The India Real Estate Outlook (H1 2014) our half yearly, flagship report which analyses the real estate market - office & residential; across top 6 cities in India. This version is a comprehensive one, specific to the Pune market.

1. Pune
INDIA REAL ESTATE OUTLOOK REPORT (January – June 2014)
For queries on data, contact Hetal Bachkaniwala, Research
For any other query, contact Bertilda Fernandes, Marketing

2. Launches (units)
Absorption (units)
Weighted Avg Price (` per sq.ft.)
Jan - June 2014 16,883 -19% Y-o-Y July – Dec 2014 (E) 18,960 -23% Y-o-Y 2014 Year End (E) 35,840 -21% Y-o-Y
Jan-June 2014 14,719 -30% Y-o-Y July – Dec 2014 (E) 19,808 11% Y-o-Y
2014 Year End (E) 34,527 -11% Y-o-Y
Jan - June 2014 4,614 6% Y-o-Y 2014 Year End (E) 4,713 4% Y-o-Y
Residential
Market Overview

3. New Completions (mn.sq.ft.)
Absorption (sq.ft.)
Vacancy %
Jan-June 2014 2 -15% Y-o-Y July to Dec 2014 (E) 2.6 125% Y-o-Y
2014 Year End 4.7 31% Y-o-Y
Jan-June 2014 2.1 -26% Y-o-Y July to Dec 2014 (E) 2.2 85% Y-o-Y 2014 Year End 4.3 7% Y-o-Y
June 2014 20%
2014 Year End (E) 20%
Office
Weighted Average Rent (` per sq.ft. per month)
Jan-June 2014 43 10% Y-o-Y
2014 Year End (E) 47 15% Y-o-Y
Market Overview

4. Residential

5. 8,000
9,000
10,000
11,000
12,000
13,000
14,000
15,000
No. of units
Demand & Supply Trend- 2014
Downward trend in demand since 2013, and this has continued in 2014 as well
Fall in absorption expected to be complemented by a sharper drop in the number of new launches
Demand dropped by over 19% in 2013 and is expected to fall by 11% in 2014
Total number of units to be absorbed expected to fall from 38,800 in 2013 to 34,500 in 2014
New launches estimated to decrease by 21% from 45,370 units in 2013 to 35,840 units in 2014
Launches
Absorption

6. Unsold Inventory Level - QTS
The QTS ratio has been inching upwards since Sept 2013, signifying weakness in the market
Developers have reduced new launches by 19% during H1 2014, compared to H1 2013 This has not resulted in lowering the QTS ratio, as the sales volume declined further by 30% during the same period
3
4
5
6
7
8
9
No. of Quarters
71,000 units remain unsold as of June 2014 and will take 7 quarters to absorb

7. H2 2014 Forecast
The conversion time of an actual sale from a sales inquiry has reduced drastically in the past 2 months, indicating some sort of revival in demand
However, new launches are estimated to fall by 23% during the same period
Half-yearly Launches and Absorption Trend
31,458
24,513
20,720
24,652
16,883
18,960
23,122
24,895
20,937
17,858
14,719
19,808
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
No. of units
Launches
Absorption
Sales volume expected to recover from H2 2014 onwards
Forecasted to increase by 11%, compared to H2 2013

8. Weighted Average Price Trend
Half-yearly Weighted Average Trend
The bumpy ride in demand and supply does not seem to have any significant impact on prices as it continues to move upwards
Prices forecasted to increase by 4% in H2 2014 on the back of a moderate recovery in sales volume
3,500
4,000
4,500
5,000
`/Sq ft
The weighted average price increased by 6% in H1 2014
` 4,350/ sq ft
` 4,600/ sq ft
` 4,700/ sq ft

9. New Launch Analysis
3%
24%
29%
23%
21%
H1 2013
1%
23%
20%
20%
36%
H1 2014
Central
Koregaon Park, Boat Club Road, Erandwane, Deccan, Kothrud, Model Colony
East
Viman Nagar, Kharadi, Wagholi, Hadapsar, Dhanori
West
Aundh, Baner, Wakad, Hinjewadi, Bavdhan, Pashan
North
Pimpri, Chinchwad, Moshi, Chikhali, Chakan, Talegaon
South
Kondhwa, Ambegaon, Undri, Dhayari, Warje, Sinhgad Road
Micro-Market Split of Units Launched
South witnessed a phenomenal jump in new launches during H1 2014
Located between 2 major IT hubs of Hinjewadi and Kharadi, it is slowly emerging as a preferred destination for buyers
West Pune observed the sharpest fall in new launches
West Pune is facing price resistance from buyers

10. Ticket Size Analysis
Ticket Size of Launched Units by Micro Markets
96% of new units launched in the South were below the ticket size of `5 mn while West and East were at 66% and 73% respectively
0%
20%
40%
60%
80%
100%
<2.5 mn.
2.5-5 mn.
5-7.5 mn.
7.5-10 mn.
10-20 mn.
>20 mn.
Central
East
West
North
South
Majority of the locations in East and West have already breached ` 5,000/sq.ft

11. Absorption Analysis
Micro Market Split of Units Absorbed
West has observed the steepest fall in absorption because the ticket size is gradually going up
2%
27%
30%
20%
21%
H1 2013
3%
26%
26%
24%
21%
H1 2014
Central
Koregaon Park, Boat Club Road, Erandwane, Deccan, Kothrud, Model Colony
East
Viman Nagar, Kharadi, Wagholi, Hadapsar, Dhanori
West
Aundh, Baner, Wakad, Hinjewadi, Bavdhan, Pashan
North
Pimpri, Chinchwad, Moshi, Chikhali, Chakan, Talegaon
South
Kondhwa, Ambegaon, Undri, Dhayari, Warje, Sinhgad Road

12. Micro Market Health
Age of Inventory compared to QTS
South is the poorest in health with an excess of unsold inventory of the projects launched more than two years ago
Central
East
West
North
South
West is the healthiest with the lowest QTS and minimum age of unsold inventory
5
6
7
8
9
10
5
6
7
8
9
10
QTS
Despite the West witnessing the sharpest fall in absorption, its health is relatively better because the drop in absorption was matched by a similar fall in new launches

13. Price Movement
Price range in H1 2014 (per sq.ft.)
12-month change
6-month change
Central
Koregaon Park
13,000 - 17,000
8%
5%
Kothrud
7,500 - 12,500
10%
3%
Erandwane
13,500 - 18,000
17%
4%
Boat Club Road
14,000 - 19,000
1%
0%
East
Kharadi
5,200 - 6,200
11%
0%
Wagholi
3,400 - 4,500
4%
2%
Dhanori
3,800 - 4,700
1%
0%
Hadapsar
4,500 - 5,800
10%
3%
West
Aundh
7,500 - 9,500
14%
1%
Baner
5,500 - 8,000
10%
1%
Hinjewadi
4,800 - 5,800
9%
1%
Wakad
5,200 - 6,000
8%
3%

14. Price Movement
Price range in H1 2014 (per sq.ft.)
12-month change
6-month change
North
Moshi
3,600 - 4,200
6%
2%
Chikhali
3,400 - 4,000
4%
3%
Chakan
2,800 - 3,200
8%
2%
South
Ambegaon
4,200 - 5,200
7%
2%
Undri
3,800 - 4,800
12%
3%
Kondhwa
4,500 - 5,600
11%
2%

15. Key Takeaways
Demand is expected to decrease from 38,800 units in 2013 to 34,500 units in 2014
Pune will take more than 7 quarters to offload its unsold inventory
South Pune is emerging as a preferred destination for home buyers due to its strategic location
After a lull of 2 years, absorption to increase by 11% in H2 2014

16. Office

17. Vacancy Trend
Office Space Stock and Vacancy Level
Vacancy levels have been falling since 2012 on the back of a steady rise in absorption and a slower pace of completion of new projects
0%
5%
10%
15%
20%
25%
30%
0
10
20
30
40
50
60
Mn Sq ft
Stock
Occupied Stock
Vacancy (RHS)
The vacancy level observed during H1 2014 was 20%, down from 22% in H1 2013
22%
20%
Total office stock 54.3 mn.sq.ft.
Occupied 43.4 mn.sq.ft

18. New Completion and Absorption
While 2.1 mn sq ft of office space was absorbed in H1 2014, only 2 mn sq ft of new projects were completed
Absorption during H1 2014 was better than expected due to improved sentiments in the IT/ITeS and BFSI sectors (including support services)
-
0.5
1.0
1.5
2.0
2.5
3.0
Mn Sq ft
New Completion
Absorption

19. H2 2014 Forecasts
Office Space Stock and Vacancy Level
2.16 mn sq ft of space projected to be absorbed during H2 2014 which is a significant increase over H2 2013
For 2014, absorption is expected to touch 4.26 mn sq ft - an increase of 7% from 4 mn sq ft in 2013
Demand will be matched by a higher increase in new completions of 4.68 mn sq ft for 2014 2.64 mn sq ft of new projects are expected to be completed in the remaining 6 months
0%
5%
10%
15%
20%
25%
30%
0
10
20
30
40
50
60
Mn Sq ft
Stock
Occupied Stock
Vacancy (RHS)

20. Weighted Average Rents
Rental value increased by 5% over the last 6 months
The weighted average rental value is forecasted to increase from ` 43 per sq ft per month in H1 2014 to ` 47 per sq ft per month in H2 2014
A strong pipeline of new supply is expected to restrict the upside movement of rentals to single digits in H2 2014
30
35
40
45
50
55
60
`/sq.ft./month

21. Sectoral Analysis of Demand
Sector- wise Absorption Split
Share of the IT/ITeS sector has fallen during H1 2014
Other services sector has increased to 20% from <5% in H1 2013 due to demand from consulting, media, healthcare and retail companies
IT/ITeS
Financial Services
Manufacturing
Other Services
H1 2013
65%
20%
10%
5%
H2 2013
51%
8%
29%
12%
H1 2014
39%
33%
9%
20%
A few big-ticket deals by HSBC, Barclays and Citibank including support services have skewed the share towards the BFSI sector

22. Deal Size Analysis
Average Deal Size and Number of Deals
Average deal size has reduced considerably during H1 2014, though the market has seen a substantial jump in the number of deals
The average size of transactions has reduced to 21,400 sq ft in H1 2014 from 42,700 in H1 2013
0
40
80
120
-
10,000
20,000
30,000
40,000
50,000
Number
Sq ft
Average Deal Size (Sq ft)
Number of Deals (RHS)
42,700
21,400

23. Business District-wise Analysis
Business District-wise Absorption Split
Decline in share of PBD markets is attributed to the fall in IT/ITeS sectors
With an increase in share from 28% in H1 2013 to 42% in H1 2014, SBD East has emerged as most preferred by BFSI sector including support services
The SBD markets have regained their share, which they had been losing out to PBD markets over the last few years
5%
28%
6%
35%
26%
H1 2013
8%
42%
14%
22%
13%
1%
H1 2014
CBD & Off CBD
SBD East
SBD West
PBD East
PBD West
SBD North & South

24. Business District-wise Rents
Limited number of new project completions, low supply pipeline and steady demand have helped the rents in SBD West to soar by 14% over the last year
Business District
Rental Value Range in H1 2014 (per sq ft per month)
12 month change
6 month change
CBD & off CBD
55-85
6%
2%
SBD East
40-60
12%
6%
SBD West
40-55
14%
4%
PBD East
35-60
13%
5%
PBD West
32-45
9%
3%
PBD East has seen a faster rental growth compared to PBD West due to proximity to the Pune airport and the presence of a developed retail infrastructure

25. Key Takeaways
The absorption of office space, is expected to touch 4.26mn sq. ft. an increase of 7% over 2013
SBD East has emerged as the most preferred market during H1 2014 with its share in absorption increasing to 42%
PBD East has seen a faster rental growth owing to its proximity to the Pune airport & the presence of a developed retail infrastructure

26. Pune
INDIA REAL ESTATE OUTLOOK REPORT (January – June 2014)
For queries on data, contact Hetal Bachkaniwala, Research
For any other query, contact Bertilda Fernandes, Marketing