knight frank q1 2007 emerging growth centres

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Knight Frank Emerging Growth Centres - Quarter 1 2007

Research

Contents

Editorial 2

Chandigarh 4

Ludhiana 6

Lucknow 8

Guwahati 10

Bhubaneswar 12

Jaipur 14

Ahmedabad 16

Surat 18

Nagpur 20

Indore 22

Goa 24

Visakapatinam 26

Mysore 28

Coimbatore 30

Kochi 32

Summing Up 34

Emerging Growth CentresIndia Quarter 1 2007


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Knight FrankEmerging Growth Centres - Quarter 1 200702

EditorialThe real estate action is no longer limited to the large metropolises of India but has now permeated to the

burgeoning smaller towns and cities. These emerging centres of growth are lending sparkle to India's

booming economy. What is leading this transformation?

The upswing of the Indian real estate sector has been an outcome of a number of positive micro and macro

factors. Consistent and sustaining GDP growth, expanding service sector, rising purchasing power and

affluence, proactive and changing government policies have all lent momentum to this rapidly growing

sector.

Accounting for almost 80% of the total office space absorption, the Indian IT/ITES sector has been the

primary demand driver. India's low cost-high quality and productivity model has given it a leadership

position in the outsourcing arena. In a bid to scale up their operations and to remain globally competitive,

the Indian IT/ITES companies are exploring the smaller towns and cities. Rising manpower and real estate

costs, plaguing attrition levels and very often risk mitigation have been the key reasons for this movement.

Positive economic growth has also translated in rising disposable incomes and growing aspiration levels

across India. Rising consumerism has created a demand for new retailing and entertainment avenues.Realising that consumers across cities have similar needs, albeit the scale may vary, new age retailers are

vying to cash in on the first mover advantage and are expanding into hitherto unexplored smaller cities.

Advent of organised retailing has also translated into real estate growth in these emerging locations.

Growth of the Indian 'Rich' (annual income>USD 4,700) and 'Consuming' (annual income

USD 1,000-4,700) class coupled with falling interest rates and other fiscal incentives on home loans has

increased the affordability and the risk appetite of the average Indian consumer thereby leading to a

substantial rise in demand for housing. This has been further fueled by the increase in the size of 25-55 age

group of earning population and the emergence of double income, nuclear families. Over the last decade

the average age of Indian home loan borrower has reduced by 10 years.

Another variable facilitating real estate growth in India is the growing urbanisation. According to United

Nations Population Division, the urban population in India will continue to grow at a rate of 2.5%

per annum for the next two and a half decade. As per the Census of India 2001, 41% of the totalpopulation of India will be living in urban areas by 2011. The number of cities with a population of one

million or more is also is expected to double from 35 recorded in 2001 to 70 by 2005. This increase in

population will generate incremental demand for housing and other real estate components.

All these factors together with increased liquidity in the real estate sector through the international real

estate funds and private equity funds will result in radically transforming the real estate landscape over the

next 3-5 years. India's investment scenario is already undergoing a sea change and has been seen to be

making roads in rural India with telecom, rural retailing, agricultural supply chain and logistics facilities,

micro-credit, etc. All these factors foretell that the real estate growth will soon spread out of the established

boundaries.

However, to support this growth and to make it more expansive, a lot needs to be done. Foremost is the

thrust on infrastructure. According to a World Bank estimate, India needs to invest an additional 3-4% of its

GDP on infrastructure to sustain its current levels of growth and to spread the benefits of growth more

widely. Some positive steps have already been taken in this direction. Huge investments in infrastructure to

the tune of $350 billion have been envisaged over the next five years. Connectivity may get a boost with

the completion of ~13,000 kms of roads under the Golden Quadrilateral, North-South-East-West (NSEW)

corridor and with 4-laning of all the major national highways. This will further facilitate the economic

development of smaller towns and cities in the country.

Figure 2

40

30

20

10

0

1995-9

9

2003-0

4

2005-0

9(pr.)

Average Age of Indian Borrower

AverageAge(inyears)

50

Source: Industry

Figure 1

8

6

4

2

0

2002

GDP Growth Rate

Rate(%)

10

Source: CSO

2003

2004

2005

2006

2007E


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Knight Frank Emerging Growth Centres - Quarter 1 2007 03

Major real estate destinations of the country and some other emerging towns can be classified into three

broad categories depending upon the stage of real estate development that each one of them is

undergoing.

Category Cities Characteristics

Tier I Bangalore, Mumbai and NCR Fairly well established real estate market

Demand drivers quite pronounced

Tier II Hyderabad, Chennai, Pune and Kolkata Growing real estate markets

Experiencing heightened demand and

investments

Tier III Chandigarh, Ludhiana, Lucknow, Real estate markets yet to establish

Guwahati, Bhubaneswar, Jaipur, Perceived to have substantial potential

Ahmedabad, Surat, Nagpur, demand

Indore, Goa, Visakapatinam,

Mysore, Coimbatore, Kochi,Vijaywada, Mangalore, Trivandrum

and Baroda

40

30

20

10

0

1971

Rate of Urbanisation (1971-2011)

Rate(%)

50

5

15

25

35

45

1981

1991

2001

2011

Year

Figure 3

Source: Census of India, 2001

Table 1

As the Indian real estate sector moves higher on the growth curve, a number of state capitals and smaller

cities which have relatively better infrastructure and are able to support higher economic growth have

come into limelight. These emerging growth centres are characterised by low real estate costs, availability

of land for development, untapped manpower pool and rising quality of life. Many of these towns have

industrial and tourism driven economic base that can be leveraged for growth. Anticipating the latent

demand in these markets, a number of real estate developers and retailers have chalked out expansive plans

to harness the opportunity.

Through this report, Knight Frank India endeavours to delve further into the growth dynamics of 15

locations in India that are experiencing a paradigm shift in their economic and real estate scenarios and can

be classified as the emerging growth centres of the country. We have also ranked these 15 cities according

to the relative attractiveness as an emerging centre on the basis of five key decision making parameters, viz.

Real Estate, People, Physical Infrastructure, Social Infrastructure and Business Environment.


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Chandigarh

Overview

Chandigarh is the first planned city of India and is the capital of the two states of Punjab and Haryana.Designed on neighbourhood principle, the city is divided into self sufficient sectors. The commercial

hierarchy in the city follows cluster shopping, neighbourhood centre, community centre, sub-city centre

(Sector-34) and city centre (Sector-17). Residential sectors are divided on the basis of plot sizes. For

commercial space, common format in the city is that of Shop-Cum-Office (SCO) complexes. Owing to the

excellent social infrastructure, quality human resource base, continuous green spaces, compact size and

conducive government policies, Chandigarh has become an attractive IT/ITES destination.

Originally, Chandigarh's regional boundaries were confined to a radius of 8 kms that gradually increased

to 40 kms, incorporating a number of settlements from Punjab, Haryana and Himachal Pradesh. Mohali,

Kharar, Panchkula, Manimajra, Zirakpur and Dera Bassi are the locations in Chandigarh metropolitan region,

which are developing rapidly. Liberal policies, economic reforms and considerable investments in the

city have tapped the skilled labor pool while generating more employment opportunities and inviting

in-migration.

Source: Knight Frank Research

Figure 4

105

90

75

60

45

30

15

0

Sector-9

Sector-17

Sector-22

Office Market Values

Rs./sq.f

t.permonth

12,000

10,000

8,000

4,000

2,000

0

Rs./sq.f

t.

Locations

6,000

Rental Values Capital Values


Figure 5

8000

7000

6000

5000

4000

3000

2000

1000

0

Chandigarh

Mohali/Panchkula

Zirakpur

Residential Market Capital Values

Rs./sq.f

t.

Capital Values

Locations

Current Scenario

The Chandigarh real estate market has witnessed unprecedented growth over the last few quarters. With

little scope left for further development within the main city, skyrocketing property prices and diluted

peripheral control act, intensive real estate development has taken place on the outskirts. Establishment of

Chandigarh Technology Park (CTP) in Manimajra north-east of Chandigarh and IT Park in Mohali has

provided requisite space for the IT/ITES companies considering their expansion plans in Chandigarh.

CTP, that has an area of 375-acres, is also an approved Special Economic Zone. It provides flexible space

options for technology companies with plots of various sizes, built-to-suit facilities and large and small

campus sites. Wipro, Infosys and IBM are the major tenants of this Park. DLF Group has developed

DLF Infocity within CTP to provide space to the IT/ITES occupiers.

The residential real estate market in Chandigarh does not have much to offer, due to the lack of space forfurther development. Most of the new residential developments are coming up in Panchkula, Mohali and

Zirakpur and Dera Bassi on Chandigarh-Ambala highway. Panchkula real estate market mostly consists of

residential developments in the form of bungalows, independent houses and flats. With rising demand and

proximity to Chandigarh, there are ready takers for the available land parcels.

New residential developments are in the offing in Zirakpur and towards Nada Sahib, where Haryana

Development Authority (HUDA) is coming up with new sectors for group housing. In Zirakpur most of the

development is happening near the intersection of NH-21and NH-20. Many local developers are acquiring

small land parcels and building residential colonies. Some of the better-known projects include

Silver City (I & II) on Ambala Road (NH-21) and Royal Estates.

Dell facility, Mohali Quark City, Mohali


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Knight Frank Emerging Growth Centres - Quarter 1 2007 05

New residential developments by local builders, mostly in the form of townships, are coming up towards

Kharar Road, few of the more important ones being Gillco Valley, Sunny Enclave and Shivalik City.

Prominent retail locations in Chandigarh comprise the sector markets. While Sector-17 forms the city centre

with the presence of major brands, Sector-22 is an important market with wholesalers dominating the retail

set-up. Besides, the Sectors-8, 9, 35 and 26 also serve as important retail locations. Sector-9 is considered tobe the main financial and banking services hub of Chandigarh. In Mohali and Panchkula, the Local

Shopping Complexes (LSC) of every sector form the retail zone, catering to the basic needs of the

residents.

Chandigarh is an emerging market for organised retail. Among the upcoming projects, two multiplex

developments are coming up in Sector-17 and Sector-44. Centra Mall (150,000 sq.ft.), slated to be

operational by end-2007, is coming up in Chandigarh Industrial Area. Shalimar Mall and Bell Vista Mall,

under construction in Sector-5, will be operational in 2007. Bella Vista Mall will also have a hotel complex.

The prime residential locations in Chandigarh, which include sectors 4 to 10 command the highest values,

ranging between Rs.5,000-7,750/sq.ft. Other sectors command a price of Rs.3,300-4,400/sq.ft. With

developments on a fast growth trajectory, the demand for housing is expected to rise in the region.

Currently, Zirakpur has a price range of Rs.2,200-2,750/sq.ft. for plots and Rs.2,300-2,700/sq.ft. for flats

while residential developmets in Dera Bassi have capital values of Rs.1,300-2,000 /sq.ft.

Retail space supply in Chandigarh is restricted due to strict building bye-laws. Quoted lease rentals are

around Rs.120-180/sq.ft. per month for the ground floor and Rs.25-40/sq.ft. per month for first floor.

Within Chandigarh, two new projects are under construction currently; a mall-cum-multiplex in Sector-17

and another with a built up area of around 150,000 sq.ft. in the industrial area. Grade-A developments

comprising malls are coming up in Zirakpur, Dera Bassi and Mohali, under mega projects scheme. These

projects offer retail space at a rate of Rs.90-180/sq.ft. per month. However, with changing trends, a number

of hotels in mall developments are also in the pipeline.

On the commerical front, all the sectors in Chandigarh have common SCO format commanding a capital

value of around Rs.6,500-10,000/sq.ft. and with lease rentals of Rs.25-35/sq.ft. per month. The onlyexception is Sector-9, the centre for banking, financial and telecom services. The rentals here average to

about Rs.90/sq.ft. per month while the capital values are approximately Rs.9,750/sq.ft.

In the last six months, there has been a correction in the residential property market in Chandigarh. With

correction in the market, stabilisation is envisaged which will encourage transaction rate.

Corridor development is the latest buzz in Chandigarh region. Good connectivity at domestic and global

level, lower operational cost and easy availability of skilled labor, higher disposable incomes and lavish

lifestyle has put real estate on an upswing in the region. Chandigarh offers ample opportunity for hospitality

business as well. With more corporates establishing offices in the region, a significant demand of hotels is

witnessed. Further retail growth is envisaged along the highways in Zirakpur and Panchkula whereas

residential projects on Jalandhar Road and Ambala-Chandigarh highway will dominate the development.

Availability of land for real estate development in Mohali will ensure good quality real estate projects

fulfilling residential space demand from end users. Higher yields in Chandigarh will encourage the

development of integrated townships - self reliant developments encompassing residential, retail and

commercial units, over the next 3-5 years.

Rental and Capital Values

Outlook


Figure 6

200

180

160

140

120

100

80

60

40

20

0

C

handigarh

Mohali/Panchkula

Zirakpur

Retail Market Values

Rs./sq.f

t.permonth

Rs./sq.f

t.

20,000

18,000

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000

0

Locations

Rental Values Capita l Values


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Ludhiana

Overview

Ludhiana, known for its hosiery and sports goods industries, is the most populated city of Punjab. Excellentconnectivity with major cities and a favourable business environment has made the city a preferred

investment destination of the state.

Though Ludhiana has witnessed considerable real estate growth in the past few years, most of the

developments have been unplanned and have resulted in extending the city boundaries. The major

commercial activities in Ludhiana were previously confined to Chaura Bazaar, Sarafan Bazaar, Lakkar Bazaar,

Purana Bazaar and Book Bazaar, which were item specific markets. Residential developments were

predominantly located in proximity to these prime commercial pockets. Over the years, these locations

have grown at a much faster pace than the respective growth in infrastructure.


Figure 7


Locations

71

70

69

68

67

66

65

64

63

62

FerozeGandhiMarket

Pak

howalRoad

Rs./sq.f

t.permonth

Rs./sq.f

t.

5,000

4,000

3,000

2,000

1,000

0

6,000


Residential development, Agar Nagar Ansal Plaza Mall, Ferozepur Road

Current Scenario

With the announcement of mega projects and liberal government policies, Ludhiana has attracted the

attention of a number of real estate investors. Of late, new locations like Mall Road, Link Road,

Ghumar Mandi, Feroze Gandhi Market, Sarabha Nagar Market and Ferozepur Road have emerged as

alternative markets to the commercial centre of Chaura Bazaar. Feroze Gandhi Market, located to the west

of the city, comprises mostly of mixed-use developments with retail component on the ground floor and

office space on the floors above. There is considerable demand for quality office space in this micromarket.

An interesting trend witnessed in the city has been the conversion of existing residential properties in the

central part of the city for commercial usage. Notably, over a period of time, a number of residential

developments in Pakhowal Road have been converted to retail and office spaces. Pakhowal Road will also

have the prestigious office-cum-retail project, City Centre (4 mn.sq.ft.), which is expected to become the

preferred office address for various firms.

Besides the above locations, Chandigarh Road will also witness commercial projects following the workplace

principle. The demand will be primarily led by the companies from the banking and financial sector,

telecom companies and other service sector corporates. At present, preference for stand-alone buildings is

gradually catching up in the city. In the long term, with the development of the international airport at

Halwara, commercial developments are expected to come up on Jalandhar Road as well.

The city has an active residential market. Sarabha Nagar, in the western part of the city has high-end

residential development. This location is an attractive retail market as well. Gurdev Nagar, BRS Nagar,

Kitchlu Nagar, Civil Lines and Club Road are the other residential locations offering quality residential

options. Residential developments in the city are also coming up in peripheral locations of South City and

Samrali Farms on both the sides of the canal. This includes an NRI township named 'Apna Punjab'.

Chandigarh Road has become the preferred destination for integrated townships and mixed-use projects.

Preference for plotted development rather than apartments is a distinguishing feature of the residential

market in Ludhiana.


Figure 8

3,000

2,500

2,000

1,500

1,000

500

0

SarabhaNagar

RajguruNagar

ModelGram


Rs./sq.f

t.

Capital Values*

Locations

* Capital values taken for plotted developments


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Lucknow

Overview

Lucknow, the state capital of Uttar Pradesh is a city of historical and cultural significance. Amongst the fewcities which can boast of rich architectural heritage, it is fast evolving as a modern real estate destination.

Increase in economic activity, changing aspirations of the resident population and potential for real estate

growth has led to massive changes within the city.

The erstwhile old city comprising locations like Aminabad and Chowk have given way to new centres of

growth like Gomti Nagar, Mahanagar, Janakipuram and Indiranagar in the suburbs. Though Hazaratganj

remains to be the CBD of the city, these emerging growth pockets have led to an increase in commercial

activities in the suburbs. Development is now not only limited to the main city and the suburbs but is also

active along the highways connecting Lucknow to other destinations. These include Sitapur Road, Faizabad

Road, Sultanpur Road, Raebareilli Road, Kanpur Road and Hardoi Road. Major township projects by

developers like Ansal, Sahara, Omaxe, Rohtas, Eldeco etc. have been proposed on these roads.


Figure 10


Locations

60

50

40

30

20

10

0

Hazratganj

GolMarket

Rs./sq.f

t.permonth

Rs./sq.f

t.6,000

5,800

5,600

5,400

5,200

5,000

6,200


6,400

6,600

Charbagh

Sahara Ganj Mall, Shah Najaf Road Eldeco Sansar, Raebareilli Road

Current Scenario

Commercial activity in Lucknow, including retail and office sector, is mainly concentrated in and aroundHazratganj. Some other destinations like Kapurthala Commercial Complex in Mahanagar have also emerged

as alternate business centres. Offices in Hazratganj comprise those of banks, financial institutions, telecom

service providers, government agencies as well as those of some well known developers likes Parsvnath,

Halwasia, Rohtas, Eldeco, etc. Most of the developments in these locations are on the commercial complex

format and have been developed by local developers.

IT/ITES sector is yet to pick up in Lucknow and as such there is a lack of specific IT/ITES catering

developments. Also, anticipating the future demand, the STPI at Gomti Nagar is being revived. TCS and

Wipro are two IT companies going ahead with their plans in the city. Some quality office developments like

Shalimar Corporate Park and Pinnacle Towers are coming up in Gomti Nagar.

Till some time back, retail activity in Lucknow was largely unorganised in nature and concentrated in

locations like Hazratganj, Aminabad, Kaiser Bagh and to some extent in Mahanagar. Over the last few years,

with the Eastern Mall (250,000 sq.ft.) in Gomti Nagar and Sahara Ganj (400,000 sq.ft.) on Shah Najaf Road

becoming operational, organised retail has picked up in the city. However, MG Road in Hazratganj is still

the most significant retail highstreet of the city and has all major apparel, accessories and food and

beverage brands. Fun Republic Mall in Gomti Nagar is the latest addition to the city mall list and at least

8 more malls are in various stages of planning and development around the city.

The residential sector in Lucknow has witnessed a sea change in the recent times. Main city locations like

Chowk, Alambagh, Aminabad, Kaiserbagh are very congested and do not offer any new space for further

development. Some development in the form of rebuilding the old, demolished houses has however been

done in these locations. Hazratganj, Civil Lines and the Mall Avenue are the high-end residential locations of

Lucknow and have mainly bungalow style developments. A few premium residential apartments have also

come up on Mall Avenue.


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Figure 12

200

180

160

140

120

100

80

60

40

20

0

MGRoad

ShahNajafRoad

Aminabad


Rs./sq.f

t.permonth

Rs./sq

.ft.

25,000

20,000

15,000

10,000

5,000

0

Locations


Indiranagar and Gomti Nagar are the suburban locations which are witnessing hectic residential

development. Both these locations have individual bungalows and as well as new apartment style

developments. Omaxe, Eldeco, Parsvnath and UP Township in collaboration with the Uppal Group and the

Chadha Group are developing apartment projects in Gomti Nagar.

Naya Haiderabad, Mahanagar and Janakipuram are chiefly higher and middle-income residential locations.Sahara has developed two projects - Sahara State Homes and Sahara Grace in Janakipuram. Arif Industries

Metro City apartment project is being developed in Paper Mill Colony near New Haiderabad.

On the outskirts of Lucknow, Sahara is coming up with a 175-acre township called the Sahara City Homes

on Hardoi Road. Not very far from there, Eldeco is developing a 200-acre Eldeco Town on Sitapur Road.

Towards south of Lucknow, on Raebareilli Road, Rohtas is building 2/3 bedroom apartments Rohtas Icon

near Vrindavan Yojna. Also, Eldeco has its plotted row house and bungalow scheme near South City.

Just off Raebareilli Road is the 250-acre Omaxe City Township project. This development will have

apartments and villas together with office and retail blocks. The township is expected to be operational by

early 2008. Besides these, townships by Ansals and Sahara on Sultanpur Road and by Lucknow

Development Authority on Kanpur Road have also been announced.

The unprecedented rise in demand for residential space has led to a similar rise in capital values. Values in

suburban locations like Janakipuram, Gomti Nagar, Indiranagar, Aliganj and Mahanagar have increased by

25-50% over the last 2 years. Quoted rates for residential developments by Omaxe, Eldeco and Parsvnath in

Gomti Nagar are between Rs.1,800-2,200/sq.ft. Residential developments in Jankipuram and Aliganj

command a rate of Rs.1,200-1,800/sq.ft. The new residential developments coming up on the outskirts of

the city on Hardoi Road and Sitapur Road range between Rs.1,000-1,200/sq.ft. Certain developments on

Raebareilli Road are quoting a rate of Rs.750-1,000/sq.ft.

Office space rentals in the CBD of Lucknow of Hazratganj are in the range of Rs.45-55/sq.ft. per month

while those in Gol Market and Mahanagar are at approximately Rs.30-45/sq.ft. per month. The rentals for

commercial space around Charbagh and in Alambagh are about Rs.40-50/sq.ft. per month.

The ongoing rentals on the highstreet of MG Road in Hazratganj are in the range of Rs.100-180/sq.ft.

per month whereas the capital values range between Rs.15,000-20,000/sq.ft. Other important retail

markets of the city like those of Alambagh, Aminabad and Kaiserbagh command a retail rental of

Rs.70-100/sq.ft. per month, depending upon location and frontage. The capital values in the same

locations range between Rs.6,000-8,000/sq.ft. The rentals in the two operational malls of the city, the East

End Mall at Gomti Nagar and Sahara Ganj on Shah Najaf Road, are similar and quoted to be in the range of

Rs.110-160/sq.ft. per month.

Lucknow real estate market has gained momentum over the last 2-3 years. The city offers substantial

potential for future growth and this is being supplemented by proactive policies of the state government.

Lucknow Development Authority (LDA) has taken active initiative in all round development of Lucknow.

Land banks are being auctioned in specified locations to bring about a planned development of the city.

Proper planning of the city's infrastructure and of amenities and utilities is being done to support future

growth and development in the city.

The entry of a number of national level developers and retail brands in the city points towards the positive

outlook for the city. With the backing of quality manpower availability, supportive policies and increasing

purchasing power, Lucknow will emerge as a key IT/ITES as well as retail destination of North India.


Outlook

09


Figure 11

2,500

2,000

1,500

1,000

500

0

Gomtinagar

Jankipuram

HardoiRoad


Rs./sq.f

t.

Capital Values

Locations


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Guwahati

Overview

Guwahati, the capital city of the state of Assam is heralded as the ingress to the northeastern states of thecountry. Guwahati has been the service centre for the oil industry and tea plantations and home to

important tea auctions.

Being the economic hub of the region, the city is witnessing considerable migration of population from

within the state as also from the neighbouring states. Within the span of a decade, the city has seen a

considerable population growth of over 40%. This extensive population growth has been responsible for

bringing upon a number of changes in the region. Residential units, hitherto comprising individual houses,

are being developed in the form of apartment buildings in prime locations of the city situated along the

main roads of the city, viz. RG Baruah Road and GS Road. Departmental stores, supermarkets and large

format stand-alone stores are coming up all over the city. Brand-consciousness has caught up with the city's

youths and highstreet retailing is flourishing in the region.

While IT has still not penetrated the city as in the other parts of the country, Guwahati has attracted a

number of insurance and FMCG companies. Typically, the government organisations are the majoremployers in the region. Most of the offices are located in Ulubari, the CBD of the city, and in Bhangagarh

both situated along the busy GS Road. The traditional retail markets of the city are concentrated in

Fancy Bazaar, Pan Bazaar and Paltan Bazaar.


Figure 13


Locations

60

50

40

30

20

10

0

Ulubari

Ganeshguri

Rs./sq.f

t.per

month

Rs./sq.f

t.

5,000

4,000

3,000

2,000

1,000

0

6,000


7,000

The Hub, GS RoadThe Cube, GS Road

Current Scenario

In the recent years, the city's real estate market has grown on a gradual note. Although developers in the

city had undertaken construction of a number of projects, both commercial and residential, time and again

these developments were halted due to government policies regarding Floor Area Ratio (FAR). These

hiccups notwithstanding, a number of multinational companies, predominantly in the banking sector, have

established their zonal head offices in the city. Majority of these financial institutions, including ICICI Bank

and HDFC Bank, have occupied office space along the GS Road.

Organised retail has been the most notable development in the city. While a number of food and beverage

chains like Caf Coffee day, Barista and Baskin Robbins have their presence in the city, others like

McDonald's are scouting for large format retail space to set up their flagship store. According to industry

sources, Pantaloon Retail is scheduled to enter the market with its Big Bazaar brand of retail format in a few

months' time. Currently, majority of the retail space developments are taking place on GS Road, right from

Paltan Bazaar to Six-mile, mostly in the form of stand-alone stores. The upmarket residential developments

in the vicinity provide the requisite catchment. In recent times, Ganeshguri has come up fast as an

important highstreet, which could be attributed to the flyover connecting the location to GS Road.

Some of the important large format retail developments in the city include Vishal Megamart (40,000 sq.ft.)

at Paltan Bazar and Hub (40,000 sq.ft.) at Bhangagarh, both of them operational since 2005. These mega-

stores are pulling in the crowds and are enjoying sufficient conversion of footfalls.


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Bhubaneswar

Overview

Bhubaneswar, the capital of Orissa and the "Temple Town of India", is an important metropolis of easternIndia. The city is well connected with the rest of the country and has the potential to emerge as an

important growth centre.

Being the seat of administration in the state, Bhubaneswar has attracted a huge worker population, mostly

from the neighbouring locations, and has seen its population growth surge by 57% over the decade. The

prime economic drivers of the city have been trade and tourism. With the growth of IT/ITES prospects in

the city and the resurgence of the mining industry, Bhubaneswar is expected to evolve as a significant

urban centre of the country in the forthcoming years.

Though the infrastructure development in the city has been rather slow, there has been steady

development in the real estate sector of the city. A number of national level developers have expressed

interest to set up their projects in the city. With Janpath, the CBD of the city, facing paucity of land, new

commercial developments in the city are coming up in the north and southwest locations of the city.

Residential property in the city mostly comprises independent units in prime locations of Ashok Nagar,Forest Park, Jaidev Vihar and Bapuji Nagar with a few multi-storied apartments in Rasulgarh. Demand for

apartments and flats are expected to pick up with increasing preference shown by the HIG population of

the city.

A prime tourist destination of the country, Bhubaneswar has an active retail scenario. At present, retailing in

the city is largely unorganised and are located at Janpath, Cuttack-Puri Road, Ekamra Marg and

Bapuji Nagar. Several major brands have their outlets in the city with most of them concentrated in and

around Janpath.


Figure 16


Locations

60

50

40

30

20

10

0

Janpath

Chandrasekharpur

Rs./sq.f

t.permonth

Rs./sq.f

t.5,000

4,000

3,000

2,000

1,000

0

6,000


7,000

Fortune Towers, Chandrasekharpur

Current Scenario

The Bhubaneswar real estate market is government regulated with almost 70-75% of the land holding

vested with the state owned Orissa State Housing Board. Lack of space within the city has led to the

emergence of locations like Chandrasekharpur, Sailashree Vihar, Nandankanan and Patia in the north of

Bhubaneswar. Kalinganagar and Khurda are the other emerging locations in the southern part of the city.

The commercial real estate in the city at present comprises mixed-use development - office space in the

upper floors with retail on the ground and first floor. A few stand-alone office structures have been

developed by the local government to attract IT/ITES companies. Some of the major developments by the

State Government through Industrial Development Corporation of Orissa (IDCO) are the Tower 2000 in

Mancheswar Industrial Estate, IDCO Towers in Janpath and Fortune Towers in Chandrasekharpur which

houses prominent companies like TCS, Reliance Infocomm, Tata Teleservices, POSCO and Essar Steel.

The Orissa Government has accorded Priority Sector status to the IT sector to attract investment in to the

region. IT majors Infosys and Satyam who had set up their development centre in Bhubaneswar in 1997 are

contemplating expansion plans. An important development by IDCO has been the Infocity-I, the IT SEZ in

Chandrasekharpur.

Forum Mart, Off Janpath


13/36


Adjacent to Infocity-I Delhi-based DLF Group is coming up with their IT Park in Chandaka Industrial Estate.

Genpact has also announced plans of setting up a BPO SEZ on 25-acres of land in the Mancheswar

Industrial Estate of the city. Apart from IT, a 60-acre biotechnology park is also planned in the city.

On the residential property front, the government had been the major provider of housing in terms of land

and built up space. However, deficient supply from the government has prompted the city's residents toturn towards the private developers to meet their housing demand. A number of township developments

have been proposed to come up in the suburban and peripheral locations. These include a 100-acre

township by Sahara India along the NH-5, the Club Town project in Chandrasekharpur and another

large-scale joint development by Bhubaneswar Municipal Corporation in Shaheed Nagar. Most of the

residential projects in the city are witnessing high absorption rates and the demand for residential units has

increased in the city in prime residential locations of Ashok Nagar, Bapuji Nagar, Shaheed Nagar and Surya

Nagar.

Bhubaneswar is also currently witnessing a perceptible change on the retail front. The 180,000 sq.ft.

Forum Mart off Janpath was the first organised retailing development in the city. According to industry

sources, retailers like Reliance and Bharti are scouting for land in the CBD. Besides this, several local

developers have plans for setting up large format malls through joint venture in the city.

In the last few years there has been an annual appreciation of almost 50% in office space values. Office

space in Janpath has lease values in the range of Rs.35-60/sq.ft. per month and capital values in this

location vary between Rs.4,000-7,500/sq.ft. The average lease rates for office space in other locations vary

between Rs.20-30/sq.ft. per month and the capital values range between Rs.2,400-4,000/sq.ft.

Presently, the residential market in terms of apartments in Bhubaneswar is driven primarily by investor

demand. As a result, prices in prime high-end residential locations have increased substantially over the past

year and are currently at a range of Rs.1,650-2,500/sq.ft. while mid-end apartments are at

Rs.1,600-1,800/sq.ft. Locations like Khurda, Patia and Nandankanan which have been promoted as the

growth corridors of the city, comprise duplex bungalows with high resale value. The residential

developments in these peripheral locations are witnessing very high absorption and prices are in the range

of Rs.1,500-1,800/sq.ft.

The retail lease rates in key highstreets of the city are estimated at Rs.45-60/sq.ft. per month while the

capital values are in the range of Rs.5,500-7,000/sq.ft. In secondary highstreets of Cuttack-Puri Road, rental

values are at Rs.35-45/sq. ft. per month and capital values are quoted at Rs.4,000-5,500/sq.ft.

The state government has been actively promoting Bhubaneswar as an upcoming IT/ITES destination.

Recently, to give further push to the sector, an International Institute of Information Technology (IIIT) was

launched at Gothapatna by the state government with support from the IT industry. There are also plans to

set up a 100-acres IT Park adjacent to the institute to house the IT companies. Real estate prices are

expected to rise further with demand arising from various MNCs and IT/ITES companies. Besides, with a

number of SEZs coming up in the neighbouring districts, including a 4,000-acre SEZ by POSCO, the

economy of the city will be further strengthened.

The government has called for participation from the private sector in industrial estates like Agro-tech Park

and Diamond Park in the region. The administration has also taken up major infrastructure projects to

improve connectivity between key cities, viz. Cuttack-Bhubaneswar and Sambalpur-Rourkela. Moreover,

work on airport expansion and modernisation is also underway. Besides these, a proposal for International

Airport and Air Cargo Complex is under consideration. All these developments are anticipated to augment

the overall attractiveness of the city and thereby draw investors in various sectors to the city.


Outlook


Figure 17

2,500

2,000

1,500

1,000

500

0

AshokNagar

ShashtriNagar

Nandankanan


Rs./sq.f

t.

Capital Values

Locations


Figure 18


Locations

60

50

40

30

20

10

0

Janpath

Cuttack-

PuriRoad

Rs./sq.f

t.permon

th

Rs./sq.f

t.


5,000

4,000

3,000

2,000

1,000

0

6,000

7,000

EkamraMarg

13


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www.knightfrank.com


Jaipur

Overview

Jaipur, the bustling capital of Rajasthan, is a major international and domestic tourist destination. Widelyknown as the Pink City, Jaipur is fast transforming into a cosmopolitan city. Over the last 15 years, Jaipur

has undergone major economic reforms. Economic growth has led to expansion of urban space in the

region. With increasing disposable incomes and changing socio-economic environment, suburban and

peripheral locations have become the focus of development.

Old Jaipur, also known as the Walled City, houses traditional markets like Bapu Bazaar and Chand Pole.

MI Road is the prime office and retail location of Jaipur and has several multistoried commercial complexes.

Old city locations of Ramchandra Chaukari, Gangapol Chaukari and Jaleb Chowk are no longer preferred for

residential purpose as they are quite congested and have become more of commercial locations. Bani Park,

Raja Park, Malviya Nagar, Jawahar Nagar and Nirman Nagar are the high-end residential locations and are

characterised by the availability of plots and apartments.

Some land parcels are still available in the Walled City and developers are actively seeking these for

development. Upcoming IT projects and SEZs are expected to trigger off further development in the city ascommercial and residential demand is likely to pick up with the increase in economic activity.


Figure 19


Locations

36

MIRoad

SubhashMarg

Rs./sq.f

t.permonth

Rs./sq.ft.

9,500

9,000

8,500

8,000

7,500

7,000


50

48

46

44

42

40

38

Current Scenario

Till late, office space in Jaipur was confined to multistoried commercial complexes on MI Road and the

locations in the vicinity. Due to the increase in demand for Grade-A office space, new developments are

coming up in Bani Park, JN Marg, Ashok Marg, Ahinsa Circle and on Tonk Road. Corporates like Tata AIG,

Genpact, HSBC, GAIL, Reliance Infocom, Yes Bank and Standard Chartered have their offices in the city.

With a number of IT parks coming up on Delhi Road, Sitapur Road, Tonk Road and Vaishali Nagar, these

peripheral locations are emerging as preferred IT destinations of the region.

Residential demand has moved from the Walled City to locations like Ashok Nagar, C-Scheme and Lal Kothi.

Vidhyadhar Nagar, Vaishali Nagar and Mansarovar are the upcoming residential locations on the outer

fringes of city. New residential projects like Omaxe City, Sushant Lok, Parsvnath Narayan City, Amarpali andVatika are coming along Ajmer Road, Tonk Road and Kalwar Road.

As with the other smaller cities of the country, Jaipur is also witnessing a retail boom. A number of malls in

variable retail formats have come up around the city. Gaurav Tower and Savitri Towers in Malviya Nagar,

Cityplex on Tonk road, Silver Square and Mall 21 are some of the existing malls in the city. At present,

a number of retail projects, including City Mall on Ashok Marg, Crystal Palm and MGF on Bhawani Road

and Golcha Trade Center on MI Road are under construction in the city.

Recently, a number of national level developers have entered the Jaipur real estate market and this has led

to increased competition for the local developers.

Crystal Court Mall, Malviya Nagar Residential development, C-Scheme


Figure 20

3,000

2,500

2,000

1,500

1,000

500

0

C-S

heme

BaniPark

TonkRoad


Rs./sq.f

t.

Capital Values

Locations

3,500

4,000


15/36



Outlook

With the entry of global firms in the city, the office market in Jaipur has been growing steadily to support

the ancillary activities. MI Road offers office space at rentals ranging from Rs.25-50/sq.ft. per month, while

office space on Subash Marg is available for capital values varying between Rs.7,800-10,000/sq.ft. and at

rentals in the range of Rs.35-55/sq.ft. per month.

In the residential segment, Bani Park, Malviya Nagar and Raja Park have witnessed an appreciation of

25-30% in the last two years. Capital values vary in the range of Rs.1,850-3,850/sq.ft. for plotted

developments in these locations. C-Scheme fetches the highest rates with capital values of apartments

ranging from Rs.3,300-4,000/sq.ft., while residential developments in Bani Park have capital values of

Rs.3,250/sq.ft. Civil Lines, Bajaj Nagar, Gandhi Nagar and Tonk Road are preferred mid-end residential

pockets with a price range of Rs.1,450-1,750/sq.ft.

Growth of retail in Jaipur is fueled by domestic and international tourism. Retail formats in the city cater

to established retail brands stores as well as to local handicraft stores. Capital values vary from

Rs.20,000-22,000/sq.ft. for shops in premium shopping malls whereas rental values vary from

Rs.70-110/sq.ft. per month. Malls in C-scheme have witnessed appreciation of approximately 35% in the

last one year due to excellent connectivity and proximity to the Walled City.

Jaipur is a growing market for real estate and has immense potential for expansion. Low operational costs,

availability of labour at cheaper rates, low attrition rates due to lack of regional competition and economic

reforms have led to many IT/ITES corporates exploring the market for their expansion plans. This has also

brought about a change in the construction quality and has ushered in a new era of development.

Investments from NRIs and inclination of service class for second home have supported the residential

market. Quality real estate and balance between demand and supply has led to a healthy market where

good appreciation in real estate values is envisaged over a period of time.


Figure 21


Locations

60

50

40

30

20

10

0

MIRoad

SahkarBhawan

Rs./sq.f

t.permonth

Rs./sq.f

t.


5,000

0

MalviyaNagar

70

80

90

100

10,000

15,000

20,000

25,000

15


16/36

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Figure 23

3,000

2,500

2,000

1,500

1,000

500

0

Ambavadi

SatelliteRoad

Prahladpur


Rs./sq.f

t.

Capital Values

Locations

16

Ahmedabad

Overview

Ahmedabad, the commercial capital of Gujarat, is referred to as Manchester of India owing to theestablished textile industry in the city. Stable business environment, traditional entrepreneurial skills and

liberal state policies have resulted in a vibrant economy of state.

Being designated as the 'Megacity' in the Union Budget, 2005 has brought substantial funding for

upgradation of infrastructure in the city. Projects like Ahmedabad Gandhinagar Metro Rail, Sabarmati River

Front Development, Bus Rapid Transportation System (BRTS) and expansion of city in a planned manner

have attracted a considerable amount of investment to the real estate market as well. Several town planning

schemes have led to development of organised space suitable for off-shoring business activities.

Presence of quality human capital, availability of land at reasonable prices and better connectivity make

Ahmedabad an attractive destination for business developments. Development of the Knowledge Corridor

and the approval of six SEZs are expected to form a strong economic base for the city. Also industrial

development across various sectors like pharma, chemicals, apparel and textile, has generated a number of

employment opportunities in the region.

Typically, Ashram Road is the established CBD of city with a number of government and corporate offices.

Central locations of CG Road, Satellite and Drive-in Road are also preferred due to better quality of space

and their proximity to residential developments in Kalupur, Daryapur, Raipur, Khadia and Jamalpur. The

traditional retail markets of Ahmedabad primarily include old city locations of Shahibaugh, Kalupur, and

Relief Road. Besides, textile mill land in the eastern part of the city has the potential for new retail,

residential and commercial ventures.


Figure 22


Locations

30

25

20

15

10

5

0

CGRoad

Ashram

Road

Rs./sq.f

t.permonth

Rs./sq.f

t.2,500

2,000

1,500

1,000

500

0

3,000


3,500

SGHighway

Current Scenario

Dynamic growth in the city has made a vast difference to the landscape of the city. With the CBD lacking

space for development, new micromarkets have emerged across the city. A number of office developments

have come up on SG Road, due to the congestion in the core city. The focus of development has shifted

from eastern Ahmedabad to the suburban and peripheral locations in the western part of the city.

As the cost for IT/ITES operations in Ahmedabad being lower by 40-50% as compared to the Tier I cities of

the country, substantial potential is envisaged for future IT/ITES investment. With several tax incentives,

concessions and a FAR of 2.25, the city is expected to attract more IT/ITES companies. Currently, IT/ITES

development in the city is at a nascent stage. Info City, an IT Park spread over 150 acres in Gandhinagar has

tenants like Microsoft, ACI and TCS. IT/ITES SEZ by the DLF Group, Mindspace IT Park by the Rahejas and

Gandhinagar Electronics Estate by Gujarat Industrial Development Corporation (GIDC) are expected to be

operational in the next few years.

In the residential segment, with the Old Central Zone of the city having reached saturation levels, locations

like Navrangpura, Naranpura and Ambavadi are witnessing strong demand for high-end apartments. Post

the 2001 earthquake, there has been a tremendous demand for low-rise buildings, bungalows and

row-houses. Suburban and peripheral locations like Bopal, Ambali, Shilaj, Satellite, Memnagar, Vastrapur,

Prahlad Nagar, Vasna and Paldi, are coming up with residential developments.

GDNR Info City IT Tower, Gandhinagar Piramyd Abhijeet, CG Road


17/36


CG Road, the retail highstreet of the city, has been a favoured location for malls and exclusive show rooms

of various international brands. Of late, the SG Highway has become the most preferred destination for

organised retail due to availability of larger developments. At present, ten malls are operational in the city.

High propensity to spend, entrepreneurial spirit, wide product range and competition among the retail

chains are driving the retail market in the city. By end-2009, the city is expected to receive a supply of

4-4.5 mn.sq.ft. built up area in the retail segment.

The CBD office micromarket rental values are currently at Rs.18-27/sq.ft. per month. Rental values in the

western suburbs of the city are around Rs.18-22/sq.ft. per month, while peripheral micromarkets, which

had an appreciation of 27% in the last few months, have rentals in a range of Rs.22-24/sq.ft. per month.

In the residential segment, New Central Zone locations have witnessed around 16%-20% appreciation in

residential values in the last few years. Capital values of apartments in this micromarket are around

Rs.1,600-2,500/sq.ft. Western suburbs of the city witnessed strong appreciation of around 20%-24% and

the prevailing rates are around Rs.1,300-1,650 per sq.ft., while south western suburbs of Paldi, Vasna,

Pralhad Nagar and Vejalpur witnessed capital values rise to the current rates of Rs.1,200-1,450/sq.ft.

Retail high street developments have witnessed a rise in rentals of around 20% in the last few years. Rental

values in the CBD micro markets are quoted at around Rs.80/sq.ft. per month. Western suburban locations

have witnessed appreciation of around 21-25% and prevailing rates here are around Rs.100-115/sq.ft.

per month. Peripheral micro market has witnessed annual appreciation of 30% and rental values are around

Rs.150/sq.ft. per month.

Ahmedabad market can be said to be in a transition stage with the real estate sector getting more

organised and user specific. Over the next one year, the sector is expected to get an investment of

Rs.150 billon.

Multi-locational peripheral development has opened the potential for IT/ITES projects. Skilled labour,

availability of land in market, quality real estate, low operational costs, good connectivity, supportivegovernment policies and entrepreneurial culture are the strengths of this city. However, social infrastructure

has still not matched the desired pace, hence self-contained and integrated projects will have better

prospects.

With the IT/ITES SEZs becoming operational over the next few years, real estate development is expected to

promote the growth and development of Ahmedabad. Stable market growth and promising returns is

envisaged in Ahmedabad in the forthcoming years.


Outlook


Figure 24

120

100

80

60

40

20

0

CGRoad

SGHighway

Drive-inRoad


Rs./sq.f

t.permonth

Rs./sq.f

t.

8,000

6,000

4,000

2,000

0

Locations

10,000

12,000


140

160

14,000

16,000

17


18/36

www.knightfrank.com



Figure 26

3,000

2,500

2,000

1,500

1,000

500

0

Citylight

Bhatar

Adajan


Rs./sq.f

t.

Capital Values

Locations

18

Surat

Overview

Surat, the second largest commercial hub in Gujarat, is also one of the major industrial locations of thecountry. It is renowned for its textile manufacturing, diamond cutting and polishing industries.

Over the last two decades rapid industrialisation, along with consequent urbanisation, have led to

large-scale conversion of agricultural land for residential, commercial and industrial use. Developers have

acquired large tracts of land in the peripheral locations and plan to sell them as plotted developments. The

CBD of the city, located along the Ring Road, is witnessing considerable space crunch and new

developments have come up in the suburbs of the city. Udhna Darwaza and Majura gate, to the south of

the city, has a small number of stand-alone structures to cater to the office space needs of the banking and

financial sector.

Locations like Ghoddod Road, Parle Point and Athwalines form the prime residential pockets of the city.

Majority of the retail markets are concentrated in these locations. Surat has a mix of local retail chains as

well as several national level retailers. Varechha forms the centre of diamond trade in the region. Another

major industry, the wholesale textile market, is located in the Ring Road.Source: Knight Frank Research

Figure 25


Locations

60

50

40

30

20

10

0

Athwalines

UdhnaDarwaza

Rs./sq.f

t.permonth

Rs./sq.f

t.

5,000

4,000

3,000

2,000

1,000

0

6,000


7,000

Citylight

70

80

8,000

9,000

Current Scenario

The real estate market of the city has witnessed considerable activity in the past few years. While industry

sources hint at the black market component being behind the upsurge in real estate development in the

city, the fact that there has been a significant population growth of 62% during the last decade has

contributed to the development of high-rise apartments and row houses in the suburban locations of the

city.

Majority of the residential projects are coming up in the northwestern part of the city, in locations of Adajan

and Rander. The southern locations of Citylight and Piplod, the HIG pockets, too have a number of

Grade-A residential developments coming up in this micromarket by 2008.

Besides residential developments, which have been the most active segment of the real estate market, retail

projects are also on the rise. Majority of the retail developments are coming up at Piplod, along the Dumas

Road. Most of these retail projects are being developed as malls, as opposed to the prevalent formats

consisting of mixed use developments. Around four malls are underway in proximity to each other on the

Dumas Road. Approximately 2 mn.sq.ft. of new retail space is estimated to enter this micromarket, which

may, according to industry sources, amount to an oversupply situation. Amongst the notable mall

developments, Iscon Mall (325,000 sq.ft.) is expected to be operational by early 2007.

Surat lacks any form of organised office space and most of the corporates present in the city have taken

space in the various commercial complexes around the city. Currently, highstreets at Majura Gate, Parle

Point, Ghoddod Road and Athwalines comprise such commercial developments. Offices in the city mostly

cater to insurance companies, broking houses, coaching centres, etc. No major IT/ITES organisation has its

presence in the city currently.

Valentine Theatre, Piplod Raj Empire Multiplex, Bhatar Road


19/36


Only a few MNCs like JM Morgan Stanley and ABN Amro are in Surat presently but with increasing

urbanisation of the region, more corporates are expected to enter the market in the near future.

The residential market in the city is witnessing an upswing in the prices over the past few years.New Grade-A residential developments in the city like Surya Darshan at Citylight and Aashirwad Palace at

Bhatar Road offer amenities like gymnasium and club houses which were previously not available to flat

buyers/owners in Surat. Currently, the residential prices exist within a range of Rs.1,650-2,700/sq.ft.

Ring Road in Surat is the commercial hub. The rates in this location vary in the range of

Rs.1,500-1,800/sq.ft. Sale is preferred over lease. The capital values at Ghoddod Road and Parle Point,

the other important commercial locations of Surat are in the range of Rs.6,000-8,000/sq.ft.

On the retail front, as with the office space, lease models are not popular in the city. Retail spaces on

Ghoddod Road and Parle Point are available at Rs.10,000-15,000/sq.ft. while rental values are quoted at

Rs.100-150/sq.ft. per month. Towards Udhna Darwaza, near the Ring Road, retail prices are within a range

of Rs.6,000-7,000/sq.ft. The rental values in the malls under development at Piplod Road are approximately

at Rs.65-70/sq.ft. per month.

Work on Surat airport will mark the onset of commercial real estate activity in the city. Direct air

connectivity with the rest of the country will provide an immense boost to the trade and commercial

prospects of the city. It shall also attract business tourists, thereby leading to an upsurge in the hospitality

segment, particularly on the Dumas Road.

Under the Surat Municipal Corporation (SMC) and Surat Urban Development Authority's (SUDA)

comprehensive development plan, a number of infrastructure projects are underway. Also, Gujarat Industrial

Development Corporation (GIDC) is to develop a Gems and Jewellery Park at Ichhapore near Surat, which

will expectedly firm up land prices around that region.

With regard to the residential property markets, prices are expected to increase further over the next

6-10 months in the locations of Adajan, Rander, Citylight and Piplod. The demand for residential units will

be persistently driven by end-users as well as investors. By the end-2008, as majority of the

underdevelopment projects are completed, the western and southern suburbs of the city will emerge as

important hubs.

The retail markets in the city are expected to become more organised with an increasing number of people

getting exposure to brand culture. Key retailers like McDonalds, RPG, Spencer & Co., Shoppers Stop, etc.

are seriously considering to enter the market. Attractive demographics and viable rentals are the two

decisive factors behind their plans to enter the Surat market.


Outlook


Figure 27

120

10080

60

40

20

0

ParlePoint

GhoddodRoad

Citylight


Rs./sq.f

t.permonth

Rs./sq.f

t.8,000

6,000

4,000

2,000

0

Locations

10,000

12,000


140 14,000

19


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Nagpur

Overview

Nagpur, besides being an industrial city, is a key business and administrative centre of Maharashtra. Thecity, spread over an area of approximately 253 sq.km., has witnessed a decadal population growth of

26.3% in 2001. Nagpur is undergoing major transformation and this is evident by the improving

infrastructure of the city, increasing focus of the local government on city development and the positive

changes in the real estate sector of the city.

The real estate prices, which had been inactive for many years, have witnessed a change with the

announcement of the Multi-modal International Hub Airport at Nagpur (MIHAN) in 2002-03. A number of

locations around the proposed MIHAN project have seen high escalation in land and residential rates. Major

companies like Satyam Infotech, GE, DLF, Shapoorji Pallonji, L&T Infotech, Patni Computers and Microsoft

have taken up large parcels of land in the SEZ within the Cargo Hub and this in turn will augment the

residential demand in the region. The prime residential projects in Nagpur, which mostly consist of

bungalows, are located in Chaoni, Dharampeth, Ramdaspeth, Shivajinagar, Wardhaman Nagar and Civil

Lines. The CBD locations of the city are Civil Lines and Sadat, while retail pockets in the city are

concentrated in Dharampeth, Gokulpeth, Sitabuldi, and Wardhaman Nagar.


Figure 28


Locations

44

42

40

38

36

34

32

CivilLines

Ramdaspeth

Rs./sq.f

t.permonth

Rs./sq.f

t.

5,000

4,000

3,000

2,000

1,000

0

6,000


Gandhibagh

Current Scenario

As the IT/ITES industry is at a nascent stage, Nagpur does not have dedicated office buildings. The few

IT companies in the city are located at the MIDC IT Park at Sadar and the IT Park at Parsodi. Developments

existing in the CBD locations and those in Itwari, Gandhibagh, Ramdaspeth and Dharampeth have a mix of

retail and office space. Insufficient demand as well as lack of good plot sizes has restricted new commercial

development in these micromarkets.

Around 1.2 mn.sq.ft. of office space is expected to come up in the market in the next 2-3 years. The

Empress City project which is expected to be operational by 2009 will contribute approximately

0.7 mn.sq.ft. of built up space. Some of the prominent developers in the city are Aditya Builders, Alankar

Real Estate, Himalaya Builders, Narang Builders and Shriram Builders.

The residential supply in Nagpur has grown by almost 100% over the last few years. With a number of new

projects mushrooming in various locations in the city, real estate development in Nagpur is on an upward

curve. Demand for housing in Nagpur arises from employees working in the local industries, businessmen,

IT/ITES and BPO professionals as well as those engaged in the insurance and banking sector. Since more

than half the population of the city constitutes of the middle-income and the upper middle-income group,

investments in residential properties by the local residents has shown a considerable increase.

The upcoming residential locations in Nagpur comprise Kamptee Road in the north-east, Khamla and

Hingna Road in the south-west and Besa and Wardha Road in the south. These locations have a number of

apartment complexes as well as stand-alone buildings coming up. Majority of the new supply is

concentrated in the southern zone (Wardha Road) near the upcoming Cargo Hub.

MIDC Infotech Tower, Parsodi Inox Multiplex, Vardhaman Nagar


21/36


The increasing demand for housing has encouraged local developers to come up with new apartment

projects in Nagpur. Some of the notable residential projects in the city are Vyankatesh City by Sukhkarta

and Vyankatesh Builders, Sahara City by Sahara Industries and Empress City by KSL Industries. The concept

of developing large-scale township projects is getting a good response from the local residents and

investors. Companies like Satyam Infotech and Reliance have acquired large parcels of land for township

development in Nagpur.

As with the other emerging cities, the retail landscape in Nagpur is experiencing significant change. The

major drivers of this growth are the increasing propensity to spend of the local population who are mostly

entrepreneurs, as well as the emerging IT sector in Nagpur. New retail growth can be seen close to the

prominent residential and high-income group locations of Dharampeth, Ramdaspeth, Gokulpeth,

Byramjee Town, Gandhibagh, Itwari and Wardhaman Nagar. New malls are also coming up around

VIP Road, Variety Square, Wardhaman Nagar and Gandhibagh. Around 3.2 mn.sq.ft. of retail supply is

expected to come up in the city by 2009. The prominent upcoming retail projects in the city include two

large format malls by N Kumar Group on VIP Road and Khamla, both awarded to the group on

Built-Operate-Transfer (BOT) basis by the Nagpur Improvement Trust.

Due to the rise in demand, the residential sector capital values have seen an annual appreciation of as high

as 150-200%. The capital rates in the upmarket residential locations like Civil Lines and Byramjee Town

range from Rs.2,000-3,750/sq.ft. while Shivajinagar and Ramdaspeth command rates of

Rs.1,500-3,200/sq.ft. Upcoming locations like Wardha Road presently command an average rate of

Rs.2,000/sq.ft. while Kamptee Road and Katol Road command rates of Rs.800-1,250/sq.ft. Besa in the south

eastern part of the city commands rates in the range of Rs.1,000-1,500/sq.ft.

Office space rental values in the CBD locations of Nagpur range from Rs.40-45/sq.ft. per month while

Ramdaspeth and Dharampeth command rental rates of Rs.35-40/sq.ft. per month. Other locations like

Itwari, Gandhibagh and Central Avenue Road command lease rates of Rs.35-40/sq.ft. per month.

Rental rates in old retail markets range from Rs.50-65/sq.ft. per month while other retail pockets like

Dharampeth and Sitabuldi command rates of Rs.60-80/sq.ft. per month. Upcoming retail locations of

VIP Road and Variety Square command rental rates of Rs.90-120/sq.ft. per month, while Wardhaman Nagarcommands a lease rate of Rs.90/sq.ft. per month.

The 'R.K. Swamy's -BBDO Guide to Urban Markets, 2005' has ranked Nagpur as the 10th richest city in the

country. With infrastructure initiatives in place, Nagpur has a potential for developing into a much sought

after real estate destination. Availability of educated manpower, cheap real estate and land for large campus

developments are attracting many IT companies to this city.

The Nagpur Improvement Trust is planning around six mega township projects in various locations in the

outskirts of the city while the Nagpur Municipal Corporation has plans to develop shopping malls on

BOT model and earn revenues as lease rentals. In the next few years, residential, commercial and retail

activity will be concentrated on Wardha Road, Airport Road, south eastern and southern western locations

around the Ring Road. IT majors like Wipro, HCL and TCS have exhibited heightened interest to set up their

facilities in the city. Thus, with excellent infrastructure in place, a proactive local government and growing

momentum in the real estate sector, Nagpur is expected to attract considerable investments in the near

future.


Outlook


Figure 30

120

100

80

60

40

20

0

VIPRoad

Dharampeth

WardhamanNagar


Rs./sq.f

t.permonth

Rs./sq.f

t.8,000

6,000

4,000

2,000

0

Locations

10,000

12,000


21


Figure 29

3,000

2,500

2,000

1,500

1,000

500

0

ByramjeeTown

Shivajinagar

WardhaRoad


Rs./sq.f

t.

Capital Values

Locations

3,500


22/36

www.knightfrank.com


Indore

Overview

Indore, the commercial capital of the state of Madhya Pradesh, is the hub of business and trading activitiesin the central India. The city is also well known for its textile industry.

Buoyed by a strong commercial base, Indore is fast becoming a favourable destination for major corporate

and foreign investors in the country. Developments such as the Special Economic Zone (SEZ) and

Auto Testing Track in Pithampur, IT Park at Khandwa Road, conversion of the domestic airport into an

international one are being undertaken at a rapid pace. Plans for developing a Super Corridor are also afoot

to improve connectivity between the eastern and the western parts of the city as well as to attract national

as well as Multi National Companies.

Encouraged by the various developmental activities underway in the city, a number of IT/ITES companies

have expressed their interest. MG Road, which can be classified as the CBD of Indore, has banks, insurance

and telecom companies' offices. Some similar offices and outlets are also located along the AB Road. With

the demand for office space market expected to rise in the next few years, real estate developers in the

region are gearing up to meet increased in demand.

There has also been heightend demand for apartments from the residents of the city. This has been on

account of rising land prices, scarcity of space within the city centre and aspiration for a modern lifestyle.

The demand for apartment-style housing could also be attributed to the fact that there has been

a 46% growth in the city's population in the decade, thereby emphasising the need to shift to alternative

housing.

Indores populace is mostly of entrepreneurs with high purchasing power. The city has a number of strongly

entrenched local brands along with national and international retailers. The old traditional unorganised

markets are slowly giving way to new organised retail markets by the arrival of new malls and shopping

centres in the city. Presently, the major retail growth can be seen in the central part of the city close to the

high-end residential locations of Palasia, Race Course, Saket and Gulmohar and also in upcoming locations

like Vijaynagar and MR 10.


Figure 31


Locations

19

MGRoad

ABRoad

Rs./sq.f

t.permonth

Rs./sq.f

t.

5,200

5,100

5,000

4,900

4,800

4,700


22.522

21.5

21

20.5

20

19.5

5,300

5,400

5,5005,600 Current Scenario

Over the last few years considerable real estate activity has been undertaken by developers in the city. Most

of these developments are taking place in the eastern part of the city near the Indore Bypass. While

developers like Satya Group and Omaxe Constructions have commenced their projects viz. Malwa County

and Omaxe City respectively, others like Parsvanath Developers, Ansal Housing, Vivan Infrastructure and

DLF Group have made large scale investments on the Indore Bypass region. Besides these, the Madhya

Pradesh government has earmarked 2,000-acres of land for an IT SEZ near the proposed international

airport. This proposed airport will be a catalyst for future real estate development in the neighbouring

locations. Another noteworthy development is the Crystal IT Park on 24-acres of land at Khandwa Road.

Prospective growth of the IT sector has fueled the growth of residential real estate in the city. Furthermore,

the revival of Pithampur and Dewas industrial estate have provided impetus to the real estate demand in

these industrial areas, as well.

Treasure Island Mall, MG Road BCM Heights, Navlakha Square


23/36


Shalimar Township (23-acres) along the bypass was the first township concept successfully implemented in

Indore by the Mirchandani Group. Meanwhile, Sahara India Infrastructure and Housing has planned Sahara

City Homes on the Bypass at Bicholi Mardana. The integrated township development would be spread over

89-acres of land.

On the retail front, Indore already has a number of national and international brands. Treasure Island(0.6 mn.sq.ft.), located on MG Road, was the first organised retail format in the city. Another mall,

Mangal City (0.25 mn.sq.ft.) located at Vijaynagar Chowk has multiplex chain, R-Adlabs, as its anchor

tenant. With several prominent retailers considering venturing in the city, retail industry has great prospects

ahead in the city. Notably, Mumbai-based K Raheja developers are coming up with a hypermarket on

11-acres of land around the Bypass. Besides, a number of national level multiplex operators have also

announced their entry into the city.

Currently the existing retail space in Indore is approximately 0.86 mn.sq.ft. Around 1 mn.sq.ft. of new retail

space is expected to enter the market in the next few months. About 4-5 malls are in the pipeline and it is

expected that by 2009 approximately 3 mn.sq.ft. of retail space will be operational in the city.

Existing offices in Indore are located in mixed-use format developments which have retail spaces on lower

one/two floors and two/three floors above as office floors. Currently, the rental values for such spaces range

from Rs.20-22/sq.ft. per month while the capital values are quoted at Rs.5,000-5,500/sq.ft. Capital values

for office space have appreciated over 100% in the past year.

With the increase in demand from the middle class segment of the city, the residential rates in the prime

locations of the city have witnessed an appreciation of 10-15% in the past two years. Currently, the prices

quoted for a high-end apartment exist within the range of approximately Rs.1,300-2000/sq.ft.

The retail market in the city is on a growth curve. While majority of the highstreet retail is concentrated

within the city, new mall developments are taking place on the outskirts of the city. At present, the retail

rentals prevalent in the CBD of the city range between Rs.40-80/sq.ft. per month.

Indore is undergoing fast paced infrastructure development to match the future demand from various

sectors. The state government along with local authorities is taking several initiatives to promote Indore as a

premier destination for IT/ITES companies in Central India. Indore is on the radar of a number of IT

companies including Wipro and TCS. Developers like K Raheja and Unitech have already been allotted land

in the proposed IT SEZ. It is, therefore, implicit that Indore is about to witness hectic activity on the IT front

in the coming years.

The city is also expected to have a large influx of people in the next few years because of the job

opportunities generated by the upcoming IT Parks. As a result, demand for housing will increase to

accommodate the incoming population. The demand is expected to be conveniently met by supply as a

number of integrated townships are underway in the Indore Bypass region. The increasing population will

also have a positive impact on the retail growth in the city and open up opportunities for modern retailing.


Outlook


Figure 33


Locations

MGRoad

ABRoad

Rs./sq.f

t.permonth

Rs./sq.f

t.


VijaynagarChowrah

6,000

5,000

4,000

3,000

2,000

1,000

0

7,000

8,000

50

40

30

20

10

0

60

70

90

80

23


Figure 32

1,200

1,000

800

600

400

200

0

Palasia

RacecourseRoad

MR10


Rs./sq.f

t.

Capital Values

Locations

1,400

1,600

1,800

2,000


24/36

www.knightfrank.com


Goa

Overview

The state of Goa, located along the western coast of the country, is a foremost tourist destination of thecountry. A steady growth of tourist inflow, both foreign and domestic, has resulted in the state achieving

one of the highest per capita income in the country.

An erstwhile Portugese colony, Goa is divided into two districts viz. North and South Goa with headquarters

at Panaji and Margao respectively. While Panaji, located in North Goa, forms the administrative capital,

Margao in south is the commercial centre of the state. Over the years, North Goa has witnessed a faster

economic growth, thereby overtaking its southern counterpart. Infrastructure development in the northern

part of the state led to early commercialisation of the region, while gradual regulated development in

South Goa provided the region with a dynamic hospitality industry, a number of five star deluxe hotels

along its coast-line.

Panaji, also the CBD of the region, has a number of government offices located at Patto while

18th June Road comprises the retail segment of the micro-market. Prime residential properties in Goa are

located in Dona Paula, Miramar and Caranzalem along the northern coast, while mid-end apartments arepresent in Margao in the south. Being a tourist hub, the retail markets in Goa are largely unorganised and

are located at beach towns of Calangute and Baga.


Figure 34


Locations

45

0

Panaji

Margao

Rs./sq.f

t.permonth

Rs./sq.f

t.

5,000

4,000

3,000

2,000

1,000

0

6,000


40

35

30

25

20

15

10

5

Current Scenario

With a number of initiatives taken up by the state government, Goa is emerging as an IT destination. As a

result, real estate market in the region has picked up considerably in the past year. Several national level

developers, including Delhi-based developers DLF and Parsvanath, have bought large parcels of land in

Goa. Another out-of-town developer, Pune-based Gera Developers, are coming up with their business

centre in the CBD of Panaji.

The state has recently set up an advanced 46-acre IT centre called Rajiv Gandhi IT Habitat at Dona Paula.

Besides housing BPO units, the centre will be engaged in the production of multi-media and entertainment

software. Plots have also been allotted to companies providing infrastructure facilities in the centre.

Another IT park has been proposed at Soccorro in North Goa. Meanwhile, Wipro has acquired 25-acres of

land adjacent to the IT Habitat for its R&D centre.

The government has approved five SEZs in the region, relating to various sectors, viz. gem and jewellery,

pharma, biotechnology, IT and services. Mumbai-based developers Raheja and Peninsula Group, along with

pharma companies like Cipla, have been allotted land for developing common infrastructure. At present,

Verna Industrial Estate houses a number of MNCs like Siemens, Cipla and Dlink.

Goa has a number of office developments coming up in the next few years. Majority of the developments

are clubbed with retail component on the ground floor. While Atria (30,000 sq.ft.) at Mapusa is a mix of

retail and office, Crossroads Avenue at Margao will have a mix of office, retail and residential units.

Currently, high-rise office developments like Dempo Plaza and Myles High Corporate Hub are limited only

to Panaji.

Patto Plaza, Panaji Myles High Corporate Hub, Panaji


25/36


The residential property market in Goa is on an upswing. While villas and bungalows along the coast are

preferred by the premium segment, demand for multi-storied apartments is also on the rise. Most of these

residential developments have come up in Dona Paula and Miramar. Dynamix Group of Mumbai has a

140-acre residential township at Bambolim which offers high-end villas, bungalows and apartments. The

project will also have a five star resort by 2008. Random residential development is also noticed at Dabolim

in the south and in northern locations of Calangute, Mapusa, Caranzalem and Taleigaon. Panaji, which

comes under EDC (Economic Development Corporation) regulations due to its heritage status, has a

restricted development. Consequently, Porvorim has come up as a satellite township to the saturated Panaji

residential market.

Retail markets in the state, although highly fragmented, are gradually becoming more organised. While

mall developments are yet to come up, a number of multi-storied shopping centres are underway in Goa.

Two retail developments Osia Mall and Profit Centre are coming up in Margao, totaling to about

0.1mn.sq.ft. of retail space. Coastal towns of Candolim and Calangute have well develo

knight frank q1 2007 emerging growth centres

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