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INDIAS TOP RESIDENTIALDESTINATIONS TO INVEST INInvestment Advisory Report November 2012


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This reportLGHQWLHVthe

top residential

destinations in the

country from the

investment point of view

over the nextYH

years (2013-2017)

Balancing return with the associated risk is the

focal point of any investment decision. Equity and

debt are considered to be the mainstream asset

FODVVHV+RZHYHUWKHWUDGHREHWZHHQUHWXUQ

and risk in both these asset classes is strikingly

GLHUHQW:KLOHHTXLW\DVDQDVVHWFODVVLV

associated with high returns albeit with a greater

risk score as measured by volatility, a relatively

stable debt investment comes with a larger

compromise on returns.

Real estate, the third mainstream asset class,

RHUVWKHEHVWFRPELQDWLRQRIUHWXUQVDQGULVN

From the perspective of return, real estate

investment in India has garnered superior returns

in comparison to other asset classes over a long

term. Further, an investment in residential

INVESTMENTadvisory REPORTIndias Residential Destinations

INTRODUCTION

property is generally done with leverage in the

form of a housing mortgage. This leverage further

increases the potential for earning higher returns

since the initial equity contribution is a fraction of

the property value.

From the perspective of risk, property investment

fares better because asset price generally

remains stable. It has been established that an

investment in real estate based on sound

research can seldom go wrong. In the sense thatin comparison to an asset class like equity which

is dependent on several factors related to the

XQGHUO\LQJEXVLQHVVOLNHSURWDELOLW\OHYHUDJH

and corporate governance, a real estate

investment is based on the underlying asset. A

sound research is inherently founded on deep

IMPORTANT TERMS USED IN THE REPORT

TERM MEANING

Metropolitan region 7KHXUEDQUHJLRQDVGHQHGE\WKHUHJLRQDOGHYHORSPHQWDXWKRULW\

Zone A Zone is a geographical division of the metropolitan region comprising of several

localities that possess similar characteristics in terms of access to employment hubs,

connectivity and demography. In most cases, the metropolitan region is divided into 4-5

]RQHVWKDWDUHODEHOHGDV&HQWUDO6RXWK1RUWK:HVWDQG(DVW

Destination Destination is the most promising residential locality from the perspective of investment

Benchmark location ,GHQWLHGEDVHGRQWKHQHDUHVWSULFHFRQWRXUDEHQFKPDUNORFDWLRQLVDQHVWDEOLVKHG

residential locality that has saturated in terms of real estate growth and infrastructure

development and is considered as the most sought after residential market within the

]RQH:LWKUHVSHFWWRSULFHIRUHFDVWLQJIRUWKHGHVWLQDWLRQDEHQFKPDUNORFDWLRQSUHIHUDEO\

in the same zone, becomes the reference point

Property price This map splits the geography of a city in accordance with the prevailing residential

contour map SURSHUW\SULFH5HVLGHQWLDOPDUNHWVIDOOLQJZLWKLQDFRQWRXUOLQHFRPPDQGSULFHLGHQWLHG

by such line

Investor Return It is the IRR (Internal Rate of Return) for a typical investor in residential property

Assumptions for Size of property: 1000 sq. ft. Investment horizon: 5 years

calculating Investor Loan to Value ratio: 60% Mortgage rate: 10.5% pa

Return Loan tenure: 20 years

Residential Property The price indicates the average capital value in the residential market of the destination

Price (`per sq.ft.) and benchmark locations

Hidden Gem Locations where we expect the real estate drivers to gather momentum beyond year 2017

We have developed a

framework built on top-

down approach in the

selection of WKHYHPRVW

promising cities and zones

within them and bottom-

up approach in the

selection of top

investment destinations


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From the perspective of

risk, property investment

fares better because asset

price generally remains

stable

understanding of the property market along with

the study of factors that drive it.

Real estate is an asset class where an educatedinvestor can mitigate the risk and enjoy the

associated superior returns at the same time.

Coupled with the other mainstream asset classes,

this investment vehicle can make for an optimally

GLYHUVLHGSRUWIROLR,QPRVWFDVHVLQYHVWPHQWLQ

real estate is fraught with decisions based on gut

feeling and tips which result in poor

investments. Hence, an investor has to clearly

delineate a real estate investment from

speculation.

7KHJOREDOQDQFLDOFULVLVRIKDVEURXJKW

about a striking change in the attitude of

investors. This change towards expectation on

investment returns, growth and risk does not

single out any one asset class but applies to most

of the assets whether it is equity, debt,

commodity or real estate. Amidst this changed

scenario it is evident that an advice on

investment in any asset class cannot be generic.

Real estate as an asset class is the foremost

example that will witness the challenge thrown by

this tenet particularly in this tough economic

scenario. Even within real estate as an asset

class, the judgment on investment outlook on

commercial real estate and residential real estate

FDQQRWEHDXQLHGRQH7KHGRPLQDQWIDFWRUV

that drive investment returns for both these are

diverse to a great extent. Hence, the investment

opinion should take into account each of these

factors.

INVESTMENTadvisory REPORT,QGLDV5HVLGHQWLDO'HVWLQDWLRQV

Although the prominence of real estate as an

asset class is increasing, the investment research

in the subject lags much behind in comparison to

other asset classes. With this report, we will makean incipient foray into the subject by identifying

the top residential destinations in the country

IURPWKHLQYHVWPHQWSRLQWRIYLHZIRUWKHQH[WYH

\HDUV7KHGHVWLQDWLRQVDUH

residential markets that we expect will

outperform in terms of the investor returns on

account of the appreciation in property prices. We

KDYHGHYHORSHGDIUDPHZRUNEXLOWRQWRSGRZQ

DSSURDFKLQWKHVHOHFWLRQRIWKHYHPRVW

promising cities and zones within them and

ERWWRPXSDSSURDFKLQWKHVHOHFWLRQRIWRS

investment destinations. Since real estate

activities are not restricted to city limits, we have

considered the entire metropolitan region in our

analysis. Our understanding of the local property

market and experience in dealing with

SDUDPHWHUVWKDWGHWHUPLQHDQXUEDQFHQWUHV

growth equips us to develop the framework for

this pioneering report.

While selection of the top residential investment

destinations remains the core of this report, we

DOVRSUHVHQWYHORFDWLRQVZKHUHZHH[SHFWWKH

real estate drivers to gather momentum albeit

GXULQJWKHHORQJDWHGWLPHKRUL]RQEH\RQG

7KHVHORFDWLRQVKDYHEHHQLGHQWLHGDVKLGGHQ

JHPVLQWKHUHSRUWIn most cases, investment

in real estate is fraught

with decisions based on

gut feeling and tips which

result in pOor

investments. Hence, an

investor has to clearly

delineate a real estate

investment from

speculation


4/123


Regional growth within a

city is anything but even

and the direction of such

growth is a critical

factor in determining the

fate of a particular

residential property

APPROACH FOR IDENTIFICATION OF THE TOP RESIDENTIALINVESTMENT DESTINATIONS

India

Urban centres

Top 100 cities

Business activity:Banking penetration, hotel room demand, air passenger traffic

Infrastructure development:Current and proposed infrastructure expenditure

Top 100 cities based on population

Employment:Occupied office space, industrial activity

Social & physical infrastructure:Analysis of development plan of respective

authorities and extensive field survey

Connectivity withimportant locations

Access to socialinfrastructure

Special factors:Proximity to

premium officespace, landavailability,

lifestyle shift,planned

development

Top 5 cities

Zone

Destination


5/123

The top residential destinations have been picked

from the universe of all urban centres in the

country. In this multi stage selection, each

parameter was chosen in a manner that captures

WKHFDXVHDQGHHFWUHODWLRQVKLSRIVXFK

parameters with the growth of residential

development in the city.

The population base of a city is a crucial indicator

RIWKHSRWHQWLDORILWVKRXVLQJPDUNHW,QWKHUVW

VWDJHRIVHOHFWLRQWRSFLWLHVZHUHLGHQWLHG

based on their population. The extent of business

activity and thrust on infrastructure development

DUHFULWLFDOIDFWRUVDHFWLQJWKHKRXVLQJPDUNHW

and accordingly these selected 100 cities were

studied. Banking penetration, hotel room

GHPDQGDQGDLUSDVVHQJHUWUDFZHUH

considered as surrogates for business activities

and current and proposed infrastructure


From the growth and

investment perspective,

zones that have high

concentration of business

activity at present and

projections of meaningful

increment in future will

have a comparative

advantage over others

that have saturated on

this

METHODOLOGY &

APPROACHSelection of top cities in the country

expenditures were taken as proxies for

infrastructure development. The cities were

ranked on these individual parameters and based

on the average ranking Mumbai, Delhi,

Bengaluru, Chennai and Pune emerged as the top

YHFLWLHV

With the fundamental prerequisite already in

SODFHWKHVHYHFLWLHVDUHZHOOSUHSDUHGWR

participate in the growth trajectory for the

foreseeable future. While a framework was

SUHSDUHGDQGWRSFLWLHVZHUHLGHQWLHGRXU

HQGHDYRXUZDVHYHQPRUHVSHFLF:HKDYH

striven to provide a crystal clear view on

investment destinations for a typical investor in a

residential property. This objective meant

LGHQWLFDWLRQRIUHVLGHQWLDOGHVWLQDWLRQVWKDW

would outperform others on the investment return

scale.

Selection of zone within a city

Regional growth within a city is anything but even

and the direction of such growth is a critical

factor in determining the fate of a particular

residential property. We therefore, split each city

into 4-5 zones to capture the quantum and

GLUHFWLRQRIVXFKJURZWK7KLVVSLOWLQWRGLHUHQW

zones is based on the homogeneity of

characteristics with respect to access toemployment centres, social and physical

infrastructure and demography.

The selection of a preferred zone depends on the

SHUVSHFWLYHRIVXFKVHOHFWLRQZKLFKGLHUV

depending on the purpose of purchasing property

which is either end-use or investment. From the

growth and investment perspective, zones that

have high concentration of business activity at

present and projections of meaningful increment

in future will have a comparative advantage over

others that have saturated on this. Growth of

business activity will create abundant

employment opportunities which in turn will lead

to a rise in inward migration and high demand for

residential property in these zones. Hence, we

LGHQWLHGWKHGULYHULQGXVWULHVLQHDFK]RQHDQG

assessed the impact of their business activity on

the kind of employment generated by such

industry. We have captured the extent of

employment generation by measuring the

TXDQWXPRIRFFXSLHGRFHVSDFHDWSUHVHQWDQG

IRUWKHQH[WYH\HDUV

A regression model capturing the impact of

change in revenue of driver industry on change inRFFXSLHGRFHVSDFHZDVGHYHORSHG5HYHQXH

SURMHFWLRQVIRUUVWWZR\HDUVZHUHEDVHGRQWKH

revenue guidance by the respective industry

associations. Projections for the remaining three

years were based on the moving average trend of

WKHSUHFHGLQJYH\HDUV$OVRWKHXSFRPLQJ

VXSSO\RIRFHVSDFHLQQH[WYH\HDUVLQDOOWKH

zones was analysed to understand the balance

between the incremental employment and

XSFRPLQJRFHVSDFH7KXVDFU\VWDOFOHDUYLHZ

on employment potential in a particular zone has

been provided. The service sector has emerged as

a driving force in most of the cases with the

Information Technology and Information

Technology enabled Services (IT/ITeS) industry

emerging as a dominant employment driver.

Besides the quantum of employment generation

in the driver industry, the nature of jobs in


6/123


accordance with its position in the value chain in

WKHLQGXVWU\ZDVWDNHQDVDGLHUHQWLDWLQJ

element. For instance, employment in software

development within the IT/ITeS industry has aGLHUHQWLPSDFWRQWKHLQFRPHSUROHRI

employees in comparison to that in the Business

3URFHVV2XWVRXUFLQJ%32UROH7KLVGLHUHQFHLQ

LQFRPHSUROHZLOOLPSDFWDRUGDELOLW\LQD

diverse manner.

Besides employment, the other important factor

IURPWKHJURZWKDQGLQYHVWPHQWSHUVSHFWLYHLV

LQIUDVWUXFWXUHGHYHORSPHQW5HJLRQDO

GHYHORSPHQWSODQVDQGHOGYLVLWVWRWKH]RQHV

equipped us to assess the scope of infrastructure

development that will have an impact on

UHVLGHQWLDOPDUNHWVZLWKLQD]RQH:HDVVHVVHG

WKHLPSDFWRIH[LVWLQJDQGXSFRPLQJSK\VLFDO

infrastructure like road, rail and airport projectsRQWKHUHVLGHQWLDOPDUNHWVRIHDFK]RQH3UHVHQFH

RIVRFLDOLQIUDVWUXFWXUHFRPSULVLQJHGXFDWLRQ

healthcare and recreation was also reviewed.

:HVHOHFWHG]RQHVKDYLQJWKHPRVWSURPLVLQJ

IXWXUHRQDFFRXQWRIWKHJURZWKLQWKHTXDQWXPRI

RFFXSLHGRFHVSDFHDQGLQFUHPHQWDO

LQIUDVWUXFWXUHGHYHORSPHQW2YHUWKHIRUHVHHDEOH

IXWXUHWKHVHSUHIHUUHG]RQHVZLOOEHWKHELJJHVW

EHQHFLDULHVEHFDXVHWKH\IDOOLQWKHGLUHFWLRQRI

movement of employment and infrastructure.

&RPPHUFLDO2FH6SDFH

IT Sector

Industrial Physical

Connectivity

%DVLFXWLOLWLHV:DWHU3RZHU

(GXFDWLRQ+HDOWKFDUH

Entertainment

6RFLDO

The service sector has

emerged as a driving force

in most of the cases with

the Information

Technology and

Information Technology

enabled Services (IT/ITeS)

industry emerging as a

dominant employment

driver

Non IT Sector

Selection of DestinationZLWKLQ]RQH

All the residential markets within the preferred

]RQHZLOOEHQHWRQDFFRXQWRIWKHJURZWKLQ

employment opportunities and infrastructureGHYHORSPHQW+RZHYHUDIHZRIWKHVHZLOOKDYHD

FRPSDUDWLYHDGYDQWDJHRYHURWKHUV$ERWWRPXS

DSSURDFKZDVDGRSWHGWRDQDO\VHWKHH[LVWLQJ

and proposed connectivity and social and

physical infrastructure facilities. The approach

ZDVPRGHOOHGEDVHGRQRXUHOGYLVLWVWRHDFKRI

WKHUHVLGHQWLDOPDUNHWVLQWKHSUHIHUUHG]RQHDQG

discussions with various stakeholders. This

primary survey coupled with our real estate

H[SHUWLVHKHOSHGXVWRDUULYHDWWKHEHVW

destinations from the perspective of investment.

7KHGHVWLQDWLRQVKDYHEHHQDQDO\VHGYLVYLVD

EHQFKPDUNORFDWLRQZKLFKLVDQHVWDEOLVKHG

residential locality that has attained a relatively

KLJKHUVDWXUDWLRQOHYHOLQWHUPVRIUHDOHVWDWH

JURZWKDQGLQIUDVWUXFWXUHGHYHORSPHQWDQGLV

FRQVLGHUHGWREHRQHRIWKHPRVWVRXJKWDIWHU

UHVLGHQWLDOPDUNHWVZLWKLQWKH]RQH7KH

EHQFKPDUNORFDWLRQIRUHDFKGHVWLQDWLRQKDV

EHHQLGHQWLHGEDVHGRQWKHQHDUHVWSULFH

FRQWRXU:LWKUHVSHFWWRSULFHIRUHFDVWLQJIRUDGHVWLQDWLRQDEHQFKPDUNORFDWLRQSUHIHUDEO\LQ

WKHVDPH]RQHEHFRPHVWKHUHIHUHQFHSRLQW

As mentioned earlier, our analytical focus was

SULPDULO\WRXQGHUVWDQGWKHVWDWHRIWKHVXEMHFW

markets connectivity with important locations

and social and physical infrastructure facilities

DYDLODEOHFXUUHQWO\DQGDOVRLQWKHIRUHVHHDEOH

IXWXUH+RZHYHULQFHUWDLQGHVWLQDWLRQVWKHUH

ZHUHYDULDWLRQVZLWKUHVSHFWWRIDFWRUVLPSDFWLQJ

future price movements like:

. 3UR[LPLW\WRSUHPLXPRFHPDUNHWV:DGDODRQHRIWKHVHOHFWHGGHVWLQDWLRQVLQ0XPEDL

ZLOOEHQHWGXHWRLWVFRQQHFWLYLW\ZLWKWKH

SUHPLXPEXVLQHVVGLVWULFWRIWKH%DQGUD.XUOD

&RPSOH[%.&

. /LPLWHGODQGDYDLODELOLW\ Limited landDYDLODELOLW\ZLOOOLPLWWKHVFRSHRIQHZ

Besides the quantum of

employment generation in

the driver industry, the

nature of jobs in

accordance with its

position in the value chain

in the industry was taken

as aGLHUHQWLDting

element

5($/(67$7('5,9(56

Business activity Infrastructure

0DQXIDFWXULQJ


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construction and put an upward pressure on

property prices in destinations like Chembur

in Mumbai.

. Lifestyle shift: Destinations like KR Puram inBengaluru possess the potential to provide alifestyle shift, which is possible generally in

projects developed on large land parcels that

facilitate high rise premium developments

with plush amenities.

. Planned development: Lack of socialinfrastructure remains a concern in some

destinations as of now. However, on account

of being in the planned development region,

education, healthcare and recreation facilities

will eventually come up in destinations like

Ulwe in Mumbai.

While dynamics of a residential market with

respect to the demand-supply scenario were

considered to understand its depth, the impact of

factors like quality of projects, premium or

DRUGDEOHFDWHJRU\RQSURSHUW\SULFHZDVDOVR

assessed. It is of paramount importance to

assess all these factors in comparison to the

benchmark locality and also other localities

within the zone. Further, these factors have to be

viewed in the context of the prevailing property

SULFH'HVWLQDWLRQVFKRVHQDUHGHQLWHO\WKHRQHV

that would outperform other locations on the

investment return scale. However, continuing

with our intention of undertaking a thread bare

analysis and providing an unequivocal

LQYHVWPHQWYLHZZHKDYHTXDQWLHGWKHFDSLWDO

appreciation and the resultant investor returns for

investment in these destinations.

As mentioned earlier, to forecast the price

movement of a destination, we have considered

the price of a benchmark location as the

reference point. The assumption is that the

destination price will grow at a faster pace (as

compared to the benchmark location price)

because of its relatively higher level of increasing

developmental activities. As a result of this, thecurrent price discount of the destination will

reduce, making price convergence imminent in

the future.

,QWKHUVWVWDJHZHKDYHIRUHFDVWHGWKHSULFHRI

a benchmark location. Empirical evidence

indicates that price variation of established

UHVLGHQWLDOPDUNHWVLVVLJQLFDQWO\H[SODLQHGE\

the changes in economic activities. In line with

this, we have conducted iterations to identify the

H[SODQDWRU\YDULDEOHVWKDWVWURQJO\LQXHQFHG

property price movement in the benchmark

locations. Indias economic growth has beenLGHQWLHGDVWKHPRVWVLJQLFDQWIDFWRU

explaining the price movements. Regression

equations have been estimated for each of the

LGHQWLHGEHQFKPDUNORFDWLRQVDQGSULFHKDV

been forecasted till 2017.

In the second stage, the price discount of aGHVWLQDWLRQKDVEHHQIRUHFDVWHGIRUWKHQH[WYH

years. In order to achieve this, we studied the

LPSDFWRIGLHUHQWIDFWRUVRQSULFHVRIWKH

benchmark location over the last decade. These

factors include:

. Incremental employment generation in thezone.

. New infrastructure projects.

. Reduction in time to commute between thebenchmark location and important places in

the zone.

Our analysis shows that the occurrence of one ofthe above mentioned factors or a combination of

them accelerated the growth of residential

property prices in a benchmark location before it

stabilized and emerged as a relatively developed

market. Assuming that the destination will have a

Over the foreseeable

future, the preferred

zones will be the biggest

EHQHFLDULHVEHFDXVHthey

fall in the direFWLRQof

movement of employment

and infrastrXFWXUH

Fontinuing with our

intention of undertaking a

thread bare analysis and

providing an unequivRFDO

investment view, we have

quDQWLHG the FDSLWal

appreFLDtion and the

resultant investor

returns for investment in

these destinations

TOP INVESTMENTDESTINATIONS RANKED INORDER OF INVESTOR RETURNDURING THE NEXT 5 YEARS

#1 Ulwe

29.0%

#2 Wadala#3 Chembur#4 Noida

Extension

27.0%25.5%22.9%

#8 Ravet

#7 Hinjewadi#6Medavakkam

#5 DwarkaExpressway

22.3%

21.2% 20.6% 20.1%

20.0%

#9 Tathawade

#10 Hebbbal

#11 Pallikarnai

19.3%19.1%18.7%

#12 Wakad

18.6%

#13 KR Puram

Investor returns per annum


8/123


Empirical evidence

indicates that price

variation of established

residential markets is

VLJQLFDQWOy explained by

the changes in economic

activities

similar impact of incremental employment

generation and new infrastructure projects, the

property price in the destination has been

forecasted by applying an estimated discount

factor on the future price movements of the

benchmark location.

2XUUHVHDUFKLQGLFDWHVWKDWDRUGDELOLW\ZLOONHHS

a resistance on price movement in many

destinations. Hence, we have created an income

pyramid of the employees in the driver industry.

This pyramid is a distribution of all the employees

according to their income. Thus, a ceiling was

applied to our destination price forecast as per

the change in this pyramid for the forecasthorizon.

REGION-WISE TOP INVESTMENT DESTINATIONS FOR NEXT 5 YEARS

Forecasted Price Appreciation in Percentage

Additionally, in cases where land availability is

not a concern, price growth will not breach the

DRUGDELOLW\WKUHVKROGRIWKHWDUJHWFRQVXPHU

group. As a result of this factor some destinations

did not qualify for the projected price growth and

were dropped from the top destinations list.

For a typical investor in residential property what

PDWWHUVLVWKHHHFWLYHUHWXUQUHVXOWLQJIURPWKH

leverage provided through the housing loan. The

same has been calculated and labelled as

Investor Return arising out of investment in

under construction residential property, in these

WRSGHVWLQDWLRQVRYHUDSHULRGRIWKHQH[WYH

\HDUV3URSHUW\VSHFLFDWLRQDQGLQYHVWPHQWVL]H

available at a destination along with selectresidential projects have also been provided in

the report.

NORTH

Mumbai Pune

NCR

Chennai

Bangalore

SOUTH

WEST

#1 Noida Extension

#2 Dwarka Expressway

111%

108%

#2Hebbal

#1 Medavakkam

#3 Pallikarnai

#4 KR Puram

94%

103%

93%

91%

#4Hinjewadi

#5Tathawade

#6Ravet

#7Wakad

100%

98%

97%

9

1%

#1Ulwe

#3Chembur

#2Wadala

145%

133%

125%

EAST


9/123


in cases where land

availability is not a

concern, price growth

will not breach the

Dordability threshold

of the target consumer

group

. With property options ranging from`3,200/sq.ft. to`15,000/sq.ft. and investor

returns in the range of 18.6% - 29% pa

residential real estate will emerge as a

SURPLVLQJDVVHWFODVVIRUWKHQH[WYH\HDUV

. With seven destinations, the western regionhas the highest number of promising

residential investment options.

. The top three investment destinations, withinvestor returns in excess of 25% pa, are from

Mumbai.

. Only Mumbai ranks ahead of the topinvestment destinations of the NCR, thebiggest residential market in the country.

. Enhanced connectivity and the proposition ofWKHGLSORPDWLFHQFODYHZLOOVLJQLFDQWO\EHQHW

the Dwarka Expressway, placing it in high

KEY takeaways

Risk factors for our outlook

2XUIRUHFDVWIRURFFXSLHGRFHVSDFHUHOLHV

largely on the service sector led by the IT/ITeS

industry. The sectors revenue growth during the

QH[WYH\HDUVZLOOKDYHDQLPSDFWRQWKH

employment, which is one of the biggest drivers

of real estate. For the IT/ITeS industry, the

revenue growth estimates for the initial two years

have been taken from the industry association

and for the remaining three years they have been

WDNHQDVWKHSUHFHGLQJYH\HDUPRYLQJDYHUDJH

growth rate between 10-12%.

While the Indian IT/ITeS industry isinterconnected with the global economy, reputed

research studies have highlighted the

interlinkage between the domestic manufacturing

sector and this industry. As a result, the weak

global economy and a slowdown in the domestic

manufacturing sector will have a direct impact on

this industry. Our analysis puts a great emphasis

on the fate of the IT/ITeS industry because of its

HPHUJHQFHDVDVLJQLFDQWHPSOR\PHQWSURYLGHU

LQWKUHHRIWKHWRSYHFLWLHV

The BFSI industry has a meaningful role in the

employment trend in cities like Mumbai and

Delhi. We have considered a revenue growth rate

RIEDVHGRQWKHSUHFHGLQJYH\HDU

moving average growth rate for this industry.

The employment generated by these industries

KDVDVLJQLFDQWLPSDFWRQRXUIRUHFDVWIRU

RFFXSLHGRFHVSDFH+HQFHDQ\PDMRU

deviation in their revenue growth will have an

DGYHUVHLPSDFWRQRXUIRUHFDVWIRURFFXSLHGRFHspace and therefore the fate of the respective

destination.

Additionally, in several cases, the fate of the

destinations is linked to the delivery of

LQIUDVWUXFWXUHSURMHFWVZKLFKPDNHVRXUDQDO\VLV

YXOQHUDEOHWRDQ\VLJQLFDQWGHYLDWLRQIURPWKH

SURJUHVVWLPHOLQHRIVXFKSURMHFWV

ranks on the investment return scale.

. The IT/ITeS industry is the driving force behindthe growth in most of the destinations.

. With four investment destinations, Pune hasthe maximum number of promising residential

property options.

. IT/ITeS, Automobile and Engineering sectorsare the primary employment drivers in Pune

. The destinations in Chennai will immenselyEHQHWIURPWKHJURZWKRIWKH,7,7H6DQG

Automobile industries in Tamil Nadu during the

QH[WYH\HDUV

. IT/ITeS and Bio-technology sectors will be thedriving forces behind the growth of

destinations in Bengaluru.


10/123


BENGALURU METROPOLITIONREGION POPULATION

Population in Millions

Source: Census 2011, Knight Frank Research

Population Average Annual Growth

1991 2001 2011

Bengaluru (also known as Bangalore), the capital of Karnataka is located

in the south-eastern part of the state. The city is located at an

altitude of 950m. above the sea level, thereby making its climate very

serene. Bengaluru is the third most populous city of India with a very diverse

demography. It is also known as the Garden City of India. It houses the

largest number of Information Technology (IT) and Information Technology

Enabled Services (ITeS) companies in India for which it earned the

sobriquet of the Silicon Valley. It also houses numerous public sector

companies including defence, aerospace and bio-technology.

Bengaluru urban agglomeration is known as Bengaluru Metropolitan

Region (BMR) comprising Bengaluru urban district, Bengaluru rural district

and Ramanagara district. The Bruhat Bengaluru Mahanagara Palike

(BBMP) is in charge of the civic administration of the city. The corporation

is spread over an area of 741 sq. km. Bangalore Metropolitan Region

Development Authority (BMRDA), an autonomous body created by theGovernment of Karnataka is the nodal agency looking after the overall

development of the BMR. During the last two decades the population

growth was phenomenal in the BMR. It rose at an annual rate of 3.9%

GXULQJSULPDULO\GXHWRDKXJHLQX[RI,7,7H6HPSOoyees.

BENGALURU

4.84 6.54 9.595.2% 3.1% 3.9%


11/123

CHIKKABOMMASANDRA

VARTURVARTUR

CHIKKA

15000

6000

3500

Major Roads

Railway Line

Existing Metro

Under Construction

South Zone

West Zone

Central Zone

East Zone

North Zone

Price Contours (`/ sq.ft)

Proposed Metro

Nagawara

:KLWHHOG

%+DOOL7HUPLQDO

0*5RDG

Gottigere

%RRPDVDQGUD

$QMDQDSXUD1,&(-XQFWLRQ

1DJDVDQGUD

%DQJDORUH,QWHUQDWLRQDO

([KLELWLRQ&HQWUH

3XWWHQDKDOOL

0\VRUH

5RDG

.HQJUL

BENGALURU MAP



12/123

Bengaluru Metropolitan

Region (BMR) is spread over

741 sq. km.

Market Overview

ZONE MAJOR RESIDENTIAL

DESTINATIONS

Central MG Road, Vitthal Mallya Road,

Frazer Town, Lavelle Road,

Richmond Road, Langford Town

West Malleswaram, Rajajinagar, Tumkur

Road, Vijayanagar, Yeshwanthpur

North Banaswadi, Hebbal, Bellary Road,

Hennur, Yelahanka, Jakkur, HBR

Layout

East :KLWHHOG2OG$LUSRUW5RDG2OG

Madras Road, KR Puram

South Koramangala, Sarjapur Road, HSR

layout, Jayanagar, JP Nagar,

Bannerghtta Road, Kanakapura

Road

7KH%05PDUNHWFDQEHGLYLGHGLQWRYHEURDG

zones: Central, West, North, East and South.

South Bengaluru, a locale which until the mid-

1990s housed a strong Kannada (native language of

Karnataka) speaking population now boasts ofbeing a cosmopolitan region. This was mainly on

DFFRXQWRIDKXJHLQX[ RISRSXODWLRQIURPDOORYHU

India. Electronic City located on Hosur Road in the

VRXWKHPHUJHGDVWKHUVW,7KXERI%HQJDOXUXLQ

1990. Many IT giants like Infosys, HCL

Technologies, HP, Wipro, Genpact and Siemens

have setup their campuses in this region. With the

setting up of these companies, the South

Bengaluru region became a preferred commercial

as well as residential destination. The availability of

land, strong infrastructure and presence of the

middle-income segment have contributed to the

development of this zone. The residential clusters

LQSUR[LPLW\WRWKH(OHFWURQLF&LW\OLNH6DUMDSXU

Koramangala, Jayanagar, BTM Layout,

Bannerghatta Road and Hosur Road have attracted

a large number of immigrants especially the IT

employees. Social infrastructure like the availability

of quality hospitals, prestigious educational

institutions and retail malls are some of the major

reasons behind residential demand in this part of

Bengaluru.

This region started losing its charm since 1998

when the Government of Karnataka announced the

new international airport at Devanahalli - a town

located in the north of Bengaluru. Major IT/ITeS

companies started acquiring land closer to the

DLUSRUWLQWKHQRUWKIRUWKHLUH[SDQVLRQ7KH\

refrained from buying any new land in this region,

hampering the overall growth of the South

Bengaluru region. In this bargain North Bengaluru

emerged a better investment destination compared

to the south.

The new international airport at Devanahalli

commenced in 2008. By virtue of this, North

Bengaluru became one of the most sought after

destinations of Bengaluru. Numerous real estate

and infrastructure projects were announced to

enhance the connectivity between Bengaluru city

centre and the airport; this included High Speed

Rail Link (HSRL), monorail and Metro rail. Moreover,

to generate employment in this region, the

government in association with private companiesHDUPDUNHGODUJHLQYHVWPHQWVVXFKDV.,$'%3DUN

$LUSRUW7RZQVKLS$HURWURSROLV,QIRUPDWLRQ

Technology Investment Region (ITIR), Devanahalli

Business Park (DBP) and Global Finance District

(GFD). These also attracted a lot of institutional

buyers like real estate developers and

hoteliers.This region is on the cusp of becoming the

new commercial business district (CBD) of

%HQJDOXUX+HQFHLWLVZRUWKZKLOHWRH[SORUHWKLV

region with respect to the real estate investment.

Major micro-markets covered under this zone are

Hebbal, Devanahalli, Yelahanka and Hennur.

Before 1990, the eastern zone was home only tosome of the reputed heavy manufacturing

LQGXVWULHVOLNH+LQGXVWDQ$HURQDXWLFV/LPLWHG

+$/%(0/DQG,7,WKDWZHUHLQVWUXPHQWDOLQWKH

growth of this region. With the dawn of the IT sector

some of these industries have gradually turned into

WHFKSDUNV3UR[LPLW\WRWKH2XWHU5LQJ5RDG255

FRXSOHGZLWKWKHDYDLODELOLW\RIJUDGHGRFHVSDFH

attracted major IT/ITeS companies in the eastern

]RQH7KLVIXHOOHGWKHH[SDQVL RQRIFRPPHUFLDODQG

residential development in this region.

&RQVHTXHQWO\:KLWHHOG&95DPDQ1DJDU%URRNH

)LHOG2OG0DGUDV5RDG,QGLUDQDJDU.53XUDP2OG

$LUSRUW5RDG0DKDGHYDSXUD+RRGL&LUFOHDQG6DL

%DED$VKUDPHPHUJHGDVWKHSUHIHUUHGUHVLGHQWLDOdestinations among the IT employees. Moreover,


2007 2008 2012*2009 2010 2011

* Till September 2012

RESIDENTIAL PROJECT LAUNCHTREND IN BENGALURU

Launches Source: Knight Frank Research

31,236

20,60814,439

31,733

54,075

24,741

9.59 mn.population in the BMR, an

increase of98% in thelast two decades


13/123


2007 2008 2009 2010

5%

180,000

160,000

140,000

120,000

100,000

80,000

60,000

40,000

20,000

No.

ofUnits

Stock Cumulative Absorption % of Unsold Units

RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF BENGALURU

2011

Source: Knight Frank Research

2012*

2OG0DGUDV5RDG:KLWHHOG5RDG,73/DQG9DUWKXU

Road emerged as a business district having many

tech-parks, SEZs, captive campuses and business

centres.

Central Bengaluru is the commercial and retail

KHDUWRIWKHFLW\ZLWKYDULRXVFRUSRUDWHRFHV

ORFDWHGLQPLFURPDUNHWVOLNHWKH0*5RDG9LWWKDO

Mallya Road, Commissariat Street, Ulsoor and

/DYHOOH5RDG([FHOOHQWFRQQHFWLYLW\ZLWKYDULRXV

parts of the city, good physical and social

infrastructure along with the presence of organized

retail has ensured the highest property prices in

WKLVSDUWRIWKHFLW\7KHSURPLQHQWUHVLGHQWLDOmicro-markets of this region include MG Road,

/DQJIRUG5RDG5LFKPRQG7RZQ/DOEDJK5RDG

9LWWKDO0DOO\D5RDG5HVLGHQF\5RDGDQG)UDVHU

7RZQ0DMRULW\RIWKHUHVLGHQWLDOGHYHORSPHQWVLQ

the central locations are bungalows and

independent residential units, however some

SRFNHWVOLNH5LFKPRQG7RZQ5LFKPRQG5RDG

0DOOHVKZDUDP3LSHOLQH5RDGDQG0*5RDGDUH

witnessing growth in multi-storey high-rise

constructions as well.

3ULPDULO\DQLQGXVWULDOKXE:HVW%HQJDOXUXKRXVHV

RQHRIWKHODUJHVWLQGXVWULDODUHDVRI$VLD3HHQ\D

,QGXVWULDO$UHD7KHUHDUHKXJHVHWXSVRIVHYHUDO

renowned engineering, transformers, motors and

generator companies here. Being an industrial hub,

WKLVUHJLRQZDVQRWFDXJKWLQWKH,7,7H6ZDYHRI

the mid-1990s, that transformed South and East

Bengaluru as one of the most sought after

residential markets. However, this region gained a

lot of traction with the announcement of the

XSFRPLQJLQIUDVWUXFWXUHSURMHFWVYL]HOHYDWHG

H[SUHVVZD\PHWURDQGWKHURDGFRQQHFWLYLW\DORQJ

WKH7XPNXU5RDG0LFURPDUNHWVVXFKDV

0DOOHVZDUDP


14/123

Real Estate Drivers

Infrastructure Development

Employment Indicators

Service Sector

IT Sector

Manufacturing Sector

Biotech Sector

Rail Network

Bangalore Metro Corridor I & II

Monorail Corridor

Infrastructure Development

Pheripheral Ring Road

Elevated Road / Expressway

Road Network

62 km. Outer Ring Roadconnects all the major IT

hubs from North to South

EXISTING ARTERIAL ROAD NETWORK

DISTANCE OBSERVATIONS

Outer Ring Road (ORR) 62 km. ORR provides connectivity with all the major highways around the

city. Passing across the major suburbs viz. Hebbal - KR Puram -

Marathahalli - Sarjapur Rd. - Silk Board Junction

Nandi Infrastructure Corridor 42 km. Long peripheral road, connecting Jalahalli in the north with the

Enterprises (NICE) Electronic City on Hosur Road in the South. The corridor connects

Ring Road Mumbai and Chennai through NH-4 in the western region and NH-

7 in the southern region respectively. Initially a four-lane structure

with provision for expansion upto six-lane. NICE Ring Road has

HQDEOHGWUDFIURP0XPEDLWRPRYHGLUHFWO\WR&KHQQDLZLWKRXW

crossing downtown Bengaluru

Hosur Road (NH7) 40 km. A four to eight-lane national highway (Part of NH7) connecting

Bengaluru city with Hosur, a town in Tamil Nadu. The Hosur Road

passes via the Electronic City one of the largest IT industrial parks

of Bengaluru

Bengaluru Elevated Toll-way 10 km. A 10 km. long elevated and tolled expressway connecting

Bomanahalli to Electronic City


High Speed Rail Link

EXISTING SUBURBAN RAIL NETWORK

DISTANCE OBSERVATIONS

Metro Train Network 6.7 km. Reach I, a 6.7 km. part of the East-West corridor, connecting

Phase I, Reach I Byappanahaalli with MG Road is operational since October 2011

Metro rail operational

between Byappanahaalli

and MG Road since Oct 2011

ROAD NETWORK

METRO TRAIN NETWORK


15/123

A 33 km. High Speed RailLink proposed - will

operate between Cubbon

Road and Bengaluru

International Airport

UPCOMING ARTERIAL ROAD NETWORK

CONNECTIVITY & LENGTH OBSERVATIONS CURRENT EXPECTEDSTATUS COMPLETION

Road widening from Hebbal A six-lane elevated road over the Under 2013-14

to Bengaluru International Airport existing road connecting with the Cons truction

20 km. international airport is under

construction. The elevated stretch that

starts from Kodigehalli gate will be a

six-lane highway extending over 4 km.

The project will have a series of seven

\RYHUVIURP+HEEDOWRWKH7UXPSHW

Junction near the airport

High Speed Rail Link (HSRL) $NP+65/KDVEHHQSURSRVHG Five Post 2016

33 km. that will connect the city centre with consortiums

WKHDLUSRUW7KH+65/ZLOORSHUDWH shortlistedEHWZHHQ&XEERQ5RDGDQG%HQJDOXUX

International Airport with two halts in

EHWZHHQRQHDW+HEEDODQGDQRWKHU

at Yelahanka.

Monorail Project %HQJDOXUX$LU5DLO/LQN/WG%$5/KDV Proposed Post 2015

41 km. proposed 31 km. monorail from JP

1DJDUVRXWKWR+HEEDOQRUWKDQG

NPEHWZHHQ3HULSKHUDO5LQJ5RDG

355DQG0DJDGL5RDG7KLVSURMHFW

will function as a feeder service to metro

rail as well as the international airport

Peripheral Ring Road (PRR) $NP355KDVEHHQSURSRVHGLW Pre-feasibility Post 2016

116 km. will connect the entire peripheral stage

arterial road linking all the major

KLJKZD\VDQGWKHGLVWULFWURDGV0DMRU

FRQQHFWLQJDUHDZRXOGEH+RVXU5RDG

WR7XPNXU5RDGYLD.53XUDP%HOODU\

5RDG2OG0DGUDV5RDGDQG6DUMDSXU

5RDG7KH355LVH[SHFWHGWRHDVHWKH

FRQJHVWLRQRQWKH255

Bengaluru Metro Rail Phase I D$NP1RUWK6RXWK16PHWUR Under 2014-15

42 km. FRUULGRUKDVEHHQSURSRVHGLWZLOO construction

FRQQHFW+HVDUDJKDWWDFLUFOHLQQRUWK

ZLWK3XWWHQDKDOOLLQVRXWK

E$QNP(DVW:HVW(:PHWUR

FRUULGRUKDVEHHQSURSRVHGLWZLOO

FRQQHFW%\DSSDQDKDOOLZLWK0\VRUH

5RDG5HDFK,DNPSDUWRIWKH(:

FRUULGRUFRQQHFWLQJ%\DSSDQDKDDOOL

ZLWK0*5RDGLVRSHUDWLRQDOVLQFH

2FWREHU

Bengaluru Metro Rail Phase 2 D3KDVH,,HQYLVDJHVH[WHQVLRQRIWKH In-principle %H\RQG

NP 0HWUR3KDVH,RQWKH16FRUULGRU7R approval

the north it will be extended upto received from

%HQJDOXUX,QWHUQDWLRQDO([KLELWLRQ WKH*RYWRI

&HQWUH%,(&DQGWRWKHVRXWKLWZLOOEH Karnataka.

H[WHQGHGXSWR1,&(-XQFWLRQ Awaiting

approval from

E(:FRUULGRULVSODQQHGWREH the Urban

H[WHQGHGXSWR:KLWHHOGWRWKHHDVW Development

and Kengeri to the west. Department0LQLVWU\

F)XUWKHUWZRQHZOLQHVKDYHEHHQ

SODQQHGLQ3KDVH,,RQHFRQQHFWLQJ


A 116 km. Peripheral RingRoad proposed -

connecting Hosur Road to

Tumkur Road via KR Puram,

Bellary Road, Old Madras

Road and Sarjapur Road


16/123

Over 2,000 IT & ITeScompanies present in

Bengaluru including more

than 100 Fortune-500

companies

UPCOMING ARTERIAL ROAD NETWORK

CONNECTIVITY & LENGTH OBSERVATIONS CURRENT EXPECTEDSTATUS COMPLETION

Rashtreeye Vidyalaya (RV) Road with

Bommasandra in the South,

Electronics City on the Hosur road with

the city centre

d) Another line will be parallel to the

NS Corridor of Phase I, running

between Nagawara in the north and

Gottigere in the South. It will have two

interchange stations, one at MG Road

and another at Jayadeva hospital

Elevated corridor from Central Silk A 15 km. elevated corridor connecting Pre-Feasibility Beyond 2015

Board Junction to Jayamahal Road Central Silk Board Junction to stage

15 km. Jayamahal Road is envisaged to ease

WKHWUDFRZEHWZHHQ1RUWKDQG

South Bengaluru. This will also

facilitate in reaching the new

international airport in the North.

Construction of elevated corridor A 28 km. West-East elevated corridor Pre-Feasibility Beyond 2014

between Jnanabharathi and along the Ring Road connecting stage

Old Airport Road Tumkur (Jnanabharathi) with Old

28 km. Airport Road. The corridor will pass

through Sirsi Circle, Town Hall, Hudson

Circle, Vellara junction and Old Airport

Road. The proposed corridor is

expected to ease the East-West city

WUDFRZ

Bengaluru - Mysore Expressway A six-lane expressway connecting Land Beyond 2017

140 km. Bengaluru with Mysore is under acquisitions

construction. Only peripheral part of

56 km. has been completed till date.


Bengaluru is the IT and Bio-technology capital ofIndia. It also houses numerous Government

promoted heavy industries including defence

RUJDQL]DWLRQVVFLHQWLFHVWDEOLVKPHQWV

aerospace and telecommunication companies. It

also has renowned Indian educational institutions

RHULQJDSOHWKRUDRIMRERSSRUWXQLWLHV

However, Bengalurus economy is primarily

driven by the IT/ITeS sector and bio-technology

sector.

IT/ITeS SECTOR

Over 2,000 IT/ITeS companies, including more

than 100 Fortune-500 companies have

established their operations in Bengaluru. These

companies in all, generate software exports worth

`700bn. and directly employ over 650,000

professionals. Prominent Fortune-500 companiesoperational in Bengaluru are IBM, Dell, HP,

CISCO, Sun Microsystems, Microsoft, Toyota, ING,

Tesco, Citigroup, JP Morgan Chase, Goldman

Sachs, Bosch and Tyco. Prominent Indian IT &

ITeS companies like TCS, Infosys, Wipro and

Mahindra Satyam have major operations in the

city.

Bengalurus IT/ITeS sector accounts for almost

one-third of Indias IT/ITeS revenue and almost

half of the Indian Bio-Technology companies are

located in Bengaluru. These sectors play a very

vital role in the growth of commercial andresidential real estate in Bengaluru.

IT/ITeS companies have been predominantly

concentrated in South, South East Bengaluru and

the Outer Ring Road (ORR) stretch from Hebbal to

Employment Indicators in Bengaluru

Bengaluru generates

software exports worth

`700 bn.

650,000 ITprofessionals directly

employed in Bengaluru

IT/ITeS and Bio-technology

sector are the driving

factors for Bengaluru's

growth


17/123

Silk Board junction. This region houses many

renowned tech-parks, IT/ITeS SEZs and captive

campuses of Fortune-500 IT companies. Micro-

PDUNHWVDORQJ:KLWHHOG(OHFWURQLF&LW\2556DUMDSXUDQG%DQQHUJKDWWD5RDGKDYHGHYHORSHG

into self-sustaining hubs. East Bengaluru has

RYHUPQVTIWRIRFHVSDFH$SDUWIURPWKH

large campuses of IT/ITeS companies such as

'HOO7&6/7,QIRWHFK*(+3DQGL*DWHWKHUH

DUHQXPHURXVVWDQGDORQHFRPPHUFLDORFH

EXLOGLQJVOLNH%ULJDGH0HWURSROLV3UHVWLJH

6KDQWLQLNHWDQ(PEDVV\&UHVW,73%*957HFK

3DUN6-5L3DUNDQG6DODUSXULD7HFK3DUNDFURVV

WKH,7KXERI:KLWHHOGLQ(DVW%HQJDOXUX

(OHFWURQLF&LW\,QGXVWULDO3DUNORFDWHGLQWKH

southern region is spread over 330 acres having

RYHUPQVTIWRIRFHVSDFHLQFOXGLQJWKH

FDSWLYHRFHV,WLVGLYLGHGLQWRWKUHHSKDVHVRI

which one is completely dedicated to the bio-

technology sector, while the other two pre-

dominantly house IT/ITeS sector companies.

0DMRUFRPSDQLHVKDYLQJRFHVKHUHDUH,QIRV\V

:LSUR+&/*HQSDFW6LHPHQV7&6DQG0DKLQGUD

6DW\DP1RQFDSWLYHFRPPHUFLDORFHVSDFHV

LQFOXGH6-5(TXLQR[+DULWD,73DUN*OREDO7HFK

3DUN695)RUWXQDHDQG+LUDQDQGDQL8SVFDOH

7KH255VWUHWFKEHWZHHQ+HEEDOWR6LON%RDUG

-XQFWLRQDFTXLUHGLPSRUWDQFHZLWKWKH

commencement of the Bengaluru International

$LUSRUWLQLQ'HYDQDKDOOL7KLVVWUHWFKVHUYHV

as a main junction between the airport and the

established IT hub of Bengaluru i.e. Electronic

&LW\DQG:KLWHHOG7KLVVWUHWFKKDVODUJHPXOWL

tenanted IT parks. Major IT parks include Manyata

(PEDVV\%XVLQHVV3DUN6DODUSXULD6XSUHPH

&HVVQD%XVLQHVV3DUNDQG3UHVWLJH7HFK3DUN

The countrys IT/ITeS sector grew at an annual

UDWHRIWR`EQGXULQJDQG

is estimated to reach EQE\$VSHU

1$66&20WKH,7,7H6VHFWRUKDVFUHDWHG

tremendous job opportunities, generating over 11mn. direct and indirect jobs. It is

estimated that the sector would create

RYHUPQE\DQGFORVHWRPQMREVE\

%HQJDOXUXIRUPVRQHWKLUGRIWKHFRXQWU\V

WRWDO,7,7H6UHYHQXHV:HH[SHFW%HQJDOXUXWR

continue its growth trajectory in-line with the

FRXQWU\V,7,7H6JURZWK)XUWKHUWKH*RYHUQPHQW

of Karnataka proposes to increase employment

RSSRUWXQLWLHVLQWKHVRIWZDUHH[SRUWHOGWRDERXW

PQE\IURPPQDWSUHVHQW

With the strengthening of the global economy,

robust domestic fundamentals and easyavailability of skilled human capital the IT/ITeS

LQGXVWU\KHUHLVH[SHFWHGWRJURZVLJQLFDQWO\LQ

the coming years.

`

IT/ITeS sector constitutes

70% of the totalRFHspace in Bengaluru

OFFICE SPACE BREAK-UP

Source: .QLJKW)UDQN5HVHDUFK

BENGALURU OFFICESPACE DYNAMICS

before2008

2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E


140

100

40

ZONE WISE DISTRIBUTION OFOFFICE SPACE STOCK


&HQWUDO West South East North

Currently the total RFH

space stock in Bengaluru

is 92 mn. sq.ft. of which

79.80 mn. sq.ft. is occupied

2 mn. direct and indirectJoBS TO BE GENERATED BY

2020 IN BENGALURU


18/123

NORM DETAILS

Time line for property registration Any time until possession

Re-sale before possession Allowed

Transfer charges payable to builder `200-300 psf

Loading (as % of carpet) 33%

Remarks Investor friendly market. Gains from lower Stamp Duty are taken back by

KLJKHU9$7UDWH(HFWLYHO\WD[HVDUHKLJKHULQFRPSDULVRQWR0XPEDL

and Pune

MARKET NORMS

BIO-TECHNOLOGY SECTOR

India is ranked among the top 12 biotechnology

destinations in the world and third largest in the

$VLD3DFLFUHJLRQ7KH*RYHUQPHQWRI.DUQDWDND

is committed to establishing a Biotech corridor

for the development of the biotech industry in

.DUQDWDND7KHFRUULGRULQ%HQJDOXUXVKDOOH[WHQG

from the Indian Institute of Science to the

8QLYHUVLW\RI$JULFXOWXUDO6FLHQFHV.DUQDWDNDKDV

DODUJHQXPEHURIELRWHFKFRPSDQLHVVXFKDV

$VWUD=HQHFD,QGLD%LRFRQ,QGLD&DGLOOD

6PLWK.OLQH%HHFKDPDQG:RFNKDUGW

7KH,QGLDQ%LRWHFKQRORJ\6HFWRULVH[SHFWHGWR

grow to USD 10 bn. by 2015 from USD 4 bn.

SRVWHGLQVFDO%HQJDOXUXKDVHPHUJHGDVD%LRWHFKFDSLWDORI,QGLDDFFRXQWLQJRYHU

40% or USD 1.6 bn. of the countrys total

UHYHQXHV2IWKHELRWHFKUPVDFURVVWKH

FRXQWU\RUDUHORFDWHGLQ.DUQDWDNDDQG

RUDUHLQ%HQJDOXUXRZLQJWRULFKKXPDQ

capital and cost advantage over peers overseas.

&XUUHQWO\WKHWRWDORFHVSDFHVWRFNLQ%HQJDOXUX

LVDERXWPQVTIWRIZKLFKPQVTIWLV

USD 10 bn. the size ofIndian Bio-technology

sector by 2015. Current size

USD 4 bn.


RFFXSLHGUHVXOWLQJLQDYDFDQF\OHYHORI

Bengaluru retained the top slot for the highest

RFHVSDFHDEVRUSWLRQLQWKHFRXQWU\LQ)


19/123

Proposed Monorail

Major Roads

Railway Line

Benchmark location

Top destination

Employment Hubs

Major Roads

Existing Metro

Proposed Metro

Airport

Railway Line

Benchmark location

Top destination

Employment Hubs

KR PURAM

WHITEFIELD

B Halli Terminal

MG Road

KR Puram

:KLWHHOG

B Narayanapura

Mahadevapura

CV Raman Nagar

%URRNHHOG

Hudi

KIADB Export

Promotion Area ,QWHUQDWLRQDO7HFKQRORJ\

3DUN%DQJDORUH,73%

EPIP Zone


EAST BENGALURU MAP

HEBBAL


20/123

bengaluru dominance in the

BPO/KPO sectors have won

it a place in the dictionary

as Bangalored meaning

Outsourced

Bengaluru was a laid-back city till the mid-1990s

when the IT boom reshaped it into a major city of

India. Many large domestic IT companies as well

DVWKH)RUWXQHFRPSDQLHVVHWXSWKHLURFHV

here giving a boost to the Bengaluru real estate

market. Today, Bengaluru has become the

software hub of India, commonly known as the

Silicon Valley of India. Its dominance in the KPO

(Knowledge Process Outsourcing) and BPO

(Business Process Outsourcing) sectors have won

it a place in the dictionary as Bangalored

meaning Outsourced. We believe Bengalurus

dominance in the IT/ITeS sector will continue in

the foreseeable future.

As per the fundamental economics of the real

estate sector, the price appreciation depends on

two factors - employment and infrastructure

development (connectivity). This phenomenon

has been witnessed in the South and South-East

regions of Bengaluru. In the mid-1990s, since the

growth of the IT/ITeS sector many large IT parksand campuses have been set-up in the Electronic

&LW\VRXWKDQG:KLWHHOGVRXWKHDVWUHJLRQ

This attracted many software engineers to

Bengaluru consequently leading to demand for

residential real estate. Micro-markets such as

Bannerghatta Road, Kanakpura, Sarjapur Road, JP

1DJDU-D\D1DJDU:KLWHHOG9DUWKXU

Mahadevapura, CV Raman Nagar, Uttarahalli, KR

Puram and Electronic City have emerged as

residential markets. However, South Bengaluru

destinations lost their charm post the


Airport (BIA) near Devanahalli in North Bengaluru.As a natural phenomenon for the real estate

sector, all focus including government,

corporates and general public at large, has now

shifted northwards a new growth corridor for

real estate.

We expect North and East Bengaluru to be the

ELJJHVWEHQHFLDULHVRIWKH%,$DQGH[SHFWWKHP

to emerge as the new Central Business Districts

(CBD) of Bengaluru within the next decade. This

can be further substantiated by the numerous

infrastructure projects undertaken by the

government such as High Speed Rail Link (HSRL),

Metro Lines, monorail and the Peripheral Ring

Road that are at various stages of construction.

On completion, these projects will enhance the

connectivity of the city centre with the BIA.

PREFERRED

ZONES INBENGALURU

Availability of huge land parcels along the road

between the city centre and the BIA has attracted

many large corporates.

Residential end-users at large prefer residing in

Northern Bengaluru as against the south; this

was not the case 4-5 years back. The change in

preference was mainly on account of shifting of

the airport to the north near Devanahalli. We

expect the stretch from Hebbal to Yelahanka in

the north to gain large price appreciation in the

QH[WYH\HDUVPDLQO\RQDFFRXQWRILWVSUR[LPLW\

to the airport, connectivity with the city centre

and upcoming social infrastructure.

East Bengaluru in itself is a well-developed and

VHOIVXVWDLQLQJ]

RQH$WLWVF

RUH:KLWHHOGDVDmicro-market has evolved over the years. It has

become one of the most preferred destinations

for the IT/ITeS employees, as it is close to the IT

FRUULGRURI:KLWHHOGDQG,73%,WDOVRKDVDZHOO

developed social infrastructure (school, hospitals

etc.) and a well-organized retail market.

Moreover, this region will have smooth

accessibility to the airport with the proposed 116

km. Peripheral Ring Road (PRR). The PRR will link

Hosur Road with Tumkur Road via KR Puram,

Bellary Road, Old Madras Road and Sarjapur

5RDG+HQFHPDUNHWVOLNH.53XUDP:KLWHHOG

Budigere Cross and Old Madras Road will see

some good traction in the next 4-5 years.

Therefore, based on the above developments we

believe North and East Bengaluru regions will

ZLWQHVVJRRGWUDFWLRQRYHUWKHQH[WYH\HDUV


NORTHBENGALURU

The focus of the GOK over the last decade has

clearly been North Bengaluru. By shifting the

Bengaluru International Airport (BIA) near

Devanahalli in the north thereby replacing old

HAL Bengaluru International Airport, GOK has

substantiated its intention in developing North

Bengaluru. Since the new airport is 40 km.

outside the city, GOK has also planned Mass

Transit Systems (MTS) l ike monorail, Metro-Line

and High Speed Rail Link (HSRL) to enable

travellers to reach the airport faster. Also,

commuter rail system has been planned to

connect Devanahalli with Yeshvantpur via

Yelahanka. Additionally, widening of the NH-7upto BIA from the existing six-lane to eight-lane is

XQGHUSURFHVV7KLVFDQVXVWDLQKLJKHUWUDFGXH

to airport expansion and expected real estate

developments on either side of the NH-7. Further,

South Bengaluru micro-

markets lost its charm

post the commencementof the Bengaluru

International Airport in

North Bengaluru

We anticipate North and

East Bengaluru to be the

biggestEHQHFLDULHVof

the BIA and expect them to

emerge as the new Central

Business Districts (CBD) of

Bengaluru within the next

decade


21/123

`1,150 bn.Investment earmarked for

North Bengaluru

the GOK is also developing the Peripheral Ring

Road (PRR) as an eight lane expressway along

the periphery of Bengaluru for a total road length

of 116 km. that will connect all the peripheryregions to the airport. Availability of vast vacant

land parcels close to the airport and along the

road leading to the airport has enabled GOK to

plan projects worth`1,150bn., including

Devanahalli Business Park (DBP), Aero SEZ,

Information Technology Investment Region (ITIR),

Bio-Technology, Aerotropolis and many other

recreational developments.

Further, the GOK has also invited many

FRUSRUDWHVWRVHWXSWKHLUXQLWVRFHVLQ1RUWK

Bengaluru. Many large companies such as HAL,

BEML, Infosys, Dynamatic Technologies Ltd, IFCIand Tata Elxsi have signed an MoU with the GOK.

55 multinational IT companies including Infosys,

Wipro, TCS and Cognizant have evinced interest

LQVHWWLQJXSWKHLURFHVLQWKH,7,52YHUPQ

people are expected to get direct employment

IURPWKH,7,5DQGRYHUPQLQGLUHFW

employment. Employment due to the ITIR in itself

speaks about the growth of this region. These

developments are expected to completely change

1RUWK%HQJDOXUXIURPDQXQH[FLWLQJORFDWLRQWRD

bustling self-sustaining city.

Growth of the residential market in this zone has

been primarily along the Outer Ring Road (ORR)

VXFKDV+HEEDO6DKDNDUD1DJDU'ROODUV&RORQ\

571DJDU%DQDVZDGL0DKDGHYDSXUDDQG

1DJZDUD+RZHYHUSRVWFRPPHQFHPHQWRIWKH

%,$LQWKHVWUHWFKIURP+HEEDOWR%,$LV


2007 2008 2009 2010

50,000

40,000

30,000

10,000

No.

ofUnits


RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF NORTH BENGALURU

2011


2012*

witnessing residential developments. Proximity to

the airport and to the commercial hub of

Manayata Tech Park has made this pocket of

Bengaluru the preferred residential location bythe IT population.

$VRQ6HSWHPEHU1RUWK%HQJDOXUXKDVZLWQHVVHG

DWRWDORIUHVLGHQWLDOXQLWVEHLQJODXQFKHG

VLQFH2IWKLVDWRWDORIXQLWVKDYH

EHHQDEVRUEHGUHVXOWLQJLQUHPDLQLQJ

unsold. Over the years, unsold units have risen

mainly on account of low pace of absorption due

to uncertain global markets. Announcement of

QHZSURMHFWVKDVFRPHGRZQLQWKHUVWP

RIDVRQO\XQLWVKDYHEHHQODXQFKHG

DJDLQVWWKHXQLWVODXQFKHGLQ7KH

excess supply from the previous years has had an

DGYHUVHLPSDFWRQWKHXQVROGXQLWVSHUFHQWDJH


2007 2008 2012*2009 2010 2011


RESIDENTIAL PROJECT LAUNCHTREND IN NORTH BENGALURU


13,355

14% 14%

15%

42,329 unitslaunched and 28,785 units

absorbed since 2007 in

North Bengaluru

4 mn. direct andindirect employment to be

genereated over next 3

decade in North

Bengaluru


22/123

Existing

Infrastructure

HEBBAL TO BIA ROAD

A 3.72 km. six-lane elevated road over the

existing road is under construction. The project

ZLOOKDYHDVHULHVRIVHYHQ\RYHUVIURP+HEEDOWR

the Trumpet Junction near the airport. The

elevated road starts from the Kodigehalli gate

and connects to the international airport. This

SURMHFWE\WKH1DWLRQDO+LJKZD\$XWKRULW\RI,QGLD

1+$,LVDWYDULRXVVWDJHVRIFRQVWUXFWLRQIURP+HEEDOWRWKH


23/123

EMPLOYMENT HUBS IN NORTH BENGALURU

SECTOR PROJECT NAME MAJOR COMPANIES

IT/ITeS Manyata Embassy Business Park Philips, IBM, ANZ


Employment Indicators inNorth Bengaluru

Further, there is the aerospace SEZ that is being

planned here besides three industrial parks on

3,000 acres of land. Many renowned hotels like

Oberoi, JW Marriot and Fortune are also planned

here. There is plenty of commercial development

in the pipeline, with several developers having

bought huge land parcels for development in the

stretch from Hebbal to Devanahalli. With so muchcommercial development, we expect residential

development to follow suit in this region making

it the most sought after destination in the next 4-

5 years.

Few builders who have planned residential

projects in North Bengaluru are Brigade Group

with their Gateway, Ozone Developers with their

integrated project called Urbana, Prestige with

their Ozone and Golfshire Projects, Hiranandani

Upscale with their Chancery, Nitesh with their

Columbus Square and Sobha with their Althea.

6LQFHRYHUPQVTIWRIRFHVSDFH

LQFOXGLQJFDSWLYHRFHVKDVEHHQFRQVWUXFWHGLQ

METRO-LINE

A 24 km. North-South (NS) corridor connecting

Hesaraghatta circle near Nagasandra (north) with

Puttenahalli (south) has been proposed. Along

with this, there are also plans (under Metro Phase

II) to extend the Metro line from Hesarghatta up

WRWKH%,$7KHVHVLJQLFDQWSURMHFWVZLOODGG

value to the property along this route.

The region has a demand for residential,

commercial and retail spaces. With plans for the

development of an aerospace Special Economic

Manyata Embassy Business

Park has over 7.5 mn. sq. ft.

stock and 9.4 mn. sq. ft.

under construction

North Bengaluru region

is expected to

generate direct and

indirect employment of

over 4-4.5 mn. inthe next decade

Zone (SEZ), IT SEZ and creation of separate

workspaces in the vicinity of the airport, there is

also a huge supply of residential layouts.

HIGH SPEED RAIL LINK (HSRL)

A 33 km. HSRL has been proposed and will

connect the city centre with the airport. The HSRL

will operate between Cubbon Road and BIA with

two halts between them, one at Hebbal and the

other at Yelahanka. The HSRL will run parallel to

the expressway.

North zone of the city has a host of civic

infrastructure projects, large commercial

developments and new residential options that

have changed the characteristics of the localities

over the last few years. Bengaluru International

Airport has been the main catalyst for the change

in this region. The monorail, Metro Rail and

Bengaluru-Mysore Infrastructure Corridor (BMIC)project as well as the social infrastructure

facilities are together set to drive Bengaluru

further ahead.

The existing major employment driver in this

region is the IT/ITeS sector. However, in future the

incremental employment in this region will be

generated from the planned commercial

developments such as ITIR, Aero SEZ, Devanahalli

Business Park, Aerotropolis and Global Financial

District. Cumulatively the GOK has envisaged an

investment of`1,150bn. in the North Bengaluru

region and is expected to generate direct and

indirect employment of over 4-4.5 mn. in the next

decade.


24/123

1RUWK%HQJDOXUX2YHUWKHQH[WYH\HDUVPQ

VTIWRIRFHVSDFHLVH[SHFWHGWREHDGGHGWR

WKHH[LVWLQJLQYHQWRU\WKHUHE\WDNLQJLWWRPQ

VTIWE\WKHHQGRI+RZHYHUGHPDQGLVH[SHFWHGQRWRQO\IURPWKH,7,7H6VHFWRUEXWDOVR

IURPWKHDHURVSDFHVHFWRUORJLVWLFFRPSDQLHV

DQGQDQFLDOVHFWRUV([FHVVLYHGHPDQGIRU

TXDOLW\RFHVSDFHKDVNHSWYDFDQF\OHYHOVLQ

ORZHUVLQJOHGLJLWVLQDQGZHH[SHFWLWWR

UHPDLQDWWKDWOHYHOWLOO:HIRUHFDVWDQ

LQFUHPHQWDOPQVTIWRIRFHVSDFHWREH

DEVRUEHGRYHUWKHQH[WYH\HDUV

3UHIHUHQFHRIWKHFRPSDQLHVWREHLQFORVH

SUR[LPLW\RIWKHDLUSRUWDQGHPSOR\HHV

SUHIHUHQFHWRVWD\FORVHUWRWKHLUZRUNSODFHZLOO

RYHUDOOGULYHWKHGHPDQGIRUFRPPHUFLDODVZHOO

DVUHVLGHQWLDOUHDOHVWDWHLQWKLVORFDWLRQ


before2008

2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E

NORTH BENGALURU OFFICESPACE DYNAMICS

EAST BENGALURU(DVW%HQJDOXUXKDGVLPLODUFKDUDFWHULVWLFVDVWKDW

RI%HQJDOXUXFLW\%HLQJDQRQGHVFULSW]RQHXQWLO

WKHPLGVWKHUHJLRQJDLQHGSURPLQHQFHRQO\

DIWHUWKH,7ERRPRIWKHV3UR[LPLW\WRWKH

FLW\FHQWUHDQGKXJHDYDLODELOLW\RIODQGDWWUDFWHG

PDQ\,7,7H6FRPSDQLHVKHUH2YHUPQVTIW

RI,7,7H6VSDFHLVRSHUDWLRQDODVRI-XQH

0DMRU,7,7H6KXEVOLNH6DODUSXULD+DOOPDUN,73%

50=(FRVSDFH3UHVWLJH6KDQWLQLNHWDQDQG

%DJPDQH:RUOG&HQWUHKDYHPDGHWKLVSRFNHWRI

%HQJDOXUXWKHSUHIHUUHGUHVLGHQWLDOORFDWLRQE\,7

SRSXODWLRQ)XUWKHUZLWKWKHJURZWKRI

SRSXODWLRQWKLVUHJLRQKDGDJUHDWGHDORIVRFLDO

LQIUDVWUXFWXUHWRSURYLGHHQWHUWDLQPHQWRSWLRQVWR

WKHUHVLGHQWV*URZWKRIWKHUHVLGHQWLDOPDUNHWLQ

WKLV]RQHKDVEHHQSULPDULO\DORQJWKH:KLWHHOG

5RDG.53XUDP2OG0DGUDV5RDG2OG$LUSRUW

5RDG,73/&95DPDQ1DJDU0DKDGHYDSXUD

+RRGL&LUFOHDQG,QGLUD1DJDU

$VRQ6HSWHPEHU(DVW%HQJDOXUXKDVZLWQHVVHGD

WRWDORIUHVLGHQWLDOXQLWVEHLQJODXQFKHG

VLQFH2IWKLVDWRWDORIXQLWVKDYH

EHHQDEVRUEHGUHVXOWLQJLQUHPDLQLQJ

XQVROG2YHUWKH\HDUVXQVROGXQLWVKDYHULVHQ

PDLQO\RQDFFRXQWRIORZSDFHRIDEVRUSWLRQGXH

WRKLJKQXPEHURIODXQFKHV$QQRXQFHPHQWRI

QHZSURMHFWVKDVFRQWLQXHGZLWKLWVKLJK

PRPHQWXPDQGPZLWQHVVHGWKHODXQFKRI

XQLWVDVFRPSDUHGWRXQLWVODXQFKHG

WKURXJKRXW([FHVVVXSSO\IURPWKHSUHYLRXV

\HDUVKDVDQDGYHUVHLPSDFWRQWKHXQVROGXQLWV

SHUFHQWDJH


RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF EAST BENGALURU

2007 2008 2009 2010

No.ofUnits

6WRFN &XPXODWLYH$EVRUSWLRQ RI8QVROG8QLWV

2011


2012*

Currently the total RFH

spaFHVWRFNLQ1RUth

Bengaluru is 7.7 mn. sq.ft.

of ZKLFKPQVT. ft. is

RFFXSLHG

23,689XQLWVODXQFKHGand 15,946 units absorbed

VLQFH7 in East

Bengaluru

Over 30 mn. sq. ft. ofIT/ITeS spaFHLVoperational

as of June 2012 in East

Bengaluru

We expeFW another 9.5mn. sq.ft. of new RFH

spaFHto beFomeoperational by 2017


25/123

Existing

Infrastructure

PERIPHERAL RING ROAD (PRR)

A 116 km. PRR connecting the entire

peripheral arterial road linking all the major

highways has been proposed. The majorconnecting areas would be Hosur Road

(south) to Tumkur Road (west) via KR Puram

(east), Bellary Road (north), Old Madras

Road and Sarjapur Road (south). The PRR is

expected to ease the congestion on the

ORR.

METRO-LINE

A 15.5 km. metro rail line has been proposed

under Phase-II of the Bengaluru Metro. This

is the extension of the existing metro line

which runs between Byappanahalli and MG

Road. The new metro line stretch, a part of

East-West corridor, will start from the

%\DSSDQDKDOOLDQGWHUPLQDWHDW:KLWHHOG

on the East. This corridor has 14 metro

stations - Jyothipuram, KR Puram,

Narayanapura, Mahadevapura,

Garudacharpalya, Doddanakundi,

Visvesvaraya Industrial Estate,

Kundalahalli, Vaidehi Hospital, Satyasai

Medical Institute, ITPL, Kadugodi, Ujwala9LG\DOD\DDQG:KLWHHOG

CONNECTIVITY FROM OLD

MADRAS ROAD TO DEVANAHALLI

The distance between the Old Madras Road

(OMR) in the East and Devanahalli in the North is

over 40 km. There are two major routes that

connect the city centre in the east with the airport

QHDU'HYDQDKDOOLLQWKHQRUWK7KHUVWURXWH

Baiyappanahalli Hebbal BIA is a 40 km. drive


before2008

2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E

60

50

40

30

20

10

EAST BENGALURU OFFICESPACE DYNAMICS

along the ORR. The second route starts on the NH-

QHDU%DL\DSSDQDKDOOLRWKH2OG0DGUDV5RDG

It then connects with the airport via NH-648 near

the Hoskote Industrial area. This stretch has also

witnessed a lot of residential traction post the

commencement of BIA. Manyata Tech Park,

:KLWHHOG5RDG,73%+RVNRWH,QGXVWULDO3DUN

and other IT space on the ORR are the major

developments fuelling demand for residential

houses in this pocket.

UpcomingInfrastructure

2007 2008 2012*2009 2010 2011


RESIDENTIAL PROJECT LAUNCHTREND IN NORTH BENGALURU


4,691

2,961

429

3,795

6,399

5,415

A 15.5 km. metro railline has been proposed

under Phase-II of the

Bengaluru Metro

The new metro line

stretch, a part of East-

West corridor, will start

from the Byappanahalli

and terminate at

:KLWHHOG on the East


26/123


EMPLOYMENT HUBS IN EAST BENGALURU

SECTOR PROJECT NAME MAJOR COMPANIES

IT/ITeS Bagmane World Centre EMC2

IT/ITeS Ferns Icon Lenovo, ST Micro Electronics

IT/ITeS ITPB Zone ABB, Accenture, Amazon

Employment Indicators in

East BengaluruThe IT/ITeS sector continues to be the major

employment driver of this region. Over 30 mn. sq.

IWRFHVSDFHZDVRFFXSLHGDVRI-XQH

Major IT/ITeS hubs in this region include

Salarpuria Hallmark, ITPB, RMZ Ecospace,

Prestige Shantiniketan and Bagmane World

&HQWUH7KHRYHUDOOGHPDQGIRUWKLVORFDWLRQZLOO

EHGULYHQE\WZRPDMRUFKDUDFWHULVWLFVD,7,7H6

employees preference to stay close to their

ZRUNSODFHDQGEZHOOHVWDEOLVKHGVRFLDO

infrastructure including organized retail market.7KHSURSRVHG355ZLOOHQKDQFHFRQQHFWLYLW\RIDOO

the industrial hubs of Bengaluru. One node of

this PRR is Hoskote - an upcoming industrial and

DXWRPRELOHKXE0DQ\-DSDQHVHFRPSDQLHVKDYH

evinced interest in setting up their plants here.

6LQFHPRUHWKDQPQVTIWRIRFH

space has been constructed in Eastern

%HQJDOXUX2YHUWKHQH[WYH\HDUVZHH[SHFW

RYHUPQVTIWRIRFHVSDFHWREHDGGHGWR

the existing inventory taking the total stock to 57

PQVTIWE\WKHHQGRI,7,7H6VHFWRU

remains the single largest demand driver for

WKHVHVSDFHV&XUUHQWO\RIWKHRFHVSDFHLQ

the region is vacant and this is expected toUHGXFHWRE\:HIRUHFDVWDQ

LQFUHPHQWDOPQVTIWRIRFHVSDFHWREH

DEVRUEHGRYHUWKHQH[WYH\HDUV

INVESTMENTDESTINATIONS INBENGALURU

Hebbal located in the northern region and KR

Puram in the eastern region are the most

promising residential destinations in Bengaluru.Proximity to the Manyata Tech Park near Hebbal

DQG:KLWHHOG5RDGQHDU.53XUDPPDNHVWKHVH

destinations an ideal residential location.

Additionally, connectivity of the eastern region

ZLWKWKHQRUWKHUQUHJLRQWKURXJK255DQGWKDWRI

WKHFLW\FHQWUHZLWKWKHDLUSRUWLQWKHQRUWK

WKURXJK1+%HOODU\5RDGKDYHLPSURYHGWKH

commuting experience. Further, the upcoming

355ZKLFKLVH[SHFWHGWRFRQQHFWDOOWKH

SHULSKHUDOGLVWULFWVZLOOHDVHFRQQHFWLYLW\IURPWKH

eastern region to the airport. Proposed

infrastructure projects such as the monorail,

Metro and High Speed Rail Link is expected tofurther enhance the connectivity from the city

FHQWUHWRWKHDLUSRUW7KHVHGHVWLQDWLRQVZLOO

EHQHWLPPHQVHO\IURPWKHDERYHPHQWLRQHG

developments.

The GOK is carrying out numerous infrastructure

projects across the cities that are in various

stages of construction. These projects areexpected to bring about phenomenal changes in

WHUPVRIFRQQHFWLYLW\DPRQJGLHUHQWORFDWLRQV

ZLWKLQWKHFLW\DQGUHGXFHWKHFRPPXWLQJWLPH

7KHVHIDFWRUVZLOOKDYHDFRQVLGHUDEOHLPSDFWRQ

WKHUHDOHVWDWHSULFHVDFURVVWKHFLW\+RZHYHU

WKHSULFHDSSUHFLDWLRQZLOOQRWEHXQLIRUPDFURVV

WKHFLW\DQGZLOOYDU\EDVHGXSRQYDULRXVWKHPHV

:HEHOLHYHWKDWRYHUDSHULRGRIWKHQH[WYH

\HDUV1RUWK(DVW%HQJDOXUXZLOOSURYLGHWKH

highest appreciation compared to other zones.

Based on the announced infrastructure projects,

FRXSOHGZLWKSUR[LPLW\WRWKH,7FRUULGRUZHKDYHVKRUWOLVWHGWZRGHVWLQDWLRQVWKDWORRNSURPLVLQJ

in this zone viz. Hebbal and KR Puram. These

destinations share some common characteristics

among themselves making them ideal residential

Since 2008 more than 37mn. sq. ft. of RFHVSace

has been constructed in

East Bengaluru

:HH[SHct another 24mn. sq.ft. of new RFH

VSace to become

RSHUDtional by 2017

We believe Hebbal and KR

Puram toSUovide the

highest DSSUHciation in

Bengaluru market


27/123


destinations. These destinations are in close

SUR[LPLW\WRWKH,7FRUULGRURI+HEEDO:KLWHHOG

Road and the ORR (Hebbal-KR Puram-

Marathahalli stretch). Additionally, thesedestinations are also well connected with the

Bengaluru International Airport and Bengaluru

city centre. The upcoming monorail, Metro, HSRL

and elevated road will enhance connectivity

between the city centre and the airport.

Following are the factors that will have a positive

impact on the chosen destination:

. Bengaluru will witness an incremental demandRIPQVTIWRIRFHVSDFHRYHUWKHQH[W

YH\HDUVSULPDULO\GULYHQE\WKH,7,7H6

sector. More than 60% of this will be within

North-East Bengaluru.

. Bio-technology industry of Karnataka isforecasted to grow at an annual average rateof 10% over the next six years from USD

170mn. in 2011 to USD 272mn. in 2017. A large

number of these units are expected to be set-

up in the north-east region mainly on account

of favourable regulations, availability of vastland parcels, proximity to the city centre and

the talent pool of the city.

. The distinct feature of these destinations willbe a) proximity to the major employment hubs

of Bengaluru i.e. Manyata Tech Park in the

1RUWKDQG:KLWHHOGDQG,73/LQWKH(DVWE

quick and easy accessibility to the city centre

DQGUHWDLOKXEVIRUGDLO\UHTXLUHPHQWVDQGF

distance to the airport.

. Additionally, the upcoming metro, monorail,HSRL corridor between Hebbal and BIA will

further boost the connectivity of this location.

. Proposed PRR will further enhance theconnectivity from all the peripheral districts.

More than 60% of theincremental RFHVSace

to be in North and East

Bengaluru

Bio-technology industry in

Karnataka is estimated to

grow at 10% CAGR from USD

170mn. in 2011 to USD 272mn.

in 2017


28/123


PRICE FORECAST

* Figures in`/sq.ft

2012

HebbalRMV/Sanjay Nagar

`6,350

2017E

`8,230

`9,145

`4,250

DESTINATION

HEBBAL

Hebbal was once the end of the northern city limit

of Bengaluru. However with Bengalurus

horizontal growth, Hebbal has witnessed a

complete make-over in the last decade. Hebbal,

previously, endowed with a calm and serene

environment has now become quite active and

lively. Hebbal gained importance as a destination

with the establishment of Bengaluru InternationalAirport near Devanahalli which is 30 km. away

from Hebbal. It has now emerged into one of the

IT/ITeS hub, housing many tech parks and

campuses of IT companies. The infrastructure of

Hebbal is outstanding; it has well linked roads

FRQQHFWLQJGLHUHQWSDUWVRIWKHFLW\7KLVZLOOEH

further enhanced once the monorail, HSRL and

Metro commence in the next 4-5 years that will

connect the city-centre with the airport. This is

expected to immensely increase the residential

prices in Hebbal.

There was a dearth of residential projects in

Hebbal before 2008. It witnessed the launch of a

mere 110 residential units in 2008.

Developers got attracted to this destination post


Airport near Devanahalli in 2008. On account of

this, 372 new residential units were launched in

2010, which on a year-on-year basis registered a

rise of 285%.

As on September 2012, 557 units out of the total

1,604 units launched were unsold, implying 34.7%of the total inventory as unsold.

We have benchmarked Hebbal to RMV/Sanjay

Nagar which is an established micro-market and

has characteristics similar to Hebbal. Going

forward, we expect the absorption rate to

increase due to the reasons stated earlier and

this will positively impact prices in Hebbal.

Currently, Hebbal prices are 33% lower than our

benchmarked micro-market. We forecast this

discount to narrow down to 10% by the end of 2017

resulting in Hebbal prices moving up from

`4,250/sq.ft. to`8,230/sq.ft.


2007 2008 2009 2010

1,800

1,500

1,200

900

600

300


RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF HEBBAL

2011 2012*

1%

33%

8%

35%


Launches

2007 2008 2012*2009 2010 2011

RESIDENTIAL PROJECT LAUNCHTREND IN HEBBAL


11097

372

666

721 units launchedand 233 units absorbed in

last 21 months in Hebbal

No.

ofUnits



5% 4%

We forecast prices in

Hebbal to appreciate by

94% from 2012 to 2017

305

55


29/123

PRICE MOVEMENT

9,000

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

* Figures in`per sq.ft

2013E 2014E 2015E 2016E 2017E2007 2008 2009 2010 2011 2012

Hebbal RMV/Sanjay Nagar Discount Margin

`3.6 mn. and

`5.3 mn. are theminimum ticket size for

investment in Hebbal for a

2 BHK and 3 BHK Apartment

respectively


Investment Options in Hebbal

INVESTMENT TICKET SIZE

Apartment Size in sq.ft. Ticket Size in `mn.

SELECT PROJECTS

Source: Knight Frank ResearchSource: Knight Frank Research

Project Developer No. of Launch Completion

Units Date Date

Waters Equinox 380 Sep-11 Mar-16

Edge

Sobha Sobha 498 Jun-11 Mar-15

City Developers

1250 - 1850 5.3 - 7.9

850 - 1100 3.6 - 4.7

3BHK

2BHK


33%

10%


30/123


Launches

2007 2008 2012*2009 2010 2011

RESIDENTIAL PROJECT LAUNCHTREND IN KR PURAM


DESTINATION

KR PURAM

.53XUDPORFDWHGRQ1+RWKH2OG0DGUDV

5RDGLVNPIURP%DL\DSSDQDKDOOL0HWUR

VWDWLRQDQGLVMXVWNPIURP0*5RDG,WV

SUR[LPLW\WRWKH,7FRUULGRURI:KLWHHOGDVZHOODV

RI0DQ\DWD7HFK3DUNKDVPDGHLWWKHPRVW

VRXJKWDIWHUGHVWLQDWLRQDPRQJWKH,7HPSOR\HHV

7KHSURSRVHG3HULSKHUDO5LQJ5RDG355ZLOO

FRQQHFW(DVWHUQ%HQJDOXUXZLWK+RVNRWHZKLFKLVNPIURPWKH.53XUDP:LGHQLQJRIWKH2OG

0DGUDV5RDG+LJKZD\WRHLJKWODQHKDV

enhanced the connectivity; the commute time to

,73/QHDU:KLWHHOGKDVUHGXFHGWR

minutes. Hence, KR Puram-Budigere Cross stretch

has emerged as a good destination. Proximity to

WKH,7KXERI:KLWHHOGLPSURYHGFRQQHFWLYLW\

ZLWKWKHDLUSRUWDQGSUR[LPLW\WRWKH

%\DSSDQDKDOOLPHWURUDLOKXEKDYHJHQHUDWHG

LQWHUHVWDPRQJSURVSHFWLYHEX\HUV

2YHUXQLWVZHUHODXQFKHGVLQFHLQ.5

3XUDPPLFURPDUNHW7KLVOHGWRDQLQFUHDVHLQ

XQVROGXQLWVZKLFKDVDSHUFHQWDJHWRWRWDO

LQYHQWRU\NHSWRQULVLQJVLQFH$VRQ6HSWHPEHU

RIWKHWRWDOXQLWVVWRRGXQVROGLQ.5

Puram as there is still some supply overhang of

the previous year.

:HKDYHEHQFKPDUNHG.53XUDPZLWK:KLWHHOG

ZKLFKLVRQHRIWKHPRVWHVWDEOLVKHGPLFUR

PDUNHWVRI(DVW%HQJDOXUX*RLQJIRUZDUGZH

H[SHFWWKHDEVRUSWLRQUDWHWRLQFUHDVHGXHWRWKH

IDFWRUVVWDWHGHDUOLHUDQGWKLVZLOOSRVLWLYHO\

impact prices in KR Puram. Currently, KR Puram

SULFHVDUHORZHUWKDQWKHHVWDEOLVKHG

PDUNHW:HIRUHFDVWWKLVGLVFRXQWWRQDUURZGRZQ

WRE\WKHHQGRIUHVXOWLQJLQ.53XUDP

prices moving up from`3,245/sq.ft. to

`VTIW


2007 2008 2009 2010

6WRFN &XPXODWLYH$EVRUSWLRQ RI8QVROG8QLWV

RESIDENTIAL DEMAND-SUPPLY ANALYSIS OF KR PURAM

2011 2012*

6,095 units launchedin KR Puram since 2007, of

which 42% launched in last

33 months

No.

ofU

nits


CONNECTIVITY TOIMPORTANT LOCATIONS

'LVWDQFH 7UDYHOWLPH

%\5RDG([LVWLQJ %\0HWUR5DLO3URSRVHG

:KLWHHOG :KLWHHOG

13km

52mins

13km

mins

881

254

1,118

414


Over the nextYHyears,

we expect KR Puram to

follow :KLWHHOG in terms

of price

We forecast prices in KR

Puram to appreciate by

91% from 2012 to 2017


31/123

`3.1 mn. and

`4.7 mn. are theminimum ticket size for

investment in KR Puram for

a 2 BHK and 3 BHK

Apartment respectively

SELECT PROJECTS


Project Developer No. of Launch Completion

Units Date Date

Purva Puravankara 306 Mar-11 Sep-14

Midtown

Pashmina Pashmina 250 Jan-12 Dec-14

Waterfront Developers

Purple Purple 135 Jan-11 Dec-13

Woods Estates

INVESTMENT TICKET SIZE

Apartment Size in sq.ft. Ticket Size in `mn.


1450 - 2100 4.7 - 6.8

950 - 1220 3.1 - 4.0

3BHK

2BHK


PRICE MOVEMENT

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

* Figures in`per sq.ft

KR Puram :KLWHHOG Discount Margin


2013E 2014E 2015E 2016E 2017E2007 2008 2009 2010 2011 2012


PRICE FORECAST

* Figures in`/sq.ft

2012

KR Puram:KLWHHOG

`5,175

2017E

`6,200

`7,370

`3,245

37%

15%

Investment Options

in KR Puram


32/123


HIDDEN GEM

YelahankaCONNECTIVITY TOIMPORTANT LOCATIONSFROM YELAHANKA

* By road

Distance

18km

17km 19

km

Yelahanka located further north of Hebbal is at a

distance of 19km. from the Bengaluru

International Airport (BIA). It was initially

envisaged as the satellite city of Bengaluru, but is

now a part of the BBMP The Municipal

Corporation of Bengaluru. The NH-7 provides

excellent connectivity with the airport as well as

the city centre.

The destination gained prominence only after thecommencement of BIA at Devanahalli. However,

this was the sole reason for the swift rise in the

real estate prices of Yelahanka. The current prices

KDYHDOUHDG\EXLOWLQWKHEHQHWDULVLQJRXWRIWKH

announced projects, which we believe will see

light only after 2017. As on date, Yelahanka is still

short of social infrastructure including basic

amenities like water and electricity. Moreover, the

organised retail market is still non-existent in this

destination.

The Government of Karnataka has proposed

numerous infrastructure projects includingwidening of elevated road, High Speed Rail Link

and Metro Rail to improve the connectivity

between the airport and Bengaluru City Centre.

Also, commuter rail system has been planned to

connect Devanahalli with Yeshvantpur via

Yelahanka.

Further, the Government of Karnataka has formed

Bengaluru International Airport Area Planning

Authority (BIAAPA) to ensure organized

development of Bengaluru North, Devanahalli

and Dodaballapur Taluka. A total investment of

`1,150bn. has been earmarked in order to make

North Bengaluru a self-sustaining business hub.

Some of the major investments are Information

Technology Investment Region (ITIR) inDevanahalli, Aero SEZ an aviation hub in

Devanahalli, Devanahalli Business Park and

Aerotropolis. The Government of Karnataka is in

talks with banking giants to set up a Global

Financial District near Devanahalli. These

developments are expected to completely change

North Bengaluru from an unexciting location to a

bustling self-sustaining city.

Cumulatively, the above developments have the

potential to generate 4 mn. direct and indirect

jobs in North Bengaluru over the next two

decades. Hence, we believe that Yelahankas

eventual evolution as a Peripheral Business District will

give birth to a thriving resiential real estate destination.

BBAE LH

Yelahanka located

further north of Hebbal is

at a distance of 19 km

Yelahanka is still short of

social infrastructure and

basic amenities

Bengaluru International

Airport Area Planning

Authority formed by

Government of Karnataka

Destination gained

prominence only after the

commencement of

Bengaluru INTERNATIONALAIRPORT


33/123


8.701.9%6.56 2.9%

CHENNAI METROPOLITION REGION POPULATION

Population in Millions

resized - kf investment advisory report 2012

Documents