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Sep 20, 2013, 03.13 PM IST | Source: Jones Lang LaSalle

A Review of India Real Estate in 2012

2012 was a sluggish year in terms of economic growth, largely because of high interest rates and poor industrial production.

- THE ECONOMY IN 2012

2012 was a sluggish year in terms of economic growth, largely  because of high interest rates and poor industrial production. Indeed, the index of industrial production rose by just 0.4% in April-August 2012, as compared to 5.6% in the same period of 2011. Manufacturing activity, which contributes significantly to India's GDP, also took a big hit in 2012. Inflation remained high, impacting sentiments and investor interest across businesses - including real estate.
 

- RESIDENTIAL REAL ESTATE IN 2012

As has been the case in the past, the larger cities of Mumbai and NCR-Delhi recorded healthy absorption of residential units during 2012,  with a 60% contribution to the overall absorption. Chennai and Pune were among the other two cities that increased their share of absorption during 2012 to 26% from the 23% recorded a year ago.

At a country level, a total of 160,622 residential units were launched in 2012, as compared to 154,701 units for the corresponding period of 2011. From the pricing perspective, the average residential capital values in 2012 appreciated in the range of 1-3% y-o-y.

Among the top 7 cities of India, the capital value growth in Pune and NCR-Delhi was the highest, while Hyderabad and Bangalore saw a slower rate of capital value growth. There is still no price correction on the cards, but the quantum of appreciation definitely reduced significantly in all the top seven cities of India in 2012.

 

 

 

 

 

 

 

 

 

 

- Although demand showed signs of improvement with the approach of the festive season, developers are still struggling with rising inventories and have attempted to sell off their existing stock via out-of-the-box marketing techniques and pricing mechanisms to attract end users and investors.

- Infrastructure deficit continues to be a key restraint for the growth of residential markets across India.

- Overpricing has been an issue in Pune, Hyderabad and Kolkata, resulting in a relatively smaller share of absorption from these cities during 2012.

- From a supply perspective, Hyderabad and Kolkata saw a decline in the number of residential units launched, accounting for less than 2% respectively of the total in 2012YTD.

- COMMERCIAL REAL ESTATE IN 2012

The secondary business districts (SBDs) of Mumbai, Bangalore and Pune, followed by central business districts (CBDs) of Bangalore and Gachibowli in Hyderabad, began emerging as landlord markets. This is primarily because these areas have a lower-than-average vacancy levels from a national perspective, and also because of the relatively higher rental value change in these submarkets as compared  to the corresponding trough levels in the past.

The CBDs of NCR-Delhi, Mumbai, Pune and Hyderabad remained neutral markets because of negligible vacancies (5-10%) as compared to the national average of 19%. Also, these locations saw persistent market stagnation because of negligible rental growth and lower vibrancy.

The suburban business districts of NCR-Delhi, Mumbai, Chennai and Kolkata, which have higher-than-average vacancies, remained occupier friendly markets. Higher vacancy expectations continues to exert short-term pressure on their rental value growth.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- In 2012, the cautious occupier sentiment that resulted from the on-going global uncertainties was one of the key reasons behind slow commercial property leasing activity in the major cities of India.

- With domestic office occupiers going slow on expansion, MNC occupiers have been delaying deal closures as they have to go through multiple levels of approvals to execute expansion plans amid sustained cost pressures.

- Among the top seven cities, Mumbai and NCR-Delhi recorded a y-o-y absorption drop of around 47% and 26% respectively during 2012.


2012 was defined by a notable decline in absorption of office space across most of the cities in India from the 2011 levels. However, the larger cities of Mumbai, NCR-Delhi, Bangalore and Chennai contributed to a healthy 72.5% of the country’s net absorption of commercial real estate. In fact, the share of pre-commitments to absorption in 2012 was more than recorded during the previous year.

- RETAIL REAL ESTATE IN 2012

- With an operational stock of close to 65 million sq ft during 2012 YTD, the retail mall supply across the top seven cities of India slowed considerably as compared to the supply recorded in 2011.

- With a drop in supply of over 65%, new completions in 2012YTD were at a new low when we consider the trend of the past five years (since 2007). Barring Hyderabad, all cities recorded completions during 2012, albeit at a slower pace than witnessed in 2011.

- Mumbai, NCR-Delhi, Bangalore and Chennai together absorbed 81% of the total retail space in 2012. This is significant, considering their consolidated contribution of 70% in total retail space absorption in 2011.

 

 

 

 

 

 

 

 

 

 

Retailers in cities like NCR-Delhi, Mumbai and Bangalore continued to actively lease space in superior quality malls due to the limited availability of new space and the low vacancy rates in existing prime malls. The total net absorption of retail space across India projected for 2012 was 4.4 million square feet, led by NCR-Delhi and Bangalore (which together absorbed 2.6 million square feet). They were followed by Mumbai, Pune and Kolkata, where absorption was around 0.8, 0.5 and 0.4 million square feet respectively.

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Property rates
  • Residential
  • commercial
Mumbai
Capital Values Rate/Sq ft (INR)
Aajiwali
3000 - 5000
Ambernath
3000 - 5000
Badlapur
1000 - 3000
Bhandup (West)
11000 - 13000
Chembur (East)
15000 - 17000
Chembur (West)
11000 - 14000
Dombivali (East)
4000 - 6000
Ghatkopar
13000 - 15000
Heeranandani Gardens Estate - Powai
25000 - 30000
Hiranandani Gardens Estate - Powai
25000 - 30000
Kalyan (East)
2000 - 4000
Kalyan( West)
3000 - 5000
Karjat
1000 - 3000
Khandala
8000 - 10000
Kharegaon
5000 - 7000
King Circle
17000 - 28000
LBS Marg
12000 - 15000
Lonavala
3000 - 5000
Mulund (East)
11000 - 14000
Mulund (West)
11000 - 14000
Mumbai Nasik Highway
3000 - 6000
Powai
15000 - 17000
Senapati Bhagath Singh Road
3000 - 5000
Sion (East)
18000 - 21000
Sion (West)
17000 - 22000
Tilak Nagar
12000 - 22000
Ulhasnagar
3000 - 5000
Vikhroli
11000 - 14000
4 Bunglows
17000 - 28000
7 Bunglows
13000 - 23000
Chandivali
10000 - 15000
Malad (East)
12000 - 14000
Versova
21000 - 24000
Airoli
4000 - 8000
Belapur
6000 - 9000
Ghansoli
6000 - 8000
Kalamboli
4000 - 9000
Kamothe
4000 - 6000
Nerul
7000 - 10000
Palm Beach Road
12000 - 15000
Panvel
3000 - 6000
Sanpada
8000 - 10000
Sea Woods
8000 - 10000
Ulwe
3000 - 6000
Uran
3000 - 6000
Vashi
9000 - 12000
Altamount Road
62000 - 72000
Breach Candy
62000 - 74000
Chowpathy
48000 - 58000
Colaba
42000 - 46000
Cuffe Parade
67000 - 69000
Dadar(East)
32000 - 34000
Dadar(West)
29000 - 32000
Lower Parel
32000 - 34000
Mahalaxmi
38000 - 40000
Malabar Hills
68000 - 75000
Mumbai Central
23000 - 34000
Napean Sea Road
66000 - 74000
Parel
26000 - 34000
Prabhadevi
37000 - 39000
Tardeo
41000 - 49000
Worli
36000 - 41000
Andheri (West)
18000 - 20000
Andheri(East)
15000 - 17000
Bevarly Park
5000 - 7000
Bhayander (East)
5000 - 6000
Bhayander (West)
3000 - 5000
Boisar
1000 - 3000
Borivali (East)
11000 - 13000
Borivali (West)
10000 - 14000
Dahisar
4000 - 8000
Goregaon (East)
13000 - 17000
Goregaon (West)
12000 - 14000
Kandivali (East)
12000 - 14000
Kandiwali (West)
11000 - 12000
Malad(West)
9000 - 14000
Mira Road
5000 - 7000
Naigaon
1000 - 4000
Nala Sopara (Eastt)
3000 - 5000
Nalasopara (West)
3000 - 5000
Poonam Nagar
6000 - 8000
Shanti Nagar
7000 - 9000
Shrishti
6000 - 9000
Vasai Road
1200 - 4000
Virar
1000 - 3000
Note: Price trend are based on asking rate and not necessarily on the transaction date
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