Prices
in the prominent Mumbai micro-market of
Bandra, for example, declined by an average
of 16% during Q1 2009.
Q1 2009- Decline Continues
Q2 2009- Stabilisation
During the second quarter of 2009, the Indian
residential market exhibited a general trend
of price stabilisation, and in isolated cases
even price appreciation. Prices for Grade A
properties in the Mumbai micro-market of
Worli, for example, remained stagnant during
this quarter after declining by 11% during the
previous quarter. Similarly, in the NCR micro-
market of New Friends Colony, residential
prices remained stable during this quarter
after declining by 16% during the previous
quarter. This stabilisation was largely
triggered by an upswing in the sentiments of
consumers who had been sitting on the fence
anticipating further price declines. The push
for affordable housing gathered momentum,
and while some developers remarketed
luxury projects as affordable projects by
reducing the price and unit size, other
developers commenced construction of
genuine affordable projects devoid of various
frills and amenities. This affordable housing
initiative instigated the residential market's
recovery by drawing the interest of the
average middle income buyer. The benefit of
re-marketing luxury projects was significant
because in the current climate, funding
institutions are far more comfortable
financing semi-luxury and affordable projects.
Consequently, the theme of project stalling,
so prominent during the previous two
quarters, was not so prevalent during Q2
2009. Demand during this quarter was also
boosted by ICICI Bank's interest rate
reduction during March by 25-50 basis points.
As opposed to the previous quarter, during
which the consolidation process began and
prices largely stabilized, Q3'09 witnessed
price increases in several micro markets
around India. Moreover, this price increase
was evident across premium and relatively
lower end micro markets. For example, prices
in the posh South Mumbai micro market
increased by an average of 15% during Q3
2009. During the same period, in the
significantly less expensive micro market of
Andheri, prices increased by an average of
20%. Such price increases were fuelled by
improved demand, particularly from the mid-
income segment. End user demand improved
for a variety of reasons. The formation of a
stable central government back in May
instigated a sense of calm that was
supplemented by an improving job market,
cheaper home loans and continued
infrastructure initiatives. The affordable
housing initiative, which came to prominence
as a consequence of the property slump,
continued to gather momentum during Q3'09
on the back of Central Government initiatives,
namely time bound income tax exemptions to
developers of affordable projects and a 1%
interest subsidy on loans up to Rs.1 million
for properties costing up to Rs.2 million.
Luxury housing demand, which obviously was
adversely impacted by the realty slump, is
slowly picking up again.
Q3 2009- Green Shoots of Recovery
Although
developers
attempted to
hold prices by
offering
incentives to
potential
buyers, end
users and
investors sat
on the fence
anticipating
further price
decreases
Supply Cumulative Supply
No
. o
f re
sid
en
tia
l un
its
0
400000
20
09
20
10
20
11
250000
50000
Source: Knight Frank Research
Figure 1
Pan India Estimated Supply 2009-11
350000
300000
200000
100000
Year
150000
88039
138054 140744
226093
366837
Q3 2009
residentialmarket
KnightFrank.comReview
For example, in Mumbai, Orbit Terraces, a
luxury housing project in Lower Parel by Orbit
Corporation, witnessed 300 enquiries for 80
apartments during its launch in September.
Similarly, in October'08, a flat in Cuffe Parade
was sold for a record price of Rs.98,000 per
sq.ft. The upsurge in luxury demand can be
partially attributed to the healthy
performance in recent months of the Indian
financial markets, as a result of which
wealthy investors have been able to generate
returns to pump into residential investment.
Because of improving demand, which was
reflected by the upsurge in residential
enquiries and conversion rates amongst
particularly middle income consumers,
construction activity gradually picked up
pace, and a chunk of projects that had been
stalled and postponed were once again back
on the radar.
The realty slump has altered the landscape of
India's residential market. Perhaps the most
conspicuous shift in market dynamics is
being witnessed in the interaction of the
demand and supply side. In the bull market,
developers cashed in on premium segment
housing demand and dictated prices.
However, as consumers turned cautious and
premium segment demand dried up,
developers began to feel the pinch of the
liquidity crunch. Consequently, prices were
slashed and developers were compelled to
come up with innovative solutions like
discounted parking and assistance with EMI
payments in order to attract buyers.
The analysis of residential rates across India
over the past 5 years reveals that even after
the price correction of the past year,
residential prices across the country remain
significantly higher than inflation adjusted
rates in 2009. The inflation index appreciated
by 31% between 2005 and Sep'09, but
property prices in prominent cities like
Mumbai and Bengaluru during the same
period appreciated by an average of 150%.
Residential prices in micro-markets like
Lessons Learnt
South Mumbai and Worli have risen by 188%
and 218% respectively since Jan'05. The
average price of a Grade A residential
property in Worli, which stood at
Rs.11,000/sq.ft. as of Jan'05, increased to
Rs.35,000/sq.ft. as of Sep'09. The notable
exception to this trend in Mumbai is the micro
market of Ghatkopar (E), where prices rose by
just 22% over the aforementioned four year
period. Similarly in Bengaluru, current prices
are up by an average of 160% relative to
Jan'05 prices. Capital values in micro-markets
of M G Road and Malleshwaram have
appreciated by 250% and 233% respectively.
Even though southern and eastern micro-
markets contributed to a large portion of
residential supply in Bengaluru over the last
3 years, prices in J P Nagar and Banswadi
have appreciated by 115% and 119%
respectively relative to Jan'05 prices.
The above comparisons suggest that
although significant price correction has
taken place over the past year, prevailing
rates are still artificially high. Further,
between May'09 and Sep'09, as sentiments
turned buoyant, prices have once again
increased. This price increase, coupled with
the fact that the RBI's mid-term monetary
policy review hints at an upward revision of
interest rates, suggests that the residential
market revival that we are currently
witnessing might not progress at the hectic
pace of the realty boom. The residential price
appreciation that is evident around the
country might just prove a touch premature.
Although the residential market is on the
upswing again, the trauma of the past year
has placed the market's focus squarely on
affordable housing, and the long term
development of this initiative is expected to
necessitate greater cognizance of consumer
sentiments by developers. This has already
resulted in introspection by developers, who,
due to greater price sensitivity in the realty
market are now being forced to justify
exorbitant floor rise charges and loading.
They have realized that a market slump
requires greater alignment with demand
dynamics. The push for affordable housing is
undoubtedly the most significant silver lining
of the realty slump. Developers realized that
the middle class home buyers market was a
huge and untapped source of demand, and
they demonstrated their eagerness to tap into
this market by reducing unit sizes and
lowering rates of premium projects to re-
market them as affordable housing projects.
While the initial impetus for affordable
housing might have been reactionary, several
major developers are now foraying into this
segment as the needs of middle income
home buyers can no longer be ignored.
While affordable housing has carved a niche
for itself in recent times, it is understood that
the government will have a significant role to
play in this segment. The importance of the
public private partnership model in
facilitating the development of low cost
housing cannot be understated.
Over the past year, the government has been
proactively involved in aiding the realty
sector through a series of direct and indirect
measures. A series of cuts in key policy rates
and the recently unveiled 1% interest rate
subsidy on home loans up to Rs.10 Lakhs (for
properties costing no more than Rs.20 Lakhs)
are examples of measures that helped
stimulate the residential market to an extent.
The interest subsidy was introduced bearing
in mind the positive impact of home loan rate
cuts by leading finance institutions such as
HDFC and ICICI Bank. The realty slowdown
has brought into focus the extreme sensitivity
of home buyers to interest rate movements.
The government's most important direct
intervention in India's real estate sector is
expected to come in the form of the Real
Estate Regulator Bill, expected to be
introduced during the upcoming Parliament
winter session. The difficulties of last year
have highlighted procedural flaws that the
government feels a regulator could help
eradicate. The regulator bill will seek to
deregulate the Rent Control Act, owing to
which a chunk of rental housing stock around
India has been withdrawn from the market.
The rental housing market in India is yet to
flourish, and this was exhibited during the
realty slump, when consumers who were
averse to buying were craving a healthy rental
market to fall back on.The 6% depreciation of
the US Dollar vis-à-vis the Indian Rupee over
the past two months, coupled with the recent
volatility of the British Pound versus the
Indian Rupee, has started to alter the
dynamics of the second home buyers market.
High net worth Indians and NRIs are
increasingly inclined to shop for second
homes in the United States and the UK, where
homes can now be purchased at prices
similar to homes in popular Indian second
home destinations like Alibaug, Lonavala and
Kasauli. A decline in NRI and HNI investment
in Indian real estate could badly hamper the
industry's premium housing market.
The Way Forward
From now until the end of 2011, approximately
367,000 units, equating to roughly
533 mn.sq.ft. of Grade A residential supply,
are expected to crop up in the seven major
cities around India. Of this unit supply, NCR
accounts for approximately 25% and Mumbai
comprises approximately 20%. 80% of the
total expected supply will be evenly
distributed between 2010 and 2011. Further,
roughly 75% of the total unit supply will be
accounted for by 2 and 3 BHK units. During
the realty boom, one might have expected to
see a higher composition of 4 BHK and other
premium segment units, but now, developers
are mindful of the importance of smaller units
to compensate for exorbitant prices. It must
be noted that the total expected supply until
the end of 2011 is contingent on the validity
of current project completion schedules. The
struggles of the past year dramatically halted
the progress of India's real estate sector. The
advent of a stable central government and a
general improvement in India's financial
climate has stabilised the sector and
reinvigorated the residential market, which is
witnessing increased enquiries and rising
prices once again. As the real estate sector
continues its emergence from the woes of
FY 08-09, the importance of imbibing the
lessons of hindsight and experience is
paramount. Prices need to be realistically
aligned with demand sentiments. The push
for affordable housing, which would need to
be facilitated by government intervention
both on the financial and logistical fronts,
will alter the profile of residential prices
across India. Significant infrastructure
initiatives around the country will open up
new markets and alleviate the upward
pressure that congestion exerts on prices.
However, a city like Mumbai needs to look at
how to better utilise existing land. The
potential benefits of such an initiative are
evidenced by the successful utilisation of the
NTC mill lands in Mumbai for commercial
development. India's residential market is
now set to embark on a different and more
Unit-Wise Distribution of Pan India
Supply 2009-11
Figure 3
Source: Knight Frank Research
Studio - 1%
1 BHK - 3%
1 ½ BHK - 3%
2 BHK - 36%
2 ½ BHK - 4%
3 BHK - 39%
3 ½ BHK - 2%
4 BHK - 7%
5 BHK Penthouse - 3%
even after the
price
correction of
the past year,
residential
prices across
the country
remain
significantly
higher than
2009 inflation
adjusted
rates
04 05
socially conscious path, a path that is
essential in order to avoid the formation of a
property price bubble such as the one that
derailed the US real estate sector.
Distribution of Pan India Supply 2009-11
(in No. of units)
Figure 2
Source: Knight Frank Research
Chennai - 9%
Bengaluru - 10%
NCR - 25%
Hyderabad - 15%
Kolkata - 7%
Mumbai - 20%
Pune - 14%
Note: Maps included are not to scale (Source: Google Maps).
Q3 2009
residentialmarket
KnightFrank.comReview
For example, in Mumbai, Orbit Terraces, a
luxury housing project in Lower Parel by Orbit
Corporation, witnessed 300 enquiries for 80
apartments during its launch in September.
Similarly, in October'08, a flat in Cuffe Parade
was sold for a record price of Rs.98,000 per
sq.ft. The upsurge in luxury demand can be
partially attributed to the healthy
performance in recent months of the Indian
financial markets, as a result of which
wealthy investors have been able to generate
returns to pump into residential investment.
Because of improving demand, which was
reflected by the upsurge in residential
enquiries and conversion rates amongst
particularly middle income consumers,
construction activity gradually picked up
pace, and a chunk of projects that had been
stalled and postponed were once again back
on the radar.
The realty slump has altered the landscape of
India's residential market. Perhaps the most
conspicuous shift in market dynamics is
being witnessed in the interaction of the
demand and supply side. In the bull market,
developers cashed in on premium segment
housing demand and dictated prices.
However, as consumers turned cautious and
premium segment demand dried up,
developers began to feel the pinch of the
liquidity crunch. Consequently, prices were
slashed and developers were compelled to
come up with innovative solutions like
discounted parking and assistance with EMI
payments in order to attract buyers.
The analysis of residential rates across India
over the past 5 years reveals that even after
the price correction of the past year,
residential prices across the country remain
significantly higher than inflation adjusted
rates in 2009. The inflation index appreciated
by 31% between 2005 and Sep'09, but
property prices in prominent cities like
Mumbai and Bengaluru during the same
period appreciated by an average of 150%.
Residential prices in micro-markets like
Lessons Learnt
South Mumbai and Worli have risen by 188%
and 218% respectively since Jan'05. The
average price of a Grade A residential
property in Worli, which stood at
Rs.11,000/sq.ft. as of Jan'05, increased to
Rs.35,000/sq.ft. as of Sep'09. The notable
exception to this trend in Mumbai is the micro
market of Ghatkopar (E), where prices rose by
just 22% over the aforementioned four year
period. Similarly in Bengaluru, current prices
are up by an average of 160% relative to
Jan'05 prices. Capital values in micro-markets
of M G Road and Malleshwaram have
appreciated by 250% and 233% respectively.
Even though southern and eastern micro-
markets contributed to a large portion of
residential supply in Bengaluru over the last
3 years, prices in J P Nagar and Banswadi
have appreciated by 115% and 119%
respectively relative to Jan'05 prices.
The above comparisons suggest that
although significant price correction has
taken place over the past year, prevailing
rates are still artificially high. Further,
between May'09 and Sep'09, as sentiments
turned buoyant, prices have once again
increased. This price increase, coupled with
the fact that the RBI's mid-term monetary
policy review hints at an upward revision of
interest rates, suggests that the residential
market revival that we are currently
witnessing might not progress at the hectic
pace of the realty boom. The residential price
appreciation that is evident around the
country might just prove a touch premature.
Although the residential market is on the
upswing again, the trauma of the past year
has placed the market's focus squarely on
affordable housing, and the long term
development of this initiative is expected to
necessitate greater cognizance of consumer
sentiments by developers. This has already
resulted in introspection by developers, who,
due to greater price sensitivity in the realty
market are now being forced to justify
exorbitant floor rise charges and loading.
They have realized that a market slump
requires greater alignment with demand
dynamics. The push for affordable housing is
undoubtedly the most significant silver lining
of the realty slump. Developers realized that
the middle class home buyers market was a
huge and untapped source of demand, and
they demonstrated their eagerness to tap into
this market by reducing unit sizes and
lowering rates of premium projects to re-
market them as affordable housing projects.
While the initial impetus for affordable
housing might have been reactionary, several
major developers are now foraying into this
segment as the needs of middle income
home buyers can no longer be ignored.
While affordable housing has carved a niche
for itself in recent times, it is understood that
the government will have a significant role to
play in this segment. The importance of the
public private partnership model in
facilitating the development of low cost
housing cannot be understated.
Over the past year, the government has been
proactively involved in aiding the realty
sector through a series of direct and indirect
measures. A series of cuts in key policy rates
and the recently unveiled 1% interest rate
subsidy on home loans up to Rs.10 Lakhs (for
properties costing no more than Rs.20 Lakhs)
are examples of measures that helped
stimulate the residential market to an extent.
The interest subsidy was introduced bearing
in mind the positive impact of home loan rate
cuts by leading finance institutions such as
HDFC and ICICI Bank. The realty slowdown
has brought into focus the extreme sensitivity
of home buyers to interest rate movements.
The government's most important direct
intervention in India's real estate sector is
expected to come in the form of the Real
Estate Regulator Bill, expected to be
introduced during the upcoming Parliament
winter session. The difficulties of last year
have highlighted procedural flaws that the
government feels a regulator could help
eradicate. The regulator bill will seek to
deregulate the Rent Control Act, owing to
which a chunk of rental housing stock around
India has been withdrawn from the market.
The rental housing market in India is yet to
flourish, and this was exhibited during the
realty slump, when consumers who were
averse to buying were craving a healthy rental
market to fall back on.The 6% depreciation of
the US Dollar vis-à-vis the Indian Rupee over
the past two months, coupled with the recent
volatility of the British Pound versus the
Indian Rupee, has started to alter the
dynamics of the second home buyers market.
High net worth Indians and NRIs are
increasingly inclined to shop for second
homes in the United States and the UK, where
homes can now be purchased at prices
similar to homes in popular Indian second
home destinations like Alibaug, Lonavala and
Kasauli. A decline in NRI and HNI investment
in Indian real estate could badly hamper the
industry's premium housing market.
The Way Forward
From now until the end of 2011, approximately
367,000 units, equating to roughly
533 mn.sq.ft. of Grade A residential supply,
are expected to crop up in the seven major
cities around India. Of this unit supply, NCR
accounts for approximately 25% and Mumbai
comprises approximately 20%. 80% of the
total expected supply will be evenly
distributed between 2010 and 2011. Further,
roughly 75% of the total unit supply will be
accounted for by 2 and 3 BHK units. During
the realty boom, one might have expected to
see a higher composition of 4 BHK and other
premium segment units, but now, developers
are mindful of the importance of smaller units
to compensate for exorbitant prices. It must
be noted that the total expected supply until
the end of 2011 is contingent on the validity
of current project completion schedules. The
struggles of the past year dramatically halted
the progress of India's real estate sector. The
advent of a stable central government and a
general improvement in India's financial
climate has stabilised the sector and
reinvigorated the residential market, which is
witnessing increased enquiries and rising
prices once again. As the real estate sector
continues its emergence from the woes of
FY 08-09, the importance of imbibing the
lessons of hindsight and experience is
paramount. Prices need to be realistically
aligned with demand sentiments. The push
for affordable housing, which would need to
be facilitated by government intervention
both on the financial and logistical fronts,
will alter the profile of residential prices
across India. Significant infrastructure
initiatives around the country will open up
new markets and alleviate the upward
pressure that congestion exerts on prices.
However, a city like Mumbai needs to look at
how to better utilise existing land. The
potential benefits of such an initiative are
evidenced by the successful utilisation of the
NTC mill lands in Mumbai for commercial
development. India's residential market is
now set to embark on a different and more
Unit-Wise Distribution of Pan India
Supply 2009-11
Figure 3
Source: Knight Frank Research
Studio - 1%
1 BHK - 3%
1 ½ BHK - 3%
2 BHK - 36%
2 ½ BHK - 4%
3 BHK - 39%
3 ½ BHK - 2%
4 BHK - 7%
5 BHK Penthouse - 3%
even after the
price
correction of
the past year,
residential
prices across
the country
remain
significantly
higher than
2009 inflation
adjusted
rates
04 05
socially conscious path, a path that is
essential in order to avoid the formation of a
property price bubble such as the one that
derailed the US real estate sector.
Distribution of Pan India Supply 2009-11
(in No. of units)
Figure 2
Source: Knight Frank Research
Chennai - 9%
Bengaluru - 10%
NCR - 25%
Hyderabad - 15%
Kolkata - 7%
Mumbai - 20%
Pune - 14%
Note: Maps included are not to scale (Source: Google Maps).
Q3 2009
residentialmarket
KnightFrank.comReview
Market Review
Today Delhi, Ghaziabad, Faridabad, Noida
and Greater Noida form the core of the NCR.
Ghaziabad and Faridabad are predominantly
industrial towns, whereas economic activity
in Delhi, Gurgaon, Noida and Greater Noida is
driven by the IT/ITES, Automobile,
Telecommunications, Medicine & Pharma and
Banking and Finance sectors. In recent times
the NCR has witnessed a somewhat balanced
and widespread network of infrastructure
development that has further strengthened
the intra and inter transportation network of
the NCR. Construction of the 8-lane
Delhi Gurgaon Expressway and the 8-lane
Delhi Noida Direct Flyover has vastly
improved connectivity of Delhi with Gurgaon
and Noida respectively.
NATIONALCAPITALREGION(NCR)
This resulted in a rise in enquiries and
conversion rates, thereby gradually
stabilizing the residential market in the NCR.
The NCR market will witness approximately
92,000 units, equating to 160.16 mn.sq.ft. of
fresh supply of residential space. Out of the
total upcoming supply, 57% will be available
in the year 2011. This reflects the stalling of a
few commenced projects and the lack of
announced new projects over the last year
due to the residential market slump.
Current Scenario
This prominent development prompted
developers to explore peripheral locations of
Gurgaon and Noida for primarily residential
development. The partly operational and
rapidly growing network of the
Delhi Metro Project is also providing a growth
impetus to the NCR. An efficient
communication system within the region has
augmented the attractiveness of peripheral
areas which, due to cheap land cost are
relatively more affordable.
The middle of the year 2008 saw the first
impact of the recent global economic
slowdown on Indian real estate, especially
across NCR. Low liquidity levels and tight
credit conditions on the supply side, coupled
with job insecurity and low demand
sentiments on the consumer side, negatively
impacted the NCR residential market. The
consequent drop in demand led to a number
of announced projects being phased out and
postponed. To improve demand across the
NCR market, developers resorted to offering
lucrative benefits like discounted car parking
and club membership along with the
apartment. Schemes like payment of EMI on
and from possession were also offered as a
measure to surge demand. Larger sized
premium housing was being restructured into
affordable housing units. Such measures
were largely unsuccessful though, and
significant price correction occurred across
the NCR. Investors foreseeing further future
price corrections resorted to distress selling
of their properties which further worsened the
situation.
The Government of India, in a bid to counter
the economic slump, introduced two
economic stimulus packages. These
packages focused on increasing liquidity
within the economy and reducing the cost of
borrowing. Interest rates were lowered, there
was an increased focus on priority sector
lending and developers were aided by means
of debt restructuring. A major impetus to
consumer sentiments was the formation of
the stable congress regime at the general
assembly elections.
Two-thirds of this supply will come under the
3-BHK category, indicating that developers in
the region are optimistic about premium
segment demand once the residential market
picks up. Due to unavailability of larger land
parcels within Delhi, not much development
is visible in the region. Locations like
Model Town, Khyber Pass, Subhash Nagar
and Shivaji Marg are currently witnessing
private developer activity. Projects like the
EMMAR MGF's Commonwealth Games Village
near Mayur Vihar and Victoria Gardens by
M2K Developers in Model Town will be part of
the upcoming supply by the year 2011.
A lot of infrastructure initiatives are underway
across Delhi and will boost the demand and
catchment for various residential colonies.
Proximal locations will benefit from
development of the ongoing
Delhi Metro Project. The Commonwealth
Games, to be held in Delhi in 2010, will
benefit locations like Sarita Vihar, Jasola,
Friends Colony, New Friends Colony,
Mayur Vihar, Preet Vihar and I.P. Extension. In
east Delhi, work on the flyover at Anand Vihar
bus stand is also under way. The flyover will
not only ease traffic at the junction, but also
improve connectivity to east Delhi locations
like Dilshad Garden. Three flyovers are also
being constructed at Nelson Mandela Marg,
EXISTING
1. Chanakyapuri
2. Jor Bagh
3. Golf Links
4. Greater Kailash I & II
5. Defence Colony
6. Pritampura
7. Preet Vihar
8. Mayur Vihar
9. Friends Colony
10. Janakpuri
11. Dwarka
12. Vasant Kunj
13. Hauz Khas
14. Ghaziabad
Delhi
Delhi & Ghaziabad
1
2
3
4
5
6
7
8
9
10
11
12
13
14
06 07
Distribution of Supply 2009-11
(in No. of units)
Figure 4
Source: Knight Frank Research
Noida - 7%
Greater Noida - 12%
Ghaziabad - 27%
Faridabad - 24%
Gurgaon - 29%
Delhi - 2%
Supply Cumulative Supply
No
. o
f re
sid
en
tia
l un
its
0
100000
20
09
20
10
20
11
70000
20000
Source: Knight Frank Research
Figure 5
Estimated Supply 2009-11
90000
80000
60000
40000
30000
Year
10000
50000
9625
26391
56186
36016
92202
Rao Tula Ram Marg, and near Munirka. This
network of flyovers on Outer Ring Road will
de-congest traffic in South Delhi.
The IT/ITES sector has been the most
important driver for the real estate sector in
Gurgaon, and has been supported by the
growth impetus from banking & finance,
automobile and strategic consulting firms.
Infrastructure initiatives planned as per the
new approved Master Plan 2021
areprompting developers to explore new
locations in Gurgaon for residential
development. Approximately 26,500 units,
equating to 58.23 mn.sq.ft. of fresh supply,
will be infused into the market till 2011.
Around two thirds of this supply will be
accounted for by 3 and 4-BHK units, thereby
reflecting the positive prognosis for premium
sector housing in Gurgaon despite the
property slump of the past year.
Gurgaon will have the maximum share of
about 29% of supply across the NCR by 2011.
Gurgaon
Delhi
Within the NCR, Delhi continues to be the
most important residential zone. Locations
like Jor Bagh, Chanakyapuri, Golf Links,
Friends Colony, Defence Colony,
Greater Kailash I & II and Haus Khas are a few
of the most sought-after residential zones,
attracting higher premium in terms of
property prices. However, in recent times,
locations like Dwarka, Vasant Kunj, Janakpuri,
Vikaspuri, Rohini, Pritampura and
Mayur Vihar have been gaining importance.
Approximately 1,500 units, equating to
3.41 mn.sq.ft. of supply, are expected to
come up in Delhi by the end of 2011.
Q3 2009
residentialmarket
KnightFrank.comReview
Market Review
Today Delhi, Ghaziabad, Faridabad, Noida
and Greater Noida form the core of the NCR.
Ghaziabad and Faridabad are predominantly
industrial towns, whereas economic activity
in Delhi, Gurgaon, Noida and Greater Noida is
driven by the IT/ITES, Automobile,
Telecommunications, Medicine & Pharma and
Banking and Finance sectors. In recent times
the NCR has witnessed a somewhat balanced
and widespread network of infrastructure
development that has further strengthened
the intra and inter transportation network of
the NCR. Construction of the 8-lane
Delhi Gurgaon Expressway and the 8-lane
Delhi Noida Direct Flyover has vastly
improved connectivity of Delhi with Gurgaon
and Noida respectively.
NATIONALCAPITALREGION(NCR)
This resulted in a rise in enquiries and
conversion rates, thereby gradually
stabilizing the residential market in the NCR.
The NCR market will witness approximately
92,000 units, equating to 160.16 mn.sq.ft. of
fresh supply of residential space. Out of the
total upcoming supply, 57% will be available
in the year 2011. This reflects the stalling of a
few commenced projects and the lack of
announced new projects over the last year
due to the residential market slump.
Current Scenario
This prominent development prompted
developers to explore peripheral locations of
Gurgaon and Noida for primarily residential
development. The partly operational and
rapidly growing network of the
Delhi Metro Project is also providing a growth
impetus to the NCR. An efficient
communication system within the region has
augmented the attractiveness of peripheral
areas which, due to cheap land cost are
relatively more affordable.
The middle of the year 2008 saw the first
impact of the recent global economic
slowdown on Indian real estate, especially
across NCR. Low liquidity levels and tight
credit conditions on the supply side, coupled
with job insecurity and low demand
sentiments on the consumer side, negatively
impacted the NCR residential market. The
consequent drop in demand led to a number
of announced projects being phased out and
postponed. To improve demand across the
NCR market, developers resorted to offering
lucrative benefits like discounted car parking
and club membership along with the
apartment. Schemes like payment of EMI on
and from possession were also offered as a
measure to surge demand. Larger sized
premium housing was being restructured into
affordable housing units. Such measures
were largely unsuccessful though, and
significant price correction occurred across
the NCR. Investors foreseeing further future
price corrections resorted to distress selling
of their properties which further worsened the
situation.
The Government of India, in a bid to counter
the economic slump, introduced two
economic stimulus packages. These
packages focused on increasing liquidity
within the economy and reducing the cost of
borrowing. Interest rates were lowered, there
was an increased focus on priority sector
lending and developers were aided by means
of debt restructuring. A major impetus to
consumer sentiments was the formation of
the stable congress regime at the general
assembly elections.
Two-thirds of this supply will come under the
3-BHK category, indicating that developers in
the region are optimistic about premium
segment demand once the residential market
picks up. Due to unavailability of larger land
parcels within Delhi, not much development
is visible in the region. Locations like
Model Town, Khyber Pass, Subhash Nagar
and Shivaji Marg are currently witnessing
private developer activity. Projects like the
EMMAR MGF's Commonwealth Games Village
near Mayur Vihar and Victoria Gardens by
M2K Developers in Model Town will be part of
the upcoming supply by the year 2011.
A lot of infrastructure initiatives are underway
across Delhi and will boost the demand and
catchment for various residential colonies.
Proximal locations will benefit from
development of the ongoing
Delhi Metro Project. The Commonwealth
Games, to be held in Delhi in 2010, will
benefit locations like Sarita Vihar, Jasola,
Friends Colony, New Friends Colony,
Mayur Vihar, Preet Vihar and I.P. Extension. In
east Delhi, work on the flyover at Anand Vihar
bus stand is also under way. The flyover will
not only ease traffic at the junction, but also
improve connectivity to east Delhi locations
like Dilshad Garden. Three flyovers are also
being constructed at Nelson Mandela Marg,
EXISTING
1. Chanakyapuri
2. Jor Bagh
3. Golf Links
4. Greater Kailash I & II
5. Defence Colony
6. Pritampura
7. Preet Vihar
8. Mayur Vihar
9. Friends Colony
10. Janakpuri
11. Dwarka
12. Vasant Kunj
13. Hauz Khas
14. Ghaziabad
Delhi
Delhi & Ghaziabad
1
2
3
4
5
6
7
8
9
10
11
12
13
14
06 07
Distribution of Supply 2009-11
(in No. of units)
Figure 4
Source: Knight Frank Research
Noida - 7%
Greater Noida - 12%
Ghaziabad - 27%
Faridabad - 24%
Gurgaon - 29%
Delhi - 2%
Supply Cumulative Supply
No
. o
f re
sid
en
tia
l un
its
0
100000
20
09
20
10
20
11
70000
20000
Source: Knight Frank Research
Figure 5
Estimated Supply 2009-11
90000
80000
60000
40000
30000
Year
10000
50000
9625
26391
56186
36016
92202
Rao Tula Ram Marg, and near Munirka. This
network of flyovers on Outer Ring Road will
de-congest traffic in South Delhi.
The IT/ITES sector has been the most
important driver for the real estate sector in
Gurgaon, and has been supported by the
growth impetus from banking & finance,
automobile and strategic consulting firms.
Infrastructure initiatives planned as per the
new approved Master Plan 2021
areprompting developers to explore new
locations in Gurgaon for residential
development. Approximately 26,500 units,
equating to 58.23 mn.sq.ft. of fresh supply,
will be infused into the market till 2011.
Around two thirds of this supply will be
accounted for by 3 and 4-BHK units, thereby
reflecting the positive prognosis for premium
sector housing in Gurgaon despite the
property slump of the past year.
Gurgaon will have the maximum share of
about 29% of supply across the NCR by 2011.
Gurgaon
Delhi
Within the NCR, Delhi continues to be the
most important residential zone. Locations
like Jor Bagh, Chanakyapuri, Golf Links,
Friends Colony, Defence Colony,
Greater Kailash I & II and Haus Khas are a few
of the most sought-after residential zones,
attracting higher premium in terms of
property prices. However, in recent times,
locations like Dwarka, Vasant Kunj, Janakpuri,
Vikaspuri, Rohini, Pritampura and
Mayur Vihar have been gaining importance.
Approximately 1,500 units, equating to
3.41 mn.sq.ft. of supply, are expected to
come up in Delhi by the end of 2011.
Q3 2009
residentialmarket
KnightFrank.comReview
0908
A major portion of fresh supply in Gurgaon is
in locations like Golf Course Road,
Extended Golf Course Road, Sohna Road,
newly planned sectors on NH 8, Pataudi Road
and Sectors 37 C & D, 108 and 109. Projects
from prominent Grade A developers like DLF,
Unitech, Ramprastha Group, Raheja Group,
Ambience Developer & Infrastructure Pvt. Ltd.,
Tulip, Parsvnath, Emmar MGF, Bestech Group,
ERA Group and BPTP are part of the new
supply. This new supply will contain a mix of
EXISTING
1. Springfield Colony
2. New Sectors 21 C & D
3. Old Faridabad
4. Suraj Kund Road
Gurgaon Faridabad
UPCOMING
1. Sohna Road
2. Golf Course Road Extn.
3. Pataudi Road
EXISTING
1. MG Road
2. Sushant Lok
3. DLF Phase II & III
4. DLF Phase I
5. DLF Phase V
both high end premium and low cost
affordable homes. Projects like Caitriona by
Ambience Developer & Infrastructure Pvt. Ltd.
on NH 8, Magnolias and The Belaire by DLF,
Verandas by Salcon Group on
Golf Course Road, Palm Springs and
Palm Drive by EMMAR MGF and Garden II and
The Residences by Unitech Group are a few
premium projects under construction in
Gurgaon. Projects like the Atharva and
Vedaanta by Raheja Group, ILD Espire Green
by ILD Group and Eden Towers by the
Ramprastha Group are under construction in
the new planned sectors in Gurgaon.
A number of infrastructure initiatives across
Gurgaon are expected to bring to the fore
various locations in Gurgaon. The
Delhi-Mumbai Industrial Corridor (DMIC) is
one of the key infrastructure initiatives in the
new Master Plan. As per the Investment Plan
under DMIC, the Manesar Bawal investment
region is being developed in Phase I.
Gurgaon and Faridabad
1
2
3
1
2
3
4
5
1
2
3
4
Supported by this is the 135.6 kms long
Western Peripheral Expressway, the
Kundli Manesar Palwal (KMP) Expressway.
The new planned sectors on Pataudi Road will
benefit from the KMP Expressway. A number
of developers have launched their projects on
Pataudi Road anticipating a huge inflow of
housing demand. The Delhi Metro Project is
being extended into Gurgaon. It links Delhi to
Gurgaon through M.G. Road as well as from
Dwarka. Locations like the M.G. Road,
locations like Sectors 18 & 19 in
Old Faridabad and residential sectors on NH 2
and Suraj Kund Road have been the hub of
the real estate activity. However, in the past
couple of years, due to availability of larger
and cheaper land parcels, locations like the
Nehar Par region have seen extensive real
estate development. Sectors 70-89 here have
witnessed huge residential developments.
Till 2011, a total of about 22,000 units,
equating to 34.27 mn.sq.ft. of fresh
residential supply, are expected in Faridabad.
This supply equates to about 21% of the total
NCR supply during this period. 45% of this
supply will be accounted for by 3 BHK units
and 35% by2 BHK units.
Out of the total upcoming supply in Faridabad,
the Nehar Par area will witness maximum
development, followed by limited activity on
NH 2 and Suraj Kund Road. A number of
prominent developers are carrying out
construction activity in the Nehar Par region.
BPTP Group and OMAXE have launched
projects in Sectors 70-89.
1. Noida Sector 34
2. Noida Sector 50
3. Noida Sector 45
4. Noida Sector 128
5. Noida Sector 134
EXISTING
1. Noida Sector 44
2. Noida Sector 93A & B
3. Greater Noida
Sushant Lok III, Golf Course Road,
Extended Golf Course Road, Sohna Road and
new planned sectors falling between Sectors
69-78 and Sectors 99-112 will gain visibility.
Office and retail developments across
Sohna Road, Golf Course Road and
Extended Golf Course Road will further boost
housing demand in and around these regions.
Due to the upcoming commercial
development at IMT Manesar, residential
Sectors 76-95 will gain attractiveness. To
improve connectivity to the new sectors of
Gurgaon, namely Sectors 99-112, an over
bridge is under construction at the
Old Gurgaon railway station. The over bridge
will improve connectivity from
Sectors 3 & 3A to new sectors, especially
Sectors 104 and 105.
Faridabad pre-dominantly has been an
industrial township in the NCR. In the past
few years a number of malls have come up on
NH 2 and have re-defined the retail scenario
in Faridabad. Key developed residential
Faridabad
Noida and Greater Noida
UPCOMING
Noida and Greater Noida
1
1
2
3
2
Approximately
26,500 units,
equating to
58.23 mn.sq.ft.
of fresh
supply, will be
infused into
the gurgaon
market till 2011
Q3 2009
residentialmarket
KnightFrank.comReview
0908
A major portion of fresh supply in Gurgaon is
in locations like Golf Course Road,
Extended Golf Course Road, Sohna Road,
newly planned sectors on NH 8, Pataudi Road
and Sectors 37 C & D, 108 and 109. Projects
from prominent Grade A developers like DLF,
Unitech, Ramprastha Group, Raheja Group,
Ambience Developer & Infrastructure Pvt. Ltd.,
Tulip, Parsvnath, Emmar MGF, Bestech Group,
ERA Group and BPTP are part of the new
supply. This new supply will contain a mix of
EXISTING
1. Springfield Colony
2. New Sectors 21 C & D
3. Old Faridabad
4. Suraj Kund Road
Gurgaon Faridabad
UPCOMING
1. Sohna Road
2. Golf Course Road Extn.
3. Pataudi Road
EXISTING
1. MG Road
2. Sushant Lok
3. DLF Phase II & III
4. DLF Phase I
5. DLF Phase V
both high end premium and low cost
affordable homes. Projects like Caitriona by
Ambience Developer & Infrastructure Pvt. Ltd.
on NH 8, Magnolias and The Belaire by DLF,
Verandas by Salcon Group on
Golf Course Road, Palm Springs and
Palm Drive by EMMAR MGF and Garden II and
The Residences by Unitech Group are a few
premium projects under construction in
Gurgaon. Projects like the Atharva and
Vedaanta by Raheja Group, ILD Espire Green
by ILD Group and Eden Towers by the
Ramprastha Group are under construction in
the new planned sectors in Gurgaon.
A number of infrastructure initiatives across
Gurgaon are expected to bring to the fore
various locations in Gurgaon. The
Delhi-Mumbai Industrial Corridor (DMIC) is
one of the key infrastructure initiatives in the
new Master Plan. As per the Investment Plan
under DMIC, the Manesar Bawal investment
region is being developed in Phase I.
Gurgaon and Faridabad
1
2
3
1
2
3
4
5
1
2
3
4
Supported by this is the 135.6 kms long
Western Peripheral Expressway, the
Kundli Manesar Palwal (KMP) Expressway.
The new planned sectors on Pataudi Road will
benefit from the KMP Expressway. A number
of developers have launched their projects on
Pataudi Road anticipating a huge inflow of
housing demand. The Delhi Metro Project is
being extended into Gurgaon. It links Delhi to
Gurgaon through M.G. Road as well as from
Dwarka. Locations like the M.G. Road,
locations like Sectors 18 & 19 in
Old Faridabad and residential sectors on NH 2
and Suraj Kund Road have been the hub of
the real estate activity. However, in the past
couple of years, due to availability of larger
and cheaper land parcels, locations like the
Nehar Par region have seen extensive real
estate development. Sectors 70-89 here have
witnessed huge residential developments.
Till 2011, a total of about 22,000 units,
equating to 34.27 mn.sq.ft. of fresh
residential supply, are expected in Faridabad.
This supply equates to about 21% of the total
NCR supply during this period. 45% of this
supply will be accounted for by 3 BHK units
and 35% by2 BHK units.
Out of the total upcoming supply in Faridabad,
the Nehar Par area will witness maximum
development, followed by limited activity on
NH 2 and Suraj Kund Road. A number of
prominent developers are carrying out
construction activity in the Nehar Par region.
BPTP Group and OMAXE have launched
projects in Sectors 70-89.
1. Noida Sector 34
2. Noida Sector 50
3. Noida Sector 45
4. Noida Sector 128
5. Noida Sector 134
EXISTING
1. Noida Sector 44
2. Noida Sector 93A & B
3. Greater Noida
Sushant Lok III, Golf Course Road,
Extended Golf Course Road, Sohna Road and
new planned sectors falling between Sectors
69-78 and Sectors 99-112 will gain visibility.
Office and retail developments across
Sohna Road, Golf Course Road and
Extended Golf Course Road will further boost
housing demand in and around these regions.
Due to the upcoming commercial
development at IMT Manesar, residential
Sectors 76-95 will gain attractiveness. To
improve connectivity to the new sectors of
Gurgaon, namely Sectors 99-112, an over
bridge is under construction at the
Old Gurgaon railway station. The over bridge
will improve connectivity from
Sectors 3 & 3A to new sectors, especially
Sectors 104 and 105.
Faridabad pre-dominantly has been an
industrial township in the NCR. In the past
few years a number of malls have come up on
NH 2 and have re-defined the retail scenario
in Faridabad. Key developed residential
Faridabad
Noida and Greater Noida
UPCOMING
Noida and Greater Noida
1
1
2
3
2
Approximately
26,500 units,
equating to
58.23 mn.sq.ft.
of fresh
supply, will be
infused into
the gurgaon
market till 2011
Q3 2009
residentialmarket
KnightFrank.comReview
1110
BPTP's Parklands is the largest project in the
region. Projects like New Heights and The
Forest by OMAXE Group, La-Vista and
KLJ Green by KLJ Group, ERA Landmark by
ERA Group, The Jade by Uppals and Chloris by
Mahindra Lifesapce are part of the upcoming
supply in Faridabad.
Various infrastructure projects in and around
Faridabad are under construction and will act
as a growth impetus for the market. Under the
JNNRUM Scheme, Faridabad has been
granted Rs.25 billion for urban infrastructure.
Construction of the Badarpur Flyover will help
in freeing the Badarpur border area from
congestion faced by travellers, thereby
facilitating smooth flow of traffic. This
development will make residential projects
on NH 2 an attractive option. Construction of
the Delhi Metro Project in Faridabad is
underway. The resultant improved
connectivity from Faridabad to CBD regions of
Delhi will also benefit the region. Developers
can foresee great potential for growth in the
Nehar Par area, hence maximum fresh supply
is planned in this region. Sectors 70-89 of the
Nehar Par region are in close proximity to the
Eastern Periphery Expressway, which
connects Ghaziabad, Noida, Faridabad and
Palwal, hence establishing it as a major
industrial corridor. Besides this, the
Haryana Urban Development Authority
(HUDA) is actively participating in
construction of sector roads within the
Nehar Par region (Sectors 70-89), which will
improve internal connectivity. As per the new
master plan, Sectors 70-74 are earmarked as
semi-commercial zones and Sector 79 is
earmarked as a complete commercial zone.
Development of these zones will attract a lot
of catchment for residential sectors in the
Nehar Par area. The Faridabad-Palwal belt is
to be developed as an industrial zone under
the Delhi Mumbai Industrial Corridor (DMIC)
project as a part of the Phase I development.
Ghaziabad, along with Faridabad, forms the
core of industrial townships across the NCR
market. Due to its proximity to Delhi and
Ghaziabad
Indirapuram, Vaishali and Vasundhara have
been the heart of group housing
development. A number of retail
developments around Indirapuram and the
region's close proximity to Noida Sector 62,
the emerging commercial hub, have led to
Indirapuram, Vaishali and Vasundhara
gaining in popularity.
Till 2011, Ghaziabad is expected to witness a
fresh inflow of about 25,000 units, equating
to 33.54 mn.sq.ft of residential space, spread
across locations like Indirapuram, Vaishali,
Vasundhara, Raj Nagar extension and
NH 24 Crossings Republic. 40% of this
supply will be accounted for by 3-BHK units
and 46% by 2-BHK units. Out of the total
supply expected by 2011, about 51% is
expected to be available in 2011 and about
32% in 2010. The total supply will comprise a
mix of affordable as well as premium projects.
Projects like the Exotica Elegance and
ATS Advantage in Indirapuram,
Express Greens and Park Sapphire in Vaishali
and Gardenia Green and Gardern Glamour in
Vasundhara are a few premium segment
projects in Ghaziabad.
Raheja Atlantis, Gurgaon
Due to availability of cheap land parcels on
NH 58, Raj Nagar Extension and
NH 24 Crossings Republic have been
explored by a number of developers for
affordable projects.
From a macro prospective, Ghaziabad will
witness a number of infrastructure
developments which will benefit the region
as a whole. The Delhi Metro Project has been
approved for extension in Ghaziabad, which
will improve its connectivity with various
locations across the NCR. The work on this
network is already underway. The project is to
be developed in three phases, connecting
various locations like Vaishali, Indirapuram
and Ghaziabad new bus stand to locations
like Rajiv Chowk and Mehrauli in Delhi. The
estimated travel time between Vaishali and
Indirapuram to Rajiv Chowk is about
20 minutes. On the Delhi-Ghaziabad border,
work on the Anand Vihar rail junction is being
carried out. This mega rail junction will be
larger than all other rail junctions across the
NCR, and hence, Ghaziabad will witness
increased rail mobility. This development will
improve the attractiveness of Ghaziabad as a
residential and industrial location. Locations
like Indirapuram, Vaishali and Vasundhara
also enjoy proximity to Noida’s Sector 62,
which is an upcoming commercial hub. A
multilateral flyover is under construction at
Gazipur Chowk, which is close to new zones
of Ghaziabad, namely Indirapuram, Vaishali
and Vasundhara. This internal development
will further strengthen connectivity of
Ghaziabad to Noida and East Delhi, hence
making the zone more attractive for home
buyers. A flyover is also under construction at
Mohan Nagar Chowk. It is being constructed
with the aim of improving connectivity to NH
58. As various projects are under way at
Raj Nagar Extension, the GDA is taking ample
steps to improve connectivity to this new and
developing zone. A link road, connecting
NH 58 to the residential zone at
Raj Nagar Extension, is under construction.
Besides the Link Road, the GDA has also
started work on sector roads within the
Raj Nagar Extension region. Due to its good
connectivity, NH 24 Crossing Republic has
the potential of establishing itself as a strong
residential corridor in the Ghaziabad market.
Noida is a well planned city, with ample work
opportunities available within the region.
Noida Sector 18 Market, the Centrestage Mall,
the Great India Place and a few other retail
malls add to Noida’s status as a
cosmopolitan location. Noida has witnessed
substantial real estate growth on account of
the IT/ITES sector growth. Due to limited
availability of larger land parcels in Noida,
Noida
group housing developments have been
restricted to newer locations in Sectors 44, 50,
51, 52, 62 and approved residential sectors on
the Noida-Greater Noida Expressway. Fresh
residential supply of 6,000 units, equating to
10.76 mn.sq.ft., are expected to come up in
Noida by the end of 2011. This forms about
7% of the total supply expected to enter the
NCR market by the end of 2011. 90% of this
expected supply will be evenly distributed
amongst 2, 3 and 4-BHK units.
Out of the total expected supply by 2011, a
major share is accounted for by premium
segment housing. Celeste Towers by
Assotech, Amrapali Sapphire by
Amrapali Group, Forest Spa and Grandwoods
by OMAXE Group and Mahagun Maple are a
few of the upcoming projects categorized
under premium housing. The first half of
2009 witnessed the launch of Jaypee Group's
Aman in Sector 151 and Unitech's Uni Homes
in Sector 117, both of which are categorized
under the affordable segment.
In terms of urban infrastructure planning,
Noida has been an exemplary town. Aspects
like connectivity, power supply and water
supply have been the prime focus of
development authorities. The DND Flyway and
Taj Expressway are major transportation
nodes. The Noida Greater Noida Expressway
has facilitated several group housing
developments and has prompted developers
to explore new residential sectors along the
expressway.
Bestech Park View, Gurgaon
Unit-Wise Distribution of Supply 2009-11
Figure 6
Source: Knight Frank Research
Studio - 0%
1 BHK - 1%
2 BHK - 30%
2 ½ BHK - 2%
3 BHK - 43%
3 ½ BHK - 7%
4 BHK - 15%
5 BHK Penthouse - 2%
Till 2011
Ghaziabad is
expected to
witness a
fresh inflow
of about
25,000 units,
equating to
33.54 mn.sq.ft
of residential
space
Till 2011, a
total of
about 22,000
units,
equating to
34.27 mn.sq.ft.
of fresh
residential
supply, is
expected in
FaridabadNoida, many private developers have
explored the region for group housing
developments. Mohan Nagar, Raj Nagar and
Kavi Nagar are old residential locations,
where residential formats are predominantly
builder floors and plotted developments.
Locations like Ramprastha Colony,
Q3 2009
residentialmarket
KnightFrank.comReview
1110
BPTP's Parklands is the largest project in the
region. Projects like New Heights and The
Forest by OMAXE Group, La-Vista and
KLJ Green by KLJ Group, ERA Landmark by
ERA Group, The Jade by Uppals and Chloris by
Mahindra Lifesapce are part of the upcoming
supply in Faridabad.
Various infrastructure projects in and around
Faridabad are under construction and will act
as a growth impetus for the market. Under the
JNNRUM Scheme, Faridabad has been
granted Rs.25 billion for urban infrastructure.
Construction of the Badarpur Flyover will help
in freeing the Badarpur border area from
congestion faced by travellers, thereby
facilitating smooth flow of traffic. This
development will make residential projects
on NH 2 an attractive option. Construction of
the Delhi Metro Project in Faridabad is
underway. The resultant improved
connectivity from Faridabad to CBD regions of
Delhi will also benefit the region. Developers
can foresee great potential for growth in the
Nehar Par area, hence maximum fresh supply
is planned in this region. Sectors 70-89 of the
Nehar Par region are in close proximity to the
Eastern Periphery Expressway, which
connects Ghaziabad, Noida, Faridabad and
Palwal, hence establishing it as a major
industrial corridor. Besides this, the
Haryana Urban Development Authority
(HUDA) is actively participating in
construction of sector roads within the
Nehar Par region (Sectors 70-89), which will
improve internal connectivity. As per the new
master plan, Sectors 70-74 are earmarked as
semi-commercial zones and Sector 79 is
earmarked as a complete commercial zone.
Development of these zones will attract a lot
of catchment for residential sectors in the
Nehar Par area. The Faridabad-Palwal belt is
to be developed as an industrial zone under
the Delhi Mumbai Industrial Corridor (DMIC)
project as a part of the Phase I development.
Ghaziabad, along with Faridabad, forms the
core of industrial townships across the NCR
market. Due to its proximity to Delhi and
Ghaziabad
Indirapuram, Vaishali and Vasundhara have
been the heart of group housing
development. A number of retail
developments around Indirapuram and the
region's close proximity to Noida Sector 62,
the emerging commercial hub, have led to
Indirapuram, Vaishali and Vasundhara
gaining in popularity.
Till 2011, Ghaziabad is expected to witness a
fresh inflow of about 25,000 units, equating
to 33.54 mn.sq.ft of residential space, spread
across locations like Indirapuram, Vaishali,
Vasundhara, Raj Nagar extension and
NH 24 Crossings Republic. 40% of this
supply will be accounted for by 3-BHK units
and 46% by 2-BHK units. Out of the total
supply expected by 2011, about 51% is
expected to be available in 2011 and about
32% in 2010. The total supply will comprise a
mix of affordable as well as premium projects.
Projects like the Exotica Elegance and
ATS Advantage in Indirapuram,
Express Greens and Park Sapphire in Vaishali
and Gardenia Green and Gardern Glamour in
Vasundhara are a few premium segment
projects in Ghaziabad.
Raheja Atlantis, Gurgaon
Due to availability of cheap land parcels on
NH 58, Raj Nagar Extension and
NH 24 Crossings Republic have been
explored by a number of developers for
affordable projects.
From a macro prospective, Ghaziabad will
witness a number of infrastructure
developments which will benefit the region
as a whole. The Delhi Metro Project has been
approved for extension in Ghaziabad, which
will improve its connectivity with various
locations across the NCR. The work on this
network is already underway. The project is to
be developed in three phases, connecting
various locations like Vaishali, Indirapuram
and Ghaziabad new bus stand to locations
like Rajiv Chowk and Mehrauli in Delhi. The
estimated travel time between Vaishali and
Indirapuram to Rajiv Chowk is about
20 minutes. On the Delhi-Ghaziabad border,
work on the Anand Vihar rail junction is being
carried out. This mega rail junction will be
larger than all other rail junctions across the
NCR, and hence, Ghaziabad will witness
increased rail mobility. This development will
improve the attractiveness of Ghaziabad as a
residential and industrial location. Locations
like Indirapuram, Vaishali and Vasundhara
also enjoy proximity to Noida’s Sector 62,
which is an upcoming commercial hub. A
multilateral flyover is under construction at
Gazipur Chowk, which is close to new zones
of Ghaziabad, namely Indirapuram, Vaishali
and Vasundhara. This internal development
will further strengthen connectivity of
Ghaziabad to Noida and East Delhi, hence
making the zone more attractive for home
buyers. A flyover is also under construction at
Mohan Nagar Chowk. It is being constructed
with the aim of improving connectivity to NH
58. As various projects are under way at
Raj Nagar Extension, the GDA is taking ample
steps to improve connectivity to this new and
developing zone. A link road, connecting
NH 58 to the residential zone at
Raj Nagar Extension, is under construction.
Besides the Link Road, the GDA has also
started work on sector roads within the
Raj Nagar Extension region. Due to its good
connectivity, NH 24 Crossing Republic has
the potential of establishing itself as a strong
residential corridor in the Ghaziabad market.
Noida is a well planned city, with ample work
opportunities available within the region.
Noida Sector 18 Market, the Centrestage Mall,
the Great India Place and a few other retail
malls add to Noida’s status as a
cosmopolitan location. Noida has witnessed
substantial real estate growth on account of
the IT/ITES sector growth. Due to limited
availability of larger land parcels in Noida,
Noida
group housing developments have been
restricted to newer locations in Sectors 44, 50,
51, 52, 62 and approved residential sectors on
the Noida-Greater Noida Expressway. Fresh
residential supply of 6,000 units, equating to
10.76 mn.sq.ft., are expected to come up in
Noida by the end of 2011. This forms about
7% of the total supply expected to enter the
NCR market by the end of 2011. 90% of this
expected supply will be evenly distributed
amongst 2, 3 and 4-BHK units.
Out of the total expected supply by 2011, a
major share is accounted for by premium
segment housing. Celeste Towers by
Assotech, Amrapali Sapphire by
Amrapali Group, Forest Spa and Grandwoods
by OMAXE Group and Mahagun Maple are a
few of the upcoming projects categorized
under premium housing. The first half of
2009 witnessed the launch of Jaypee Group's
Aman in Sector 151 and Unitech's Uni Homes
in Sector 117, both of which are categorized
under the affordable segment.
In terms of urban infrastructure planning,
Noida has been an exemplary town. Aspects
like connectivity, power supply and water
supply have been the prime focus of
development authorities. The DND Flyway and
Taj Expressway are major transportation
nodes. The Noida Greater Noida Expressway
has facilitated several group housing
developments and has prompted developers
to explore new residential sectors along the
expressway.
Bestech Park View, Gurgaon
Unit-Wise Distribution of Supply 2009-11
Figure 6
Source: Knight Frank Research
Studio - 0%
1 BHK - 1%
2 BHK - 30%
2 ½ BHK - 2%
3 BHK - 43%
3 ½ BHK - 7%
4 BHK - 15%
5 BHK Penthouse - 2%
Till 2011
Ghaziabad is
expected to
witness a
fresh inflow
of about
25,000 units,
equating to
33.54 mn.sq.ft
of residential
space
Till 2011, a
total of
about 22,000
units,
equating to
34.27 mn.sq.ft.
of fresh
residential
supply, is
expected in
FaridabadNoida, many private developers have
explored the region for group housing
developments. Mohan Nagar, Raj Nagar and
Kavi Nagar are old residential locations,
where residential formats are predominantly
builder floors and plotted developments.
Locations like Ramprastha Colony,
Q3 2009
residentialmarket
KnightFrank.comReview
As connectivity concerns have been
addressed, residential sectors along the
expressway are expected to gain greater
visibility. Besides, commercial developments
on the expressway will aid more real estate
activity. Work on an under pass at
Rajnigandha Chowk is also underway. As this
junction is an important entry node to Noida,
the development will improve mobility within
Noida.
Greater Noida is the extension of the
development format of Noida. The region has
been identified as a future institutional and
commercial zone in the NCR. Availability of
larger land parcels has facilitated developers
to explore the region for extensive group
housing development. Till 2011,
Greater Noida is expected to witness a fresh
supply of about 11,200 units, equating to
20.62 mn.sq.ft. of residential space. This is
about 12 % of the total supply planned across
the NCR. Approximately 58% of the total
supply expected in Greater Noida over the
next two years will enter the market in 2011,
and half of the total expected supply will be
accounted for by 3-BHK units.
The city's potential for development is being
tapped by most Grade A developers across
the NCR. Projects by Jaypee Group,
OMAXE Group, Unitech, Supertech, Eldeco,
Niti Shree Group and Parsvnath constitute a
major share of the upcoming supply. The
Jaypee Greens, a golf course project by
Jaypee Group, E-Homes by
Designer Arch Infrastructure, Panorama and
Palacia by Parsvnath Group, Palm Green by
Omaxe and Horizon and Cascades by
Unitech Group are a few key upcoming
projects in the region.
The infrastructure planning of Greater Noida
is similar to that of Noida. Road connectivity
aspects, provision of water and power
facilities have been the areas of focus in the
development plan. As per the New Master
Plan, about 13% of the total land available in
Greater Noida
Greater Noida is to be used for development
of transportation facilities. Greater Noida
enjoys connectivity advantages as it is linked
to Delhi by the Taj Expressway. According to
the New Master Plan, Greater Noida will be
connected to NH 24 by a 60 meter wide road,
which will facilitate inter region trade. A
130 meter wide road links the north and
south zones of Greater Noida. The road
passes through the ZITA, Pi, Rio and Sigma
Sectors, improving their connectivity with all
the locations within Greater Noida and
thereby making them more attractive for
residential development. There are
designated commercial and institutional
sectors like the Knowledge Park I- IV and
Ecotech Zones. Besides the commercial
zones, a number of retail developments are
also making the region attractive. Malls like
the Ansal Plaza, OMAXE Arcade and
NRI City Centre are proving to be emerging
shopping destinations in the region. As
sectors Alpha, Beta, Pi and Sigma are closer
to these commercial and retail developments,
they are preferred residential locations.
Due to the economic slowdown, locations
across Delhi have witnessed price correction
in the past six to eight months. Post Central
Assembly elections, the markets have been
Capital & Rental Profile
Delhi
stable in terms of residential prices.
Locations like Jor Bagh, Chanakyapuri and
Golf Links command highest capital values
across Delhi. Average value of a property in
these locations is approximately
Rs.38,000-45,600/sq.ft. South Delhi
locations like Friends Colony,
New Friends Colony and Defence Colony
currently command average capital values in
the range of Rs.11,500-19,500/sq.ft. A notable
decline in capital rates in the Delhi
micro-markets has been observed in Greater
Kailash I & II, where current rates represent a
20% decline from Q1 2008 peak levels. The
micro-markets of Dwarka and Rohini
command average capital values in the range
of Rs.3,800-6,000/sq.ft and
Rs.3,000-6,000/sq.ft.
Rentals for 2 BHK apartments in Jor Bagh and
Golf Links range from a minimum of
Rs.150,000 to a maximum of Rs.250,000 per
month. Rentals for 2 BHK apartments in
Chanakyapuri range from Rs.150,000 to
Rs.200,000 per month. South Delhi locations
like New Friends Colony and Friends Colony
command rentals in the range of Rs.35,000 to
Rs.65,000 per month for 2 BHK units. Based
on the aforementioned capital and rental
values across Delhi, the average annual
rental yield for the residential segment within
Delhi is about 3.65%.
1312
Gurgaon
In the last couple of years Gurgaon has been
dominated mainly by premium segment
housing. Due to the global economic
slowdown and a decline in demand from
investors to end users, developers in
Gurgaon have shifted focus to affordable
projects. Locations like DLF Phase I-IV and
Sushant Lok I-III command capital values in
the range of Rs.2,625-7,250/sq.ft, and
locations in Golf Course Road command
average capital values in the range of
Rs.4,200-7,000/sq.ft. . The initial asking rate
for a few upcoming projects by DLF and
Salcon Group on Golf Course Road is in the
range of Rs. 9,000-10,000 /sq.ft. The
Caitriona, located on NH-8, is priced as high
as Rs.12,500/sq.ft. Locations like
Extended Golf Course Road and Sohna Road
are emerging as reasonably priced locations,
with capital values ranging between
Rs.2,600-4,550/sq.ft.
Due to thriving commercial activity in
Gurgaon, certain locations within this market
attract strong rental housing demand.
Rentals for 2 BHK units are in the range of
Rs.13,000- 20,000 per month in
DLF Phase I-IV and Rs.21,000-28,000 per
month on M.G. Road. 2 BHK apartments on
Golf Course Road command rental values in
the range of Rs.17,000-21,000 per month. The
same unit types in locations like Sushant Lok,
Extended Golf Course Road and Sohna Road
command lower rentals in the range of
Rs.10,000-15,000 per month. Due to its
strong rentals and relatively low capital
values, Gurgaon exhibits a relatively strong
annual rental yield of 4.7%.
Capital values in Faridabad range from
Rs. 1,725-6,000/sq.ft. Residential zones in
Old Faridabad and on Suraj Kunj Road
command capital values in the range of
Rs.3,250-6,000/sq.ft. Residential apartments
Faridabad
on NH 2, due to their advantageous location,
command capital values ranging from
Rs.3,500-4,200/sq.ft. Residential apartments
in Sectors 70-89 are affordable and relatively
lesser priced as compared to other locations
in Faridabad. The Nehar Par area commands
capital values in the range of
Rs. 1,725-2,400 /sq.ft.
2 BHK rentals in Sectors 18 & 19 in
Old Faridabad range from
Rs.6,500-8,000 per month. The same unit
types in posh sectors like Sector 21 C & D
command rental values in the range of
Rs.10,000-15,000 per month. New sectors like
Sectors 36 to 45 are relatively less expensive
in terms of rental values and rentals for 2 BHK
units in these locations range from
Rs.6,000-8,000 per month. Suraj Kund Road
links Faridabad to Delhi and Gurgaon and
commands premium rentals for 2 BHK units
ranging from Rs.10,000- 15,000 per month,.
Low rental values in locations like
Old Faridabad and few sectors like
Sector 36-45 in Faridabad drive a low average
annual rental yield of 3.8%.
Capital values in Old Ghaziabad locations
like Raj Nagar and Mohan Nagar are in the
range of Rs.2,000-6,000/sq.ft. Indirapuram,
Vaishali and Vasundhara command capital
values ranging from Rs.2,200-3,000/sq.ft.
Affordable locations like Crossings Republic
and Raj Nagar Extension command capital
values in the range of Rs.1,700-2,400/sq.ft.
Ghaziabad
DLF The Aralias, Gurgaon
in Greater
Kailash I & II,
current
capital rates
represent a
20% decline
from Q1 2008
peak levels
Rs.
/mo
nth
0
350000
No
ida
Source: Knight Frank Research
Figure 7
Residential Rental Values (2 BHK)
Gre
ate
r N
oid
a
Gh
azi
ab
ad
Fari
da
ba
d
Gu
rga
on
Ch
an
ak
yap
uri
/Jo
r B
ag
h/G
olf
Lin
ks
Gre
ate
r K
ail
ash
I &
II/D
efe
nce
300000
250000
200000
150000
100000
50000
Minimum Maximum
NCR Peak to Trough to Sep'09
Trough Change Sep'09 Change (Rs./sq.ft.)
Chanakyapuri -2% 0% 43,240
Jor Bagh 0% 0% 43,200
Golf Links 0% 0% 41,560
Greater Kailash I & II -20% 1% 13,000
Ghaziabad (Vaishali, Indirapuram -21% 0% 2,391
Vasundhara, Raj Nagar Extension)
Gurgaon -26% 5% 4,683
Noida -19% 0% 4,450
Greater Noida -27% 0% 2,150
Faridabad -10% 0% 3,628
Table 1
Average Residential Capital Value Trend
Source: Knight Frank Research
Q3 2009
residentialmarket
KnightFrank.comReview
As connectivity concerns have been
addressed, residential sectors along the
expressway are expected to gain greater
visibility. Besides, commercial developments
on the expressway will aid more real estate
activity. Work on an under pass at
Rajnigandha Chowk is also underway. As this
junction is an important entry node to Noida,
the development will improve mobility within
Noida.
Greater Noida is the extension of the
development format of Noida. The region has
been identified as a future institutional and
commercial zone in the NCR. Availability of
larger land parcels has facilitated developers
to explore the region for extensive group
housing development. Till 2011,
Greater Noida is expected to witness a fresh
supply of about 11,200 units, equating to
20.62 mn.sq.ft. of residential space. This is
about 12 % of the total supply planned across
the NCR. Approximately 58% of the total
supply expected in Greater Noida over the
next two years will enter the market in 2011,
and half of the total expected supply will be
accounted for by 3-BHK units.
The city's potential for development is being
tapped by most Grade A developers across
the NCR. Projects by Jaypee Group,
OMAXE Group, Unitech, Supertech, Eldeco,
Niti Shree Group and Parsvnath constitute a
major share of the upcoming supply. The
Jaypee Greens, a golf course project by
Jaypee Group, E-Homes by
Designer Arch Infrastructure, Panorama and
Palacia by Parsvnath Group, Palm Green by
Omaxe and Horizon and Cascades by
Unitech Group are a few key upcoming
projects in the region.
The infrastructure planning of Greater Noida
is similar to that of Noida. Road connectivity
aspects, provision of water and power
facilities have been the areas of focus in the
development plan. As per the New Master
Plan, about 13% of the total land available in
Greater Noida
Greater Noida is to be used for development
of transportation facilities. Greater Noida
enjoys connectivity advantages as it is linked
to Delhi by the Taj Expressway. According to
the New Master Plan, Greater Noida will be
connected to NH 24 by a 60 meter wide road,
which will facilitate inter region trade. A
130 meter wide road links the north and
south zones of Greater Noida. The road
passes through the ZITA, Pi, Rio and Sigma
Sectors, improving their connectivity with all
the locations within Greater Noida and
thereby making them more attractive for
residential development. There are
designated commercial and institutional
sectors like the Knowledge Park I- IV and
Ecotech Zones. Besides the commercial
zones, a number of retail developments are
also making the region attractive. Malls like
the Ansal Plaza, OMAXE Arcade and
NRI City Centre are proving to be emerging
shopping destinations in the region. As
sectors Alpha, Beta, Pi and Sigma are closer
to these commercial and retail developments,
they are preferred residential locations.
Due to the economic slowdown, locations
across Delhi have witnessed price correction
in the past six to eight months. Post Central
Assembly elections, the markets have been
Capital & Rental Profile
Delhi
stable in terms of residential prices.
Locations like Jor Bagh, Chanakyapuri and
Golf Links command highest capital values
across Delhi. Average value of a property in
these locations is approximately
Rs.38,000-45,600/sq.ft. South Delhi
locations like Friends Colony,
New Friends Colony and Defence Colony
currently command average capital values in
the range of Rs.11,500-19,500/sq.ft. A notable
decline in capital rates in the Delhi
micro-markets has been observed in Greater
Kailash I & II, where current rates represent a
20% decline from Q1 2008 peak levels. The
micro-markets of Dwarka and Rohini
command average capital values in the range
of Rs.3,800-6,000/sq.ft and
Rs.3,000-6,000/sq.ft.
Rentals for 2 BHK apartments in Jor Bagh and
Golf Links range from a minimum of
Rs.150,000 to a maximum of Rs.250,000 per
month. Rentals for 2 BHK apartments in
Chanakyapuri range from Rs.150,000 to
Rs.200,000 per month. South Delhi locations
like New Friends Colony and Friends Colony
command rentals in the range of Rs.35,000 to
Rs.65,000 per month for 2 BHK units. Based
on the aforementioned capital and rental
values across Delhi, the average annual
rental yield for the residential segment within
Delhi is about 3.65%.
1312
Gurgaon
In the last couple of years Gurgaon has been
dominated mainly by premium segment
housing. Due to the global economic
slowdown and a decline in demand from
investors to end users, developers in
Gurgaon have shifted focus to affordable
projects. Locations like DLF Phase I-IV and
Sushant Lok I-III command capital values in
the range of Rs.2,625-7,250/sq.ft, and
locations in Golf Course Road command
average capital values in the range of
Rs.4,200-7,000/sq.ft. . The initial asking rate
for a few upcoming projects by DLF and
Salcon Group on Golf Course Road is in the
range of Rs. 9,000-10,000 /sq.ft. The
Caitriona, located on NH-8, is priced as high
as Rs.12,500/sq.ft. Locations like
Extended Golf Course Road and Sohna Road
are emerging as reasonably priced locations,
with capital values ranging between
Rs.2,600-4,550/sq.ft.
Due to thriving commercial activity in
Gurgaon, certain locations within this market
attract strong rental housing demand.
Rentals for 2 BHK units are in the range of
Rs.13,000- 20,000 per month in
DLF Phase I-IV and Rs.21,000-28,000 per
month on M.G. Road. 2 BHK apartments on
Golf Course Road command rental values in
the range of Rs.17,000-21,000 per month. The
same unit types in locations like Sushant Lok,
Extended Golf Course Road and Sohna Road
command lower rentals in the range of
Rs.10,000-15,000 per month. Due to its
strong rentals and relatively low capital
values, Gurgaon exhibits a relatively strong
annual rental yield of 4.7%.
Capital values in Faridabad range from
Rs. 1,725-6,000/sq.ft. Residential zones in
Old Faridabad and on Suraj Kunj Road
command capital values in the range of
Rs.3,250-6,000/sq.ft. Residential apartments
Faridabad
on NH 2, due to their advantageous location,
command capital values ranging from
Rs.3,500-4,200/sq.ft. Residential apartments
in Sectors 70-89 are affordable and relatively
lesser priced as compared to other locations
in Faridabad. The Nehar Par area commands
capital values in the range of
Rs. 1,725-2,400 /sq.ft.
2 BHK rentals in Sectors 18 & 19 in
Old Faridabad range from
Rs.6,500-8,000 per month. The same unit
types in posh sectors like Sector 21 C & D
command rental values in the range of
Rs.10,000-15,000 per month. New sectors like
Sectors 36 to 45 are relatively less expensive
in terms of rental values and rentals for 2 BHK
units in these locations range from
Rs.6,000-8,000 per month. Suraj Kund Road
links Faridabad to Delhi and Gurgaon and
commands premium rentals for 2 BHK units
ranging from Rs.10,000- 15,000 per month,.
Low rental values in locations like
Old Faridabad and few sectors like
Sector 36-45 in Faridabad drive a low average
annual rental yield of 3.8%.
Capital values in Old Ghaziabad locations
like Raj Nagar and Mohan Nagar are in the
range of Rs.2,000-6,000/sq.ft. Indirapuram,
Vaishali and Vasundhara command capital
values ranging from Rs.2,200-3,000/sq.ft.
Affordable locations like Crossings Republic
and Raj Nagar Extension command capital
values in the range of Rs.1,700-2,400/sq.ft.
Ghaziabad
DLF The Aralias, Gurgaon
in Greater
Kailash I & II,
current
capital rates
represent a
20% decline
from Q1 2008
peak levels
Rs.
/mo
nth
0
350000
No
ida
Source: Knight Frank Research
Figure 7
Residential Rental Values (2 BHK)
Gre
ate
r N
oid
a
Gh
azi
ab
ad
Fari
da
ba
d
Gu
rga
on
Ch
an
ak
yap
uri
/Jo
r B
ag
h/G
olf
Lin
ks
Gre
ate
r K
ail
ash
I &
II/D
efe
nce
300000
250000
200000
150000
100000
50000
Minimum Maximum
NCR Peak to Trough to Sep'09
Trough Change Sep'09 Change (Rs./sq.ft.)
Chanakyapuri -2% 0% 43,240
Jor Bagh 0% 0% 43,200
Golf Links 0% 0% 41,560
Greater Kailash I & II -20% 1% 13,000
Ghaziabad (Vaishali, Indirapuram -21% 0% 2,391
Vasundhara, Raj Nagar Extension)
Gurgaon -26% 5% 4,683
Noida -19% 0% 4,450
Greater Noida -27% 0% 2,150
Faridabad -10% 0% 3,628
Table 1
Average Residential Capital Value Trend
Source: Knight Frank Research
Q3 2009
residentialmarket
KnightFrank.comReview
In the recent past, several projects
commanding low capital values have been
launched in emerging locations like
NH 24 Crossings Republic and
NH 58 Raj Nagar Extension.
Indirapuram, Vaishali and Vasundhara are
the most sought after residential rental
locations in Ghaziabad. Rental Values for
2 BHK units in Indirapuram range from
Rs.8,500-12,000 per month. The same unit
types in Vaishali and Vasundhara command
somewhat cheaper rentals in the range of
Rs.6,500-9,500 per month. The average
annual rental yield for properties in these
locations is around 4.1%.
As a major share of group housing
developments across Noida are in the
premium segment, property prices till the
recent past have been quite high. Due to the
recent launch of a few affordable housing
projects, capital values in Noida have gone
below Rs.3,000/sq.ft. As of today, locations
across Noida command capital values in the
range of Rs.2,800-6,000/sq.ft. Due to the
economic downturn, demand for housing
dried out in Noida. Apart from weakening of
Noida
demand, the launch of affordable projects
across various sectors along the
Noida-Greater Noida Expressway contributed
to this price correction.
Rental values in Noida vary according to the
location as well as property type. 2 BHK
apartments in locations like Sector 44, 50, 51,
52 and 62 command rental values ranging
from Rs.12,000-18,000 per month. Rental
rates for 2 BHK apartments on the expressway
are in the range of Rs.8,500- 14,000 per
month. The average annual rental yield for
residential development in Noida is about 4%.
In terms of capital values, Greater Noida is
more affordable as compared to Noida. The
market commands average capital values in
the range of Rs.1,900-3,000/sq.ft. depending
on the location of the project and the grade
that the developer falls into. Currently,
Jaypee Group's Golf Course project is the
most expensive under construction project in
the region and has apartments in the range of
Rs.5,400-9,000 /sq.ft.
Rentals for 2 BHK apartments in the
Greater Noida market range from
Rs.6,000- 10,000 per month. The same unit
types command rental values ranging
between Rs.6,000-8,500 per month in
Sectors Alpha and Beta, and Rs.8,000-10,000
per month in Sectors Phi and Chi. Sector Pi,
where substantial construction activity is
visible, fetches 2 BHK rentals in the range of
Rs.7,000-10,000 per month. Due to
Greater Noida's rental market being relatively
immature, the average annual rental yield in
this market is relatively low at 3.2%.
On a macro level, the Central Government is
consistently focusing on providing fiscal
incentives to ensure a stable liquidity level
within the economy. Measures are being
taken continually so as to ensure creation of
demand. In the month of July, the RBI further
reduced the reverse repo rate by about
Greater Noida
City Outlook
1514
275 basis points, bringing it down to as low
as 3.25%. This step was been taken to ensure
higher liquidity levels and enhance the
lending capacity of banks. On a more micro
level, within the NCR, funds have been
allocated and are being utilised for physical
infrastructure developments. Issues
pertaining to connectivity, water and power
supply and social security are being
addressed by the regional development
authorities on a priority basis. Infrastructure
projects planned in Gurgaon, Noida,
Greater Noida, Faridabad and Ghaziabad are
expected to provide substantial and
sustainable growth to the residential
segments in these locations.
Developers across the NCR market have
identified a sustainable demand for
affordable housing projects. Newer sectors
across the region are being explored to create
products that are designed to serve end-user
demand. Residential zones in new planned
sectors of Gurgaon (76-113), the Nehar Par
area of Faridabad, NH 24- Crossings Republic
in Ghaziabad, residential sectors on the
Noida-Greater Noida Expressway and
designated residential pockets in
Greater Noida are already witnessing
affordable housing construction. These
residential zones are foreseen as prime
growth zones, provided the regional
authorities meet the physical infrastructure
requirements. Even Noida and Gurgaon,
hitherto prime residential locations, are
witnessing affordable housing development.
This affordable housing trend can be
attributed to the real estate sector slump,
which forced developers to restructure
projects to cater to lower income end-user
demand. 34 Pavilion, developed by
Supertech Group in Noida Sector 34, is an
example of such a restructured project. The
potential success of the affordable housing
push could change the profile of prices and
supply that has been witnessed across the
NCR market in recent years.
Project Status Remarks
Western Peripheral Expressway Under Construction This development will lend greater visibility to the nearby Pataudi Road in
Gurgaon.
Gurgaon Metro Project Under Construction The development will link Gurgaon to Delhi from M.G.Road and Dwarka.
Residential zones like Sushant Lok III, Extended Golf Course Road,
Sohna Road and new planned sectors between Sectors 69-78 and
Sectors 99-112 will benefit in terms of accessibility
6-Lane Badarpur Flyover Under Construction This development will reduce travel time across the Delhi-Faridabad border
by about 20 minutes, thus increasing accessibility of the Nehar Par region
Eastern Periphery Expressway Under Construction The expressway will improve connectivity of Faridabad to Ghaziabad and
Noida. As this project is accessible from the Nehar Par region, projects
in Sectors 70 - 89 will also benefit
Yamuna Expressway Under Construction The expressway will connect Greater Noida to Agra via Delhi and Mathura Road.
This 6 lane, 165.37 Km long stretch is expected to emerge as a major trade
and freight corridor in the NCR region
Noida Metro Project Operational Delhi Metro has been extended into Noida from Yamuna Bank station in Delhi
to Noida Sector 32. This 13.1 Km stretch has 10 stations. The Metro stations
at Noida Sectors 16, 18, 32 and 37 will provide better visibility to
residential sectors 34, 44, 50, 51,52 and commercial sectors 16, 16A, 18 and 62.
Table 2
NCR Major Infrastructure Developments
Source: Knight Frank Research
The residential segment in the NCR has
shown some signs of recovery in the last
quarter. Market enquiries have picked up and
are yielding conversions, as is evidenced by a
drastic increase in home loan disbursements
during the last three months. Although
demand is picking up, its pace is not as fast
as anticipated. End-users are looking for
affordable options. Hence, developers should
focus on meeting end-user demand and
creating affordable products rather than
maximizing profits. The public sector will
have a huge role to play in the development
of affordable housing. Developers will need
to be provided with tax subsidies and on the
demand front, meaningful interest rate
subsidies will have to be provided.
Given the general stability of markets around
Delhi and the minimal supply expected in this
part of the NCR until 2011, it is reasonable to
expect residential prices in Delhi to remain
relatively stable or even increase if demand in
the region significantly increases due to
better internal connectivity. In Gurgaon, since
the start of Q2 2009, prices have been very
stable and in some cases are reflecting a
slight increase, although the latter is more
project and developer specific rather than an
overall trend. Given that Gurgaon will account
for over a third of the supply expected across
the NCR until the end of 2011, it is unlikely
that noteworthy price increases will be
witnessed in this market down the road.
Over the last 3-4 months, most micro-markets
across the NCR have shown price stability,
which reflects a period of consolidation
following the storm of the realty slump. Prices
appear to have bottomed out and although
price declines are largely in the past, it is too
early to project price increases in a particular
market. Since a large portion of the upcoming
supply in NCR over the next 3 years will hit
the market in 2011, one would expect price
volatility to start around that period as well.
Several infrastructure initiatives around the
NCR are expected to boost residential options
through augmenting connectivity and de-
congesting traffic within certain locations. If
consumers are attracted to hitherto small
markets around the NCR due to better
infrastructure, the subsequent de-congestion
of demand in the region could alleviate the
upward pressure on prices in locations like
Gurgaon and Noida, which are becoming
increasingly attractive residential
Due to
declining
demand,
Ghaziabad has
witnessed a
price
correction of
about 24%
since peak
levels in 2008
destinations and are thus vulnerable to
exaggerated price appreciation.
Given the
general
stability of
markets
around Delhi
and the
minimal supply
expected,
prices in delhi
are expected
to remain
relatively
stable
Q3 2009
residentialmarket
KnightFrank.comReview
In the recent past, several projects
commanding low capital values have been
launched in emerging locations like
NH 24 Crossings Republic and
NH 58 Raj Nagar Extension.
Indirapuram, Vaishali and Vasundhara are
the most sought after residential rental
locations in Ghaziabad. Rental Values for
2 BHK units in Indirapuram range from
Rs.8,500-12,000 per month. The same unit
types in Vaishali and Vasundhara command
somewhat cheaper rentals in the range of
Rs.6,500-9,500 per month. The average
annual rental yield for properties in these
locations is around 4.1%.
As a major share of group housing
developments across Noida are in the
premium segment, property prices till the
recent past have been quite high. Due to the
recent launch of a few affordable housing
projects, capital values in Noida have gone
below Rs.3,000/sq.ft. As of today, locations
across Noida command capital values in the
range of Rs.2,800-6,000/sq.ft. Due to the
economic downturn, demand for housing
dried out in Noida. Apart from weakening of
Noida
demand, the launch of affordable projects
across various sectors along the
Noida-Greater Noida Expressway contributed
to this price correction.
Rental values in Noida vary according to the
location as well as property type. 2 BHK
apartments in locations like Sector 44, 50, 51,
52 and 62 command rental values ranging
from Rs.12,000-18,000 per month. Rental
rates for 2 BHK apartments on the expressway
are in the range of Rs.8,500- 14,000 per
month. The average annual rental yield for
residential development in Noida is about 4%.
In terms of capital values, Greater Noida is
more affordable as compared to Noida. The
market commands average capital values in
the range of Rs.1,900-3,000/sq.ft. depending
on the location of the project and the grade
that the developer falls into. Currently,
Jaypee Group's Golf Course project is the
most expensive under construction project in
the region and has apartments in the range of
Rs.5,400-9,000 /sq.ft.
Rentals for 2 BHK apartments in the
Greater Noida market range from
Rs.6,000- 10,000 per month. The same unit
types command rental values ranging
between Rs.6,000-8,500 per month in
Sectors Alpha and Beta, and Rs.8,000-10,000
per month in Sectors Phi and Chi. Sector Pi,
where substantial construction activity is
visible, fetches 2 BHK rentals in the range of
Rs.7,000-10,000 per month. Due to
Greater Noida's rental market being relatively
immature, the average annual rental yield in
this market is relatively low at 3.2%.
On a macro level, the Central Government is
consistently focusing on providing fiscal
incentives to ensure a stable liquidity level
within the economy. Measures are being
taken continually so as to ensure creation of
demand. In the month of July, the RBI further
reduced the reverse repo rate by about
Greater Noida
City Outlook
1514
275 basis points, bringing it down to as low
as 3.25%. This step was been taken to ensure
higher liquidity levels and enhance the
lending capacity of banks. On a more micro
level, within the NCR, funds have been
allocated and are being utilised for physical
infrastructure developments. Issues
pertaining to connectivity, water and power
supply and social security are being
addressed by the regional development
authorities on a priority basis. Infrastructure
projects planned in Gurgaon, Noida,
Greater Noida, Faridabad and Ghaziabad are
expected to provide substantial and
sustainable growth to the residential
segments in these locations.
Developers across the NCR market have
identified a sustainable demand for
affordable housing projects. Newer sectors
across the region are being explored to create
products that are designed to serve end-user
demand. Residential zones in new planned
sectors of Gurgaon (76-113), the Nehar Par
area of Faridabad, NH 24- Crossings Republic
in Ghaziabad, residential sectors on the
Noida-Greater Noida Expressway and
designated residential pockets in
Greater Noida are already witnessing
affordable housing construction. These
residential zones are foreseen as prime
growth zones, provided the regional
authorities meet the physical infrastructure
requirements. Even Noida and Gurgaon,
hitherto prime residential locations, are
witnessing affordable housing development.
This affordable housing trend can be
attributed to the real estate sector slump,
which forced developers to restructure
projects to cater to lower income end-user
demand. 34 Pavilion, developed by
Supertech Group in Noida Sector 34, is an
example of such a restructured project. The
potential success of the affordable housing
push could change the profile of prices and
supply that has been witnessed across the
NCR market in recent years.
Project Status Remarks
Western Peripheral Expressway Under Construction This development will lend greater visibility to the nearby Pataudi Road in
Gurgaon.
Gurgaon Metro Project Under Construction The development will link Gurgaon to Delhi from M.G.Road and Dwarka.
Residential zones like Sushant Lok III, Extended Golf Course Road,
Sohna Road and new planned sectors between Sectors 69-78 and
Sectors 99-112 will benefit in terms of accessibility
6-Lane Badarpur Flyover Under Construction This development will reduce travel time across the Delhi-Faridabad border
by about 20 minutes, thus increasing accessibility of the Nehar Par region
Eastern Periphery Expressway Under Construction The expressway will improve connectivity of Faridabad to Ghaziabad and
Noida. As this project is accessible from the Nehar Par region, projects
in Sectors 70 - 89 will also benefit
Yamuna Expressway Under Construction The expressway will connect Greater Noida to Agra via Delhi and Mathura Road.
This 6 lane, 165.37 Km long stretch is expected to emerge as a major trade
and freight corridor in the NCR region
Noida Metro Project Operational Delhi Metro has been extended into Noida from Yamuna Bank station in Delhi
to Noida Sector 32. This 13.1 Km stretch has 10 stations. The Metro stations
at Noida Sectors 16, 18, 32 and 37 will provide better visibility to
residential sectors 34, 44, 50, 51,52 and commercial sectors 16, 16A, 18 and 62.
Table 2
NCR Major Infrastructure Developments
Source: Knight Frank Research
The residential segment in the NCR has
shown some signs of recovery in the last
quarter. Market enquiries have picked up and
are yielding conversions, as is evidenced by a
drastic increase in home loan disbursements
during the last three months. Although
demand is picking up, its pace is not as fast
as anticipated. End-users are looking for
affordable options. Hence, developers should
focus on meeting end-user demand and
creating affordable products rather than
maximizing profits. The public sector will
have a huge role to play in the development
of affordable housing. Developers will need
to be provided with tax subsidies and on the
demand front, meaningful interest rate
subsidies will have to be provided.
Given the general stability of markets around
Delhi and the minimal supply expected in this
part of the NCR until 2011, it is reasonable to
expect residential prices in Delhi to remain
relatively stable or even increase if demand in
the region significantly increases due to
better internal connectivity. In Gurgaon, since
the start of Q2 2009, prices have been very
stable and in some cases are reflecting a
slight increase, although the latter is more
project and developer specific rather than an
overall trend. Given that Gurgaon will account
for over a third of the supply expected across
the NCR until the end of 2011, it is unlikely
that noteworthy price increases will be
witnessed in this market down the road.
Over the last 3-4 months, most micro-markets
across the NCR have shown price stability,
which reflects a period of consolidation
following the storm of the realty slump. Prices
appear to have bottomed out and although
price declines are largely in the past, it is too
early to project price increases in a particular
market. Since a large portion of the upcoming
supply in NCR over the next 3 years will hit
the market in 2011, one would expect price
volatility to start around that period as well.
Several infrastructure initiatives around the
NCR are expected to boost residential options
through augmenting connectivity and de-
congesting traffic within certain locations. If
consumers are attracted to hitherto small
markets around the NCR due to better
infrastructure, the subsequent de-congestion
of demand in the region could alleviate the
upward pressure on prices in locations like
Gurgaon and Noida, which are becoming
increasingly attractive residential
Due to
declining
demand,
Ghaziabad has
witnessed a
price
correction of
about 24%
since peak
levels in 2008
destinations and are thus vulnerable to
exaggerated price appreciation.
Given the
general
stability of
markets
around Delhi
and the
minimal supply
expected,
prices in delhi
are expected
to remain
relatively
stable
Q3 2009
residentialmarket
KnightFrank.comReview
Mumbai
Market Review
The Mumbai market has witnessed a
transition in the profile of residential
developments over the past two years. This
can be attributed to the fluctuations and
uncertainty caused by the impact of the
global slowdown on the financial capital of
the country.
Home to the Reserve Bank of India, the
National Stock Exchange and the Bombay
Stock Exchange in addition to numerous
multinational companies entering the Indian
market, this city has seen a change in
demographic profiles and thus a shift in
residential trends. In the past few years,
factors such as double income families,
higher disposable income and easy
availability of home loans have encouraged
buyers to aspire for a higher level of luxury,
be it in the heart of Mumbai or the outskirts.
This correspondingly led to a shift in the type
of apartments being constructed and 2 and
3-BHKs with additional amenities became the
focus of most developers.
While the city has grown northwards to the
Western Suburbs, Extended Suburban and
Central Suburbs, the micro-market of Navi
Mumbai to the east of Mumbai has seen a
substantial level of development.
In Q1 and Q2 2008, the fluctuating stock
market as well as high interest rates affected
sentiments of both developers and buyers.
The auction of two residential plots and one
commercial plot in BKC in March 2008 was
one of the few important signs that depicted
changing market dynamics. While the
commercial plot received no bids, the
residential plots were auctioned at a much
higher price than predicted. However, post
the closure of Q1 2008, winning bidders
expressed their inability to pay for the land
and requested an extension till the end of the
year. In Q2 2008, both the smaller as well as
some of the larger developers began facing
problems in funding. Although developers
held on to prices that were commanded
earlier, evidence of them feeling the pinch
included delayed possession and freebies
that were offered to prospective buyers.
During Q3 2008 builders were optimistic that
the festive season would spark residential
demand. However, the market failed to pick
up. High interest rates coupled with inflated
prices and the anticipation of further
reduction in prices resulted in people
delaying plans of buying a home. With a view
to lessen the burden faced by buyers as well
as to encourage construction of affordable
housing for the masses, public sector banks
offered various packages with lowered
interest rates for loans upto Rs.2 million.
Simultaneously, the increasing cost of
construction, high interest rates and the
inability of developers to reduce prices in
prime areas due to high land costs resulted in
a change in marketing strategy. A number of
developers started reconfiguring larger
housing units to small ones in order to sell
their current projects, while others began
developing affordable housing projects in
order to attract the middle and lower income
customers.
Besides affordable housing projects that
were located outside the city or in the
suburbs, 'semi-luxury' apartments were also
introduced in the market. These units offered
a reduced area but with modern amenities
and facilities. Also, the semi-luxury units
were located in easily accessible areas.
By the end of Q4 2008, Mumbai's residential
market had witnessed a noticeable correction
in prices across all types of residential
developments, and consequently new units
types emerged. While Studio apartments and
1-BHK apartments had become virtually non-
existent in the last few years, developers
revised plans of constructing larger 2 and
3BHKs in favour of smaller units across the
city. This was expected to target end-users
rather than speculative investors, as was the
trend earlier. Both the government as well as
private players set out to develop projects
emphasising affordability for all income
categories. During the last few months of
2008, various attempts were made to
stimulate residential demand in the city.
In order to reduce the demand-supply
mismatch among the masses the
Maharashtra Housing and Area Development
Authority (MHADA) sold applications for
affordable housing units in various pockets
of the city for individuals under all income
categories. In addition to this, the Mumbai
Metropolitan Regional Development Authority
(MMRDA) announced its tie up with a private
developer to build around 6,000 tenements
in Karjat. This Public Private Partnership (PPP)
model was implemented under the rental
housing project of the authority with a view to
help decongest the city over the next five
years. The state government also issued a
notification clearing a Floor Space Index (FSI)
of 2.5 for housing schemes targeted at the
Economically Weaker Sections (EWS), Low
Income Groups (LIG) and Middle Income
Groups (MIG). The permissible FSI for land
developed for the HIG segment remains as
per Development Control Regulations. The
aforementioned factors have combined to
usher in a different developmental trend
within the city.
As access to fresh funding in 2009 remained
constricted, the construction timelines of
most developers fell behind schedule. Many
projects have been stalled, and some
developers have changed the type of units
being constructed and are even cancelling
plans of developing projects in the near
future. During the first half of the year, there
continued to be lower demand for apartments
in comparison to what was witnessed in the
past two years. Despite developer incentives
such as reduced down payment, rebates on
stamp duty, customised apartments and free
parking slots, sales remained muted. Most
buyers started driving a hard bargain as they
were aware that developers were not in a
position to hold their prices for too long.
Currently, the Mumbai residential market can
be divided into 6 micro-markets, namely the
Island city, the Western Suburbs, the Central
Suburbs, the Extended Suburbs, Thane and
Current Scenario
Navi Mumbai. In all these markets will
witness an infusion of approximately 80.61
mn.sq.ft, comprising around 72,906 units of
new residential space by the end of 2011. Out
of the total upcoming supply, 46% will be
available in 2010. This can be attributed to
the delay caused to most projects that were
estimated to be completed in 2008 and 2009.
This micro-market can be divided into two
sub-markets i.e. South Mumbai which
includes locations like Malabar Hill,
Carmichael Road, Napeansea Road, Cuffe
Parade, Colaba and Altamount Road and
Central Mumbai locations like Lower Parel,
Worli, Prabhadevi and Mahalaxmi.
South Mumbai locations are considered to be
the prime markets. While there is virtually no
space for large scale developments in South
Mumbai, one or two projects that fall under
this micro-market are extremely high end
residential developments. Most of these
properties command a premium price due to
the stunning sea-view that they offer, their
close proximity to the traditional CBD and
off-CBD locations of Nariman Point, Fort,
Ballard Estate and Churchgate and the fact
that the supporting infrastructure is excellent.
The Island City
Unlike South Mumbai which is one of the
oldest residential micro-markets for Grade A
developments, the central Mumbai locations
have come to the fore only in the last decade.
Most of these developments have sprung up
on erstwhile mill lands.
The Island city developments largely consist
of 2,3 and 4-BHK apartments with average
sizes of 1,300 sq.ft., 2,300 sq.ft. and 3,700
sq.ft. respectively, and demand for these
units emanates primarily from NRIs and HNIs.
The 2 and 3BHKs comprise 42 % and 35% of
the market share respectively.
Distribution of Supply 2009-11
(in No. of units)
Figure 8
Source: Knight Frank Research
Island City - 6%
Western Suburbs - 37%
Extended Suburbs - 7%
Central Suburbs -13%
Thane - 19%
Navi Mumbai - 18%
Some notable developments include Mittal
Grandeur by Mittal Builders at Cuffe Parade,
Vivarea by K Raheja Corp. at Mahalaxmi and
RNA Mirage by RNA Corp. at Worli. In all
around 8.24 mn.sq.ft. of new residential
space is estimated to be added to the Island
City over the next three years and will
contribute around 4,732 units. Factors like
the Bandra-Worli Sea Link are also expected
to stimulate growth of these corridors due to
the improved connectivity to the Suburban
Business Districts of BKC and Andheri.
Supply Cumulative Supply
Source: Knight Frank Research
Figure 9
Estimated Supply 2009-11
Year
No
. o
f re
sid
en
tia
l un
its
0
80000
20
09
20
10
20
11
50000
10000
70000
60000
40000
30000
2000016785
33508
22613
50293
72906
In total
around 72,906
units,
equating to
80.61 mn.sq.ft.
of new
residential
space, will be
infused in the
mumbai market
by end-2011
by end-2008
developers
revised plans
of
constructing
larger 2 and
3 BHKs in
favour of
smaller units
across the
city
16 17
Q3 2009
residentialmarket
KnightFrank.comReview
Mumbai
Market Review
The Mumbai market has witnessed a
transition in the profile of residential
developments over the past two years. This
can be attributed to the fluctuations and
uncertainty caused by the impact of the
global slowdown on the financial capital of
the country.
Home to the Reserve Bank of India, the
National Stock Exchange and the Bombay
Stock Exchange in addition to numerous
multinational companies entering the Indian
market, this city has seen a change in
demographic profiles and thus a shift in
residential trends. In the past few years,
factors such as double income families,
higher disposable income and easy
availability of home loans have encouraged
buyers to aspire for a higher level of luxury,
be it in the heart of Mumbai or the outskirts.
This correspondingly led to a shift in the type
of apartments being constructed and 2 and
3-BHKs with additional amenities became the
focus of most developers.
While the city has grown northwards to the
Western Suburbs, Extended Suburban and
Central Suburbs, the micro-market of Navi
Mumbai to the east of Mumbai has seen a
substantial level of development.
In Q1 and Q2 2008, the fluctuating stock
market as well as high interest rates affected
sentiments of both developers and buyers.
The auction of two residential plots and one
commercial plot in BKC in March 2008 was
one of the few important signs that depicted
changing market dynamics. While the
commercial plot received no bids, the
residential plots were auctioned at a much
higher price than predicted. However, post
the closure of Q1 2008, winning bidders
expressed their inability to pay for the land
and requested an extension till the end of the
year. In Q2 2008, both the smaller as well as
some of the larger developers began facing
problems in funding. Although developers
held on to prices that were commanded
earlier, evidence of them feeling the pinch
included delayed possession and freebies
that were offered to prospective buyers.
During Q3 2008 builders were optimistic that
the festive season would spark residential
demand. However, the market failed to pick
up. High interest rates coupled with inflated
prices and the anticipation of further
reduction in prices resulted in people
delaying plans of buying a home. With a view
to lessen the burden faced by buyers as well
as to encourage construction of affordable
housing for the masses, public sector banks
offered various packages with lowered
interest rates for loans upto Rs.2 million.
Simultaneously, the increasing cost of
construction, high interest rates and the
inability of developers to reduce prices in
prime areas due to high land costs resulted in
a change in marketing strategy. A number of
developers started reconfiguring larger
housing units to small ones in order to sell
their current projects, while others began
developing affordable housing projects in
order to attract the middle and lower income
customers.
Besides affordable housing projects that
were located outside the city or in the
suburbs, 'semi-luxury' apartments were also
introduced in the market. These units offered
a reduced area but with modern amenities
and facilities. Also, the semi-luxury units
were located in easily accessible areas.
By the end of Q4 2008, Mumbai's residential
market had witnessed a noticeable correction
in prices across all types of residential
developments, and consequently new units
types emerged. While Studio apartments and
1-BHK apartments had become virtually non-
existent in the last few years, developers
revised plans of constructing larger 2 and
3BHKs in favour of smaller units across the
city. This was expected to target end-users
rather than speculative investors, as was the
trend earlier. Both the government as well as
private players set out to develop projects
emphasising affordability for all income
categories. During the last few months of
2008, various attempts were made to
stimulate residential demand in the city.
In order to reduce the demand-supply
mismatch among the masses the
Maharashtra Housing and Area Development
Authority (MHADA) sold applications for
affordable housing units in various pockets
of the city for individuals under all income
categories. In addition to this, the Mumbai
Metropolitan Regional Development Authority
(MMRDA) announced its tie up with a private
developer to build around 6,000 tenements
in Karjat. This Public Private Partnership (PPP)
model was implemented under the rental
housing project of the authority with a view to
help decongest the city over the next five
years. The state government also issued a
notification clearing a Floor Space Index (FSI)
of 2.5 for housing schemes targeted at the
Economically Weaker Sections (EWS), Low
Income Groups (LIG) and Middle Income
Groups (MIG). The permissible FSI for land
developed for the HIG segment remains as
per Development Control Regulations. The
aforementioned factors have combined to
usher in a different developmental trend
within the city.
As access to fresh funding in 2009 remained
constricted, the construction timelines of
most developers fell behind schedule. Many
projects have been stalled, and some
developers have changed the type of units
being constructed and are even cancelling
plans of developing projects in the near
future. During the first half of the year, there
continued to be lower demand for apartments
in comparison to what was witnessed in the
past two years. Despite developer incentives
such as reduced down payment, rebates on
stamp duty, customised apartments and free
parking slots, sales remained muted. Most
buyers started driving a hard bargain as they
were aware that developers were not in a
position to hold their prices for too long.
Currently, the Mumbai residential market can
be divided into 6 micro-markets, namely the
Island city, the Western Suburbs, the Central
Suburbs, the Extended Suburbs, Thane and
Current Scenario
Navi Mumbai. In all these markets will
witness an infusion of approximately 80.61
mn.sq.ft, comprising around 72,906 units of
new residential space by the end of 2011. Out
of the total upcoming supply, 46% will be
available in 2010. This can be attributed to
the delay caused to most projects that were
estimated to be completed in 2008 and 2009.
This micro-market can be divided into two
sub-markets i.e. South Mumbai which
includes locations like Malabar Hill,
Carmichael Road, Napeansea Road, Cuffe
Parade, Colaba and Altamount Road and
Central Mumbai locations like Lower Parel,
Worli, Prabhadevi and Mahalaxmi.
South Mumbai locations are considered to be
the prime markets. While there is virtually no
space for large scale developments in South
Mumbai, one or two projects that fall under
this micro-market are extremely high end
residential developments. Most of these
properties command a premium price due to
the stunning sea-view that they offer, their
close proximity to the traditional CBD and
off-CBD locations of Nariman Point, Fort,
Ballard Estate and Churchgate and the fact
that the supporting infrastructure is excellent.
The Island City
Unlike South Mumbai which is one of the
oldest residential micro-markets for Grade A
developments, the central Mumbai locations
have come to the fore only in the last decade.
Most of these developments have sprung up
on erstwhile mill lands.
The Island city developments largely consist
of 2,3 and 4-BHK apartments with average
sizes of 1,300 sq.ft., 2,300 sq.ft. and 3,700
sq.ft. respectively, and demand for these
units emanates primarily from NRIs and HNIs.
The 2 and 3BHKs comprise 42 % and 35% of
the market share respectively.
Distribution of Supply 2009-11
(in No. of units)
Figure 8
Source: Knight Frank Research
Island City - 6%
Western Suburbs - 37%
Extended Suburbs - 7%
Central Suburbs -13%
Thane - 19%
Navi Mumbai - 18%
Some notable developments include Mittal
Grandeur by Mittal Builders at Cuffe Parade,
Vivarea by K Raheja Corp. at Mahalaxmi and
RNA Mirage by RNA Corp. at Worli. In all
around 8.24 mn.sq.ft. of new residential
space is estimated to be added to the Island
City over the next three years and will
contribute around 4,732 units. Factors like
the Bandra-Worli Sea Link are also expected
to stimulate growth of these corridors due to
the improved connectivity to the Suburban
Business Districts of BKC and Andheri.
Supply Cumulative Supply
Source: Knight Frank Research
Figure 9
Estimated Supply 2009-11
Year
No
. o
f re
sid
en
tia
l un
its
0
80000
20
09
20
10
20
11
50000
10000
70000
60000
40000
30000
2000016785
33508
22613
50293
72906
In total
around 72,906
units,
equating to
80.61 mn.sq.ft.
of new
residential
space, will be
infused in the
mumbai market
by end-2011
by end-2008
developers
revised plans
of
constructing
larger 2 and
3 BHKs in
favour of
smaller units
across the
city
16 17
Q3 2009
residentialmarket
KnightFrank.comReview
Western Suburbs
Over the years, residential demand for the
western suburban locations of Bandra, Khar,
Santacruz, Juhu, Andheri, Vile Parle,
Jogeshwari, Goregon, Malad, Borivali,
Kandivali and Mira Road has increased. This
can be attributed to the fresh supply
available and comparatively low prices
commanded in comparison to those of the
Island City. In addition to this, the shift of
many multi-national companies to the SBD of
BKC, Andheri-Kurla Road and Malad has
resulted in many employees preferring
accommodation here.
Western Suburban locations can be broadly
classified under two categories. Locations
such as Bandra, Khar, Santacruz and Juhu are
considered to be prime locations. Most of the
residential supply here consists largely of
redevelopment projects located on inner
lanes. These projects comprise 2,3 and
4-BHK apartments contributing 33%, 43%
and 20% of the total upcoming supply in
these areas. Andheri is another location that
has gained prominence as a prime residential
market over the past few years. This belt is
generally preferred by the higher income
group and upper middle income group.
Further north of Andheri, locations like
Goregaon, Malad, Kandivali and Mira Road
have a significant amount of construction
underway. Due to the availability of larger
land parcels and cheaper land cost, rates in
these locations are relatively lower and are
hence favoured by the middle class. Projects
here largely consist of 2,2.5 and 3-BHK
configurations. Owing to improved
infrastructure facilities on the whole, capital
values commanded on the western side of
these locations are relatively higher than
those on the eastern side. However, over the
past few years various infrastructure
initiatives have improved connectivity to and
within the eastern parts thus increasing the
level of interest in these locations. The
western suburbs are expected to infuse
maximum supply in the Mumbai micro-market
by the end of 2011 contributing a supply of
30.82 mn.sq.ft.
This would add a total of 26,611 units.
Prominent developments will include JVPD1
by Mayfair Housing in Vile Parle (W) , Runwal
Symphony by Runwal Group in Santacruz (E)
and Samarpan Royale by Kanakia
Construction Pvt. Ltd in Borivali (E). The
recent opening of the Bandra-Worli Sea Link
has led to better connectivity between the
Central Business Districts of South Mumbai
and the Western Suburbs and decreased
travel time to various locations. This will
enable further growth along this corridor.
Locations such as Naigaon, Vasai and Virar
on the far flung north western belt are
considered extended suburbs of the city.
These locations have been gaining
prominence among the middle class and
lower middle class. The availability of huge
and cheap land parcels has encouraged
construction of large townships in these
areas. A combination of these affordable
rates and ample open green spaces within
these complexes have been 'pull' factors for
Extended Suburbs
most home buyers. However, while
connectivity does exist, it is not as developed
as that in the western suburban locations and
there is a considerable amount of time spent
in travel. This coupled with factors such as
frequent power cuts and irregular water
supply has therefore proved to be a large
deterrent. Currently, to circumvent these
problems most of the newer developments
have made provisions to provide 24-hour
water supply as well as generator backups
within the complexes.
A noticeable trend across projects in these
locations is the higher availability of 1-BHKs
as well. Totally 4,950 number of units will be
added to this micro-market over the next
three years, contributing around 3.4 mn.sq.ft.
of new residential space. These will consist of
mainly 1 BHK and 2 BHK apartments which
contribute 33% and 47% with an average size
of 580 sq.ft and 843 sq.ft. respectively. Mittal
Enclave by Mittal Builders in Naigoan (E) and
Balaji Complex by Lotus Group in Virar (W) are
two important projects that are under-
construction in this micro-market.
South Mumbai
1
1
3
2
4
5
6
7
8
9
10
11
2
3
4
5
6
7
8
UPCOMING
1. Lower Parel
2. Vashi
3. Kharghar
4. Panvel / New Panvel
5. Khoparkhairane
6. Nerul
7. Kamote
8. Ghatkopar (W)
EXISTING
1. Malabar Hill
2. Carmichael Road
3. Napeansea Road
4. Cuffe Parade
5. Colaba
6. Worli / Prabhadevi
7. Mahalaxmi
8. Bandra (W)
9. Khar (W)
10. Santacruz (W)
11. Juhu
North Mumbai
1
1
2
34
56
78
9
10
11
12
13
14
15
EXISTING
1. Andheri (W)
UPCOMING
1. Andheri (E)
2. Goregaon (E) & (W)
3. Kandivali (W)
4. Kandivali (E)
5. Malad (W)
6. Malad (E)
7. Borivali (W)
8. Borivali (E)
9. Mira Road
10. Vasai / Naigaon / Virar
11. Powai
12. Bhandup
13. Mulund
14. Thane
15. Airoli
18 19
Q3 2009
residentialmarket
KnightFrank.comReview
Western Suburbs
Over the years, residential demand for the
western suburban locations of Bandra, Khar,
Santacruz, Juhu, Andheri, Vile Parle,
Jogeshwari, Goregon, Malad, Borivali,
Kandivali and Mira Road has increased. This
can be attributed to the fresh supply
available and comparatively low prices
commanded in comparison to those of the
Island City. In addition to this, the shift of
many multi-national companies to the SBD of
BKC, Andheri-Kurla Road and Malad has
resulted in many employees preferring
accommodation here.
Western Suburban locations can be broadly
classified under two categories. Locations
such as Bandra, Khar, Santacruz and Juhu are
considered to be prime locations. Most of the
residential supply here consists largely of
redevelopment projects located on inner
lanes. These projects comprise 2,3 and
4-BHK apartments contributing 33%, 43%
and 20% of the total upcoming supply in
these areas. Andheri is another location that
has gained prominence as a prime residential
market over the past few years. This belt is
generally preferred by the higher income
group and upper middle income group.
Further north of Andheri, locations like
Goregaon, Malad, Kandivali and Mira Road
have a significant amount of construction
underway. Due to the availability of larger
land parcels and cheaper land cost, rates in
these locations are relatively lower and are
hence favoured by the middle class. Projects
here largely consist of 2,2.5 and 3-BHK
configurations. Owing to improved
infrastructure facilities on the whole, capital
values commanded on the western side of
these locations are relatively higher than
those on the eastern side. However, over the
past few years various infrastructure
initiatives have improved connectivity to and
within the eastern parts thus increasing the
level of interest in these locations. The
western suburbs are expected to infuse
maximum supply in the Mumbai micro-market
by the end of 2011 contributing a supply of
30.82 mn.sq.ft.
This would add a total of 26,611 units.
Prominent developments will include JVPD1
by Mayfair Housing in Vile Parle (W) , Runwal
Symphony by Runwal Group in Santacruz (E)
and Samarpan Royale by Kanakia
Construction Pvt. Ltd in Borivali (E). The
recent opening of the Bandra-Worli Sea Link
has led to better connectivity between the
Central Business Districts of South Mumbai
and the Western Suburbs and decreased
travel time to various locations. This will
enable further growth along this corridor.
Locations such as Naigaon, Vasai and Virar
on the far flung north western belt are
considered extended suburbs of the city.
These locations have been gaining
prominence among the middle class and
lower middle class. The availability of huge
and cheap land parcels has encouraged
construction of large townships in these
areas. A combination of these affordable
rates and ample open green spaces within
these complexes have been 'pull' factors for
Extended Suburbs
most home buyers. However, while
connectivity does exist, it is not as developed
as that in the western suburban locations and
there is a considerable amount of time spent
in travel. This coupled with factors such as
frequent power cuts and irregular water
supply has therefore proved to be a large
deterrent. Currently, to circumvent these
problems most of the newer developments
have made provisions to provide 24-hour
water supply as well as generator backups
within the complexes.
A noticeable trend across projects in these
locations is the higher availability of 1-BHKs
as well. Totally 4,950 number of units will be
added to this micro-market over the next
three years, contributing around 3.4 mn.sq.ft.
of new residential space. These will consist of
mainly 1 BHK and 2 BHK apartments which
contribute 33% and 47% with an average size
of 580 sq.ft and 843 sq.ft. respectively. Mittal
Enclave by Mittal Builders in Naigoan (E) and
Balaji Complex by Lotus Group in Virar (W) are
two important projects that are under-
construction in this micro-market.
South Mumbai
1
1
3
2
4
5
6
7
8
9
10
11
2
3
4
5
6
7
8
UPCOMING
1. Lower Parel
2. Vashi
3. Kharghar
4. Panvel / New Panvel
5. Khoparkhairane
6. Nerul
7. Kamote
8. Ghatkopar (W)
EXISTING
1. Malabar Hill
2. Carmichael Road
3. Napeansea Road
4. Cuffe Parade
5. Colaba
6. Worli / Prabhadevi
7. Mahalaxmi
8. Bandra (W)
9. Khar (W)
10. Santacruz (W)
11. Juhu
North Mumbai
1
1
2
34
56
78
9
10
11
12
13
14
15
EXISTING
1. Andheri (W)
UPCOMING
1. Andheri (E)
2. Goregaon (E) & (W)
3. Kandivali (W)
4. Kandivali (E)
5. Malad (W)
6. Malad (E)
7. Borivali (W)
8. Borivali (E)
9. Mira Road
10. Vasai / Naigaon / Virar
11. Powai
12. Bhandup
13. Mulund
14. Thane
15. Airoli
18 19
Q3 2009
residentialmarket
KnightFrank.comReview
Home-Lake Lucerene by Supreme Universal in
Powai. Approximately 11.16 mn sq.ft.is
expected to be added to this micro-market by
end of 2011 adding a total of around 9,408
units. Infrastructure initiatives like the Metro-
Rail Project, the Mumbai Mono-Rail Project
and the Santacruz-Chembur Sea Link are
expected to lead to further developments
along this corridor, with locations like Wadala,
Chembur and Ghatkopar experiencing a
higher interest level.
Thane has witnessed extensive large-scale
developments over the last few years. This is
primarily due to the availability of larger land
parcels that have been freed by the closure
and relocation of many industries. Its
proximity to Mumbai, as well as improving
infrastructure, such as its connectivity to the
Western Suburbs via the Thane Gorbunder
Road have also been factors instrumental in
propelling growth in this micro-market. Most
developments here include high-rises in self
sustained townships which have led to its
emergence as a new residential market for
the middle segment.
Majority of the developments here consist of
1, 2 and 3 BHKs with an average size of 613
sq.ft., 952 sq.ft. and 1,380 sq.ft. respectively.
Prominent among them are Hiranandani
Meadows-Amanda & Amanda B by
Hiranandani, Ackruti Greenwoods by Ackruti
and Siddhachal VI by Kalpataru. Over the
next three years around 12.94 mn.sq.ft. of
new residential space comprising
approximately 13,820 number of units are
expected to be added to this micro-market.
This micro-market has grown extensively over
the last few years with significant
developments having taken place in the last
three years. Vashi, Kharghar, Airoli and Nerul
are few important locations that have
witnessed maximum developments in Navi-
Mumbai. Vashi was one of the first few
markets to come into the limelight due to its
Thane
Navi Mumbai
proximity to the Mumbai-Pune Express way as
well as connectivity to Mumbai via the Vashi
Bridge. This also encouraged the growth of
various commercial and retail developments
that occurred simultaneously. The
establishment of Vashi in this micro-market
led to the subsequent development of other
pockets as well. These included the locations
of Kharghar and Nerul with concentrated
developments along the Palm Beach Marg.
The Palm Beach stretch extends from Vashi to
Belapur, and runs parallel to the Thane Creek.
Most of these developments also offer an
unrestricted view of the same. As a result,
values in these locations have appreciated
significantly during the boom period
experienced in the last few years. This factor
coupled with various other developments and
infrastructure initiatives has also led to areas
such as Airoli, Ghansoli, Sanpada and Panvel
gaining prominence.
Most developments here include 2 BHKs
contributing 67% to the total units entering
this micro-market.
Unit-Wise Distribution of Supply 2009-11
Figure 10
Source: Knight Frank Research
Studio - 1%
1 BHK - 11%
1 ½ BHK - 2%
2 BHK - 48%
2 ½ BHK - 10%
3 BHK - 23%
3 ½ BHK - 1%
4 BHK - 3%
5 BHK / Penthouses - 1%
In all, these locations are estimated to infuse
approximately 14 mn.sq.ft. and a total of
13,385 units by the end of 2011. One of the
most notable constructions includes Ellora
Castle by Ellora Group in CBD Belapur which
is considered to be the most high-end project
in this micro-market. It would comprise a
5-BHK apartment on each floor and the total
cost of each flat would soar over Rs.10 million.
Over the next few years various infrastructure
developments like the Mumbai-Monorail
Project as well as the proposed construction
of a new international airport in the Kopar-
Panvel area are expected to have a positive
impact on the transformation of the Navi-
Mumbai micro-market.
The Mumbai residential capitial values have
witnessed a wide range of fluctuations in the
commanded prices since 2008. During Q1
2008, prime locations of South Mumbai,
Worli, Bandra as well as Central Mumbai saw
a stabilisation of prices as well as a marginal
drop in a few areas. Simultaneously, other
locations such as the Goregaon-Borivali
stretch, Vashi, Mulund, Sion and Chembur
continued to observe an appreciation of
Capital & Rental Profile
prices. In Q2 2008, builders across all
micro-markets started hiking prices once
again. However, while they stepped-up their
prices, they also started including freebies in
an effort to maintain commanded prices.
Despite these efforts, most developers
succumbed to the economic pressure and in
Central Suburbs
Over the last few years, due to various
commercial developments on LBS Marg as
well as Powai, central suburban locations
have been witnessing heightened residential
construction activity as well as demand.
Factors such as widening of LBS Marg,
construction of the Eastern Express Highway
and flyovers on this major artery have
resulted in the transformation of a
neighbourhood with less prospects to that of
a favourable one. Locations in this
micro-market include Sion, Wadala, Chembur,
Powai, Mulund, etc. These markets are
preferred not only by the middle class group
but also by investors due to the level of
appreciation in capital values witnessed
especially in Powai and Mulund.
Most of the residential projects here
comprise 2BHKs apartments which account
for 38% of the total upcoming units in the
Central Suburbs. A few notable projects
include Lodha Imperia by Lodha Group in
Bhandup (W) and Nirmal Galaxy- Polaris by
Nirmal Lifestyle in Mulund (W) and Lake
Q3 2008, rates across the board decreased
by 2-15%. The Goregaon to Borivali stretch
and Thane remained an exception to this. Q4
2008 brought no respite to these negative
sentiments. While prices in prime locations
such as South Mumbai, Worli and Bandra
stabilised, other locations saw a further drop
varying from 5-30% where the maximum
decrease occurred in the Goregaon-Borivali
stretch, Ghatkopar (E), Mulund as well as
some Central Mumbai locations.
Q1 2009 continued to see downward
spiralling prices, however by Q2 2009, most
markets started to stabilise with Bandra
displaying signs of a mild recovery. By Q3
2009, all the micro-markets have shown an
increase in prices with prime locations
displaying maximum recovery. Currently,
residential rental yields in Mumbai range
between 3-6%. South Mumbai, Worli and
Bandra have a rental yield around 6%.
Rentals for 2 and 3-BHKs in South Mumbai
range from a minimum of Rs.925,000 to a
maximum of Rs.450,000 per month. Rentals
for 2 and 3-BHKs in Bandra range from
Rs.150,000-420,000 per month.
Source: Knight Frank Research
Figure 11
Residential Rental Values (2 BHK)
Rs.
/mo
nth
0
350000
So
uth
Mu
mb
ai
(Gra
de
A)
200000
300000
250000
150000
100000
50000
So
uth
Mu
mb
ai
(Gra
de
B)
Wo
rli
(Gra
de
A)
Wo
rli
(Gra
de
B)
Ba
nd
ra (
W)
Po
wa
i
Minimum Maximum
The western
suburbs are
expected to
infuse
maximum
supply in the
Mumbai micro-
market by the
end of 2011
contributing a
supply of 30.82
mn.sq.ft.
20 21
Mumbai Peak to Trough to Sep'09
Trough Change Sep'09 Change (Rs./sq.ft.)
South Mumbai (Grade A) -7% 15% 57,500
South Mumbai (Grade B) -5% 35% 35,000
Worli (Grade A) -11% 21% 35,000
Worli ( Grade B) -10% 11% 25,000
Bandra (W) -21% 18% 22,500
Andheri (W) -22% 22% 11,000
Ghatkopar (E) -33% 0% 5,500
Thane -24% 16% 5,500
Vashi -31% 11% 5,000
Mulund -26% 10% 5,500
Powai -19% 15% 9,750
Bhandup -22% 3% 5,000
Sion / Chembur -33% 7% 7,500
Central Mumbai -42% 20% 10,500
(Parel, Sewri, Byculla)
Table 3
Average Residential Capital Value Trend
Source: Knight Frank Research
2 bhk
apartments
contribute
67% to the
total no. of
units entering
the navi
mumbai micro-
markets
Q3 2009
residentialmarket
KnightFrank.comReview
Home-Lake Lucerene by Supreme Universal in
Powai. Approximately 11.16 mn sq.ft.is
expected to be added to this micro-market by
end of 2011 adding a total of around 9,408
units. Infrastructure initiatives like the Metro-
Rail Project, the Mumbai Mono-Rail Project
and the Santacruz-Chembur Sea Link are
expected to lead to further developments
along this corridor, with locations like Wadala,
Chembur and Ghatkopar experiencing a
higher interest level.
Thane has witnessed extensive large-scale
developments over the last few years. This is
primarily due to the availability of larger land
parcels that have been freed by the closure
and relocation of many industries. Its
proximity to Mumbai, as well as improving
infrastructure, such as its connectivity to the
Western Suburbs via the Thane Gorbunder
Road have also been factors instrumental in
propelling growth in this micro-market. Most
developments here include high-rises in self
sustained townships which have led to its
emergence as a new residential market for
the middle segment.
Majority of the developments here consist of
1, 2 and 3 BHKs with an average size of 613
sq.ft., 952 sq.ft. and 1,380 sq.ft. respectively.
Prominent among them are Hiranandani
Meadows-Amanda & Amanda B by
Hiranandani, Ackruti Greenwoods by Ackruti
and Siddhachal VI by Kalpataru. Over the
next three years around 12.94 mn.sq.ft. of
new residential space comprising
approximately 13,820 number of units are
expected to be added to this micro-market.
This micro-market has grown extensively over
the last few years with significant
developments having taken place in the last
three years. Vashi, Kharghar, Airoli and Nerul
are few important locations that have
witnessed maximum developments in Navi-
Mumbai. Vashi was one of the first few
markets to come into the limelight due to its
Thane
Navi Mumbai
proximity to the Mumbai-Pune Express way as
well as connectivity to Mumbai via the Vashi
Bridge. This also encouraged the growth of
various commercial and retail developments
that occurred simultaneously. The
establishment of Vashi in this micro-market
led to the subsequent development of other
pockets as well. These included the locations
of Kharghar and Nerul with concentrated
developments along the Palm Beach Marg.
The Palm Beach stretch extends from Vashi to
Belapur, and runs parallel to the Thane Creek.
Most of these developments also offer an
unrestricted view of the same. As a result,
values in these locations have appreciated
significantly during the boom period
experienced in the last few years. This factor
coupled with various other developments and
infrastructure initiatives has also led to areas
such as Airoli, Ghansoli, Sanpada and Panvel
gaining prominence.
Most developments here include 2 BHKs
contributing 67% to the total units entering
this micro-market.
Unit-Wise Distribution of Supply 2009-11
Figure 10
Source: Knight Frank Research
Studio - 1%
1 BHK - 11%
1 ½ BHK - 2%
2 BHK - 48%
2 ½ BHK - 10%
3 BHK - 23%
3 ½ BHK - 1%
4 BHK - 3%
5 BHK / Penthouses - 1%
In all, these locations are estimated to infuse
approximately 14 mn.sq.ft. and a total of
13,385 units by the end of 2011. One of the
most notable constructions includes Ellora
Castle by Ellora Group in CBD Belapur which
is considered to be the most high-end project
in this micro-market. It would comprise a
5-BHK apartment on each floor and the total
cost of each flat would soar over Rs.10 million.
Over the next few years various infrastructure
developments like the Mumbai-Monorail
Project as well as the proposed construction
of a new international airport in the Kopar-
Panvel area are expected to have a positive
impact on the transformation of the Navi-
Mumbai micro-market.
The Mumbai residential capitial values have
witnessed a wide range of fluctuations in the
commanded prices since 2008. During Q1
2008, prime locations of South Mumbai,
Worli, Bandra as well as Central Mumbai saw
a stabilisation of prices as well as a marginal
drop in a few areas. Simultaneously, other
locations such as the Goregaon-Borivali
stretch, Vashi, Mulund, Sion and Chembur
continued to observe an appreciation of
Capital & Rental Profile
prices. In Q2 2008, builders across all
micro-markets started hiking prices once
again. However, while they stepped-up their
prices, they also started including freebies in
an effort to maintain commanded prices.
Despite these efforts, most developers
succumbed to the economic pressure and in
Central Suburbs
Over the last few years, due to various
commercial developments on LBS Marg as
well as Powai, central suburban locations
have been witnessing heightened residential
construction activity as well as demand.
Factors such as widening of LBS Marg,
construction of the Eastern Express Highway
and flyovers on this major artery have
resulted in the transformation of a
neighbourhood with less prospects to that of
a favourable one. Locations in this
micro-market include Sion, Wadala, Chembur,
Powai, Mulund, etc. These markets are
preferred not only by the middle class group
but also by investors due to the level of
appreciation in capital values witnessed
especially in Powai and Mulund.
Most of the residential projects here
comprise 2BHKs apartments which account
for 38% of the total upcoming units in the
Central Suburbs. A few notable projects
include Lodha Imperia by Lodha Group in
Bhandup (W) and Nirmal Galaxy- Polaris by
Nirmal Lifestyle in Mulund (W) and Lake
Q3 2008, rates across the board decreased
by 2-15%. The Goregaon to Borivali stretch
and Thane remained an exception to this. Q4
2008 brought no respite to these negative
sentiments. While prices in prime locations
such as South Mumbai, Worli and Bandra
stabilised, other locations saw a further drop
varying from 5-30% where the maximum
decrease occurred in the Goregaon-Borivali
stretch, Ghatkopar (E), Mulund as well as
some Central Mumbai locations.
Q1 2009 continued to see downward
spiralling prices, however by Q2 2009, most
markets started to stabilise with Bandra
displaying signs of a mild recovery. By Q3
2009, all the micro-markets have shown an
increase in prices with prime locations
displaying maximum recovery. Currently,
residential rental yields in Mumbai range
between 3-6%. South Mumbai, Worli and
Bandra have a rental yield around 6%.
Rentals for 2 and 3-BHKs in South Mumbai
range from a minimum of Rs.925,000 to a
maximum of Rs.450,000 per month. Rentals
for 2 and 3-BHKs in Bandra range from
Rs.150,000-420,000 per month.
Source: Knight Frank Research
Figure 11
Residential Rental Values (2 BHK)
Rs.
/mo
nth
0
350000
So
uth
Mu
mb
ai
(Gra
de
A)
200000
300000
250000
150000
100000
50000
So
uth
Mu
mb
ai
(Gra
de
B)
Wo
rli
(Gra
de
A)
Wo
rli
(Gra
de
B)
Ba
nd
ra (
W)
Po
wa
i
Minimum Maximum
The western
suburbs are
expected to
infuse
maximum
supply in the
Mumbai micro-
market by the
end of 2011
contributing a
supply of 30.82
mn.sq.ft.
20 21
Mumbai Peak to Trough to Sep'09
Trough Change Sep'09 Change (Rs./sq.ft.)
South Mumbai (Grade A) -7% 15% 57,500
South Mumbai (Grade B) -5% 35% 35,000
Worli (Grade A) -11% 21% 35,000
Worli ( Grade B) -10% 11% 25,000
Bandra (W) -21% 18% 22,500
Andheri (W) -22% 22% 11,000
Ghatkopar (E) -33% 0% 5,500
Thane -24% 16% 5,500
Vashi -31% 11% 5,000
Mulund -26% 10% 5,500
Powai -19% 15% 9,750
Bhandup -22% 3% 5,000
Sion / Chembur -33% 7% 7,500
Central Mumbai -42% 20% 10,500
(Parel, Sewri, Byculla)
Table 3
Average Residential Capital Value Trend
Source: Knight Frank Research
2 bhk
apartments
contribute
67% to the
total no. of
units entering
the navi
mumbai micro-
markets
Q3 2009
residentialmarket
KnightFrank.comReview
Outlook
With an increase in city limits, Mumbai will
continue its vertical and horizontal growth.
While affordable housing projects are
increasingly gaining momentum, these are
still restricted largely to far-flung locations
like Mira Road, Vasai, Virar, Thane,and Nerul.
This is primarily due to high land costs within
city limits. Though attempts have been made
by developers to provide smaller unit sizes in
locations closer to the city centre, affordable
projects in most areas of the Island City and
the Bandra-Juhu belt would require the
advent of a Public Private Partnership (PPP)
model.
Over the next few year, attempts by the
Maharashtra Housing & Area Development
Authority (MHADA) to provide affordable
housing should help to alleviate middle
income end user demand. An example of this
is the Mumbai Metropolitan Regional
Development Authority’s (MMRDA) endeavour
to build around 6,000 tenements in Karjat
under the rental housing scheme. The state
government's stipulation of a Floor Space
Index (FSI) of 2.5 for housing schemes for the
Economically Weaker Sections (EWS), Low
Income Groups (LIG) and Middle Income
Groups (MIG) is also expected to encourage
private developers to target these segments.
Project Status Remarks
Bandra-Worli Completed This project is 5.6 kms long and connects from the intersection of Western Express Highway
Sea Link and SV Road at the Bandra end to Khan Abdul Gaffar Khan Road at the Worli end.
It has helped to de-congest the daily traffic problems experienced at the Mahim junction
for those commuting from South Mumbai to various suburban locations. Traffic congestion at
the Worli end is still posing a problem to commuters.
Western Freeway Planning This project has been further split into 2 phases:
Sea Link Project Phase II-A will extend from Worli to Haji Ali
Phase II-B will extend from Haji Ali to Nariman Point
This project will create a diversion for traffic on the sea link, and will thus increase traffic
speed and reduce delays at intersections at the Worli end of the sea link.
Eastern Freeway Under Construction Phase 1-The four-lane Eastern Freeway Project, which starts near the Chhatrapati Shivaji
Project Estimated Completion Museum, will stretch till the Mumbai Port Trust road before joining the Eastern Express
2012 Highway via the Anik-Panjrapole link road, near Wadala.
Phase 2-The second phase will will link the Anik-Panjrapole link road with Ghatkopar.
Vehicles that travel northeast from Fort take the D N Road-J J Flyover-Dr B R Ambedkar Road
route, which takes almost an hour, to reach Sion. The Eastern Freeway is expected to reduce
this travel time by around 40 minutes and alleviate the pressure on existing roads.
Due to resulting better connectivity, locations like Mulund and Ghatkopar and other central
suburban locations will see increased residential demand.
Metro Rail Project Under Construction Phase 1 includes the Versova - Andheri – Ghatkopar stretch, which is around 11.07 km.
Estimated Completion Stations Include Versova - D.N. Nagar - Azad Nagar – Andheri – WEH – Chakala - Airport Road
2011 - Marol Naka – Sakinaka - Subhash Nagar - Asalpha Road – Ghatkopar. This will be followed
by work on the 38.24 km Colaba - Bandra – Charkop stretch and the 13.37 km Bandra - Kurla
– Mankhurd stretch
This project will help provide East-West rail based connectivity to the Central and Western
suburbs, and thus will facilitate a smooth and efficient interchange between suburban rail
system and the MRT System at the Andheri and Ghatkopar stations. It will also provide rail
based access to the MIDC, SEEPZ and commercial developments in Andheri.
Santacruz Chembur Under Construction The Santacruz Chembur Link Road is an important arterial road that will connect the Western
Link Road Express Highway (WEH) and the Eastern Express Highway (EEH). It will stretch 6.45 km and
will commence from Dr. Hans Bhugra Junction on the WEH in Santacruz East, run east,
skirt the Vidyanagari Campus (Mumbai University at Kalina) on its south and meet Lal
Bahadur Shastri (LBS) Marg after crossing Mithi River Bridge.
This two-deck bridge will enable vehicles to cover the stretch between Santacruz and
Chembur in 17 minutes, while currently it takes about 2 hours.
Mumbai Mono Rail Under Construction Pilot Project- 20 kms monorail system from Sant Gadge Maharaj Chowk – Wadala
Project Estimated Completion – Chembur station.
2011 This mono rail system is being implemented with the intention of supporting the public rapid
transit system. Also, it will serve to decrease travel time in those areas where it is impossible
to provide direct access to the public rapid transit system and where the widening of existing
narrow roads is not possible.
Table 4
Mumbai Major Infrastructure Developments
Source: Knight Frank Research
Both the government as well as private
players are striving to improve connectivity to
and thus further the development of western,
extended as well as central suburban
locations of the city. Navi Mumbai, for
example, is expected to witness increased
residential growth due to various initiatives
that will increase its connectivity to Mumbai
as well as the IT, manufacturing and
educational hub of Pune. Various
infrastructure initiatives around Mumbai will
help to de-congest the city by providing the
means for people to access more affordable
locations.
Over the past quarter, rates across Mumbai
micro-markets have increased marginally due
to an improvement in sales inquiries and
conversions and the optimism generated
during the festive season. Because quoted
rates are still in excess of what the majority of
end-user demand is willing to pay, the
aforementioned price increases could yet
prove transient. In the next few years,
locations like Navi Mumbai, Thane, Mulund,
Ghatkopar and Chembur are expected to see
a price appreciation of 10-15% due to various
infrastrstructure initiatives and commercial
developments as well as a mix of both luxury
and affordable housing.
While demand around Mumbai has increased
in comparison to that witnessed during the
recent slump, it is still moving at a sluggish
pace. Demand in the market primarily
comprises affordable and premium buyers,
and the former account for a substantial
chunk of demand. Although developers are
now targeting this demand segment, the
public sector will also have a key role to play
in this intiative. Developers and consumers
need to be aided by tax and interest rate
subsidies respectively.
While various initiatives are anticipated to
boost growth along different corridors,
problems such as delayed approvals remain a
logistical hindrance. If such issues are
addressed, as is expected through the soon
to be introduced real estate regulator bill,
22 23
by Q2 2009,
most markets
started to
stabilize with
Bandra
displaying
signs of a
mild recovery
Mumbai’s transformation from a congested
city to a desirable residential location could
be greatly accelerated.
Over the past
quarter, rates
across
Mumbai micro-
markets have
increased
marginally
due to an
improvement
in sales
inquiries and
conversions
and the
optimism
generated
during the
festive season
Q3 2009
residentialmarket
KnightFrank.comReview
Outlook
With an increase in city limits, Mumbai will
continue its vertical and horizontal growth.
While affordable housing projects are
increasingly gaining momentum, these are
still restricted largely to far-flung locations
like Mira Road, Vasai, Virar, Thane,and Nerul.
This is primarily due to high land costs within
city limits. Though attempts have been made
by developers to provide smaller unit sizes in
locations closer to the city centre, affordable
projects in most areas of the Island City and
the Bandra-Juhu belt would require the
advent of a Public Private Partnership (PPP)
model.
Over the next few year, attempts by the
Maharashtra Housing & Area Development
Authority (MHADA) to provide affordable
housing should help to alleviate middle
income end user demand. An example of this
is the Mumbai Metropolitan Regional
Development Authority’s (MMRDA) endeavour
to build around 6,000 tenements in Karjat
under the rental housing scheme. The state
government's stipulation of a Floor Space
Index (FSI) of 2.5 for housing schemes for the
Economically Weaker Sections (EWS), Low
Income Groups (LIG) and Middle Income
Groups (MIG) is also expected to encourage
private developers to target these segments.
Project Status Remarks
Bandra-Worli Completed This project is 5.6 kms long and connects from the intersection of Western Express Highway
Sea Link and SV Road at the Bandra end to Khan Abdul Gaffar Khan Road at the Worli end.
It has helped to de-congest the daily traffic problems experienced at the Mahim junction
for those commuting from South Mumbai to various suburban locations. Traffic congestion at
the Worli end is still posing a problem to commuters.
Western Freeway Planning This project has been further split into 2 phases:
Sea Link Project Phase II-A will extend from Worli to Haji Ali
Phase II-B will extend from Haji Ali to Nariman Point
This project will create a diversion for traffic on the sea link, and will thus increase traffic
speed and reduce delays at intersections at the Worli end of the sea link.
Eastern Freeway Under Construction Phase 1-The four-lane Eastern Freeway Project, which starts near the Chhatrapati Shivaji
Project Estimated Completion Museum, will stretch till the Mumbai Port Trust road before joining the Eastern Express
2012 Highway via the Anik-Panjrapole link road, near Wadala.
Phase 2-The second phase will will link the Anik-Panjrapole link road with Ghatkopar.
Vehicles that travel northeast from Fort take the D N Road-J J Flyover-Dr B R Ambedkar Road
route, which takes almost an hour, to reach Sion. The Eastern Freeway is expected to reduce
this travel time by around 40 minutes and alleviate the pressure on existing roads.
Due to resulting better connectivity, locations like Mulund and Ghatkopar and other central
suburban locations will see increased residential demand.
Metro Rail Project Under Construction Phase 1 includes the Versova - Andheri – Ghatkopar stretch, which is around 11.07 km.
Estimated Completion Stations Include Versova - D.N. Nagar - Azad Nagar – Andheri – WEH – Chakala - Airport Road
2011 - Marol Naka – Sakinaka - Subhash Nagar - Asalpha Road – Ghatkopar. This will be followed
by work on the 38.24 km Colaba - Bandra – Charkop stretch and the 13.37 km Bandra - Kurla
– Mankhurd stretch
This project will help provide East-West rail based connectivity to the Central and Western
suburbs, and thus will facilitate a smooth and efficient interchange between suburban rail
system and the MRT System at the Andheri and Ghatkopar stations. It will also provide rail
based access to the MIDC, SEEPZ and commercial developments in Andheri.
Santacruz Chembur Under Construction The Santacruz Chembur Link Road is an important arterial road that will connect the Western
Link Road Express Highway (WEH) and the Eastern Express Highway (EEH). It will stretch 6.45 km and
will commence from Dr. Hans Bhugra Junction on the WEH in Santacruz East, run east,
skirt the Vidyanagari Campus (Mumbai University at Kalina) on its south and meet Lal
Bahadur Shastri (LBS) Marg after crossing Mithi River Bridge.
This two-deck bridge will enable vehicles to cover the stretch between Santacruz and
Chembur in 17 minutes, while currently it takes about 2 hours.
Mumbai Mono Rail Under Construction Pilot Project- 20 kms monorail system from Sant Gadge Maharaj Chowk – Wadala
Project Estimated Completion – Chembur station.
2011 This mono rail system is being implemented with the intention of supporting the public rapid
transit system. Also, it will serve to decrease travel time in those areas where it is impossible
to provide direct access to the public rapid transit system and where the widening of existing
narrow roads is not possible.
Table 4
Mumbai Major Infrastructure Developments
Source: Knight Frank Research
Both the government as well as private
players are striving to improve connectivity to
and thus further the development of western,
extended as well as central suburban
locations of the city. Navi Mumbai, for
example, is expected to witness increased
residential growth due to various initiatives
that will increase its connectivity to Mumbai
as well as the IT, manufacturing and
educational hub of Pune. Various
infrastructure initiatives around Mumbai will
help to de-congest the city by providing the
means for people to access more affordable
locations.
Over the past quarter, rates across Mumbai
micro-markets have increased marginally due
to an improvement in sales inquiries and
conversions and the optimism generated
during the festive season. Because quoted
rates are still in excess of what the majority of
end-user demand is willing to pay, the
aforementioned price increases could yet
prove transient. In the next few years,
locations like Navi Mumbai, Thane, Mulund,
Ghatkopar and Chembur are expected to see
a price appreciation of 10-15% due to various
infrastrstructure initiatives and commercial
developments as well as a mix of both luxury
and affordable housing.
While demand around Mumbai has increased
in comparison to that witnessed during the
recent slump, it is still moving at a sluggish
pace. Demand in the market primarily
comprises affordable and premium buyers,
and the former account for a substantial
chunk of demand. Although developers are
now targeting this demand segment, the
public sector will also have a key role to play
in this intiative. Developers and consumers
need to be aided by tax and interest rate
subsidies respectively.
While various initiatives are anticipated to
boost growth along different corridors,
problems such as delayed approvals remain a
logistical hindrance. If such issues are
addressed, as is expected through the soon
to be introduced real estate regulator bill,
22 23
by Q2 2009,
most markets
started to
stabilize with
Bandra
displaying
signs of a
mild recovery
Mumbai’s transformation from a congested
city to a desirable residential location could
be greatly accelerated.
Over the past
quarter, rates
across
Mumbai micro-
markets have
increased
marginally
due to an
improvement
in sales
inquiries and
conversions
and the
optimism
generated
during the
festive season
Q3 2009
residentialmarket
KnightFrank.comReview
Pune
Market Review
The residential market of Pune has
undergone a considerable change over the
past two years. This is largely due to the
ripple effects of global slowdown and the
subsequent impact on various industries
within the city.
While the main commercial drivers in Pune
include the engineering and automobile
sector on one side, the presence and growth
of the IT/ITES sectors have also had a positive
effect on the growth of the economic and real
estate sectors of the city over the past few
years. In the past two years, the Pune
residential market has continued to grow in a
radial pattern, although the extent and pace
of development has varied. This has been
due to the different demographic profiles of
various regions. The north western locations
of the city have been largely impacted due to
their proximity to the manufacturing hubs in
Pimpri-Chinchwad, Bhosari, Chakan and the
IT and pharmaceutical/chemical industries in
Hinjewadi.
These north-western locations also enjoy
their proximity to the Mumbai-Bangalore
Highway. In the eastern part of the city,
locations close to the corridor of Hadapsar
and Kharadi have witnessed substantial
growth due to the development of these IT
hubs as well as that of Magarpatta City.
During Q1 2008, the Pune market was
relatively buoyant despite the global
economic slowdown. However, the cascading
effects of various developments resulted in
this market receiving a severe blow, similar, if
not worse than that faced by the metros and
mini-metros across the country. During Q2
2008, the manufacturing and real estate
sector faced problems not only due to the
general slowdown but also because of the
anti-north Indian tirade which left migrant
workers fleeing the state of Maharashtra. This
had a tremendous effect especially on the
industrial belt of Pune-Nashik where the
workforce declined by almost 30-35%, thus
increasing the cost of labour. Many
companies were forced to halt their routine
production, manufacturing and construction
activities till alternate arrangements were
available. Q3 and Q4 2008 offered no respite
to the negative sentiments that prevailed in
the market. News of the Satyam scandal
largely affected the IT/ITES sector which is
one of the main drivers of the Pune real
estate market. Though the brunt of the
slowdown did not completely affect the top
5-10 developers, the smaller developers in
the city started to feel the pressure. The need
for affordable and low cost housing now
dawned on the minds of developers. As a
boost to the Low Income Group (LIG), during
August 2008, the city-based Naiknavre
Developers handed over 237 LIG flats in
Hadapsar to the Pune Municipal Corporation
(PMC) free of cost.
With the real estate situation taking a beating
in the year 2008, developers in Pune have
started re-strategising in order to increase
residential demand. In the early half of 2009,
realising that job security is uppermost on
the minds of home buyers, the Promoters and
Builders Association of Pune began devising
a three-month relief package to address the
EMI portion for the period in case of job loss.
In addition to that, members in the builders
association were asked to reduce prices to
the maximum possible extent in order to
stimulate demand. Some developers also
offered price guarantee schemes. In case
prices dipped after the booking was made,
but before possession, the sale amount
would be revised accordingly.
Currently, the Pune residential market can be
divided into 5 sets of zones. The North and
North- Western Zone, the West and
South-Western Zone, the South and
South-Eastern Zone, the East and
North-Eastern Zone and the Central Zone. In
all these zones will witness an infusion of
approximately 53,176 units, adding around
54.27 mn.sq.ft. of new residential space. The
year 2010 will witness the maximum infusion
of supply accounting for around 44% of the
total. This can be attributed to the fact that
most of the under construction projects were
delayed.
Current Scenario
North and North-Western Zone
This zone consists of the northern locations
of Pimpri-Chinchwad, Aundh, Aundh Annex
(Pimple Nilkah, Pimple Saudagar) and north-
western locations like Wakad, Baner and
Pashan. The important connecting road to
these locations include NH 4, Kalewadi Main
Road, Baner Road, Pashan Sus Road, Pashan
Road and the Mumbai-Pune Bypass Road.
This region which was primarily driven by the
industrial belt of Pimpri-Chindhwad, Bhosari,
Chankan and the IT hub of Hinjewadi
continues to be influenced by these sectors.
In addition to this, their proximity to the
financial hub of Mumbai and connectivity to
the Mumbai- Bangalore Highway also known
as the Mumbai-Pune Bypass Road has led to
the increased demand across this corridor.
Locations in this zone are currently
witnessing a great deal of construction where
the project profile varies from ultra-luxurious
apartments and villas to affordable schemes.
Of these, 2-BHKs account for around 48% of
the total supply expected in this zone, while
3 BHKs account for around 35%. The average
sizes of these 2 and 3-BHK units are
1,082 sq.ft. and 1,534 sq.ft. respectively. A
few notable developments in this zone
include Rajaveer Palace by G K Developers in
Aundh Annexe (Pimple Saudagar) and Swiss
County by Rama Group in Wakad Annexe. In
all around 22.51 mn.sq.ft. is expected to
enter the north and north-western zone by
end-2011 . This includes around 20,307 units
in this zone that will be added to the market.
Important residential locations like Bavdhan,
Kothrud, Karve Nagar, Warje, Malwadi and
Dhayari are included in this zone. The main
connecting roads include Karve Road, Paud
Road, Sinhagad Road and the Mumbai-Pune
Bypass Road.
Kothrud and Karve Nagar are established
residential micro-markets in the south-west
and due to the extent of existing
development, there is very little scope for
further construction activity. However, there
are a few re-developments taking place in
certain pockets within these locations. To the
west, the location of Bavdhan has come into
the limelight in the past two-three years. This
location has sparse existing developments
and is currently undergoing a high level of
construction particularly around 3 km from
Chandini Chowk just 5-10 minutes away from
the highway. The demand for this location
can be attributed to the relatively lower rates
currently prevalent here in comparison to
many other upcoming western locations. It
also enjoys proximity to the established
market of Kothrud and the Mumbai-Bangalore
Highway. Further south of Pune the location
of Dhayari is also witnessing considerable
developments. Despite the presence of
substantial housing stock, there is further
scope for construction due to the availability
of sizeable land parcels there. Most of the
developments here are dominated by
two-three major players.
The locations of Sinhagad Road, Karve Road
and Dhayari account for a major share of the
total development underway in the west and
south-west zone. In all, this zone has an
expected 8,435 units that will be added to the
market over the next three years.
West and South-Western Zone
Approximately 52% of the upcoming
apartments consist of 2- BHKs with an
average size of around 1005 sq.ft. This zone
also has a large predominance of 1 and 3
BHKs which account for 14% and 25% of the
total supply in the south and south-western
region. A few important projects include
Eisha Erica by Eisha Group in Dhayari,
Nanded City by Magarpatta City Project at
Sinhagad Road and Nyati Esplanade by Nyati
Group in Bavdhan. Approximately 8.50
mn.sq.ft. of new residential space is expected
to enter this zone by end-2011.
The locations considered in this zone
comprise Wanwadi, Pisoli, Kondwa, NIBM and
Katraj. Most developments in these areas are
not organised and consist of mainly old
structures. In the internals roads
redevelopments are taking place and these
constructions are mainly undertaken by
smaller developers.
South and the South-Eastern Zone
Distribution of Supply 2009-11
(in No. of units)
Figure 12
Source: Knight Frank Research
North and North West - 38%
West and South West - 16%
South and South East - 17%
East and North East - 28%
Central - 1%
Unit-Wise Distribution of Supply 2009-11
Figure 14
Source: Knight Frank Research
Studio - 1%
1 BHK - 10%
1 ½ BHK - 2%
2 BHK - 47%
2 ½ BHK - 6%
3 BHK - 31%
3 ½ BHK - 2%
4 BHK - 1%
5 BHK / Penthouses - 1%
14563
22190
Supply Cumulative Supply
Source: Knight Frank Research
Figure 13
Estimated Supply 2009-11
Year
No
. o
f re
sid
en
tia
l un
its
0
60000
20
09
20
10
20
11
50000
10000
40000
30000
2000016423
36753
53176
2010 will
witness the
maximum
infusion of
supply,
accounting
for 44% of the
total
expected by
end-2011
24 25
Q3 2009
residentialmarket
KnightFrank.comReview
Pune
Market Review
The residential market of Pune has
undergone a considerable change over the
past two years. This is largely due to the
ripple effects of global slowdown and the
subsequent impact on various industries
within the city.
While the main commercial drivers in Pune
include the engineering and automobile
sector on one side, the presence and growth
of the IT/ITES sectors have also had a positive
effect on the growth of the economic and real
estate sectors of the city over the past few
years. In the past two years, the Pune
residential market has continued to grow in a
radial pattern, although the extent and pace
of development has varied. This has been
due to the different demographic profiles of
various regions. The north western locations
of the city have been largely impacted due to
their proximity to the manufacturing hubs in
Pimpri-Chinchwad, Bhosari, Chakan and the
IT and pharmaceutical/chemical industries in
Hinjewadi.
These north-western locations also enjoy
their proximity to the Mumbai-Bangalore
Highway. In the eastern part of the city,
locations close to the corridor of Hadapsar
and Kharadi have witnessed substantial
growth due to the development of these IT
hubs as well as that of Magarpatta City.
During Q1 2008, the Pune market was
relatively buoyant despite the global
economic slowdown. However, the cascading
effects of various developments resulted in
this market receiving a severe blow, similar, if
not worse than that faced by the metros and
mini-metros across the country. During Q2
2008, the manufacturing and real estate
sector faced problems not only due to the
general slowdown but also because of the
anti-north Indian tirade which left migrant
workers fleeing the state of Maharashtra. This
had a tremendous effect especially on the
industrial belt of Pune-Nashik where the
workforce declined by almost 30-35%, thus
increasing the cost of labour. Many
companies were forced to halt their routine
production, manufacturing and construction
activities till alternate arrangements were
available. Q3 and Q4 2008 offered no respite
to the negative sentiments that prevailed in
the market. News of the Satyam scandal
largely affected the IT/ITES sector which is
one of the main drivers of the Pune real
estate market. Though the brunt of the
slowdown did not completely affect the top
5-10 developers, the smaller developers in
the city started to feel the pressure. The need
for affordable and low cost housing now
dawned on the minds of developers. As a
boost to the Low Income Group (LIG), during
August 2008, the city-based Naiknavre
Developers handed over 237 LIG flats in
Hadapsar to the Pune Municipal Corporation
(PMC) free of cost.
With the real estate situation taking a beating
in the year 2008, developers in Pune have
started re-strategising in order to increase
residential demand. In the early half of 2009,
realising that job security is uppermost on
the minds of home buyers, the Promoters and
Builders Association of Pune began devising
a three-month relief package to address the
EMI portion for the period in case of job loss.
In addition to that, members in the builders
association were asked to reduce prices to
the maximum possible extent in order to
stimulate demand. Some developers also
offered price guarantee schemes. In case
prices dipped after the booking was made,
but before possession, the sale amount
would be revised accordingly.
Currently, the Pune residential market can be
divided into 5 sets of zones. The North and
North- Western Zone, the West and
South-Western Zone, the South and
South-Eastern Zone, the East and
North-Eastern Zone and the Central Zone. In
all these zones will witness an infusion of
approximately 53,176 units, adding around
54.27 mn.sq.ft. of new residential space. The
year 2010 will witness the maximum infusion
of supply accounting for around 44% of the
total. This can be attributed to the fact that
most of the under construction projects were
delayed.
Current Scenario
North and North-Western Zone
This zone consists of the northern locations
of Pimpri-Chinchwad, Aundh, Aundh Annex
(Pimple Nilkah, Pimple Saudagar) and north-
western locations like Wakad, Baner and
Pashan. The important connecting road to
these locations include NH 4, Kalewadi Main
Road, Baner Road, Pashan Sus Road, Pashan
Road and the Mumbai-Pune Bypass Road.
This region which was primarily driven by the
industrial belt of Pimpri-Chindhwad, Bhosari,
Chankan and the IT hub of Hinjewadi
continues to be influenced by these sectors.
In addition to this, their proximity to the
financial hub of Mumbai and connectivity to
the Mumbai- Bangalore Highway also known
as the Mumbai-Pune Bypass Road has led to
the increased demand across this corridor.
Locations in this zone are currently
witnessing a great deal of construction where
the project profile varies from ultra-luxurious
apartments and villas to affordable schemes.
Of these, 2-BHKs account for around 48% of
the total supply expected in this zone, while
3 BHKs account for around 35%. The average
sizes of these 2 and 3-BHK units are
1,082 sq.ft. and 1,534 sq.ft. respectively. A
few notable developments in this zone
include Rajaveer Palace by G K Developers in
Aundh Annexe (Pimple Saudagar) and Swiss
County by Rama Group in Wakad Annexe. In
all around 22.51 mn.sq.ft. is expected to
enter the north and north-western zone by
end-2011 . This includes around 20,307 units
in this zone that will be added to the market.
Important residential locations like Bavdhan,
Kothrud, Karve Nagar, Warje, Malwadi and
Dhayari are included in this zone. The main
connecting roads include Karve Road, Paud
Road, Sinhagad Road and the Mumbai-Pune
Bypass Road.
Kothrud and Karve Nagar are established
residential micro-markets in the south-west
and due to the extent of existing
development, there is very little scope for
further construction activity. However, there
are a few re-developments taking place in
certain pockets within these locations. To the
west, the location of Bavdhan has come into
the limelight in the past two-three years. This
location has sparse existing developments
and is currently undergoing a high level of
construction particularly around 3 km from
Chandini Chowk just 5-10 minutes away from
the highway. The demand for this location
can be attributed to the relatively lower rates
currently prevalent here in comparison to
many other upcoming western locations. It
also enjoys proximity to the established
market of Kothrud and the Mumbai-Bangalore
Highway. Further south of Pune the location
of Dhayari is also witnessing considerable
developments. Despite the presence of
substantial housing stock, there is further
scope for construction due to the availability
of sizeable land parcels there. Most of the
developments here are dominated by
two-three major players.
The locations of Sinhagad Road, Karve Road
and Dhayari account for a major share of the
total development underway in the west and
south-west zone. In all, this zone has an
expected 8,435 units that will be added to the
market over the next three years.
West and South-Western Zone
Approximately 52% of the upcoming
apartments consist of 2- BHKs with an
average size of around 1005 sq.ft. This zone
also has a large predominance of 1 and 3
BHKs which account for 14% and 25% of the
total supply in the south and south-western
region. A few important projects include
Eisha Erica by Eisha Group in Dhayari,
Nanded City by Magarpatta City Project at
Sinhagad Road and Nyati Esplanade by Nyati
Group in Bavdhan. Approximately 8.50
mn.sq.ft. of new residential space is expected
to enter this zone by end-2011.
The locations considered in this zone
comprise Wanwadi, Pisoli, Kondwa, NIBM and
Katraj. Most developments in these areas are
not organised and consist of mainly old
structures. In the internals roads
redevelopments are taking place and these
constructions are mainly undertaken by
smaller developers.
South and the South-Eastern Zone
Distribution of Supply 2009-11
(in No. of units)
Figure 12
Source: Knight Frank Research
North and North West - 38%
West and South West - 16%
South and South East - 17%
East and North East - 28%
Central - 1%
Unit-Wise Distribution of Supply 2009-11
Figure 14
Source: Knight Frank Research
Studio - 1%
1 BHK - 10%
1 ½ BHK - 2%
2 BHK - 47%
2 ½ BHK - 6%
3 BHK - 31%
3 ½ BHK - 2%
4 BHK - 1%
5 BHK / Penthouses - 1%
14563
22190
Supply Cumulative Supply
Source: Knight Frank Research
Figure 13
Estimated Supply 2009-11
Year
No
. o
f re
sid
en
tia
l un
its
0
60000
20
09
20
10
20
11
50000
10000
40000
30000
2000016423
36753
53176
2010 will
witness the
maximum
infusion of
supply,
accounting
for 44% of the
total
expected by
end-2011
24 25
Q3 2009
residentialmarket
KnightFrank.comReview
However, there are a few upcoming large
developments by prominent developers in
and around the Kondwa and NIBM locations.
The important connecting roads for this zone
include NH 4, Swami Vivekanand Road,
Kondwa Road, NIBM Road and Vitthal Rao
Shivankar Road .
Of the total supply expected to enter the
south and south-eastern zone, the Kondwa
and NIBM micro-markets are expected to
witness maximum supply. Most of the
developments here consist of 2 and 3-BHKs
with an average size of 1,069 sq.ft. and
1,522 sq.ft. respectively. 2-BHKs account for
42% of the supply in this zone, 2.5-BHKs and
3-BHKs account for 14% and 32%
respectively. Though the prices in these
locations are relatively low and newer
developments are Grade A, the inner
connectivity and condition of the roads are
very poor. Around 9,057 units, adding
5.85 sq.ft. in all are expected to enter this
micro-market during 2009-11. Some notable
developments in this region include Raheja
Vista by K Raheja Corp in NIBM, Kumar Palms
by Kumar Properties Construction &
Biotechnology at Kondwa and Olive-Simply
Divine by Mindspace Realty Pvt. Ltd. at Katraj.
Currently the ROB at Phursungi has reduced
traffic congestion and improved connectivity
between Hadapsar and Kondhwa via
Phursungi. This along with the route
connecting Saswad Road to the Katraj
Kondhwa Bypass has led to developments in
Undri, Pisoli, Mohammadwadi, Kondhwa,
Handewadi, etc.
Locations such as Hadapsar and Manjiri in
the east and Mundhwa, Kharadi, Wadgaon
Sheri, Viman Nagar, Wagholi and Kalyani
Nagar in the north east are important
residential micro-markets in this zone. Of
these markets, locations like Kalyani Nagar,
Wadgaon Sheri and Viman Nagar are the
established residential micro-markets with
very little scope for large scale developments.
East and the North-Eastern Zone
On the other hand micro-markets such as
Kharadi, Hadapsar and Magarpatta City are
witnessing extensive developments. This is
primarily due to the high level of demand
generated mostly from those employed in the
IT/ITES hubs of Hadapsar, Magarpatta and
Kharadi. Also, proximity to the Pune airport
at Lohegaon has stimulated demand along
the Airport and New Airport Road in the north-
east of the city. The important connecting
roads for this region include the Pune-
Sholapur National Highway, Mundhwa Road,
Kharadi Bypass, Nagar Road, New Airport
Road and Airport Road.
Kharadi and Hadapsar are the largest
contributors to the upcoming supply
expected to enter the eastern and
north-eastern zone by end-2011. Most of the
developments consist of townships due to
availability of large land parcels. These
developments largely consist of 2 and 3-BHK
apartments with an average size of 1,007
sq.ft. and 1,600 sq.ft. respectively. A few
notable developments in this zone include
Runwal Seagul by Runwal Housing in
Hadapsar and Mystique Moods by
Naiknavare Developers Pvt. Ltd. in Viman
Nagar. This zone is expected to see an
additional supply of around 16.90 mn.sq.ft.
by end-2011, adding a total of approximately
15,056 units.
Central Zone
Deccan, Wanerwadi, Model Colony, Senapati
Bapat Road, Shivaji Nagar, Wakdewadi, Boat
Club Road, Bund Garden Road, Koregaon
Park, Camp, Swargate and Navi Peth form the
traditional residential micro-markets of Pune.
Since the development of Pune was radial in
nature, locations like Shivaji Nagar, Deccan
Camp and Swargate form the central
business districts of the city and this has
resulted in residential developments in and
around these micro-markets. Although there
is virtually no scope for large scale
developments, these locations continue to
command a premium price. This is largely
due to the fact that although the upcoming IT
Hubs of Hinjewadi, Kharadi and Hadapsar
exist, a large share of retail and commercial
activity in still concentrated in the central
micro-markets. Also, accessibility to the
IT/ITES hubs and various industries in the
north, west and east is comparatively easier
due to the improved connectivity within the
heart of the city.
Most of the projects are premium and consist
mostly of 2-BHK, 3-BHK and 4-BHK
apartments accounting for 44%, 44% and
12% of the total supply in this zone. Also
construction of bungalow developments is
also very prominent in the inner lanes of
these locations. A notable project in this zone
is Ganga Orchard by Goel Ganga
Comfort Zone, Baner Road
Developments in Koregaon Park, Annexe. In
total approximately 0.5 mn sq.ft. of new
residential space is expected to be added to
this market from 2009-2011 contributing
around 321 residential units.
Capital values across the Pune residential
market have been relatively stable over the
past one year, despite minor fluctuations
across certain micro-markets. The market as a
whole witnessed a rise in prices from January
2008- July 2008 where capital values reached
the peak. Post this, prices across all
micro-markets were relatively stable till
December 2008. From Q1 2009 however,
residential capital values began declining,
with a few markets witnessing a13-19%
correction in Q1 alone. Q2 2009 brought
mixed sentiments across the markets. Rates
in some markets continued to fall marginally,
while others remained stable and a few
markets displayed mild signs of recovery. In
Q3 2009 however, most of the markets have
displayed an increase in quoted prices while
a few markets continue to exhibit stable
prices.
Currently the rental yield across locations
varies between 3-7%. Koregaon Park, Boat
Club Road and Bhavdhan display a 5% rental
yield.
Capital & Rental Profile
UPCOMING
1. Bavdhan
2. Aundh / Aundh Annexe
3. Baner
4. Hadapsar
5. Kondhwa
6. Dhayari
7. Viman Nagar
8. Kharadi
EXISTING
1. Kothrud
2. Koregaon Park
3. Deccan
Pune
1
1
2
3
4
56
7
8
2
3
26 27
Pune Peak to Trough to Sep'09
Trough Change Sep'09 Change (Rs./sq.ft.)
Koregaon Park -19% 0% 8,500
Boat Club Road -29% 0% 8,500
Deccan -6% 0% 7,250
Sopan Baug / Uday Baug -13% 21% 4,250
Aundh -1% 1% 5,250
Hadapsar -20% 0% 3,800
Kothrud -19% 0% 4,375
Vimanagar -10% 13% 4,250
Wanorie -3% 7% 3,750
Kondhwa - Undri -11% 5% 3,250
Table 5
Average Residential Capital Value Trend
Source: Knight Frank Research
Q3 2009
residentialmarket
KnightFrank.comReview
However, there are a few upcoming large
developments by prominent developers in
and around the Kondwa and NIBM locations.
The important connecting roads for this zone
include NH 4, Swami Vivekanand Road,
Kondwa Road, NIBM Road and Vitthal Rao
Shivankar Road .
Of the total supply expected to enter the
south and south-eastern zone, the Kondwa
and NIBM micro-markets are expected to
witness maximum supply. Most of the
developments here consist of 2 and 3-BHKs
with an average size of 1,069 sq.ft. and
1,522 sq.ft. respectively. 2-BHKs account for
42% of the supply in this zone, 2.5-BHKs and
3-BHKs account for 14% and 32%
respectively. Though the prices in these
locations are relatively low and newer
developments are Grade A, the inner
connectivity and condition of the roads are
very poor. Around 9,057 units, adding
5.85 sq.ft. in all are expected to enter this
micro-market during 2009-11. Some notable
developments in this region include Raheja
Vista by K Raheja Corp in NIBM, Kumar Palms
by Kumar Properties Construction &
Biotechnology at Kondwa and Olive-Simply
Divine by Mindspace Realty Pvt. Ltd. at Katraj.
Currently the ROB at Phursungi has reduced
traffic congestion and improved connectivity
between Hadapsar and Kondhwa via
Phursungi. This along with the route
connecting Saswad Road to the Katraj
Kondhwa Bypass has led to developments in
Undri, Pisoli, Mohammadwadi, Kondhwa,
Handewadi, etc.
Locations such as Hadapsar and Manjiri in
the east and Mundhwa, Kharadi, Wadgaon
Sheri, Viman Nagar, Wagholi and Kalyani
Nagar in the north east are important
residential micro-markets in this zone. Of
these markets, locations like Kalyani Nagar,
Wadgaon Sheri and Viman Nagar are the
established residential micro-markets with
very little scope for large scale developments.
East and the North-Eastern Zone
On the other hand micro-markets such as
Kharadi, Hadapsar and Magarpatta City are
witnessing extensive developments. This is
primarily due to the high level of demand
generated mostly from those employed in the
IT/ITES hubs of Hadapsar, Magarpatta and
Kharadi. Also, proximity to the Pune airport
at Lohegaon has stimulated demand along
the Airport and New Airport Road in the north-
east of the city. The important connecting
roads for this region include the Pune-
Sholapur National Highway, Mundhwa Road,
Kharadi Bypass, Nagar Road, New Airport
Road and Airport Road.
Kharadi and Hadapsar are the largest
contributors to the upcoming supply
expected to enter the eastern and
north-eastern zone by end-2011. Most of the
developments consist of townships due to
availability of large land parcels. These
developments largely consist of 2 and 3-BHK
apartments with an average size of 1,007
sq.ft. and 1,600 sq.ft. respectively. A few
notable developments in this zone include
Runwal Seagul by Runwal Housing in
Hadapsar and Mystique Moods by
Naiknavare Developers Pvt. Ltd. in Viman
Nagar. This zone is expected to see an
additional supply of around 16.90 mn.sq.ft.
by end-2011, adding a total of approximately
15,056 units.
Central Zone
Deccan, Wanerwadi, Model Colony, Senapati
Bapat Road, Shivaji Nagar, Wakdewadi, Boat
Club Road, Bund Garden Road, Koregaon
Park, Camp, Swargate and Navi Peth form the
traditional residential micro-markets of Pune.
Since the development of Pune was radial in
nature, locations like Shivaji Nagar, Deccan
Camp and Swargate form the central
business districts of the city and this has
resulted in residential developments in and
around these micro-markets. Although there
is virtually no scope for large scale
developments, these locations continue to
command a premium price. This is largely
due to the fact that although the upcoming IT
Hubs of Hinjewadi, Kharadi and Hadapsar
exist, a large share of retail and commercial
activity in still concentrated in the central
micro-markets. Also, accessibility to the
IT/ITES hubs and various industries in the
north, west and east is comparatively easier
due to the improved connectivity within the
heart of the city.
Most of the projects are premium and consist
mostly of 2-BHK, 3-BHK and 4-BHK
apartments accounting for 44%, 44% and
12% of the total supply in this zone. Also
construction of bungalow developments is
also very prominent in the inner lanes of
these locations. A notable project in this zone
is Ganga Orchard by Goel Ganga
Comfort Zone, Baner Road
Developments in Koregaon Park, Annexe. In
total approximately 0.5 mn sq.ft. of new
residential space is expected to be added to
this market from 2009-2011 contributing
around 321 residential units.
Capital values across the Pune residential
market have been relatively stable over the
past one year, despite minor fluctuations
across certain micro-markets. The market as a
whole witnessed a rise in prices from January
2008- July 2008 where capital values reached
the peak. Post this, prices across all
micro-markets were relatively stable till
December 2008. From Q1 2009 however,
residential capital values began declining,
with a few markets witnessing a13-19%
correction in Q1 alone. Q2 2009 brought
mixed sentiments across the markets. Rates
in some markets continued to fall marginally,
while others remained stable and a few
markets displayed mild signs of recovery. In
Q3 2009 however, most of the markets have
displayed an increase in quoted prices while
a few markets continue to exhibit stable
prices.
Currently the rental yield across locations
varies between 3-7%. Koregaon Park, Boat
Club Road and Bhavdhan display a 5% rental
yield.
Capital & Rental Profile
UPCOMING
1. Bavdhan
2. Aundh / Aundh Annexe
3. Baner
4. Hadapsar
5. Kondhwa
6. Dhayari
7. Viman Nagar
8. Kharadi
EXISTING
1. Kothrud
2. Koregaon Park
3. Deccan
Pune
1
1
2
3
4
56
7
8
2
3
26 27
Pune Peak to Trough to Sep'09
Trough Change Sep'09 Change (Rs./sq.ft.)
Koregaon Park -19% 0% 8,500
Boat Club Road -29% 0% 8,500
Deccan -6% 0% 7,250
Sopan Baug / Uday Baug -13% 21% 4,250
Aundh -1% 1% 5,250
Hadapsar -20% 0% 3,800
Kothrud -19% 0% 4,375
Vimanagar -10% 13% 4,250
Wanorie -3% 7% 3,750
Kondhwa - Undri -11% 5% 3,250
Table 5
Average Residential Capital Value Trend
Source: Knight Frank Research
Q3 2009
residentialmarket
KnightFrank.comReview
Meanwhile Sopan Baug/Uday Baug,
Hadapsar and Undri/Kondwa have a 4%
rental yield. Deccan, Kalyani Nagar and
Aundh have a 3% rental yield while Baner
commands the highest yield of 7%.
The Pune residential market has witnessed
increased activity in the past few years. The
rapid and diverse growth of the city’s demand
base augurs well for the growth prospects of
various zones across the city. The increasing
prominence of the city, coupled with the
initiation of several infrastructure projects, is
expected to further promote residential
development in the city. The north and north-
western zones will contribute a substantial
chunk of the total supply estimated to be
infused in the city by the end of 2011,
In the north-western part of the city, the
Wakad- Aundh Road is most frequently used
for Mumbai-Pune travel. In addition to this, it
is also used to reach the Rajiv Gandhi
Infotech Park at Hinjewadi. The widening of
this road under the MSRDC-Pune City
Integrated Road Development Project is
expected to improve connectivity not only
between Mumbai and Pune, but also to other
Outlook
locations such as Pimple Saudagar, Wakad,
Pimple Nilakh, Rahatani, Sanghvi and Aundh.
This is expected to augment the
attractiveness of micro-markets in the north
western zone, which as a result are expected
to witness a price appreciation of 10-15% over
the next two years.
Southern locations like Undri-Kondwa, NIBM
and Dhayari are also expected to gain
momentum in terms of residential
development over the coming years, and
consequently could witness a price increase
of 8-10% during this period. Low capital
values, improved connectivity via the
Mumbai-Pune Bypass and various proposed
infrastructure projects such as the Metro Rail
Project are all expected to contribute to the
aforementioned growth. The proximity of
Kondwa and NIBM to the IT/ITES hubs of
Hadapsar, Magarpatta and Kharadi, coupled
with the various infrastructure initiatives
under the MSRDC - Pune City Integrated Road
Development Project, will also boost
residential development in these locations.
The ROB at Phursungi has reduced traffic
congestion and improved connectivity
between Hadapsar and Kondhwa. This, along
with the route connecting Saswad Road with
Katraj Kondhwa Bypass, has promoted
development in Undri, Pisoli,
Mohammadwadi, Kondhwa, Handewadi .
Locations like Hadapsar, Kharadi and
Magarpatta, which are important markets in
the East and North-eastern zone, also exhibit
good development potential.
Project Status Remarks
Bus Rapid Transit Planning/Pilot The ambitious plan over the next few years is to have a whopping 100 km. BRT network.
System Projects Completed The work on the first phase will cost Rs.650 million, and will be funded by the Jawaharlal
Nehru National Urban Renewal Mission of the central government.
Pilot Project 1- Currently operational along the Hadapsar-Swargate-Katraj Corridor
Pilot Project 2- Currently operational on the Solapur-Bhairoba Nallah stretch
The markets that have been impacted by the pilot projects are Hadapsar, Swargate, Katraj,
Bibwewadi and Sahakar Nagar. Traffic congestion has eased, thereby reducing travel time.
MSRDC - Pune City This Rs.2.6 billion project includes 33 developments in all. These developments include 6
road Integrated Road improvement projects, 9 railway over bridges, the widening of 1 railway over bridge, 2 river
Development Project over bridges and 15 flyovers. These roadways will decrease traffic congestion at major
junctions .The completion of some of the aforementioned work has already eased traffic and
prompted the development of contiguous locations. A few examples of ongoing
developments include :-
Completed at University Flyover at University + Senapati Bapat Road- Traffic congestion along University Road, Ashok
Nagar, Gokhale Nagar, Model Colony, etc. has eased and this has led to an increase in
residential and retail development. It has also reduced the travel time from central Pune to
peripheral locations like Aundh, Baner, Pimple Saudagar, Hinjewadi, etc. and has thus
increased the reach of the central micro-markets.
In progress Wakad Aund Road Widening- This road is used to travel from Mumbai to Pune or vice versa.
is also used to reach Rajiv Gandhi Infotech Park at Hinjewadi. Vehicular movement in
locations such as Pimple Saudagar, Wakad, Pimple Nilakh, Rahatani, Sanghvi and Aundh
will improve significantly, and this is expected to improve residential demand in these
locations, particularly from employees of the Rajiv Gandhi Infotech Park in Hinjewadi.
In progress Baner Road Widening-This is expected to stimulate demand for retail , office and residential
space in locations such as Baner, Aundh and Pashan.
Metro Rail Project Planning - Estimated The 3 routes that have been identified are Warje-Chinchwad (via Karve Road, Jangli Maharaj
Completion 2012 Road, Shivajinagar and Pune-Mumbai Road), Shivaji Nagar- Kalyani Nagar (via Raja Bahadur
Mill Road and Pune-Ahmednagar Road) and Agriculture-Swargate (via Shivaji Nagar via
Shivaji Road)
The Metro Corridors planned within Pune will reduce road traffic and improve connectivity
to various regions that are currently not easily accessible. Examples of such regions are
Warje, located in southwest Pune, and Chinchwad, located in northwest Pune.
90’ Wide Ring Road Proposed It includes 2 roads that connect Somatne Phata to Pune City (South) and Lohegaon (North) to
Wadki. These roads will pass through Mamurdi, Kiwale, Chincholi, Nigdi, Talawade, Chikhli,
Moshi, Wadmukhwadi, Charholi, Nirgudi, Wadgaon Shinde, Lohegaon, Wagholi, Manjri
Khurd, Loni Kalbhor, Phursungi, Wadki, Urali Devachi, Undri, Pisoli, Katraj, Kondhwa
Budhruk, Nimbalkarwadi, Shindewadi, Ambegaon Khurd, Dhayari, Wadgaon, Khurd, Warje,
Bhugaon, Lande, Jambhe, Mahlungi and Maan.
This development will benefit both Pune and Pimpri-Chinchwad by reducing congestion
on major arterial roads and improving connectivity within the city. The Ring Road will also
connect software parks in the east and northwest of the city. As this development will also
improve connectivity of the peripheral regions with the central region, development in
peripheral regions could prosper.
It
Table 6
Pune Major Infrastructure Developments
Source: Knight Frank Research
This is primarily due to the high level of
commercial development in the eastern zone.
The Hadapsar Saswad-Loni Kalbhor Road has
helped to ease vehicular access to IT Parks at
Hadapsar, Kharadi and Phursungi. This,
coupled with the pilot project of the The Bus
Rapid Transit System along the Hadapsar-
Swargate-Katraj corridor, has reduces travel
time to and from these locations. Various
other proposed projects under the
MSRDC- Pune City Integrated Road
Development Project are expected to
accelerate growth along this corridor.
While Q1 2009 witnessed price declines, Q2
and Q3 witnessed signs of recovery in certain
markets. This trend is expected to continue in
the next quarter, and price stabilisation is
expected to continue into Q1 2010. Although
most buyers are willing to purchase a home,
they are still very cautious and far more price
sensitive than they were during the boom
period. This change in demand psyche,
coupled with the aforementioned
infrastructure initiatives that will de-congest
the city and improve access to peripheral
locations, is expected to keep residential
prices in Pune largely in check for the
foreseeable future
Rajaveer Palace - Pimple Saudagar, Aundh Annexe
28 29
Figure 15
Residential Rental Values (2 BHK)
Rs.
/mo
nth
0
40000
Ko
reg
ao
n P
ark
25000
5000
35000
30000
20000
15000
10000
Bo
at
Clu
b R
oa
d
Ka
lya
nin
ag
ar
Au
nd
h
Ha
da
psa
r
Vim
an
ag
ar
Ko
nd
hw
a -
Un
di
Ka
rve
Ro
ad
Ba
vdh
an
Ba
ne
r
Minimum Maximum
Q3 2009
residentialmarket
KnightFrank.comReview
Meanwhile Sopan Baug/Uday Baug,
Hadapsar and Undri/Kondwa have a 4%
rental yield. Deccan, Kalyani Nagar and
Aundh have a 3% rental yield while Baner
commands the highest yield of 7%.
The Pune residential market has witnessed
increased activity in the past few years. The
rapid and diverse growth of the city’s demand
base augurs well for the growth prospects of
various zones across the city. The increasing
prominence of the city, coupled with the
initiation of several infrastructure projects, is
expected to further promote residential
development in the city. The north and north-
western zones will contribute a substantial
chunk of the total supply estimated to be
infused in the city by the end of 2011,
In the north-western part of the city, the
Wakad- Aundh Road is most frequently used
for Mumbai-Pune travel. In addition to this, it
is also used to reach the Rajiv Gandhi
Infotech Park at Hinjewadi. The widening of
this road under the MSRDC-Pune City
Integrated Road Development Project is
expected to improve connectivity not only
between Mumbai and Pune, but also to other
Outlook
locations such as Pimple Saudagar, Wakad,
Pimple Nilakh, Rahatani, Sanghvi and Aundh.
This is expected to augment the
attractiveness of micro-markets in the north
western zone, which as a result are expected
to witness a price appreciation of 10-15% over
the next two years.
Southern locations like Undri-Kondwa, NIBM
and Dhayari are also expected to gain
momentum in terms of residential
development over the coming years, and
consequently could witness a price increase
of 8-10% during this period. Low capital
values, improved connectivity via the
Mumbai-Pune Bypass and various proposed
infrastructure projects such as the Metro Rail
Project are all expected to contribute to the
aforementioned growth. The proximity of
Kondwa and NIBM to the IT/ITES hubs of
Hadapsar, Magarpatta and Kharadi, coupled
with the various infrastructure initiatives
under the MSRDC - Pune City Integrated Road
Development Project, will also boost
residential development in these locations.
The ROB at Phursungi has reduced traffic
congestion and improved connectivity
between Hadapsar and Kondhwa. This, along
with the route connecting Saswad Road with
Katraj Kondhwa Bypass, has promoted
development in Undri, Pisoli,
Mohammadwadi, Kondhwa, Handewadi .
Locations like Hadapsar, Kharadi and
Magarpatta, which are important markets in
the East and North-eastern zone, also exhibit
good development potential.
Project Status Remarks
Bus Rapid Transit Planning/Pilot The ambitious plan over the next few years is to have a whopping 100 km. BRT network.
System Projects Completed The work on the first phase will cost Rs.650 million, and will be funded by the Jawaharlal
Nehru National Urban Renewal Mission of the central government.
Pilot Project 1- Currently operational along the Hadapsar-Swargate-Katraj Corridor
Pilot Project 2- Currently operational on the Solapur-Bhairoba Nallah stretch
The markets that have been impacted by the pilot projects are Hadapsar, Swargate, Katraj,
Bibwewadi and Sahakar Nagar. Traffic congestion has eased, thereby reducing travel time.
MSRDC - Pune City This Rs.2.6 billion project includes 33 developments in all. These developments include 6
road Integrated Road improvement projects, 9 railway over bridges, the widening of 1 railway over bridge, 2 river
Development Project over bridges and 15 flyovers. These roadways will decrease traffic congestion at major
junctions .The completion of some of the aforementioned work has already eased traffic and
prompted the development of contiguous locations. A few examples of ongoing
developments include :-
Completed at University Flyover at University + Senapati Bapat Road- Traffic congestion along University Road, Ashok
Nagar, Gokhale Nagar, Model Colony, etc. has eased and this has led to an increase in
residential and retail development. It has also reduced the travel time from central Pune to
peripheral locations like Aundh, Baner, Pimple Saudagar, Hinjewadi, etc. and has thus
increased the reach of the central micro-markets.
In progress Wakad Aund Road Widening- This road is used to travel from Mumbai to Pune or vice versa.
is also used to reach Rajiv Gandhi Infotech Park at Hinjewadi. Vehicular movement in
locations such as Pimple Saudagar, Wakad, Pimple Nilakh, Rahatani, Sanghvi and Aundh
will improve significantly, and this is expected to improve residential demand in these
locations, particularly from employees of the Rajiv Gandhi Infotech Park in Hinjewadi.
In progress Baner Road Widening-This is expected to stimulate demand for retail , office and residential
space in locations such as Baner, Aundh and Pashan.
Metro Rail Project Planning - Estimated The 3 routes that have been identified are Warje-Chinchwad (via Karve Road, Jangli Maharaj
Completion 2012 Road, Shivajinagar and Pune-Mumbai Road), Shivaji Nagar- Kalyani Nagar (via Raja Bahadur
Mill Road and Pune-Ahmednagar Road) and Agriculture-Swargate (via Shivaji Nagar via
Shivaji Road)
The Metro Corridors planned within Pune will reduce road traffic and improve connectivity
to various regions that are currently not easily accessible. Examples of such regions are
Warje, located in southwest Pune, and Chinchwad, located in northwest Pune.
90’ Wide Ring Road Proposed It includes 2 roads that connect Somatne Phata to Pune City (South) and Lohegaon (North) to
Wadki. These roads will pass through Mamurdi, Kiwale, Chincholi, Nigdi, Talawade, Chikhli,
Moshi, Wadmukhwadi, Charholi, Nirgudi, Wadgaon Shinde, Lohegaon, Wagholi, Manjri
Khurd, Loni Kalbhor, Phursungi, Wadki, Urali Devachi, Undri, Pisoli, Katraj, Kondhwa
Budhruk, Nimbalkarwadi, Shindewadi, Ambegaon Khurd, Dhayari, Wadgaon, Khurd, Warje,
Bhugaon, Lande, Jambhe, Mahlungi and Maan.
This development will benefit both Pune and Pimpri-Chinchwad by reducing congestion
on major arterial roads and improving connectivity within the city. The Ring Road will also
connect software parks in the east and northwest of the city. As this development will also
improve connectivity of the peripheral regions with the central region, development in
peripheral regions could prosper.
It
Table 6
Pune Major Infrastructure Developments
Source: Knight Frank Research
This is primarily due to the high level of
commercial development in the eastern zone.
The Hadapsar Saswad-Loni Kalbhor Road has
helped to ease vehicular access to IT Parks at
Hadapsar, Kharadi and Phursungi. This,
coupled with the pilot project of the The Bus
Rapid Transit System along the Hadapsar-
Swargate-Katraj corridor, has reduces travel
time to and from these locations. Various
other proposed projects under the
MSRDC- Pune City Integrated Road
Development Project are expected to
accelerate growth along this corridor.
While Q1 2009 witnessed price declines, Q2
and Q3 witnessed signs of recovery in certain
markets. This trend is expected to continue in
the next quarter, and price stabilisation is
expected to continue into Q1 2010. Although
most buyers are willing to purchase a home,
they are still very cautious and far more price
sensitive than they were during the boom
period. This change in demand psyche,
coupled with the aforementioned
infrastructure initiatives that will de-congest
the city and improve access to peripheral
locations, is expected to keep residential
prices in Pune largely in check for the
foreseeable future
Rajaveer Palace - Pimple Saudagar, Aundh Annexe
28 29
Figure 15
Residential Rental Values (2 BHK)
Rs.
/mo
nth
0
40000
Ko
reg
ao
n P
ark
25000
5000
35000
30000
20000
15000
10000
Bo
at
Clu
b R
oa
d
Ka
lya
nin
ag
ar
Au
nd
h
Ha
da
psa
r
Vim
an
ag
ar
Ko
nd
hw
a -
Un
di
Ka
rve
Ro
ad
Ba
vdh
an
Ba
ne
r
Minimum Maximum
Q3 2009
residentialmarket
KnightFrank.comReview
3130
BEngalUrU
Market Review
The residential market of Bengaluru had
shown a steady property growth from 2007 to
mid 2008 which was particularly true for
premium properties. Significant factors which
influenced its growth were, demand for high
quality residential units and increasing
disposable income among the denizens. The
city administration had taken various steps to
further residential growth while formulating
the City Development Plan (CDP-2015) for
Greater Bengaluru. The Plan has proposed an
upward revision of FAR limits up to 2.5 and
development of satellite towns around the
city. To support real estate growth the State
Government had commenced infrastructure
developments such as the construction of the
Bengaluru Metro Railway Service, the
elevated highway at Electronic City, the
Bengaluru- Mysore Infrastructure Corridor- an
expressway to the Bengaluru International
Airport Limited (BIAL) at Devanahalli and
widening of the existing roads. All these
proposed and ongoing developments are
expected to play an important role in
spreading residential development across
the city.
to target the end user driven middle class
segment. The government on its part has
facilitated the reduction of interest rates and
lowered stamp duty charges to encourage
residential buyers.
The residential market in Bengaluru is
currently stabilising. Although some
micro-markets are witnessing a price
correction, it is less prominent now. In the
aftermath of the slowdown, very limited
projects have been announced in the city and
most of the projected supply would be a
result of the spill over from earlier residential
developments. More mature residential
markets are currently witnessing a revival
with steady capital price appreciation since
the last quarter whereas capital values in
other residential markets have stabilised.
Knight Frank Research estimates that the city
will witness a residential supply of about
38,000 units translating to approximately
72 mn.sq.ft. between 2009 and 2011. While
53% of this supply will be in form of 3 BHK
apartments, 2 BHK apartments will constitute
30% of the total supply. The southern zone at
39% share, will be the largest contributor to
the supply, whereas northern and eastern
zones will contribute about 26% each to the
supply.
Current Scenario
The global economic crisis brought about a
slowdown in the residential market around
mid 2008. In a bid to encourage sagging
consumer confidence, private and
nationalized banks lowered home loan rates
during the last few months of 2008, although
the impact was marginal. The reduced
absorption in the residential market forced
many developers to provide discounts in a
bid to push sales. As a result of the slowdown
most residential projects which were under
development have either been deferred or
stalled in lieu of the reduced demand for
premium properties. This has shifted the
focus from premium housing to affordable
housing projects over the past year, primarily Supply Cumulative Supply
Source: Knight Frank Research
Figure 17
Estimated Supply 2009-11
Year
No
. o
f re
sid
en
tia
l un
its
0
40000
20
09
20
10
20
11
25000
5000
35000
30000
20000
15000
10000
The CBD continues catering to the demand
from the high income segment whereas the
suburbs are catering to the middle and upper
middle class segments by offering larger
residential units with standard amenities
such as power back up, clubhouses, sports
facilities and open spaces.
Based on its geographical pattern, the
Bengaluru residential market can be divided
into the following zones namely the CBD,
Bengaluru North, Bengaluru South,
Bengaluru East and Bengaluru West. The CBD
or the Central Business District represents the
most prominent residential locations in the
city. This zone is largely saturated with little
opportunity for further development .The
prime demand for this zone comes from the
high income segment. Bengaluru West
comprises well established old residential
pockets in the city. Bengaluru North is the
zone where most residential development
activity is being focused. The residential
demand for this zone is primarily investor
driven. Bengaluru South and Bengaluru East
UPCOMING
1. Whitefield
2. Marathahalli
3. Basavnagar
4. Bannerghatta Road
5. BTM Layout
6. Hebbal
7. Sarjapur Road
8. Outer Ring Road
9. Banasawadi
10. HSR Layout
11. Yelahanka
EXISTING
1. Vijayanagar
2. Magadi Road
3. Rajajinagar
4. Ulsoor
5. Koramangala
6. Seshadripuram
7. Jayanagar
8. Indiranagar
Bengaluru
1
1
2
3
4
5
6
7
8
9
10
11
23
4
5
6
7
8
Distribution of Supply 2009-11
(in No. of units)
Figure 16
Source: Knight Frank Research
CBD - 1%
North - 26%
South - 39%
East - 26%
West - 8%
are the fastest developing zones in the city.
The high population density in these zones
can be attributed to the presence of IT hubs
in these locations.
Residential market in central Bengaluru
comprises Palace Cross Road, Richmond
Road, Lavelle Road, Infantry Road,
Cunningham Road and Brunton Road. Few
residential projects are coming up here due
to unavailability of land and even these offer
few apartments. Furthermore, redevelopment
of old buildings into those with contemporary
facilities, catering mostly to HNIs is also
taking place in this micro-market. The higher
income segment constitutes the primary
demand segment in the CBD.
This micro-market is estimated to witness a
supply of about 450 units constituting
approximately 1.2 mn.sq.ft. during 2009 and
2010.
Central Business District (CBD)
In the
aftermath of
the
slowdown,
very limited
projects have
been
announced in
the city and
most of the
projected
supply would
be a result of
the spillover
from earlier
residential
developments
18458
15693
3622
34151
37773
Q3 2009
residentialmarket
KnightFrank.comReview
3130
BEngalUrU
Market Review
The residential market of Bengaluru had
shown a steady property growth from 2007 to
mid 2008 which was particularly true for
premium properties. Significant factors which
influenced its growth were, demand for high
quality residential units and increasing
disposable income among the denizens. The
city administration had taken various steps to
further residential growth while formulating
the City Development Plan (CDP-2015) for
Greater Bengaluru. The Plan has proposed an
upward revision of FAR limits up to 2.5 and
development of satellite towns around the
city. To support real estate growth the State
Government had commenced infrastructure
developments such as the construction of the
Bengaluru Metro Railway Service, the
elevated highway at Electronic City, the
Bengaluru- Mysore Infrastructure Corridor- an
expressway to the Bengaluru International
Airport Limited (BIAL) at Devanahalli and
widening of the existing roads. All these
proposed and ongoing developments are
expected to play an important role in
spreading residential development across
the city.
to target the end user driven middle class
segment. The government on its part has
facilitated the reduction of interest rates and
lowered stamp duty charges to encourage
residential buyers.
The residential market in Bengaluru is
currently stabilising. Although some
micro-markets are witnessing a price
correction, it is less prominent now. In the
aftermath of the slowdown, very limited
projects have been announced in the city and
most of the projected supply would be a
result of the spill over from earlier residential
developments. More mature residential
markets are currently witnessing a revival
with steady capital price appreciation since
the last quarter whereas capital values in
other residential markets have stabilised.
Knight Frank Research estimates that the city
will witness a residential supply of about
38,000 units translating to approximately
72 mn.sq.ft. between 2009 and 2011. While
53% of this supply will be in form of 3 BHK
apartments, 2 BHK apartments will constitute
30% of the total supply. The southern zone at
39% share, will be the largest contributor to
the supply, whereas northern and eastern
zones will contribute about 26% each to the
supply.
Current Scenario
The global economic crisis brought about a
slowdown in the residential market around
mid 2008. In a bid to encourage sagging
consumer confidence, private and
nationalized banks lowered home loan rates
during the last few months of 2008, although
the impact was marginal. The reduced
absorption in the residential market forced
many developers to provide discounts in a
bid to push sales. As a result of the slowdown
most residential projects which were under
development have either been deferred or
stalled in lieu of the reduced demand for
premium properties. This has shifted the
focus from premium housing to affordable
housing projects over the past year, primarily Supply Cumulative Supply
Source: Knight Frank Research
Figure 17
Estimated Supply 2009-11
Year
No
. o
f re
sid
en
tia
l un
its
0
40000
20
09
20
10
20
11
25000
5000
35000
30000
20000
15000
10000
The CBD continues catering to the demand
from the high income segment whereas the
suburbs are catering to the middle and upper
middle class segments by offering larger
residential units with standard amenities
such as power back up, clubhouses, sports
facilities and open spaces.
Based on its geographical pattern, the
Bengaluru residential market can be divided
into the following zones namely the CBD,
Bengaluru North, Bengaluru South,
Bengaluru East and Bengaluru West. The CBD
or the Central Business District represents the
most prominent residential locations in the
city. This zone is largely saturated with little
opportunity for further development .The
prime demand for this zone comes from the
high income segment. Bengaluru West
comprises well established old residential
pockets in the city. Bengaluru North is the
zone where most residential development
activity is being focused. The residential
demand for this zone is primarily investor
driven. Bengaluru South and Bengaluru East
UPCOMING
1. Whitefield
2. Marathahalli
3. Basavnagar
4. Bannerghatta Road
5. BTM Layout
6. Hebbal
7. Sarjapur Road
8. Outer Ring Road
9. Banasawadi
10. HSR Layout
11. Yelahanka
EXISTING
1. Vijayanagar
2. Magadi Road
3. Rajajinagar
4. Ulsoor
5. Koramangala
6. Seshadripuram
7. Jayanagar
8. Indiranagar
Bengaluru
1
1
2
3
4
5
6
7
8
9
10
11
23
4
5
6
7
8
Distribution of Supply 2009-11
(in No. of units)
Figure 16
Source: Knight Frank Research
CBD - 1%
North - 26%
South - 39%
East - 26%
West - 8%
are the fastest developing zones in the city.
The high population density in these zones
can be attributed to the presence of IT hubs
in these locations.
Residential market in central Bengaluru
comprises Palace Cross Road, Richmond
Road, Lavelle Road, Infantry Road,
Cunningham Road and Brunton Road. Few
residential projects are coming up here due
to unavailability of land and even these offer
few apartments. Furthermore, redevelopment
of old buildings into those with contemporary
facilities, catering mostly to HNIs is also
taking place in this micro-market. The higher
income segment constitutes the primary
demand segment in the CBD.
This micro-market is estimated to witness a
supply of about 450 units constituting
approximately 1.2 mn.sq.ft. during 2009 and
2010.
Central Business District (CBD)
In the
aftermath of
the
slowdown,
very limited
projects have
been
announced in
the city and
most of the
projected
supply would
be a result of
the spillover
from earlier
residential
developments
18458
15693
3622
34151
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Q3 2009
residentialmarket
KnightFrank.comReview
3332
prominent residential project which has come
up in this zone. This region will witness a
supply of approximately 10,000 residential
units translating into 20 mn.sq.ft. by 2011.
Owing to the state of under development in
the region, the proportion of end users is low.
Therefore, the residential demand in this
region is predominantly investor driven.
An important infrastructure development in
the north zone is the under construction
elevated highway connecting Yelahanka to
the city. Further, development of an internal
ring road in Yelahanka will improve the
connectivity within the micro-market. The
Bengaluru Mysore Infrastructure Corridor
(BMIC), which would provide connectivity to
this location from the south, is expected to
increase its development potential ,
particularly in the residential sector.
Bengaluru East
Residential layouts in Bengaluru East are
located at Indira Nagar, Airport Road, Frazer
Town, Cooke Town, Lingarajpuram,
Marthahalli Juction, HRBR Layout, Banaswadi,
Old Madras Road, KR Puram, Brookefields,
Hoodi and Whitefield. This region is
witnessing a varied mix of developments
ranging from apartments to villas and row
houses. This zone has a strong concentration
of the IT/ITES segment. The economic
slowdown has affected this zone the most as
its residential development is directly
dependent on IT/ITES growth. The IT sector
employees and NRI segment are driving the
demand for upcoming residential units in this
zone. Brigade Group is coming up with a
huge integrated township called Metropolis
along the Whitefield Road. In the vicinity of
the IT corridor, a large number of residential
projects are being developed at Brookefields,
Hoodi and Hobli. Total Environment is coming
up with a high end residential apartment
complex in Whitefield called Windmills of the
Mind which is expected to entice HNIs.
Approximately 18 mn.sq.ft.of residential
space or 9,800 units is under construction
here and is expected to be ready for
occupancy by 2011.
Most of the upcoming supply is due to the
spill over from last year. Prominent
developers like Nitesh Estates, Purvankara
and Embassy Group are coming up with
customised high-end apartments over the
next two years, viz. the Nitesh Canary Wharf,
Purva Grande and Embassy Habitat
respectively.
Residential market in Bengaluru North
consists of locations like Sadashivnagar,
Jayamahal, RT Nagar, Hebbal, Bellary Road,
Yelahanka, Dollars Colony, Dasarahalli,
Tumkur Road and Jalahalli. The international
airport at Devanahalli along with the
improved connectivity to the city through the
four-lane Bellary Road are the key drivers for
rapid developments in this region.
Availability of large land parcels has led to
proposed development of theme based
luxurious villa developments as well as huge
integrated township projects which are yet to
take off. Mumbai based developer B Raheja
has come up with its maiden high-end
residential project Pebble Bay at Dollars
Colony. Godrej Woodsman Estate is another
Bengaluru North
Purva Fountain Square, Marathahalli
The development of the Outer Ring Road
(ORR) has improved the accessibility of
eastern locations like Sarjapur Road,
Marathahalli and Varathur.
Malleswaram, Seshadripuram, Rajajinagar,
Vijaynagar and Magadi Road are the
prominent residential locations of Bengaluru
West. Being one of the oldest residential
catchments in the city, this zone mainly
consists of individual houses and bungalows.
Scarcity of land has reduced the scope for
new residential development and hence, only
few projects are coming up in this
micro-market. The prominent projects are
Mantri Greens by the Mantri Group at
Malleswaram and a 40 acre self-contained
enclave by the Brigade Group called Brigade
Gateway located at Malleswaram-Rajajinagar.
Dubai based company ETA Star also made
their entry into Bengaluru with their project
Bengaluru West
'The Gardens' coming up at Magadi Road.
Residential development of about 5 mn.sq.ft.
constituting 2,900 units will be ready for
occupation by 2011.
In Bengaluru South, the residential expanse
spreads across Koramangala, Hosur Road,
Bannerghatta Road, Sarjapur Road, Outer
Ring Road, HSR Layout, Jayanagar, JP Nagar,
Banashankari, Kanakapura Road and
neighbouring locations. This zone represents
locations which are fast emerging as
potential residential destinations in the city.
The availability of land, strong infrastructure
development and presence of the middle
income segment as a pull factor, have
contributed to the development of this zone.
Among the current residential projects, there
is a high concentration along the Sarjapur
Outer Ring Road due to its proximity to the IT
corridor. Adarsh Group has launched an
integrated township project Adarsh Palm
Retreat sprawling across 200 acres, while
Sobha Group has several projects lined up
along the Outer Ring Road. In anticipation of
the upcoming Knowledge City and BMIC
project, prominent developers like Brigade,
Mantri and Purvankara have positioned their
projects along the Kanakpura Road. DLF has
made its foray into the city with Westend
Heights at Bannerghatta Road. An estimated
residential development of 28 mn.sq.ft. or
14,600 units by 2011 make this micro-market
Bengaluru South
the largest contributor to the city's housing
supply.
The elevated highway project between Silk
Board intersection and Attebelle will enhance
the connectivity of Electronic City and
surrounding locations on Hosur Road with the
city. This will improve the potential of
residential locations around Electronic City.
Another important project that is expected to
benefit this micro-market is the Bengaluru
Mysore Infrastructure Corridor (BMIC).
Expected to be ready by 2011, this project will
increase the micro-market's accessibility to
the western zone of the city. Expected by
2012, the development of the first phase of
the awaited Bengaluru Development
Authority- Peripheral Ring Road (BDA-PRR),
will work in favour of the residential
development in this micro-market. The
BDA-PRR will increase the locations
connectivity to the eastern zone.
The economic slowdown resulted in a
correction of residential capital and rental
values in the city. However, the market is
witnessing stabilisation now and some
prominent residential locations are
witnessing an appreciation in capital values.
During the slump Bengaluru had witnessed
correction in capital values in almost all the
residential locations.
Capital & Rental Profile
In Bengaluru
South,
prominent
recovery has
been
witnessed in
Koramangala,
where prices
have
increased by
36% post the
economic
slump
Unit-Wise Distribution of Supply 2009-11
Figure 18
Source: Knight Frank Research
1 BHK - 2%
2 BHK - 30%
2 ½ BHK - 3%
3 BHK - 53%
3 ½ BHK - 1%
4 BHK - 6%
5 BHK/Penthouses/Villa - 5%
Knight Frank
Research
estimates that
the city will
witness a
residential
supply of
about 38000
units,
translating
to
approximately
72 mn.sq.ft.
between 2009
and 2011
Bengaluru Peak to Trough to Sep'09
Trough Change Sep'09 Change (Rs./sq.ft.)
M.G. Road -34% 47% 14,000
Koramangla -24% 36% 6,750
Indira nagar -38% 23% 6,350
Malleshwaram -11% 20% 6,000
J.P. Nagar -6% 15% 4,300
Basavangudi -13% 5% 5,250
Rajaji Nagar -15% 4% 4,850
Banswadi -29% 3% 3,500
Table 7
Average Residential Capital Value Trend
Source: Knight Frank Research
Q3 2009
residentialmarket
KnightFrank.comReview
3332
prominent residential project which has come
up in this zone. This region will witness a
supply of approximately 10,000 residential
units translating into 20 mn.sq.ft. by 2011.
Owing to the state of under development in
the region, the proportion of end users is low.
Therefore, the residential demand in this
region is predominantly investor driven.
An important infrastructure development in
the north zone is the under construction
elevated highway connecting Yelahanka to
the city. Further, development of an internal
ring road in Yelahanka will improve the
connectivity within the micro-market. The
Bengaluru Mysore Infrastructure Corridor
(BMIC), which would provide connectivity to
this location from the south, is expected to
increase its development potential ,
particularly in the residential sector.
Bengaluru East
Residential layouts in Bengaluru East are
located at Indira Nagar, Airport Road, Frazer
Town, Cooke Town, Lingarajpuram,
Marthahalli Juction, HRBR Layout, Banaswadi,
Old Madras Road, KR Puram, Brookefields,
Hoodi and Whitefield. This region is
witnessing a varied mix of developments
ranging from apartments to villas and row
houses. This zone has a strong concentration
of the IT/ITES segment. The economic
slowdown has affected this zone the most as
its residential development is directly
dependent on IT/ITES growth. The IT sector
employees and NRI segment are driving the
demand for upcoming residential units in this
zone. Brigade Group is coming up with a
huge integrated township called Metropolis
along the Whitefield Road. In the vicinity of
the IT corridor, a large number of residential
projects are being developed at Brookefields,
Hoodi and Hobli. Total Environment is coming
up with a high end residential apartment
complex in Whitefield called Windmills of the
Mind which is expected to entice HNIs.
Approximately 18 mn.sq.ft.of residential
space or 9,800 units is under construction
here and is expected to be ready for
occupancy by 2011.
Most of the upcoming supply is due to the
spill over from last year. Prominent
developers like Nitesh Estates, Purvankara
and Embassy Group are coming up with
customised high-end apartments over the
next two years, viz. the Nitesh Canary Wharf,
Purva Grande and Embassy Habitat
respectively.
Residential market in Bengaluru North
consists of locations like Sadashivnagar,
Jayamahal, RT Nagar, Hebbal, Bellary Road,
Yelahanka, Dollars Colony, Dasarahalli,
Tumkur Road and Jalahalli. The international
airport at Devanahalli along with the
improved connectivity to the city through the
four-lane Bellary Road are the key drivers for
rapid developments in this region.
Availability of large land parcels has led to
proposed development of theme based
luxurious villa developments as well as huge
integrated township projects which are yet to
take off. Mumbai based developer B Raheja
has come up with its maiden high-end
residential project Pebble Bay at Dollars
Colony. Godrej Woodsman Estate is another
Bengaluru North
Purva Fountain Square, Marathahalli
The development of the Outer Ring Road
(ORR) has improved the accessibility of
eastern locations like Sarjapur Road,
Marathahalli and Varathur.
Malleswaram, Seshadripuram, Rajajinagar,
Vijaynagar and Magadi Road are the
prominent residential locations of Bengaluru
West. Being one of the oldest residential
catchments in the city, this zone mainly
consists of individual houses and bungalows.
Scarcity of land has reduced the scope for
new residential development and hence, only
few projects are coming up in this
micro-market. The prominent projects are
Mantri Greens by the Mantri Group at
Malleswaram and a 40 acre self-contained
enclave by the Brigade Group called Brigade
Gateway located at Malleswaram-Rajajinagar.
Dubai based company ETA Star also made
their entry into Bengaluru with their project
Bengaluru West
'The Gardens' coming up at Magadi Road.
Residential development of about 5 mn.sq.ft.
constituting 2,900 units will be ready for
occupation by 2011.
In Bengaluru South, the residential expanse
spreads across Koramangala, Hosur Road,
Bannerghatta Road, Sarjapur Road, Outer
Ring Road, HSR Layout, Jayanagar, JP Nagar,
Banashankari, Kanakapura Road and
neighbouring locations. This zone represents
locations which are fast emerging as
potential residential destinations in the city.
The availability of land, strong infrastructure
development and presence of the middle
income segment as a pull factor, have
contributed to the development of this zone.
Among the current residential projects, there
is a high concentration along the Sarjapur
Outer Ring Road due to its proximity to the IT
corridor. Adarsh Group has launched an
integrated township project Adarsh Palm
Retreat sprawling across 200 acres, while
Sobha Group has several projects lined up
along the Outer Ring Road. In anticipation of
the upcoming Knowledge City and BMIC
project, prominent developers like Brigade,
Mantri and Purvankara have positioned their
projects along the Kanakpura Road. DLF has
made its foray into the city with Westend
Heights at Bannerghatta Road. An estimated
residential development of 28 mn.sq.ft. or
14,600 units by 2011 make this micro-market
Bengaluru South
the largest contributor to the city's housing
supply.
The elevated highway project between Silk
Board intersection and Attebelle will enhance
the connectivity of Electronic City and
surrounding locations on Hosur Road with the
city. This will improve the potential of
residential locations around Electronic City.
Another important project that is expected to
benefit this micro-market is the Bengaluru
Mysore Infrastructure Corridor (BMIC).
Expected to be ready by 2011, this project will
increase the micro-market's accessibility to
the western zone of the city. Expected by
2012, the development of the first phase of
the awaited Bengaluru Development
Authority- Peripheral Ring Road (BDA-PRR),
will work in favour of the residential
development in this micro-market. The
BDA-PRR will increase the locations
connectivity to the eastern zone.
The economic slowdown resulted in a
correction of residential capital and rental
values in the city. However, the market is
witnessing stabilisation now and some
prominent residential locations are
witnessing an appreciation in capital values.
During the slump Bengaluru had witnessed
correction in capital values in almost all the
residential locations.
Capital & Rental Profile
In Bengaluru
South,
prominent
recovery has
been
witnessed in
Koramangala,
where prices
have
increased by
36% post the
economic
slump
Unit-Wise Distribution of Supply 2009-11
Figure 18
Source: Knight Frank Research
1 BHK - 2%
2 BHK - 30%
2 ½ BHK - 3%
3 BHK - 53%
3 ½ BHK - 1%
4 BHK - 6%
5 BHK/Penthouses/Villa - 5%
Knight Frank
Research
estimates that
the city will
witness a
residential
supply of
about 38000
units,
translating
to
approximately
72 mn.sq.ft.
between 2009
and 2011
Bengaluru Peak to Trough to Sep'09
Trough Change Sep'09 Change (Rs./sq.ft.)
M.G. Road -34% 47% 14,000
Koramangla -24% 36% 6,750
Indira nagar -38% 23% 6,350
Malleshwaram -11% 20% 6,000
J.P. Nagar -6% 15% 4,300
Basavangudi -13% 5% 5,250
Rajaji Nagar -15% 4% 4,850
Banswadi -29% 3% 3,500
Table 7
Average Residential Capital Value Trend
Source: Knight Frank Research
Q3 2009
residentialmarket
KnightFrank.comReview
3534
Even the premium residential location of CBD
like M.G. Road witnessed the brunt of the
slowdown, correcting by almost 34% from the
2008 average peak prices of Rs.13,000-
16,000/sq.ft. to Rs.7,000-12,000/sq.ft in Q1
2009. Converse has also been true for this
premium market, which recovered in prices
by almost 47% during the last six months
between March'09 to September'09 as the
sentiments turned positive and the economic
activity in the country witnessed
improvement. Another prominent location of
Indira Nagar also witnessed a sharp
correction of about 38% from the peak until
March'09, when prices reached the bottom.
However, with the turn of events, this market
has also seen an up move in prices by about
23% between March'09 and September'09.
In Bengaluru East the capital values remain
lower than other micro-markets due to an
oversupply of residential units. Locations like
Whitefield have been witnessing capital rates
which vary from Rs.2,300-3,500/sq.ft., which
is lower than most developed residential
locations in other micro-markets.
Whitefield witnessed a correction of about
13% during the slump. But, now it has
stabilised and has undergone a marginal
price increase of 4% in the March'09 to
September'09 period. However, on account of
large supply in the next 2 years, the prices are
not expected to move up considerably in this
micro-market.
In West Bengaluru, the residential capital
values have been steady over the past year.
It is a result of the relative saturation of this
micro-market. Locations in the west like
Malleshawaram have capital rates ranging
from Rs.5,000-7,000/sq.ft. During the
slowdown, this micro-market had seen a
correction of 11% in capital values, but with a
turnaround in sentiments, the prices in this
market have increased by 20%.
Bengaluru South has been witnessing
relatively strong residential development.
The capital values range from
Rs.5,500-8,000/sq.ft. in prime locations like
Koramangala and vary between
Rs.3,000- 5,600/sq.ft. in residential pockets
further south like JP Nagar. This variance in
rates can be attributed to differential
development across locations in the south.
Capital values in Koramangala declined by
almost 25% during the slump. But, the
recovery was better in Koramangala market,
where prices increased by 36% post the
economic slump. In fact, currently the prices
are at new peak levels here.
The residential rental values in the middle
income segment had witnessed a drop in the
fourth quarter of 2008. This segment
witnessed an average drop by 10% across all
micro-markets except in off-central locations
of Vasanth Nagar, Richmond Town,
Indiranagar, Cox Town, Frazer Town,
Banaswadi and Benson Town. The maximum
rental decline took place in the mid-range
micro-markets of Whitefield and
Marathahalli. Bengaluru has witnessed some
changes in the city's infrastructure, such as
the relocation of the airport, which has
negatively impacted rental values of
properties near the Old Airport Road and
Indiranagar. Also, most of apartments that
were launched in 2006-07 are ready for
possession now, adding to the supply which
far exceeds the demand. The economic
slowdown has also played its part in bringing
down the rental values as most of the
apartments are occupied by IT employees and
as the spending power has shrunk, tenants
are looking for better deals exerting further
pressure on the rental market. In order to
combat the weak market sentiment,
apartment owners are now offering discounts
to retain/attract tenants. Locations such as
Sarjapur Road, Outer Ring Road and HSR
Layout (south-east), Whitefield, Marathahalli
and Airport Road in the east, and
Bannerghatta Road in the south are
witnessing oversupply, whereas the North
Bengaluru rental market has seen a slight
hype in the recent past owing to proposed
upcoming developments in the area.
However, the overall slowdown in the real
estate market has resulted in a rental
correction in the north market.
This market has not witnessed any significant
rental transactions in the recent past.
In Bengaluru, while the premium rental
markets like the Central Business District
(CBD) as well as the off-CBD locations are
witnessing few transactions, the middle
income markets are witnessing regular rental
transactions. In the CBD, locations like
Rajbhavan Road, Lavelle Road, Richmond
Town and Langford Town are witnessing high
demand for rental property and the rates
range from Rs.60,000-200,000 for a 2-BHK
apartment, However, in off CBD locations like
Frazer Town, Cox Town and Ulsoor locations,
where supply is abundant, the rentals are
lower at Rs.25,000-60,000 for a 2-BHK
apartment.
Locations with steady mid-market rentals
include Rajbhavan Road, Vasanth Nagar,
Malleshwaram, Sadashivanagar,
Koramangala, Indiranagar, Madiwala,
Cambridge Layout, Ulsoor and Domlur. In
South Bengaluru, established residential
locations like Koramangala have rentals
which range from Rs.45,000-150,000
whereas locations further south of
Bannerghatta Road and BTM layout have
rentals ranging between Rs.14,000-35,000
for a 2-BHK apartment.
Localities towards East Bengaluru such as
Whitefield, Marathahalli and Brookefield,
have a relatively lower rental demand for both
mid and premium markets. The rentals in
these locations range from Rs.12,000-30,000
for a 2-BHK apartment.
The rental market in West Bengaluru is
primarily serviced by independent houses
with locations like Malleshwaram having
rentals ranging from Rs.10,000-20,000 for a
2-BHK independent house. In North
Bengaluru prominent residential locations
like Hebbal have rental values ranging from
Rs.15,000-30,000 for a 2BHK apartment.
Without much variance, the residential rental
yield across all mentioned micro- markets are
in the range of 3-4% per annum.
The residential market of Bengaluru has
witnessed heightened activity in the past few
years. With the increasing prominence of the
city, several infrastructure projects that will
have a bearing on the growth of its real estate
development have been initiated. The
prominent emerging residential markets are
located towards the eastern and southern
parts of the city.
Outlook
Project Status Remarks
Elevated Highway between Expected completion in 2010 Will provide faster connectivity from Electronic city to
Silk board intersection and Attebelle Koramangala thereby reducing travel time. This is expected to
increase the residential potential of locations around Electronic
City
Bengaluru Development Expected completion of Ist The first phase would improve the connectivity towards
Authority -Peripheral Ring Road (BDA-PRR) phase in 2012 the north eastern parts of the city comprising of locations from
Tumkur Road to Hosur Road which would connect Bellary Road,
Old Madras Road, Varthur Road and Sarjapura Road
Bengaluru Mysore Expected competion in 2011 Will provide good connectivity to Mysore thereby increasing the
Infrastructure Corridor (BMIC) residential potential of locations like Bidadi. It would provide
better accessibilty to the south western micro-markets in
Bengaluru .The four-lane expressway is expandable to six-lane,
and alternatively the 10-mtr median can be used for a metro rail
system or a high-speed train network that could connect the
entire area of the project. Plans have been incorporated into the
project for providing inter-modal stations along the expressway
for future use of rail network.
Table 8
Bengaluru Major Infrastructure Developments
Source: Knight Frank Research
The stretch extending from Electronic City in
the south towards Varathur in the east is
expected to be the strongest contributor to
residential development over the next 2-3
years. This stretch includes prominent
locations like Kanakpura Road and Sarjapur
road.
Electronic City and its surrounding locations
like Mysore Road have a presence of strong
office development, predominantly IT space.
Its connectivity to the city is expected to
improve once the elevated highway is
completed. The Bengaluru Mysore
Infrastructure Corridor (BMIC) cuts across this
micro-market which would increase its
accessibility towards the western parts of the
city. The development of the Bengaluru
Development Authority -Peripheral Ring Road
(BDA-PRR) will increase its connectivity
towards the east. Once the elevated highway
is operational, this micromarket will have
better accessibility to prominent retail
locations in the area namely Forum and Total
Mall. These developments are expected to
make the micro-market more attractive for
residential development.
Bannerghatta Road in the south is expected
to be another prime destination for
Source: Knight Frank Research
Figure 19
Residential Rental Values (2 BHK)
Rs.
/mo
nth
0
160000
Ko
ram
an
ga
la
100000
20000
140000
120000
80000
60000
40000
Ind
ira
na
ga
r
Sa
rja
pu
r R
oa
d
He
bb
al
Ba
nn
erg
ha
tta
Ro
ad
BTM
La
you
t
Minimum MaximumL&T South City, Bannerghatta
Q3 2009
residentialmarket
KnightFrank.comReview
3534
Even the premium residential location of CBD
like M.G. Road witnessed the brunt of the
slowdown, correcting by almost 34% from the
2008 average peak prices of Rs.13,000-
16,000/sq.ft. to Rs.7,000-12,000/sq.ft in Q1
2009. Converse has also been true for this
premium market, which recovered in prices
by almost 47% during the last six months
between March'09 to September'09 as the
sentiments turned positive and the economic
activity in the country witnessed
improvement. Another prominent location of
Indira Nagar also witnessed a sharp
correction of about 38% from the peak until
March'09, when prices reached the bottom.
However, with the turn of events, this market
has also seen an up move in prices by about
23% between March'09 and September'09.
In Bengaluru East the capital values remain
lower than other micro-markets due to an
oversupply of residential units. Locations like
Whitefield have been witnessing capital rates
which vary from Rs.2,300-3,500/sq.ft., which
is lower than most developed residential
locations in other micro-markets.
Whitefield witnessed a correction of about
13% during the slump. But, now it has
stabilised and has undergone a marginal
price increase of 4% in the March'09 to
September'09 period. However, on account of
large supply in the next 2 years, the prices are
not expected to move up considerably in this
micro-market.
In West Bengaluru, the residential capital
values have been steady over the past year.
It is a result of the relative saturation of this
micro-market. Locations in the west like
Malleshawaram have capital rates ranging
from Rs.5,000-7,000/sq.ft. During the
slowdown, this micro-market had seen a
correction of 11% in capital values, but with a
turnaround in sentiments, the prices in this
market have increased by 20%.
Bengaluru South has been witnessing
relatively strong residential development.
The capital values range from
Rs.5,500-8,000/sq.ft. in prime locations like
Koramangala and vary between
Rs.3,000- 5,600/sq.ft. in residential pockets
further south like JP Nagar. This variance in
rates can be attributed to differential
development across locations in the south.
Capital values in Koramangala declined by
almost 25% during the slump. But, the
recovery was better in Koramangala market,
where prices increased by 36% post the
economic slump. In fact, currently the prices
are at new peak levels here.
The residential rental values in the middle
income segment had witnessed a drop in the
fourth quarter of 2008. This segment
witnessed an average drop by 10% across all
micro-markets except in off-central locations
of Vasanth Nagar, Richmond Town,
Indiranagar, Cox Town, Frazer Town,
Banaswadi and Benson Town. The maximum
rental decline took place in the mid-range
micro-markets of Whitefield and
Marathahalli. Bengaluru has witnessed some
changes in the city's infrastructure, such as
the relocation of the airport, which has
negatively impacted rental values of
properties near the Old Airport Road and
Indiranagar. Also, most of apartments that
were launched in 2006-07 are ready for
possession now, adding to the supply which
far exceeds the demand. The economic
slowdown has also played its part in bringing
down the rental values as most of the
apartments are occupied by IT employees and
as the spending power has shrunk, tenants
are looking for better deals exerting further
pressure on the rental market. In order to
combat the weak market sentiment,
apartment owners are now offering discounts
to retain/attract tenants. Locations such as
Sarjapur Road, Outer Ring Road and HSR
Layout (south-east), Whitefield, Marathahalli
and Airport Road in the east, and
Bannerghatta Road in the south are
witnessing oversupply, whereas the North
Bengaluru rental market has seen a slight
hype in the recent past owing to proposed
upcoming developments in the area.
However, the overall slowdown in the real
estate market has resulted in a rental
correction in the north market.
This market has not witnessed any significant
rental transactions in the recent past.
In Bengaluru, while the premium rental
markets like the Central Business District
(CBD) as well as the off-CBD locations are
witnessing few transactions, the middle
income markets are witnessing regular rental
transactions. In the CBD, locations like
Rajbhavan Road, Lavelle Road, Richmond
Town and Langford Town are witnessing high
demand for rental property and the rates
range from Rs.60,000-200,000 for a 2-BHK
apartment, However, in off CBD locations like
Frazer Town, Cox Town and Ulsoor locations,
where supply is abundant, the rentals are
lower at Rs.25,000-60,000 for a 2-BHK
apartment.
Locations with steady mid-market rentals
include Rajbhavan Road, Vasanth Nagar,
Malleshwaram, Sadashivanagar,
Koramangala, Indiranagar, Madiwala,
Cambridge Layout, Ulsoor and Domlur. In
South Bengaluru, established residential
locations like Koramangala have rentals
which range from Rs.45,000-150,000
whereas locations further south of
Bannerghatta Road and BTM layout have
rentals ranging between Rs.14,000-35,000
for a 2-BHK apartment.
Localities towards East Bengaluru such as
Whitefield, Marathahalli and Brookefield,
have a relatively lower rental demand for both
mid and premium markets. The rentals in
these locations range from Rs.12,000-30,000
for a 2-BHK apartment.
The rental market in West Bengaluru is
primarily serviced by independent houses
with locations like Malleshwaram having
rentals ranging from Rs.10,000-20,000 for a
2-BHK independent house. In North
Bengaluru prominent residential locations
like Hebbal have rental values ranging from
Rs.15,000-30,000 for a 2BHK apartment.
Without much variance, the residential rental
yield across all mentioned micro- markets are
in the range of 3-4% per annum.
The residential market of Bengaluru has
witnessed heightened activity in the past few
years. With the increasing prominence of the
city, several infrastructure projects that will
have a bearing on the growth of its real estate
development have been initiated. The
prominent emerging residential markets are
located towards the eastern and southern
parts of the city.
Outlook
Project Status Remarks
Elevated Highway between Expected completion in 2010 Will provide faster connectivity from Electronic city to
Silk board intersection and Attebelle Koramangala thereby reducing travel time. This is expected to
increase the residential potential of locations around Electronic
City
Bengaluru Development Expected completion of Ist The first phase would improve the connectivity towards
Authority -Peripheral Ring Road (BDA-PRR) phase in 2012 the north eastern parts of the city comprising of locations from
Tumkur Road to Hosur Road which would connect Bellary Road,
Old Madras Road, Varthur Road and Sarjapura Road
Bengaluru Mysore Expected competion in 2011 Will provide good connectivity to Mysore thereby increasing the
Infrastructure Corridor (BMIC) residential potential of locations like Bidadi. It would provide
better accessibilty to the south western micro-markets in
Bengaluru .The four-lane expressway is expandable to six-lane,
and alternatively the 10-mtr median can be used for a metro rail
system or a high-speed train network that could connect the
entire area of the project. Plans have been incorporated into the
project for providing inter-modal stations along the expressway
for future use of rail network.
Table 8
Bengaluru Major Infrastructure Developments
Source: Knight Frank Research
The stretch extending from Electronic City in
the south towards Varathur in the east is
expected to be the strongest contributor to
residential development over the next 2-3
years. This stretch includes prominent
locations like Kanakpura Road and Sarjapur
road.
Electronic City and its surrounding locations
like Mysore Road have a presence of strong
office development, predominantly IT space.
Its connectivity to the city is expected to
improve once the elevated highway is
completed. The Bengaluru Mysore
Infrastructure Corridor (BMIC) cuts across this
micro-market which would increase its
accessibility towards the western parts of the
city. The development of the Bengaluru
Development Authority -Peripheral Ring Road
(BDA-PRR) will increase its connectivity
towards the east. Once the elevated highway
is operational, this micromarket will have
better accessibility to prominent retail
locations in the area namely Forum and Total
Mall. These developments are expected to
make the micro-market more attractive for
residential development.
Bannerghatta Road in the south is expected
to be another prime destination for
Source: Knight Frank Research
Figure 19
Residential Rental Values (2 BHK)
Rs.
/mo
nth
0
160000
Ko
ram
an
ga
la
100000
20000
140000
120000
80000
60000
40000
Ind
ira
na
ga
r
Sa
rja
pu
r R
oa
d
He
bb
al
Ba
nn
erg
ha
tta
Ro
ad
BTM
La
you
t
Minimum MaximumL&T South City, Bannerghatta
Q3 2009
residentialmarket
KnightFrank.comReview
residential development over the coming
years. Lower capital values and the presence
of strong residential catchment around this
micro-market will be beneficial for its growth.
Its close proximity to the BMIC corridor and
the BDA-PRR, is expected to improve its
accessibility towards the northern and
western parts of the city.
The location is in close proximity to Hosur
Road which connects it to the city and also
has the presence of established retail
locations like Big Bazaar and Forum Mall.
Micro-markets like Sarjapur Road,
Marathahalli and Varathur are witnessing
ample office space development. The
development of the Outer Ring Road (ORR)
The stretch
extending
from
Electronic
City in the
south
towards
Varathur in
the east is
expected to be
the strongest
contributor
to residential
development
over the next
2-3 years
has made it accessible from most prominent
locations in the city. Presence of retail
establishments such as Total Mall , More
Supermarket and Reliance Fresh would help
in further residential growth. These locations
are also in relative close proximity to the BDA
PRR and have a presence of strong residential
catchment.
Locations like Yelahanka and Doddabelapur
in the north are expected to witness
residential development for the lower and
middle income category. The strong
industrial development in the region and the
lack of proper dwelling units have increased
the prospect of residential development. An
elevated highway connecting Yelahanka with
the city is currently under construction.
Moreover, an internal ring road will be built in
Yelahanka, improving connectivity within the
micro market. A portion of the BMIC also cuts
across this location providing acessibilty to
South Bengaluru. Doddabelapur is well
connected to the city by the recently
constructed airport highway. It is also in
close proximity to the Bengaluru International
Airport Limited (BIAL) which has intensified
residential development in the area. As of
now, it lacks organised retail establishments
and proper social infrastructure facilities like
hospitals and schools, but is expected to
develop over the next few years.
An evident trend in the last year has been the
buyers' preference for completed projects
and the ones offering value for money.
Developers also responded by offering
payment schemes that are deferred until
possession. Affordable housing projects
targeting the middle income segment will see
a larger representation in the residential
developments in the city. Government
initiatives like reduction in stamp duty to 6%
will also provide relief to the sector.
The economic slump adversely affected the
real estate development, which witnessed a
price correction of 25-35% even in the prime
locations like M.G.Road, Koramangala and
Indira Nagar.
However, with the turnaround in economic
activity these premium markets reaped the
maximum benefit by witnessing increase in
capital values by 25-45% in the last 6 months
i.e. March'09 and September'09. In the
southern zone, the residential prices have
bottomed out with a few micro-markets also
witnessing a marginal price increase of
5-10%. However, a large proportion, of about
40% of the city's supply, which is due to
come up in this zone will prevent meaningful
price increases in the medium term.
hyderabad
Market Review
The residential market in Hyderabad, which
was primarily driven by the IT/ITES industry,
has undergone a noticeable change in
development trend since 2005. Proactive
government initiatives, growth of the IT,
Pharma and Biotech sectors and the
inception of SEZs, Industrial Parks and IT
campuses all contributed to the residential
boom in Hyderabad. This rapid development,
along with the sudden demand for quality
housing, has seen the entry of many national
and international developers into the local
market. Thus, over a span of 2-3 years,
Hyderabad has witnessed extensive growth
of premium and luxury segment housing,
gated communities and villas. This, coupled
with speculative buying, caused property
prices in Hyderabad to escalate to
unaffordable levels, thus reducing the buying
capacity of the MIG segment across
Hyderabad. The global economic slowdown
adversely impacted the demand for housing
in the Hyderabad residential market, where a
lack of interest by end-users and investors
led to a decline in property prices.
Meanwhile, high supply in face of this
reduced demand has created a demand-
supply mismatch in the luxury housing
segment.
In the last decade, considerable interest has
been generated in the residential segment
near the Hitech City area. Real estate
development has picked up considerably in
areas near the IT investment destinations
such as Madhapur, Kondapur and
Gachibowli. Till the year 2000, residential
development was concentrated in
Himayatnagar, Kukatpally, Secunderabad
and Dilsukhnagar, while premium
development came up in Banjara Hills,
Begumpet, Jubilee Hills and Marredpally.
With saturation and low land availability in
these areas, development shifted to locations
such as Kukatpally, Nizampet, Miyapur,
Chandanagar, Kondapur and Kompally, all of
which have greater land availability. With the
entry of international majors into the
residential housing market of Hyderabad, the
development of large gated communities,
townships, and individual houses in
suburban areas of Hyderabad is prominent.
The global financial meltdown in the last
quarter of 2008 has changed the approach of
developers, who over the last year have
shifted focus from premium to affordable
housing. From 2009 to 2011, residential
space supply of approximately 53,000 units,
which equates to roughly 87 mn.sq.ft. of
residential space, are expected to crop up
around Hyderabad and will be evenly
distributed across 2010 and 2011. Of the total
expected supply until the end of 2011,
approximately 50% will be accounted for by
3-BHK units and 30% by 2-BHK units. This
reflects a shift to a more practical approach
towards housing by developers, who due to
the realty slump have become averse to the
idea of luxury accommodation and are
scaling down unit sizes. Notable projects that
comprise upcoming supply are The Iconia,
located at Kondapur, Aparna Sarovar and
Current Scenario
Aparna Cyber Commune in Gopannapalli,
Nagarjuna Residency in Gachibowli,
Sky Lounge in Hitech City and
Aditya Sunshine in Kothuguda. Locations in
the Madhapur-Gachibowli Corridor,
Kukatpally and Miyapur should remain
preferred residential locations because of
their proximity to work destinations.
Distribution of Supply 2009-11
(in No. of units)
Figure 20
Source: Knight Frank Research
Central - 4%
West - 65%
East - 12%
North - 13%
South - 6%
Supply Cumulative Supply
No
. o
f re
sid
en
tia
l un
its
0
60000
20
09
20
10
20
11
20000
Source: Knight Frank Research
Figure 21
Estimated Supply 2009-11
40000
30000
Year
10000
50000
1720119675
16412
36876
53288
36 37
Central Zone
The central zone comprises areas like
Begumpet, Maredpally, Somajiguda,
Himayatnagar, Chikkadpally,
Srinagar Colony, Banjara Hills and Jubilee
Hills, all of which cater to higher income
groups as well as the upper middle- income
segment. Residential demand in this zone is
primarily driven by government officials,
businessmen, corporate office employees,
BPOs and NRIs, all of whom prefer this area of
Hyderabad due to its good connectivity to
other locations and proximity to shopping
malls, schools, colleges, hospitals and other
facilities. The total estimated supply which
will enter this zone by the end of 2011 is
approximately 2,100 units, which equates to
approximately 2.5 mn.sq.ft. Of this, 18% will
enter the market by the end of 2009, with
10% expected in 2010 and the majority 72%
expected in 2011.
Q3 2009
residentialmarket
KnightFrank.comReview
residential development over the coming
years. Lower capital values and the presence
of strong residential catchment around this
micro-market will be beneficial for its growth.
Its close proximity to the BMIC corridor and
the BDA-PRR, is expected to improve its
accessibility towards the northern and
western parts of the city.
The location is in close proximity to Hosur
Road which connects it to the city and also
has the presence of established retail
locations like Big Bazaar and Forum Mall.
Micro-markets like Sarjapur Road,
Marathahalli and Varathur are witnessing
ample office space development. The
development of the Outer Ring Road (ORR)
The stretch
extending
from
Electronic
City in the
south
towards
Varathur in
the east is
expected to be
the strongest
contributor
to residential
development
over the next
2-3 years
has made it accessible from most prominent
locations in the city. Presence of retail
establishments such as Total Mall , More
Supermarket and Reliance Fresh would help
in further residential growth. These locations
are also in relative close proximity to the BDA
PRR and have a presence of strong residential
catchment.
Locations like Yelahanka and Doddabelapur
in the north are expected to witness
residential development for the lower and
middle income category. The strong
industrial development in the region and the
lack of proper dwelling units have increased
the prospect of residential development. An
elevated highway connecting Yelahanka with
the city is currently under construction.
Moreover, an internal ring road will be built in
Yelahanka, improving connectivity within the
micro market. A portion of the BMIC also cuts
across this location providing acessibilty to
South Bengaluru. Doddabelapur is well
connected to the city by the recently
constructed airport highway. It is also in
close proximity to the Bengaluru International
Airport Limited (BIAL) which has intensified
residential development in the area. As of
now, it lacks organised retail establishments
and proper social infrastructure facilities like
hospitals and schools, but is expected to
develop over the next few years.
An evident trend in the last year has been the
buyers' preference for completed projects
and the ones offering value for money.
Developers also responded by offering
payment schemes that are deferred until
possession. Affordable housing projects
targeting the middle income segment will see
a larger representation in the residential
developments in the city. Government
initiatives like reduction in stamp duty to 6%
will also provide relief to the sector.
The economic slump adversely affected the
real estate development, which witnessed a
price correction of 25-35% even in the prime
locations like M.G.Road, Koramangala and
Indira Nagar.
However, with the turnaround in economic
activity these premium markets reaped the
maximum benefit by witnessing increase in
capital values by 25-45% in the last 6 months
i.e. March'09 and September'09. In the
southern zone, the residential prices have
bottomed out with a few micro-markets also
witnessing a marginal price increase of
5-10%. However, a large proportion, of about
40% of the city's supply, which is due to
come up in this zone will prevent meaningful
price increases in the medium term.
hyderabad
Market Review
The residential market in Hyderabad, which
was primarily driven by the IT/ITES industry,
has undergone a noticeable change in
development trend since 2005. Proactive
government initiatives, growth of the IT,
Pharma and Biotech sectors and the
inception of SEZs, Industrial Parks and IT
campuses all contributed to the residential
boom in Hyderabad. This rapid development,
along with the sudden demand for quality
housing, has seen the entry of many national
and international developers into the local
market. Thus, over a span of 2-3 years,
Hyderabad has witnessed extensive growth
of premium and luxury segment housing,
gated communities and villas. This, coupled
with speculative buying, caused property
prices in Hyderabad to escalate to
unaffordable levels, thus reducing the buying
capacity of the MIG segment across
Hyderabad. The global economic slowdown
adversely impacted the demand for housing
in the Hyderabad residential market, where a
lack of interest by end-users and investors
led to a decline in property prices.
Meanwhile, high supply in face of this
reduced demand has created a demand-
supply mismatch in the luxury housing
segment.
In the last decade, considerable interest has
been generated in the residential segment
near the Hitech City area. Real estate
development has picked up considerably in
areas near the IT investment destinations
such as Madhapur, Kondapur and
Gachibowli. Till the year 2000, residential
development was concentrated in
Himayatnagar, Kukatpally, Secunderabad
and Dilsukhnagar, while premium
development came up in Banjara Hills,
Begumpet, Jubilee Hills and Marredpally.
With saturation and low land availability in
these areas, development shifted to locations
such as Kukatpally, Nizampet, Miyapur,
Chandanagar, Kondapur and Kompally, all of
which have greater land availability. With the
entry of international majors into the
residential housing market of Hyderabad, the
development of large gated communities,
townships, and individual houses in
suburban areas of Hyderabad is prominent.
The global financial meltdown in the last
quarter of 2008 has changed the approach of
developers, who over the last year have
shifted focus from premium to affordable
housing. From 2009 to 2011, residential
space supply of approximately 53,000 units,
which equates to roughly 87 mn.sq.ft. of
residential space, are expected to crop up
around Hyderabad and will be evenly
distributed across 2010 and 2011. Of the total
expected supply until the end of 2011,
approximately 50% will be accounted for by
3-BHK units and 30% by 2-BHK units. This
reflects a shift to a more practical approach
towards housing by developers, who due to
the realty slump have become averse to the
idea of luxury accommodation and are
scaling down unit sizes. Notable projects that
comprise upcoming supply are The Iconia,
located at Kondapur, Aparna Sarovar and
Current Scenario
Aparna Cyber Commune in Gopannapalli,
Nagarjuna Residency in Gachibowli,
Sky Lounge in Hitech City and
Aditya Sunshine in Kothuguda. Locations in
the Madhapur-Gachibowli Corridor,
Kukatpally and Miyapur should remain
preferred residential locations because of
their proximity to work destinations.
Distribution of Supply 2009-11
(in No. of units)
Figure 20
Source: Knight Frank Research
Central - 4%
West - 65%
East - 12%
North - 13%
South - 6%
Supply Cumulative Supply
No
. o
f re
sid
en
tia
l un
its
0
60000
20
09
20
10
20
11
20000
Source: Knight Frank Research
Figure 21
Estimated Supply 2009-11
40000
30000
Year
10000
50000
1720119675
16412
36876
53288
36 37
Central Zone
The central zone comprises areas like
Begumpet, Maredpally, Somajiguda,
Himayatnagar, Chikkadpally,
Srinagar Colony, Banjara Hills and Jubilee
Hills, all of which cater to higher income
groups as well as the upper middle- income
segment. Residential demand in this zone is
primarily driven by government officials,
businessmen, corporate office employees,
BPOs and NRIs, all of whom prefer this area of
Hyderabad due to its good connectivity to
other locations and proximity to shopping
malls, schools, colleges, hospitals and other
facilities. The total estimated supply which
will enter this zone by the end of 2011 is
approximately 2,100 units, which equates to
approximately 2.5 mn.sq.ft. Of this, 18% will
enter the market by the end of 2009, with
10% expected in 2010 and the majority 72%
expected in 2011.
Q3 2009
residentialmarket
KnightFrank.comReview
3938
The fact that the bulk of supply in this zone
will crop up in 2011 reflects the slump the
realty sector has experienced over the past
year or so. The upcoming supply will be
evenly distributed between 2 and 3-BHK
units. A few notable upcoming premium
projects in this zone are RRS Towers at
Raj Bhawan Road, expected to be ready by
the end of 2009, and Janapriya Metropolis,
priced between Rs.2-3 million and expected
to be available in 2011.
The increasing traffic congestion in
Hyderabad has led to identification of three
high density corridors for construction of a
mass rapid transit system. The first corridor,
approximately 30 km. long and covering
27 stations, will stretch from Miyapur to
LB Nagar. The second corridor, approximately
15 km. in length, will stretch from
Secunderabad to Falaknuma and will cover 16
stations. The third corridor, approximately 27
km. in length and including 23 stations, will
stretch from Nagole to Shilparamam. The
proposed metro will comprise areas like
Erragadda, Sanjeevareddy Nagar, Punjagutta,
Assembly, Secretariat, Gandhi Bhavan,
Osmania Medical College, Malakpet,
Dilsukhnagar, Chikkadpalli and Ramnagar.
The western zone comprises locations like
Kukatpally, Madhapur, Miyapur,
Nanakramguda, Ameenpur, Gopannapalli,
Nallagandla, Gachibowli, Hitech City,
Kothaguda, Kondapur and Shankarpally. The
total estimated supply entering this zone by
the end of 2011 will be approximately 32,500
units, which equates to 62 mn.sq.ft. and
renders the western zone the largest
contributor to residential supply in
Hyderabad by the end of 2011. Of this total,
35% will enter the market by the end of 2009,
with another 35% expected in 2010 and the
remaining 30% expected in 2011.
Approximately 50% of the upcoming supply
will be accounted for by 3-BHK units, with
2-BHK units accounting for 20% and 4-BHK
units a further 10%.
Western Zone
EXISTING
1. Banjara Hills
2. Jubilee Hills
3. Srinagar Colony
4. Madhapur
5. Hitech City/Kondapur
6. Kukatpally Housing Board
7. Miyapur
8. Begumpet
9. Maredpally (East/West)
10. Kompally
UPCOMING
1. Medchal
2. Nanakramguda
3. Nallagandha/Tellapur
4. Manikonda
5. LB Nagar
6. Kokapet/Narsingi
7. Shamirpet
8. Uppal
9. Gopanpalli
Hyderabad
1
2
4
7
6
9
10
5
4
5
9
3
8
1
2
3
6
7
8
North western regions like Bachupally,
Nizampet and Pragati Nagar feature
development of villas and row houses,
whereas Gachibowli, Madhapur and parts of
Kukatpally primarily feature high-end
residential apartments. Demand in this
region is end user driven and a majority of the
upcoming supply will cater to people working
for IT firms in and around Hitech City and
Gachibowli. Residential demand in the
western zone is boosted by its proximity to
work places, upcoming retail development
and supporting infrastructure in the form of
connecting railway stations, the National
Highway and the Express Highway that
connects to the airport. Future residential
development in this zone will be boosted by
the ongoing development of the financial
district at Gachibowli. The impact of the realty
slump is reflected by the fact that several
projects which were launched in 2007 and
were supposed to be completed by 2010 are
behind schedule. An example of this is
Maytas Hill County, situated at Bachupally,
which has come to a standstill. Prominent
projects launched in 2009 include
Lodha Belleza, located at Kuktpally,
Botanika, which is situated near Botanical
Gardens in Kondapur, and Celestia, a
residential-cum-commercial project located
near the financial district. The recently
launched Rainbow Vistas, by
Ashoka Developers near Kukatpally, and
Manjeera Diamond, by Manjeera Group near
Tellapur, are examples of the slowly shifting
focus towards affordable housing.
The P V Narsimharao Elevated Expressway,
stretching from Mehdipatnam to Aaramghar,
is one of the biggest infrastructure projects in
Hyderabad. This 11.6 km. expressway, which
has been operational since this past October,
is aimed at improving connectivity between
the city and the international airport. Another
benefit of this development is that traffic at
Mehdipatnam will get de-congested, thus
providing an alternate route to access
Shamshabad airport.
This zone represents the second largest
contributor to Hyderabad's residential
supply, with approximately 6500 units,
equating to approximately 11 mn.sq.ft. of
residential space, expected to enter the
market by the end of 2011. Of this total, 35%
will enter the market by the end of 2009, with
another 30% expected in 2010 and the
remaining 35% expected in 2011.
Approximately 50% of the upcoming supply
will be accounted for by 3-BHK units and 25%
by 2-BHK units. This zone is the second most
preferred residential destination and is
primarily investment driven due to its good
infrastructure facilities and proximity to the
cantonment area. High-rise developments are
not permitted due to the location’s proximity
to Hakimpet airport. Large-scale construction
activity in the north zone is being witnessed
in Kompally, Qutbullapur, Nagpur Highway,
Yapral and Shamirpet. Future demand for
Grade A projects in this zone will be
strengthened by the development of the
biotechnology sector at Shamirpet. The realty
slump has impacted projects like Casa
Estabana and Grand Ville, which although
commenced in 2008 have slowed down due
Northern Zone
to fears pertaining to declining premium
segment demand. Major projects currently
under way in this region include Arcadia and
Gardenia Towers, both expected to be
available in 2011 and Prakruthi Nivas,
expected to be completed imminently.
The eastern zone comprises locations such as
Uppal, Nacharam, Mallapur, Kapra,
Cherlapalle, Pocharam, Kuntloor, Rampally
and Ghatkesar. The total estimated supply
which will enter this zone by the end of 2011
is approximately 6,500 units, equating to 7
mn.sq.ft. of residential space. Of this total, a
meagre 15% will enter the market by the end
of 2009, with another 50% expected in 2010
and the remaining 35% expected in 2011.
Approximately two-thirds of the upcoming
supply by the end of 2011 will be accounted
for by 2-BHK units. This could be indicative of
cautious developers who realize the value of
smaller and more affordable units going
forward. The eastern zone is yet to take off as
a residential location due to its predominant
composition of chemical, pharmaceutical and
biochemical industries, leading to pollution
and unpleasant living conditions. Upcoming
IT/ITES projects like Arena Town Centre could
boost demand in this zone.
Eastern Zone
Indu Fortune Fields, Near Hi-Tech City
Source: Knight Frank Research
Unit-Wise Distribution of Supply 2009-11
Figure 22
1 BHK - 1%
2 BHK - 30%
2 ½ BHK - 3%
3 BHK - 49%
4 BHK - 7%
5 BHK Penthouse - 3%
Villas - 7%
Q3 2009
residentialmarket
KnightFrank.comReview
3938
The fact that the bulk of supply in this zone
will crop up in 2011 reflects the slump the
realty sector has experienced over the past
year or so. The upcoming supply will be
evenly distributed between 2 and 3-BHK
units. A few notable upcoming premium
projects in this zone are RRS Towers at
Raj Bhawan Road, expected to be ready by
the end of 2009, and Janapriya Metropolis,
priced between Rs.2-3 million and expected
to be available in 2011.
The increasing traffic congestion in
Hyderabad has led to identification of three
high density corridors for construction of a
mass rapid transit system. The first corridor,
approximately 30 km. long and covering
27 stations, will stretch from Miyapur to
LB Nagar. The second corridor, approximately
15 km. in length, will stretch from
Secunderabad to Falaknuma and will cover 16
stations. The third corridor, approximately 27
km. in length and including 23 stations, will
stretch from Nagole to Shilparamam. The
proposed metro will comprise areas like
Erragadda, Sanjeevareddy Nagar, Punjagutta,
Assembly, Secretariat, Gandhi Bhavan,
Osmania Medical College, Malakpet,
Dilsukhnagar, Chikkadpalli and Ramnagar.
The western zone comprises locations like
Kukatpally, Madhapur, Miyapur,
Nanakramguda, Ameenpur, Gopannapalli,
Nallagandla, Gachibowli, Hitech City,
Kothaguda, Kondapur and Shankarpally. The
total estimated supply entering this zone by
the end of 2011 will be approximately 32,500
units, which equates to 62 mn.sq.ft. and
renders the western zone the largest
contributor to residential supply in
Hyderabad by the end of 2011. Of this total,
35% will enter the market by the end of 2009,
with another 35% expected in 2010 and the
remaining 30% expected in 2011.
Approximately 50% of the upcoming supply
will be accounted for by 3-BHK units, with
2-BHK units accounting for 20% and 4-BHK
units a further 10%.
Western Zone
EXISTING
1. Banjara Hills
2. Jubilee Hills
3. Srinagar Colony
4. Madhapur
5. Hitech City/Kondapur
6. Kukatpally Housing Board
7. Miyapur
8. Begumpet
9. Maredpally (East/West)
10. Kompally
UPCOMING
1. Medchal
2. Nanakramguda
3. Nallagandha/Tellapur
4. Manikonda
5. LB Nagar
6. Kokapet/Narsingi
7. Shamirpet
8. Uppal
9. Gopanpalli
Hyderabad
1
2
4
7
6
9
10
5
4
5
9
3
8
1
2
3
6
7
8
North western regions like Bachupally,
Nizampet and Pragati Nagar feature
development of villas and row houses,
whereas Gachibowli, Madhapur and parts of
Kukatpally primarily feature high-end
residential apartments. Demand in this
region is end user driven and a majority of the
upcoming supply will cater to people working
for IT firms in and around Hitech City and
Gachibowli. Residential demand in the
western zone is boosted by its proximity to
work places, upcoming retail development
and supporting infrastructure in the form of
connecting railway stations, the National
Highway and the Express Highway that
connects to the airport. Future residential
development in this zone will be boosted by
the ongoing development of the financial
district at Gachibowli. The impact of the realty
slump is reflected by the fact that several
projects which were launched in 2007 and
were supposed to be completed by 2010 are
behind schedule. An example of this is
Maytas Hill County, situated at Bachupally,
which has come to a standstill. Prominent
projects launched in 2009 include
Lodha Belleza, located at Kuktpally,
Botanika, which is situated near Botanical
Gardens in Kondapur, and Celestia, a
residential-cum-commercial project located
near the financial district. The recently
launched Rainbow Vistas, by
Ashoka Developers near Kukatpally, and
Manjeera Diamond, by Manjeera Group near
Tellapur, are examples of the slowly shifting
focus towards affordable housing.
The P V Narsimharao Elevated Expressway,
stretching from Mehdipatnam to Aaramghar,
is one of the biggest infrastructure projects in
Hyderabad. This 11.6 km. expressway, which
has been operational since this past October,
is aimed at improving connectivity between
the city and the international airport. Another
benefit of this development is that traffic at
Mehdipatnam will get de-congested, thus
providing an alternate route to access
Shamshabad airport.
This zone represents the second largest
contributor to Hyderabad's residential
supply, with approximately 6500 units,
equating to approximately 11 mn.sq.ft. of
residential space, expected to enter the
market by the end of 2011. Of this total, 35%
will enter the market by the end of 2009, with
another 30% expected in 2010 and the
remaining 35% expected in 2011.
Approximately 50% of the upcoming supply
will be accounted for by 3-BHK units and 25%
by 2-BHK units. This zone is the second most
preferred residential destination and is
primarily investment driven due to its good
infrastructure facilities and proximity to the
cantonment area. High-rise developments are
not permitted due to the location’s proximity
to Hakimpet airport. Large-scale construction
activity in the north zone is being witnessed
in Kompally, Qutbullapur, Nagpur Highway,
Yapral and Shamirpet. Future demand for
Grade A projects in this zone will be
strengthened by the development of the
biotechnology sector at Shamirpet. The realty
slump has impacted projects like Casa
Estabana and Grand Ville, which although
commenced in 2008 have slowed down due
Northern Zone
to fears pertaining to declining premium
segment demand. Major projects currently
under way in this region include Arcadia and
Gardenia Towers, both expected to be
available in 2011 and Prakruthi Nivas,
expected to be completed imminently.
The eastern zone comprises locations such as
Uppal, Nacharam, Mallapur, Kapra,
Cherlapalle, Pocharam, Kuntloor, Rampally
and Ghatkesar. The total estimated supply
which will enter this zone by the end of 2011
is approximately 6,500 units, equating to 7
mn.sq.ft. of residential space. Of this total, a
meagre 15% will enter the market by the end
of 2009, with another 50% expected in 2010
and the remaining 35% expected in 2011.
Approximately two-thirds of the upcoming
supply by the end of 2011 will be accounted
for by 2-BHK units. This could be indicative of
cautious developers who realize the value of
smaller and more affordable units going
forward. The eastern zone is yet to take off as
a residential location due to its predominant
composition of chemical, pharmaceutical and
biochemical industries, leading to pollution
and unpleasant living conditions. Upcoming
IT/ITES projects like Arena Town Centre could
boost demand in this zone.
Eastern Zone
Indu Fortune Fields, Near Hi-Tech City
Source: Knight Frank Research
Unit-Wise Distribution of Supply 2009-11
Figure 22
1 BHK - 1%
2 BHK - 30%
2 ½ BHK - 3%
3 BHK - 49%
4 BHK - 7%
5 BHK Penthouse - 3%
Villas - 7%
Q3 2009
residentialmarket
KnightFrank.comReview
4140
Some of the major projects underway here are
May Flower Heights at Nacharam,
Nilgiri Homes and Emerald Heights at
Pocharam, Sky City at Indira Nagar and
Arena Town Centre, which is being developed
by NSL Group and is an IT/ITES SEZ with
residential, retail and hospitality
components. Affordable housing is gaining
prominence and the AP government has come
up with a project called Sadbhavana, which
comes under the Rajiv Swagruha Corporation
that caters to the mid-income segment in
Pocharam.
In terms of infrastructure initiatives, Phase II
of the Outer Ring Road, which is under
construction, will improve the traffic situation
and connectivity in the eastern zone.
Phase II B, which will extend from Patancheru
to Pedda Amberpet Junction, is expected to
be grounded in October 2009. The extended
circuit will also connect areas such as
Dundigal, Medchal (towards the north),
Thumkunta (near Shamirpet towards the
north east) and Keesara and Ghatkesar
Junctions (near Pocharam towards the east).
The southern zone encompasses locations
such as Malakpet, Attapur, Upparpally,
Saidabad, Santoshnagar, Rajendranagar and
Shamshabad. The total estimated supply
which will enter this zone by the end of 2011
is approximately 2,500 units, which equates
to 4.2 mn.sq.ft of residential space. Of this
total, 55% will enter the market by the end of
2009, with another 35% expected in 2010 and
Southern Zone
the remaining 10% expected in 2011.
2 and 3-BHK units will account for roughly
60% of this upcoming supply, with the
remainder being accounted for by a decent
share of 4-BHK, 5-BHK and villa units. This
could reflect a positive prognosis for
premium and luxury housing in this particular
zone. With the development of
Shamshabad International Airport and other
developments like SEZs, Hardware Park and
Fab City, this zone has been growing as a
residential location in recent times. Physical
infrastructure development towards the
international airport could further boost
residential demand in this zone. Most of the
projects in this zone are by local developers
and a majority of the development is
characterized by residential layouts and
plots. A couple of notable projects in this
zone are MAK Banyan Tree Retreat and
Sunshine Valley Gated Community.
Phase II A of the Outer Ring Road, which is
expected to be completed by June 2010, is a
noteworthy infrastructure initiative in the
southern zone. The development will stretch
from Shamshabad to Pedda Amberpet
Junction, and will augment access to
Srisailam Highway and
Nagarjunasagar Highway.
In general, capital values across the central
zone declined marginally during the realty
slump, although rates in Banjara Hills
Capital & Rental Profile
Central Zone
declined by an average of 25% from peak
levels observed in Q2 2008. Currently, prices
in Banjara Hills and Jubilee Hills range from
Rs.5,000 to Rs.7,500 per sq.ft. Rental values
in the central zone dropped considerably by
20-25% during the realty slump as consumers
turned cautious and curbed budgets due to
the tough economic climate of the past year.
Average rentals for 2 BHK units in the
central zone currently range from a minimum
of Rs.15,000 per month to as high as
Rs.40,000 per month. Given prevailing
capital values in this zone, these rentals
equate to a rental yield of about 3%.
Western zone locations like Kondapur,
Miyapur and Kukatpally witnessed declining
prices to the tune of 10-20% during the realty
slump. Capital values in the market of
Madhapur have declined by an average of
43% from 2008 peak values. As the western
zone is highly concentrated with IT/ITES
employees, rentals here have declined by an
average of 10-12% on account of job and pay
cuts. Currently, rentals in the western zone for
2 BHK units range from Rs.5,000 per month to
Rs.15,000 per month. The average rental yield
in this zone is about 4%.
Western Zone
Northern Zone
Eastern Zone
Although capital values in the northern zone
declined by an average of 10-20% from 2008
peak levels, the development of
ICICI Knowledge Park, SP Biotech and
premium institutes like BITS Pilani and other
engineering institutes have boosted
residential demand in the region during the
past year. Construction of the elevated
expressway from Paradise to Shamirpet,
which was postponed, will on completion
boost residential demand in the region.
Currently, capital values for apartments and
villas range between Rs.1,499-5,000/sq.ft.
and rentals for 2-BHK units range from
Rs.10,000 to Rs.20,000 per month. Given the
above, the rental yield in the northern zone
equates to approximately 4%.
The eastern zone witnessed a negligible
decline in rental and capital values as it was
not over-exposed to demand from the
flagging IT/ITES sector. Capital values in the
region currently range from
Rs.1,500-3,500/sq.ft. and rental values for
2 BHK units range from Rs.5,000 to Rs.15,000
per month. The rental yield in this zone is
approximately 4%.
Southern Zone
Outlook
The southern zone has seen a marginal
decline in rental and capital values as there is
no existing social infrastructure. Capital
values in this zone range from
Rs.2,200-3,500/sq.ft. and rental values for
2 BHK units range from Rs.5,000 to Rs.15,000
per month. The rental yield in this zone is
approximately 2%.
Residential decline in Hyderabad was
inevitable given the decline over the past
year of the IT/ITES sector, which is a key
demand driver for the city's residential
market. Capital values in major
micro-markets like Banjara Hills, Jubilee Hills,
Madhapur and Gachibowli have declined by
an average of 15-30 % over the past year.
However, declining raw material and land
prices, home loan rate concessions and the
formation of a stable government have
helped stabilise the residential market in
India, Hyderabad included. Going forward,
increasing focus on affordable housing can
be expected. While there is a demand for
housing within the range of Rs.1.5-3.5 million
with unit sizes ranging between
700-1,500 sq.ft., there is a shortfall of
projects that cater to the mid-income
segment.
Developers are now aware of the importance
of the affordability factor and have been
taking measures to reach out to middle and
lower income buyers. Over the past year,
prominent developers have been re-
modelling premium units and launching the
same as affordable units. In addition to this,
several developers have been offering to pay
EMIs on the behalf of buyers until
possession. The promising future for
affordable housing is reflected by the fact
that absorption rates in affordable segment
projects like the Waterfront Project, located at
Shamirpet have been healthy. Key developers
leading the affordable housing initiative
include Janapriya, Modi Builders, Prajay and
Obili. Luxury segment activity has been scant
in recent times and can be expected to
continue in this vein as needs of the middle
income consumer assume increasing focus.
Over the next couple of quarters, residential
prices around Hyderabad can be expected to
remain stable if not slightly increase. In
addition to this, the onset of the festive
season is expected to witness significant
residential investment from locals as well as
NRIs. Over the course of the next couple of
years, prices in western zone locations like
Kukatpally, Madhapur, Miyapur, and
Gachibowli could remain stagnant due to the
large quantum of 32,500 units of supply
expected to crop up around the western zone
until the end of 2011.
Project Status Remarks
Outer Ring Road Phase I- Remaining 4 Phase I from Gachibowli to Shamshabad will increase connectivity
Phase I & Phase II lanes to be completed by to residential locations such as Narsingi and APPA Junction
May 2010
Phase II A to be Phase II A will stretch from Narsingi to Patancheru &
completed by June 2010 Shamshabad to Pedda Amberpet
Phase II B expected to be
grounded in October 2009
P. V. Narsimharao Operational 11.6 Kms expressway aimed at augmenting connectivity between the city and
Elevated Expressway international airport. Traffic at Mehdipatnam has been de-congested, improving
from Mehdipatnam connectivity within the inner city and providing an alternate route to access
to Aaramghar Shamshabad Airport
Metro Rail Project Tendering process ongoing Mass rapid transit system to cover three high density corridors and will
Project expected to commence augment access to established residential markets like Erragadda, Sanjeevareddy
in the 2nd quarter of 2010 Nagar, Punjagutta, Malakpet, Dilsukhnagar, Chikkadpalli and Ramnagar
Table 10
Hyderabad Major Infrastructure Developments
Source: Knight Frank Research
Source: Knight Frank ResearchR
s./m
on
th
0
40000
Jub
ile
e H
ills
25000
Figure 23
Residential Rental Values (2 BHK)
35000
30000
20000
15000
Ba
nja
ra H
ills
Sri
na
ga
r C
olo
ny
Be
gu
mp
et
Se
cun
dra
ba
d
Ma
dh
ap
ur
Ga
chib
ow
li
Ku
ka
tpa
lly
Miv
ap
ur
Up
pa
l
Minimum Maximum
10000
5000
Hyderabad Peak to Trough to Sep'09
Trough Change Sep'09 Change (Rs./sq.ft.)
Banjara Hills -24% 17% 6,000
Jubilee Hills -8% 0% 6,000
Srinagar Colony -14% 0% 4,500
Begumpet -23% 0% 3,750
Secundrabad -19% 8% 3,500
Madhapur -43% 0% 3,150
Gachibowli -39% 0% 2,900
Table 9
Average Residential Capital Value Trend
Source: Knight Frank Research
Q3 2009
residentialmarket
KnightFrank.comReview
4140
Some of the major projects underway here are
May Flower Heights at Nacharam,
Nilgiri Homes and Emerald Heights at
Pocharam, Sky City at Indira Nagar and
Arena Town Centre, which is being developed
by NSL Group and is an IT/ITES SEZ with
residential, retail and hospitality
components. Affordable housing is gaining
prominence and the AP government has come
up with a project called Sadbhavana, which
comes under the Rajiv Swagruha Corporation
that caters to the mid-income segment in
Pocharam.
In terms of infrastructure initiatives, Phase II
of the Outer Ring Road, which is under
construction, will improve the traffic situation
and connectivity in the eastern zone.
Phase II B, which will extend from Patancheru
to Pedda Amberpet Junction, is expected to
be grounded in October 2009. The extended
circuit will also connect areas such as
Dundigal, Medchal (towards the north),
Thumkunta (near Shamirpet towards the
north east) and Keesara and Ghatkesar
Junctions (near Pocharam towards the east).
The southern zone encompasses locations
such as Malakpet, Attapur, Upparpally,
Saidabad, Santoshnagar, Rajendranagar and
Shamshabad. The total estimated supply
which will enter this zone by the end of 2011
is approximately 2,500 units, which equates
to 4.2 mn.sq.ft of residential space. Of this
total, 55% will enter the market by the end of
2009, with another 35% expected in 2010 and
Southern Zone
the remaining 10% expected in 2011.
2 and 3-BHK units will account for roughly
60% of this upcoming supply, with the
remainder being accounted for by a decent
share of 4-BHK, 5-BHK and villa units. This
could reflect a positive prognosis for
premium and luxury housing in this particular
zone. With the development of
Shamshabad International Airport and other
developments like SEZs, Hardware Park and
Fab City, this zone has been growing as a
residential location in recent times. Physical
infrastructure development towards the
international airport could further boost
residential demand in this zone. Most of the
projects in this zone are by local developers
and a majority of the development is
characterized by residential layouts and
plots. A couple of notable projects in this
zone are MAK Banyan Tree Retreat and
Sunshine Valley Gated Community.
Phase II A of the Outer Ring Road, which is
expected to be completed by June 2010, is a
noteworthy infrastructure initiative in the
southern zone. The development will stretch
from Shamshabad to Pedda Amberpet
Junction, and will augment access to
Srisailam Highway and
Nagarjunasagar Highway.
In general, capital values across the central
zone declined marginally during the realty
slump, although rates in Banjara Hills
Capital & Rental Profile
Central Zone
declined by an average of 25% from peak
levels observed in Q2 2008. Currently, prices
in Banjara Hills and Jubilee Hills range from
Rs.5,000 to Rs.7,500 per sq.ft. Rental values
in the central zone dropped considerably by
20-25% during the realty slump as consumers
turned cautious and curbed budgets due to
the tough economic climate of the past year.
Average rentals for 2 BHK units in the
central zone currently range from a minimum
of Rs.15,000 per month to as high as
Rs.40,000 per month. Given prevailing
capital values in this zone, these rentals
equate to a rental yield of about 3%.
Western zone locations like Kondapur,
Miyapur and Kukatpally witnessed declining
prices to the tune of 10-20% during the realty
slump. Capital values in the market of
Madhapur have declined by an average of
43% from 2008 peak values. As the western
zone is highly concentrated with IT/ITES
employees, rentals here have declined by an
average of 10-12% on account of job and pay
cuts. Currently, rentals in the western zone for
2 BHK units range from Rs.5,000 per month to
Rs.15,000 per month. The average rental yield
in this zone is about 4%.
Western Zone
Northern Zone
Eastern Zone
Although capital values in the northern zone
declined by an average of 10-20% from 2008
peak levels, the development of
ICICI Knowledge Park, SP Biotech and
premium institutes like BITS Pilani and other
engineering institutes have boosted
residential demand in the region during the
past year. Construction of the elevated
expressway from Paradise to Shamirpet,
which was postponed, will on completion
boost residential demand in the region.
Currently, capital values for apartments and
villas range between Rs.1,499-5,000/sq.ft.
and rentals for 2-BHK units range from
Rs.10,000 to Rs.20,000 per month. Given the
above, the rental yield in the northern zone
equates to approximately 4%.
The eastern zone witnessed a negligible
decline in rental and capital values as it was
not over-exposed to demand from the
flagging IT/ITES sector. Capital values in the
region currently range from
Rs.1,500-3,500/sq.ft. and rental values for
2 BHK units range from Rs.5,000 to Rs.15,000
per month. The rental yield in this zone is
approximately 4%.
Southern Zone
Outlook
The southern zone has seen a marginal
decline in rental and capital values as there is
no existing social infrastructure. Capital
values in this zone range from
Rs.2,200-3,500/sq.ft. and rental values for
2 BHK units range from Rs.5,000 to Rs.15,000
per month. The rental yield in this zone is
approximately 2%.
Residential decline in Hyderabad was
inevitable given the decline over the past
year of the IT/ITES sector, which is a key
demand driver for the city's residential
market. Capital values in major
micro-markets like Banjara Hills, Jubilee Hills,
Madhapur and Gachibowli have declined by
an average of 15-30 % over the past year.
However, declining raw material and land
prices, home loan rate concessions and the
formation of a stable government have
helped stabilise the residential market in
India, Hyderabad included. Going forward,
increasing focus on affordable housing can
be expected. While there is a demand for
housing within the range of Rs.1.5-3.5 million
with unit sizes ranging between
700-1,500 sq.ft., there is a shortfall of
projects that cater to the mid-income
segment.
Developers are now aware of the importance
of the affordability factor and have been
taking measures to reach out to middle and
lower income buyers. Over the past year,
prominent developers have been re-
modelling premium units and launching the
same as affordable units. In addition to this,
several developers have been offering to pay
EMIs on the behalf of buyers until
possession. The promising future for
affordable housing is reflected by the fact
that absorption rates in affordable segment
projects like the Waterfront Project, located at
Shamirpet have been healthy. Key developers
leading the affordable housing initiative
include Janapriya, Modi Builders, Prajay and
Obili. Luxury segment activity has been scant
in recent times and can be expected to
continue in this vein as needs of the middle
income consumer assume increasing focus.
Over the next couple of quarters, residential
prices around Hyderabad can be expected to
remain stable if not slightly increase. In
addition to this, the onset of the festive
season is expected to witness significant
residential investment from locals as well as
NRIs. Over the course of the next couple of
years, prices in western zone locations like
Kukatpally, Madhapur, Miyapur, and
Gachibowli could remain stagnant due to the
large quantum of 32,500 units of supply
expected to crop up around the western zone
until the end of 2011.
Project Status Remarks
Outer Ring Road Phase I- Remaining 4 Phase I from Gachibowli to Shamshabad will increase connectivity
Phase I & Phase II lanes to be completed by to residential locations such as Narsingi and APPA Junction
May 2010
Phase II A to be Phase II A will stretch from Narsingi to Patancheru &
completed by June 2010 Shamshabad to Pedda Amberpet
Phase II B expected to be
grounded in October 2009
P. V. Narsimharao Operational 11.6 Kms expressway aimed at augmenting connectivity between the city and
Elevated Expressway international airport. Traffic at Mehdipatnam has been de-congested, improving
from Mehdipatnam connectivity within the inner city and providing an alternate route to access
to Aaramghar Shamshabad Airport
Metro Rail Project Tendering process ongoing Mass rapid transit system to cover three high density corridors and will
Project expected to commence augment access to established residential markets like Erragadda, Sanjeevareddy
in the 2nd quarter of 2010 Nagar, Punjagutta, Malakpet, Dilsukhnagar, Chikkadpalli and Ramnagar
Table 10
Hyderabad Major Infrastructure Developments
Source: Knight Frank Research
Source: Knight Frank Research
Rs.
/mo
nth
0
40000
Jub
ile
e H
ills
25000
Figure 23
Residential Rental Values (2 BHK)
35000
30000
20000
15000
Ba
nja
ra H
ills
Sri
na
ga
r C
olo
ny
Be
gu
mp
et
Se
cun
dra
ba
d
Ma
dh
ap
ur
Ga
chib
ow
li
Ku
ka
tpa
lly
Miv
ap
ur
Up
pa
l
Minimum Maximum
10000
5000
Hyderabad Peak to Trough to Sep'09
Trough Change Sep'09 Change (Rs./sq.ft.)
Banjara Hills -24% 17% 6,000
Jubilee Hills -8% 0% 6,000
Srinagar Colony -14% 0% 4,500
Begumpet -23% 0% 3,750
Secundrabad -19% 8% 3,500
Madhapur -43% 0% 3,150
Gachibowli -39% 0% 2,900
Table 9
Average Residential Capital Value Trend
Source: Knight Frank Research
Q3 2009
residentialmarket
KnightFrank.comReview
Chennai
Market Review
The residential real estate market of Chennai
had shown a steady rise between 2005 and
mid 2008. This market was predominantly
driven by a strong potential for growth in
real estate. Factors which influenced its
growth were perceived demand for premium
housing units and growth of the IT/ITES
sector in the city. The Chennai Metropolitan
Development Authority (CMDA) on its part
encouraged real estate development by
promoting Rajiv Gandhi Salai as a prominent
IT destination and Sriperumbudur as an
electronic and manufacturing hub. This
resulted in increased residential
development towards the south and west of
the city with locations like GST Road and Rajiv
Gandhi Salai, Ponamallee High Road gaining
prominence. Prominent infrastructure
development work like commencement of the
Outer Ring Road which would connect
prominent locations in the western and
southern parts of the city, completion of the
flyover at Kathipara Junction and
development of road connectivity to locations
along the GST Road have increased the
spread of residential development in the city.
catchments namely CBD, Chennai North,
Chennai South, and Chennai West. The CBD
represents the most prominent residential
locations in the city which include the old
well established residential pockets of
From mid 2008, the effects of the global
economic slowdown had a direct impact on
the growth of residential development in the
city. The slowdown in the manufacturing and
IT/ITES sectors led to an unprecedented
uncertainty among the working class. This
dampened the demand for premium housing
and consumers started postponing house
purchase decisions. Most residential
projects, which were under development, had
either been deferred or stalled. A perceptible
shift of focus from premium housing to
affordable housing projects was observed,
primarily to tap the housing demand from
the middle income segment. Towards the end
of 2008, Government took several measures
to boost the demand in the economy. Private
and nationalised banks have reduced their
interest rates on home loans and most of the
developers in the city are ready to accept
payments from home buyers after the
structure has been constructed. But these
measures are yet to create a strong impact on
increasing residential sales.
The residential sector in Chennai is currently
recovering from a price correction of close to
20% over the past year. There have been
limited new residential developments in the
city and most of the upcoming supply would
be a result of the spill-over from earlier
developments. Capital values in most
residential micro-markets are stabilizing.
Knight Frank Research estimates that the city
will have a residential supply of about 33,000
residential units amounting to approximately
45 mn.sq.ft. by 2011. About 68% of these
upcoming housing units will come up in the
southern zone. Of the total supply, the share
of 3 BHK apartments will be 55%. The CBD or
the Central Business District continues to
cater to the high income segment whereas
the middle income segment would prefer the
suburban and peripheral locations as they
are more economical.
Chennai can be geographically divided into
four zones based on its residential
Current Scenario
Chennai. This zone is saturated with little
room for development. The prime demand for
this zone comes from the high income
segment. Chennai North is in a nascent stage
of residential development and is expected to
contribute significantly once the focused
residential development activity commences
in locations within this zone. Chennai West
and Chennai South consist of locations which
are rapidly developing in terms of residential
space. The presence of both office and retail
space has attracted the residential
development, which is predominantly
occupied by end users. In addition to the well
placed social infrastructure like schools and
hospitals, these zones have a good
connectivity.
The CBD predominantly comprises the
eastern parts of the city. Residential markets
in eastern Chennai include Nungambakkam
Thyagaraya Nagar (T-Nagar), Mylapore,
R. A. Puram and Alwarpet. Paucity of land has
resulted in limited development of new
Central Business District (CBD)
residential projects in this zone. Most of the
emerging supply is in the form of
redevelopment projects either by remodelling
or redeveloping existing residential units into
apartments with contemporary features. Most
of these apartments have limited number of
units due to development constraints. These
units predominantly cater to the high income
segments. During 2009-11, the new
residential supply in this zone is expected to
be a little over 300 units translating to
approximately 0.6 mn.sq.ft., which reflects
the level of saturation. Prominent developers
like Appaswamy Real Estate, Lancor Holdings
and Vijayshanthi Builders are developing
high-end projects in the CBD.
The prominent projects are West Hills in
Saidapet, Coral in T-Nagar and Pebble in
Numgambakkam. Chaitanya Developers is
coming up with two projects on Boat Club
Road namely Satyanarayana Avenue and
ABM Avenue. Most of these projects are
expected to be completed within two years
from now.
the city will
witness a
supply of
about 33,000
residential
units,
amounting to
approximately
45 mn.sq.ft. of
residential
supply, by the
end of 2011
4342
UPCOMING
1. Ambattur
2. Porur
3. Vandalur
4. Sriperumbudur
5. Thiruvanmiur
6. Velachery
7. Perungudi
8. Pallavaram
9. Tambaram
10. Karapakkam
EXISTING
1. Thyagaraja Nagar
2. Mylapore
3. Royapettah
4. Chetpet
5. Adyar
6. Vadapalani
7. Nandanam
8. Besant Nagar
Chennai
1
12
3
4
5
67
8
9
10
2
3
4
5
6
7
8
Distribution of Supply 2009-11
(in No. of units)
Figure 24
Source: Knight Frank Research
CBD - 1%
North - 6%
South - 68%
West - 25%
0
35000
20
09
20
10
20
11
15000
10000
5000
Source: Knight Frank Research
Figure 25
Estimated Supply 2009-11
30000
25000
20000
Supply Cumulative Supply
Year
No
. o
f re
sid
en
tia
l un
its
8567 7995
1618016562
32742
Q3 2009
residentialmarket
KnightFrank.comReview
Chennai
Market Review
The residential real estate market of Chennai
had shown a steady rise between 2005 and
mid 2008. This market was predominantly
driven by a strong potential for growth in
real estate. Factors which influenced its
growth were perceived demand for premium
housing units and growth of the IT/ITES
sector in the city. The Chennai Metropolitan
Development Authority (CMDA) on its part
encouraged real estate development by
promoting Rajiv Gandhi Salai as a prominent
IT destination and Sriperumbudur as an
electronic and manufacturing hub. This
resulted in increased residential
development towards the south and west of
the city with locations like GST Road and Rajiv
Gandhi Salai, Ponamallee High Road gaining
prominence. Prominent infrastructure
development work like commencement of the
Outer Ring Road which would connect
prominent locations in the western and
southern parts of the city, completion of the
flyover at Kathipara Junction and
development of road connectivity to locations
along the GST Road have increased the
spread of residential development in the city.
catchments namely CBD, Chennai North,
Chennai South, and Chennai West. The CBD
represents the most prominent residential
locations in the city which include the old
well established residential pockets of
From mid 2008, the effects of the global
economic slowdown had a direct impact on
the growth of residential development in the
city. The slowdown in the manufacturing and
IT/ITES sectors led to an unprecedented
uncertainty among the working class. This
dampened the demand for premium housing
and consumers started postponing house
purchase decisions. Most residential
projects, which were under development, had
either been deferred or stalled. A perceptible
shift of focus from premium housing to
affordable housing projects was observed,
primarily to tap the housing demand from
the middle income segment. Towards the end
of 2008, Government took several measures
to boost the demand in the economy. Private
and nationalised banks have reduced their
interest rates on home loans and most of the
developers in the city are ready to accept
payments from home buyers after the
structure has been constructed. But these
measures are yet to create a strong impact on
increasing residential sales.
The residential sector in Chennai is currently
recovering from a price correction of close to
20% over the past year. There have been
limited new residential developments in the
city and most of the upcoming supply would
be a result of the spill-over from earlier
developments. Capital values in most
residential micro-markets are stabilizing.
Knight Frank Research estimates that the city
will have a residential supply of about 33,000
residential units amounting to approximately
45 mn.sq.ft. by 2011. About 68% of these
upcoming housing units will come up in the
southern zone. Of the total supply, the share
of 3 BHK apartments will be 55%. The CBD or
the Central Business District continues to
cater to the high income segment whereas
the middle income segment would prefer the
suburban and peripheral locations as they
are more economical.
Chennai can be geographically divided into
four zones based on its residential
Current Scenario
Chennai. This zone is saturated with little
room for development. The prime demand for
this zone comes from the high income
segment. Chennai North is in a nascent stage
of residential development and is expected to
contribute significantly once the focused
residential development activity commences
in locations within this zone. Chennai West
and Chennai South consist of locations which
are rapidly developing in terms of residential
space. The presence of both office and retail
space has attracted the residential
development, which is predominantly
occupied by end users. In addition to the well
placed social infrastructure like schools and
hospitals, these zones have a good
connectivity.
The CBD predominantly comprises the
eastern parts of the city. Residential markets
in eastern Chennai include Nungambakkam
Thyagaraya Nagar (T-Nagar), Mylapore,
R. A. Puram and Alwarpet. Paucity of land has
resulted in limited development of new
Central Business District (CBD)
residential projects in this zone. Most of the
emerging supply is in the form of
redevelopment projects either by remodelling
or redeveloping existing residential units into
apartments with contemporary features. Most
of these apartments have limited number of
units due to development constraints. These
units predominantly cater to the high income
segments. During 2009-11, the new
residential supply in this zone is expected to
be a little over 300 units translating to
approximately 0.6 mn.sq.ft., which reflects
the level of saturation. Prominent developers
like Appaswamy Real Estate, Lancor Holdings
and Vijayshanthi Builders are developing
high-end projects in the CBD.
The prominent projects are West Hills in
Saidapet, Coral in T-Nagar and Pebble in
Numgambakkam. Chaitanya Developers is
coming up with two projects on Boat Club
Road namely Satyanarayana Avenue and
ABM Avenue. Most of these projects are
expected to be completed within two years
from now.
the city will
witness a
supply of
about 33,000
residential
units,
amounting to
approximately
45 mn.sq.ft. of
residential
supply, by the
end of 2011
4342
UPCOMING
1. Ambattur
2. Porur
3. Vandalur
4. Sriperumbudur
5. Thiruvanmiur
6. Velachery
7. Perungudi
8. Pallavaram
9. Tambaram
10. Karapakkam
EXISTING
1. Thyagaraja Nagar
2. Mylapore
3. Royapettah
4. Chetpet
5. Adyar
6. Vadapalani
7. Nandanam
8. Besant Nagar
Chennai
1
12
3
4
5
67
8
9
10
2
3
4
5
6
7
8
Distribution of Supply 2009-11
(in No. of units)
Figure 24
Source: Knight Frank Research
CBD - 1%
North - 6%
South - 68%
West - 25%
0
35000
20
09
20
10
20
11
15000
10000
5000
Source: Knight Frank Research
Figure 25
Estimated Supply 2009-11
30000
25000
20000
Supply Cumulative Supply
Year
No
. o
f re
sid
en
tia
l un
its
8567 7995
1618016562
32742
Q3 2009
residentialmarket
KnightFrank.comReview
Chennai North
The residential market in Chennai North
consists of locations like Tondiarpet, Padi,
Ayanavaram, Purusawakam, Madhavaram,
Red-Hills and Ennore. The residential market
in the northern part of Chennai is relatively
under-developed as compared to other parts
of the city. This belt has predominantly been
home to small-scale industries like textiles
and chemicals. A majority of the people
residing in these areas are from the lower
income group and this is reflected in the
housing development pattern with the dearth
of Grade A developments in this zone. The
lack of proper social infrastructure like
schools, health care facilities, entertainment
avenues, is the prime cause of the relative
underdevelopment. Water supply continues
to be a problem in these locations while
power supply is sporadic, the road
connectivity is good but accessibility of
interior locations is a problem. Prominent
projects in this location include Lumbini
Square by True Value Homes in
Purusawakam, Orchid Springs by Alliance
Infrastructure at Padi and Esplanade by
Emaar MGF at Tondiarpet.
This region is expected to come up with a
supply of approximately 2,100 housing units
constituting 3 mn.sq.ft. by 2011. The
residential demand is currently driven by the
low income segment.
Anna Nagar, Porur, Moggapair,
Sriperumbudur and locations on Mount
Poonamallee Road constitute the prime
residential locations towards Chennai West.
The western zone consists of locations that
are amongst the upcoming areas in Chennai.
The saturation of land banks in the CBD has
seen the movement of residential
development towards the west due to its
proximity to important roadways like NH-4, its
inherently strong residential catchment,
presence of schools health care facilities,
restaurants and educational centres, major
electronic and manufacturing industries in
this zone. The western zone is expected to
add about 8,100 housing units constituting
12 mn. sq.ft. to the existing residential supply
by 2011. The setting up of the electronic
hardware corridor at Sriperumbadur by the
government has resulted in increasing
interest in residential development in this
zone. Multinationals like Hyundai, Nokia, Dell
and Samsung have set up their units in these
locations and this is expected to further
contribute to the increase in demand for
residential space. This zone is primarily
expected to cater to demand coming from the
manufacturing sector. Prominent residential
projects expected to be available within the
next two years include Metrozone by The
Ozone Group, Shyamala by Ceebros, Sky City
by Dugar Housing and Infinity by Vijayshanti
Builders.
Major developments that are expected to
come up in this zone include the
development of the satellite town along the
Poonamallee High Road. This satellite town to
be developed by the Tamil Nadu Housing
Board (TNHB) would have the requisite
physical and social infrastructure. Similarly,
the six lane ORR project connecting Vandalur
Chennai West
(NH-45) to Tiruvottiyur Ponneri Panjetty (TPP)
will improve the connectivity of this micro-
market with the southern zone of the city.
Sriperumbudur will also benefit from the
proposed airport development towards the
NH-4.
In Chennai South, the prime residential space
spreads across Adayar, Besant Nagar,
Velachery, locations off Rajiv Gandhi Salai
like Sozhlinganallur, Kelambakkam, Padur,
Seruseri, and locations across GST Road like
Tambaram, Pallikarnai, Vandalur and
Maraimalai Nagar.
Chennai South
prominent residential locations in the CBD
vary from Rs.6,500-17,000/sq.ft. The
prominent markets like Poes Garden and
T-Nagar, which do not have scope for
significant new supply, remained resilient to
the real estate slump. Hence, the price
correction from 2008 peak remained at a
maximum of 5% in these locations. These
markets also witnessed a smart recovery in
prices as the economic environment
improved, witnessing an up move in prices by
about 10% between March'09 and
September'09. In Chennai South the capital
values remained lower than other
micro-markets due to a large supply of
residential units. Locations across Rajiv
Gandhi Salai and GST Road have been
witnessing capital rates which vary from
approximately Rs.2,500 -3,500/sq.ft. Chennai
West, which represents emerging residential
pockets, is witnessing capital values in the
range of Rs.7,000-8,500/sq.ft. in Anna Nagar
and Rs.2,000-3,000/sq.ft. in locations further
west like Sriperumbudur. This variance in
rates can be attributed to differential
development across locations in the west.
Chennai North has a dearth of proper
residential development with just a couple of
prominent projects which are slated to be
ready over the next two years. The capital
values in the north zone range between
Rs.1,500-2,000/sq.ft. in locations like
Madhavaram and Red Hills. Purusawakam
and Tondiarpet are the two micro-markets in
the north zone with a couple of premium
upcoming residential projects and capital
values varying between Rs.3,000-5,700/sq.ft.
While the rental markets in the high end
segment continued to decline since
mid-2008, the mid end rental markets
remained stable. It can be primarily attributed
to households seeking economical dwelling
units due to the slump in the market, causing
a demand side pressure. Since mid-2008 the
rentals have dropped by about 15% for the
high end segment and approximately 5% in
the mid end segment.
The rental values in prime suburban locations
like Adayar, Besant Nagar, Mylapore range
from Rs.60,000-150,000 for a 2-BHK
apartment.
This zone represents locations which are
viewed amongst the prime upcoming
residential destinations in the city. The
development of the IT corridor along Rajiv
Gandhi Salai and concessions given by the
government in promoting this industry have
indirectly led to the growth of residential
markets in locations around this micro-
market. The availability of land and
development of both social and physical
infrastructure like the four lane expressway,
MRTS system, hotels like Asiana and Fortune,
educational institutes like Sathyabama
College, hospitals like Lifeline over the past
couple of years have accelerated the growth
of residential space in this zone. With 68%
share of the total residential unit supply, this
micro-market accounts for the largest
contribution to housing supply in the city.
About 22,000 residential units translating to
approximately 30 mn.sq.ft. of housing space
is expected to come up in this zone by 2011.
A majority of this supply will hit the market in
2011. Prominent projects in the zone include
Estancia by Arun Excello, Mantri Synergy by
Mantri Developers, Upscale by Hiranandani,
Swanlake by Puruvankara, Pushpadhruma by
Marg Developers and the upcoming
residential project by L&T. Most of these
projects have been under development over
the past one year and the delay in their
execution is reflective of the low market
sentiment.
The economic slowdown has resulted in lower
capital and rental values for the residential
sector. The residential capital values across
Chennai, which witnessed a correction in the
range of 5-20% from peak until
September '09 are currently stabilizing.
Central locations like Guindy that corrected
by 19% and Vadapalani that corrected by
20% from peak until September'09 were
amongst the locations that witnessed the
major brunt of the slump. The capital values
in these locations range between
Rs.3,200-5,100/sq.ft. The capital values of
Capital & Rental Profile
Majorly
affected
markets
include
Central
locations like
Guindy, where
prices have
corrected by
19% from peak
levels, and
Vadapalani,
where prices
have
corrected by
20% from peak
levels
4544
Minimum Maximum
Source: Knight Frank Research
Figure 27
Residential Rental Values (2 BHK)
Rs.
/mo
nth
0
160000
Ad
aya
r
100000
20000
140000
120000
80000
60000
40000
R A
Pu
ram
Sa
nto
me
Alw
arp
et
Ve
lach
ery
Mo
gg
ap
ir
Ch
ole
me
du
Pa
llik
arn
al
Unit-Wise Distribution of Supply 2009-11
Figure 26
Source: Knight Frank Research
1 BHK - 6%
2 BHK - 32%
2 ½ BHK - 2%
3 BHK - 55%
3 ½ BHK - 0%
4 BHK - 2%
5 BHK/Penthouses/Villa - 3%
Chennai Peak to Trough to Sep'09
Trough Change Sep'09 Change (Rs./sq.ft.)
Egmore/Kilpauk -5% 7% 5,600
Boat Club 0% 0% 16,000
Poes Garden -7% 4% 14,250
T Nagar -2% 11% 7,750
R A Puram -3% 6% 9,000
Ashok Nagar -2% 9% 6,000
Guindy -19% 14% 4,150
Vadapalani -20% 0% 3,600
Table 11
Average Residential Capital Value Trend
Source: Knight Frank Research
Q3 2009
residentialmarket
KnightFrank.comReview
Chennai North
The residential market in Chennai North
consists of locations like Tondiarpet, Padi,
Ayanavaram, Purusawakam, Madhavaram,
Red-Hills and Ennore. The residential market
in the northern part of Chennai is relatively
under-developed as compared to other parts
of the city. This belt has predominantly been
home to small-scale industries like textiles
and chemicals. A majority of the people
residing in these areas are from the lower
income group and this is reflected in the
housing development pattern with the dearth
of Grade A developments in this zone. The
lack of proper social infrastructure like
schools, health care facilities, entertainment
avenues, is the prime cause of the relative
underdevelopment. Water supply continues
to be a problem in these locations while
power supply is sporadic, the road
connectivity is good but accessibility of
interior locations is a problem. Prominent
projects in this location include Lumbini
Square by True Value Homes in
Purusawakam, Orchid Springs by Alliance
Infrastructure at Padi and Esplanade by
Emaar MGF at Tondiarpet.
This region is expected to come up with a
supply of approximately 2,100 housing units
constituting 3 mn.sq.ft. by 2011. The
residential demand is currently driven by the
low income segment.
Anna Nagar, Porur, Moggapair,
Sriperumbudur and locations on Mount
Poonamallee Road constitute the prime
residential locations towards Chennai West.
The western zone consists of locations that
are amongst the upcoming areas in Chennai.
The saturation of land banks in the CBD has
seen the movement of residential
development towards the west due to its
proximity to important roadways like NH-4, its
inherently strong residential catchment,
presence of schools health care facilities,
restaurants and educational centres, major
electronic and manufacturing industries in
this zone. The western zone is expected to
add about 8,100 housing units constituting
12 mn. sq.ft. to the existing residential supply
by 2011. The setting up of the electronic
hardware corridor at Sriperumbadur by the
government has resulted in increasing
interest in residential development in this
zone. Multinationals like Hyundai, Nokia, Dell
and Samsung have set up their units in these
locations and this is expected to further
contribute to the increase in demand for
residential space. This zone is primarily
expected to cater to demand coming from the
manufacturing sector. Prominent residential
projects expected to be available within the
next two years include Metrozone by The
Ozone Group, Shyamala by Ceebros, Sky City
by Dugar Housing and Infinity by Vijayshanti
Builders.
Major developments that are expected to
come up in this zone include the
development of the satellite town along the
Poonamallee High Road. This satellite town to
be developed by the Tamil Nadu Housing
Board (TNHB) would have the requisite
physical and social infrastructure. Similarly,
the six lane ORR project connecting Vandalur
Chennai West
(NH-45) to Tiruvottiyur Ponneri Panjetty (TPP)
will improve the connectivity of this micro-
market with the southern zone of the city.
Sriperumbudur will also benefit from the
proposed airport development towards the
NH-4.
In Chennai South, the prime residential space
spreads across Adayar, Besant Nagar,
Velachery, locations off Rajiv Gandhi Salai
like Sozhlinganallur, Kelambakkam, Padur,
Seruseri, and locations across GST Road like
Tambaram, Pallikarnai, Vandalur and
Maraimalai Nagar.
Chennai South
prominent residential locations in the CBD
vary from Rs.6,500-17,000/sq.ft. The
prominent markets like Poes Garden and
T-Nagar, which do not have scope for
significant new supply, remained resilient to
the real estate slump. Hence, the price
correction from 2008 peak remained at a
maximum of 5% in these locations. These
markets also witnessed a smart recovery in
prices as the economic environment
improved, witnessing an up move in prices by
about 10% between March'09 and
September'09. In Chennai South the capital
values remained lower than other
micro-markets due to a large supply of
residential units. Locations across Rajiv
Gandhi Salai and GST Road have been
witnessing capital rates which vary from
approximately Rs.2,500 -3,500/sq.ft. Chennai
West, which represents emerging residential
pockets, is witnessing capital values in the
range of Rs.7,000-8,500/sq.ft. in Anna Nagar
and Rs.2,000-3,000/sq.ft. in locations further
west like Sriperumbudur. This variance in
rates can be attributed to differential
development across locations in the west.
Chennai North has a dearth of proper
residential development with just a couple of
prominent projects which are slated to be
ready over the next two years. The capital
values in the north zone range between
Rs.1,500-2,000/sq.ft. in locations like
Madhavaram and Red Hills. Purusawakam
and Tondiarpet are the two micro-markets in
the north zone with a couple of premium
upcoming residential projects and capital
values varying between Rs.3,000-5,700/sq.ft.
While the rental markets in the high end
segment continued to decline since
mid-2008, the mid end rental markets
remained stable. It can be primarily attributed
to households seeking economical dwelling
units due to the slump in the market, causing
a demand side pressure. Since mid-2008 the
rentals have dropped by about 15% for the
high end segment and approximately 5% in
the mid end segment.
The rental values in prime suburban locations
like Adayar, Besant Nagar, Mylapore range
from Rs.60,000-150,000 for a 2-BHK
apartment.
This zone represents locations which are
viewed amongst the prime upcoming
residential destinations in the city. The
development of the IT corridor along Rajiv
Gandhi Salai and concessions given by the
government in promoting this industry have
indirectly led to the growth of residential
markets in locations around this micro-
market. The availability of land and
development of both social and physical
infrastructure like the four lane expressway,
MRTS system, hotels like Asiana and Fortune,
educational institutes like Sathyabama
College, hospitals like Lifeline over the past
couple of years have accelerated the growth
of residential space in this zone. With 68%
share of the total residential unit supply, this
micro-market accounts for the largest
contribution to housing supply in the city.
About 22,000 residential units translating to
approximately 30 mn.sq.ft. of housing space
is expected to come up in this zone by 2011.
A majority of this supply will hit the market in
2011. Prominent projects in the zone include
Estancia by Arun Excello, Mantri Synergy by
Mantri Developers, Upscale by Hiranandani,
Swanlake by Puruvankara, Pushpadhruma by
Marg Developers and the upcoming
residential project by L&T. Most of these
projects have been under development over
the past one year and the delay in their
execution is reflective of the low market
sentiment.
The economic slowdown has resulted in lower
capital and rental values for the residential
sector. The residential capital values across
Chennai, which witnessed a correction in the
range of 5-20% from peak until
September '09 are currently stabilizing.
Central locations like Guindy that corrected
by 19% and Vadapalani that corrected by
20% from peak until September'09 were
amongst the locations that witnessed the
major brunt of the slump. The capital values
in these locations range between
Rs.3,200-5,100/sq.ft. The capital values of
Capital & Rental Profile
Majorly
affected
markets
include
Central
locations like
Guindy, where
prices have
corrected by
19% from peak
levels, and
Vadapalani,
where prices
have
corrected by
20% from peak
levels
4544
Minimum Maximum
Source: Knight Frank Research
Figure 27
Residential Rental Values (2 BHK)
Rs.
/mo
nth
0
160000
Ad
aya
r
100000
20000
140000
120000
80000
60000
40000
R A
Pu
ram
Sa
nto
me
Alw
arp
et
Ve
lach
ery
Mo
gg
ap
ir
Ch
ole
me
du
Pa
llik
arn
al
Unit-Wise Distribution of Supply 2009-11
Figure 26
Source: Knight Frank Research
1 BHK - 6%
2 BHK - 32%
2 ½ BHK - 2%
3 BHK - 55%
3 ½ BHK - 0%
4 BHK - 2%
5 BHK/Penthouses/Villa - 3%
Chennai Peak to Trough to Sep'09
Trough Change Sep'09 Change (Rs./sq.ft.)
Egmore/Kilpauk -5% 7% 5,600
Boat Club 0% 0% 16,000
Poes Garden -7% 4% 14,250
T Nagar -2% 11% 7,750
R A Puram -3% 6% 9,000
Ashok Nagar -2% 9% 6,000
Guindy -19% 14% 4,150
Vadapalani -20% 0% 3,600
Table 11
Average Residential Capital Value Trend
Source: Knight Frank Research
Q3 2009
residentialmarket
KnightFrank.comReview
On the other hand, in peripheral locations
towards the south like Rajiv Gandhi Salai and
GST Road rentals are much lower ranging
from Rs.15,000-30,000 for a 2-BHK
apartment. For locations in the west which
are now considered good residential markets
like Anna Nagar, the rentals range from
Rs.20,000-60,000 for a 2-BHK apartment,
whereas emerging western locations like
Moggapair and Sriperumbudur command
much lower rentals varying between
Rs.8,000-15,000 for a 2-BHK independent
house. Towards the north there is a dearth of
quality residential dwelling units most of
which are developed to cater to the low
income segment. Locations closer to the
coast-line command higher rentals such as
Santhome, which is currently witnessing
rental values between Rs.45,000-120,000 for
a 2-BHK house. The Chennai residential
micro-markets are not very disparate in terms
of the rental yields. The residential rental
yields in the city remain in the range of
3-4% p.a.
The residential market in Chennai is at the
cusp of a change with the demand for cost
effective housing units dominating the city's
residential space. There is a perceptible
Outlook
change in the behavioural pattern of
consumers. A couple of years back, most city
developers focused on developing premium
housing whereas today there is a gradual
shift towards value oriented residential units.
The changed market scenario and consumer
behaviour would make it necessary to
reposition and restructure the premium
projects.
This would mark a shift from catering to the
high end segment like second home buyers,
NRIs and HNIs to the middle income segment.
Incentive offers like a proposed additional FSI
for such projects would go a long way in
furthering residential development for the
middle income segment. The changed market
dynamics have also prompted developers to
focus on value housing whereby they
concentrate on providing basic amenities,
like uninterrupted power and water supply,
rather than clubs and swimming pools. This
can be witnessed in some of the recently
announced residential projects by prominent
developers in the city.
The residential development is expected to
grow towards the western and southern
quadrants of the city. Micro-markets such as
GST Road and Rajiv Gandhi Salai in the south
and locations like Sriperumbudur, Ambattur
and areas off Mount Poonamallee Road
towards the west are expected to generate
strong residential interest over the next
3-4 years.
Ambattur is poised to be a prominent
micro-market for residential development in
near future. The Madras-Tiruvallur Highway
(MTH Road or NH 205) now known as CTH
Road, passes through Ambattur and the
Chennai-Kolkata Highway is just about 7 km.
from the place making it a strategic location.
The new Chennai Bypass Road between
Maduravoyal and Madhavaram would pass
through Ambattur Industrial Estate. The
completed first phase of the Bypass Road
connects NH45 with NH4. The second phase,
under construction, would connect NH4 with
NH5 and NH205 via Ambattur Industrial
Estate. The Chennai Central-Arakkonam
railway line passes through Ambattur and has
a railway station at Ambattur.
Suburban broad gauge EMU trains operate
daily from Chennai Central and Chennai
Beach to Avadi, Tiruvallur, Arakkonam and
Tiruttani via Ambattur.
By rail, Ambattur is 30 minutes from Chennai
Central, 20 minutes from Perambur and
10 minutes from Villivakkam. Many fast EMU
locals (suburban trains) towards Tiruvallur,
Avadi and Tiruttani halt at Ambattur railway
station. In addition to this Ambattur is
expected to provide for a strong influx of
IT/ITES space making it a preferred
residential location.
Poonamallee High Road which extends up to
Sriperumbudur in the west is another
growth of
residential
development
is expected to
be towards
the western
and southern
quadrants of
the city
Central Park South, Rajiv Gandhi Salai
4746
Project Status Remarks
100 ft Bypass road connecting Expected to be completed The Chennai Bypass is a fully-access controlled expressway that
Madhuravoyal and Madhavaram in 2010 interconnects four national highways. The first phase is 19 km six lane
fully access controlled carriageway from Tambaram on the Grand Southern
Trunk Road(NH 45) to Maduravoyal which lies on the Chennai -Bangalore
NH4. A 3-tier interchange has also been constructed at the starting point at
Irumbuliyur Highways around Chennai. Constructed as part of the National
Highway Development Project to decongest the city of transiting vehicles,
the expressway interconnects NH45, NH4, NH205 and NH5.The second
phase include extending the bypass by 13 km from Maduravoyal to
Madhavaram on the Chennai - Kolkata NH5. It also includes 2 interchanges.
A clover-leaf grade separator at Maduravoyal Junction and a trumpet
interchange at Madhavaram where the bypass phase II ends.
Outer Ring Road (ORR) from Expected completion of The 62-km Chennai Outer Ring Road project, proposed on the outskirts
Vandalur to Tiruvottayur 1st phase -2012 of the Chennai Metropolitan Area, aims at decongesting traffic and to
enable dispersal of urban growth. The ORR will connect Vandalur (NH
45) to Tiruvottiyur Ponneri Panjetty (TPP) road. The project will come up
in four stages. The six-lane ORR will include a provision for a 22-metre
wide corridor for public transport
Velachery MRTS Railway station Expected to be completed Through rail network it will increase the connectivity of OMR and
in 2009 Velachery to the city centre.
Table 12
Chennai Major Infrastructure Developments
Source: Knight Frank Research
micro-market where residential development
is expected to increase over the next couple
of years. The Tamil Nadu Housing Board
(TNHB) is expected to develop a satellite town
in this location as a part of their city
development plan. It would have all the
required social infrastructure facilities like
schools, healthcare centres, parks and
shopping complexes along with basic
infrastructure like roads, electricity and
drinking water. The six lane ORR project
which will connect Vandalur (NH-45) to
Tiruvottiyur Ponneri Panjetty (TPP) Road is
expected to provide better connectivity of this
micro-market towards the south of the city.
Sriperumbudur with its strong industrial
presence is expected to spawn residential
development. The proposed airport on the
NH-4 is also expected to entice residential
development towards Sriperumbudur.
In the south, micro markets like GST Road
and Rajiv Gandhi Salai are expected to
develop into prominent residential locations
in the future. The presence of the prominent
IT and hospitality developments in these
The prominent
markets like
Poes Garden
and T-Nagar,
which do not
have scope
for
significant
new supply,
remained
resilient to
the real
estate slump
micro-markets is expected to translate into
bigger residential developments over the
next 2-3 years. The proposed ORR is expected
to provide better connectivity to these
locations from the western parts of the city.
Satellite towns have also been proposed in
these locations .The development of the
MRTS in Velachery and Rajiv Gandhi Salai
would further increase the attractiveness of
these locations. The relatively lower cost of
residential units in these locations has
contributed to an increase in the affordable
housing projects in these micro-markets.
The relaxation of costal regulation zone
construction rules is likely to generate a
renewed interest of developers and investors
along the East Coast Road. Rajiv Gandhi Salai
would witness pricing pressure on account of
large supply and lack of social infrastructure,
which in turn would shift the focus to GST
Road that boasts of a relatively stronger
physical and social infrastructure in this
region. The sustenance of the residential
sector for the next couple of years would
primarily depend on tapping into the end
user market by providing them with products
which cater to their preferences.
Q3 2009
residentialmarket
KnightFrank.comReview
On the other hand, in peripheral locations
towards the south like Rajiv Gandhi Salai and
GST Road rentals are much lower ranging
from Rs.15,000-30,000 for a 2-BHK
apartment. For locations in the west which
are now considered good residential markets
like Anna Nagar, the rentals range from
Rs.20,000-60,000 for a 2-BHK apartment,
whereas emerging western locations like
Moggapair and Sriperumbudur command
much lower rentals varying between
Rs.8,000-15,000 for a 2-BHK independent
house. Towards the north there is a dearth of
quality residential dwelling units most of
which are developed to cater to the low
income segment. Locations closer to the
coast-line command higher rentals such as
Santhome, which is currently witnessing
rental values between Rs.45,000-120,000 for
a 2-BHK house. The Chennai residential
micro-markets are not very disparate in terms
of the rental yields. The residential rental
yields in the city remain in the range of
3-4% p.a.
The residential market in Chennai is at the
cusp of a change with the demand for cost
effective housing units dominating the city's
residential space. There is a perceptible
Outlook
change in the behavioural pattern of
consumers. A couple of years back, most city
developers focused on developing premium
housing whereas today there is a gradual
shift towards value oriented residential units.
The changed market scenario and consumer
behaviour would make it necessary to
reposition and restructure the premium
projects.
This would mark a shift from catering to the
high end segment like second home buyers,
NRIs and HNIs to the middle income segment.
Incentive offers like a proposed additional FSI
for such projects would go a long way in
furthering residential development for the
middle income segment. The changed market
dynamics have also prompted developers to
focus on value housing whereby they
concentrate on providing basic amenities,
like uninterrupted power and water supply,
rather than clubs and swimming pools. This
can be witnessed in some of the recently
announced residential projects by prominent
developers in the city.
The residential development is expected to
grow towards the western and southern
quadrants of the city. Micro-markets such as
GST Road and Rajiv Gandhi Salai in the south
and locations like Sriperumbudur, Ambattur
and areas off Mount Poonamallee Road
towards the west are expected to generate
strong residential interest over the next
3-4 years.
Ambattur is poised to be a prominent
micro-market for residential development in
near future. The Madras-Tiruvallur Highway
(MTH Road or NH 205) now known as CTH
Road, passes through Ambattur and the
Chennai-Kolkata Highway is just about 7 km.
from the place making it a strategic location.
The new Chennai Bypass Road between
Maduravoyal and Madhavaram would pass
through Ambattur Industrial Estate. The
completed first phase of the Bypass Road
connects NH45 with NH4. The second phase,
under construction, would connect NH4 with
NH5 and NH205 via Ambattur Industrial
Estate. The Chennai Central-Arakkonam
railway line passes through Ambattur and has
a railway station at Ambattur.
Suburban broad gauge EMU trains operate
daily from Chennai Central and Chennai
Beach to Avadi, Tiruvallur, Arakkonam and
Tiruttani via Ambattur.
By rail, Ambattur is 30 minutes from Chennai
Central, 20 minutes from Perambur and
10 minutes from Villivakkam. Many fast EMU
locals (suburban trains) towards Tiruvallur,
Avadi and Tiruttani halt at Ambattur railway
station. In addition to this Ambattur is
expected to provide for a strong influx of
IT/ITES space making it a preferred
residential location.
Poonamallee High Road which extends up to
Sriperumbudur in the west is another
growth of
residential
development
is expected to
be towards
the western
and southern
quadrants of
the city
Central Park South, Rajiv Gandhi Salai
4746
Project Status Remarks
100 ft Bypass road connecting Expected to be completed The Chennai Bypass is a fully-access controlled expressway that
Madhuravoyal and Madhavaram in 2010 interconnects four national highways. The first phase is 19 km six lane
fully access controlled carriageway from Tambaram on the Grand Southern
Trunk Road(NH 45) to Maduravoyal which lies on the Chennai -Bangalore
NH4. A 3-tier interchange has also been constructed at the starting point at
Irumbuliyur Highways around Chennai. Constructed as part of the National
Highway Development Project to decongest the city of transiting vehicles,
the expressway interconnects NH45, NH4, NH205 and NH5.The second
phase include extending the bypass by 13 km from Maduravoyal to
Madhavaram on the Chennai - Kolkata NH5. It also includes 2 interchanges.
A clover-leaf grade separator at Maduravoyal Junction and a trumpet
interchange at Madhavaram where the bypass phase II ends.
Outer Ring Road (ORR) from Expected completion of The 62-km Chennai Outer Ring Road project, proposed on the outskirts
Vandalur to Tiruvottayur 1st phase -2012 of the Chennai Metropolitan Area, aims at decongesting traffic and to
enable dispersal of urban growth. The ORR will connect Vandalur (NH
45) to Tiruvottiyur Ponneri Panjetty (TPP) road. The project will come up
in four stages. The six-lane ORR will include a provision for a 22-metre
wide corridor for public transport
Velachery MRTS Railway station Expected to be completed Through rail network it will increase the connectivity of OMR and
in 2009 Velachery to the city centre.
Table 12
Chennai Major Infrastructure Developments
Source: Knight Frank Research
micro-market where residential development
is expected to increase over the next couple
of years. The Tamil Nadu Housing Board
(TNHB) is expected to develop a satellite town
in this location as a part of their city
development plan. It would have all the
required social infrastructure facilities like
schools, healthcare centres, parks and
shopping complexes along with basic
infrastructure like roads, electricity and
drinking water. The six lane ORR project
which will connect Vandalur (NH-45) to
Tiruvottiyur Ponneri Panjetty (TPP) Road is
expected to provide better connectivity of this
micro-market towards the south of the city.
Sriperumbudur with its strong industrial
presence is expected to spawn residential
development. The proposed airport on the
NH-4 is also expected to entice residential
development towards Sriperumbudur.
In the south, micro markets like GST Road
and Rajiv Gandhi Salai are expected to
develop into prominent residential locations
in the future. The presence of the prominent
IT and hospitality developments in these
The prominent
markets like
Poes Garden
and T-Nagar,
which do not
have scope
for
significant
new supply,
remained
resilient to
the real
estate slump
micro-markets is expected to translate into
bigger residential developments over the
next 2-3 years. The proposed ORR is expected
to provide better connectivity to these
locations from the western parts of the city.
Satellite towns have also been proposed in
these locations .The development of the
MRTS in Velachery and Rajiv Gandhi Salai
would further increase the attractiveness of
these locations. The relatively lower cost of
residential units in these locations has
contributed to an increase in the affordable
housing projects in these micro-markets.
The relaxation of costal regulation zone
construction rules is likely to generate a
renewed interest of developers and investors
along the East Coast Road. Rajiv Gandhi Salai
would witness pricing pressure on account of
large supply and lack of social infrastructure,
which in turn would shift the focus to GST
Road that boasts of a relatively stronger
physical and social infrastructure in this
region. The sustenance of the residential
sector for the next couple of years would
primarily depend on tapping into the end
user market by providing them with products
which cater to their preferences.
Q3 2009
residentialmarket
KnightFrank.comReview
EXISTING
1. Ballygunge
2. Alipore
3. Tollygunge
4. Lake Town
5. Bhawanipur
UPCOMING
1. Rajahart
2. Behala
3. Maheshtala
4. Bata Nagar
5. Kona Expressway
6. Garia
7. Jessore
KOLKATA
Market Review
The residential real estate market of Kolkata,
the capital city and commercial centre of
Eastern India, has witnessed a significant
change in its skyline over the past two-three
years. The staid brick structures of the city
have made way for multi-towered high-rises,
ushering in a modern era governed by fast
paced technology and a changed lifestyle.
This may be attributed to the growth of the
IT/ITES sector in the city, marked by high pay
packages, thereby leading to increased
consumerism and investments in the real
estate sector. Nuclear families with
requirements for modern apartment lifestyles
have become the order of the day Kolkata.
However, the enthusiasm witnessed in the
residential market of the city took a beating
with the global economic turmoil dampening
developers' spirits, who had undertaken
several high profile residential projects,
mostly in Rajarhat, in the eastern part of the
city. Majority of the projects, launched two
years back, had to extend their completion
timelines due to the tight liquidity condition
of the developers. The positive factor
observed in the city's residential market was
that, unlike other cities across the country,
the rate of decline in residential prices
witnessed in the city was much lower as
compared to other metros. This may be owing
to the fact that the Kolkata market was not
speculative in terms of residential demand.
Besides, proactive government measures to
curb disorganised real estate development by
way of entering into joint ventures with
developers also aided in keeping the prices
in check, thereby avoiding a steep decline.
The end-user driven market has assured that
although the overall sales growth rate has
come down, the volume of sales has
remained the same. Not surprisingly, majority
of the demand for residential property
emanated from the middle income segment
of the city. Diminution was noted in the
demand for apartments in the higher income
groups.
The Kolkata residential market over the past
year has shown considerable resistance to
the overall slowdown in the real estate sector.
While the slump in property prices in Tier I
cities was in the range of 25-40% and above,
the average decline in Kolkata was about
10-18%. Not much slackening of demand for
residential property was seen in the city
despite increase in construction cost and a
dull share market.
However, in the last two quarters of 2008,
Kolkata's residential market registered a
lower growth rate as compared to the
previous year. The demand in the real estate
sector had touched peak levels between
January-March 2008. This was post the real
estate boom of 2007 in the city's residential
sector. According to industry sources,
residential property sales had registered a
growth of nearly 30-40% in 2007 which
dwindled by 10-15% in 2008. On a positive
note there has been a gradual revival in
transactions during the last two quarters,
with the demand for residential property
primarily subsisting in the middle price
range.
Current Scenario
At present, the prime residential locations of
Kolkata are concentrated in the central and
south-central part of the city. Up market
addresses in the city include CBD locations
like Park Street and Camac Street and south-
central locations like Gurusaday Road,
Jodhpur Park, Gole Park and Lake Garden.
These locations can be termed as established
residential markets with very less scope for
new development. Besides, southern city
locations like New Alipore, Rashbehari,
Tollygunge and Gariahat are other popular
residential destinations in Kolkata, the most
expensive being Ballygunge and Alipore.
During the past three years, extensive
residential real estate development was
undertaken in the suburban locations of the
city, particularly in Rajarhat in the east,
Jessore Road in the north and towards Behala
further down south. A number of leading
national and international developers have
launched their projects in these suburban
locations. Howrah, too, has seen its share of
residential real estate development in the
recent few years. By the end of the year 2011,
around 24,750 residential units, translating
to roughly 32 mn.sq.ft. of residential space is
estimated to be operational in the city.
Central Kolkata has predominantly been the
seat of administration with a number of
government offices located here. The
residential pockets in this micro-market have
typically been termed as some of the most
preferred locations in the city. Despite the
dearth of sufficient land parcel in the area,
which has restricted the development of new
projects, demand for residential property has
always been high. As with Central Kolkata,
the South-Central locations of the city will
continue to be sought-after residential
markets, primarily on the grounds of good
connectivity. Being linked to all corners of the
city by means of a well developed road
network and a rail connection supported by
Central & South-Central Kolkata
Kolkata
1
1
2
3
4
5
6
7
2
3
4
5
the Kolkata Metro Project, the residential
zones in these micro-markets will continue to
attract end-users and investors alike. Besides
the infrastructure and connectivity
advantages, the central and south-central
parts of the city also enjoy the benefits of
matured office and retail markets, which act
as a major catchment factor for the
residential segment.
Amongst the key residential projects in the
region, a note can be made of the recently
completed high-end project Oasis by the Fort
Group at Panditya Road. At present, around
620 residential units are underway which are
scheduled to be completed by end-2011,
adding around 1.6 mn.sq.ft. of residential
space to the central Kolkata market. Of the
units under construction, about 38% are
2-BHK units while 52% comprise 3-BHK units.
Important upcoming residential projects in
this location include Merlin Regency and
Srijan Heritage Park, launched by Kolkata-
based developers Merlin Group and Srijan
Properties respectively.
around 24,750
units,
translating
to roughly 32
mn.sq.ft. of
residential
space to
come up in
the city
4948
Distribution of Supply 2009-11
(in No. of units)
Figure 28
Source: Knight Frank Research
Central & South Central - 3%
East - 55%
West - 10%
North - 11%
South - 21%
2840
11430 10480
14270
24750
0
30000
20
09
20
10
20
11
15000
10000
5000
Source: Knight Frank Research
Figure 29
Estimated Supply 2009-11
25000
20000
Supply Cumulative Supply
Year
No
. o
f re
sid
en
tia
l un
its
Q3 2009
residentialmarket
KnightFrank.comReview
EXISTING
1. Ballygunge
2. Alipore
3. Tollygunge
4. Lake Town
5. Bhawanipur
UPCOMING
1. Rajahart
2. Behala
3. Maheshtala
4. Bata Nagar
5. Kona Expressway
6. Garia
7. Jessore
KOLKATA
Market Review
The residential real estate market of Kolkata,
the capital city and commercial centre of
Eastern India, has witnessed a significant
change in its skyline over the past two-three
years. The staid brick structures of the city
have made way for multi-towered high-rises,
ushering in a modern era governed by fast
paced technology and a changed lifestyle.
This may be attributed to the growth of the
IT/ITES sector in the city, marked by high pay
packages, thereby leading to increased
consumerism and investments in the real
estate sector. Nuclear families with
requirements for modern apartment lifestyles
have become the order of the day Kolkata.
However, the enthusiasm witnessed in the
residential market of the city took a beating
with the global economic turmoil dampening
developers' spirits, who had undertaken
several high profile residential projects,
mostly in Rajarhat, in the eastern part of the
city. Majority of the projects, launched two
years back, had to extend their completion
timelines due to the tight liquidity condition
of the developers. The positive factor
observed in the city's residential market was
that, unlike other cities across the country,
the rate of decline in residential prices
witnessed in the city was much lower as
compared to other metros. This may be owing
to the fact that the Kolkata market was not
speculative in terms of residential demand.
Besides, proactive government measures to
curb disorganised real estate development by
way of entering into joint ventures with
developers also aided in keeping the prices
in check, thereby avoiding a steep decline.
The end-user driven market has assured that
although the overall sales growth rate has
come down, the volume of sales has
remained the same. Not surprisingly, majority
of the demand for residential property
emanated from the middle income segment
of the city. Diminution was noted in the
demand for apartments in the higher income
groups.
The Kolkata residential market over the past
year has shown considerable resistance to
the overall slowdown in the real estate sector.
While the slump in property prices in Tier I
cities was in the range of 25-40% and above,
the average decline in Kolkata was about
10-18%. Not much slackening of demand for
residential property was seen in the city
despite increase in construction cost and a
dull share market.
However, in the last two quarters of 2008,
Kolkata's residential market registered a
lower growth rate as compared to the
previous year. The demand in the real estate
sector had touched peak levels between
January-March 2008. This was post the real
estate boom of 2007 in the city's residential
sector. According to industry sources,
residential property sales had registered a
growth of nearly 30-40% in 2007 which
dwindled by 10-15% in 2008. On a positive
note there has been a gradual revival in
transactions during the last two quarters,
with the demand for residential property
primarily subsisting in the middle price
range.
Current Scenario
At present, the prime residential locations of
Kolkata are concentrated in the central and
south-central part of the city. Up market
addresses in the city include CBD locations
like Park Street and Camac Street and south-
central locations like Gurusaday Road,
Jodhpur Park, Gole Park and Lake Garden.
These locations can be termed as established
residential markets with very less scope for
new development. Besides, southern city
locations like New Alipore, Rashbehari,
Tollygunge and Gariahat are other popular
residential destinations in Kolkata, the most
expensive being Ballygunge and Alipore.
During the past three years, extensive
residential real estate development was
undertaken in the suburban locations of the
city, particularly in Rajarhat in the east,
Jessore Road in the north and towards Behala
further down south. A number of leading
national and international developers have
launched their projects in these suburban
locations. Howrah, too, has seen its share of
residential real estate development in the
recent few years. By the end of the year 2011,
around 24,750 residential units, translating
to roughly 32 mn.sq.ft. of residential space is
estimated to be operational in the city.
Central Kolkata has predominantly been the
seat of administration with a number of
government offices located here. The
residential pockets in this micro-market have
typically been termed as some of the most
preferred locations in the city. Despite the
dearth of sufficient land parcel in the area,
which has restricted the development of new
projects, demand for residential property has
always been high. As with Central Kolkata,
the South-Central locations of the city will
continue to be sought-after residential
markets, primarily on the grounds of good
connectivity. Being linked to all corners of the
city by means of a well developed road
network and a rail connection supported by
Central & South-Central Kolkata
Kolkata
1
1
2
3
4
5
6
7
2
3
4
5
the Kolkata Metro Project, the residential
zones in these micro-markets will continue to
attract end-users and investors alike. Besides
the infrastructure and connectivity
advantages, the central and south-central
parts of the city also enjoy the benefits of
matured office and retail markets, which act
as a major catchment factor for the
residential segment.
Amongst the key residential projects in the
region, a note can be made of the recently
completed high-end project Oasis by the Fort
Group at Panditya Road. At present, around
620 residential units are underway which are
scheduled to be completed by end-2011,
adding around 1.6 mn.sq.ft. of residential
space to the central Kolkata market. Of the
units under construction, about 38% are
2-BHK units while 52% comprise 3-BHK units.
Important upcoming residential projects in
this location include Merlin Regency and
Srijan Heritage Park, launched by Kolkata-
based developers Merlin Group and Srijan
Properties respectively.
around 24,750
units,
translating
to roughly 32
mn.sq.ft. of
residential
space to
come up in
the city
4948
Distribution of Supply 2009-11
(in No. of units)
Figure 28
Source: Knight Frank Research
Central & South Central - 3%
East - 55%
West - 10%
North - 11%
South - 21%
2840
11430 10480
14270
24750
0
30000
20
09
20
10
20
11
15000
10000
5000
Source: Knight Frank Research
Figure 29
Estimated Supply 2009-11
25000
20000
Supply Cumulative Supply
Year
No
. o
f re
sid
en
tia
l un
its
Q3 2009
residentialmarket
KnightFrank.comReview
North Kolkata
The northern part of the city, comprising
locations like Madhyamgram, Barasat and
Jessore Road, is discerned by a number of
low-rise apartment blocks. Of late, this region
has emerged as a much favoured residential
destination for the mid-income category. With
a number of infrastructure initiatives
underway, the region is expected to witness
significant residential demand in the
forthcoming years. The widening of Jessore
Road to 6 lanes will substantially reduce the
traffic congestion on route to the city's
central locations. Besides, Jessore Road will
also be connected to the main road in
Rajarhat, thereby providing swifter
communication between the two micro-
markets. With the Belghoria Expressway also
under construction and Jessore Road's
linkage to NH-34, North Kolkata will emerge
as an important inter-region trade corridor in
the near future.
On the real estate development front, major
activity is observed on Jessore Road because
of its proximity to the airport. Developments
like Aponaloy by Reside Group and Diamond
City North by Diamond Group, both located
on Jessore Road, are some of the noteworthy
residential projects in the region which
became operational in the past year. Another
important project Fortune City by Fortune Park
Housing at Madhyamgram was also
completed in 2008. Srijan Midlands by Srijan
Realty, with over 360 units, is one of the
prominent upcoming residential projects on
Jessore Road. Another key project Avani
Oxford by Avani Estates is underway in Lake
Town. The project Orbit Skyview by the Orbit
Group, located between BT Road and
Northern Avenue, is approaching completion
and is expected to be fully operational in
Q1 2010. In the recent months, Barasat, the
district headquarters of 24 Parganas North,
have been increasingly coming up as an
attractive location for affordable housing.
A number of residential projects by local
developers are currently underway, notable
amongst them being Larica Township by the
Larica Group, Fortune Township by the
Fortune Park housing and Pushpakalay by
Pushpakalay Residents Group.
By the end of 2011, this northern
micro-market is estimated to witness the
infusion of around 4.1 mn.sq.ft. of new
residential space. Approximately 2,760 units
are in the pipeline, of which around 45%
belong to the 3-BHK category, followed by
42% consisting of 2-BHK units.
East Kolkata
The eastern part of Kolkata, primarily
comprising Rajarhat, Salt Lake and parts of
the Eastern Metropolitan Bypass (EM Bypass)
has been proclaimed as the new face of
Kolkata realty in recent years. This region has
attracted the maximum number of real estate
developers, both national and international,
to launch their projects. While Salt Lake
Sector V served to be the IT hub of the city,
residential developments in this
micro-market enjoyed proximity to the airport
and good connectivity with other parts of
Kolkata. The development in this region,
particularly Rajarhat, was triggered by the
unlocking of large land parcels by the
government (HIDCO), with an objective of
decongesting the city.
While the year 2006-07 saw the launch of
several high profile residential
developments, slated for completion by the
end of 2008 and 2009, only a handful
projects have actually been completed.
Significantly, most of these completed
projects are not fully occupied despite
considerable bookings in majority of them.
The reason behind the unoccupied
apartments can be attributed to limited
development of social and physical
infrastructure in the region.
The construction delay witnessed by various
commercial and retail projects in the region,
is also an important factor leading to low
occupancy levels in residential developments
in Rajarhat. The retail developments in
particular, were expected to cater to the
residential catchment and hence a delay in
their completion has hampered residential
activity in the region. However, with the
economy stabilising and developers
resuming construction activity, completion of
these projects is expected in the next few
years. The state authorities are also taking
positive steps towards addressing the issue
of transportation and social infrastructure
within Rajarhat. Work on the cancer specialty
hospital by the TATA Group is in progress
while Delhi Public School has already started
its branch in the region.
Meanwhile, various physical infrastructure
initiatives are underway in Rajarhat which are
expected to boost residential demand in the
region. On its completion, the Airport Link
Road, connecting Action Area II, will lead to
reduced travel time and allow easy access
from Rajarhat to the airport. Besides, an ultra
modern bus terminal is being constructed in
Rajarhat. This terminal will effectively connect
Rajarhat to various parts of the city, primarily
towards the CBD and South Kolkata
locations. Also, to improve the intra-region
connectivity, the state authority HIDCO, is
focusing on constructing sector roads within
Rajarhat. On completion these infrastructure
initiatives, , shall play a major role in
attracting prospective home owners to the
region.
The slump in the market notwithstanding,
Rajarhat still accounts for around 45% of the
total residential space (mn.sq.ft.) by
end-2011.
This considerable amount of supply in the
pipeline can be attributed to the extended
completion timelines for many large scale
residential developments. A note can be
made of the Uniworld City Project by Bengal
Unitech whose 3,000 apartments were
scheduled to have been completed by the
end of 2009, but are now expected to be
ready in 2010. Delay in its completion
however did not dampen the marketing
strategists and Q2 2009 saw the launch of
another set of residential towers, Vistas, in
the 100-acre township project. This year also
witnessed the launch of Eden Court,
portending Tata Housing's foray into the
city's realty sector. Despite the slowdown
observed in Rajarhat's residential market, the
project consisting of 330 units has been
promoted as upper mid-end and is scheduled
to be available by 2011. Meanwhile,
developers are trying hard to differentiate
their products based on lifestyle amenities.
As one of the strategies, Elita Garden Vista, a
1,278-unit high-rise project by Keppel Magus
has been promoted as premium living,
offering an 'international lifestyle' with
various amenities ranging from tennis courts,
a multi-purpose plaza to landscaped
gardens. Another high profile residential
project in the region, the WBIDFC promoted
Sankalpa has launched its second phase in
Action Area I in Rajarhat. It has the unique
proposition of being the only residential
tower in the midst of commercial
developments in Rajarhat Action Area I. Due
to its location attractiveness; Sankalpa is one
of the most expensive residential options in
the micro-market. Besides the high-rise
towers, there are a number of operational
villa projects in Rajarhat. These include the
much-promoted Vedic Village, launched as a
spa-cum-resort with options to purchase villa
properties such as Lake Front Villas, Eco
Homes, Whirlpool Homes, Aqua Homes and
Farm Bungalows.
In order to provide balance to the residential
profile of the developments in Rajarhat,
which at present seem highly skewed
towards the upper mid-end and high-end
segment of the society, the West Bengal
Housing Board has taken the welcome step of
allotting construction of 12,000 LIG and
8,000 MIG units on 150 acres of land in
Rajarhat to the Shapoorji Pallonji Group. The
first phase of the project Shukhobrishti is
almost ready and around 1,500 LIG units are
expected to be ready for possession this year.
In the coming two years, Rajarhat is expected
to witness the completion of over 11,000
residential units.
in the north,
major activity
is observed
on Jessore
Road because
of its
proximity to
the airportRavi Rashmi, Rajahart
The eastern
region has
attracted the
maximum
number of
real estate
developers,
both national
and
international
Diamond Heights, Chetla Road
5150
Unit-Wise Distribution of Supply 2009-11
Figure 30
Source: Knight Frank Research
1 BHK - 3%
2 BHK - 40%
3 BHK - 47%
5 BHK & Above - 1%
4 BHK - 9%
Q3 2009
residentialmarket
KnightFrank.comReview
North Kolkata
The northern part of the city, comprising
locations like Madhyamgram, Barasat and
Jessore Road, is discerned by a number of
low-rise apartment blocks. Of late, this region
has emerged as a much favoured residential
destination for the mid-income category. With
a number of infrastructure initiatives
underway, the region is expected to witness
significant residential demand in the
forthcoming years. The widening of Jessore
Road to 6 lanes will substantially reduce the
traffic congestion on route to the city's
central locations. Besides, Jessore Road will
also be connected to the main road in
Rajarhat, thereby providing swifter
communication between the two micro-
markets. With the Belghoria Expressway also
under construction and Jessore Road's
linkage to NH-34, North Kolkata will emerge
as an important inter-region trade corridor in
the near future.
On the real estate development front, major
activity is observed on Jessore Road because
of its proximity to the airport. Developments
like Aponaloy by Reside Group and Diamond
City North by Diamond Group, both located
on Jessore Road, are some of the noteworthy
residential projects in the region which
became operational in the past year. Another
important project Fortune City by Fortune Park
Housing at Madhyamgram was also
completed in 2008. Srijan Midlands by Srijan
Realty, with over 360 units, is one of the
prominent upcoming residential projects on
Jessore Road. Another key project Avani
Oxford by Avani Estates is underway in Lake
Town. The project Orbit Skyview by the Orbit
Group, located between BT Road and
Northern Avenue, is approaching completion
and is expected to be fully operational in
Q1 2010. In the recent months, Barasat, the
district headquarters of 24 Parganas North,
have been increasingly coming up as an
attractive location for affordable housing.
A number of residential projects by local
developers are currently underway, notable
amongst them being Larica Township by the
Larica Group, Fortune Township by the
Fortune Park housing and Pushpakalay by
Pushpakalay Residents Group.
By the end of 2011, this northern
micro-market is estimated to witness the
infusion of around 4.1 mn.sq.ft. of new
residential space. Approximately 2,760 units
are in the pipeline, of which around 45%
belong to the 3-BHK category, followed by
42% consisting of 2-BHK units.
East Kolkata
The eastern part of Kolkata, primarily
comprising Rajarhat, Salt Lake and parts of
the Eastern Metropolitan Bypass (EM Bypass)
has been proclaimed as the new face of
Kolkata realty in recent years. This region has
attracted the maximum number of real estate
developers, both national and international,
to launch their projects. While Salt Lake
Sector V served to be the IT hub of the city,
residential developments in this
micro-market enjoyed proximity to the airport
and good connectivity with other parts of
Kolkata. The development in this region,
particularly Rajarhat, was triggered by the
unlocking of large land parcels by the
government (HIDCO), with an objective of
decongesting the city.
While the year 2006-07 saw the launch of
several high profile residential
developments, slated for completion by the
end of 2008 and 2009, only a handful
projects have actually been completed.
Significantly, most of these completed
projects are not fully occupied despite
considerable bookings in majority of them.
The reason behind the unoccupied
apartments can be attributed to limited
development of social and physical
infrastructure in the region.
The construction delay witnessed by various
commercial and retail projects in the region,
is also an important factor leading to low
occupancy levels in residential developments
in Rajarhat. The retail developments in
particular, were expected to cater to the
residential catchment and hence a delay in
their completion has hampered residential
activity in the region. However, with the
economy stabilising and developers
resuming construction activity, completion of
these projects is expected in the next few
years. The state authorities are also taking
positive steps towards addressing the issue
of transportation and social infrastructure
within Rajarhat. Work on the cancer specialty
hospital by the TATA Group is in progress
while Delhi Public School has already started
its branch in the region.
Meanwhile, various physical infrastructure
initiatives are underway in Rajarhat which are
expected to boost residential demand in the
region. On its completion, the Airport Link
Road, connecting Action Area II, will lead to
reduced travel time and allow easy access
from Rajarhat to the airport. Besides, an ultra
modern bus terminal is being constructed in
Rajarhat. This terminal will effectively connect
Rajarhat to various parts of the city, primarily
towards the CBD and South Kolkata
locations. Also, to improve the intra-region
connectivity, the state authority HIDCO, is
focusing on constructing sector roads within
Rajarhat. On completion these infrastructure
initiatives, , shall play a major role in
attracting prospective home owners to the
region.
The slump in the market notwithstanding,
Rajarhat still accounts for around 45% of the
total residential space (mn.sq.ft.) by
end-2011.
This considerable amount of supply in the
pipeline can be attributed to the extended
completion timelines for many large scale
residential developments. A note can be
made of the Uniworld City Project by Bengal
Unitech whose 3,000 apartments were
scheduled to have been completed by the
end of 2009, but are now expected to be
ready in 2010. Delay in its completion
however did not dampen the marketing
strategists and Q2 2009 saw the launch of
another set of residential towers, Vistas, in
the 100-acre township project. This year also
witnessed the launch of Eden Court,
portending Tata Housing's foray into the
city's realty sector. Despite the slowdown
observed in Rajarhat's residential market, the
project consisting of 330 units has been
promoted as upper mid-end and is scheduled
to be available by 2011. Meanwhile,
developers are trying hard to differentiate
their products based on lifestyle amenities.
As one of the strategies, Elita Garden Vista, a
1,278-unit high-rise project by Keppel Magus
has been promoted as premium living,
offering an 'international lifestyle' with
various amenities ranging from tennis courts,
a multi-purpose plaza to landscaped
gardens. Another high profile residential
project in the region, the WBIDFC promoted
Sankalpa has launched its second phase in
Action Area I in Rajarhat. It has the unique
proposition of being the only residential
tower in the midst of commercial
developments in Rajarhat Action Area I. Due
to its location attractiveness; Sankalpa is one
of the most expensive residential options in
the micro-market. Besides the high-rise
towers, there are a number of operational
villa projects in Rajarhat. These include the
much-promoted Vedic Village, launched as a
spa-cum-resort with options to purchase villa
properties such as Lake Front Villas, Eco
Homes, Whirlpool Homes, Aqua Homes and
Farm Bungalows.
In order to provide balance to the residential
profile of the developments in Rajarhat,
which at present seem highly skewed
towards the upper mid-end and high-end
segment of the society, the West Bengal
Housing Board has taken the welcome step of
allotting construction of 12,000 LIG and
8,000 MIG units on 150 acres of land in
Rajarhat to the Shapoorji Pallonji Group. The
first phase of the project Shukhobrishti is
almost ready and around 1,500 LIG units are
expected to be ready for possession this year.
In the coming two years, Rajarhat is expected
to witness the completion of over 11,000
residential units.
in the north,
major activity
is observed
on Jessore
Road because
of its
proximity to
the airportRavi Rashmi, Rajahart
The eastern
region has
attracted the
maximum
number of
real estate
developers,
both national
and
international
Diamond Heights, Chetla Road
5150
Unit-Wise Distribution of Supply 2009-11
Figure 30
Source: Knight Frank Research
1 BHK - 3%
2 BHK - 40%
3 BHK - 47%
5 BHK & Above - 1%
4 BHK - 9%
Q3 2009
residentialmarket
KnightFrank.comReview
Of the total number of upcoming units, 40%
will be 2-BHK units with around 47% in the 3-
BHK category and the rest comprising 4-BHK
and above.
Meanwhile, EM Bypass is another stretch with
a number of real estate developments. Silver
Spring, the condominium development by
Bengal Silver Spring Project consisting of
520 units, is an important residential project
along the EM Bypass which became fully
operational in 2008. This micro-market,
owing to its existing infrastructure and good
connectivity has higher price ranges as
compared to its adjacent market of Rajarhat.
Notably, the prices are in an upper bracket
along the eastern part of the stretch and
witnessing a gradual decline as one moves
down south towards Garia. This can be
attributed to the demographic profile of the
residents. At present, a number of high
profile residential projects are being
undertaken off EM Bypass. Amongst them, a
note can be made of Active Acres, by Ruchi
Realty, comprising 6 towers of 19 floors each
with a variety of modern amenities and Ideal
Lakeview, a 180-unit project by the Ideal
Group which is scheduled to be ready in
2010. Ambuja Upohar, by Bengal Ambuja, is
another key project located off EM Bypass
with 11 planned towers of 19 and 17 storeys.
Besides these high-end projects along the
EM Bypass, there are a number of smaller
affordable projects southwards. Of these, a
mention can be made of Sunny Valley by
Sunny Promoters.
In all, around 1,985 residential units are
under development along the EM Bypass.
They will contribute about 2.58 mn.sq.ft. of
residential space by the end of 2011. Of
these, 42% shall consist of 2 BHK units and
45% of 3 BHK units.
The western part of the city comprising
Howrah, on the other side of the river Hoogly,
has always been considered to be somewhat
hinterlands by the residents. Real estate
West Kolkata
development, till recently, had not taken off
as with the development in other parts of the
city. However, with a number of infrastructure
initiatives in place and with better
connectivity across the river Hoogly, the
region has attracted a number of developers
to set up their projects.
Kona Expressway in Howrah can be
considered to be one of the emerging
residential markets in Kolkata. The region is
well connected to Kolkata's CBD by means of
NH-34 and the second bridge over the
Hooghly river, known as Vidya Sagar Setu.
A key development under construction in the
region is the 108-acre Kolkata Logistics
International City. The facility is the first of its
kind in the city, providing integrated state-of-
the-art services related to logistics,
warehousing, wholesale and retail trading,
truck parking and trans-loading operations.
With the completion of the project, the region
will act as a prominent belt for inter-region
trade and warehousing facility. Residential
development in Kona Expressway includes
the 390-acre Kolkata West International City
by the Indonesia-based Salim Group along
with Kolkata Metropolitan Development
Authority (KMDA) and Singapore-based
Universal Group. Almost 90% of the work has
been completed in the first phase of the
township, which at present is offering row
house developments. Other upcoming
residential developments along the Kona
Expressway include The Gateway by Unitech
and an affordable housing project by the
Ganges Group. At present, this expressway is
facing considerable traffic bottleneck in the
evenings, which is expected to be sorted with
the completion of another set of 4-lanes to be
introduced along the stretch.
It remains to be seen whether the upcoming
developments in Howrah are able to
persuade the mindset of the city's residents
in relocating to the other side of the river.
Nonetheless, if bookings in the Kolkata West
International City are to be believed, the
transition has already been set in motion.
Altogether, the western region accounts for
almost 10% of the total number of residential
units by 2011, translating to around
4.25 mn.sq.ft.
Typically South Kolkata has been the city's
most preferred residential destination owing
to its proximity to the metro railway stations
and the bypass connector. This part of the
city has an equitable mix of high-end and
mid-end living, some of the most expensive
residential locations include Ballygunge and
Alipore, while locations like Garia, Behala
and pockets along the D.H. Road primarily
comprise affordable housing. Residents of
the city generally prefer this micro-market for
their accommodation needs due to the well
developed social infrastructure and
connectivity. The entertainment industry
located in Tollygunge is home to several well
known clubs, the most famous being the
113-year old Tolly Club.
Besides, South Kolkata has a number of
prestigious educational institutes and retail
markets, which have been instrumental in
attracting home-buyers as well as developers
to launch their projects here.
South Kolkata
Meanwhile, with the extension of the Kolkata
Metro further down south, connectivity
concerns of commuters from Garia,
Narendrapur and Sonarpur have been
addressed effectively. On account of this
development various developers have
launched affordable housing projects in
Narendrapur and Sonarpur.
Notable residential developments in this
region include the 35-storied South City
Complex by South City Projects on Prince
Anwar Shah Road, which are touted to be the
highest residential towers in eastern India,
while Genexx Valley at Behala Chowrasta is
another large-scale residential development
consisting of over 2,000 units. Amongst the
key upcoming projects, a mention can be
made of Diamond City South by the Diamond
Group in Tollygunge and the distinctive
Kolkata Riverside Township Project at
Batanagar by Riverbank Holdings. The 262
acre Kolkata Riverside Project, located along
the river Ganges, will have various amenities
like an organised transport hub, a multi-
specialty hospital, golf course, sports club,
international standard school, mall space, IT
office space and a 5-Star hotel. While
booking is open for the first phase of
residential development, the entire project is
scheduled to be operational by the end of
2014.
On the other hand, a number of affordable
housing projects have come up along the
Narendrapur-Sonargaon belt. Mayfair Greens
by Mayfair Housing and Sherwood Estate by
PS Group and Srijan are a few notable
residential developments in Narendrapur.
Another key mid-range residential project
that can be mentioned is Eden Realty
promoted Eden City at Maheshtala.
Overall, South Kolkata is estimated to
witness a supply infusion of around
6.8 mn.sq.ft. of residential space, translating
approximately to 5,200 units, by end-2011. Of
the total number of units, 40% belong to the
2-BHK category while 48% are 3-BHK units.
The residential market in Kolkata has proved
to be comparatively resilient to the market
downturn which can be attributed to the
relative absence of speculative buyers. While
property prices in prime locations continue to
witness an upward trend, they have
stagnated to last year's level in suburban
markets due to the dearth of investments. For
instance, in Rajarhat prices have remained
constant between Rs. 2,500-3,000/sq.ft. for
almost two quarters now, although
construction cost has risen by about 25%
Capital & Rental Profile
during the last six months. Over the last
2-3 years, residential property prices in
Rajarhat had shot up by over 50%. In the face
of economic recession, this location
witnessed the steepest decline of around
15-30% during the period September 08-09,
amongst all micro-markets in the city. In
contrast, prime locations like Ballygunge and
Alipore have seen a considerable hike in
property prices. While prices in these
locations at the end of 2007 ranged from
Rs.7,000-10,000/sq.ft., they increased to
Rs.10,000-13,000/sq.ft. in 2009. This incline
in prices may be attributed to the limited
availability of real estate options, successful
retail and commercial projects and improved
connectivity.
Upcoming residential locations in the south
like Behala witnessed some amount of price
decline as well. While prices in these
southern markets had peaked around
Rs.2,800/sq.ft. in Q2 2008, they declined by
14% during Q2 2009. However, of late, the
market has shown signs of slight upturn with
buyers evincing interest in house purchase.
The rental market in Kolkata, at present, is
primarily led by the IT expatriates in the city.
Besides, Kolkata being the regional
headquarter for most banks, there is the need
to accommodate a sizeable number of
employees from the banking industry as well.
The steel and mining industry too has its
demand for rented accommodations in the
city.
Kona
Expressway in
Howrah can
be considered
one of the
emerging
residential
markets in
Kolkata
extension of
the Kolkata
Metro to
further down
south has
addressed the
connectivity
concerns of
commuters
from Garia,
Narendrapur
and Sonarpur
5352
Kolkata Peak to Trough to Sep'09
Trough Change Sep'09 Change (Rs./sq.ft.)
Ballygunge -5% 5% 10,000
Alipore -11% 9% 9,000
South of Park St. -10% 2% 5,500
Behala -14% 4% 2,500
New Town Rajarhat -31% 2% 2,650
Salt Lake -13% 0% 3,500
Table 13
Average Residential Capital Value Trend
Source: Knight Frank Research
Q3 2009
residentialmarket
KnightFrank.comReview
Of the total number of upcoming units, 40%
will be 2-BHK units with around 47% in the 3-
BHK category and the rest comprising 4-BHK
and above.
Meanwhile, EM Bypass is another stretch with
a number of real estate developments. Silver
Spring, the condominium development by
Bengal Silver Spring Project consisting of
520 units, is an important residential project
along the EM Bypass which became fully
operational in 2008. This micro-market,
owing to its existing infrastructure and good
connectivity has higher price ranges as
compared to its adjacent market of Rajarhat.
Notably, the prices are in an upper bracket
along the eastern part of the stretch and
witnessing a gradual decline as one moves
down south towards Garia. This can be
attributed to the demographic profile of the
residents. At present, a number of high
profile residential projects are being
undertaken off EM Bypass. Amongst them, a
note can be made of Active Acres, by Ruchi
Realty, comprising 6 towers of 19 floors each
with a variety of modern amenities and Ideal
Lakeview, a 180-unit project by the Ideal
Group which is scheduled to be ready in
2010. Ambuja Upohar, by Bengal Ambuja, is
another key project located off EM Bypass
with 11 planned towers of 19 and 17 storeys.
Besides these high-end projects along the
EM Bypass, there are a number of smaller
affordable projects southwards. Of these, a
mention can be made of Sunny Valley by
Sunny Promoters.
In all, around 1,985 residential units are
under development along the EM Bypass.
They will contribute about 2.58 mn.sq.ft. of
residential space by the end of 2011. Of
these, 42% shall consist of 2 BHK units and
45% of 3 BHK units.
The western part of the city comprising
Howrah, on the other side of the river Hoogly,
has always been considered to be somewhat
hinterlands by the residents. Real estate
West Kolkata
development, till recently, had not taken off
as with the development in other parts of the
city. However, with a number of infrastructure
initiatives in place and with better
connectivity across the river Hoogly, the
region has attracted a number of developers
to set up their projects.
Kona Expressway in Howrah can be
considered to be one of the emerging
residential markets in Kolkata. The region is
well connected to Kolkata's CBD by means of
NH-34 and the second bridge over the
Hooghly river, known as Vidya Sagar Setu.
A key development under construction in the
region is the 108-acre Kolkata Logistics
International City. The facility is the first of its
kind in the city, providing integrated state-of-
the-art services related to logistics,
warehousing, wholesale and retail trading,
truck parking and trans-loading operations.
With the completion of the project, the region
will act as a prominent belt for inter-region
trade and warehousing facility. Residential
development in Kona Expressway includes
the 390-acre Kolkata West International City
by the Indonesia-based Salim Group along
with Kolkata Metropolitan Development
Authority (KMDA) and Singapore-based
Universal Group. Almost 90% of the work has
been completed in the first phase of the
township, which at present is offering row
house developments. Other upcoming
residential developments along the Kona
Expressway include The Gateway by Unitech
and an affordable housing project by the
Ganges Group. At present, this expressway is
facing considerable traffic bottleneck in the
evenings, which is expected to be sorted with
the completion of another set of 4-lanes to be
introduced along the stretch.
It remains to be seen whether the upcoming
developments in Howrah are able to
persuade the mindset of the city's residents
in relocating to the other side of the river.
Nonetheless, if bookings in the Kolkata West
International City are to be believed, the
transition has already been set in motion.
Altogether, the western region accounts for
almost 10% of the total number of residential
units by 2011, translating to around
4.25 mn.sq.ft.
Typically South Kolkata has been the city's
most preferred residential destination owing
to its proximity to the metro railway stations
and the bypass connector. This part of the
city has an equitable mix of high-end and
mid-end living, some of the most expensive
residential locations include Ballygunge and
Alipore, while locations like Garia, Behala
and pockets along the D.H. Road primarily
comprise affordable housing. Residents of
the city generally prefer this micro-market for
their accommodation needs due to the well
developed social infrastructure and
connectivity. The entertainment industry
located in Tollygunge is home to several well
known clubs, the most famous being the
113-year old Tolly Club.
Besides, South Kolkata has a number of
prestigious educational institutes and retail
markets, which have been instrumental in
attracting home-buyers as well as developers
to launch their projects here.
South Kolkata
Meanwhile, with the extension of the Kolkata
Metro further down south, connectivity
concerns of commuters from Garia,
Narendrapur and Sonarpur have been
addressed effectively. On account of this
development various developers have
launched affordable housing projects in
Narendrapur and Sonarpur.
Notable residential developments in this
region include the 35-storied South City
Complex by South City Projects on Prince
Anwar Shah Road, which are touted to be the
highest residential towers in eastern India,
while Genexx Valley at Behala Chowrasta is
another large-scale residential development
consisting of over 2,000 units. Amongst the
key upcoming projects, a mention can be
made of Diamond City South by the Diamond
Group in Tollygunge and the distinctive
Kolkata Riverside Township Project at
Batanagar by Riverbank Holdings. The 262
acre Kolkata Riverside Project, located along
the river Ganges, will have various amenities
like an organised transport hub, a multi-
specialty hospital, golf course, sports club,
international standard school, mall space, IT
office space and a 5-Star hotel. While
booking is open for the first phase of
residential development, the entire project is
scheduled to be operational by the end of
2014.
On the other hand, a number of affordable
housing projects have come up along the
Narendrapur-Sonargaon belt. Mayfair Greens
by Mayfair Housing and Sherwood Estate by
PS Group and Srijan are a few notable
residential developments in Narendrapur.
Another key mid-range residential project
that can be mentioned is Eden Realty
promoted Eden City at Maheshtala.
Overall, South Kolkata is estimated to
witness a supply infusion of around
6.8 mn.sq.ft. of residential space, translating
approximately to 5,200 units, by end-2011. Of
the total number of units, 40% belong to the
2-BHK category while 48% are 3-BHK units.
The residential market in Kolkata has proved
to be comparatively resilient to the market
downturn which can be attributed to the
relative absence of speculative buyers. While
property prices in prime locations continue to
witness an upward trend, they have
stagnated to last year's level in suburban
markets due to the dearth of investments. For
instance, in Rajarhat prices have remained
constant between Rs. 2,500-3,000/sq.ft. for
almost two quarters now, although
construction cost has risen by about 25%
Capital & Rental Profile
during the last six months. Over the last
2-3 years, residential property prices in
Rajarhat had shot up by over 50%. In the face
of economic recession, this location
witnessed the steepest decline of around
15-30% during the period September 08-09,
amongst all micro-markets in the city. In
contrast, prime locations like Ballygunge and
Alipore have seen a considerable hike in
property prices. While prices in these
locations at the end of 2007 ranged from
Rs.7,000-10,000/sq.ft., they increased to
Rs.10,000-13,000/sq.ft. in 2009. This incline
in prices may be attributed to the limited
availability of real estate options, successful
retail and commercial projects and improved
connectivity.
Upcoming residential locations in the south
like Behala witnessed some amount of price
decline as well. While prices in these
southern markets had peaked around
Rs.2,800/sq.ft. in Q2 2008, they declined by
14% during Q2 2009. However, of late, the
market has shown signs of slight upturn with
buyers evincing interest in house purchase.
The rental market in Kolkata, at present, is
primarily led by the IT expatriates in the city.
Besides, Kolkata being the regional
headquarter for most banks, there is the need
to accommodate a sizeable number of
employees from the banking industry as well.
The steel and mining industry too has its
demand for rented accommodations in the
city.
Kona
Expressway in
Howrah can
be considered
one of the
emerging
residential
markets in
Kolkata
extension of
the Kolkata
Metro to
further down
south has
addressed the
connectivity
concerns of
commuters
from Garia,
Narendrapur
and Sonarpur
5352
Kolkata Peak to Trough to Sep'09
Trough Change Sep'09 Change (Rs./sq.ft.)
Ballygunge -5% 5% 10,000
Alipore -11% 9% 9,000
South of Park St. -10% 2% 5,500
Behala -14% 4% 2,500
New Town Rajarhat -31% 2% 2,650
Salt Lake -13% 0% 3,500
Table 13
Average Residential Capital Value Trend
Source: Knight Frank Research
Q3 2009
residentialmarket
KnightFrank.comReview
Minimum Maximum
Source: Knight Frank Research
Figure 31
Residential Rental Values (2 BHK)
Rs.
/mo
nth
0
45000
Ba
llyg
un
ge
/ A
lip
ore
30000
10000
40000
35000
25000
20000
15000
Ra
jarh
at
EM
Byp
ass
Ga
ria
Be
ha
la
Sa
lt L
ak
e
Jad
avp
ur
Pri
nce
An
wa
r S
ha
h R
oa
d
5000
Not surprisingly, the residential markets in
the vicinity of the city's CBD have the highest
rental values. Locations like Loudon Street,
Park Street and residential pockets along the
AJC Bose Road have rentals ranging from
Rs.100,000-175,000 for a premium 2-BHK
apartment. Prime residential markets in the
south like Ballygunge and Alipore demand
high rentals as well which are in the range of
Rs.75,000-125,000 for premium 2-BHK
apartments. Average minimum rentals in
these markets are around Rs.40,000.
Meanwhile, the rental market in Salt Lake has
picked up remarkably in the last few years
owing to its proximity to the IT hub of Salt
Lake Sector V. At present, a 2-BHK in this
micro-market has average rentals of around
Rs.12,000 while a 3-BHK charges
approximately Rs.30,000. Rental values
along the EM Bypass range between
Rs.10,000-40,000 for 2 and 3-BHK units,
depending upon the eastward or southward
direction of the location on the stretch. Of
late, Prince Anwar Shah Road, which has
become prominent on the city's residential
scene owing to the South City Complex, offers
rental accommodation within
Rs.15,000-35,000 for 2 and 3-BHKs. Further
down south, rentals exist between
Rs.5,000-10,000 in Behala and around
Rs.8,000-12,000 in Jadavpur. The rental
market in Kolkata, still at an evolving stage,
is expected to strengthen in the forthcoming
years with an increase in the number of
corporates in the city.
The Kolkata real estate market, which showed
signs of sluggishness in the last two
quarters, is expected to look up positively in
the next few months. Consumer sentiments
are being revived with the lowering of home
loan interests, albeit gradually and investor
interest in the city's real estate is being
renewed. Industry sources have pegged an
increase in bank credit to home buyers by
almost 60% in the last 3-4 months. This
reasonably faster upturn, as compared to
other metro cities, can be attributed to the
stable and steady character of the city's
property market. According to industry
sources, the number of real estate
transactions in the city's residential segment,
which had dipped by 50% in September
2008, have now recovered by about 30%.
With sales picking up, developers are now
mulling over launching new projects.
However, non-availability of land has become
a major problem in the path of the state's real
estate development. On the other hand,
given the quantum of residential units in the
pipeline, there exists the potential threat of
an oversupply situation in the key upcoming
market of Rajarhat. The issue of
non-occupancy in completed projects still
looms large, the reasons being inadequacy of
basic infrastructure such as internal roads,
electricity, sewage, drinking water, transport,
market place and security. Of the five
proposed sectors in the area, only Action
Area I has been provided with electricity; the
others currently run on generators. Action
Area II is expected to be provided with power
soon. There are also plans to connect the
area with the main city through a light rail
Outlook
transit and an extension of the proposed
east-west metro corridor in future. Thus,
completion of the basic infrastructure
development in the region will expectedly
take another 3-4 years. At present, residents
face the problem of commuting due to lack of
proper transportation facilities. Besides, the
area does not have any Panchayat or
corporation body yet. Hence, the newly
formed Newtown Development Authority
should look at developing all parts of the
area more homogenously.
Not surprisingly, given the economic
slowdown, only a limited number of projects
have been announced in the last few months.
Developers and other market players term
this lull as maturing of the market rather than
a slowdown.
While prices in most locations have remained
constant in the past few months, they are
expected to firm up in the next few months by
around 8-10%.
Project Status Remarks
Kolkata Logistics International City Under Construction This is a 108 acre development on Kona Expressway. On completion the
region will emerge as a prominent belt for inter region trade and warehousing
facility.
Rajarhat Airport Link Road Under Construction Connecting Rajarhat to the Airport from Action Area II, the project will allow
commuters from Rajarhat easy access to the airport, hence reducing travel
time.
Jessore Road - Rajarhat Connector Under Construction It will act as a swift transit channel between the two micro-markets.
Extension of Kolkata Metro Garia Completed This 8.07 km. stretch from Tollygunge to Garia has improved connectivity and
reduced travel time for commuters from Garia, Narendrapur, Sonarpur and all
major business centres in Kolkata.
Widening of Jessore Road to 6 Lanes Under Construction With the widening of the Jessore Road to 6 lanes, transit time to Kolkata - CBD
regions will substantially reduce.
Four-lane road between Garia and Under Construction This 12 km. road will link EM Bypass to Baruipur, thereby improving
Baruipur connectivity between the locations.
Flyover between EM Bypass and Under Construction On completion, the flyover will aid in diverting heavy traffic on EM Bypass-VIP
VIP Road near Ultadanga crossing Road from the Ultadanga crossing junction.
Flyover on VIP Road between Proposed This twin flyover flanking VIP Road from Dum Dum Park over Baguihati and up
Dum Dum Park and Jora Mandir to Telghoria bus stand would be a help to daily commuters.
East-West Metro Corridor project Under Construction From Salt Lake the 14.67 km. route will run through eastern and central
between Salt Lake and Howrah Kolkata. Between Mahakaran and Howarh railway station, it will run under
100 ft. of the Hooghly river (first underwater metro in India).
Table 14
Kolkata Major Infrastructure Developments
Source: Knight Frank Research
While
property
prices in prime
locations
continue to
witness an
upward trend,
they have
stagnated in
the suburban
markets due
to a dearth
of investment
5554
An important point which came out during the
residential market study on the upcoming
supply is the increasing preference for 2 and
3-BHK units over other larger formats. Around
40% of the total upcoming supply falls under
2-BHK and 47% under the 3-BHK category.
This reflects on the changing socio-set up of
the city's residents. Kolkata has come a long
way from the city known for its expansive
families with extended family members all
living under one roof, typically a 4-BHK or
even a 5-BHK tenement. Modern amenities
and facilities feature prominently while
choosing a residential project. However, the
price needs to be kept under control as the
market is very cost sensitive.
Presently, due to limited land supply in the
heart of the city, peripheral locations on
Jessore Road and Kona Expressway as well as
in locations like Madhyamgram, Narendrapur,
Sonarpur, Batanagar and Maheshtala are
being explored for residential development.
Connectivity and transportation issues being
some of the major concerns associated with
these somewhat distant locations, various
initiatives are being taken by the concerned
government authorities to make these
locations attractive for home buyers.
As apparent from the table of infrastructure
initiatives, Jessore Road in the north, Rajarhat
in the east, EM Bypass in the east and south-
east and Howrah in the west, are expected to
emerge as the preferred residential markets
in the near future. With the ongoing
infrastructure in place, these markets will
offer the home-buyer improved connectivity
to various parts of the city. Besides, these
markets have a sizeable amount of
residential space in the pipeline which is
scheduled to be completed in the next
two-three years.
given the
quantum of
residential
units in the
pipeline, there
exists the
potential
threat of an
oversupply
situation in
Rajarhat
Q3 2009
residentialmarket
KnightFrank.comReview
Minimum Maximum
Source: Knight Frank Research
Figure 31
Residential Rental Values (2 BHK)
Rs.
/mo
nth
0
45000
Ba
llyg
un
ge
/ A
lip
ore
30000
10000
40000
35000
25000
20000
15000
Ra
jarh
at
EM
Byp
ass
Ga
ria
Be
ha
la
Sa
lt L
ak
e
Jad
avp
ur
Pri
nce
An
wa
r S
ha
h R
oa
d
5000
Not surprisingly, the residential markets in
the vicinity of the city's CBD have the highest
rental values. Locations like Loudon Street,
Park Street and residential pockets along the
AJC Bose Road have rentals ranging from
Rs.100,000-175,000 for a premium 2-BHK
apartment. Prime residential markets in the
south like Ballygunge and Alipore demand
high rentals as well which are in the range of
Rs.75,000-125,000 for premium 2-BHK
apartments. Average minimum rentals in
these markets are around Rs.40,000.
Meanwhile, the rental market in Salt Lake has
picked up remarkably in the last few years
owing to its proximity to the IT hub of Salt
Lake Sector V. At present, a 2-BHK in this
micro-market has average rentals of around
Rs.12,000 while a 3-BHK charges
approximately Rs.30,000. Rental values
along the EM Bypass range between
Rs.10,000-40,000 for 2 and 3-BHK units,
depending upon the eastward or southward
direction of the location on the stretch. Of
late, Prince Anwar Shah Road, which has
become prominent on the city's residential
scene owing to the South City Complex, offers
rental accommodation within
Rs.15,000-35,000 for 2 and 3-BHKs. Further
down south, rentals exist between
Rs.5,000-10,000 in Behala and around
Rs.8,000-12,000 in Jadavpur. The rental
market in Kolkata, still at an evolving stage,
is expected to strengthen in the forthcoming
years with an increase in the number of
corporates in the city.
The Kolkata real estate market, which showed
signs of sluggishness in the last two
quarters, is expected to look up positively in
the next few months. Consumer sentiments
are being revived with the lowering of home
loan interests, albeit gradually and investor
interest in the city's real estate is being
renewed. Industry sources have pegged an
increase in bank credit to home buyers by
almost 60% in the last 3-4 months. This
reasonably faster upturn, as compared to
other metro cities, can be attributed to the
stable and steady character of the city's
property market. According to industry
sources, the number of real estate
transactions in the city's residential segment,
which had dipped by 50% in September
2008, have now recovered by about 30%.
With sales picking up, developers are now
mulling over launching new projects.
However, non-availability of land has become
a major problem in the path of the state's real
estate development. On the other hand,
given the quantum of residential units in the
pipeline, there exists the potential threat of
an oversupply situation in the key upcoming
market of Rajarhat. The issue of
non-occupancy in completed projects still
looms large, the reasons being inadequacy of
basic infrastructure such as internal roads,
electricity, sewage, drinking water, transport,
market place and security. Of the five
proposed sectors in the area, only Action
Area I has been provided with electricity; the
others currently run on generators. Action
Area II is expected to be provided with power
soon. There are also plans to connect the
area with the main city through a light rail
Outlook
transit and an extension of the proposed
east-west metro corridor in future. Thus,
completion of the basic infrastructure
development in the region will expectedly
take another 3-4 years. At present, residents
face the problem of commuting due to lack of
proper transportation facilities. Besides, the
area does not have any Panchayat or
corporation body yet. Hence, the newly
formed Newtown Development Authority
should look at developing all parts of the
area more homogenously.
Not surprisingly, given the economic
slowdown, only a limited number of projects
have been announced in the last few months.
Developers and other market players term
this lull as maturing of the market rather than
a slowdown.
While prices in most locations have remained
constant in the past few months, they are
expected to firm up in the next few months by
around 8-10%.
Project Status Remarks
Kolkata Logistics International City Under Construction This is a 108 acre development on Kona Expressway. On completion the
region will emerge as a prominent belt for inter region trade and warehousing
facility.
Rajarhat Airport Link Road Under Construction Connecting Rajarhat to the Airport from Action Area II, the project will allow
commuters from Rajarhat easy access to the airport, hence reducing travel
time.
Jessore Road - Rajarhat Connector Under Construction It will act as a swift transit channel between the two micro-markets.
Extension of Kolkata Metro Garia Completed This 8.07 km. stretch from Tollygunge to Garia has improved connectivity and
reduced travel time for commuters from Garia, Narendrapur, Sonarpur and all
major business centres in Kolkata.
Widening of Jessore Road to 6 Lanes Under Construction With the widening of the Jessore Road to 6 lanes, transit time to Kolkata - CBD
regions will substantially reduce.
Four-lane road between Garia and Under Construction This 12 km. road will link EM Bypass to Baruipur, thereby improving
Baruipur connectivity between the locations.
Flyover between EM Bypass and Under Construction On completion, the flyover will aid in diverting heavy traffic on EM Bypass-VIP
VIP Road near Ultadanga crossing Road from the Ultadanga crossing junction.
Flyover on VIP Road between Proposed This twin flyover flanking VIP Road from Dum Dum Park over Baguihati and up
Dum Dum Park and Jora Mandir to Telghoria bus stand would be a help to daily commuters.
East-West Metro Corridor project Under Construction From Salt Lake the 14.67 km. route will run through eastern and central
between Salt Lake and Howrah Kolkata. Between Mahakaran and Howarh railway station, it will run under
100 ft. of the Hooghly river (first underwater metro in India).
Table 14
Kolkata Major Infrastructure Developments
Source: Knight Frank Research
While
property
prices in prime
locations
continue to
witness an
upward trend,
they have
stagnated in
the suburban
markets due
to a dearth
of investment
5554
An important point which came out during the
residential market study on the upcoming
supply is the increasing preference for 2 and
3-BHK units over other larger formats. Around
40% of the total upcoming supply falls under
2-BHK and 47% under the 3-BHK category.
This reflects on the changing socio-set up of
the city's residents. Kolkata has come a long
way from the city known for its expansive
families with extended family members all
living under one roof, typically a 4-BHK or
even a 5-BHK tenement. Modern amenities
and facilities feature prominently while
choosing a residential project. However, the
price needs to be kept under control as the
market is very cost sensitive.
Presently, due to limited land supply in the
heart of the city, peripheral locations on
Jessore Road and Kona Expressway as well as
in locations like Madhyamgram, Narendrapur,
Sonarpur, Batanagar and Maheshtala are
being explored for residential development.
Connectivity and transportation issues being
some of the major concerns associated with
these somewhat distant locations, various
initiatives are being taken by the concerned
government authorities to make these
locations attractive for home buyers.
As apparent from the table of infrastructure
initiatives, Jessore Road in the north, Rajarhat
in the east, EM Bypass in the east and south-
east and Howrah in the west, are expected to
emerge as the preferred residential markets
in the near future. With the ongoing
infrastructure in place, these markets will
offer the home-buyer improved connectivity
to various parts of the city. Besides, these
markets have a sizeable amount of
residential space in the pipeline which is
scheduled to be completed in the next
two-three years.
given the
quantum of
residential
units in the
pipeline, there
exists the
potential
threat of an
oversupply
situation in
Rajarhat
Q3 2009
residentialmarket
KnightFrank.comReview
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