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KnightFrank.com
Q3 2009
Residential
Market
Review
Knight Frank
HIGHLIGHTS
! 367,000 units, equating to roughly 533 mn.sq.ft. of residential space, are
expected to come up across the 7 major cities by the end of 2011
! 75% of this supply will be accounted for by 2 and 3 BHK units, indicating a shift
by developers to smaller units
! The prevailing trend of rising prices, which is largely down to the improving
economic climate and resurgent middle income end-user demand, is as of now
more developer and project specific as opposed to a general market trend
! Developers are now more cognizant of affordability, and are reducing unit sizes
and the scale of amenities in order to reach out to the sizeable middle income
consumer segment
Q3 2009
residential
market
Review
250000 managed to hold onto prices largely due to Price declines continued, but on a larger
226093
the inclusion of freebies and incentives like scale, as funding shortfalls brought
200000
free parking, reduced interest rates for construction activity to a virtual standstill
150000 138054 140744 specific projects and the deferment of the across the country. An example of the
payment of EMI till possession. While the relatively greater magnitude of price declines
100000 88039
mid-market segment witnessed a marginal that occurred during this quarter is Central
50000
decline in property prices, largely due to Mumbai, where prices in locations like Parel
0 spiraling interest rates, the prime residential and Sewri declined by an average of 30%
2011
2010
02
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• Refinance of Rs.40 billion to National Q2 2009- Stabilisation genuine affordable projects devoid of various
Housing Bank aimed to increase the frills and amenities. This affordable housing
During the second quarter of 2009, the Indian
capability of HFCs to lend to the housing initiative instigated the residential market's
residential market exhibited a general trend
sector. recovery by drawing the interest of the
of price stabilisation, and in isolated cases
• The permission to classify the restructured average middle income buyer. The benefit of
even price appreciation. Prices for Grade A
commercial real estate loans as 'standard re-marketing luxury projects was significant
properties in the Mumbai micro-market of
assets', although for a limited period, because in the current climate, funding
Worli, for example, remained stagnant during
provided great relief to the industry. institutions are far more comfortable
this quarter after declining by 11% during the
• To enhance the accessibility of funds to the financing semi-luxury and affordable projects.
previous quarter. Similarly, in the NCR micro-
sector, External Commercial Borrowing (ECB) Consequently, the theme of project stalling,
market of New Friends Colony, residential
was allowed to fund the development of so prominent during the previous two
prices remained stable during this quarter
integrated townships. quarters, was not so prevalent during Q2
after declining by 16% during the previous
2009. Demand during this quarter was also
Again, these measures failed to augment quarter. This stabilisation was largely
boosted by ICICI Bank's interest rate
demand. Faced with precarious market triggered by an upswing in the sentiments of
reduction during March by 25-50 basis points.
conditions, developers continued to rely on consumers who had been sitting on the fence
innovation, an example being the anticipating further price declines. The push
Q3 2009- Green Shoots of Recovery
reconfiguration of large unit sizes to make for affordable housing gathered momentum,
and while some developers remarketed As opposed to the previous quarter, during
such units more affordable. This strategy
luxury projects as affordable projects by which the consolidation process began and
resulted in the advent of 'semi-luxury'
reducing the price and unit size, other prices largely stabilized, Q3'09 witnessed
apartments, which although smaller in size
developers commenced construction of price increases in several micro markets
offer amenities on par with the demands of
around India. Moreover, this price increase
modern lifestyles.
Although was evident across premium and relatively
lower end micro markets. For example, prices
Q1 2009- Decline Continues
The price declines witnessed this quarter developers in the posh South Mumbai micro market
increased by an average of 15% during Q3
mirrored the events of the previous quarter.
The steep price declines witnessed around attempted to 2009. During the same period, in the
significantly less expensive micro market of
India during the first quarter of 2009
highlighted the fact that incentives offered by hold prices by Andheri, prices increased by an average of
20%. Such price increases were fuelled by
developers, examples being reduced down
payments and rebates on stamp duty, did
offering improved demand, particularly from the mid-
income segment. End user demand improved
little to boost sales. End users continued to
drive a hard bargain in the knowledge that
incentives to for a variety of reasons. The formation of a
stable central government back in May
with the financial year coming to a close,
developers would be more inclined to
potential instigated a sense of calm that was
supplemented by an improving job market,
compromise on price. Consequently,
developers began to launch previously
buyers, end cheaper home loans and continued
infrastructure initiatives. The affordable
deferred projects as scaled down semi-luxury
projects at reduced rates. Mumbai's housing
users and housing initiative, which came to prominence
as a consequence of the property slump,
market, due to its exorbitant prices that were
investors sat continued to gather momentum during Q3'09
fuelled by raging end user and investor
on the back of Central Government initiatives,
demand, witnessed the most significant price on the fence namely time bound income tax exemptions to
decline across India during this period. Prices
developers of affordable projects and a 1%
in the prominent Mumbai micro-market of anticipating interest subsidy on loans up to Rs.1 million
Bandra, for example, declined by an average
for properties costing up to Rs.2 million.
of 16% during Q1 2009. further price Luxury housing demand, which obviously was
adversely impacted by the realty slump, is
decreases slowly picking up again.
03
Q3 2009
residential
market
Review
For example, in Mumbai, Orbit Terraces, a South Mumbai and Worli have risen by 188% rates are still artificially high. Further,
luxury housing project in Lower Parel by Orbit and 218% respectively since Jan'05. The between May'09 and Sep'09, as sentiments
Corporation, witnessed 300 enquiries for 80 average price of a Grade A residential turned buoyant, prices have once again
apartments during its launch in September. property in Worli, which stood at increased. This price increase, coupled with
Similarly, in October'08, a flat in Cuffe Parade Rs.11,000/sq.ft. as of Jan'05, increased to the fact that the RBI's mid-term monetary
was sold for a record price of Rs.98,000 per Rs.35,000/sq.ft. as of Sep'09. The notable policy review hints at an upward revision of
sq.ft. The upsurge in luxury demand can be exception to this trend in Mumbai is the micro interest rates, suggests that the residential
partially attributed to the healthy market of Ghatkopar (E), where prices rose by market revival that we are currently
performance in recent months of the Indian just 22% over the aforementioned four year witnessing might not progress at the hectic
financial markets, as a result of which period. Similarly in Bengaluru, current prices pace of the realty boom. The residential price
wealthy investors have been able to generate are up by an average of 160% relative to appreciation that is evident around the
returns to pump into residential investment. Jan'05 prices. Capital values in micro-markets country might just prove a touch premature.
Because of improving demand, which was of M G Road and Malleshwaram have
Although the residential market is on the
reflected by the upsurge in residential appreciated by 250% and 233% respectively.
upswing again, the trauma of the past year
enquiries and conversion rates amongst Even though southern and eastern micro-
has placed the market's focus squarely on
particularly middle income consumers, markets contributed to a large portion of
affordable housing, and the long term
construction activity gradually picked up residential supply in Bengaluru over the last
development of this initiative is expected to
pace, and a chunk of projects that had been 3 years, prices in J P Nagar and Banswadi
necessitate greater cognizance of consumer
stalled and postponed were once again back have appreciated by 115% and 119%
sentiments by developers. This has already
on the radar. respectively relative to Jan'05 prices.
resulted in introspection by developers, who,
The above comparisons suggest that due to greater price sensitivity in the realty
Lessons Learnt although significant price correction has market are now being forced to justify
The realty slump has altered the landscape of taken place over the past year, prevailing exorbitant floor rise charges and loading.
India's residential market. Perhaps the most They have realized that a market slump
conspicuous shift in market dynamics is even after the requires greater alignment with demand
being witnessed in the interaction of the dynamics. The push for affordable housing is
demand and supply side. In the bull market, price undoubtedly the most significant silver lining
developers cashed in on premium segment of the realty slump. Developers realized that
housing demand and dictated prices. correction of the middle class home buyers market was a
However, as consumers turned cautious and huge and untapped source of demand, and
premium segment demand dried up, the past year, they demonstrated their eagerness to tap into
developers began to feel the pinch of the this market by reducing unit sizes and
liquidity crunch. Consequently, prices were residential lowering rates of premium projects to re-
slashed and developers were compelled to market them as affordable housing projects.
come up with innovative solutions like prices across While the initial impetus for affordable
discounted parking and assistance with EMI housing might have been reactionary, several
payments in order to attract buyers. the country major developers are now foraying into this
segment as the needs of middle income
The analysis of residential rates across India remain home buyers can no longer be ignored.
over the past 5 years reveals that even after
the price correction of the past year, significantly While affordable housing has carved a niche
residential prices across the country remain for itself in recent times, it is understood that
significantly higher than inflation adjusted higher than the government will have a significant role to
rates in 2009. The inflation index appreciated play in this segment. The importance of the
by 31% between 2005 and Sep'09, but 2009 inflation public private partnership model in
property prices in prominent cities like facilitating the development of low cost
Mumbai and Bengaluru during the same adjusted housing cannot be understated.
period appreciated by an average of 150%.
Residential prices in micro-markets like rates
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Over the past year, the government has been The Way Forward socially conscious path, a path that is
proactively involved in aiding the realty essential in order to avoid the formation of a
sector through a series of direct and indirect From now until the end of 2011, approximately property price bubble such as the one that
measures. A series of cuts in key policy rates 367,000 units, equating to roughly derailed the US real estate sector.
and the recently unveiled 1% interest rate 533 mn.sq.ft. of Grade A residential supply,
Figure 2
subsidy on home loans up to Rs.10 Lakhs (for are expected to crop up in the seven major
cities around India. Of this unit supply, NCR
Distribution of Pan India Supply 2009-11
properties costing no more than Rs.20 Lakhs)
(in No. of units)
are examples of measures that helped accounts for approximately 25% and Mumbai
stimulate the residential market to an extent. comprises approximately 20%. 80% of the
The interest subsidy was introduced bearing total expected supply will be evenly
in mind the positive impact of home loan rate distributed between 2010 and 2011. Further,
cuts by leading finance institutions such as roughly 75% of the total unit supply will be
HDFC and ICICI Bank. The realty slowdown accounted for by 2 and 3 BHK units. During
has brought into focus the extreme sensitivity the realty boom, one might have expected to
of home buyers to interest rate movements. see a higher composition of 4 BHK and other
premium segment units, but now, developers
The government's most important direct are mindful of the importance of smaller units
intervention in India's real estate sector is to compensate for exorbitant prices. It must
expected to come in the form of the Real be noted that the total expected supply until
Estate Regulator Bill, expected to be the end of 2011 is contingent on the validity Chennai - 9%
introduced during the upcoming Parliament of current project completion schedules. The Bengaluru - 10%
winter session. The difficulties of last year struggles of the past year dramatically halted NCR - 25%
have highlighted procedural flaws that the the progress of India's real estate sector. The Hyderabad - 15%
05
Q3 2009
residential
market
Review
(NCR) augmented the attractiveness of peripheral fresh supply of residential space. Out of the
areas which, due to cheap land cost are total upcoming supply, 57% will be available
relatively more affordable. in the year 2011. This reflects the stalling of a
Figure 4
few commenced projects and the lack of
Distribution of Supply 2009-11
The middle of the year 2008 saw the first announced new projects over the last year
(in No. of units)
impact of the recent global economic due to the residential market slump.
slowdown on Indian real estate, especially
Figure 5
across NCR. Low liquidity levels and tight
Estimated Supply 2009-11
credit conditions on the supply side, coupled
100000
with job insecurity and low demand 92202
90000
sentiments on the consumer side, negatively
80000
impacted the NCR residential market. The
consequent drop in demand led to a number 70000
No. of residential units
2010
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14
8
10
2
4
11
9
13
5
12
Delhi is visible in the region. Locations like Rao Tula Ram Marg, and near Munirka. This
EXISTING Model Town, Khyber Pass, Subhash Nagar network of flyovers on Outer Ring Road will
and Shivaji Marg are currently witnessing de-congest traffic in South Delhi.
1. Chanakyapuri
private developer activity. Projects like the
2. Jor Bagh
EMMAR MGF's Commonwealth Games Village Gurgaon
3. Golf Links
near Mayur Vihar and Victoria Gardens by The IT/ITES sector has been the most
4. Greater Kailash I & II M2K Developers in Model Town will be part of important driver for the real estate sector in
5. Defence Colony the upcoming supply by the year 2011. Gurgaon, and has been supported by the
6. Pritampura
growth impetus from banking & finance,
A lot of infrastructure initiatives are underway
7. Preet Vihar automobile and strategic consulting firms.
across Delhi and will boost the demand and
8. Mayur Vihar Infrastructure initiatives planned as per the
catchment for various residential colonies.
9. Friends Colony new approved Master Plan 2021
Proximal locations will benefit from
10. Janakpuri areprompting developers to explore new
development of the ongoing
11. Dwarka locations in Gurgaon for residential
Delhi Metro Project. The Commonwealth
development. Approximately 26,500 units,
12. Vasant Kunj Games, to be held in Delhi in 2010, will
equating to 58.23 mn.sq.ft. of fresh supply,
13. Hauz Khas benefit locations like Sarita Vihar, Jasola,
will be infused into the market till 2011.
14. Ghaziabad Friends Colony, New Friends Colony,
Around two thirds of this supply will be
Mayur Vihar, Preet Vihar and I.P. Extension. In
accounted for by 3 and 4-BHK units, thereby
Two-thirds of this supply will come under the east Delhi, work on the flyover at Anand Vihar
reflecting the positive prognosis for premium
3-BHK category, indicating that developers in bus stand is also under way. The flyover will
sector housing in Gurgaon despite the
the region are optimistic about premium not only ease traffic at the junction, but also
property slump of the past year.
segment demand once the residential market improve connectivity to east Delhi locations
picks up. Due to unavailability of larger land like Dilshad Garden. Three flyovers are also Gurgaon will have the maximum share of
parcels within Delhi, not much development being constructed at Nelson Mandela Marg, about 29% of supply across the NCR by 2011.
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Q3 2009
residential
market
Review
1
3 4
2
5
3 1
1 2
Gurgaon Faridabad
UPCOMING EXISTING
Approximately
1. Sohna Road
2. Golf Course Road Extn.
1. Springfield Colony
2. New Sectors 21 C & D
26,500 units,
3. Pataudi Road 3. Old Faridabad equating to
4. Suraj Kund Road
EXISTING 58.23 mn.sq.ft.
1. MG Road both high end premium and low cost
2. Sushant Lok affordable homes. Projects like Caitriona by of fresh
3. DLF Phase II & III Ambience Developer & Infrastructure Pvt. Ltd.
4. DLF Phase I on NH 8, Magnolias and The Belaire by DLF,
supply, will be
Verandas by Salcon Group on
5. DLF Phase V
Golf Course Road, Palm Springs and
infused into
A major portion of fresh supply in Gurgaon is
in locations like Golf Course Road,
Palm Drive by EMMAR MGF and Garden II and
The Residences by Unitech Group are a few
the gurgaon
Extended Golf Course Road, Sohna Road,
newly planned sectors on NH 8, Pataudi Road
premium projects under construction in
Gurgaon. Projects like the Atharva and
market till 2011
and Sectors 37 C & D, 108 and 109. Projects Vedaanta by Raheja Group, ILD Espire Green various locations in Gurgaon. The
from prominent Grade A developers like DLF, by ILD Group and Eden Towers by the Delhi-Mumbai Industrial Corridor (DMIC) is
Unitech, Ramprastha Group, Raheja Group, Ramprastha Group are under construction in one of the key infrastructure initiatives in the
Ambience Developer & Infrastructure Pvt. Ltd., the new planned sectors in Gurgaon. new Master Plan. As per the Investment Plan
Tulip, Parsvnath, Emmar MGF, Bestech Group, under DMIC, the Manesar Bawal investment
A number of infrastructure initiatives across
ERA Group and BPTP are part of the new region is being developed in Phase I.
Gurgaon are expected to bring to the fore
supply. This new supply will contain a mix of
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Noida and Greater Noida Sushant Lok III, Golf Course Road, locations like Sectors 18 & 19 in
UPCOMING Extended Golf Course Road, Sohna Road and Old Faridabad and residential sectors on NH 2
new planned sectors falling between Sectors and Suraj Kund Road have been the hub of
1. Noida Sector 34
69-78 and Sectors 99-112 will gain visibility. the real estate activity. However, in the past
2. Noida Sector 50
Office and retail developments across couple of years, due to availability of larger
3. Noida Sector 45
Sohna Road, Golf Course Road and and cheaper land parcels, locations like the
4. Noida Sector 128 Extended Golf Course Road will further boost Nehar Par region have seen extensive real
5. Noida Sector 134 housing demand in and around these regions. estate development. Sectors 70-89 here have
Due to the upcoming commercial witnessed huge residential developments.
EXISTING
development at IMT Manesar, residential Till 2011, a total of about 22,000 units,
1. Noida Sector 44 Sectors 76-95 will gain attractiveness. To equating to 34.27 mn.sq.ft. of fresh
2. Noida Sector 93A & B improve connectivity to the new sectors of residential supply, are expected in Faridabad.
3. Greater Noida Gurgaon, namely Sectors 99-112, an over This supply equates to about 21% of the total
bridge is under construction at the NCR supply during this period. 45% of this
Supported by this is the 135.6 kms long Old Gurgaon railway station. The over bridge supply will be accounted for by 3 BHK units
Western Peripheral Expressway, the will improve connectivity from and 35% by2 BHK units.
Kundli Manesar Palwal (KMP) Expressway. Sectors 3 & 3A to new sectors, especially
The new planned sectors on Pataudi Road will Out of the total upcoming supply in Faridabad,
Sectors 104 and 105.
benefit from the KMP Expressway. A number the Nehar Par area will witness maximum
of developers have launched their projects on Faridabad development, followed by limited activity on
Pataudi Road anticipating a huge inflow of NH 2 and Suraj Kund Road. A number of
Faridabad pre-dominantly has been an
housing demand. The Delhi Metro Project is prominent developers are carrying out
industrial township in the NCR. In the past
being extended into Gurgaon. It links Delhi to construction activity in the Nehar Par region.
few years a number of malls have come up on
Gurgaon through M.G. Road as well as from BPTP Group and OMAXE have launched
NH 2 and have re-defined the retail scenario
Dwarka. Locations like the M.G. Road, projects in Sectors 70-89.
in Faridabad. Key developed residential
09
Q3 2009
residential
market
Review
industrial corridor. Besides this, the Indirapuram, Vaishali and Vasundhara have
Haryana Urban Development Authority been the heart of group housing
(HUDA) is actively participating in development. A number of retail
construction of sector roads within the developments around Indirapuram and the
Nehar Par region (Sectors 70-89), which will region's close proximity to Noida Sector 62,
improve internal connectivity. As per the new the emerging commercial hub, have led to
master plan, Sectors 70-74 are earmarked as Indirapuram, Vaishali and Vasundhara
semi-commercial zones and Sector 79 is gaining in popularity.
earmarked as a complete commercial zone.
Till 2011, Ghaziabad is expected to witness a
Development of these zones will attract a lot
fresh inflow of about 25,000 units, equating
of catchment for residential sectors in the
to 33.54 mn.sq.ft of residential space, spread
Nehar Par area. The Faridabad-Palwal belt is
across locations like Indirapuram, Vaishali,
to be developed as an industrial zone under
Vasundhara, Raj Nagar extension and
the Delhi Mumbai Industrial Corridor (DMIC)
NH 24 Crossings Republic. 40% of this
project as a part of the Phase I development.
supply will be accounted for by 3-BHK units
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KnightFrank.com
Due to availability of cheap land parcels on Raj Nagar Extension region. Due to its good group housing developments have been
NH 58, Raj Nagar Extension and connectivity, NH 24 Crossing Republic has restricted to newer locations in Sectors 44, 50,
NH 24 Crossings Republic have been the potential of establishing itself as a strong 51, 52, 62 and approved residential sectors on
explored by a number of developers for residential corridor in the Ghaziabad market. the Noida-Greater Noida Expressway. Fresh
affordable projects. residential supply of 6,000 units, equating to
Noida 10.76 mn.sq.ft., are expected to come up in
From a macro prospective, Ghaziabad will
Noida is a well planned city, with ample work Noida by the end of 2011. This forms about
witness a number of infrastructure
opportunities available within the region. 7% of the total supply expected to enter the
developments which will benefit the region
Noida Sector 18 Market, the Centrestage Mall, NCR market by the end of 2011. 90% of this
as a whole. The Delhi Metro Project has been
the Great India Place and a few other retail expected supply will be evenly distributed
approved for extension in Ghaziabad, which
malls add to Noida’s status as a amongst 2, 3 and 4-BHK units.
will improve its connectivity with various
cosmopolitan location. Noida has witnessed
locations across the NCR. The work on this Out of the total expected supply by 2011, a
substantial real estate growth on account of
network is already underway. The project is to major share is accounted for by premium
the IT/ITES sector growth. Due to limited
be developed in three phases, connecting segment housing. Celeste Towers by
availability of larger land parcels in Noida,
various locations like Vaishali, Indirapuram Assotech, Amrapali Sapphire by
and Ghaziabad new bus stand to locations Amrapali Group, Forest Spa and Grandwoods
like Rajiv Chowk and Mehrauli in Delhi. The
Till 2011 by OMAXE Group and Mahagun Maple are a
estimated travel time between Vaishali and
Indirapuram to Rajiv Chowk is about
Ghaziabad is few of the upcoming projects categorized
under premium housing. The first half of
20 minutes. On the Delhi-Ghaziabad border,
work on the Anand Vihar rail junction is being
expected to 2009 witnessed the launch of Jaypee Group's
Aman in Sector 151 and Unitech's Uni Homes
carried out. This mega rail junction will be
larger than all other rail junctions across the
witness a in Sector 117, both of which are categorized
under the affordable segment.
NCR, and hence, Ghaziabad will witness
increased rail mobility. This development will
fresh inflow In terms of urban infrastructure planning,
Noida has been an exemplary town. Aspects
improve the attractiveness of Ghaziabad as a
of about like connectivity, power supply and water
residential and industrial location. Locations
supply have been the prime focus of
like Indirapuram, Vaishali and Vasundhara 25,000 units, development authorities. The DND Flyway and
also enjoy proximity to Noida’s Sector 62,
which is an upcoming commercial hub. A equating to Taj Expressway are major transportation
nodes. The Noida Greater Noida Expressway
multilateral flyover is under construction at
Gazipur Chowk, which is close to new zones 33.54 mn.sq.ft has facilitated several group housing
developments and has prompted developers
of Ghaziabad, namely Indirapuram, Vaishali
and Vasundhara. This internal development of residential to explore new residential sectors along the
expressway.
will further strengthen connectivity of
Ghaziabad to Noida and East Delhi, hence space
making the zone more attractive for home
buyers. A flyover is also under construction at
Mohan Nagar Chowk. It is being constructed
with the aim of improving connectivity to NH
58. As various projects are under way at
Raj Nagar Extension, the GDA is taking ample
steps to improve connectivity to this new and
developing zone. A link road, connecting
NH 58 to the residential zone at
Raj Nagar Extension, is under construction.
Besides the Link Road, the GDA has also
started work on sector roads within the
Bestech Park View, Gurgaon
11
Q3 2009
residential
market
Review
As connectivity concerns have been Greater Noida is to be used for development stable in terms of residential prices.
addressed, residential sectors along the of transportation facilities. Greater Noida Locations like Jor Bagh, Chanakyapuri and
expressway are expected to gain greater enjoys connectivity advantages as it is linked Golf Links command highest capital values
visibility. Besides, commercial developments to Delhi by the Taj Expressway. According to across Delhi. Average value of a property in
on the expressway will aid more real estate the New Master Plan, Greater Noida will be these locations is approximately
activity. Work on an under pass at connected to NH 24 by a 60 meter wide road, Rs.38,000-45,600/sq.ft. South Delhi
Rajnigandha Chowk is also underway. As this which will facilitate inter region trade. A locations like Friends Colony,
junction is an important entry node to Noida, 130 meter wide road links the north and New Friends Colony and Defence Colony
the development will improve mobility within south zones of Greater Noida. The road currently command average capital values in
Noida. passes through the ZITA, Pi, Rio and Sigma the range of Rs.11,500-19,500/sq.ft. A notable
Sectors, improving their connectivity with all decline in capital rates in the Delhi
Greater Noida the locations within Greater Noida and micro-markets has been observed in Greater
Greater Noida is the extension of the thereby making them more attractive for Kailash I & II, where current rates represent a
development format of Noida. The region has residential development. There are 20% decline from Q1 2008 peak levels. The
been identified as a future institutional and designated commercial and institutional micro-markets of Dwarka and Rohini
commercial zone in the NCR. Availability of sectors like the Knowledge Park I- IV and command average capital values in the range
larger land parcels has facilitated developers Ecotech Zones. Besides the commercial of Rs.3,800-6,000/sq.ft and
to explore the region for extensive group zones, a number of retail developments are Rs.3,000-6,000/sq.ft.
housing development. Till 2011, also making the region attractive. Malls like
Rentals for 2 BHK apartments in Jor Bagh and
Greater Noida is expected to witness a fresh the Ansal Plaza, OMAXE Arcade and
Golf Links range from a minimum of
supply of about 11,200 units, equating to NRI City Centre are proving to be emerging
Rs.150,000 to a maximum of Rs.250,000 per
20.62 mn.sq.ft. of residential space. This is shopping destinations in the region. As
month. Rentals for 2 BHK apartments in
about 12 % of the total supply planned across sectors Alpha, Beta, Pi and Sigma are closer
Chanakyapuri range from Rs.150,000 to
the NCR. Approximately 58% of the total to these commercial and retail developments,
Rs.200,000 per month. South Delhi locations
supply expected in Greater Noida over the they are preferred residential locations.
like New Friends Colony and Friends Colony
next two years will enter the market in 2011,
command rentals in the range of Rs.35,000 to
and half of the total expected supply will be Capital & Rental Profile Rs.65,000 per month for 2 BHK units. Based
accounted for by 3-BHK units.
Delhi on the aforementioned capital and rental
The city's potential for development is being values across Delhi, the average annual
Due to the economic slowdown, locations
tapped by most Grade A developers across rental yield for the residential segment within
across Delhi have witnessed price correction
the NCR. Projects by Jaypee Group, Delhi is about 3.65%.
in the past six to eight months. Post Central
OMAXE Group, Unitech, Supertech, Eldeco, Assembly elections, the markets have been
Niti Shree Group and Parsvnath constitute a
major share of the upcoming supply. The
Jaypee Greens, a golf course project by Table 1
Jaypee Group, E-Homes by Average Residential Capital Value Trend
Designer Arch Infrastructure, Panorama and NCR Peak to Trough to Sep'09
Trough Change Sep'09 Change (Rs./sq.ft.)
Palacia by Parsvnath Group, Palm Green by
Chanakyapuri -2% 0% 43,240
Omaxe and Horizon and Cascades by
Jor Bagh 0% 0% 43,200
Unitech Group are a few key upcoming
Golf Links 0% 0% 41,560
projects in the region.
Greater Kailash I & II -20% 1% 13,000
The infrastructure planning of Greater Noida Ghaziabad (Vaishali, Indirapuram -21% 0% 2,391
is similar to that of Noida. Road connectivity Vasundhara, Raj Nagar Extension)
facilities have been the areas of focus in the Noida -19% 0% 4,450
development plan. As per the New Master Greater Noida -27% 0% 2,150
Plan, about 13% of the total land available in Faridabad -10% 0% 3,628
Source: Knight Frank Research
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KnightFrank.com
Figure 7 locations in Golf Course Road command on NH 2, due to their advantageous location,
Residential Rental Values (2 BHK) average capital values in the range of command capital values ranging from
350000
Rs.4,200-7,000/sq.ft. . The initial asking rate Rs.3,500-4,200/sq.ft. Residential apartments
300000 for a few upcoming projects by DLF and in Sectors 70-89 are affordable and relatively
Salcon Group on Golf Course Road is in the lesser priced as compared to other locations
250000 range of Rs. 9,000-10,000 /sq.ft. The in Faridabad. The Nehar Par area commands
Caitriona, located on NH-8, is priced as high capital values in the range of
Rs./month
200000
as Rs.12,500/sq.ft. Locations like Rs. 1,725-2,400 /sq.ft.
150000 Extended Golf Course Road and Sohna Road
2 BHK rentals in Sectors 18 & 19 in
are emerging as reasonably priced locations,
100000 Old Faridabad range from
with capital values ranging between
Rs.6,500-8,000 per month. The same unit
50000 Rs.2,600-4,550/sq.ft.
types in posh sectors like Sector 21 C & D
0 Due to thriving commercial activity in command rental values in the range of
Gurgaon
Ghaziabad
Faridabad
Noida
Greater Noida
Gurgaon, certain locations within this market Rs.10,000-15,000 per month. New sectors like
attract strong rental housing demand. Sectors 36 to 45 are relatively less expensive
Rentals for 2 BHK units are in the range of in terms of rental values and rentals for 2 BHK
Rs.13,000- 20,000 per month in units in these locations range from
DLF Phase I-IV and Rs.21,000-28,000 per Rs.6,000-8,000 per month. Suraj Kund Road
month on M.G. Road. 2 BHK apartments on links Faridabad to Delhi and Gurgaon and
Golf Course Road command rental values in commands premium rentals for 2 BHK units
Minimum Maximum
the range of Rs.17,000-21,000 per month. The ranging from Rs.10,000- 15,000 per month,.
Source: Knight Frank Research
same unit types in locations like Sushant Lok, Low rental values in locations like
Extended Golf Course Road and Sohna Road Old Faridabad and few sectors like
Gurgaon
command lower rentals in the range of Sector 36-45 in Faridabad drive a low average
In the last couple of years Gurgaon has been Rs.10,000-15,000 per month. Due to its annual rental yield of 3.8%.
dominated mainly by premium segment strong rentals and relatively low capital
housing. Due to the global economic values, Gurgaon exhibits a relatively strong Ghaziabad
slowdown and a decline in demand from annual rental yield of 4.7%. Capital values in Old Ghaziabad locations
investors to end users, developers in
like Raj Nagar and Mohan Nagar are in the
Gurgaon have shifted focus to affordable Faridabad range of Rs.2,000-6,000/sq.ft. Indirapuram,
projects. Locations like DLF Phase I-IV and
Capital values in Faridabad range from Vaishali and Vasundhara command capital
Sushant Lok I-III command capital values in
Rs. 1,725-6,000/sq.ft. Residential zones in values ranging from Rs.2,200-3,000/sq.ft.
the range of Rs.2,625-7,250/sq.ft, and
Old Faridabad and on Suraj Kunj Road Affordable locations like Crossings Republic
command capital values in the range of and Raj Nagar Extension command capital
in Greater Rs.3,250-6,000/sq.ft. Residential apartments values in the range of Rs.1,700-2,400/sq.ft.
13
Q3 2009
residential
market
Review
In the recent past, several projects demand, the launch of affordable projects 275 basis points, bringing it down to as low
commanding low capital values have been across various sectors along the as 3.25%. This step was been taken to ensure
launched in emerging locations like Noida-Greater Noida Expressway contributed higher liquidity levels and enhance the
NH 24 Crossings Republic and to this price correction. lending capacity of banks. On a more micro
NH 58 Raj Nagar Extension. level, within the NCR, funds have been
Rental values in Noida vary according to the
allocated and are being utilised for physical
Indirapuram, Vaishali and Vasundhara are location as well as property type. 2 BHK
infrastructure developments. Issues
the most sought after residential rental apartments in locations like Sector 44, 50, 51,
pertaining to connectivity, water and power
locations in Ghaziabad. Rental Values for 52 and 62 command rental values ranging
supply and social security are being
2 BHK units in Indirapuram range from from Rs.12,000-18,000 per month. Rental
addressed by the regional development
Rs.8,500-12,000 per month. The same unit rates for 2 BHK apartments on the expressway
authorities on a priority basis. Infrastructure
types in Vaishali and Vasundhara command are in the range of Rs.8,500- 14,000 per
projects planned in Gurgaon, Noida,
somewhat cheaper rentals in the range of month. The average annual rental yield for
Greater Noida, Faridabad and Ghaziabad are
Rs.6,500-9,500 per month. The average residential development in Noida is about 4%.
expected to provide substantial and
annual rental yield for properties in these
sustainable growth to the residential
locations is around 4.1%. Greater Noida segments in these locations.
In terms of capital values, Greater Noida is
Noida more affordable as compared to Noida. The Developers across the NCR market have
As a major share of group housing market commands average capital values in identified a sustainable demand for
developments across Noida are in the the range of Rs.1,900-3,000/sq.ft. depending affordable housing projects. Newer sectors
premium segment, property prices till the on the location of the project and the grade across the region are being explored to create
recent past have been quite high. Due to the that the developer falls into. Currently, products that are designed to serve end-user
recent launch of a few affordable housing Jaypee Group's Golf Course project is the demand. Residential zones in new planned
projects, capital values in Noida have gone most expensive under construction project in sectors of Gurgaon (76-113), the Nehar Par
below Rs.3,000/sq.ft. As of today, locations the region and has apartments in the range of area of Faridabad, NH 24- Crossings Republic
across Noida command capital values in the Rs.5,400-9,000 /sq.ft. in Ghaziabad, residential sectors on the
14
KnightFrank.com
The residential segment in the NCR has overall trend. Given that Gurgaon will account destinations and are thus vulnerable to
shown some signs of recovery in the last for over a third of the supply expected across exaggerated price appreciation.
quarter. Market enquiries have picked up and the NCR until the end of 2011, it is unlikely
are yielding conversions, as is evidenced by a
drastic increase in home loan disbursements
that noteworthy price increases will be
witnessed in this market down the road.
Given the
during the last three months. Although
demand is picking up, its pace is not as fast
Over the last 3-4 months, most micro-markets general
across the NCR have shown price stability,
as anticipated. End-users are looking for
affordable options. Hence, developers should
which reflects a period of consolidation stability of
following the storm of the realty slump. Prices
focus on meeting end-user demand and
creating affordable products rather than
appear to have bottomed out and although
markets
price declines are largely in the past, it is too
maximizing profits. The public sector will
early to project price increases in a particular
around Delhi
have a huge role to play in the development
of affordable housing. Developers will need
market. Since a large portion of the upcoming
supply in NCR over the next 3 years will hit
and the
to be provided with tax subsidies and on the
demand front, meaningful interest rate
the market in 2011, one would expect price
volatility to start around that period as well.
minimal supply
subsidies will have to be provided.
Table 2
NCR Major Infrastructure Developments
Project Status Remarks
Western Peripheral Expressway Under Construction This development will lend greater visibility to the nearby Pataudi Road in
Gurgaon.
Gurgaon Metro Project Under Construction The development will link Gurgaon to Delhi from M.G.Road and Dwarka.
Residential zones like Sushant Lok III, Extended Golf Course Road,
Sohna Road and new planned sectors between Sectors 69-78 and
Sectors 99-112 will benefit in terms of accessibility
6-Lane Badarpur Flyover Under Construction This development will reduce travel time across the Delhi-Faridabad border
by about 20 minutes, thus increasing accessibility of the Nehar Par region
Eastern Periphery Expressway Under Construction The expressway will improve connectivity of Faridabad to Ghaziabad and
Noida. As this project is accessible from the Nehar Par region, projects
in Sectors 70 - 89 will also benefit
Yamuna Expressway Under Construction The expressway will connect Greater Noida to Agra via Delhi and Mathura Road.
This 6 lane, 165.37 Km long stretch is expected to emerge as a major trade
and freight corridor in the NCR region
Noida Metro Project Operational Delhi Metro has been extended into Noida from Yamuna Bank station in Delhi
to Noida Sector 32. This 13.1 Km stretch has 10 stations. The Metro stations
at Noida Sectors 16, 18, 32 and 37 will provide better visibility to
residential sectors 34, 44, 50, 51,52 and commercial sectors 16, 16A, 18 and 62.
Source: Knight Frank Research
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In order to reduce the demand-supply Figure 9 Unlike South Mumbai which is one of the
mismatch among the masses the Estimated Supply 2009-11 oldest residential micro-markets for Grade A
Maharashtra Housing and Area Development 80000 developments, the central Mumbai locations
72906
Authority (MHADA) sold applications for 70000
have come to the fore only in the last decade.
affordable housing units in various pockets Most of these developments have sprung up
60000
of the city for individuals under all income on erstwhile mill lands.
No. of residential units
50293
categories. In addition to this, the Mumbai 50000
The Island city developments largely consist
Metropolitan Regional Development Authority
40000
of 2,3 and 4-BHK apartments with average
(MMRDA) announced its tie up with a private 33508
30000 sizes of 1,300 sq.ft., 2,300 sq.ft. and 3,700
developer to build around 6,000 tenements
22613 sq.ft. respectively, and demand for these
in Karjat. This Public Private Partnership (PPP) 20000
16785
units emanates primarily from NRIs and HNIs.
model was implemented under the rental
10000 The 2 and 3BHKs comprise 42 % and 35% of
housing project of the authority with a view to
0 the market share respectively.
help decongest the city over the next five
2011
2009
2010
17
Q3 2009
residential
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Review
South Mumbai
11 5
8
7
10
2
6
1
7
4
1
3
18
KnightFrank.com
North Mumbai
10
7
8
3
4
14
5
6
2
13
12 15
1
11
This would add a total of 26,611 units. most home buyers. However, while
UPCOMING
Prominent developments will include JVPD1 connectivity does exist, it is not as developed
1. Andheri (E)
by Mayfair Housing in Vile Parle (W) , Runwal as that in the western suburban locations and
Symphony by Runwal Group in Santacruz (E) there is a considerable amount of time spent 2. Goregaon (E) & (W)
and Samarpan Royale by Kanakia in travel. This coupled with factors such as 3. Kandivali (W)
Construction Pvt. Ltd in Borivali (E). The frequent power cuts and irregular water 4. Kandivali (E)
recent opening of the Bandra-Worli Sea Link supply has therefore proved to be a large 5. Malad (W)
has led to better connectivity between the deterrent. Currently, to circumvent these 6. Malad (E)
Central Business Districts of South Mumbai problems most of the newer developments
7. Borivali (W)
and the Western Suburbs and decreased have made provisions to provide 24-hour
8. Borivali (E)
travel time to various locations. This will water supply as well as generator backups
9. Mira Road
enable further growth along this corridor. within the complexes.
10. Vasai / Naigaon / Virar
Extended Suburbs A noticeable trend across projects in these 11. Powai
locations is the higher availability of 1-BHKs
Locations such as Naigaon, Vasai and Virar 12. Bhandup
as well. Totally 4,950 number of units will be
on the far flung north western belt are 13. Mulund
added to this micro-market over the next
considered extended suburbs of the city. 14. Thane
three years, contributing around 3.4 mn.sq.ft.
These locations have been gaining 15. Airoli
of new residential space. These will consist of
prominence among the middle class and
mainly 1 BHK and 2 BHK apartments which
lower middle class. The availability of huge EXISTING
contribute 33% and 47% with an average size
and cheap land parcels has encouraged 1. Andheri (W)
of 580 sq.ft and 843 sq.ft. respectively. Mittal
construction of large townships in these
Enclave by Mittal Builders in Naigoan (E) and
areas. A combination of these affordable
Balaji Complex by Lotus Group in Virar (W) are
rates and ample open green spaces within
two important projects that are under-
these complexes have been 'pull' factors for
construction in this micro-market.
19
Q3 2009
residential
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Figure 10 Home-Lake Lucerene by Supreme Universal in proximity to the Mumbai-Pune Express way as
Unit-Wise Distribution of Supply 2009-11 Powai. Approximately 11.16 mn sq.ft.is well as connectivity to Mumbai via the Vashi
expected to be added to this micro-market by Bridge. This also encouraged the growth of
end of 2011 adding a total of around 9,408 various commercial and retail developments
units. Infrastructure initiatives like the Metro- that occurred simultaneously. The
Rail Project, the Mumbai Mono-Rail Project establishment of Vashi in this micro-market
and the Santacruz-Chembur Sea Link are led to the subsequent development of other
expected to lead to further developments pockets as well. These included the locations
along this corridor, with locations like Wadala, of Kharghar and Nerul with concentrated
Chembur and Ghatkopar experiencing a developments along the Palm Beach Marg.
higher interest level. The Palm Beach stretch extends from Vashi to
Belapur, and runs parallel to the Thane Creek.
Thane Most of these developments also offer an
Studio - 1% Thane has witnessed extensive large-scale unrestricted view of the same. As a result,
1 BHK - 11% developments over the last few years. This is values in these locations have appreciated
1 ½ BHK - 2% significantly during the boom period
primarily due to the availability of larger land
2 BHK - 48% experienced in the last few years. This factor
parcels that have been freed by the closure
2 ½ BHK - 10%
and relocation of many industries. Its coupled with various other developments and
3 BHK - 23%
proximity to Mumbai, as well as improving infrastructure initiatives has also led to areas
3 ½ BHK - 1%
infrastructure, such as its connectivity to the such as Airoli, Ghansoli, Sanpada and Panvel
4 BHK - 3%
5 BHK / Penthouses - 1% Western Suburbs via the Thane Gorbunder gaining prominence.
Source: Knight Frank Research Road have also been factors instrumental in
Most developments here include 2 BHKs
propelling growth in this micro-market. Most
Central Suburbs contributing 67% to the total units entering
developments here include high-rises in self
this micro-market.
Over the last few years, due to various sustained townships which have led to its
commercial developments on LBS Marg as emergence as a new residential market for
well as Powai, central suburban locations
have been witnessing heightened residential
the middle segment.
The western
Majority of the developments here consist of
construction activity as well as demand.
Factors such as widening of LBS Marg, 1, 2 and 3 BHKs with an average size of 613 suburbs are
sq.ft., 952 sq.ft. and 1,380 sq.ft. respectively.
construction of the Eastern Express Highway
and flyovers on this major artery have Prominent among them are Hiranandani expected to
Meadows-Amanda & Amanda B by
resulted in the transformation of a
neighbourhood with less prospects to that of Hiranandani, Ackruti Greenwoods by Ackruti
infuse
and Siddhachal VI by Kalpataru. Over the
a favourable one. Locations in this
next three years around 12.94 mn.sq.ft. of
maximum
micro-market include Sion, Wadala, Chembur,
Powai, Mulund, etc. These markets are new residential space comprising
approximately 13,820 number of units are
supply in the
preferred not only by the middle class group
but also by investors due to the level of expected to be added to this micro-market.
Mumbai micro-
appreciation in capital values witnessed
especially in Powai and Mulund. Navi Mumbai
market by the
This micro-market has grown extensively over
Most of the residential projects here
comprise 2BHKs apartments which account
the last few years with significant end of 2011
developments having taken place in the last
for 38% of the total upcoming units in the
Central Suburbs. A few notable projects
three years. Vashi, Kharghar, Airoli and Nerul contributing a
are few important locations that have
include Lodha Imperia by Lodha Group in
witnessed maximum developments in Navi- supply of 30.82
Bhandup (W) and Nirmal Galaxy- Polaris by
Mumbai. Vashi was one of the first few
Nirmal Lifestyle in Mulund (W) and Lake
markets to come into the limelight due to its mn.sq.ft.
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KnightFrank.com
In all, these locations are estimated to infuse Figure 11 Q3 2008, rates across the board decreased
approximately 14 mn.sq.ft. and a total of Residential Rental Values (2 BHK) by 2-15%. The Goregaon to Borivali stretch
13,385 units by the end of 2011. One of the 350000 and Thane remained an exception to this. Q4
most notable constructions includes Ellora 2008 brought no respite to these negative
300000
Castle by Ellora Group in CBD Belapur which sentiments. While prices in prime locations
is considered to be the most high-end project 250000 such as South Mumbai, Worli and Bandra
in this micro-market. It would comprise a stabilised, other locations saw a further drop
Rs./month
200000
5-BHK apartment on each floor and the total varying from 5-30% where the maximum
cost of each flat would soar over Rs.10 million. 150000 decrease occurred in the Goregaon-Borivali
Over the next few years various infrastructure stretch, Ghatkopar (E), Mulund as well as
100000
developments like the Mumbai-Monorail some Central Mumbai locations.
Project as well as the proposed construction 50000
Q1 2009 continued to see downward
of a new international airport in the Kopar-
0 spiralling prices, however by Q2 2009, most
Panvel area are expected to have a positive
markets started to stabilise with Bandra
South Mumbai (Grade A)
Worli (Grade A)
Worli (Grade B)
Bandra (W)
Powai
impact on the transformation of the Navi-
displaying signs of a mild recovery. By Q3
Mumbai micro-market.
2009, all the micro-markets have shown an
increase in prices with prime locations
Capital & Rental Profile displaying maximum recovery. Currently,
The Mumbai residential capitial values have residential rental yields in Mumbai range
Minimum Maximum
witnessed a wide range of fluctuations in the between 3-6%. South Mumbai, Worli and
Source: Knight Frank Research
commanded prices since 2008. During Q1 Bandra have a rental yield around 6%.
2008, prime locations of South Mumbai, prices. In Q2 2008, builders across all Rentals for 2 and 3-BHKs in South Mumbai
Worli, Bandra as well as Central Mumbai saw micro-markets started hiking prices once range from a minimum of Rs.925,000 to a
a stabilisation of prices as well as a marginal again. However, while they stepped-up their maximum of Rs.450,000 per month. Rentals
drop in a few areas. Simultaneously, other prices, they also started including freebies in for 2 and 3-BHKs in Bandra range from
locations such as the Goregaon-Borivali an effort to maintain commanded prices. Rs.150,000-420,000 per month.
stretch, Vashi, Mulund, Sion and Chembur Despite these efforts, most developers
continued to observe an appreciation of succumbed to the economic pressure and in
2 bhk
Table 3
Average Residential Capital Value Trend apartments
Mumbai Peak to Trough to Sep'09
Trough Change Sep'09 Change (Rs./sq.ft.) contribute
South Mumbai (Grade A) -7% 15% 57,500
South Mumbai (Grade B) -5% 35% 35,000 67% to the
Worli (Grade A) -11% 21% 35,000
Worli ( Grade B) -10% 11% 25,000 total no. of
Bandra (W) -21% 18% 22,500
Andheri (W) -22% 22% 11,000 units entering
Ghatkopar (E) -33% 0% 5,500
Thane -24% 16% 5,500 the navi
Vashi -31% 11% 5,000
Mulund -26% 10% 5,500 mumbai micro-
Powai -19% 15% 9,750
Bhandup -22% 3% 5,000 markets
Sion / Chembur -33% 7% 7,500
Central Mumbai -42% 20% 10,500
(Parel, Sewri, Byculla)
Source: Knight Frank Research
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Table 4
Mumbai Major Infrastructure Developments
Project Status Remarks
Bandra-Worli Completed This project is 5.6 kms long and connects from the intersection of Western Express Highway
Sea Link and SV Road at the Bandra end to Khan Abdul Gaffar Khan Road at the Worli end.
It has helped to de-congest the daily traffic problems experienced at the Mahim junction
for those commuting from South Mumbai to various suburban locations. Traffic congestion at
the Worli end is still posing a problem to commuters.
Western Freeway Planning This project has been further split into 2 phases:
Sea Link Project Phase II-A will extend from Worli to Haji Ali
Phase II-B will extend from Haji Ali to Nariman Point
This project will create a diversion for traffic on the sea link, and will thus increase traffic
speed and reduce delays at intersections at the Worli end of the sea link.
Eastern Freeway Under Construction Phase 1-The four-lane Eastern Freeway Project, which starts near the Chhatrapati Shivaji
Project Estimated Completion Museum, will stretch till the Mumbai Port Trust road before joining the Eastern Express
2012 Highway via the Anik-Panjrapole link road, near Wadala.
Phase 2-The second phase will will link the Anik-Panjrapole link road with Ghatkopar.
Vehicles that travel northeast from Fort take the D N Road-J J Flyover-Dr B R Ambedkar Road
route, which takes almost an hour, to reach Sion. The Eastern Freeway is expected to reduce
this travel time by around 40 minutes and alleviate the pressure on existing roads.
Due to resulting better connectivity, locations like Mulund and Ghatkopar and other central
suburban locations will see increased residential demand.
Metro Rail Project Under Construction Phase 1 includes the Versova - Andheri – Ghatkopar stretch, which is around 11.07 km.
Estimated Completion Stations Include Versova - D.N. Nagar - Azad Nagar – Andheri – WEH – Chakala - Airport Road
2011 - Marol Naka – Sakinaka - Subhash Nagar - Asalpha Road – Ghatkopar. This will be followed
by work on the 38.24 km Colaba - Bandra – Charkop stretch and the 13.37 km Bandra - Kurla
– Mankhurd stretch
This project will help provide East-West rail based connectivity to the Central and Western
suburbs, and thus will facilitate a smooth and efficient interchange between suburban rail
system and the MRT System at the Andheri and Ghatkopar stations. It will also provide rail
based access to the MIDC, SEEPZ and commercial developments in Andheri.
Santacruz Chembur Under Construction The Santacruz Chembur Link Road is an important arterial road that will connect the Western
Link Road Express Highway (WEH) and the Eastern Express Highway (EEH). It will stretch 6.45 km and
will commence from Dr. Hans Bhugra Junction on the WEH in Santacruz East, run east,
skirt the Vidyanagari Campus (Mumbai University at Kalina) on its south and meet Lal
Bahadur Shastri (LBS) Marg after crossing Mithi River Bridge.
This two-deck bridge will enable vehicles to cover the stretch between Santacruz and
Chembur in 17 minutes, while currently it takes about 2 hours.
Mumbai Mono Rail Under Construction Pilot Project- 20 kms monorail system from Sant Gadge Maharaj Chowk – Wadala
Project Estimated Completion – Chembur station.
2011 This mono rail system is being implemented with the intention of supporting the public rapid
transit system. Also, it will serve to decrease travel time in those areas where it is impossible
to provide direct access to the public rapid transit system and where the widening of existing
narrow roads is not possible.
Source: Knight Frank Research
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KnightFrank.com
Figure 13 County by Rama Group in Wakad Annexe. In Approximately 52% of the upcoming
Estimated Supply 2009-11 all around 22.51 mn.sq.ft. is expected to apartments consist of 2- BHKs with an
60000 enter the north and north-western zone by average size of around 1005 sq.ft. This zone
53176 end-2011 . This includes around 20,307 units also has a large predominance of 1 and 3
50000
in this zone that will be added to the market. BHKs which account for 14% and 25% of the
total supply in the south and south-western
No. of residential units
40000
36753 West and South-Western Zone region. A few important projects include
Important residential locations like Bavdhan, Eisha Erica by Eisha Group in Dhayari,
30000
Kothrud, Karve Nagar, Warje, Malwadi and Nanded City by Magarpatta City Project at
22190
20000 Dhayari are included in this zone. The main Sinhagad Road and Nyati Esplanade by Nyati
16423
14563
connecting roads include Karve Road, Paud Group in Bavdhan. Approximately 8.50
10000
Road, Sinhagad Road and the Mumbai-Pune mn.sq.ft. of new residential space is expected
2010
Kothrud and Karve Nagar are established South and the South-Eastern Zone
Year residential micro-markets in the south-west
The locations considered in this zone
Supply Cumulative Supply and due to the extent of existing
comprise Wanwadi, Pisoli, Kondwa, NIBM and
Source: Knight Frank Research
development, there is very little scope for
Katraj. Most developments in these areas are
North and North-Western Zone further construction activity. However, there
not organised and consist of mainly old
This zone consists of the northern locations are a few re-developments taking place in
structures. In the internals roads
of Pimpri-Chinchwad, Aundh, Aundh Annex certain pockets within these locations. To the
redevelopments are taking place and these
(Pimple Nilkah, Pimple Saudagar) and north- west, the location of Bavdhan has come into
constructions are mainly undertaken by
western locations like Wakad, Baner and the limelight in the past two-three years. This
smaller developers.
Pashan. The important connecting road to location has sparse existing developments
Figure 14
these locations include NH 4, Kalewadi Main and is currently undergoing a high level of
Unit-Wise Distribution of Supply 2009-11
Road, Baner Road, Pashan Sus Road, Pashan construction particularly around 3 km from
Road and the Mumbai-Pune Bypass Road. Chandini Chowk just 5-10 minutes away from
This region which was primarily driven by the the highway. The demand for this location
industrial belt of Pimpri-Chindhwad, Bhosari, can be attributed to the relatively lower rates
In addition to this, their proximity to the also enjoys proximity to the established
financial hub of Mumbai and connectivity to market of Kothrud and the Mumbai-Bangalore
the Mumbai- Bangalore Highway also known Highway. Further south of Pune the location
as the Mumbai-Pune Bypass Road has led to of Dhayari is also witnessing considerable
the increased demand across this corridor. developments. Despite the presence of
substantial housing stock, there is further
Locations in this zone are currently scope for construction due to the availability Studio - 1%
witnessing a great deal of construction where of sizeable land parcels there. Most of the 1 BHK - 10%
the project profile varies from ultra-luxurious developments here are dominated by 1 ½ BHK - 2%
apartments and villas to affordable schemes. two-three major players. 2 BHK - 47%
the total supply expected in this zone, while The locations of Sinhagad Road, Karve Road 3 BHK - 31%
and Dhayari account for a major share of the 3 ½ BHK - 2%
3 BHKs account for around 35%. The average
total development underway in the west and 4 BHK - 1%
sizes of these 2 and 3-BHK units are
5 BHK / Penthouses - 1%
1,082 sq.ft. and 1,534 sq.ft. respectively. A south-west zone. In all, this zone has an
expected 8,435 units that will be added to the Source: Knight Frank Research
few notable developments in this zone
include Rajaveer Palace by G K Developers in market over the next three years.
25
Q3 2009
residential
market
Review
Pune
7
2
3
8
2
1
3
1
4
6 5
However, there are a few upcoming large Vista by K Raheja Corp in NIBM, Kumar Palms
UPCOMING
developments by prominent developers in by Kumar Properties Construction &
1. Bavdhan
and around the Kondwa and NIBM locations. Biotechnology at Kondwa and Olive-Simply
2. Aundh / Aundh Annexe The important connecting roads for this zone Divine by Mindspace Realty Pvt. Ltd. at Katraj.
3. Baner include NH 4, Swami Vivekanand Road, Currently the ROB at Phursungi has reduced
4. Hadapsar Kondwa Road, NIBM Road and Vitthal Rao traffic congestion and improved connectivity
5. Kondhwa Shivankar Road . between Hadapsar and Kondhwa via
26
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27
Q3 2009
residential
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Figure 15
Residential Rental Values (2 BHK)
40000
35000
30000
25000
Rs./month
20000
15000
10000
0 locations such as Pimple Saudagar, Wakad, This is primarily due to the high level of
Koregaon Park
Kalyaninagar
Aundh
Hadapsar
Vimanagar
Kondhwa - Undi
Karve Road
Bavdhan
Baner
Pimple Nilakh, Rahatani, Sanghvi and Aundh. commercial development in the eastern zone.
This is expected to augment the The Hadapsar Saswad-Loni Kalbhor Road has
attractiveness of micro-markets in the north helped to ease vehicular access to IT Parks at
western zone, which as a result are expected Hadapsar, Kharadi and Phursungi. This,
Minimum Maximum to witness a price appreciation of 10-15% over coupled with the pilot project of the The Bus
the next two years. Rapid Transit System along the Hadapsar-
Meanwhile Sopan Baug/Uday Baug,
Swargate-Katraj corridor, has reduces travel
Hadapsar and Undri/Kondwa have a 4% Southern locations like Undri-Kondwa, NIBM
time to and from these locations. Various
rental yield. Deccan, Kalyani Nagar and and Dhayari are also expected to gain
other proposed projects under the
Aundh have a 3% rental yield while Baner momentum in terms of residential
MSRDC- Pune City Integrated Road
commands the highest yield of 7%. development over the coming years, and
Development Project are expected to
consequently could witness a price increase
accelerate growth along this corridor.
Outlook of 8-10% during this period. Low capital
values, improved connectivity via the While Q1 2009 witnessed price declines, Q2
The Pune residential market has witnessed
Mumbai-Pune Bypass and various proposed and Q3 witnessed signs of recovery in certain
increased activity in the past few years. The
infrastructure projects such as the Metro Rail markets. This trend is expected to continue in
rapid and diverse growth of the city’s demand
Project are all expected to contribute to the the next quarter, and price stabilisation is
base augurs well for the growth prospects of
aforementioned growth. The proximity of expected to continue into Q1 2010. Although
various zones across the city. The increasing
Kondwa and NIBM to the IT/ITES hubs of most buyers are willing to purchase a home,
prominence of the city, coupled with the
Hadapsar, Magarpatta and Kharadi, coupled they are still very cautious and far more price
initiation of several infrastructure projects, is
with the various infrastructure initiatives sensitive than they were during the boom
expected to further promote residential
under the MSRDC - Pune City Integrated Road period. This change in demand psyche,
development in the city. The north and north-
Development Project, will also boost coupled with the aforementioned
western zones will contribute a substantial
residential development in these locations. infrastructure initiatives that will de-congest
chunk of the total supply estimated to be
The ROB at Phursungi has reduced traffic the city and improve access to peripheral
infused in the city by the end of 2011,
congestion and improved connectivity locations, is expected to keep residential
In the north-western part of the city, the between Hadapsar and Kondhwa. This, along prices in Pune largely in check for the
Wakad- Aundh Road is most frequently used with the route connecting Saswad Road with foreseeable future
for Mumbai-Pune travel. In addition to this, it Katraj Kondhwa Bypass, has promoted
28
KnightFrank.com
Table 6
Pune Major Infrastructure Developments
Project Status Remarks
Bus Rapid Transit Planning/Pilot The ambitious plan over the next few years is to have a whopping 100 km. BRT network.
System Projects Completed The work on the first phase will cost Rs.650 million, and will be funded by the Jawaharlal
Nehru National Urban Renewal Mission of the central government.
Pilot Project 1- Currently operational along the Hadapsar-Swargate-Katraj Corridor
Pilot Project 2- Currently operational on the Solapur-Bhairoba Nallah stretch
The markets that have been impacted by the pilot projects are Hadapsar, Swargate, Katraj,
Bibwewadi and Sahakar Nagar. Traffic congestion has eased, thereby reducing travel time.
MSRDC - Pune City This Rs.2.6 billion project includes 33 developments in all. These developments include 6
road Integrated Road improvement projects, 9 railway over bridges, the widening of 1 railway over bridge, 2 river
Development Project over bridges and 15 flyovers. These roadways will decrease traffic congestion at major
junctions .The completion of some of the aforementioned work has already eased traffic and
prompted the development of contiguous locations. A few examples of ongoing
developments include :-
Completed at University Flyover at University + Senapati Bapat Road- Traffic congestion along University Road, Ashok
Nagar, Gokhale Nagar, Model Colony, etc. has eased and this has led to an increase in
residential and retail development. It has also reduced the travel time from central Pune to
peripheral locations like Aundh, Baner, Pimple Saudagar, Hinjewadi, etc. and has thus
increased the reach of the central micro-markets.
In progress Wakad Aund Road Widening- This road is used to travel from Mumbai to Pune or vice versa.
It is also used to reach Rajiv Gandhi Infotech Park at Hinjewadi. Vehicular movement in
locations such as Pimple Saudagar, Wakad, Pimple Nilakh, Rahatani, Sanghvi and Aundh
will improve significantly, and this is expected to improve residential demand in these
locations, particularly from employees of the Rajiv Gandhi Infotech Park in Hinjewadi.
In progress Baner Road Widening-This is expected to stimulate demand for retail , office and residential
space in locations such as Baner, Aundh and Pashan.
Metro Rail Project Planning - Estimated The 3 routes that have been identified are Warje-Chinchwad (via Karve Road, Jangli Maharaj
Completion 2012 Road, Shivajinagar and Pune-Mumbai Road), Shivaji Nagar- Kalyani Nagar (via Raja Bahadur
Mill Road and Pune-Ahmednagar Road) and Agriculture-Swargate (via Shivaji Nagar via
Shivaji Road)
The Metro Corridors planned within Pune will reduce road traffic and improve connectivity
to various regions that are currently not easily accessible. Examples of such regions are
Warje, located in southwest Pune, and Chinchwad, located in northwest Pune.
90’ Wide Ring Road Proposed It includes 2 roads that connect Somatne Phata to Pune City (South) and Lohegaon (North) to
Wadki. These roads will pass through Mamurdi, Kiwale, Chincholi, Nigdi, Talawade, Chikhli,
Moshi, Wadmukhwadi, Charholi, Nirgudi, Wadgaon Shinde, Lohegaon, Wagholi, Manjri
Khurd, Loni Kalbhor, Phursungi, Wadki, Urali Devachi, Undri, Pisoli, Katraj, Kondhwa
Budhruk, Nimbalkarwadi, Shindewadi, Ambegaon Khurd, Dhayari, Wadgaon, Khurd, Warje,
Bhugaon, Lande, Jambhe, Mahlungi and Maan.
This development will benefit both Pune and Pimpri-Chinchwad by reducing congestion
on major arterial roads and improving connectivity within the city. The Ring Road will also
connect software parks in the east and northwest of the city. As this development will also
improve connectivity of the peripheral regions with the central region, development in
peripheral regions could prosper.
Source: Knight Frank Research
29
Q3 2009
residential
market
Review
BEngalUrU
to target the end user driven middle class
In the segment. The government on its part has
facilitated the reduction of interest rates and
Figure 16
Distribution of Supply 2009-11
aftermath of lowered stamp duty charges to encourage
(in No. of units) the residential buyers.
CBD - 1%
North - 26%
the city and developments. More mature residential
markets are currently witnessing a revival
South - 39%
East - 26%
most of the with steady capital price appreciation since
the last quarter whereas capital values in
West - 8%
Source: Knight Frank Research
projected other residential markets have stabilised.
Knight Frank Research estimates that the city
development of satellite towns around the mid 2008. In a bid to encourage sagging 35000 34151
city. To support real estate growth the State consumer confidence, private and 30000
nationalized banks lowered home loan rates
No. of residential units
elevated highway at Electronic City, the absorption in the residential market forced 15693
15000
Bengaluru- Mysore Infrastructure Corridor- an many developers to provide discounts in a
10000
expressway to the Bengaluru International bid to push sales. As a result of the slowdown
Airport Limited (BIAL) at Devanahalli and most residential projects which were under 5000 3622
widening of the existing roads. All these development have either been deferred or
0
proposed and ongoing developments are stalled in lieu of the reduced demand for
2011
2009
2010
expected to play an important role in premium properties. This has shifted the
Year
spreading residential development across focus from premium housing to affordable
Supply Cumulative Supply
the city. housing projects over the past year, primarily
Source: Knight Frank Research
30
KnightFrank.com
Bengaluru
11
6
2 1
3
4 8
1 3
2
7
5
7
8
10
The CBD continues catering to the demand are the fastest developing zones in the city.
UPCOMING
from the high income segment whereas the The high population density in these zones
1. Whitefield
suburbs are catering to the middle and upper can be attributed to the presence of IT hubs
2. Marathahalli middle class segments by offering larger in these locations.
3. Basavnagar residential units with standard amenities
4. Bannerghatta Road such as power back up, clubhouses, sports Central Business District (CBD)
5. BTM Layout facilities and open spaces. Residential market in central Bengaluru
6. Hebbal comprises Palace Cross Road, Richmond
Based on its geographical pattern, the
7. Sarjapur Road Road, Lavelle Road, Infantry Road,
Bengaluru residential market can be divided
8. Outer Ring Road Cunningham Road and Brunton Road. Few
into the following zones namely the CBD,
residential projects are coming up here due
9. Banasawadi Bengaluru North, Bengaluru South,
to unavailability of land and even these offer
10. HSR Layout Bengaluru East and Bengaluru West. The CBD
few apartments. Furthermore, redevelopment
11. Yelahanka or the Central Business District represents the
of old buildings into those with contemporary
most prominent residential locations in the
facilities, catering mostly to HNIs is also
EXISTING city. This zone is largely saturated with little
taking place in this micro-market. The higher
1. Vijayanagar opportunity for further development .The
income segment constitutes the primary
2. Magadi Road prime demand for this zone comes from the
demand segment in the CBD.
high income segment. Bengaluru West
3. Rajajinagar
comprises well established old residential This micro-market is estimated to witness a
4. Ulsoor
pockets in the city. Bengaluru North is the supply of about 450 units constituting
5. Koramangala
zone where most residential development approximately 1.2 mn.sq.ft. during 2009 and
6. Seshadripuram activity is being focused. The residential 2010.
7. Jayanagar demand for this zone is primarily investor
8. Indiranagar driven. Bengaluru South and Bengaluru East
31
Q3 2009
residential
market
Review
Figure 18
Bengaluru East
Unit-Wise Distribution of Supply 2009-11 Knight Frank
Residential layouts in Bengaluru East are
Research located at Indira Nagar, Airport Road, Frazer
Town, Cooke Town, Lingarajpuram,
estimates that Marthahalli Juction, HRBR Layout, Banaswadi,
Old Madras Road, KR Puram, Brookefields,
the city will Hoodi and Whitefield. This region is
witnessing a varied mix of developments
witness a ranging from apartments to villas and row
houses. This zone has a strong concentration
residential of the IT/ITES segment. The economic
slowdown has affected this zone the most as
supply of its residential development is directly
dependent on IT/ITES growth. The IT sector
1 BHK - 2%
2 BHK - 30%
about 38000 employees and NRI segment are driving the
2 ½ BHK - 3% demand for upcoming residential units in this
3 BHK - 53% units, zone. Brigade Group is coming up with a
3 ½ BHK - 1%
huge integrated township called Metropolis
4 BHK - 6% translating along the Whitefield Road. In the vicinity of
5 BHK/Penthouses/Villa - 5%
Jayamahal, RT Nagar, Hebbal, Bellary Road, Owing to the state of under development in
Yelahanka, Dollars Colony, Dasarahalli, the region, the proportion of end users is low.
Tumkur Road and Jalahalli. The international Therefore, the residential demand in this
32
KnightFrank.com
'The Gardens' coming up at Magadi Road. the largest contributor to the city's housing
In Bengaluru Residential development of about 5 mn.sq.ft. supply.
constituting 2,900 units will be ready for
South, occupation by 2011.
The elevated highway project between Silk
Board intersection and Attebelle will enhance
prominent Bengaluru South the connectivity of Electronic City and
surrounding locations on Hosur Road with the
recovery has In Bengaluru South, the residential expanse
spreads across Koramangala, Hosur Road,
city. This will improve the potential of
residential locations around Electronic City.
been Bannerghatta Road, Sarjapur Road, Outer
Ring Road, HSR Layout, Jayanagar, JP Nagar,
Another important project that is expected to
benefit this micro-market is the Bengaluru
witnessed in Banashankari, Kanakapura Road and
Mysore Infrastructure Corridor (BMIC).
neighbouring locations. This zone represents
Expected to be ready by 2011, this project will
Koramangala, locations which are fast emerging as
increase the micro-market's accessibility to
potential residential destinations in the city.
the western zone of the city. Expected by
where prices The availability of land, strong infrastructure
2012, the development of the first phase of
development and presence of the middle
the awaited Bengaluru Development
have income segment as a pull factor, have
Authority- Peripheral Ring Road (BDA-PRR),
contributed to the development of this zone.
will work in favour of the residential
increased by Among the current residential projects, there
development in this micro-market. The
is a high concentration along the Sarjapur
BDA-PRR will increase the locations
36% post the Outer Ring Road due to its proximity to the IT
connectivity to the eastern zone.
corridor. Adarsh Group has launched an
economic integrated township project Adarsh Palm
Retreat sprawling across 200 acres, while
Capital & Rental Profile
slump Sobha Group has several projects lined up The economic slowdown resulted in a
along the Outer Ring Road. In anticipation of correction of residential capital and rental
The development of the Outer Ring Road the upcoming Knowledge City and BMIC values in the city. However, the market is
(ORR) has improved the accessibility of project, prominent developers like Brigade, witnessing stabilisation now and some
eastern locations like Sarjapur Road, Mantri and Purvankara have positioned their prominent residential locations are
Marathahalli and Varathur. projects along the Kanakpura Road. DLF has witnessing an appreciation in capital values.
made its foray into the city with Westend During the slump Bengaluru had witnessed
Bengaluru West Heights at Bannerghatta Road. An estimated correction in capital values in almost all the
residential development of 28 mn.sq.ft. or residential locations.
Malleswaram, Seshadripuram, Rajajinagar,
14,600 units by 2011 make this micro-market
Vijaynagar and Magadi Road are the
prominent residential locations of Bengaluru
West. Being one of the oldest residential
catchments in the city, this zone mainly Table 7
consists of individual houses and bungalows. Average Residential Capital Value Trend
Scarcity of land has reduced the scope for Bengaluru Peak to Trough to Sep'09
Trough Change Sep'09 Change (Rs./sq.ft.)
new residential development and hence, only
M.G. Road -34% 47% 14,000
few projects are coming up in this
Koramangla -24% 36% 6,750
micro-market. The prominent projects are
Indira nagar -38% 23% 6,350
Mantri Greens by the Mantri Group at
Malleshwaram -11% 20% 6,000
Malleswaram and a 40 acre self-contained
J.P. Nagar -6% 15% 4,300
enclave by the Brigade Group called Brigade
Basavangudi -13% 5% 5,250
Gateway located at Malleswaram-Rajajinagar.
Rajaji Nagar -15% 4% 4,850
Dubai based company ETA Star also made
Banswadi -29% 3% 3,500
their entry into Bengaluru with their project
Source: Knight Frank Research
33
Q3 2009
residential
market
Review
Even the premium residential location of CBD values have been steady over the past year. changes in the city's infrastructure, such as
like M.G. Road witnessed the brunt of the It is a result of the relative saturation of this the relocation of the airport, which has
slowdown, correcting by almost 34% from the micro-market. Locations in the west like negatively impacted rental values of
2008 average peak prices of Rs.13,000- Malleshawaram have capital rates ranging properties near the Old Airport Road and
16,000/sq.ft. to Rs.7,000-12,000/sq.ft in Q1 from Rs.5,000-7,000/sq.ft. During the Indiranagar. Also, most of apartments that
2009. Converse has also been true for this slowdown, this micro-market had seen a were launched in 2006-07 are ready for
premium market, which recovered in prices correction of 11% in capital values, but with a possession now, adding to the supply which
by almost 47% during the last six months turnaround in sentiments, the prices in this far exceeds the demand. The economic
between March'09 to September'09 as the market have increased by 20%. slowdown has also played its part in bringing
sentiments turned positive and the economic down the rental values as most of the
Bengaluru South has been witnessing
activity in the country witnessed apartments are occupied by IT employees and
relatively strong residential development.
improvement. Another prominent location of as the spending power has shrunk, tenants
The capital values range from
Indira Nagar also witnessed a sharp are looking for better deals exerting further
Rs.5,500-8,000/sq.ft. in prime locations like
correction of about 38% from the peak until pressure on the rental market. In order to
Koramangala and vary between
March'09, when prices reached the bottom. combat the weak market sentiment,
Rs.3,000- 5,600/sq.ft. in residential pockets
However, with the turn of events, this market apartment owners are now offering discounts
further south like JP Nagar. This variance in
has also seen an up move in prices by about to retain/attract tenants. Locations such as
rates can be attributed to differential
23% between March'09 and September'09. Sarjapur Road, Outer Ring Road and HSR
development across locations in the south.
Layout (south-east), Whitefield, Marathahalli
In Bengaluru East the capital values remain Capital values in Koramangala declined by
and Airport Road in the east, and
lower than other micro-markets due to an almost 25% during the slump. But, the
Bannerghatta Road in the south are
oversupply of residential units. Locations like recovery was better in Koramangala market,
witnessing oversupply, whereas the North
Whitefield have been witnessing capital rates where prices increased by 36% post the
Bengaluru rental market has seen a slight
which vary from Rs.2,300-3,500/sq.ft., which economic slump. In fact, currently the prices
hype in the recent past owing to proposed
is lower than most developed residential are at new peak levels here.
upcoming developments in the area.
locations in other micro-markets.
However, the overall slowdown in the real
The residential rental values in the middle
estate market has resulted in a rental
Whitefield witnessed a correction of about income segment had witnessed a drop in the
correction in the north market.
13% during the slump. But, now it has fourth quarter of 2008. This segment
stabilised and has undergone a marginal witnessed an average drop by 10% across all
price increase of 4% in the March'09 to micro-markets except in off-central locations Figure 19
September'09 period. However, on account of of Vasanth Nagar, Richmond Town, Residential Rental Values (2 BHK)
large supply in the next 2 years, the prices are Indiranagar, Cox Town, Frazer Town, 160000
not expected to move up considerably in this Banaswadi and Benson Town. The maximum
140000
micro-market. rental decline took place in the mid-range
micro-markets of Whitefield and 120000
In West Bengaluru, the residential capital
Marathahalli. Bengaluru has witnessed some
100000
Rs./month
80000
60000
40000
20000
0
Koramangala
Indiranagar
Sarjapur Road
Hebbal
Bannerghatta Road
BTM Layout
Minimum Maximum
L&T South City, Bannerghatta
Source: Knight Frank Research
34
KnightFrank.com
This market has not witnessed any significant Localities towards East Bengaluru such as The stretch extending from Electronic City in
rental transactions in the recent past. Whitefield, Marathahalli and Brookefield, the south towards Varathur in the east is
have a relatively lower rental demand for both expected to be the strongest contributor to
In Bengaluru, while the premium rental
mid and premium markets. The rentals in residential development over the next 2-3
markets like the Central Business District
these locations range from Rs.12,000-30,000 years. This stretch includes prominent
(CBD) as well as the off-CBD locations are
for a 2-BHK apartment. locations like Kanakpura Road and Sarjapur
witnessing few transactions, the middle
road.
income markets are witnessing regular rental The rental market in West Bengaluru is
transactions. In the CBD, locations like primarily serviced by independent houses Electronic City and its surrounding locations
Rajbhavan Road, Lavelle Road, Richmond with locations like Malleshwaram having like Mysore Road have a presence of strong
Town and Langford Town are witnessing high rentals ranging from Rs.10,000-20,000 for a office development, predominantly IT space.
demand for rental property and the rates 2-BHK independent house. In North Its connectivity to the city is expected to
range from Rs.60,000-200,000 for a 2-BHK Bengaluru prominent residential locations improve once the elevated highway is
apartment, However, in off CBD locations like like Hebbal have rental values ranging from completed. The Bengaluru Mysore
Frazer Town, Cox Town and Ulsoor locations, Rs.15,000-30,000 for a 2BHK apartment. Infrastructure Corridor (BMIC) cuts across this
where supply is abundant, the rentals are Without much variance, the residential rental micro-market which would increase its
lower at Rs.25,000-60,000 for a 2-BHK yield across all mentioned micro- markets are accessibility towards the western parts of the
apartment. in the range of 3-4% per annum. city. The development of the Bengaluru
Development Authority -Peripheral Ring Road
Locations with steady mid-market rentals
Outlook (BDA-PRR) will increase its connectivity
include Rajbhavan Road, Vasanth Nagar,
towards the east. Once the elevated highway
Malleshwaram, Sadashivanagar, The residential market of Bengaluru has is operational, this micromarket will have
Koramangala, Indiranagar, Madiwala, witnessed heightened activity in the past few better accessibility to prominent retail
Cambridge Layout, Ulsoor and Domlur. In years. With the increasing prominence of the locations in the area namely Forum and Total
South Bengaluru, established residential city, several infrastructure projects that will Mall. These developments are expected to
locations like Koramangala have rentals have a bearing on the growth of its real estate make the micro-market more attractive for
which range from Rs.45,000-150,000 development have been initiated. The residential development.
whereas locations further south of prominent emerging residential markets are
Bannerghatta Road and BTM layout have located towards the eastern and southern Bannerghatta Road in the south is expected
rentals ranging between Rs.14,000-35,000 parts of the city. to be another prime destination for
for a 2-BHK apartment.
Table 8
Bengaluru Major Infrastructure Developments
Project Status Remarks
Elevated Highway between Expected completion in 2010 Will provide faster connectivity from Electronic city to
Silk board intersection and Attebelle Koramangala thereby reducing travel time. This is expected to
increase the residential potential of locations around Electronic
City
Bengaluru Development Expected completion of Ist The first phase would improve the connectivity towards
Authority -Peripheral Ring Road (BDA-PRR) phase in 2012 the north eastern parts of the city comprising of locations from
Tumkur Road to Hosur Road which would connect Bellary Road,
Old Madras Road, Varthur Road and Sarjapura Road
Bengaluru Mysore Expected competion in 2011 Will provide good connectivity to Mysore thereby increasing the
Infrastructure Corridor (BMIC) residential potential of locations like Bidadi. It would provide
better accessibilty to the south western micro-markets in
Bengaluru .The four-lane expressway is expandable to six-lane,
and alternatively the 10-mtr median can be used for a metro rail
system or a high-speed train network that could connect the
entire area of the project. Plans have been incorporated into the
project for providing inter-modal stations along the expressway
for future use of rail network.
Source: Knight Frank Research
35
Q3 2009
residential
market
Review
has made it accessible from most prominent However, with the turnaround in economic
The stretch locations in the city. Presence of retail activity these premium markets reaped the
establishments such as Total Mall , More maximum benefit by witnessing increase in
extending Supermarket and Reliance Fresh would help capital values by 25-45% in the last 6 months
in further residential growth. These locations i.e. March'09 and September'09. In the
from are also in relative close proximity to the BDA southern zone, the residential prices have
PRR and have a presence of strong residential bottomed out with a few micro-markets also
Electronic catchment. witnessing a marginal price increase of
5-10%. However, a large proportion, of about
City in the Locations like Yelahanka and Doddabelapur
40% of the city's supply, which is due to
in the north are expected to witness
come up in this zone will prevent meaningful
south residential development for the lower and
price increases in the medium term.
middle income category. The strong
towards industrial development in the region and the
lack of proper dwelling units have increased
Varathur in the prospect of residential development. An
elevated highway connecting Yelahanka with
the east is the city is currently under construction.
Moreover, an internal ring road will be built in
expected to be Yelahanka, improving connectivity within the
micro market. A portion of the BMIC also cuts
the strongest across this location providing acessibilty to
Road which connects it to the city and also initiatives like reduction in stamp duty to 6%
has the presence of established retail will also provide relief to the sector.
Marathahalli and Varathur are witnessing price correction of 25-35% even in the prime
ample office space development. The locations like M.G.Road, Koramangala and
36
KnightFrank.com
2011
2009
2010
residential housing market of Hyderabad, the
The residential market in Hyderabad, which development of large gated communities, Year
Supply Cumulative Supply
was primarily driven by the IT/ITES industry, townships, and individual houses in
has undergone a noticeable change in suburban areas of Hyderabad is prominent. Source: Knight Frank Research
37
Q3 2009
residential
market
Review
Hyderabad
10
1 7
6
3
9
9 5
4
2
8
6 2 3
The fact that the bulk of supply in this zone Assembly, Secretariat, Gandhi Bhavan,
UPCOMING will crop up in 2011 reflects the slump the Osmania Medical College, Malakpet,
1. Medchal realty sector has experienced over the past Dilsukhnagar, Chikkadpalli and Ramnagar.
2. Nanakramguda year or so. The upcoming supply will be
38
KnightFrank.com
39
Q3 2009
residential
market
Review
Some of the major projects underway here are the remaining 10% expected in 2011. Figure 23
May Flower Heights at Nacharam, 2 and 3-BHK units will account for roughly Residential Rental Values (2 BHK)
Nilgiri Homes and Emerald Heights at 60% of this upcoming supply, with the 40000
Pocharam, Sky City at Indira Nagar and remainder being accounted for by a decent 35000
Arena Town Centre, which is being developed share of 4-BHK, 5-BHK and villa units. This
30000
by NSL Group and is an IT/ITES SEZ with could reflect a positive prognosis for
residential, retail and hospitality premium and luxury housing in this particular 25000
Rs./month
components. Affordable housing is gaining zone. With the development of
20000
prominence and the AP government has come Shamshabad International Airport and other
15000
up with a project called Sadbhavana, which developments like SEZs, Hardware Park and
comes under the Rajiv Swagruha Corporation Fab City, this zone has been growing as a 10000
that caters to the mid-income segment in residential location in recent times. Physical
5000
Pocharam. infrastructure development towards the
international airport could further boost 0
In terms of infrastructure initiatives, Phase II
Secundrabad
Srinagar Colony
Begumpet
Jubilee Hills
Banjara Hills
Madhapur
Gachibowli
Kukatpally
Mivapur
Uppal
residential demand in this zone. Most of the
of the Outer Ring Road, which is under
projects in this zone are by local developers
construction, will improve the traffic situation
and a majority of the development is
and connectivity in the eastern zone.
characterized by residential layouts and
Minimum Maximum
Phase II B, which will extend from Patancheru
plots. A couple of notable projects in this
to Pedda Amberpet Junction, is expected to Source: Knight Frank Research
zone are MAK Banyan Tree Retreat and
be grounded in October 2009. The extended declined by an average of 25% from peak
Sunshine Valley Gated Community.
circuit will also connect areas such as levels observed in Q2 2008. Currently, prices
Dundigal, Medchal (towards the north), Phase II A of the Outer Ring Road, which is in Banjara Hills and Jubilee Hills range from
Thumkunta (near Shamirpet towards the expected to be completed by June 2010, is a Rs.5,000 to Rs.7,500 per sq.ft. Rental values
north east) and Keesara and Ghatkesar noteworthy infrastructure initiative in the in the central zone dropped considerably by
Junctions (near Pocharam towards the east). southern zone. The development will stretch 20-25% during the realty slump as consumers
from Shamshabad to Pedda Amberpet turned cautious and curbed budgets due to
Southern Zone Junction, and will augment access to the tough economic climate of the past year.
The southern zone encompasses locations Srisailam Highway and Average rentals for 2 BHK units in the
such as Malakpet, Attapur, Upparpally, Nagarjunasagar Highway. central zone currently range from a minimum
Saidabad, Santoshnagar, Rajendranagar and of Rs.15,000 per month to as high as
Shamshabad. The total estimated supply Capital & Rental Profile Rs.40,000 per month. Given prevailing
which will enter this zone by the end of 2011 capital values in this zone, these rentals
is approximately 2,500 units, which equates
Central Zone equate to a rental yield of about 3%.
to 4.2 mn.sq.ft of residential space. Of this In general, capital values across the central
total, 55% will enter the market by the end of zone declined marginally during the realty Western Zone
2009, with another 35% expected in 2010 and slump, although rates in Banjara Hills
Western zone locations like Kondapur,
Miyapur and Kukatpally witnessed declining
Table 9
Average Residential Capital Value Trend prices to the tune of 10-20% during the realty
Hyderabad Peak to Trough to Sep'09 slump. Capital values in the market of
Trough Change Sep'09 Change (Rs./sq.ft.) Madhapur have declined by an average of
Banjara Hills -24% 17% 6,000 43% from 2008 peak values. As the western
Jubilee Hills -8% 0% 6,000 zone is highly concentrated with IT/ITES
Srinagar Colony -14% 0% 4,500 employees, rentals here have declined by an
Begumpet -23% 0% 3,750 average of 10-12% on account of job and pay
Secundrabad -19% 8% 3,500 cuts. Currently, rentals in the western zone for
Madhapur -43% 0% 3,150 2 BHK units range from Rs.5,000 per month to
Gachibowli -39% 0% 2,900 Rs.15,000 per month. The average rental yield
Source: Knight Frank Research in this zone is about 4%.
40
KnightFrank.com
Northern Zone Southern Zone Developers are now aware of the importance
of the affordability factor and have been
Although capital values in the northern zone The southern zone has seen a marginal
taking measures to reach out to middle and
declined by an average of 10-20% from 2008 decline in rental and capital values as there is
lower income buyers. Over the past year,
peak levels, the development of no existing social infrastructure. Capital
prominent developers have been re-
ICICI Knowledge Park, SP Biotech and values in this zone range from
modelling premium units and launching the
premium institutes like BITS Pilani and other Rs.2,200-3,500/sq.ft. and rental values for
same as affordable units. In addition to this,
engineering institutes have boosted 2 BHK units range from Rs.5,000 to Rs.15,000
several developers have been offering to pay
residential demand in the region during the per month. The rental yield in this zone is
EMIs on the behalf of buyers until
past year. Construction of the elevated approximately 2%.
possession. The promising future for
expressway from Paradise to Shamirpet,
affordable housing is reflected by the fact
which was postponed, will on completion Outlook that absorption rates in affordable segment
boost residential demand in the region.
Residential decline in Hyderabad was projects like the Waterfront Project, located at
Currently, capital values for apartments and
inevitable given the decline over the past Shamirpet have been healthy. Key developers
villas range between Rs.1,499-5,000/sq.ft.
year of the IT/ITES sector, which is a key leading the affordable housing initiative
and rentals for 2-BHK units range from
demand driver for the city's residential include Janapriya, Modi Builders, Prajay and
Rs.10,000 to Rs.20,000 per month. Given the
market. Capital values in major Obili. Luxury segment activity has been scant
above, the rental yield in the northern zone
micro-markets like Banjara Hills, Jubilee Hills, in recent times and can be expected to
equates to approximately 4%.
Madhapur and Gachibowli have declined by continue in this vein as needs of the middle
an average of 15-30 % over the past year. income consumer assume increasing focus.
Eastern Zone
However, declining raw material and land Over the next couple of quarters, residential
The eastern zone witnessed a negligible prices around Hyderabad can be expected to
prices, home loan rate concessions and the
decline in rental and capital values as it was remain stable if not slightly increase. In
formation of a stable government have
not over-exposed to demand from the addition to this, the onset of the festive
helped stabilise the residential market in
flagging IT/ITES sector. Capital values in the season is expected to witness significant
India, Hyderabad included. Going forward,
region currently range from residential investment from locals as well as
increasing focus on affordable housing can
Rs.1,500-3,500/sq.ft. and rental values for NRIs. Over the course of the next couple of
be expected. While there is a demand for
2 BHK units range from Rs.5,000 to Rs.15,000 years, prices in western zone locations like
housing within the range of Rs.1.5-3.5 million
per month. The rental yield in this zone is Kukatpally, Madhapur, Miyapur, and
with unit sizes ranging between
approximately 4%. Gachibowli could remain stagnant due to the
700-1,500 sq.ft., there is a shortfall of
projects that cater to the mid-income large quantum of 32,500 units of supply
segment. expected to crop up around the western zone
until the end of 2011.
Table 10
Hyderabad Major Infrastructure Developments
Project Status Remarks
Outer Ring Road Phase I- Remaining 4 Phase I from Gachibowli to Shamshabad will increase connectivity
Phase I & Phase II lanes to be completed by to residential locations such as Narsingi and APPA Junction
May 2010
Phase II A to be Phase II A will stretch from Narsingi to Patancheru &
completed by June 2010 Shamshabad to Pedda Amberpet
Phase II B expected to be
grounded in October 2009
P. V. Narsimharao Operational 11.6 Kms expressway aimed at augmenting connectivity between the city and
Elevated Expressway international airport. Traffic at Mehdipatnam has been de-congested, improving
from Mehdipatnam connectivity within the inner city and providing an alternate route to access
to Aaramghar Shamshabad Airport
Metro Rail Project Tendering process ongoing Mass rapid transit system to cover three high density corridors and will
Project expected to commence augment access to established residential markets like Erragadda, Sanjeevareddy
in the 2nd quarter of 2010 Nagar, Punjagutta, Malakpet, Dilsukhnagar, Chikkadpalli and Ramnagar
Source: Knight Frank Research
41
Q3 2009
residential
market
Review
Figure 25
Chennai
From mid 2008, the effects of the global
economic slowdown had a direct impact on Estimated Supply 2009-11
the growth of residential development in the 35000
Figure 24 32742
2011
2009
2010
the middle income segment. Towards the end
of 2008, Government took several measures Year
CBD - 1% to boost the demand in the economy. Private Supply Cumulative Supply
North - 6% and nationalised banks have reduced their Source: Knight Frank Research
South - 68%
interest rates on home loans and most of the catchments namely CBD, Chennai North,
West - 25%
developers in the city are ready to accept Chennai South, and Chennai West. The CBD
Source: Knight Frank Research
payments from home buyers after the represents the most prominent residential
Market Review structure has been constructed. But these locations in the city which include the old
measures are yet to create a strong impact on well established residential pockets of
The residential real estate market of Chennai
increasing residential sales.
had shown a steady rise between 2005 and
mid 2008. This market was predominantly
Current Scenario
the city will
driven by a strong potential for growth in
real estate. Factors which influenced its The residential sector in Chennai is currently witness a
growth were perceived demand for premium recovering from a price correction of close to
housing units and growth of the IT/ITES 20% over the past year. There have been supply of
sector in the city. The Chennai Metropolitan limited new residential developments in the
Development Authority (CMDA) on its part city and most of the upcoming supply would about 33,000
encouraged real estate development by be a result of the spill-over from earlier
promoting Rajiv Gandhi Salai as a prominent developments. Capital values in most residential
IT destination and Sriperumbudur as an residential micro-markets are stabilizing.
electronic and manufacturing hub. This Knight Frank Research estimates that the city
units,
resulted in increased residential will have a residential supply of about 33,000
development towards the south and west of residential units amounting to approximately
amounting to
the city with locations like GST Road and Rajiv
Gandhi Salai, Ponamallee High Road gaining
45 mn.sq.ft. by 2011. About 68% of these
upcoming housing units will come up in the
approximately
prominence. Prominent infrastructure
development work like commencement of the
southern zone. Of the total supply, the share
of 3 BHK apartments will be 55%. The CBD or
45 mn.sq.ft. of
Outer Ring Road which would connect
prominent locations in the western and
the Central Business District continues to
cater to the high income segment whereas
residential
southern parts of the city, completion of the
flyover at Kathipara Junction and
the middle income segment would prefer the
suburban and peripheral locations as they
supply, by the
development of road connectivity to locations
along the GST Road have increased the
are more economical. end of 2011
spread of residential development in the city. Chennai can be geographically divided into
four zones based on its residential
42
KnightFrank.com
Chennai
4
6
3
2 1
2
5
4
5
6
7
10
Chennai. This zone is saturated with little residential projects in this zone. Most of the
UPCOMING
room for development. The prime demand for emerging supply is in the form of
1. Ambattur
this zone comes from the high income redevelopment projects either by remodelling
2. Porur segment. Chennai North is in a nascent stage or redeveloping existing residential units into
3. Vandalur of residential development and is expected to apartments with contemporary features. Most
4. Sriperumbudur contribute significantly once the focused of these apartments have limited number of
5. Thiruvanmiur residential development activity commences units due to development constraints. These
6. Velachery in locations within this zone. Chennai West units predominantly cater to the high income
and Chennai South consist of locations which segments. During 2009-11, the new
7. Perungudi
are rapidly developing in terms of residential residential supply in this zone is expected to
8. Pallavaram
space. The presence of both office and retail be a little over 300 units translating to
9. Tambaram
space has attracted the residential approximately 0.6 mn.sq.ft., which reflects
10. Karapakkam development, which is predominantly the level of saturation. Prominent developers
occupied by end users. In addition to the well like Appaswamy Real Estate, Lancor Holdings
placed social infrastructure like schools and and Vijayshanthi Builders are developing
EXISTING
hospitals, these zones have a good high-end projects in the CBD.
1. Thyagaraja Nagar connectivity.
2. Mylapore The prominent projects are West Hills in
43
Q3 2009
residential
market
Review
Figure 26 This region is expected to come up with a (NH-45) to Tiruvottiyur Ponneri Panjetty (TPP)
Unit-Wise Distribution of Supply 2009-11 supply of approximately 2,100 housing units will improve the connectivity of this micro-
constituting 3 mn.sq.ft. by 2011. The market with the southern zone of the city.
residential demand is currently driven by the Sriperumbudur will also benefit from the
low income segment. proposed airport development towards the
NH-4.
Chennai West
Anna Nagar, Porur, Moggapair,
Chennai South
Sriperumbudur and locations on Mount In Chennai South, the prime residential space
Poonamallee Road constitute the prime spreads across Adayar, Besant Nagar,
residential locations towards Chennai West. Velachery, locations off Rajiv Gandhi Salai
The western zone consists of locations that like Sozhlinganallur, Kelambakkam, Padur,
are amongst the upcoming areas in Chennai. Seruseri, and locations across GST Road like
The saturation of land banks in the CBD has Tambaram, Pallikarnai, Vandalur and
1 BHK - 6%
2 BHK - 32% seen the movement of residential Maraimalai Nagar.
2 ½ BHK - 2% development towards the west due to its
3 BHK - 55% proximity to important roadways like NH-4, its
3 ½ BHK - 0% inherently strong residential catchment, Majorly
4 BHK - 2%
presence of schools health care facilities,
5 BHK/Penthouses/Villa - 3%
restaurants and educational centres, major affected
Source: Knight Frank Research electronic and manufacturing industries in
this zone. The western zone is expected to markets
Chennai North
add about 8,100 housing units constituting
The residential market in Chennai North 12 mn. sq.ft. to the existing residential supply include
consists of locations like Tondiarpet, Padi, by 2011. The setting up of the electronic
Ayanavaram, Purusawakam, Madhavaram, hardware corridor at Sriperumbadur by the
Central
Red-Hills and Ennore. The residential market
in the northern part of Chennai is relatively
government has resulted in increasing
interest in residential development in this
locations like
under-developed as compared to other parts
of the city. This belt has predominantly been
zone. Multinationals like Hyundai, Nokia, Dell
and Samsung have set up their units in these
Guindy, where
home to small-scale industries like textiles
and chemicals. A majority of the people
locations and this is expected to further
contribute to the increase in demand for
prices have
residing in these areas are from the lower
income group and this is reflected in the
residential space. This zone is primarily
expected to cater to demand coming from the
corrected by
housing development pattern with the dearth
of Grade A developments in this zone. The
manufacturing sector. Prominent residential
19% from peak
projects expected to be available within the
lack of proper social infrastructure like
schools, health care facilities, entertainment
next two years include Metrozone by The levels, and
Ozone Group, Shyamala by Ceebros, Sky City
avenues, is the prime cause of the relative by Dugar Housing and Infinity by Vijayshanti Vadapalani,
underdevelopment. Water supply continues Builders.
to be a problem in these locations while
Major developments that are expected to
where prices
power supply is sporadic, the road
connectivity is good but accessibility of come up in this zone include the
development of the satellite town along the
have
interior locations is a problem. Prominent
projects in this location include Lumbini Poonamallee High Road. This satellite town to
be developed by the Tamil Nadu Housing
corrected by
Square by True Value Homes in
Purusawakam, Orchid Springs by Alliance Board (TNHB) would have the requisite 20% from peak
Infrastructure at Padi and Esplanade by physical and social infrastructure. Similarly,
Emaar MGF at Tondiarpet. the six lane ORR project connecting Vandalur levels
44
KnightFrank.com
The economic slowdown has resulted in lower and Rs.2,000-3,000/sq.ft. in locations further 120000
capital and rental values for the residential west like Sriperumbudur. This variance in
100000
sector. The residential capital values across rates can be attributed to differential
Rs./month
Chennai, which witnessed a correction in the development across locations in the west. 80000
range of 5-20% from peak until Chennai North has a dearth of proper
60000
September '09 are currently stabilizing. residential development with just a couple of
40000
Central locations like Guindy that corrected prominent projects which are slated to be
by 19% and Vadapalani that corrected by ready over the next two years. The capital 20000
20% from peak until September'09 were values in the north zone range between
0
amongst the locations that witnessed the Rs.1,500-2,000/sq.ft. in locations like
Adayar
R A Puram
Santome
Alwarpet
Velachery
Cholemedu
Pallikarnal
Moggapir
major brunt of the slump. The capital values Madhavaram and Red Hills. Purusawakam
in these locations range between and Tondiarpet are the two micro-markets in
Rs.3,200-5,100/sq.ft. The capital values of the north zone with a couple of premium Minimum Maximum
45
Q3 2009
residential
market
Review
Outlook
The residential market in Chennai is at the
cusp of a change with the demand for cost
effective housing units dominating the city's
residential space. There is a perceptible Central Park South, Rajiv Gandhi Salai
46
KnightFrank.com
The new Chennai Bypass Road between micro-market where residential development micro-markets is expected to translate into
Maduravoyal and Madhavaram would pass is expected to increase over the next couple bigger residential developments over the
through Ambattur Industrial Estate. The of years. The Tamil Nadu Housing Board next 2-3 years. The proposed ORR is expected
completed first phase of the Bypass Road (TNHB) is expected to develop a satellite town to provide better connectivity to these
connects NH45 with NH4. The second phase, in this location as a part of their city locations from the western parts of the city.
under construction, would connect NH4 with development plan. It would have all the Satellite towns have also been proposed in
NH5 and NH205 via Ambattur Industrial required social infrastructure facilities like these locations .The development of the
Estate. The Chennai Central-Arakkonam schools, healthcare centres, parks and MRTS in Velachery and Rajiv Gandhi Salai
railway line passes through Ambattur and has shopping complexes along with basic would further increase the attractiveness of
a railway station at Ambattur. infrastructure like roads, electricity and these locations. The relatively lower cost of
drinking water. The six lane ORR project residential units in these locations has
Suburban broad gauge EMU trains operate
which will connect Vandalur (NH-45) to contributed to an increase in the affordable
daily from Chennai Central and Chennai
Tiruvottiyur Ponneri Panjetty (TPP) Road is housing projects in these micro-markets.
Beach to Avadi, Tiruvallur, Arakkonam and
expected to provide better connectivity of this
Tiruttani via Ambattur. The relaxation of costal regulation zone
micro-market towards the south of the city.
construction rules is likely to generate a
By rail, Ambattur is 30 minutes from Chennai
Sriperumbudur with its strong industrial renewed interest of developers and investors
Central, 20 minutes from Perambur and
presence is expected to spawn residential along the East Coast Road. Rajiv Gandhi Salai
10 minutes from Villivakkam. Many fast EMU
development. The proposed airport on the would witness pricing pressure on account of
locals (suburban trains) towards Tiruvallur,
NH-4 is also expected to entice residential large supply and lack of social infrastructure,
Avadi and Tiruttani halt at Ambattur railway
development towards Sriperumbudur. which in turn would shift the focus to GST
station. In addition to this Ambattur is
Road that boasts of a relatively stronger
expected to provide for a strong influx of In the south, micro markets like GST Road
physical and social infrastructure in this
IT/ITES space making it a preferred and Rajiv Gandhi Salai are expected to
region. The sustenance of the residential
residential location. develop into prominent residential locations
sector for the next couple of years would
in the future. The presence of the prominent
primarily depend on tapping into the end
Poonamallee High Road which extends up to
IT and hospitality developments in these
user market by providing them with products
Sriperumbudur in the west is another
which cater to their preferences.
Table 12
Chennai Major Infrastructure Developments
Project Status Remarks
100 ft Bypass road connecting Expected to be completed The Chennai Bypass is a fully-access controlled expressway that
Madhuravoyal and Madhavaram in 2010 interconnects four national highways. The first phase is 19 km six lane
fully access controlled carriageway from Tambaram on the Grand Southern
Trunk Road(NH 45) to Maduravoyal which lies on the Chennai -Bangalore
NH4. A 3-tier interchange has also been constructed at the starting point at
Irumbuliyur Highways around Chennai. Constructed as part of the National
Highway Development Project to decongest the city of transiting vehicles,
the expressway interconnects NH45, NH4, NH205 and NH5.The second
phase include extending the bypass by 13 km from Maduravoyal to
Madhavaram on the Chennai - Kolkata NH5. It also includes 2 interchanges.
A clover-leaf grade separator at Maduravoyal Junction and a trumpet
interchange at Madhavaram where the bypass phase II ends.
Outer Ring Road (ORR) from Expected completion of The 62-km Chennai Outer Ring Road project, proposed on the outskirts
Vandalur to Tiruvottayur 1st phase -2012 of the Chennai Metropolitan Area, aims at decongesting traffic and to
enable dispersal of urban growth. The ORR will connect Vandalur (NH
45) to Tiruvottiyur Ponneri Panjetty (TPP) road. The project will come up
in four stages. The six-lane ORR will include a provision for a 22-metre
wide corridor for public transport
Velachery MRTS Railway station Expected to be completed Through rail network it will increase the connectivity of OMR and
in 2009 Velachery to the city centre.
Source: Knight Frank Research
47
Q3 2009
residential
market
Review
Figure 29
KOLKATA
that, unlike other cities across the country,
the rate of decline in residential prices Estimated Supply 2009-11
Figure 28 witnessed in the city was much lower as 30000
2011
2009
2010
remained the same. Not surprisingly, majority
of the demand for residential property Year
Central & South Central - 3%
emanated from the middle income segment Supply Cumulative Supply
East - 55%
of the city. Diminution was noted in the Source: Knight Frank Research
West - 10%
North - 11% demand for apartments in the higher income At present, the prime residential locations of
South - 21% groups. Kolkata are concentrated in the central and
Source: Knight Frank Research south-central part of the city. Up market
Market Review Current Scenario addresses in the city include CBD locations
like Park Street and Camac Street and south-
The residential real estate market of Kolkata, The Kolkata residential market over the past
central locations like Gurusaday Road,
the capital city and commercial centre of year has shown considerable resistance to
Jodhpur Park, Gole Park and Lake Garden.
Eastern India, has witnessed a significant the overall slowdown in the real estate sector.
These locations can be termed as established
change in its skyline over the past two-three While the slump in property prices in Tier I
residential markets with very less scope for
years. The staid brick structures of the city cities was in the range of 25-40% and above,
new development. Besides, southern city
have made way for multi-towered high-rises, the average decline in Kolkata was about
locations like New Alipore, Rashbehari,
ushering in a modern era governed by fast 10-18%. Not much slackening of demand for
Tollygunge and Gariahat are other popular
paced technology and a changed lifestyle. residential property was seen in the city
residential destinations in Kolkata, the most
This may be attributed to the growth of the despite increase in construction cost and a
expensive being Ballygunge and Alipore.
IT/ITES sector in the city, marked by high pay dull share market.
packages, thereby leading to increased
However, in the last two quarters of 2008,
around 24,750
consumerism and investments in the real
estate sector. Nuclear families with Kolkata's residential market registered a
lower growth rate as compared to the
units,
requirements for modern apartment lifestyles
have become the order of the day Kolkata. previous year. The demand in the real estate
sector had touched peak levels between
translating
However, the enthusiasm witnessed in the
residential market of the city took a beating
January-March 2008. This was post the real to roughly 32
estate boom of 2007 in the city's residential
with the global economic turmoil dampening sector. According to industry sources, mn.sq.ft. of
developers' spirits, who had undertaken residential property sales had registered a
several high profile residential projects, growth of nearly 30-40% in 2007 which residential
mostly in Rajarhat, in the eastern part of the dwindled by 10-15% in 2008. On a positive
city. Majority of the projects, launched two note there has been a gradual revival in space to
years back, had to extend their completion transactions during the last two quarters,
timelines due to the tight liquidity condition with the demand for residential property come up in
of the developers. The positive factor primarily subsisting in the middle price
observed in the city's residential market was range. the city
48
KnightFrank.com
Kolkata
1
4
5
1
2 7
4 3
UPCOMING launched their projects in these suburban the Kolkata Metro Project, the residential
locations. Howrah, too, has seen its share of zones in these micro-markets will continue to
1. Rajahart
residential real estate development in the attract end-users and investors alike. Besides
2. Behala
recent few years. By the end of the year 2011, the infrastructure and connectivity
3. Maheshtala
around 24,750 residential units, translating advantages, the central and south-central
4. Bata Nagar to roughly 32 mn.sq.ft. of residential space is parts of the city also enjoy the benefits of
5. Kona Expressway estimated to be operational in the city. matured office and retail markets, which act
6. Garia as a major catchment factor for the
7. Jessore Central & South-Central Kolkata residential segment.
49
Q3 2009
residential
market
Review
Figure 30
North Kolkata East Kolkata
Unit-Wise Distribution of Supply 2009-11
The northern part of the city, comprising The eastern part of Kolkata, primarily
locations like Madhyamgram, Barasat and comprising Rajarhat, Salt Lake and parts of
Jessore Road, is discerned by a number of the Eastern Metropolitan Bypass (EM Bypass)
low-rise apartment blocks. Of late, this region has been proclaimed as the new face of
has emerged as a much favoured residential Kolkata realty in recent years. This region has
destination for the mid-income category. With attracted the maximum number of real estate
a number of infrastructure initiatives developers, both national and international,
underway, the region is expected to witness to launch their projects. While Salt Lake
significant residential demand in the Sector V served to be the IT hub of the city,
forthcoming years. The widening of Jessore residential developments in this
Road to 6 lanes will substantially reduce the micro-market enjoyed proximity to the airport
traffic congestion on route to the city's and good connectivity with other parts of
central locations. Besides, Jessore Road will 1 BHK - 3% Kolkata. The development in this region,
also be connected to the main road in 2 BHK - 40% particularly Rajarhat, was triggered by the
Rajarhat, thereby providing swifter 3 BHK - 47% unlocking of large land parcels by the
4 BHK - 9%
communication between the two micro- government (HIDCO), with an objective of
5 BHK & Above - 1%
markets. With the Belghoria Expressway also decongesting the city.
under construction and Jessore Road's Source: Knight Frank Research
While the year 2006-07 saw the launch of
linkage to NH-34, North Kolkata will emerge
Housing at Madhyamgram was also several high profile residential
as an important inter-region trade corridor in
completed in 2008. Srijan Midlands by Srijan developments, slated for completion by the
the near future.
Realty, with over 360 units, is one of the end of 2008 and 2009, only a handful
On the real estate development front, major prominent upcoming residential projects on projects have actually been completed.
activity is observed on Jessore Road because Jessore Road. Another key project Avani Significantly, most of these completed
of its proximity to the airport. Developments Oxford by Avani Estates is underway in Lake projects are not fully occupied despite
like Aponaloy by Reside Group and Diamond Town. The project Orbit Skyview by the Orbit considerable bookings in majority of them.
City North by Diamond Group, both located Group, located between BT Road and The reason behind the unoccupied
on Jessore Road, are some of the noteworthy Northern Avenue, is approaching completion apartments can be attributed to limited
residential projects in the region which and is expected to be fully operational in development of social and physical
became operational in the past year. Another Q1 2010. In the recent months, Barasat, the infrastructure in the region.
important project Fortune City by Fortune Park district headquarters of 24 Parganas North,
have been increasingly coming up as an
attractive location for affordable housing.
in the north, A number of residential projects by local
developers are currently underway, notable
major activity amongst them being Larica Township by the
Larica Group, Fortune Township by the
is observed Fortune Park housing and Pushpakalay by
Pushpakalay Residents Group.
on Jessore
By the end of 2011, this northern
Road because micro-market is estimated to witness the
infusion of around 4.1 mn.sq.ft. of new
of its residential space. Approximately 2,760 units
are in the pipeline, of which around 45%
proximity to belong to the 3-BHK category, followed by
42% consisting of 2-BHK units.
the airport Diamond Heights, Chetla Road
50
KnightFrank.com
The construction delay witnessed by various scheduled to have been completed by the
commercial and retail projects in the region, end of 2009, but are now expected to be The eastern
is also an important factor leading to low ready in 2010. Delay in its completion
occupancy levels in residential developments however did not dampen the marketing region has
in Rajarhat. The retail developments in strategists and Q2 2009 saw the launch of
particular, were expected to cater to the another set of residential towers, Vistas, in attracted the
residential catchment and hence a delay in the 100-acre township project. This year also
their completion has hampered residential witnessed the launch of Eden Court, maximum
activity in the region. However, with the portending Tata Housing's foray into the
economy stabilising and developers city's realty sector. Despite the slowdown number of
resuming construction activity, completion of observed in Rajarhat's residential market, the
these projects is expected in the next few project consisting of 330 units has been
real estate
years. The state authorities are also taking promoted as upper mid-end and is scheduled
positive steps towards addressing the issue to be available by 2011. Meanwhile,
developers,
of transportation and social infrastructure
within Rajarhat. Work on the cancer specialty
developers are trying hard to differentiate
their products based on lifestyle amenities.
both national
hospital by the TATA Group is in progress
while Delhi Public School has already started
As one of the strategies, Elita Garden Vista, a
1,278-unit high-rise project by Keppel Magus
and
its branch in the region. has been promoted as premium living,
offering an 'international lifestyle' with
international
Meanwhile, various physical infrastructure Homes, Whirlpool Homes, Aqua Homes and
various amenities ranging from tennis courts,
initiatives are underway in Rajarhat which are Farm Bungalows.
a multi-purpose plaza to landscaped
expected to boost residential demand in the
gardens. Another high profile residential
region. On its completion, the Airport Link In order to provide balance to the residential
project in the region, the WBIDFC promoted
Road, connecting Action Area II, will lead to profile of the developments in Rajarhat,
Sankalpa has launched its second phase in
reduced travel time and allow easy access which at present seem highly skewed
Action Area I in Rajarhat. It has the unique
from Rajarhat to the airport. Besides, an ultra towards the upper mid-end and high-end
proposition of being the only residential
modern bus terminal is being constructed in segment of the society, the West Bengal
tower in the midst of commercial
Rajarhat. This terminal will effectively connect Housing Board has taken the welcome step of
developments in Rajarhat Action Area I. Due
Rajarhat to various parts of the city, primarily allotting construction of 12,000 LIG and
to its location attractiveness; Sankalpa is one
towards the CBD and South Kolkata 8,000 MIG units on 150 acres of land in
of the most expensive residential options in
locations. Also, to improve the intra-region Rajarhat to the Shapoorji Pallonji Group. The
the micro-market. Besides the high-rise
connectivity, the state authority HIDCO, is first phase of the project Shukhobrishti is
towers, there are a number of operational
focusing on constructing sector roads within almost ready and around 1,500 LIG units are
villa projects in Rajarhat. These include the
Rajarhat. On completion these infrastructure expected to be ready for possession this year.
much-promoted Vedic Village, launched as a
initiatives, , shall play a major role in In the coming two years, Rajarhat is expected
spa-cum-resort with options to purchase villa
attracting prospective home owners to the to witness the completion of over 11,000
properties such as Lake Front Villas, Eco
region. residential units.
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Of the total number of upcoming units, 40% development, till recently, had not taken off Altogether, the western region accounts for
will be 2-BHK units with around 47% in the 3- as with the development in other parts of the almost 10% of the total number of residential
BHK category and the rest comprising 4-BHK city. However, with a number of infrastructure units by 2011, translating to around
and above. initiatives in place and with better 4.25 mn.sq.ft.
connectivity across the river Hoogly, the
Meanwhile, EM Bypass is another stretch with South Kolkata
region has attracted a number of developers
a number of real estate developments. Silver
to set up their projects. Typically South Kolkata has been the city's
Spring, the condominium development by
most preferred residential destination owing
Bengal Silver Spring Project consisting of Kona Expressway in Howrah can be
to its proximity to the metro railway stations
520 units, is an important residential project considered to be one of the emerging
and the bypass connector. This part of the
along the EM Bypass which became fully residential markets in Kolkata. The region is
city has an equitable mix of high-end and
operational in 2008. This micro-market, well connected to Kolkata's CBD by means of
mid-end living, some of the most expensive
owing to its existing infrastructure and good NH-34 and the second bridge over the
residential locations include Ballygunge and
connectivity has higher price ranges as Hooghly river, known as Vidya Sagar Setu.
Alipore, while locations like Garia, Behala
compared to its adjacent market of Rajarhat. A key development under construction in the
and pockets along the D.H. Road primarily
Notably, the prices are in an upper bracket region is the 108-acre Kolkata Logistics
comprise affordable housing. Residents of
along the eastern part of the stretch and International City. The facility is the first of its
the city generally prefer this micro-market for
witnessing a gradual decline as one moves kind in the city, providing integrated state-of-
their accommodation needs due to the well
down south towards Garia. This can be the-art services related to logistics,
developed social infrastructure and
attributed to the demographic profile of the warehousing, wholesale and retail trading,
connectivity. The entertainment industry
residents. At present, a number of high truck parking and trans-loading operations.
located in Tollygunge is home to several well
profile residential projects are being With the completion of the project, the region
known clubs, the most famous being the
undertaken off EM Bypass. Amongst them, a will act as a prominent belt for inter-region
113-year old Tolly Club.
note can be made of Active Acres, by Ruchi trade and warehousing facility. Residential
Realty, comprising 6 towers of 19 floors each development in Kona Expressway includes Besides, South Kolkata has a number of
with a variety of modern amenities and Ideal the 390-acre Kolkata West International City prestigious educational institutes and retail
Lakeview, a 180-unit project by the Ideal by the Indonesia-based Salim Group along markets, which have been instrumental in
Group which is scheduled to be ready in with Kolkata Metropolitan Development attracting home-buyers as well as developers
2010. Ambuja Upohar, by Bengal Ambuja, is Authority (KMDA) and Singapore-based to launch their projects here.
another key project located off EM Bypass Universal Group. Almost 90% of the work has
with 11 planned towers of 19 and 17 storeys. been completed in the first phase of the
Besides these high-end projects along the township, which at present is offering row
EM Bypass, there are a number of smaller house developments. Other upcoming
affordable projects southwards. Of these, a residential developments along the Kona
Kona
mention can be made of Sunny Valley by Expressway include The Gateway by Unitech
Sunny Promoters. and an affordable housing project by the
Expressway in
In all, around 1,985 residential units are
Ganges Group. At present, this expressway is
facing considerable traffic bottleneck in the
Howrah can
under development along the EM Bypass.
They will contribute about 2.58 mn.sq.ft. of
evenings, which is expected to be sorted with
the completion of another set of 4-lanes to be
be considered
residential space by the end of 2011. Of
these, 42% shall consist of 2 BHK units and
introduced along the stretch.
one of the
45% of 3 BHK units. It remains to be seen whether the upcoming
developments in Howrah are able to
emerging
West Kolkata persuade the mindset of the city's residents
in relocating to the other side of the river.
residential
The western part of the city comprising
Howrah, on the other side of the river Hoogly, Nonetheless, if bookings in the Kolkata West
International City are to be believed, the
markets in
has always been considered to be somewhat
hinterlands by the residents. Real estate transition has already been set in motion.
Kolkata
52
KnightFrank.com
specialty hospital, golf course, sports club, during the last six months. Over the last
extension of international standard school, mall space, IT 2-3 years, residential property prices in
office space and a 5-Star hotel. While Rajarhat had shot up by over 50%. In the face
the Kolkata booking is open for the first phase of of economic recession, this location
residential development, the entire project is witnessed the steepest decline of around
Metro to scheduled to be operational by the end of 15-30% during the period September 08-09,
2014. amongst all micro-markets in the city. In
further down contrast, prime locations like Ballygunge and
On the other hand, a number of affordable
Alipore have seen a considerable hike in
south has housing projects have come up along the
property prices. While prices in these
Narendrapur-Sonargaon belt. Mayfair Greens
locations at the end of 2007 ranged from
addressed the by Mayfair Housing and Sherwood Estate by
Rs.7,000-10,000/sq.ft., they increased to
PS Group and Srijan are a few notable
Rs.10,000-13,000/sq.ft. in 2009. This incline
connectivity residential developments in Narendrapur.
in prices may be attributed to the limited
Another key mid-range residential project
availability of real estate options, successful
concerns of that can be mentioned is Eden Realty
retail and commercial projects and improved
promoted Eden City at Maheshtala.
commuters connectivity.
53
Q3 2009
residential
market
Review
25000
corporates in the city.
20000
continue to
15000 Outlook
10000
The Kolkata real estate market, which showed witness an
5000 signs of sluggishness in the last two
0 quarters, is expected to look up positively in upward trend,
the next few months. Consumer sentiments
EM Bypass
Garia
Behala
Jadavpur
Salt Lake
Ballygunge / Alipore
they have
Rajarhat
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KnightFrank.com
An important point which came out during the these somewhat distant locations, various
residential market study on the upcoming initiatives are being taken by the concerned given the
supply is the increasing preference for 2 and government authorities to make these
3-BHK units over other larger formats. Around locations attractive for home buyers. quantum of
40% of the total upcoming supply falls under
2-BHK and 47% under the 3-BHK category.
As apparent from the table of infrastructure residential
initiatives, Jessore Road in the north, Rajarhat
This reflects on the changing socio-set up of
the city's residents. Kolkata has come a long
in the east, EM Bypass in the east and south- units in the
east and Howrah in the west, are expected to
way from the city known for its expansive
families with extended family members all
emerge as the preferred residential markets pipeline, there
in the near future. With the ongoing
living under one roof, typically a 4-BHK or
even a 5-BHK tenement. Modern amenities
infrastructure in place, these markets will exists the
offer the home-buyer improved connectivity
and facilities feature prominently while
choosing a residential project. However, the
to various parts of the city. Besides, these potential
markets have a sizeable amount of
price needs to be kept under control as the
residential space in the pipeline which is
threat of an
market is very cost sensitive.
scheduled to be completed in the next
Presently, due to limited land supply in the two-three years.
oversupply
heart of the city, peripheral locations on
Jessore Road and Kona Expressway as well as
situation in
in locations like Madhyamgram, Narendrapur,
Sonarpur, Batanagar and Maheshtala are
Rajarhat
being explored for residential development.
Connectivity and transportation issues being
some of the major concerns associated with
Table 14
Kolkata Major Infrastructure Developments
Project Status Remarks
Kolkata Logistics International City Under Construction This is a 108 acre development on Kona Expressway. On completion the
region will emerge as a prominent belt for inter region trade and warehousing
facility.
Rajarhat Airport Link Road Under Construction Connecting Rajarhat to the Airport from Action Area II, the project will allow
commuters from Rajarhat easy access to the airport, hence reducing travel
time.
Jessore Road - Rajarhat Connector Under Construction It will act as a swift transit channel between the two micro-markets.
Extension of Kolkata Metro Garia Completed This 8.07 km. stretch from Tollygunge to Garia has improved connectivity and
reduced travel time for commuters from Garia, Narendrapur, Sonarpur and all
major business centres in Kolkata.
Widening of Jessore Road to 6 Lanes Under Construction With the widening of the Jessore Road to 6 lanes, transit time to Kolkata - CBD
regions will substantially reduce.
Four-lane road between Garia and Under Construction This 12 km. road will link EM Bypass to Baruipur, thereby improving
Baruipur connectivity between the locations.
Flyover between EM Bypass and Under Construction On completion, the flyover will aid in diverting heavy traffic on EM Bypass-VIP
VIP Road near Ultadanga crossing Road from the Ultadanga crossing junction.
Flyover on VIP Road between Proposed This twin flyover flanking VIP Road from Dum Dum Park over Baguihati and up
Dum Dum Park and Jora Mandir to Telghoria bus stand would be a help to daily commuters.
East-West Metro Corridor project Under Construction From Salt Lake the 14.67 km. route will run through eastern and central
between Salt Lake and Howrah Kolkata. Between Mahakaran and Howarh railway station, it will run under
100 ft. of the Hooghly river (first underwater metro in India).
Source: Knight Frank Research
55
Q3 2009
residential
market
RESEARCH
Review
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