property insight q1 blue may 2019 citixxxxx 14-05-2019 · affordable housing, from the earlier...
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INDIA REAL ESTATE OVERVIEW
PROPERTY INSIGHTSIndia Quarter1, 2019
Introduction
Economy
During the October-December quarter, growth of the Indian economy slipped to 6.6%, primarily due to weaker
domestic and external demand, higher oil prices and slightly tight financial conditions. Private consumption,
further slowed to 8.4% in the third quarter, while investment demand remained at 10.6% in the third quarter.
India’s retail price inflation rate was under check at 3.38 percent in October and declined thereafter to 2.11 percent
in December ‘18. During the October-December period, industrial output grew at a slightly slower pace of 3.63% as
compared to 5.9% in the same period of the previous year.
GDP estimates have been revised downwards from 7.4% in the February policy to 7.2% now, with the domestic
economy facing headwinds on account of the slowdown in the global economy, ongoing trade tensions, rise in
crude prices and domestic investments having slowed down. But India’s consumer confidence improved for the
second quarter in row and domestic consumption driven by public expenditure and an increase in disposable
incomes through tax benefits is a major driver going forward.
Introduction
GDP growth rate & Repo Rate
POLICY UPDATES
GDP Growth Repo rate
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Q22018
Source: World Bank, RBI
Note: GDP numbers for Q3 2018 correspond to the Oct – Dec quarter
Q32018
GST rate cut to 5% for residential projects and 1% for affordable housingprojects
In the 33rd GST counsel meeting, the Group of Ministers panel decided to reduce the prevailing GST on under-
construction residential projects, which had been a long-standing demand from both developers as well as
buyers. The GST Council acting upon the new definition for affordable housing (60 sqm carpet area and priced at
INR 45 lakhs in metros and 90 sqm carpet area and priced at INR 45 lakhs in non-metros) reduced GST to 1% on
affordable housing, from the earlier prevailing 8%. The cities classified as metros are Delhi NCR (Delhi, Noida,
Greater Noida, Gurugram, Faridabad and Gaziabad), Kolkata, Hyderabad, Mumbai, Bengaluru, Chennai.
For all other under-construction projects, the GST was cut from 12% to 5% with the Input Tax Credit (ITC) facility
also rescinded. This received mixed reactions as the removal of input tax credit was seen as largely negating the
GST cut with developers hinting at an increase in costs which could lead to a price hike. The government in a
further clarification allowed developers to either choose the older GST of 12% with applicable input tax credit or
switch to the new 5% GST tax regime. However, this choice was available only for projects which were still under-
construction as of March 31, 2019. New projects launched after April 1, 2019 were to go ahead with the new GST
rate only. While the ITC benefit was discontinued as developers were not providing clarity on the extent of the
benefit being passed on to the buyers, the benefit of the new norms should largely be seen for new project
launches post April 2019. By taking away the ITC clause and reducing the GST, the government has largely eased
the process and created a more level playing field for both buyers and developers.
Introduction
Increase in holding period for unsold inventory
ndNotional rent exemption on 2 house and rollover of capital gains forndpurchase of 2 home
RBI REPO rate cut
In the wake of the high inventory levels amid slowly recovering sales, the government in the interim budget 2018-19
announced an extension in the period of applicable tax on unsold inventory to 2 years. By doing so, government has
eased off the burden from developers and gave them some needed room to clear off their existing unsold units. But
this may be less effective as the new launches will be coming at a competitive price and with reduced GST.
The government in the Interim Budget also allowed exemption on notional rent from a second house which was to be
treated as self-occupied. It also allowed a rollover of capital gains for purchasing two residential houses from 1 and
increasing the limit to up to INR 2 crores. This was aimed at spurring homebuying activity and allow some more
liquidity in the hands of homeowners.
The Reserve Bank of India in its latest Monetary Policy Committee meeting announced a reduction of 25 bps in the
repo rate, which now stands at 6.0%. This marks the second successive rate cut by the central bank, though the
stance continues to remain neutral. The focus remains on managing inflationary pressures, though growth
figures high on the agenda as well for the central bank.
Transmission of previous rate cuts have been slow and not done in full measure. Some banks in anticipation of the
repo rate cut had already cut their MCLR and thus home loan rates as well. However, more benefits need to be
passed on to the consumers. The RBI announcement of banks moving their interest rate benchmarking to
external benchmarks from April 1, also does not seem to have been implemented across the board. Rate cut
transmissions and moving to external benchmarks by the wider banking industry could pave the way for causing a
further reduction in interest rates for consumers and this should have a positive impact on home loan growth.
Impact on Residential Sector
RBI’s push for external benchmark linked lending rates
The Reserve Bank of India came out with an Internal Study Group report in October 2017 which was a review on the
efficacy of the MCLR based lending system. A major sore point was the transmission of rate cuts as per the monetary
policy and hence consumers not getting the full benefit of a relaxed interest rate regime. Considering that we moved
from base rate to MCLR based interest rates largely following on from the fact that MCLR was more sensitive to policy
rate signals, the stickiness of loan rates despite a proactive and easing repo rate environment has not really been
beneficial to consumers. In fact, with the banks free to decide their MCLR and the spread over MCLR, the lending rates
have not shown enough decline despite the accommodative stance of the monetary policy since 2015.
The report recommended to move to linking the interest rates to an external benchmark like Treasury Bills,
Certificate of Deposit rate or the RBI’s policy repo rate. Also, key recommendations included giving banks a free
hand to decide the spread over the external benchmark and to keep it constant over the loan tenure while the
periodicity of setting the loan rates was to be made quarterly compared to the once a year process followed earlier.
The idea was to migrate all PLR/base rate/MCLR linked loans to the new regime by a fixed date without any
conversion fee to be charged by the banks.
The underlying philosophy behind the above recommendations was to make the entire process of setting lending
rates by banks transparent and to improve monetary transmission. While banks would not have discretion over the
benchmark rate, they would have complete freedom to fix the spread over the external benchmark for new
borrowers. The fixed spread over the benchmark through the tenure of the loan would limit the scope for any
arbitrary adjustment by banks in resetting the spread over time for existing borrowers. This entire exercise would
have led to enhanced flexibility in setting the lending interest rates by banks in response to changing monetary
policy signals.
There were as usual various differing views, with banks largely showing an unwillingness towards the new system.
Their main concerns were:
The new system did not work since banks were funded by retail deposits where deposit rates had not changed
much and hence the external benchmark was not a viable option.
Banks could not manage their interest rate risk with fixed interest rate-linked liabilities against floating interest
rate linked assets likely to cause an asset-liability mismatch.
MCLR regime hadn’t had a long enough run to check its efficacy.
Banks should have flexibility of changing the spread during the tenure of the loan.
Ÿ
Ÿ
Ÿ
Ÿ
Impact on Residential Sector
What is however, interesting to note is that though the RBI asked for banks to move to the new external benchmark
by April, 2019, it has now postponed the implementation even as it holds additional consultations with all
stakeholders.
Even during the early discussions, foreign banks had shown an active interest in moving to this new regime which
is also quite popular across western economies. In fact, Citi is the only bank in the country that currently offers a
loan product that already is linked to 3 months T-bill as its external benchmark and follows a quarterly reset of the
interest rate, while also allowing seamless movement across MCLR to the TBLR (Treasury Bill Benchmark linked
Lending Rate).
In anticipation of moving to an external benchmark linked lending rate, SBI has also announced linking its deposit
accounts over INR 1 lakh to the repo rate from May 1, 2019.
This is likely to show the way for other banks to move ahead and accept the change while moving to a regime
where an external benchmark-based lending rate regime is the way to go, to allow for better monetary policy
transmission consumer benefit even as banks create appropriate safeguards for themselves to manage their
interest rate risks and their profitability during the transition phase.
Certain key points for consideration are:
Switching to an external benchmark would be equivalent to RBI setting an incontrovertible “standard” on the interest
rate fluctuations on loan products; banks will be free to decide the spread giving them more independence there.
Should we follow a single external benchmark, or one can choose from T-bills, CDs and repo rate
Linking deposit rates to external benchmark while protecting retail depositors
Monetary policy periodicity being quarterly, external benchmark reset should also be quarterly which is a more
dynamic method
Ÿ
Ÿ
Ÿ
Ÿ
Real Estate Market Snapshot
Residential
Q-O-Q increase in new unit
launches during Q1 2019
6%
Share of mid segment in overall
unit launches in Q1 2019
51%
Contribution of Mumbai,
Bengaluru and Pune in new
launches during Q1 2019
66%
Total retail transactions
in Q1 2019
Total retail transactions
in Q1 2019
2.2 msf 78.4 msf
Retail
Pan-India vacancy in malls
12.4%
Office
Gross leasing in Q1 2019,
150% growth y-o-y
13.0msf
New supply in Q1 2019, 11.7%
growth q-o-q
15.1 msf
Net absorption in Q1 2019,
two-fold growth y-o-y
11.7 msf
Indian Residential Sector Overview
Ahmedabad and Mumbai witnessed
strong growth in launches
Affordable Segment
Mumbai and Bengaluru contributed
nearly 63% of total launches
Mid Segment
Hyderabad contributed 50% of
new launches in Q1 2019
High-end Segment
Hyderabad, Pune and Ahmedabad witnessed
launches in the luxury segment during Q1 2019
Luxury Segment
New Launches in Q1 2019 (in units)
Affordable Mid High-end Luxury
Ahmedabad Bengaluru Chennai Delhi-NCR Hyderabad Mumbai Pune
Unit launches increased slightly by 5% q-o-q across the top 7 cities (Delhi-NCR, Bengaluru, Mumbai, Chennai,
Hyderabad, Pune, and Ahmedabad) during Q1 2019. Mumbai contributed the maximum to new launches with a
37% share followed by Bengaluru and Pune both contributing 17% share each. Except Bengaluru, Chennai and
Delhi NCR all other cities recorded a q-o-q growth in launches in Q1 2019, with Ahmedabad, Hyderabad and
Mumbai witnessing the maximum q-o-q growth.
Key Trends
23%
69%
36%
53%
33%
3% 3% 3%12%
54%
22%
25%
60%
37%
8%
43%
89%
43%
4%
11%
3%
64%
Mid segment saw an improved share in new launches with nearly 50% share of the overall units launched in
Q1 2019, followed by the affordable segment with a 39% share. Both mid and affordable segments witnessed q-o-q
growth of 5% and 28% respectively. Mumbai and Bengaluru continued to see maximum launches in the mid
segment while Mumbai and Pune contributed most towards launches in the affordable segment with both cities
combining for nearly 58% of total launches in this category. High-end projects saw a q-o-q drop of 42% in
launches; however, luxury segment recorded a rise of 53% q-o-q in launches on the back of new projects in
Hyderabad, Ahmedabad and Pune.
Buyers across all cities continued to prefer mid and affordable segment options due to their relative low-ticket
sizes and availability across major residential corridors. Homebuyers’ preference towards completed and close
to completion projects remained intact mainly to avail the benefits of no GST on completed projects which have
received occupancy certificate (OC).
1Ahmedabad, Bengaluru, Chennai, Delhi-NCR, Hyderabad, Mumbai and Pune.
The GST council has recently reduced GST rates on under-construction properties. The rates have reduced from
8% to 1% for affordable homes and from 12% to 5% for other categories. Also, the size which constitutes
affordable housing has also been revised to 60 sq. mtr in metro cities and 90 sq mtr in non-metro cities, with the
price fixed at INR 45 lakhs across cities.
3%6%
Mumbai ...................................................................................... 1
Delhi-NCR .................................................................................. 4
Bengaluru .................................................................................. 7
Index
Residential Overview
Mumbai
New unit launches continued to rise during Q1 2019
with an increase of 20% q-o-q and were at nearly
15,600 units. On a y-o-y basis, new launches were up
nearly 1.5 times in Q1 2019 compared to Q1 2018.
Majority of the new projects were launched in
Extended Eastern and Western sub-markets of the city
with both contributing nearly 49% of new launches.
Thane sub-market followed with a 24% share in launches.
Affordable and mid-segment housing continued to be
the preferred options for homebuyers. To cater to this
demand, developers continued to launch projects in
these categories, with mid-segment projects contributing
nearly 56% of total launches followed by the affordable
segment with a 40% share during Q1 2019.
Buyers are still preferring to purchase ready to
move in or nearing possession properties across all
sub-markets.
Share of launches in price segments
Unit launches gather momentum
Source: Cushman & Wakefield Research
1
South
South Central
Far North
Central
North East
North
Location
48.0 - 75.0
46.0 - 83.0
12.5 - 20.0
27.0 - 61.0
15.0 - 24.0
28.0 - 50.0
2017
48.0 - 75.0
46.0 - 83.0
12.5 - 20.0
27.0 - 61.0
15.0 - 24.0
28.0 - 50.0
2018
55.0 - 85.0
46.0 - 83.0
27.0 - 61.0
30.0 - 60.0
12.5 - 20.0
15.0 - 24.0
Q12019
Average Capital Values – High-End (INR ‘000/sf)
South
South Central
Far North
Central
North East
North
Location 2017
40.0 - 50.0
45.0 - 58.0
10.0 - 16.0
23.0 - 45.0
10.0 - 14.0
20.0 - 30.0
2018
40.0 - 50.0
45.0 - 58.0
10.0 - 16.0
23.0 - 45.0
10.0 - 14.0
20.0 - 30.0
Q1 2019
40.0 - 50.0
45.0 - 58.0
10.0 - 16.0
23.0 - 45.0
10.0 - 14.0
20.0 - 30.0
Source: Cushman & Wakefield Research
For details on project launches, refer Annexure
The values in the legend are in INR/sf.
2018 Q1 2019
< 7,500 7,501 - 25,000 25,001 - 40,000 > 40,000
45%
51%
4%
63%
23%
13%1%0%
69%
19%
8%4%
2017
Average Capital Values – Mid Segment (INR '000/sf)
Launches – segment-wise across submarkets (%)
Submarkets Affordable Mid High-end Luxury Total (Number of units)
Eastern Suburbs
Western Suburbs
South Central
Thane
Navi Mumbai
0%
0%
0%
5%
63%
84%
86%
0%
85%
0%
16%
14%
100%
0%
37%
0%
0%
0%
0%
0%
2,116
1,054
136
3,675
865
With, Reserve Of India (RBI) reducing the repo
rate to 6% recently, we expect the banks will pass on
this benefit to home buyers which will eventually
result into reduced home loan EMIs and thus will
provide a push to demand in the coming quarters.
The reduction in GST rates from 8% to 1% for under-
construction affordable homes and from 12% to 5%
for other homes will also provide positive
momentum to homebuying activity. However, home
buyers are still preferring ready possession or
nearing completion projects to avail the benefit of
no GST on completed homes.
The extended Eastern and Western suburbs of
Mumbai along with select locations in Navi Mumbai
and Thane witnessed completion of projects during
the quarter. With improved launches in the extended
suburbs, Navi Mumbai and Thane will continue to
lead the construction activity in the near future. We
are likely to see developers push for early
completion of ongoing projects, as buyers are
preferring ready to move in or nearing completion
projects.
The capital and rental values have largely remained
stable in both the mid and high-end segments across
most of the markets. Going forward we expect capital
values across majority of sub-markets will remain
stable except select peripheral locations which may
see a marginal rise in capital values.
Source: Cushman & Wakefield Research
KEY TO SUBMARKETS:
Eastern Suburbs: Sion, Wadala, Kurla, Chembur, Ghatkopar, Vikhroli, Powai, Chandivali, Kanjurmarg, Bhandup, Mulund
Western Suburbs: Andheri, Jogeshwari, Goregaon, JVLR, Malad, Kandivali, Borivali, Dahisar
South Central: Worli, Prabhadevi, Lower Parel / Parel, Dadar, Matunga
Thane: Thane, Ghodbunder Road
Navi Mumbai: Airoli, Ghansoli, Rabale, Koparkhairane, Vashi, Turbhe, Sanpada, Nerul, Belapur, Kharghar, Panvel
% indicates proportion of unit launches in different segments within a submarket.
2
A total of 7.3 msf of incremental Grade A office supply is expected by end-2019.
Select sub-markets like Thane-Belapur Road, Malad - Goregaon and BKC are expected to drive overall
demand in future. We expect IT-BPM and Professional services shall show strong performance along
with flexible spaces operators and telecom & media sector in near future.
With vacancies across most sub-markets likely to see a marginal drop, we expect rents to marginally
appreciate in key office corridors like BKC, Andheri – Kurla and Powai.
RentalsVacancyAbsorption
Office
Leasing Vacancy Rentals
Retail mall leasing is expected to witness improved with select Grade A quality malls witnessing churn
and new retail players entering the market which is likely to result in improved leasing activity. Also,
upcoming malls in the BKC submarket, which are expected to complete during 2019-2020 are also
expected to healthy leasing by retailers.
Rental growth is expected to be led by select, quality projects with superior performance on account of
lease renewals and a tenant churn with demand being restricted to such quality developments.
Upcoming quality projects shall also aid rental growth in their respective submarkets.
Select main street locations are also expected to see appreciation in rental values going forward, as they
are witnessing increased demand from retailers.
Retail
Residential
Launches Buyer sentiment Price
Outlook
Developers will continue to launch affordable and mid-segment category projects across all sub-
markets in coming future. Extended Eastern and Western Suburbs along with Thane and Navi Mumbai
are expected to witness majority of new launches.
The extended suburbs of Eastern and Western Mumbai Metropolitan Region are expected to see more
growth in terms of demand due to availability of affordable and mid-segment projects across all
locations and may also see marginal price growth going forward.
With majority of under-construction projects registered on MahaRERA, there is growing perception of
reduced risk of project delays giving homebuyers the confidence of timely delivery of their homes.
3
Residential Overview
Delhi-NCR
New unit launches were recorded at 2,220 units
during Q1 2019 which was higher by 73% on a y-o-y
basis. Though the number of launches were muted
(4% q-o-q drop), new launch activity was headlined by
prominent national and regional developers with a
good track record for project execution. Entry of such
developers is expected to lend some impetus to a
market which continues to grapple with high unsold
inventory amidst only a gradual pick-up in sales activity.
Gurugram, which recorded 60% of the new unit
launches in Q1 2019, saw activity in the micro-markets of
Dwarka Expressway, Sohna Road, Golf Course
Extension Road and Old Gurugram. New projects in
Noida were launched in Sector-75 & Noida Expressway. Source: Cushman & Wakefield Research
For details on project launches, refer Annexure
The values in the legend are in INR/sf.
Prominent developers headlining new launches
South-West
South-East
Gurugram*
South-Central
Noida
Central
Location
32.0 – 51.032.0 – 49.0
24.0 - 35.024.0 - 35.0
*10.0 – 16.2*10.0 – 16.2
25.0 - 45.025.0 - 43.0
7.0 – 9.07.0 – 9.0
60.0 - 95.060.0 - 90.0
20182017
33.0 – 53.0
24.0 - 35.0
28.0 - 45.0
63.0 - 98.0
10.0 – 16.2
7.0 – 9.0
Q1 2019
Share of launches in price segments
2018 Q1 2019
< 3,500 3,501 - 8,000 8,001 - 20,000 > 20,000
89%
37.8%
60.5%
2017
17%
52%
31%
Average Capital Values – High-End (INR ‘000/sf)
South-East
South-Central
Gurugram*
Noida*
Location 2018
20.0 – 25.0
23.8 – 33.3
*4.5 – 9.0
*4.0 - 6.5
20.0 – 27.0
24.0 – 35.0
*4.5 – 9.0
*4.0 - 6.5
2017
4.5 - 9.0*
20.0 – 25.0
23.8 – 33.3
4.0 - 6.5*
Q1 2019
Average Capital Values – Mid Segment (INR '000/sf)
*Capital values have been recalibrated historically
Source: Cushman & Wakefield Research
4
In a trend similar to the previous quarter, mid segment constituted the majority share of 89% in new unit launches
indicating the thrust by developers on this segment which garners the maximum demand from customers. New unit
launches in the high-end segment had an 11% share of the total.
1.7%11%
Launches – segment-wise across submarkets (%)
0%
0%
0%
0%
100%
72%
0%
0%
28/%
Delhi
Gurugram
Noida
0%
0%
0%
0
1340
880
Submarkets Affordable Mid High-end Luxury Total (Number of units)
Source: Cushman & Wakefield Research
KEY TO SUBMARKETS:
Gurugram: Excludes Manesar, Sohna
Noida: Excludes Greater Noida, Noida Extension
% indicates proportion of unit launches in different segments within a submarket.
Average capital values increased by around 4% in
the submarkets of South & Central Delhi as demand
for properties in these areas was higher in the
secondary market compared to the limited supply.
Capital values in Gurugram & Noida were largely
range-bound due to enough availability to meet
demand for property in these areas. Rental values also
increased by 1-4% q-o-q for both high-end and mid
segment properties in South & Central Delhi with
demand for rented properties picking pace in these
areas.
New completions were witnessed in residential
corridors including Dwarka Expressway, Sohna Road,
New Gurugram, Greater Noida West and Noida
Expressway during the first quarter of 2019. More
projects are scheduled for completion in the
upcoming quarters in Dwarka Expressway and Noida
Expressway as several developers continue to
maintain the impetus on execution of existing projects
in the city.
Insolvency and RERA interventions such as bringing
in the state-owned NBCC to execute stalled projects in
the city (primarily in Noida) is likely to help restore some
lost buyer confidence in the real estate market. In
another partnership between two private developers,
the project management arm of ATS Group will
complete three projects of Logix Group in Noida. These
measures will put to rest some of the consumer
dissatisfaction in Delhi NCR which has emerged from
significant delays in completion timelines of projects.
5
The second half of 2019 is likely to see infusion of 5.6 msf of new office space in Delhi NCR in office
corridors including Golf Course Road Extension and NH8 in Gurugram as well as Noida Expressway,
some of which might get deferred further.
Leasing is expected to maintain a positive momentum in the upcoming quarters, with the non-CBD
region of Gurugram expected to lead the office transaction activity.
Overall market rents are likely to remain largely similar in the upcoming quarter.
RentalsVacancyAbsorption
Office
Launches Buyer sentiment Price
New unit launches expected to remain steady in the upcoming quarter, especially on account of general
elections which may likely slow down the approval process for projects.
Sales are expected to maintain a steady pace with a gradual improvement in buyer sentiment.
The high unsold inventory in Delhi NCR is likely to keep capital prices largely range-bound across most
submarkets.
Leasing Vacancy Rentals
Apparels, lifestyle and F&B brands are likely to be the major demand drivers for retail spaces with
international retailers planning to expand in the city, in continuation of the prevailing market trend.
The second half of 2019 is expected to see addition of 1.7 msf of mall space across Delhi and Noida, which
is expected to garner healthy occupancy levels based on preleasing activity in these developments.
Stable demand & space availability will keep rentals across malls and main streets largely similar, even
though select malls with high occupancy levels might see some increase in rents.
Retail
Residential
Outlook
6
< 2,800 2,801 - 8,000 8,001 - 20,000 > 20,000
Residential Overview
Bengaluru
The successful implementation of Karnataka RERA
is evident in the improved in market sentiment in the
city’s real estate market, both from the buyers’ and
developers’ end. The city recorded 7,652 new units
launched during the first quarter of 2019.
Mid segment, which finds maximum favour with
the city’s working population, contributed nearly 64%
to the total launches during the quarter. Units in the
affordable category contributed 33% of the total. In
order to optimize the overall ticket sizes and aid
affordability, developers in the city have been
reducing unit sizes, a trend which has been observed
in new unit launches over the last 12-18 months.
Unit launches increasing; buyer sentiment improving
Share of launches in price segments
1%
Source: Cushman & Wakefield Research
For details on project launches, refer Annexure
The values in the legend are in INR/sf.
Q1 2019
33%
64%
3%
2018
28%
52%
19%
1%
2017
13%
80%
2%
5%
Source: Cushman & Wakefield Research
Average Capital Values – High-End Segment (INR '000/sf)
2017
7.5 - 11.5
18.0 - 21.0
18.0 - 21.0
7.5 – 11.5
8.5 - 12.0
6.5 - 10.0
2018
7.5 - 11.5
18.0 - 21.0
18.0 - 21.0
7.5 – 11.5
8.5 - 12.0
6.5 - 10.0
Average Capital Values – Mid-End (INR '000/sf)
4.5 – 6.75
7.0 – 10.0
4.5 – 6.5
5.0 – 7.0
7.0 – 11.0
6.5 – 8.5
6.5 – 7.5
10.0 – 12.5
4.3 - 6.0
2018
4.5 – 6.75
7.0 – 10.0
4.5 – 6.5
5.0 – 7.0
7.0 – 11.0
6.5 – 8.5
6.5 – 7.5
10.0 – 12.5
4.3 - 6.0
2017
4.5 – 6.75
8.0 – 11.0
5 – 7
5.5 – 7.5
8.0 – 11.5
7.5 – 9.5
6.5 – 7.5
9.5 – 13
4.5 - 6.5
Q1 2019
Central
South East
North
East
South
Off Central I
South West
Off Central II
North West
Location
Central
South
Off Central
North
East
Central
Location
North Bengaluru (areas including Thanisandra, Hosahalli) witnessed the launch of more than 3,000 units during
Q1, with many prominent developers launching their projects over the last 6 months. Demand for residential real
estate aided by a strong office market and infrastructure developments like the upcoming metro corridor are
adding to the attractiveness of North Bengaluru as a hotspot for residential developments
Q1 2019
8 - 12
18.0 - 21.0
18.0 - 21.0
7 – 11.8
9 - 13.0
7.5 - 11.0
7
Submarkets Affordable Mid High-end Luxury Total (Number of units)
Launches – segment-wise across submarkets (%)
23%
0%
0%
0%
81%
0%
0%
0%
77%
100%
100%
0%
7%
0%
100%
100%
0%
0%
0%
0%
12%
0%
100%
0%
North
East
North East
North West
South
Central
South East
South West
0%
0%
0%
0%
0%
0%
0%
0%
3,060
79
187
0
2,192
0
1,744
390
Source: Cushman & Wakefield Research
KEY TO SUBMARKETS:
North: Hebbal, Bellary Road, Yelahanka, Doddaballapur Road, Hennur Road, Thanisandara Road, Hebbal, Jakkur, Devanahalli
East: Marathahalli, Whitefield, Old Airport Road, Old Madras Road, Budigere Cross, Whitefield, Old Airport Road
North-west: Malleshwaram, Rajajinagar, Tumkur Road, Malleshwaram, Rajajinagar, Yeshwantpur
South: Jayanagar, J P Nagar, Kanakapura Road, Bannerghatta Road, BTM Layout, Banashankari, Koramangala
Central: Brunton Road, Artillery Road, Ali Askar Road, Cunningham Road, Lavelle Road, Palace Cross Road,
Off Cunningham Road, Ulsoor Road, Richmond Road, Sankeys Road
South-east: Sarjapur Road, Outer Ring Road (Marathahalli- Sarjapur), HSR Layout, Hosur Road
% indicates proportion of unit launches in different segments within a submarket.
North submarket contributed 40% of the new
unit launches with Jakkur, Hosahalli and
Thanisandara Road witnessing activity during the
quarter. South submarket with a 29% share of the
new launches saw action in Jayanagar, J.P Nagar,
Anekal, Gotigere, and Begur Hobli.
Around 7,420 units were completed during the
quarter with 36% of these completed units in the
North submarket in various locations including
Hebbal, Yelahanka and Devanahalli. The South-East
micro-markets of Sarjapur Road, Varthur,
Doddakennahalli had a share of 30% in the overall
completions in Q1 2019.
Capital Values in both the high-end and mid
segments saw a growth of 5-10% during Q1 2019 on
the back of improved sales and are likely to remain
on an upward trajectory in the quarters ahead.
8
9
Leasing Vacancy Rentals
Vacancy is likely to remain stable with the rise in demand being met by existing space availability coupled
with an upcoming supply addition of 0.23 msf of retail space in the next quarter.
Apparel and F&B sectors shall continue to be the major demand drivers for retail with international brands
expanding their footprint in the city.
Retail
Bengaluru is expected to have additional new supply of around 2.8 msf of office space in the
upcoming quarter.
Rentals are likely to rise in select micro-markets with tight vacancies even as upcoming supply is
likely to be pre-leased to a great extent.
RentalsVacancyAbsorption
Office
Launches Buyer sentiment Price
Mid segment will continue to garner the maximum attention with developers continuing to maintain focus
on launches in this segment.
High demand is likely to exert an upward pressure on capital values, which have already increased by 10 –
15% in the last 12 months.
Residential
Outlook
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