RESIDENTIAL REAL ESTATE MARKET REPORT

Mumbai Metropolitan Region (MMR) National Capital Region (NCR) Pune Bengaluru Hyderabad Chennai

Q3 FY 12-13

Cities covered by Liases Foras.

About Liases Foras

Founded in 1998, Liases Foras is a non-brokerage real estate research firm that offers data and advisory services. Our works on industry and scientific prognosis of the local market is highly regarded. Clientele includes leading mortgage companies such as HDFC Ltd, Axis, among others, real estate funds, developers, government bodies and leading international research organisations.

Services Offered
Data Services: Providing quarterly updated data on real estate projects across twenty two cities in India as shown in above map. Quarterly market reports and presentations Advisory Services: Best use analysis Risk Analysis Valuation and Pricing

- Project Monitoring - Project Rating

For more information visit: www.liasesforas.com or e-mail us at: contact@liasesforas.com

Festive season failed to boost the residential realty sector

The third quarter of FY2012-13 saw the residential realty sector slipping into lull once again. The market did not seem to be enamored by the festive spirit and the astounding performance of the second quarter proved to be just a flash in the pan. Weakness in India's macroeconomic scenario continued as the Index of Industrial Production (IIP) growth for November fell to a four month low and current account deficit as a percentage of GDP stood at an unsustainable level of 5.4% for Q2 FY 2012-2013. The residential real estate market also mirrored the negative sentiment and witnessed a lackluster performance in Q3 FY 2012-13. The old demons of surging prices, ballooning inventory levels and subdued demand returned to haunt the sector in the third quarter. The table below provides a snapshot of the performance across the six major cities for Q3 FY 201213:

Particulars
Inventory (MnSqft) Sales (MnSqft) Value of Stock Sold (Rs Cr) Wt Avg Price per sqft Sales Velocity (%) Months Inventory
Source:Liases Foras

Bengaluru Chennai Hyderabad MMR

Q3 71.09 Q2 65.28 Q3 Q2 Q3 Q2 Q3 Q2 Q3 Q2 Q3 Q2 12.16 15.59 5,011 6,342 4,705 4,274 2.62% 66.31 55.31 5.06 6.62 2,259 2,687 4,548 4,301 1.38% 42.50 37.46 4.61 4.06 1,506 1,390 3,444 3,320 1.53% 144.72 136.02 10.3 9.75 9,224 8,346 11,295 11,385 1.35%

NCR
283 268.46 20.49 25.94 8,413 11,167 4,339 4,123 1.40%

Pune
56.4 55.96 9.2 11.31 3,936 4,282 4,549 4,411 2.37%

3.23%
15 10

2.08%
36 22

1.24%
23 25

1.37%
39 39

1.71%
36 28

3.44%
14 12

Hyderabad crawls out of the slump

Though, the performance was subdued across the nation, it is quite evident that Hyderabad market gained traction and came out of the muted sentiment witnessed over the past few quarters. It is the only city to have shown a growth in sales over the quarter leading to inventory of 23 months, down from the level recorded in the previous quarter. The meltdown of the Telangana issue coupled with the brisk pace of progress of the Hyderabad Metro Rail phase-I, boosted the market. Ready properties featured high on the buyers' preference list in this quarter, especially in Hyderabad. 35% of the total supply in Hyderabad was ready to move in properties. Investors seeking immediate returns and end users seeking faster possession have shown inclination towards the completed properties. Pune and MMR followed the suit with 19% and 14% of the total supply being dominated by ready properties.

Source:Liases Foras

Highest number of new launches this quarter.

This quarter has seen the highest number of new launches since 2009, with Q4 FY 2009-10 being the only exception. It is noteworthy that the price of new launches was 24% lower than that of existing supply, paving way for affordable housing to turn into a reality in the near future. In terms of cost bracket, it can be observed that most of the new supply is skewed towards products in the budget segment (Rs 25 lacs -Rs 50 lacs) and mid-segment (Rs 50 lacs -Rs1 crore). 50% of the new supply for the quarter was contributed by the affordable and budget segment.

Pune MMR Chennai All India Price - New Supply 120

Inventory in Million sqft

NCR Hyderabad Bangalore All India Price - Existing Supply

7000 6000 4000 3000 2000 1000 0 Rs. Per sqft 5000

100 80 60 40 20 0

Source:Liases Foras

National Capital Region In keeping with the previous trend, most of the new supply for the quarter has been recorded in the NCR. Greater Noida, Noida, Raj Nagar Extension in Ghaziabad, Bhiwadi and Gurgaon were inundated with new project launches. Noida Extension has witnessed 6,148 units of new launches, the highest in the city, on account of change in the Development Plan and increase in FSI. The increase in FSI serves as a payoff for the compensation (63% cash and 10% land) given to the farmers during the Noida Land Row. Moreover, with developers unable to obtain loans, it is also an incentive to boost sales. Habitation has started in Raj Nagar Extension (Ghaziabad), and the location has seen a launch of 4,149 units in the affordable segment. New supply in Gurgaon is mostly in the premium segment. Developers in Gurgaon continue to face water scarcity and have to arrange tankers for construction work, thus escalating the cost of construction.

Mumbai Metropolitan Region Navi Mumbai and Panvel ruled the roost in terms of new launches in MMR, followed by Extended Central suburbs. As Island City and Western Suburb have reached saturation, the peripheral regions have come to the rescue and eased the pressure of growing population. In Island City new supply of 542 units were recorded in this quarter which is in Sewri West from two projects by Lodha Group and Ruparel Realty. Ulwe in Navi Mumbai, could be seen as attracting investors and its prices have surged 9% in last four quarters. Moreover, the proximity to proposed Reliance SEZ and Trans Harbour Link accentuates the appeal of the location. SaiSahil by Paradise Group, White Castle by Lakhani Builder and Yash Heights by Yash Developers are some of the new launches in Ulwe. Similarly, Panvel, with its proximity to Pune and JNPT (the Jawaharlal Nehru Port Trust), coupled with strong rail connectivity has gained much prominence. Balaji Vijay Sapphire by Emkayen Group, Govind Greenfields by Priyal Group, Greenscapes by Monarch Universal are the major launches in Panvel. Bengaluru Bannerghatta Road, Sarjapur Road, Whitefield, Yelahanka and Hennur Road have contributed 75% of the new supply in the city. The IT stretch of Whitefield, Sarjapur Road and Marathalli have been preferred launch locations of the developers. Pune Hinjewadi and Wagholi have logged in maximum number of launches for this quarter, which was mostly in the budget segment. The festive fever continued with pre-EMI schemes and waiver on stamp duty offered in a move to boost sales. Wagholi saw 627 units of new launches on the back of major development activities. The plan for a 25 km elevated bridge has been laid to connect the Nagar Road junction with Shikrapur. DP Road located between Nagar Road and Wagholi is an emerging destination in the Pune realty market. Matrix Meadows by Matrix Infra, Pristine City by Pristine Properties, Post Lakeside by Agarwal Ventures and Crystal Rock by Swati Constructions are the main projects in Wagholi. Koregaon Park, Erandwane, Kharadi and Baner witnessed quite a few launches in the luxury end. Chennai A good number of premium launches were registered in Chennai this quarter. Abov, termed as the tallest building in Chennai, by Akshaya Builders in Kelambakkam, Green`s Lotus by Greens Valleys Shelters in T. Nagar, Elliots by Shree Nivas Housing in Besant Nagar and Green Edge by XS Real in Royapettah were the major launches in this segment. About 57% of the new launches were garnered by Sholinganallur, Avadi and Kelambakkam.

Prices continue to edge higher

The price of existing supply remains at an elevated level across most of the six major cities on an annual as well as sequential basis. This had a cascading effect on the demand and inventory piles. Sales in terms of volume and value slipped in most of the cities due to which time required to clear the stock at the existing absorption pace showed a significant rise. NCR witnessed an uptrend in prices with Faridabad and North Delhi showing 23% and 21% sequential gain. However, the pace of price increase slowed in Q3 2012-13 as against the previous quarter. Bengaluru saw a whopping 10% surge in prices on account of mushrooming IT companies and availability of superior range of products. Moreover, execution of projects at a faster pace has also impacted the upward movement of prices. Apparently, MMR is inching towards normalcy as prices have moved southward after three long quarters. Even as the remaining suburbs recorded a 2%-3% quarterly price rise, it is likely that the long due correction could see the light of the day, as the3% sequential price drop in the Island City could have a rippling effect on the prices across other locations in the city. However, effects of a sudden rise in Ready Reckoner rates in Mumbai, since 1 January 2013, cannot be completely ruled out.

Location wise price trends across the cities

MMR
Location Lower Parel Goregaon (E) Mulund West Thane West Mira Road East Kalyan West Panvel Bhiwadi Ghaziabad Greater Noida Gurgaon Noida Sarjapur Road Whitefield Hebbal MG Road Kanakpura Baner Bavdhan Kalyani Nagar Talegaon Wagholi Gachibowli Chandanagar Hitech City Cyberabad Madhapur Anna Nagar Vellachery Egmore Adyar Ambattur Tambaram Porur Kanchipuram
Source:Liases Foras

Q3 FY11-12 27,649 12,578 8,670 6,663 5,001 4,112 4,023 2,007 2,423 2,404 5,681 3,577 3,163 4,584 4,836 5,000 3,089 4,862 4,307 5,195 2,479 3,081 3,382 2,623 2,700 3,500 4,159 5,368 5,264 14,140 11,239 3,914 3,284 3,619 2,302

Q4 FY 11-12 28,446 12,598 8,686 6,948 5,120 4,318 4,067

Q1 FY 12-13 27,011 14,218 9,394 7,278 5,411 4,523 4,288 2,413 2,867 2,504 6,762 4,023 4,119 5,215 4,856 5,000 3,179 5,205 4,576 11,007 2,703 3,274 3,267 2,699 2,750 4,000 4,590 6,042 5,654 15,150 11,239 4,195 3,292 4,925 2,702

Q2 FY 12-13 26,596 13,707 9,638 7,538 5,607 4,695 4,502 2,464 3,053 2,931 7,220 4,277 3,936 4,559 5,787 5,000 3,164 5,403 5,194 9,980 2,793 3,376 3,379 2,800 2,750 4,000 4,996 7,005 5,599 15,702 10,704 4,869 3,334 5,194 2,701

Q3 FY 12-13 26,833 14,700

9,932
7,772 5,785

5,053 4,590
2,637 3,173 3,266 7,511 4,931 4,262 4,467 7,644 5,000 3,581 6,099 5,370 7,574 2,805 3,946 3,470 2,988 3,060 4,400 5,820 7,551 5,886 16,431 14,901 4,858 3,336 5,553 2,699

NCR
2,100 2,621 2,418 6,239 3,834

Bengaluru
3,183 4,499 4,874 5,000 3,097

Pune
5,077 4,263 5,576 2,579 3,147

Hyderabad
3,422 2,693 2,700 3,600 4,386

Chennai
5,478 5,109 14,150 11,239 4,026 3,322 5,345 2,751

Rare bit of good news on the sales front

Business turnover Unit sales

15% 16%

20% 21% 9% 8%

Bengaluru Chennai Hyderabad MMR NCR Pune 28%33%

13% 12%

17% 19% 7% 8% 4% 5% 24% 30% Bengaluru Chennai Hyderabad MMR NCR Pune

33%35% 13%

6% 7% 17%

Inner Circle: Q2 FY12-13 Outer Circle: Q3 FY12-13 Source:Liases Foras

In terms of composition NCR, MMR and Bengaluru contribute more that 50% of the total sales in India's residential realty sector. Although, the trend rolled over this quarter, the sales contribution saw a marginal decline across most of the major six cities with an exception of MMR and Hyderabad. NCR, Bengaluru and Chennai lost their respective chunks in the pie both in terms of volume as well as value. On the flipside, MMR,in terms of volume, garnered a market share of 17% compared to 13% in the previous quarter, whereas in terms of business turnover, the region contributed 30% of the sales as against 24% recorded in the September quarter. Treading on the same lines, Hyderabad witnessed an increase in contribution in volume sales and business turnover. Sales Velocity Period Q3 FY2012 -13 Q2 FY2012 -13
Source:Liases Foras

Bengaluru 2.62% 3.23%

Chennai 1.38% 2.08%

Hyderabad 1.53% 1.24%

MMR 1.35% 1.37%

NCR 1.40% 1.71%

Pune 2.37% 3.44%

The pace of off take also slowed across the cities. Chennai witnessed a significant decline in the sales velocity to 1.38% in the Q3 from 2.08% in the previous quarter. In Q3 FY 2012-13, Bengaluru outdid Pune to show the fastest pace of sale across the nation. Sales movement was slowest in MMR, while Hyderabad saw slight acceleration in its velocity.

National Capital Region In the NCR region, Noida, Greater Noida and Ghaziabad region contribute about 70% of the total sales. Maximum demand for the quarter was garnered by Raj Nagar Extension in Ghaziabad, Bhiwadi, Noida Extension and Noida Sector 143. However, Bhiwadi saw a marginal decline as compared to the previous quarter. In terms of cost bracket, demand was polarized towards the budget segment (Rs 25 lacs Rs 50 lacs) and midsegment (Rs 50 lacs Rs1 crore). Mumbai Metropolitan Region In Mumbai, sales in terms of unit climbed 3% QoQ in December 2012 quarter. Extended Central Suburbs, Navi Mumbai, Thane and Panvel contributed nearly 60% of the total sales in Mumbai, while sales contribution of Island City, Central Suburbs and Western Suburbs has shown a steady decline over the past few quarters. Thane, Ulwe and Panvel have emerged as the bright spots closely followed by Dombivali (E), Virar (W) and Mira Road (E). Meanwhile, Airoli in Navi Mumbai and Ambernath (W) in Extended Central Suburbs have shown a significant surge in sales volume in Q3 2012-2013, clearly indicating the rise in appeal of the peripheral regions on grounds of increased infrastructure activities and better connectivity. Bengaluru In Bengaluru, major unit sales were registered in Kanakapura Road, Whitefield, Sarjapur Road and Hosur Road on account of proliferating offices in the IT/ITES sector. Bannerghatta Road and Yelahanka also witnessed a significant increase in sales. Budget segment (Rs 25 lacs Rs 50 lacs) and midsegment (Rs 50 lacs Rs1 crore) were major contributors towards sales. Hyderabad Hyderabad, the only market to have shown a sales growth, logged in maximum unit sales from Gachibowli, Chandanagar, Kukatpally and Madhapur, the organised real estate corridor. The city has shown remarkable improvement which can be credited to the improvement in construction activity. Pune Chakan, Hadapsar and Aundh contributed 65%of the total unit sales this quarter. However, when compared to the previous quarter, most of the suburbs saw significant declines. Unit sales inKarve Road and Aundh plunged 83% and 65%, respectively. Chakan, Pimpri-Chinchwad, Sahakar Nagar and Yerawada are the only suburbs to have seen a growth in unit sales.

Market sees spiral movement.

Months inventory across the major cities in India Pune NCR MMR Hyderabad Chennai Bangaluru 0
Source:Liases Foras

12 15 28 23 25 22 10 10 15 20 30 40 50 36 38 39 39

Q3 Q2

Efficiency has taken a hit across the cities and achieving a healthy level of 8 months of inventory seems to be a far-fetched dream. In Chennai, months inventory shot up from 22 to 36 on account of slower pace of offtake. Likewise, the significant rise in months inventory in NCR, Bengaluru and Pune can be attributable to the decline in the sales velocity coupled with a good number of new supply in the region. However, Hyderabad saw a decline in months inventory from 25 months to 23 months, MMR maintained its level at 39 months. It is interesting to observe that the market is following a spiral movement where the efficient markets like Pune and Bengaluru are slipping into the inefficient territory while perceived inefficient markets like Hyderabad and MMR are moving into the efficient zone.

Final quarter awaited with bated breath

So far the positive momentum which followed the announcement of various reforms by the FDI in September failed to buoy the Indian residential realty sector. Even as affordable housing has drawn the long delayed attention, it remains to be seen whether the implementation of the policies actually result in the creation of affordable housing. While, price still remains at elevated levels, new properties being launched at lower price points are a welcome move and generate prospects of moving towards efficiency in the long run. The spotlight now lies on the fourth and final quarter of 2012-2013 which will help us to draw conclusion on the overall performance of the Indian residential sector. Moreover, announcements made in the Union Budget 2013-14 are also likely to have repercussions on the market and the prevailing sentiment.

Glossary of Terms used: Inventory: Inventory is the unsold stock between two dates of survey. It covers all new launches (new additions) as well as carried-forward inventory from the previous survey: Previous Unsold + New Additions. Weighted Average Price: This represents average price of the city/location against the unsold stock. every projects unsold stock is multiplied with its price and summation of this product is divided by total unsold stock to derive the weighted average price. Sales Velocity: This signifies demand supply scenario in a market. It is the ratio between monthly sales and total supply and gives an idea of gestation period of a project as per the existing dynamics. Ideally SV shall be between 2.75% and 3%. The pace translates into gestation period of a maximum of 36 months of a project. Value of stock sold: represents stock the value of the trade or in other words business done during the period. This is calculated by multiplying the sq. ft. sold during the period with prevailing prices. Months Inventory: This represents the number of months required for the inventory in the market to be absorbed according to the existing demand. It is calculated by dividing the closing stock (marketable stock) by monthly sales. FY-Fiscal year starting from 1st of April and ending on 31st March. Q3- Quarter ending December Disclaimer The information provided in this report is basd on the data collected by Liases Foras. Liases Foras has taken due care in the collection of the data. However, Liases Foras does not warranty the correctness of the information provided in this report. The report is available only on "as is" basis and without any warranties express or implied. Liases Foras disclaims all warranties including the implied warranty of merchantability and fitness for any purpose. Without prejudice to the above, Liases Foras will not be liable for any damages of any kind arising from the use of this report , including, but not limited to direct, indirect, incidental, punitive, special, consequential and/ or exemplary damages including but not limited to, damages for loss of profit goodwill resulting from:
? The incorrectness and/or inaccuracy of the information available on or through the Site ? Any action taken, proceeding initiated, transaction entered into on the basis of the information

available in this report Terms of usage, Except as expressly permitted below, users of this report should not copy, modify, alter, reverse engineer, disassemble, sell, transfer, rent, license, publish, distribute, disseminate or otherwise allow access to all or any of the Information.