The Real Estate (Regulation and Development) Act,
2016 has renewed overall market sentiment and
induced a positive feeling amongst buyers. Increasing
enquiries indicate that the transaction volumes
should improve towards the end of the year,
especially during the festive season.
2. Quarterly Review
INDIA | RESIDENTIAL
August 2, 2016
Residential sector
on the cusp of
slow recovery
The Real Estate (Regulation and Development) Act,
2016 has renewed overall market sentiment and
induced a positive feeling amongst buyers. Increasing
enquiries indicate that the transaction volumes
should improve towards the end of the year,
especially during the festive season.
Forecast at a glance
Demand
Demand should stay healthy in the mid-
end segment especially in projects
nearing completions
Supply
Developers are likely to hold new
lauches till the festive season
Capital Values
Should remain stable; however select
prime areas with limited supply should
continue to demand a premium
Rental Rate
To remain stable till the end of this year
as many markets have inventory
overhang
Construction
Developers set to remain focused on
completion and delivery of existing
projects to regain buyers’ confidence
New launches witnessed uptrend
During the second quarter of 2016, the top six cities1 in
India noted the launch of about 24,000 new residential
units, taking the H1 2016 total to approximately 42,000
units. In Q2 2016, Bengaluru witnessed the maximum
number of launches and accounted for about 48% of the
total units followed by Pune 21% and Mumbai 16%.
Gurgaon and NOIDA remained subdued in terms of new
launches as developers remained focused in their efforts
to address the existing inventory overhang.
Developers are offering deep discounts and freebies
across cities to lure fence sitters, investors as well as
end-users. However, we saw most of the sales
happenning in ready to move or in projects nearing
completions.
There have been limited number of new launches in
previous eight-nine quarters. We anticipate an increase
in new launches in coming quarters, as many developers
are looking to the festive season to launch their projects.
Most markets are extremely price conscious and project
pricing should remain a key criterion for the success of a
project.
Return on Alternative Investments
INDICATORS Q1 2016 Q2 2016
QOQ%
CHANGE
Gold 27,583 31.507 14.23%
Silver 35,403 44,755 26.42%
Fixed Deposit*
7.25% 7.25% 0.00%
Equity – BSE 24,346 27,144 11.49%
S&P BSE Realty
Index**
1,176 1,542 31.12%
Source: Government of India, Colliers International India Research
*SBI fixed deposit rate for a period of more than one year and amount
below INR 1 Crores
**S&P BSE Realty Index is a free float weighted index, comprised of
real estate development companies in BSE – 500 Index
1
Bengaluru, Chennai, Pune, Mumbai, Noida and Gurgaon
3. Colliers Quarterly Q2 2016
MUMBAI | RESIDENTIAL
August 2, 2016
Moving towards
recovery despite a
relaxed quarter
High unsold stocks and lack of potential buyers
should reduce the number of launches in H2 2016.
Transaction volumes are likely to improve towards the
end of the year, especially during the festive season.
Forecast at a glance
Demand
Demand should stay healthy in the mid-
end segment, with buyers looking for
attractive payment plans
Supply
We forecast limited supply additions
due to prevailing inventory overhang
Capital Values
Set to remain stable across most
locations barring a few luxury launches
in Worli and South Mumbai
Rental Rate
Likely to experience a marginal increase
in some micro markets due to limited
supply
Construction
Most projects likely to be completed on
time with minimal delays in permissions
and approvals
Slowdown in residential market
During Q2 2016, new unit launches amounted to 3,800,
raising the total so far this year to 10,300. The decrease
in the number of launches is primarly due to the fact that
Q1 witnessed unit launches in bulk by a few big
developers. Comparatively, there were not many bulk
unit launches in this quarter. Western suburbs such as
Goregaon, Andheri, Malad witnessed 37% of new
launches, followed by Central suburbs (Chembur,
Ghatkopar, Vikhroli) with 22%, Navi Mumbai with 21%,
Thane with 17% and Central Mumbai (Dadar,
Chinchpokli) with 3%.
Some major new launches this quarter include projects
by Godrej Properties (The Trees – Phase II), Sonam
Builders (Indraprasth), Ruparel Realty (Sky Greens) and
Today Global Group (Sai Vrindavan).
Market Trends
Micro Markets
Capital Values
(INR Per Sq Ft)
QOQ%
Change
YOY%
Change
South Mumbai 47,500 - 68,000 -1% -1%
Worli 47,000 - 58,000 -1% 1%
Prabhadevi 46,000 - 55,000 0% -2%
Bandra 30,000 - 52,000 1% 2%
Khar 27,000 - 35,000 2% 3%
Santacruz 24,500 - 29,500 0% 4%
Juhu 27,000 - 32,000 2% 5%
Andheri 19,000 - 22,000 -2% 2%
Powai 21,000 - 27,000 0% 9%
Thane 7,500 - 12,500 - -
Navi Mumbai –
Prime Areas
9,000 - 20,000 - -
Navi Mumbai –
Emerging Areas
5,000 - 10,000 - -
Source: Colliers International India Research
Note: Above values represents indicative base selling price for
premium properties for secondary market products
5. Colliers Quarterly Q2 2016
GURGAON | RESIDENTIAL
August 2, 2016
Mid segment
gaining traction
Growth in number of new launches should remain
muted in coming quarters if the inventory overhang is
to be addressed. Golf Course Extension Road is
likely to witness an uptick in sales primarily in
projects near completion. Dwarka Expressway may
experience growth in sales volume if the
infrastructure improves in accordance with the recent
timelines issued by the state government.
Forecast at a glance
Demand
Increase in number of enquiries
indicates that demand will pick up in the
coming quarters; demand shall remain
skewed towards developers with proven
track record
Supply
Limited new launches likely in the short
term amidst rising concerns about
consumer activism, litigation and
Regulatory Act coming into force
Capital Values
Set to remain stable in most of the micro
markets in the short term
Rental Rate
Should remain stable due to high
vacancy in prime projects and large
supply pipeline
Construction
A number of projects should see
completion in micro markets such as
Golf Course Road and New Gurgaon
Subdued growth in new launches
The second quarter of 2016 continued to see subdued
transaction volume. Most of the developers have
exercised caution in their launch strategies, as the
markets have registered a build-up of inventory due to
lower sales volume from last nine quarters. In total, 1,580
units were launched this quarter in the mid-luxury
segment. Notably, the Tata La Vida project was launched
on Dwarka Expressway in Sector 113 at a base price of
INR 8,500 per sq ft in affordable luxury segment.The
project was launched at about 20% less than the previous
launch of Tata Gateway at the same location in 2013
which was a high-end project. Ambience Group launched
2 BHK apartments in Ambience Creacions, Sector 22 at a
base price of INR 10,500 per sq ft.
Golf Course Extension Road has started gaining impetus
with the completion of a few projects. Major deliveries
include Pioneer Park and Emaar MGF Palm Drive.
Besides this, New Gurgaon micro market has started
witnessing end-user activity in both the rental and sale
segments on account of its connectivity with NH8 and
Manesar. Currently, the absorption of residential space in
this area is skewed towards the INR4,500-6,000 per sq ft
price band and rents are very low due to absence of
proper social infrastructure.
Market Trends
Micro Markets
Capital Values
(INR Per Sq
Ft)
QOQ%
Change
YOY%
Change
Golf Course Road 11,000-36,000 0% 0%
Sushant Lok 14,500-18,000 8% 0%
DLF Phase 1 11,000-13,000 0% 0%
NH-8 10,000-18,000 -2% 0%
Sohna Road and Ext 6,500–11,000 4% 0%
Source: Colliers International India Research
Note: Above values represents indicative base selling price for
premium properties for secondary market products.
7. Colliers Quarterly Q2 2016
NOIDA | RESIDENTIAL
August 2, 2016
Demand likely to
improve in coming
quarters
Following the entry of national level players such as
Godrej and Tata Housing in NOIDA market, the
market should see a couple of new launches in H2
2016. A number of projects are likely to see
completion in the wake of the Real Estate (Regulation
and Development) Act, 2016 and ongoing consumer
activism and protests over project delays.
Forecast at a glance
Demand
Mid segment ready to move in
projects are likely to remain in
demand in H2 2016
Supply
We expect a number of new project
launches by national level developers
during upcoming festive season
Capital Values
Set to remain stable in most of the
micromarkets
Rental Rate
Shall remain under pressure in H2
2016 due to continuous addition of
new supply
Construction
Developers are likely to push
completion of existing projects amidst
increased disrest among buyers over
project delays
Government contemplating
initiatives to allay the fears of
homebuyers
During Q2 2016, almost 6,000 units were issued
completion certificates, most of them located in Sectors
45, 74,75,76 and in sectors along NOIDA Expressway.
Amidst heightened concerns over the delay in possession
and to allay the fear of home buyers, the authorities of
Noida, Greater Noida and Yamuna Expressway have
decided to hire an external agency for floor wise
monitoring of residential and commercial realty projects
so that the developer is left with no leeway in deviating
from the sanctioned plans.NOIDA Authorities are also
mulling an exit policy for beleaguered developers looking
to surrender surplus land to deal with the liquidity issues.
Rents in all the micro-markets have remained stagnant in
Q2 except Sector 92 and 93 which have registered a 6%
dip in rents. A number of new projects witnessed
completion in sectors along NOIDA expressway.The
increase in supply has resulted in downward pressure on
rental values.
Market Trends
Micro Markets
Capital Values
(INR Per Sq
Ft)
QOQ%
Change
YOY%
Change
Sector 44 7,400 - 9,500 0% -16%
Sector 92,93 6,500 – 9,500 -6% 3%
Sector 50 6500 - 8000 0% -1%
Sector 61,62 5,800 – 6,200 0% -3%
Sector 28,29,37 7,500–9,500 0% 0%
Sector 70 to 79 4,300-5,500 -1% 8%
Source: Colliers International India Research
Note: Above values represents indicative base selling price for
premium properties for secondary market products
9. Colliers Quarterly Q2 2016
BENGALURU | RESIDENTIAL
August 2, 2016
End-user demand
to drive new
launches
Strong office sector performance and development of
various IT Parks in several southern, eastern and
south eastern peripheral locations should boost
residential sales in these areas.
Forecast at a glance
Demand
Likely to strengthen as a consequence
of strong office sector demand
Supply
Current oversupply situation and
delayed project deliveries likely to curtail
new launches in the next quarter
Capital Values
Set to remain stable while a few micro
markets such as Kormangala,
Jayanagar and Sadashivanagar may
witness a slight uptrend due to limited
supply
Rental Rate
Should remain stable in H2 2016 due to
continuous addition of new supply
Construction
Developers set to remain focused on
completion and delivery of existing
projects to regain buyers’ confidence
Spurt in new project launches
New unit launches in Bengaluru’s residential property
market almost doubled from Q1 2016 and stood at
nearly 11,500 units at the end of Q2. Steady end-user
demand coupled with strong office market fundamentals
which are crucial to development of new residential
clusters remained the primary catalyst behind the high
volume of new launches in this quarter.
A high proportion, 62%, of new launches in this quarter
was concentrated in the peripheral areas of existing
commercial hubs in the city. In terms of location,
Devanahalli (26%), Budigere Cross (14%) and
extensions of Kanakpura Road (12%) comprised a
significant share of total new launches.
Interestingly, the new project launches have happened
at about 10% lower than last quarter‘s weighted average
prices which shows buyers‘ sensitivity towards
affordability.
Market Trends
Micro Markets
Capital Values
(INR Per Sq
Ft)
QOQ%
Change
YOY%
Change
Central 20,000-30,000 0% 4%
Cooke Town 7,500-14,000 0% 0%
Jayanagar 8,500-10,500 0% 0%
Sadashivanagar 9,000-15,000 0% 0%
Airport Road 8,500-11,000 0% 8%
Indiranagar 8,000-13,000 5% 5%
Bannerghatta
Road
5,000-8,500 4% 4%
Kormangala 7,000-11,000 6% 6%
Whitefield 5,000-8,500 6% 6%
Yelahanka 4,000-10,000 0% -7%
Source: Colliers International India Research
Note: Above values represents indicative base selling price for
premium properties for secondary market products
11. Colliers Quarterly Q2 2016
CHENNAI | RESIDENTIAL
August 2, 2016
Recovery on cards
but at slower pace
Rising office sector absorption coupled with several
planned infrastructure upgrades is helping to revive
the sentiment amongst end-users in the residential
segment. Increasing enquiries, value deals and
vigorous marketing by developers should all help
revive the sector in H2 2016.
Forecast at a glance
Demand
Enquiries have started picking up for
ready to occupy residential stock. We
expect this trend to continue in H2 2016
Supply
Limited new supply likely to enter the
market in the wake of project delays
Capital Values
May remain steady with some locations
such as Boat Club and Nungambakkam
demanding higher capital values due to
limited land availability
Rental Rate
Likely to remain stable till the end of the
year due to current availabilities
Construction
Delays in obtaining project approvals as
well as construction delays will probably
result in limited new completions
New launches remain steady
During Q2 2016, Chennai’s residential property sector
showed green shoots of recovery as new unit launches
remained steady over the previous quarter and stood at
about 2,100 units. This is primarily because of increased
confidence amongst property developers owing to a
stable state government retaining power following the
Tamil Nadu Assembly Elections 2016. In keeping with
end-users‘ need for affordability, developers steered
clear of launching projects aimed at high-end and luxury
segments and focused on the mid-segment (78%) and
affordable (21%) categories at competitive base selling
prices to boost sales velocity.
The weighted average base selling price for all units
launched this quarter was INR 4,500 per sq ft which is
20% lower than Q1 2016 when it was recorded at INR
5,600 per sq ft. Of all locations, Poonamallee comprised
nearly 38% of total launches as a young demographic
segment employed in nearby information technology and
manufacturing hubs with high disposable incomes is
emerging as a key demand driver. Connectivity to pivotal
arterial roads such as the NH-4, Chennai Bypass Road
and Outer Ring Road is a major draw for this location.
Market Trends
Micro Markets
Capital Values
(INR Per Sq
Ft)
Q0Q%
Change
YOY%
Change
Boat Club 26,000-35,000 0% 0%
Nungambakkam 19,000-26,000 0% -6%
Alwarpet 18,500-26,000 0% -3%
Besant Nagar 13,500-17,500 0% -2%
Adyar 13,000-17,000 0% 0%
Anna Nagar 13,500-17,000 0% 3%
T. Nagar 13,500-20,500 0% 5%
Velachery 7,000-10,000 0% 10%
Sholinganallur 4,800-5,950 0% -4%
Siruseri 3,990-5,500 0% -10%
Source: Colliers International India Research
Note: Above values represents indicative base selling price for
premium properties in secondary market
13. Colliers Quarterly Q2 2016
PUNE | RESIDENTIAL
August 2, 2016
Market sentiment
likely to improve
further in H2 2016
With steady growth in the number of launches this
quarter, Pune is likely to see an increase in
developers offering big discounts to conclude
transactions for potential clients so that they can turn
their focus to new launches in coming quarters.
Forecast at a glance
Demand
Enquiry to conversion ratio set to
improve in H2 2016
Supply
We expect a decrease in the number of
new launches in the short term as
developers are likely to hold new
launches till the festive season
Capital Values
Should remain stable; huge supply
pipeline should prevent prices from
rising
Rental Rate
Continued trend of stable rents over the
last two quarters should prevail in H2
2016 as well
Construction
Uncertainty due to the adoption of new
Development Control Regulations in
Pune likely to cause delays in
completion of projects
QoQ increase in new launches
The Pune residential market witnessed launch of about
5,000 units in Q2 2016, bringing the total for the year to
7,200. The number indicates that new launches more
than doubled in Q2 over Q1. However, these unit
launches were mostly concentrated in select micro
markets where a few major developers have launched
huge residential projects on large land parcels
admeasuring 15 - 20 acres. Most of these developments
cater to high end or luxury segment. The mainstay of the
business of Pune developers, the budget segment, i.e.
homes in the price range of INR 35 to 45 lakh has
experienced a slow quarter in terms of new launches.
The micro market in east Pune, Mundhwa had the
highest number of unit launches with a 46% share, all in
the mid segment. It was followed by Wakad and Baner
with 24%, Undri with 12%, Balewadi and Bavdhan with
7%, Pimpri with 6% and lastly Kalyani Nagar with 5%.
Launches in north and west Pune were mostly in the
mid-end segment.
Market Trends
Micro Markets
Capital Values
(INR Per Sq
Ft)
QOQ%
Change
YOY%
Change
Kalyani
Nagar/Viman
Nagar/Karadi
5,800-16,500 0% -4%
Deccan/Camp/
Boat Club
7,000-15,000 0% -4%
Magarpatta/
Hadapsar
4,800-7,800 0% 0%
Baner/Hinjewadi/
Wakad/Pashan
4,800-9,500 0% 0%
Kothrud/Bavdhan/
Wajre
6,200-12,000 0% 0%
NIBM/Undri/
Kondhwa
4,400-6,250 0% -5%
Pimpri/Chinchwad
/Chakan
4,700-5,800 0% -4%
Source: Colliers International India Research
Note: Above values represent indicative base selling price for premium
properties for secondary market products