11 September Newsletter 2014 Final

1
CGCL Research
Capri Global Capital Limited
September 2014
26.00
26.20
26.40
26.60
26.80
27.00
27.20
27.40
1.45
1.50
1.55
1.60
1.65
1.70
1.75
1.80
1.85
1-Sep 6-Sep 11-Sep 16-Sep 21-Sep 26-Sep
Sensex Index
Value (000)
Realty Index
value (000)
S&P BSE Realty Index S&P BSE Sensex
Economic and Political Landscape
Service sector witnessed marginal improvement in performance
during the month of September~ HSBC India Services Business
Activity Index surged to 51.6 in September vis-a-viz 50.6 in
previous month;

Industrial demand remained subdued for second consecutive
month~ IIP growth dropped to 0.4% in August owing to decline in
output of capital & consumer goods;

Retail inflation declined to 6.46% in September from 7.8% in
August on the back of decline in fuel and food prices, meanwhile,
WPI inflation also declined to 5 year low of 2.38% in September;&

The Rupee depreciated against the US Dollar as the global reserve
currency continued to strengthen against emerging market
currencies over growing concerns for an early hike in US interest
rate by the federal reserve.

Policy/Regulatory Decisions
The Central Bank in its fourth bi-monthly monetary policy
statement maintained a status-quo on its key interest rates,
however it reduced liquidity provided under the ECR facility from
32% of eligible export credit outstanding to 15% with effect from
October 10
th
2014;&

SEBI notified REITs and Infrastructure Investment Trust regulations
2014, thus allowed foreign investors to invest in these instruments
subject to RBI guidelines.
.
Key Global Economic Developments
US Economys real GDP increased by 4.6% in Q2 2014~ highest
since 2006 primarily led by upturn in exports and acceleration in
consumer spending;

Chinese Economy growth slowed again in August on the back of
subdued m-o-m industrial growth of 6.9%~ lowest in last five
years; meanwhile, the Japanese Economy continued to witnessed
subdued demand levels triggered by introduction of higher
consumption tax rate in April 2014;&

India and China signed five year trade and economic co-
operation pact to improve trade balance~ pact will expected to
facilitate USD 20 billion Chinese investment into India.

Stock Market Performance
The benchmark S&P BSE Sensex ended flat for the review period
due to moderation in FII flows owing to continued geo political
tensions coupled with concerns over earlier than expected increase
in interest rate in the US;&

The BSE Realty Index underperformed other sectoral indices with
decline of over 8% during the review period, primarily due to
consistent selling pressure on leading listed players from NCR
region after the Delhi government increased the circle rate by upto
20%.

94
95
96
97
98
99
100
101
102
103
104
52
53
54
55
56
57
58
59
60
61
62
63
1-Jul 12-Jul 23-Jul 3-Aug 14-Aug 25-Aug 5-Sep 16-Sep 27-Sep
INR/GBP INR/USD
INR/YEN
USD YEN GBP
Sources: RBI, SEBI, BSE and CGCL Research
Market Snippets Sept. 2014
Macro Environment
Uneven economic recovery as service sector performance
improved, while IIP growth remained tepid; inflation further
tapered off
Chart 2: Rupee Movement (July-Sept)
-0.75
-0.25
0.25
0.75
1-Sep 5-Sep 9-Sep 13-Sep 17-Sep 21-Sep 25-Sep 29-Sep
USD Billion Net FII Flows (USD Bn)
Chart 3: Stock Indices in September
Chart 1: Net FII Flows in September (USD Bn)
2
CGCL Research
September 2014
City Focus: Mumbai-MMR
Peripheral locations continued to attract investment funds
interest
Real Estate Market Insights
Projects in Suburban locations attracted investments from
residential focused PE funds

a)IIFL invested INR 2,600 mn in three residential projects based
out of Western Suburbs in form of debt funding;&

b)HDFC Property Fund may partly finance Runwal Group for
transaction in which it is acquiring 24.7 acre land parcel in
suburban location from Crompton Greaves Ltd for INR 10.02
bn, the Fund is expected to provide INR 2 bn for the aforesaid
deal.

Omkar Realtors signed joint venture agreement with V Raheja
Group to develop luxury residential project on a 7.5 acre land
parcel on the Western Express Highway at Andheri (as part of
SRS). Project to have estimated total saleable area of 1.25 mn
sft;&

During the review period MMR witnessed launch of more than
200 units across 6 projects, primarily in the high end segment
offering apartments in 1-4 BHK configurations.
#

Regulatory/Policy Developments
Maharashtra Cabinet approved cluster development policy for
the Island City, ~kept FSI unchanged owing to pending court
cases;

The State government issued draft rules for formation of
housing regulatory authority first of its kind in the country;&

Bombay HC verdict empowered State government to act against
landowners for flouting ULCA, ~ government entitled to recover
excess land for public housing from private landowners for
violations under the now defunct Act.

Infrastructure Progress
Mumbai Metro updates MMRC finalized nine consortia
eligible for financial bidding post pre-qualification tenders for
the Colaba Bandra Seepz Metro.

Listed Developers Performance
Godrej Properties witnessed highest gain of 5% among city
based developers during September, with market capitalization
of INR 47.02 billion on last trading day of the month. Among
other developers Oberoi Realty witnessed decline of 8% during
the review period.

Key
Markets
Residential
Capital Values
(INR/sq ft)
Change
vis-a- vis
August 2014
Island City
Walkeshwar 63,000-71,900
Cuffe Parade 61,300-69,600
Lower Parel/
Mahalaxmi
33,300-43,000
Worli/Prabhadevi 38,400-40,400
Western Suburbs
Bandra

20,700-60,871
Andheri 11,500-41,508
Goregaon 15,400-18,800
Kandivali/Borivali 13,600-15,400
Central Suburbs
Ghatkopar 14,000-18,300
Mulund 14,400-15,300
Wadala 20,000-20,600
Chembur 17,000-17,400
Sewri 30,300- 33,900
Parel 29,000-30,900
Thane
Manpada 10,400-11,000
Ghodbunder Road 8,500-9,900
Extended Western Suburbs
Dahisar 10,100-14,200
Vasai 4,800-5,000
Nallasopara
*
3,600-5,700
Virar 4,500-4,700
Beyond Thane
Dombivli 4,900-7,500
Kalyan 3,900-5,500
Badlapur/Ambernath 2,900-4,400
Karjat 2,800-3,000
Navi Mumbai
Airoli 7,800-16,400
Nerul 10,600-11,400
Vashi 11,600-12,300
Panvel 4,700-5,500
Source: Industry Sources and CGCL Research
Notes: a.*Monthly rates for this location are not available;
b.
#
Information available as on date of publication from PropEquity

Project Developer Location BHK
Price
(INR/
sq ft)
Type
Bhagtani
Parkview
Jaycee
Homes
Khar (W) 3-4 55,000
*
A
Dev
Ratna
K.Patel
Realty
Matunga 1-3 50,000 A
Table 1: Key Residential Launches in Mumbai
*A: Apartment
3
CGCL Research
September 2014
City Focus: Delhi-NCR
Developers continued to leverage upon non core assets to
generate cash flows
Renewed trend of divesture of non core assets by leading
developers:

a)Parsvnath Developers sold 140 acres of land parcel in Sohna
Gurgaon to Supertech Ltd. for INR 6.65 bn to pare of debt;
while Anant Raj sold its wholly owned subsidiary Greatway
Estates Ltd. for INR 3.040 bn;&

b)Anant Raj, Unitech and The 3C Company envisaging sale of
built up assets and non core land assets to reduce debt.

Leading developers revealed fund raising plans, a case in point
Parsvnath Developers sought shareholder nod to raise its
borrowing limit to INR 50 bn, also plans to raise INR 10 billion
through private placement of NCD;

During the review period, NCR witnessed launch of more than
3,600 units across 6 projects, primarily in mid and affordable
segment offering apartments of 1-4 BHK configurations.
#

Delhi government increased the circle rate by upto 20%~ move
likely to adversely impact transaction momentum;

Haryana HC cancelled land allotment of 350 acre of land in
Gurgaon to DLF, directed state government to re-auction land;&

Centre issued draft of the redrawn eco-sensitive zone around
Okhla bird sanctuary ~ limits no construction zone to just100 m
in east, west and south direction and 1.27 km in the north.

Delhi Metro updates LG approved conversion of existing 11
stations into integrated transport hubs; Delhi government
released INR 2 billion to DMRC for the construction of Phase III.

DLF witnessed highest decline of 15% among city based
developers during August, with market capitalization of INR
268.75 billion on last trading day of the month. Among other
NCR based major developers Unitech declined 14% in the
review period.

Key
Markets
Residential
Capital Values
(INR/sq ft)
Change
vis-a- vis
August 2014
New Delhi
Greater Kailash 18,100-20,800
Mayur Vihar 13,300-16,200
Patparganj 11,900-12,900
Pitampura 11,500-13,400
Saket 14,100-16,400
Vasant Vihar

27,600-36,800
Gurgaon
Golf Course Road 14,500-15,100
M.G. Road 11,500-11,900
NH-8
*
6,100-6,700
Sohna Road 8,200-8,400
Noida
Sector 44 10,300-11,500
Sector 50 7,800-8,100
Sector 93 7,500-7,900
Sector 129, 131 5,000-6,300
Greater Noida
Noida Extension 3,200-3,400
Sector Alpha, Chi, Pi 3,600-4,800
Sector Beta
*
3,500-3,800
Yamuna Expressway 2,800-2,900
Ghaziabad
Indirapuram 5,600-6,100
NH 24 2,800-2,900
Raj Nagar Extension 3,100-3,200
Faridabad
Palwal
*
2,000-2,700
Sector 75
*
3,100-3,800
Suraj Kund 6,600-7,000
Price
(INR/sq
ft)
Type
Acropolis
Chintel
Group
Gurgaon 3 6,250 A
Brys
Indihomz
Brys
Group
Greater
Noida
1-4 2,460 A
Table 2: Key Residential Launches in Delhi-NCR
*A: Apartment
Notes: a.*Monthly rates for this location are not available
b.
#
Information available as on date of publication from
PropEquity
4
CGCL Research
September 2014
City Focus: Bengaluru
Citys investment activity led by Grade A commercial and
land assets
Increased interest in joint development mode for real estate
projects City based Brigade Enterprises and Singapore based
SWF GIC to jointly invest INR 15 bn in developing housing
projects across South India;

Land transaction activity in the city witnessed some traction
Shriram Properties acquired 56 acre land parcel on Old Madras
Road for INR 1,550 mn; it also paid INR 750 mn for joint
ownership rights for the 5 acre land partly owned by Unitech
Group at JP Nagar;

BDA decided to increase pricing in its seven housing projects for
2-3 BHK apartments to factor in increased cost of construction;

City remained preferred choice of MNCs for investment in
Grade A commercial assets a case in point, Goldman Sachs
investing INR 12 bn to jointly develop its Bengaluru campus
with Kalyani Developers on ORR;&

During the review period, the city witnessed launch of more
than 900 units across 5 projects; primarily in mid and
affordable segment offering apartments in 1-3 BHK
configurations with capital values in range of INR 2,900-5,700
sft.
#

Green nod for Phase II expansion of Kempegowda International
Airport BIAL accorded environmental clearance to commence
construction work;&

Central government approved INR 30 billion proposal to
convert Bangalore Mysore road into six lane national highway.

Puravankara witnessed highest gain of 11% on pan India basis
during September with market capitalization of INR 24.30
billion as on last trading day of month;&

Among other major developers, Sobha Developers observed
decline to the tune of 11% during the review period.

Key
Markets
Residential
Capital Values
(INR/sq ft)
Change
vis-a- vis
August 2014
Central Bengaluru
Lavelle Road
*
16,200-20,900
M. G. Road 12,400-15,300
Palace Road
*
13,600-28,000
Richmond Road
*
8,800-19,000
North East Bengaluru
Hebbal 5,300-5,600
Hennur

5,200-16,500
Indiranagar
*
6,900-10,300
K. R. Puram 3,400-3,500
Whitefield
*
4,700-5,300
North West Bengaluru
Jalahalli
*
3,900-4,300
Malleshwaram 10,700-11,900
RMV Extension 6,100-8,500
Sanjay Nagar 6,200-7,000
Tumkur Road
*
5,000-5,500
Yelahanka 4,300-4,500
South East Bengaluru
Electronic City
*
3,300-3,400
Hosur Road 3,700-4,000
Koramangala 6,900-7,600
Marathalli 3,400-5,800
Old Madras Road 4,400-4,600
Sarjapur Outer Ring
Road
*
4,500-6,600
Sarjapur Road 4,100-4,700
South West Bengaluru
Bannerghatta Road
*
4,300-4,900
Jayanagar
*
6,800-7,300
J. P. Nagar 3,600-7,200
Kanakpura Road 4,100-4,300
Mysore Highway 4,100-4,300
Price
(INR/
sq ft)
Type
Gulmohar
Prestige
Group
Hormavu 2-3 4,500 A
Salarpuria
Credenza
Salarpuria
Sattva

Kudlu 1-3 4,990 A
Table 3: Key Residential Launches in Bengaluru
*A: Apartment Source: Industry Sources and CGCL Research
Notes: a.*Monthly rates for this location are not available
b.There were no major regulatory/policy development in
Bengaluru city during the review period
c.
#
PropEquity
5
CGCL Research
September 2014
City Focus: Chennai
Peripheral locations in the city led the residential real estate
activity
Increased traction witnessed in residential market of East Coast
Road owing to its strategic location and well developed
connectivity to the Rajiv Gandhi Salai coupled with availability
of quality housing options;&

During the review period Chennai witnessed launch of around
400 units across four projects; primarily in the mid and
affordable segment offering apartments of 1-3 BHK
configurations. Projects launched at capital values in the range
of INR 4,150-4,295 per sq.ft.
#

Tamil Nadu Government cleared mega infrastructure project of
Madurai Tuticorin Industrial corridor with total investment outlay
of INR 1,830 bn. Further the state government revealed plans
to set up a financial institution to support funding for large
infrastructure projects;&

Construction work of a flyover commenced on second phase of
Outer Ring Road connecting Nemilichery and Thiruvottiyur~
project to be completed by September 2016.

Mahindra Lifespaces witnessed decline of 6% during
September, in line with decline observed by leading developers
during the review period. However, the stock outperformed the
realty index; with market capitalization of INR 21.01 billion as
on the last trading day of the month.

Key
Markets
Residential
Capital Values
(INR/sq ft)
Change
vis-a- vis
August 2014
North East Chennai
Tondiarpet
*
3,300-5,000
Egmore
*
12,100-14,100
North West Chennai
Poonamallee 3,300-4,700
Anna Nagar 8,200-11,800
Ambattur 4,000-4,300
Korattur 5,500-6,300
Perambur 5,300-5,600
Kolathur 4,500-5,000
Nungambakkam 13,500-15,600
Kilpauk 12,300-13,300
Mogappair 5,700-6,200
South East Chennai
Adyar 13,700-15,200
Alwarpet 15,300-18,800
Perungudi 6,000-6,400
Perumbakkam 3,800-4,100
R.A. Puram 18,100-27,000
Sholinganallur
*
4,400-4,800
Velachery

6,700-7,400
South West Chennai
Anakaputhur
*
3,500- 3,700
Chrompet 4,500-4,800
Guduvancheri 3,200-3,400
Porur 4,900-5,200
Urapakkam 3,400-4,400
Vadapalani
*
6,400-7,900
Price
(INR/
sq ft)
Type
Adwitiya
Jain
Housing
Ambattur 1-3 4,295 A
Arjun
Garden
Kochar
Properties
Gerugambakkam 2
4,150-
4,250
A
Table 4: Key Residential Launches in Chennai
*A: Apartment
Notes: a.*Monthly capital values of these locations is not available
b.
#
c. There were no major regulatory/policy developments in Chennai
city during the review period

6
CGCL Research
September 2014
City Focus: Pune
City witnessed significant investment activity across all built
up assets
Bengaluru based Nitesh Esates acquired one million sft Plaza
Centre Mall in Koregaon Park for INR 3 bn from Israeli
billionaire Mordechai Zisser;

Bengaluru based Sobha developers announced plans to invest
INR 2,500 mn in Pune by developing new projects through joint
ventures with local developers;

PE firm Blackstone acquired SEZ in Pune from IDFC Alternative
Ltd for INR 11 bn (the deal also included IT Park in Noida).
With this transaction IDFC fund exited its proprietary India
Office Fund with IRR of 22%;

Integrated township projects continued to gain traction in the
city, especially with launch of large scale projects such as
Pride World City launched by Pride Group at Charholi spread
across 400 acres entailing total investment of INR 65 bn and 25
mn sft of build up area;&

During the review period, the city witnessed launch of more
than 1,100 units across three projects primarily in the mid end
segment, offering apartments in 1-3 BHK configurations.
Capital values of the launched projects were in the range of INR
5,500-7,150 per sft.
#

City based D.S Kulkarni Developers recorded highest gain on a
pan-India basis during September at 25%, in contrast with
decline observed by leading developers. The stock
outperformed the realty index; with market capitalization of INR
2,220 mn on the last trading day of the month;&

City based Kotle Patil Developers recorded marginal gain of 1%
during the review period.

Key
Markets
Residential
Capital Values
(INR/sq ft)
Change
vis-a- vis
August 2014
North East Pune
Koregaon Park 11,100-11,800
Kalyani Nagar 9,500-10,200
Kharadi 5,900-6,700
Vishrantwadi 5,500- 5,800
Wagholi 3,600-6,000
North West Pune
Aundh 7,900- 13,100
Akurdi 5,100-5,400
Baner 7,100-8,300
Nigdi
*
5,400-6,100
Kiwale 4,200-4,500
Wakad 5,800-6,500
Pimpri 5,400-5,700
Hinjewadi 5,500-5,600
Balewadi 6,100-7,400
Bhosari 3,900-4,600
Ravet 5,000-5,100
Tathawade 4,900-5,300
South East Pune
Mukund Nagar

11,300-21,000
Karvenagar 8,700-10,300
Pisoli 3,900-4,100
Kondhwa 4,900-5,000
Salisbury Park 10,900-12,400
Lulla Nagar 6,900-9,500
Hadapsar 5,100-5,300
South West Pune
Erandwane 12,600-13,200
Karve Road 11,600-13,100
Dhayari 5,000-5,300
Kothrud 9,000-9,500
b. There were no major infrastructure and regulatory/policy
development in Pune city during the review period
Notes: b.
#
PropEquity

Price
(INR/
sq ft)
Type
Nyati
Meadows
(Phase II)
Nyati
Group
Wadgaon-
Sheri
2-3 7,150 A
Leisure
Town
Well Wisher
Group
Hadapsar 1-3
5,500-
9,000
A
Table 5: Key Residential Launches in Pune
*A: Apartment
7
CGCL Research
September 2014
City Focus: Hyderabad
State government continued to strive for a conducive policy
environment
In a bid to reinvigorate real estate development in the region,
State government is in the process of establishing an investor
friendly environment, a case in point Chief Minister K.C.Rao
announced that the State government is finalizing its new
industrial policy aimed at attracting higher investments. Further
the government identified about five lakh acre of land which
can be readily usable for setting up industries and other
commercial activities;

GMR Group revealed plans to set up INR 7,500 mn expo cum
convention centre in close proximity of Rajiv Gandhi
International Airport;&

Renewed interest in Grade A commercial leasing, a case in
point Deloitte envisaging to lease 1.4 mn sft of office space
for its BPO operations.

State government is planning to make installation of roof top
solar panels mandatory for new buildings in Hyderabad.

Hyderabad metro updates

a)First phase of the 8 km stretch connecting Nagole and
Mettuguda section expected to be commissioned by March
2015.

Among city based listed developers, Manjeera Constructions
witnessed gain of 14% during September, with market
capitalization of INR 775 million on the last trading day of the
month.

Key
Markets
Residential
Capital Values
(INR/sq ft)
Change
vis-a- vis
August
2014
North East Hyderabad
Uppal 2,300-2,500
Nacharam 2,800-3,300
AS Rao Nagar 2,300- 2,400
Bowenpally 2,500-2,800
Sainikpuri 2,300-2,600
North West Hyderabad
Somajiguda 5,200- 5,900
Begumpet 4,500-5,100
Jubilee Hills
*
4,600-5,200
Banjara Hills 6,600-7,100
Ameerpet 3,900-4,300
Kukatpally 3,400-3,700
Madhapur 4,600-4,800
Kondapur 3,000-5,500
Gachibowli 4,300-4,800
Miyapur 3,000-3,400
Nizampet
*
2,200-3,400
Nallagandla 3,100-3,400
Chandanagar
*
3,000-4,400
Kompally 2,500- 2,600
Bachupally
*
2,400- 2,800
South East Hyderabad
Himayath Nagar 4,600- 5,200
Nagole 2,600-2,700
Hyderguda
*
3,400-3,700
South West Hyderabad
Manikonda 2,800-3,000
Rajendra Nagar 2,800-3,000
Price
(INR/
sq ft)
Type
Bellezza
Lodha
Group
KPHB 3-4 6,300 A
Table 6: Key Residential Development in Hyderabad
*P: Plots; A: Apartment; NA: Not Applicable
Notes: a.
#
b. There are no new launches during the review period
8
CGCL Research
September 2014
8
Contact Us
Viswajit Srinivasan
Director Business Development
Wholesale Lending
4
th
Floor Merchant Chambers
41, Sir Vithaldas Thackersey Marg
New Marine Lines
Mumbai
t: +91 22 4088 8100
e: viswajit.srinivasan@cgcl.co.in
For business and other information related enquiries, please contact:
Ashish Khanna
Deputy Manager India Research
Wholesale Lending
2
nd
Floor, B1/H9 Building
Mohan Cooperative Industrial Estate
Mathura Road
New Delhi
t: +91 11 4777 3000
e: ashish.khanna@cgcl.co.in
Notes
Pricing: Capital values provided are on saleable area and are representative of residential units in multi-storied apartments
Abbreviations: BDA: Bangalore Development Authority; BIAL: Bangalore International Airport Ltd.; Bn: Billion; CBD: Central Business District; DMRC:
Delhi Metro Rail Corporation; ECR: Export Credit Refinance; FII: Foreign Institutional Investor; FSI: Floor Space Index; HC: High Court; IIP: Index of
Industrial Production; IRR: Internal Rate of Return; LG: Lieutenant Governor; MMR: Mumbai Metropolitan Region; MMRC: Mumbai Metro Rail
Corporation; Mn: Million; MNC: Multinational Company; NCD: Non convertible debenture; NCR: National Capital Region; ORR: Outer Ring Road;
PE: Private Equity; RBI: Reserve Bank of India; REIT: Real Estate Investment Trust; SEBI: Securities and Exchange Board of India; SEZ: Special Economic
Zone; sft: square feet; SRS: Slum redevelopment scheme; SWF: Sovereign Wealth Fund; ULCA: Urban land ceiling act.
Disclaimer: The information presented in this document is in summary form and is therefore intended for general interest and understanding only.
We at CGCL confirm that information contained herein, including projections, has been obtained from reliable sources. While we do not doubt their
accuracy, we have not yet verified them and make no guarantee, warranty or representation about them. It is not intended to be a substitute for
detailed research or the exercise of professional judgment. Nether CGCL nor any other member of the CGCL subsidiaries can accept any
responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication. On any specific matter,
reference should be made to the appropriate advisor. Also, this information is offered entirely for use by CGCL clients and professionals and all rights
to the material are reserved and cannot be reproduced without prior written consent.
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