2. BNP Paribas Real Estate - INDIA
All the building blocks
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3. CONTENTS
Summary p. 3
Macroeconomic Context p. 4
Bangalore Map p. 5
Central Business District (CBD) p. 6
Secondary Business District (SBD) p. 7
Periphery Business District (PBD) p. 8
Rental Values & Capital Values p. 9
Key Projects p. 9
Key Transactions p. 10
Glossary p. 11
CITY REPORT
BANGALORE OFFICE MARKET - Q4 2010
4. SUMMARY
There has been significant increase in leasing enquiries in Q4 Bangalore is currently witnessing a significant number of
of 2010. However, inspite of a steady rise in number of infrastructure projects being implemented, and are under
enquiries, the volume of space transacted in the region various stages of development. The Government of
witnessed a sharp decline as compared to the previous Karnataka has undertaken the development of 7 flyovers on
quarter. During this quarter Bangalore witnessed a the Outer Ring Road to provide seamless connectivity to the
cumulative transaction of approx. 0.8 mn sq.ft as compared developing peripheral regions and ease traffic flow to the
to approx. 3.7 mn sq.ft. in Q3 2010. existing SBD regions. Once completed these projects are
likely to have a positive impact on the demand for real estate
The achievable values exhibited a mixed trend. While, as
within the region as a whole.
there was a marginal increase in rental and capital values
within the CBD, there was an increased pressure on the The Phase I of Metro is progressing as per schedule and trial
achievable values within the suburban and peripheral run is expected to commence in the last week of January
micro-markets. Restricted availability of space options 2011. Planning and land acquisition for the second phase is
across the CBD with a steady demand resulted in firming up currently underway and the construction is expected to
of rentals within the micro-market. On the other hand, the commence shortly. Similar to other cities the ongoing
ongoing construction activity within the SBD and PBD micro- construction activity is likely to have a negative impact on
markets with ready availability of large volume of office the demand for surrounding development during the short
space has led to increased vacancy levels in these micro- term. However in the long run, the projects in these regions
markets. are likely to benefit from the initiatives.
During this quarter, approx. 1.1 mn sq.ft of additional space During the past few quarters, Bangalore has witnessed an
was added to the existing inventory across the SBD and PBD increased demand for IT SEZ space with many blue-chip
areas. At the same time, a total stock of approx. 10 mn sq.ft of companies actively looking at SEZ space. However, currently
investment grade office space is currently under various there is a limited supply of ready to move SEZ space in the
stages of construction across the city and is likely to be region. This scenario is however likely to change with
added to the existing stock by the end of the next year i.e. Q4 significant volume of supply likely to be added in the SBD and
2011. The SBD alone is likely to witness additional supply of PBD areas of Bangalore by mid 2012.
approx. 5 mn sq.ft of Grade A office space during the coming
Looking forward, the rental and capital values are expected
year. Given the existing availability of ready stock with
to rise marginally in the CBD area. On the other hand the
stagnant demand, some of the developers have slowed down
achievable values are likely to be impacted in the SBD areas
the pace of construction in their on-going projects. However,
such as Bannerghatta Road, Jaya Nagar and JP road due to
most of these projects are expected to be completed by end
ongoing construction activity of metro rail during the short
of 2011.
term. Alternatively, based on the growing interest for
additional space from the Blue-chip companies, the rentals
in PBD are expected to remain stable over the next few
quarters.
CITY REPORT
BANGALORE OFFICE MARKET - Q4 2010 I3I
5. CRR & SLR MACROECONOMIC CONTEXT
35
GDP growth moderates on account of unanticipated
30
factors
25
Percent
20
The Indian economy, continued on the high growth path in 2010-11 despite
an uncertain global environment. Though the overall global outlook
15
suggested some moderation in growth in both advanced and emerging
10 economies in 2011, downside risks to India's growth momentum have
5 receded considerably. However, the GDP grew moderately at 8.2 % during the
quarter as compared to 8.8% during the previous two quarters. Significant
0
slowdown in the industrial sector along with marginal downward
Jan-09
Feb-09
Mar-09
Apr-09
May-09
Jun-09
Jul-09
Aug-09
Sep-09
Oct-09
Nov-09
Dec-09
Jan-10
Feb-10
Mar-10
Apr-10
May-10
Jun-10
Jul-10
Aug-10
Sep-10
Oct-10
Nov-10
Dec-10
movement in the services sector were primary factors that led to
moderation in the GDP growth, despite of sharp increase in agricultural
SLR CRR
growth.
Modest softening of manufactured products price and pressures aided by
Repo & Reverse Repo Rate past monetary tightening by RBI, led to moderation in Wholesale Price Index
(WPI) during August-November 2010 relative to double digit levels of 11%
7
experienced during March-July 2010. However, inflationary pressures
6
revived in December 2010 with WPI inflation increasing to 8.4 percent from
5 7.5 per cent in November 2010. These were attributed to unanticipated
Percent
4 factors such as unseasonal showers and supply chain factors affecting the
3 prices of essential commodities such as vegetables. New drivers such as
2 Fuel and non-fuel international commodity prices and demand-supply
1
imbalances in some food items emerged as factors impacting the inflation
rates.
0
23-Jul-09
23-Aug-09
23-Sep-09
24-Oct-09
24-Nov-09
25-Dec-09
25-Jan-10
25-Feb-10
19-Mar-10
20-Apr-10
20-May-10
20-Jun-10
2-Jul-10
27-Jul-10
20-Aug-10
16-Sep-10
2-Nov-10
Liquidity conditions remained tight during the third quarter of 2010-11,
prompting liquidity easing measures being adopted by the Reserve Bank.
Repo
Under the Liquidity Adjustment Facility (LAF), the RBI increased the repo rate
Reverse Repo
by 25 basis points from 6.0% to 6.25% and hiked the reverse repo rate by 25
basis points from 5.0% to 5.25%. Conditions for enhancing the efficiency of
monetary policy however, improved during the quarter with the tightness in
Gross Domestic Product (GDP) liquidity leading to competition among banks, resulting in higher deposit
10.00
8.80%
and lending rates.
9.00 8.60%
8.80%
7.90%
8.00 7.60%
8.80%
8.20%
Supported by a stable economy, India continued to be high on Global
7.90%
7.00 Investment radar. According to The World Prospectus Survey by the United
5.80% Nations Conference on Trade and Development (UNCTAD), in spite of a dip in
Percent
6.00 6.10% 6%
5.00 5.30%
the FDI Inflows, India continues to be the second best attractive destination
4.00 for FDI after China. India witnessed a total FDI inflow of USD 16,039 million
3.00 dollars (as on Dec 2010) followed by Singapore and USA at third and fourth
2.00
places.
1.00 Overall, robust and broad – based growth is expected to co-exist with
0.00 elevated inflation in the near term.
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010
Major Real Estate Sales (In INR / In million) Profits (In INR / In million)
Companies in Q on Q Q on Q
India Q4 2010 Q3 2010 Q4 2010 Q3 2010
Change % Change %
Wholesale Price Index (WPI) DLF Limited 24,799 23,690 5% 4,657 4,184 11%
18.00 Unitech 6,598 6,445 2% 1,113 1,740 -36%
16.00 India Bulls 5,962 5,414 10% 2,025 1,727 17%
14.00 Sobha Developers 3,629 4,257 -15% 490 589 -17%
12.00 Peninsula Land 1,178 1,226 -4% 621 638 -3%
Percent
10.00 Parsvnath
2,198 1,955 12% 314 498 -37%
8.00 Developers
6.00 Pheonix 451 443 2% 238 221 7%
4.00 Omaxe Limited 3,480 3,544 -2% 226 367 -39%
2.00 Mahindra
1,558 890 75% 334 247 36%
0.00 Lifespace
Mar-09
Jun-09
Sept-09
Dec-09
Mar-07
Jun-07
Sept-07
Dec-07
Mar-10
Jun-10
Sept-10
Dec-10
Sept-06
Dec-06
Mar-08
Jun-08
Sept-08
Dec-08
Anantraj 2 1.329 -100% 502 480 5%
Ackruti City 2,123 1,624 31% 678 557 31%
Source: Confederation of Indian Industries Ansal Properties 3,378 3,197 6% 324 199 63%
CITY REPORT
BANGALORE OFFICE MARKET - Q4 2010 I4I
