India Residential Market Review Q309

Q3 2009

residentialmarket

KnightFrank.comReview RESEARCH

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

ResidentialMarketReview

Knight Frank

Q3 2009

residentialmarket

KnightFrank.comReview

EDITORIAL

India's real estate industry is only just

recovering from a torrid examination. The

excesses of the realty boom are a distant

memory in the backdrop of the past year's

realty crisis, of which the residential market

slump was a significant symptom. As

residential demand evaporated, developers

were forced to implement innovative coping

strategies in order to combat accumulating

inventory and a severe lack of liquidity. The

start of the current financial year ushered in a

wave of optimism that has permeated

through different sectors of the economy and

revived demand sentiments. While residential

prices are once again on the rise, the jolts of

the past year have altered the dynamics of

India's residential market. The days of

plentiful luxury projects and exorbitant prices

might have been consigned to history as

developers are now wise to the market

potential of middle class housing, or as it is

fashionably branded today, affordable

housing. Low cost housing is the key to

addressing the housing shortage of

approximately 24 million units across India,

and if “affordable housing for all” becomes a

reality, we might just have the realty slump to

thank.

Chronology of the Residential

Q2 2008- Point of Inflection

Q3 2008- Start of the Decline

Just as in Mumbai, where transactions during

this quarter declined by 15-20%, residential

transaction volumes across India declined

during Q2 2008. Despite this, many builders

managed to hold onto prices largely due to

the inclusion of freebies and incentives like

free parking, reduced interest rates for

specific projects and the deferment of the

payment of EMI till possession. While the

mid-market segment witnessed a marginal

decline in property prices, largely due to

spiraling interest rates, the prime residential

market largely maintained price levels due to

continued interest from HNIs and NRIs.

Certain developers, even prominent ones,

began to feel the pinch of relatively tighter

liqudiity and delayed possession of

apartments.

Transactions across India declined

significantly during this quarter. While this

can be partially attributed to the traditionally

lean monsoon period, during which

construction activity slows down, the effect of

the financial crisis was evident in the

reduction in building proposals during this

period. The funding shortfalls that had

started to surface in the previous quarter

intensified due to declining sales and greater

caution by funding institutions. Due to high

interest rates and spiraling construction

costs, buying a house became a financially

unviable prospect for the majority of end

users across India who were facing career

and financial uncertainties. In the face of the

mid-market housing decline, developers

intensified efforts to lure high-end customers

who mostly buy cash down or with minimal

debt. Additionally, developers began to

realize the importance of the volume game in

a depressed market. Consequently, Mumbai-

based developer Matheran Realty launched

3,000 low cost homes at a township 80 km

from Mumbai. India's premium housing

market, which held sway during the previous

quarter, began to witness declining prices,

particularly in Mumbai, where prices in South

Mumbai's Grade A residential market

declined by an average of 10%.

Price declines continued, but on a larger

scale, as funding shortfalls brought

construction activity to a virtual standstill

across the country. An example of the

relatively greater magnitude of price declines

that occurred during this quarter is Central

Mumbai, where prices in locations like Parel

and Sewri declined by an average of 30%

relative to the previous quarter's rates.

Although developers continued to attempt to

hold prices by offering incentives to potential

buyers, transactions were scarce as end

users and investors sat on the fence

anticipating further price decreases. Even the

festive season of Diwali failed to revive a

housing market in which prices had become

too misaligned with prevailing consumer

sentiments and market conditions. Price

declines were particularly steep in suburban

micro markets where supply was plentiful.

The number of project proposals received by

state governments was lower than what was

witnessed during the previous quarter. With a

view to stimulate buyers as well as to

encourage construction of relatively more

affordable housing, public sector banks

announced interest rate cuts for loans up to

Rs.2 Mn. Although well intentioned, this

measure was relatively meaningless in an

expensive housing market like Mumbai's. The

government, in its endeavor to give India's

economy a liquidity boost, slashed key policy

rates over the course of two stimulus

packages.

The stimulus packages offered the following

incentives to the sector:

• Designation of Housing Finance Company

(HFC) loans up to Rs.2 million under the

priority sector lending provision.

Q4 2008- Eye of the Storm

• Refinance of Rs.40 billion to National

Housing Bank aimed to increase the

capability of HFCs to lend to the housing

sector.

• The permission to classify the restructured

commercial real estate loans as 'standard

assets', although for a limited period,

provided great relief to the industry.

• To enhance the accessibility of funds to the

sector, External Commercial Borrowing (ECB)

was allowed to fund the development of

integrated townships.

Again, these measures failed to augment

demand. Faced with precarious market

conditions, developers continued to rely on

innovation, an example being the

reconfiguration of large unit sizes to make

such units more affordable. This strategy

resulted in the advent of 'semi-luxury'

apartments, which although smaller in size

offer amenities on par with the demands of

modern lifestyles.

The price declines witnessed this quarter

mirrored the events of the previous quarter.

The steep price declines witnessed around

India during the first quarter of 2009

highlighted the fact that incentives offered by

developers, examples being reduced down

payments and rebates on stamp duty, did

little to boost sales. End users continued to

drive a hard bargain in the knowledge that

with the financial year coming to a close,

developers would be more inclined to

compromise on price. Consequently,

developers began to launch previously

deferred projects as scaled down semi-luxury

projects at reduced rates. Mumbai's housing

market, due to its exorbitant prices that were

fuelled by raging end user and investor

demand, witnessed the most significant price

decline across India during this period. Prices

in the prominent Mumbai micro-market of

Bandra, for example, declined by an average

of 16% during Q1 2009.

Q1 2009- Decline Continues

Q2 2009- Stabilisation

During the second quarter of 2009, the Indian

residential market exhibited a general trend

of price stabilisation, and in isolated cases

even price appreciation. Prices for Grade A

properties in the Mumbai micro-market of

Worli, for example, remained stagnant during

this quarter after declining by 11% during the

previous quarter. Similarly, in the NCR micro-

market of New Friends Colony, residential

prices remained stable during this quarter

after declining by 16% during the previous

quarter. This stabilisation was largely

triggered by an upswing in the sentiments of

consumers who had been sitting on the fence

anticipating further price declines. The push

for affordable housing gathered momentum,

and while some developers remarketed

luxury projects as affordable projects by

reducing the price and unit size, other

developers commenced construction of

genuine affordable projects devoid of various

frills and amenities. This affordable housing

initiative instigated the residential market's

recovery by drawing the interest of the

average middle income buyer. The benefit of

re-marketing luxury projects was significant

because in the current climate, funding

institutions are far more comfortable

financing semi-luxury and affordable projects.

Consequently, the theme of project stalling,

so prominent during the previous two

quarters, was not so prevalent during Q2

2009. Demand during this quarter was also

boosted by ICICI Bank's interest rate

reduction during March by 25-50 basis points.

As opposed to the previous quarter, during

which the consolidation process began and

prices largely stabilized, Q3'09 witnessed

price increases in several micro markets

around India. Moreover, this price increase

was evident across premium and relatively

lower end micro markets. For example, prices

in the posh South Mumbai micro market

increased by an average of 15% during Q3

2009. During the same period, in the

significantly less expensive micro market of

Andheri, prices increased by an average of

20%. Such price increases were fuelled by

improved demand, particularly from the mid-

income segment. End user demand improved

for a variety of reasons. The formation of a

stable central government back in May

instigated a sense of calm that was

supplemented by an improving job market,

cheaper home loans and continued

infrastructure initiatives. The affordable

housing initiative, which came to prominence

as a consequence of the property slump,

continued to gather momentum during Q3'09

on the back of Central Government initiatives,

namely time bound income tax exemptions to

developers of affordable projects and a 1%

interest subsidy on loans up to Rs.1 million

for properties costing up to Rs.2 million.

Luxury housing demand, which obviously was

adversely impacted by the realty slump, is

slowly picking up again.

Q3 2009- Green Shoots of Recovery

Although

developers

attempted to

hold prices by

offering

incentives to

potential

buyers, end

users and

investors sat

on the fence

anticipating

further price

decreases

Supply Cumulative Supply

400000

250000

Source: Knight Frank Research

Figure 1

Pan India Estimated Supply 2009-11

350000

300000

200000

100000

150000

138054 140744

226093

366837

Q3 2009

residentialmarket

EDITORIAL

India's real estate industry is only just

recovering from a torrid examination. The

excesses of the realty boom are a distant

memory in the backdrop of the past year's

realty crisis, of which the residential market

slump was a significant symptom. As

residential demand evaporated, developers

were forced to implement innovative coping

strategies in order to combat accumulating

inventory and a severe lack of liquidity. The

start of the current financial year ushered in a

wave of optimism that has permeated

through different sectors of the economy and

revived demand sentiments. While residential

prices are once again on the rise, the jolts of

the past year have altered the dynamics of

India's residential market. The days of

plentiful luxury projects and exorbitant prices

might have been consigned to history as

developers are now wise to the market

potential of middle class housing, or as it is

fashionably branded today, affordable

housing. Low cost housing is the key to

addressing the housing shortage of

approximately 24 million units across India,

and if “affordable housing for all” becomes a

reality, we might just have the realty slump to

thank.

Chronology of the Residential

Q2 2008- Point of Inflection

Q3 2008- Start of the Decline

Just as in Mumbai, where transactions during

this quarter declined by 15-20%, residential

transaction volumes across India declined

during Q2 2008. Despite this, many builders

managed to hold onto prices largely due to

the inclusion of freebies and incentives like

free parking, reduced interest rates for

specific projects and the deferment of the

payment of EMI till possession. While the

mid-market segment witnessed a marginal

decline in property prices, largely due to

spiraling interest rates, the prime residential

market largely maintained price levels due to

continued interest from HNIs and NRIs.

Certain developers, even prominent ones,

began to feel the pinch of relatively tighter

liqudiity and delayed possession of

apartments.

Transactions across India declined

significantly during this quarter. While this

can be partially attributed to the traditionally

lean monsoon period, during which

construction activity slows down, the effect of

the financial crisis was evident in the

reduction in building proposals during this

period. The funding shortfalls that had

started to surface in the previous quarter

intensified due to declining sales and greater

caution by funding institutions. Due to high

interest rates and spiraling construction

costs, buying a house became a financially

unviable prospect for the majority of end

users across India who were facing career

and financial uncertainties. In the face of the

mid-market housing decline, developers

intensified efforts to lure high-end customers

who mostly buy cash down or with minimal

debt. Additionally, developers began to

realize the importance of the volume game in

a depressed market. Consequently, Mumbai-

based developer Matheran Realty launched

3,000 low cost homes at a township 80 km

from Mumbai. India's premium housing

market, which held sway during the previous

quarter, began to witness declining prices,

particularly in Mumbai, where prices in South

Mumbai's Grade A residential market

declined by an average of 10%.

Price declines continued, but on a larger

scale, as funding shortfalls brought

construction activity to a virtual standstill

across the country. An example of the

relatively greater magnitude of price declines

that occurred during this quarter is Central

Mumbai, where prices in locations like Parel

and Sewri declined by an average of 30%

relative to the previous quarter's rates.

Although developers continued to attempt to

hold prices by offering incentives to potential

buyers, transactions were scarce as end

users and investors sat on the fence

anticipating further price decreases. Even the

festive season of Diwali failed to revive a

housing market in which prices had become

too misaligned with prevailing consumer

sentiments and market conditions. Price

declines were particularly steep in suburban

micro markets where supply was plentiful.

The number of project proposals received by

state governments was lower than what was

witnessed during the previous quarter. With a

view to stimulate buyers as well as to

encourage construction of relatively more

affordable housing, public sector banks

announced interest rate cuts for loans up to

Rs.2 Mn. Although well intentioned, this

measure was relatively meaningless in an

expensive housing market like Mumbai's. The

government, in its endeavor to give India's

economy a liquidity boost, slashed key policy

rates over the course of two stimulus

packages.

The stimulus packages offered the following

incentives to the sector:

• Designation of Housing Finance Company

(HFC) loans up to Rs.2 million under the

priority sector lending provision.

Q4 2008- Eye of the Storm

• Refinance of Rs.40 billion to National

Housing Bank aimed to increase the

capability of HFCs to lend to the housing

sector.

• The permission to classify the restructured

commercial real estate loans as 'standard

assets', although for a limited period,

provided great relief to the industry.

• To enhance the accessibility of funds to the

sector, External Commercial Borrowing (ECB)

was allowed to fund the development of

integrated townships.

Again, these measures failed to augment

demand. Faced with precarious market

conditions, developers continued to rely on

innovation, an example being the

reconfiguration of large unit sizes to make

such units more affordable. This strategy

resulted in the advent of 'semi-luxury'

apartments, which although smaller in size

offer amenities on par with the demands of

modern lifestyles.

The price declines witnessed this quarter

mirrored the events of the previous quarter.

The steep price declines witnessed around

India during the first quarter of 2009

highlighted the fact that incentives offered by

developers, examples being reduced down

payments and rebates on stamp duty, did

little to boost sales. End users continued to

drive a hard bargain in the knowledge that

with the financial year coming to a close,

developers would be more inclined to

compromise on price. Consequently,

developers began to launch previously

deferred projects as scaled down semi-luxury

projects at reduced rates. Mumbai's housing

market, due to its exorbitant prices that were

fuelled by raging end user and investor

demand, witnessed the most significant price

decline across India during this period. Prices

in the prominent Mumbai micro-market of

Bandra, for example, declined by an average

of 16% during Q1 2009.

Q1 2009- Decline Continues

Q2 2009- Stabilisation

During the second quarter of 2009, the Indian

residential market exhibited a general trend

of price stabilisation, and in isolated cases

even price appreciation. Prices for Grade A

properties in the Mumbai micro-market of

Worli, for example, remained stagnant during

this quarter after declining by 11% during the

previous quarter. Similarly, in the NCR micro-

market of New Friends Colony, residential

prices remained stable during this quarter

after declining by 16% during the previous

quarter. This stabilisation was largely

triggered by an upswing in the sentiments of

consumers who had been sitting on the fence

anticipating further price declines. The push

for affordable housing gathered momentum,

and while some developers remarketed

luxury projects as affordable projects by

reducing the price and unit size, other

developers commenced construction of

genuine affordable projects devoid of various

frills and amenities. This affordable housing

initiative instigated the residential market's

recovery by drawing the interest of the

average middle income buyer. The benefit of

re-marketing luxury projects was significant

because in the current climate, funding

institutions are far more comfortable

financing semi-luxury and affordable projects.

Consequently, the theme of project stalling,

so prominent during the previous two

quarters, was not so prevalent during Q2

2009. Demand during this quarter was also

boosted by ICICI Bank's interest rate

reduction during March by 25-50 basis points.

As opposed to the previous quarter, during

which the consolidation process began and

prices largely stabilized, Q3'09 witnessed

price increases in several micro markets

around India. Moreover, this price increase

was evident across premium and relatively

lower end micro markets. For example, prices

in the posh South Mumbai micro market

increased by an average of 15% during Q3

2009. During the same period, in the

significantly less expensive micro market of

Andheri, prices increased by an average of

20%. Such price increases were fuelled by

improved demand, particularly from the mid-

income segment. End user demand improved

for a variety of reasons. The formation of a

stable central government back in May

instigated a sense of calm that was

supplemented by an improving job market,

cheaper home loans and continued

infrastructure initiatives. The affordable

housing initiative, which came to prominence

as a consequence of the property slump,

continued to gather momentum during Q3'09

on the back of Central Government initiatives,

namely time bound income tax exemptions to

developers of affordable projects and a 1%

interest subsidy on loans up to Rs.1 million

for properties costing up to Rs.2 million.

Luxury housing demand, which obviously was

adversely impacted by the realty slump, is

slowly picking up again.

Q3 2009- Green Shoots of Recovery

Although

developers

attempted to

hold prices by

offering

incentives to

potential

buyers, end

users and

investors sat

on the fence

anticipating

further price

decreases

400000

250000

Figure 1

Pan India Estimated Supply 2009-11

350000

300000

200000

100000

150000

138054 140744

226093

366837

Q3 2009

residentialmarket

For example, in Mumbai, Orbit Terraces, a

luxury housing project in Lower Parel by Orbit

Corporation, witnessed 300 enquiries for 80

apartments during its launch in September.

Similarly, in October'08, a flat in Cuffe Parade

was sold for a record price of Rs.98,000 per

sq.ft. The upsurge in luxury demand can be

partially attributed to the healthy

performance in recent months of the Indian

financial markets, as a result of which

wealthy investors have been able to generate

returns to pump into residential investment.

Because of improving demand, which was

reflected by the upsurge in residential

enquiries and conversion rates amongst

particularly middle income consumers,

construction activity gradually picked up

pace, and a chunk of projects that had been

stalled and postponed were once again back

on the radar.

The realty slump has altered the landscape of

India's residential market. Perhaps the most

conspicuous shift in market dynamics is

being witnessed in the interaction of the

demand and supply side. In the bull market,

developers cashed in on premium segment

housing demand and dictated prices.

However, as consumers turned cautious and

premium segment demand dried up,

developers began to feel the pinch of the

liquidity crunch. Consequently, prices were

slashed and developers were compelled to

come up with innovative solutions like

discounted parking and assistance with EMI

payments in order to attract buyers.

The analysis of residential rates across India

over the past 5 years reveals that even after

the price correction of the past year,

residential prices across the country remain

significantly higher than inflation adjusted

rates in 2009. The inflation index appreciated

by 31% between 2005 and Sep'09, but

property prices in prominent cities like

Mumbai and Bengaluru during the same

period appreciated by an average of 150%.

Residential prices in micro-markets like

Lessons Learnt

South Mumbai and Worli have risen by 188%

and 218% respectively since Jan'05. The

average price of a Grade A residential

property in Worli, which stood at

Rs.11,000/sq.ft. as of Jan'05, increased to

Rs.35,000/sq.ft. as of Sep'09. The notable

exception to this trend in Mumbai is the micro

market of Ghatkopar (E), where prices rose by

just 22% over the aforementioned four year

period. Similarly in Bengaluru, current prices

are up by an average of 160% relative to

Jan'05 prices. Capital values in micro-markets

of M G Road and Malleshwaram have

appreciated by 250% and 233% respectively.

Even though southern and eastern micro-

markets contributed to a large portion of

residential supply in Bengaluru over the last

3 years, prices in J P Nagar and Banswadi

have appreciated by 115% and 119%

respectively relative to Jan'05 prices.

The above comparisons suggest that

although significant price correction has

taken place over the past year, prevailing

rates are still artificially high. Further,

between May'09 and Sep'09, as sentiments

turned buoyant, prices have once again

increased. This price increase, coupled with

the fact that the RBI's mid-term monetary

policy review hints at an upward revision of

interest rates, suggests that the residential

market revival that we are currently

witnessing might not progress at the hectic

pace of the realty boom. The residential price

appreciation that is evident around the

country might just prove a touch premature.

Although the residential market is on the

upswing again, the trauma of the past year

has placed the market's focus squarely on

affordable housing, and the long term

development of this initiative is expected to

necessitate greater cognizance of consumer

sentiments by developers. This has already

resulted in introspection by developers, who,

due to greater price sensitivity in the realty

market are now being forced to justify

exorbitant floor rise charges and loading.

They have realized that a market slump

requires greater alignment with demand

dynamics. The push for affordable housing is

undoubtedly the most significant silver lining

of the realty slump. Developers realized that

the middle class home buyers market was a

huge and untapped source of demand, and

they demonstrated their eagerness to tap into

this market by reducing unit sizes and

lowering rates of premium projects to re-

market them as affordable housing projects.

While the initial impetus for affordable

housing might have been reactionary, several

major developers are now foraying into this

segment as the needs of middle income

home buyers can no longer be ignored.

While affordable housing has carved a niche

for itself in recent times, it is understood that

the government will have a significant role to

play in this segment. The importance of the

public private partnership model in

facilitating the development of low cost

housing cannot be understated.

Over the past year, the government has been

proactively involved in aiding the realty

sector through a series of direct and indirect

measures. A series of cuts in key policy rates

and the recently unveiled 1% interest rate

subsidy on home loans up to Rs.10 Lakhs (for

properties costing no more than Rs.20 Lakhs)

are examples of measures that helped

stimulate the residential market to an extent.

The interest subsidy was introduced bearing

in mind the positive impact of home loan rate

cuts by leading finance institutions such as

HDFC and ICICI Bank. The realty slowdown

has brought into focus the extreme sensitivity

of home buyers to interest rate movements.

The government's most important direct

intervention in India's real estate sector is

expected to come in the form of the Real

Estate Regulator Bill, expected to be

introduced during the upcoming Parliament

winter session. The difficulties of last year

have highlighted procedural flaws that the

government feels a regulator could help

eradicate. The regulator bill will seek to

deregulate the Rent Control Act, owing to

which a chunk of rental housing stock around

India has been withdrawn from the market.

The rental housing market in India is yet to

flourish, and this was exhibited during the

realty slump, when consumers who were

averse to buying were craving a healthy rental

market to fall back on.The 6% depreciation of

the US Dollar vis-à-vis the Indian Rupee over

the past two months, coupled with the recent

volatility of the British Pound versus the

Indian Rupee, has started to alter the

dynamics of the second home buyers market.

High net worth Indians and NRIs are

increasingly inclined to shop for second

homes in the United States and the UK, where

homes can now be purchased at prices

similar to homes in popular Indian second

home destinations like Alibaug, Lonavala and

Kasauli. A decline in NRI and HNI investment

in Indian real estate could badly hamper the

industry's premium housing market.

The Way Forward

From now until the end of 2011, approximately

367,000 units, equating to roughly

533 mn.sq.ft. of Grade A residential supply,

are expected to crop up in the seven major

cities around India. Of this unit supply, NCR

accounts for approximately 25% and Mumbai

comprises approximately 20%. 80% of the

total expected supply will be evenly

distributed between 2010 and 2011. Further,

roughly 75% of the total unit supply will be

accounted for by 2 and 3 BHK units. During

the realty boom, one might have expected to

see a higher composition of 4 BHK and other

premium segment units, but now, developers

are mindful of the importance of smaller units

to compensate for exorbitant prices. It must

be noted that the total expected supply until

the end of 2011 is contingent on the validity

of current project completion schedules. The

struggles of the past year dramatically halted

the progress of India's real estate sector. The

advent of a stable central government and a

general improvement in India's financial

climate has stabilised the sector and

reinvigorated the residential market, which is

witnessing increased enquiries and rising

prices once again. As the real estate sector

continues its emergence from the woes of

FY 08-09, the importance of imbibing the

lessons of hindsight and experience is

paramount. Prices need to be realistically

aligned with demand sentiments. The push

for affordable housing, which would need to

be facilitated by government intervention

both on the financial and logistical fronts,

will alter the profile of residential prices

across India. Significant infrastructure

initiatives around the country will open up

new markets and alleviate the upward

pressure that congestion exerts on prices.

However, a city like Mumbai needs to look at

how to better utilise existing land. The

potential benefits of such an initiative are

evidenced by the successful utilisation of the

NTC mill lands in Mumbai for commercial

development. India's residential market is

now set to embark on a different and more

Unit-Wise Distribution of Pan India

Supply 2009-11

Figure 3

Studio - 1%

1 BHK - 3%

1 ½ BHK - 3%

2 BHK - 36%

2 ½ BHK - 4%

3 BHK - 39%

3 ½ BHK - 2%

4 BHK - 7%

5 BHK Penthouse - 3%

even after the

correction of

the past year,

residential

prices across

the country

remain

significantly

higher than

2009 inflation

adjusted

socially conscious path, a path that is

essential in order to avoid the formation of a

property price bubble such as the one that

derailed the US real estate sector.

Distribution of Pan India Supply 2009-11

(in No. of units)

Figure 2

Chennai - 9%

Bengaluru - 10%

NCR - 25%

Hyderabad - 15%

Kolkata - 7%

Mumbai - 20%

Pune - 14%

Note: Maps included are not to scale (Source: Google Maps).

Q3 2009

residentialmarket

For example, in Mumbai, Orbit Terraces, a

luxury housing project in Lower Parel by Orbit

Corporation, witnessed 300 enquiries for 80

apartments during its launch in September.

Similarly, in October'08, a flat in Cuffe Parade

was sold for a record price of Rs.98,000 per

sq.ft. The upsurge in luxury demand can be

partially attributed to the healthy

performance in recent months of the Indian

financial markets, as a result of which

wealthy investors have been able to generate

returns to pump into residential investment.

Because of improving demand, which was

reflected by the upsurge in residential

enquiries and conversion rates amongst

particularly middle income consumers,

construction activity gradually picked up

pace, and a chunk of projects that had been

stalled and postponed were once again back

on the radar.

The realty slump has altered the landscape of

India's residential market. Perhaps the most

conspicuous shift in market dynamics is

being witnessed in the interaction of the

demand and supply side. In the bull market,

developers cashed in on premium segment

housing demand and dictated prices.

However, as consumers turned cautious and

premium segment demand dried up,

developers began to feel the pinch of the

liquidity crunch. Consequently, prices were

slashed and developers were compelled to

come up with innovative solutions like

discounted parking and assistance with EMI

payments in order to attract buyers.

The analysis of residential rates across India

over the past 5 years reveals that even after

the price correction of the past year,

residential prices across the country remain

significantly higher than inflation adjusted

rates in 2009. The inflation index appreciated

by 31% between 2005 and Sep'09, but

property prices in prominent cities like

Mumbai and Bengaluru during the same

period appreciated by an average of 150%.

Residential prices in micro-markets like

Lessons Learnt

South Mumbai and Worli have risen by 188%

and 218% respectively since Jan'05. The

average price of a Grade A residential

property in Worli, which stood at

Rs.11,000/sq.ft. as of Jan'05, increased to

Rs.35,000/sq.ft. as of Sep'09. The notable

exception to this trend in Mumbai is the micro

market of Ghatkopar (E), where prices rose by

just 22% over the aforementioned four year

period. Similarly in Bengaluru, current prices

are up by an average of 160% relative to

Jan'05 prices. Capital values in micro-markets

of M G Road and Malleshwaram have

appreciated by 250% and 233% respectively.

Even though southern and eastern micro-

markets contributed to a large portion of

residential supply in Bengaluru over the last

3 years, prices in J P Nagar and Banswadi

have appreciated by 115% and 119%

respectively relative to Jan'05 prices.

The above comparisons suggest that

although significant price correction has

taken place over the past year, prevailing

rates are still artificially high. Further,

between May'09 and Sep'09, as sentiments

turned buoyant, prices have once again

increased. This price increase, coupled with

the fact that the RBI's mid-term monetary

policy review hints at an upward revision of

interest rates, suggests that the residential

market revival that we are currently

witnessing might not progress at the hectic

pace of the realty boom. The residential price

appreciation that is evident around the

country might just prove a touch premature.

Although the residential market is on the

upswing again, the trauma of the past year

has placed the market's focus squarely on

affordable housing, and the long term

development of this initiative is expected to

necessitate greater cognizance of consumer

sentiments by developers. This has already

resulted in introspection by developers, who,

due to greater price sensitivity in the realty

market are now being forced to justify

exorbitant floor rise charges and loading.

They have realized that a market slump

requires greater alignment with demand

dynamics. The push for affordable housing is

undoubtedly the most significant silver lining

of the realty slump. Developers realized that

the middle class home buyers market was a

huge and untapped source of demand, and

they demonstrated their eagerness to tap into

this market by reducing unit sizes and

lowering rates of premium projects to re-

market them as affordable housing projects.

While the initial impetus for affordable

housing might have been reactionary, several

major developers are now foraying into this

segment as the needs of middle income

home buyers can no longer be ignored.

While affordable housing has carved a niche

for itself in recent times, it is understood that

the government will have a significant role to

play in this segment. The importance of the

public private partnership model in

facilitating the development of low cost

housing cannot be understated.

Over the past year, the government has been

proactively involved in aiding the realty

sector through a series of direct and indirect

measures. A series of cuts in key policy rates

and the recently unveiled 1% interest rate

subsidy on home loans up to Rs.10 Lakhs (for

properties costing no more than Rs.20 Lakhs)

are examples of measures that helped

stimulate the residential market to an extent.

The interest subsidy was introduced bearing

in mind the positive impact of home loan rate

cuts by leading finance institutions such as

HDFC and ICICI Bank. The realty slowdown

has brought into focus the extreme sensitivity

of home buyers to interest rate movements.

The government's most important direct

intervention in India's real estate sector is

expected to come in the form of the Real

Estate Regulator Bill, expected to be

introduced during the upcoming Parliament

winter session. The difficulties of last year

have highlighted procedural flaws that the

government feels a regulator could help

eradicate. The regulator bill will seek to

deregulate the Rent Control Act, owing to

which a chunk of rental housing stock around

India has been withdrawn from the market.

The rental housing market in India is yet to

flourish, and this was exhibited during the

realty slump, when consumers who were

averse to buying were craving a healthy rental

market to fall back on.The 6% depreciation of

the US Dollar vis-à-vis the Indian Rupee over

the past two months, coupled with the recent

volatility of the British Pound versus the

Indian Rupee, has started to alter the

dynamics of the second home buyers market.

High net worth Indians and NRIs are

increasingly inclined to shop for second

homes in the United States and the UK, where

homes can now be purchased at prices

similar to homes in popular Indian second

home destinations like Alibaug, Lonavala and

Kasauli. A decline in NRI and HNI investment

in Indian real estate could badly hamper the

industry's premium housing market.

The Way Forward

From now until the end of 2011, approximately

367,000 units, equating to roughly

533 mn.sq.ft. of Grade A residential supply,

are expected to crop up in the seven major

cities around India. Of this unit supply, NCR

accounts for approximately 25% and Mumbai

comprises approximately 20%. 80% of the

total expected supply will be evenly

distributed between 2010 and 2011. Further,

roughly 75% of the total unit supply will be

accounted for by 2 and 3 BHK units. During

the realty boom, one might have expected to

see a higher composition of 4 BHK and other

premium segment units, but now, developers

are mindful of the importance of smaller units

to compensate for exorbitant prices. It must

be noted that the total expected supply until

the end of 2011 is contingent on the validity

of current project completion schedules. The

struggles of the past year dramatically halted

the progress of India's real estate sector. The

advent of a stable central government and a

general improvement in India's financial

climate has stabilised the sector and

reinvigorated the residential market, which is

witnessing increased enquiries and rising

prices once again. As the real estate sector

continues its emergence from the woes of

FY 08-09, the importance of imbibing the

lessons of hindsight and experience is

paramount. Prices need to be realistically

aligned with demand sentiments. The push

for affordable housing, which would need to

be facilitated by government intervention

both on the financial and logistical fronts,

will alter the profile of residential prices

across India. Significant infrastructure

initiatives around the country will open up

new markets and alleviate the upward

pressure that congestion exerts on prices.

However, a city like Mumbai needs to look at

how to better utilise existing land. The

potential benefits of such an initiative are

evidenced by the successful utilisation of the

NTC mill lands in Mumbai for commercial

development. India's residential market is

now set to embark on a different and more

Unit-Wise Distribution of Pan India

Supply 2009-11

Figure 3

Studio - 1%

1 BHK - 3%

1 ½ BHK - 3%

2 BHK - 36%

2 ½ BHK - 4%

3 BHK - 39%

3 ½ BHK - 2%

4 BHK - 7%

even after the

correction of

the past year,

residential

prices across

the country

remain

significantly

higher than

2009 inflation

adjusted

socially conscious path, a path that is

essential in order to avoid the formation of a

property price bubble such as the one that

derailed the US real estate sector.

Distribution of Pan India Supply 2009-11

(in No. of units)

Figure 2

Chennai - 9%

Bengaluru - 10%

NCR - 25%

Hyderabad - 15%

Kolkata - 7%

Mumbai - 20%

Pune - 14%

Note: Maps included are not to scale (Source: Google Maps).

Q3 2009

residentialmarket

Market Review

Today Delhi, Ghaziabad, Faridabad, Noida

and Greater Noida form the core of the NCR.

Ghaziabad and Faridabad are predominantly

industrial towns, whereas economic activity

in Delhi, Gurgaon, Noida and Greater Noida is

driven by the IT/ITES, Automobile,

Telecommunications, Medicine & Pharma and

Banking and Finance sectors. In recent times

the NCR has witnessed a somewhat balanced

and widespread network of infrastructure

development that has further strengthened

the intra and inter transportation network of

the NCR. Construction of the 8-lane

Delhi Gurgaon Expressway and the 8-lane

Delhi Noida Direct Flyover has vastly

improved connectivity of Delhi with Gurgaon

and Noida respectively.

NATIONALCAPITALREGION(NCR)

This resulted in a rise in enquiries and

conversion rates, thereby gradually

stabilizing the residential market in the NCR.

The NCR market will witness approximately

92,000 units, equating to 160.16 mn.sq.ft. of

fresh supply of residential space. Out of the

total upcoming supply, 57% will be available

in the year 2011. This reflects the stalling of a

few commenced projects and the lack of

announced new projects over the last year

due to the residential market slump.

Current Scenario

This prominent development prompted

developers to explore peripheral locations of

Gurgaon and Noida for primarily residential

development. The partly operational and

rapidly growing network of the

Delhi Metro Project is also providing a growth

impetus to the NCR. An efficient

communication system within the region has

augmented the attractiveness of peripheral

areas which, due to cheap land cost are

relatively more affordable.

The middle of the year 2008 saw the first

impact of the recent global economic

slowdown on Indian real estate, especially

across NCR. Low liquidity levels and tight

credit conditions on the supply side, coupled

with job insecurity and low demand

sentiments on the consumer side, negatively

impacted the NCR residential market. The

consequent drop in demand led to a number

of announced projects being phased out and

postponed. To improve demand across the

NCR market, developers resorted to offering

lucrative benefits like discounted car parking

and club membership along with the

apartment. Schemes like payment of EMI on

and from possession were also offered as a

measure to surge demand. Larger sized

premium housing was being restructured into

affordable housing units. Such measures

were largely unsuccessful though, and

significant price correction occurred across

the NCR. Investors foreseeing further future

price corrections resorted to distress selling

of their properties which further worsened the

situation.

The Government of India, in a bid to counter

the economic slump, introduced two

economic stimulus packages. These

packages focused on increasing liquidity

within the economy and reducing the cost of

borrowing. Interest rates were lowered, there

was an increased focus on priority sector

lending and developers were aided by means

of debt restructuring. A major impetus to

consumer sentiments was the formation of

the stable congress regime at the general

assembly elections.

Two-thirds of this supply will come under the

3-BHK category, indicating that developers in

the region are optimistic about premium

segment demand once the residential market

picks up. Due to unavailability of larger land

parcels within Delhi, not much development

is visible in the region. Locations like

Model Town, Khyber Pass, Subhash Nagar

and Shivaji Marg are currently witnessing

private developer activity. Projects like the

EMMAR MGF's Commonwealth Games Village

near Mayur Vihar and Victoria Gardens by

M2K Developers in Model Town will be part of

the upcoming supply by the year 2011.

A lot of infrastructure initiatives are underway

across Delhi and will boost the demand and

catchment for various residential colonies.

Proximal locations will benefit from

development of the ongoing

Delhi Metro Project. The Commonwealth

Games, to be held in Delhi in 2010, will

benefit locations like Sarita Vihar, Jasola,

Friends Colony, New Friends Colony,

Mayur Vihar, Preet Vihar and I.P. Extension. In

east Delhi, work on the flyover at Anand Vihar

bus stand is also under way. The flyover will

not only ease traffic at the junction, but also

improve connectivity to east Delhi locations

like Dilshad Garden. Three flyovers are also

being constructed at Nelson Mandela Marg,

EXISTING

1. Chanakyapuri

2. Jor Bagh

3. Golf Links

4. Greater Kailash I & II

5. Defence Colony

6. Pritampura

7. Preet Vihar

8. Mayur Vihar

9. Friends Colony

10. Janakpuri

11. Dwarka

12. Vasant Kunj

13. Hauz Khas

14. Ghaziabad

Delhi & Ghaziabad

Distribution of Supply 2009-11

(in No. of units)

Figure 4

Noida - 7%

Greater Noida - 12%

Ghaziabad - 27%

Faridabad - 24%

Gurgaon - 29%

Delhi - 2%

100000

Figure 5

Estimated Supply 2009-11

Rao Tula Ram Marg, and near Munirka. This

network of flyovers on Outer Ring Road will

de-congest traffic in South Delhi.

The IT/ITES sector has been the most

important driver for the real estate sector in

Gurgaon, and has been supported by the

growth impetus from banking & finance,

automobile and strategic consulting firms.

Infrastructure initiatives planned as per the

new approved Master Plan 2021

areprompting developers to explore new

locations in Gurgaon for residential

development. Approximately 26,500 units,

equating to 58.23 mn.sq.ft. of fresh supply,

will be infused into the market till 2011.

Around two thirds of this supply will be

accounted for by 3 and 4-BHK units, thereby

reflecting the positive prognosis for premium

sector housing in Gurgaon despite the

property slump of the past year.

Gurgaon will have the maximum share of

about 29% of supply across the NCR by 2011.

Gurgaon

Within the NCR, Delhi continues to be the

most important residential zone. Locations

like Jor Bagh, Chanakyapuri, Golf Links,

Friends Colony, Defence Colony,

Greater Kailash I & II and Haus Khas are a few

of the most sought-after residential zones,

attracting higher premium in terms of

property prices. However, in recent times,

locations like Dwarka, Vasant Kunj, Janakpuri,

Vikaspuri, Rohini, Pritampura and

Mayur Vihar have been gaining importance.

Approximately 1,500 units, equating to

3.41 mn.sq.ft. of supply, are expected to

come up in Delhi by the end of 2011.

Q3 2009

residentialmarket

Market Review

Today Delhi, Ghaziabad, Faridabad, Noida

and Greater Noida form the core of the NCR.

Ghaziabad and Faridabad are predominantly

industrial towns, whereas economic activity

in Delhi, Gurgaon, Noida and Greater Noida is

driven by the IT/ITES, Automobile,

Telecommunications, Medicine & Pharma and

Banking and Finance sectors. In recent times

the NCR has witnessed a somewhat balanced

and widespread network of infrastructure

development that has further strengthened

the intra and inter transportation network of

the NCR. Construction of the 8-lane

Delhi Gurgaon Expressway and the 8-lane

Delhi Noida Direct Flyover has vastly

improved connectivity of Delhi with Gurgaon

and Noida respectively.

NATIONALCAPITALREGION(NCR)

This resulted in a rise in enquiries and

conversion rates, thereby gradually

stabilizing the residential market in the NCR.

The NCR market will witness approximately

92,000 units, equating to 160.16 mn.sq.ft. of

fresh supply of residential space. Out of the

total upcoming supply, 57% will be available

in the year 2011. This reflects the stalling of a

few commenced projects and the lack of

announced new projects over the last year

due to the residential market slump.

Current Scenario

This prominent development prompted

developers to explore peripheral locations of

Gurgaon and Noida for primarily residential

development. The partly operational and

rapidly growing network of the

Delhi Metro Project is also providing a growth

impetus to the NCR. An efficient

communication system within the region has

augmented the attractiveness of peripheral

areas which, due to cheap land cost are

relatively more affordable.

The middle of the year 2008 saw the first

impact of the recent global economic

slowdown on Indian real estate, especially

across NCR. Low liquidity levels and tight

credit conditions on the supply side, coupled

with job insecurity and low demand

sentiments on the consumer side, negatively

impacted the NCR residential market. The

consequent drop in demand led to a number

of announced projects being phased out and

postponed. To improve demand across the

NCR market, developers resorted to offering

lucrative benefits like discounted car parking

and club membership along with the

apartment. Schemes like payment of EMI on

and from possession were also offered as a

measure to surge demand. Larger sized

premium housing was being restructured into

affordable housing units. Such measures

were largely unsuccessful though, and

significant price correction occurred across

the NCR. Investors foreseeing further future

price corrections resorted to distress selling

of their properties which further worsened the

situation.

The Government of India, in a bid to counter

the economic slump, introduced two

economic stimulus packages. These

packages focused on increasing liquidity

within the economy and reducing the cost of

borrowing. Interest rates were lowered, there

was an increased focus on priority sector

lending and developers were aided by means

of debt restructuring. A major impetus to

consumer sentiments was the formation of

the stable congress regime at the general

assembly elections.

Two-thirds of this supply will come under the

3-BHK category, indicating that developers in

the region are optimistic about premium

segment demand once the residential market

picks up. Due to unavailability of larger land

parcels within Delhi, not much development

is visible in the region. Locations like

Model Town, Khyber Pass, Subhash Nagar

and Shivaji Marg are currently witnessing

private developer activity. Projects like the

EMMAR MGF's Commonwealth Games Village

near Mayur Vihar and Victoria Gardens by

M2K Developers in Model Town will be part of

the upcoming supply by the year 2011.

A lot of infrastructure initiatives are underway

across Delhi and will boost the demand and

catchment for various residential colonies.

Proximal locations will benefit from

development of the ongoing

Delhi Metro Project. The Commonwealth

Games, to be held in Delhi in 2010, will

benefit locations like Sarita Vihar, Jasola,

Friends Colony, New Friends Colony,

Mayur Vihar, Preet Vihar and I.P. Extension. In

east Delhi, work on the flyover at Anand Vihar

bus stand is also under way. The flyover will

not only ease traffic at the junction, but also

improve connectivity to east Delhi locations

like Dilshad Garden. Three flyovers are also

being constructed at Nelson Mandela Marg,

EXISTING

1. Chanakyapuri

2. Jor Bagh

3. Golf Links

4. Greater Kailash I & II

5. Defence Colony

6. Pritampura

7. Preet Vihar

8. Mayur Vihar

9. Friends Colony

10. Janakpuri

11. Dwarka

12. Vasant Kunj

13. Hauz Khas

14. Ghaziabad

Delhi & Ghaziabad

(in No. of units)

Figure 4

Noida - 7%

Greater Noida - 12%

Ghaziabad - 27%

Faridabad - 24%

Gurgaon - 29%

Delhi - 2%

100000

Figure 5

Rao Tula Ram Marg, and near Munirka. This

network of flyovers on Outer Ring Road will

de-congest traffic in South Delhi.

The IT/ITES sector has been the most

important driver for the real estate sector in

Gurgaon, and has been supported by the

growth impetus from banking & finance,

automobile and strategic consulting firms.

Infrastructure initiatives planned as per the

new approved Master Plan 2021

areprompting developers to explore new

locations in Gurgaon for residential

development. Approximately 26,500 units,

equating to 58.23 mn.sq.ft. of fresh supply,

will be infused into the market till 2011.

Around two thirds of this supply will be

accounted for by 3 and 4-BHK units, thereby

reflecting the positive prognosis for premium

sector housing in Gurgaon despite the

property slump of the past year.

Gurgaon will have the maximum share of

about 29% of supply across the NCR by 2011.

Gurgaon

Within the NCR, Delhi continues to be the

most important residential zone. Locations

like Jor Bagh, Chanakyapuri, Golf Links,

Friends Colony, Defence Colony,

Greater Kailash I & II and Haus Khas are a few

of the most sought-after residential zones,

attracting higher premium in terms of

property prices. However, in recent times,

locations like Dwarka, Vasant Kunj, Janakpuri,

Vikaspuri, Rohini, Pritampura and

Mayur Vihar have been gaining importance.

Approximately 1,500 units, equating to

3.41 mn.sq.ft. of supply, are expected to

come up in Delhi by the end of 2011.

Q3 2009

residentialmarket

A major portion of fresh supply in Gurgaon is

in locations like Golf Course Road,

Extended Golf Course Road, Sohna Road,

newly planned sectors on NH 8, Pataudi Road

and Sectors 37 C & D, 108 and 109. Projects

from prominent Grade A developers like DLF,

Unitech, Ramprastha Group, Raheja Group,

Ambience Developer & Infrastructure Pvt. Ltd.,

Tulip, Parsvnath, Emmar MGF, Bestech Group,

ERA Group and BPTP are part of the new

supply. This new supply will contain a mix of

EXISTING

1. Springfield Colony

2. New Sectors 21 C & D

3. Old Faridabad

4. Suraj Kund Road

Gurgaon Faridabad

UPCOMING

1. Sohna Road

2. Golf Course Road Extn.

3. Pataudi Road

EXISTING

1. MG Road

2. Sushant Lok

3. DLF Phase II & III

4. DLF Phase I

5. DLF Phase V

both high end premium and low cost

affordable homes. Projects like Caitriona by

Ambience Developer & Infrastructure Pvt. Ltd.

on NH 8, Magnolias and The Belaire by DLF,

Verandas by Salcon Group on

Golf Course Road, Palm Springs and

Palm Drive by EMMAR MGF and Garden II and

The Residences by Unitech Group are a few

premium projects under construction in

Gurgaon. Projects like the Atharva and

Vedaanta by Raheja Group, ILD Espire Green

by ILD Group and Eden Towers by the

Ramprastha Group are under construction in

the new planned sectors in Gurgaon.

A number of infrastructure initiatives across

Gurgaon are expected to bring to the fore

various locations in Gurgaon. The

Delhi-Mumbai Industrial Corridor (DMIC) is

one of the key infrastructure initiatives in the

new Master Plan. As per the Investment Plan

under DMIC, the Manesar Bawal investment

region is being developed in Phase I.

Gurgaon and Faridabad

Supported by this is the 135.6 kms long

Western Peripheral Expressway, the

Kundli Manesar Palwal (KMP) Expressway.

The new planned sectors on Pataudi Road will

benefit from the KMP Expressway. A number

of developers have launched their projects on

Pataudi Road anticipating a huge inflow of

housing demand. The Delhi Metro Project is

being extended into Gurgaon. It links Delhi to

Gurgaon through M.G. Road as well as from

Dwarka. Locations like the M.G. Road,

locations like Sectors 18 & 19 in

Old Faridabad and residential sectors on NH 2

and Suraj Kund Road have been the hub of

the real estate activity. However, in the past

couple of years, due to availability of larger

and cheaper land parcels, locations like the

Nehar Par region have seen extensive real

estate development. Sectors 70-89 here have

witnessed huge residential developments.

Till 2011, a total of about 22,000 units,

equating to 34.27 mn.sq.ft. of fresh

residential supply, are expected in Faridabad.

This supply equates to about 21% of the total

NCR supply during this period. 45% of this

supply will be accounted for by 3 BHK units

and 35% by2 BHK units.

Out of the total upcoming supply in Faridabad,

the Nehar Par area will witness maximum

development, followed by limited activity on

NH 2 and Suraj Kund Road. A number of

prominent developers are carrying out

construction activity in the Nehar Par region.

BPTP Group and OMAXE have launched

projects in Sectors 70-89.

1. Noida Sector 34

2. Noida Sector 50

3. Noida Sector 45

4. Noida Sector 128

5. Noida Sector 134

EXISTING

1. Noida Sector 44

2. Noida Sector 93A & B

3. Greater Noida

Sushant Lok III, Golf Course Road,

Extended Golf Course Road, Sohna Road and

new planned sectors falling between Sectors

69-78 and Sectors 99-112 will gain visibility.

Office and retail developments across

Sohna Road, Golf Course Road and

Extended Golf Course Road will further boost

housing demand in and around these regions.

Due to the upcoming commercial

development at IMT Manesar, residential

Sectors 76-95 will gain attractiveness. To

improve connectivity to the new sectors of

Gurgaon, namely Sectors 99-112, an over

bridge is under construction at the

Old Gurgaon railway station. The over bridge

will improve connectivity from

Sectors 3 & 3A to new sectors, especially

Sectors 104 and 105.

Faridabad pre-dominantly has been an

industrial township in the NCR. In the past

few years a number of malls have come up on

NH 2 and have re-defined the retail scenario

in Faridabad. Key developed residential

Faridabad

Noida and Greater Noida

UPCOMING

Approximately

26,500 units,

equating to

58.23 mn.sq.ft.

of fresh

supply, will be

infused into

the gurgaon

market till 2011

Q3 2009

residentialmarket

A major portion of fresh supply in Gurgaon is

in locations like Golf Course Road,

Extended Golf Course Road, Sohna Road,

newly planned sectors on NH 8, Pataudi Road

and Sectors 37 C & D, 108 and 109. Projects

from prominent Grade A developers like DLF,

Unitech, Ramprastha Group, Raheja Group,

Ambience Developer & Infrastructure Pvt. Ltd.,

Tulip, Parsvnath, Emmar MGF, Bestech Group,

ERA Group and BPTP are part of the new

supply. This new supply will contain a mix of

EXISTING

1. Springfield Colony

2. New Sectors 21 C & D

3. Old Faridabad

4. Suraj Kund Road

Gurgaon Faridabad

UPCOMING

1. Sohna Road

2. Golf Course Road Extn.

3. Pataudi Road

EXISTING

1. MG Road

2. Sushant Lok

3. DLF Phase II & III

4. DLF Phase I

5. DLF Phase V

both high end premium and low cost

affordable homes. Projects like Caitriona by

Ambience Developer & Infrastructure Pvt. Ltd.

on NH 8, Magnolias and The Belaire by DLF,

Verandas by Salcon Group on

Golf Course Road, Palm Springs and

Palm Drive by EMMAR MGF and Garden II and

The Residences by Unitech Group are a few

premium projects under construction in

Gurgaon. Projects like the Atharva and

Vedaanta by Raheja Group, ILD Espire Green

by ILD Group and Eden Towers by the

Ramprastha Group are under construction in

the new planned sectors in Gurgaon.

A number of infrastructure initiatives across

Gurgaon are expected to bring to the fore

various locations in Gurgaon. The

Delhi-Mumbai Industrial Corridor (DMIC) is

one of the key infrastructure initiatives in the

new Master Plan. As per the Investment Plan

under DMIC, the Manesar Bawal investment

region is being developed in Phase I.

Gurgaon and Faridabad

Supported by this is the 135.6 kms long

Western Peripheral Expressway, the

Kundli Manesar Palwal (KMP) Expressway.

The new planned sectors on Pataudi Road will

benefit from the KMP Expressway. A number

of developers have launched their projects on

Pataudi Road anticipating a huge inflow of

housing demand. The Delhi Metro Project is

being extended into Gurgaon. It links Delhi to

Gurgaon through M.G. Road as well as from

Dwarka. Locations like the M.G. Road,

locations like Sectors 18 & 19 in

Old Faridabad and residential sectors on NH 2

and Suraj Kund Road have been the hub of

the real estate activity. However, in the past

couple of years, due to availability of larger

and cheaper land parcels, locations like the

Nehar Par region have seen extensive real

estate development. Sectors 70-89 here have

witnessed huge residential developments.

Till 2011, a total of about 22,000 units,

equating to 34.27 mn.sq.ft. of fresh

residential supply, are expected in Faridabad.

This supply equates to about 21% of the total

NCR supply during this period. 45% of this

supply will be accounted for by 3 BHK units

and 35% by2 BHK units.

Out of the total upcoming supply in Faridabad,

the Nehar Par area will witness maximum

development, followed by limited activity on

NH 2 and Suraj Kund Road. A number of

prominent developers are carrying out

construction activity in the Nehar Par region.

BPTP Group and OMAXE have launched

projects in Sectors 70-89.

1. Noida Sector 34

2. Noida Sector 50

3. Noida Sector 45

4. Noida Sector 128

5. Noida Sector 134

EXISTING

1. Noida Sector 44

2. Noida Sector 93A & B

3. Greater Noida

Sushant Lok III, Golf Course Road,

Extended Golf Course Road, Sohna Road and

new planned sectors falling between Sectors

69-78 and Sectors 99-112 will gain visibility.

Office and retail developments across

Sohna Road, Golf Course Road and

Extended Golf Course Road will further boost

housing demand in and around these regions.

Due to the upcoming commercial

development at IMT Manesar, residential

Sectors 76-95 will gain attractiveness. To

improve connectivity to the new sectors of

Gurgaon, namely Sectors 99-112, an over

bridge is under construction at the

Old Gurgaon railway station. The over bridge

will improve connectivity from

Sectors 3 & 3A to new sectors, especially

Sectors 104 and 105.

Faridabad pre-dominantly has been an

industrial township in the NCR. In the past

few years a number of malls have come up on

NH 2 and have re-defined the retail scenario

in Faridabad. Key developed residential

Faridabad

UPCOMING

Approximately

26,500 units,

equating to

58.23 mn.sq.ft.

of fresh

supply, will be

infused into

the gurgaon

market till 2011

Q3 2009

residentialmarket

BPTP's Parklands is the largest project in the

region. Projects like New Heights and The

Forest by OMAXE Group, La-Vista and

KLJ Green by KLJ Group, ERA Landmark by

ERA Group, The Jade by Uppals and Chloris by

Mahindra Lifesapce are part of the upcoming

supply in Faridabad.

Various infrastructure projects in and around

Faridabad are under construction and will act

as a growth impetus for the market. Under the

JNNRUM Scheme, Faridabad has been

granted Rs.25 billion for urban infrastructure.

Construction of the Badarpur Flyover will help

in freeing the Badarpur border area from

congestion faced by travellers, thereby

facilitating smooth flow of traffic. This

development will make residential projects

on NH 2 an attractive option. Construction of

the Delhi Metro Project in Faridabad is

underway. The resultant improved

connectivity from Faridabad to CBD regions of

Delhi will also benefit the region. Developers

can foresee great potential for growth in the

Nehar Par area, hence maximum fresh supply

is planned in this region. Sectors 70-89 of the

Nehar Par region are in close proximity to the

Eastern Periphery Expressway, which

connects Ghaziabad, Noida, Faridabad and

Palwal, hence establishing it as a major

industrial corridor. Besides this, the

Haryana Urban Development Authority

(HUDA) is actively participating in

construction of sector roads within the

Nehar Par region (Sectors 70-89), which will

improve internal connectivity. As per the new

master plan, Sectors 70-74 are earmarked as

semi-commercial zones and Sector 79 is

earmarked as a complete commercial zone.

Development of these zones will attract a lot

of catchment for residential sectors in the

Nehar Par area. The Faridabad-Palwal belt is

to be developed as an industrial zone under

the Delhi Mumbai Industrial Corridor (DMIC)

project as a part of the Phase I development.

Ghaziabad, along with Faridabad, forms the

core of industrial townships across the NCR

market. Due to its proximity to Delhi and

Ghaziabad

Indirapuram, Vaishali and Vasundhara have

been the heart of group housing

development. A number of retail

developments around Indirapuram and the

region's close proximity to Noida Sector 62,

the emerging commercial hub, have led to

Indirapuram, Vaishali and Vasundhara

gaining in popularity.

Till 2011, Ghaziabad is expected to witness a

fresh inflow of about 25,000 units, equating

to 33.54 mn.sq.ft of residential space, spread

across locations like Indirapuram, Vaishali,

Vasundhara, Raj Nagar extension and

NH 24 Crossings Republic. 40% of this

supply will be accounted for by 3-BHK units

and 46% by 2-BHK units. Out of the total

supply expected by 2011, about 51% is

expected to be available in 2011 and about

32% in 2010. The total supply will comprise a

mix of affordable as well as premium projects.

Projects like the Exotica Elegance and

ATS Advantage in Indirapuram,

Express Greens and Park Sapphire in Vaishali

and Gardenia Green and Gardern Glamour in

Vasundhara are a few premium segment

projects in Ghaziabad.

Raheja Atlantis, Gurgaon

Due to availability of cheap land parcels on

NH 58, Raj Nagar Extension and

NH 24 Crossings Republic have been

explored by a number of developers for

affordable projects.

From a macro prospective, Ghaziabad will

witness a number of infrastructure

developments which will benefit the region

as a whole. The Delhi Metro Project has been

approved for extension in Ghaziabad, which

will improve its connectivity with various

locations across the NCR. The work on this

network is already underway. The project is to

be developed in three phases, connecting

various locations like Vaishali, Indirapuram

and Ghaziabad new bus stand to locations

like Rajiv Chowk and Mehrauli in Delhi. The

estimated travel time between Vaishali and

Indirapuram to Rajiv Chowk is about

20 minutes. On the Delhi-Ghaziabad border,

work on the Anand Vihar rail junction is being

carried out. This mega rail junction will be

larger than all other rail junctions across the

NCR, and hence, Ghaziabad will witness

increased rail mobility. This development will

improve the attractiveness of Ghaziabad as a

residential and industrial location. Locations

like Indirapuram, Vaishali and Vasundhara

also enjoy proximity to Noida’s Sector 62,

which is an upcoming commercial hub. A

multilateral flyover is under construction at

Gazipur Chowk, which is close to new zones

of Ghaziabad, namely Indirapuram, Vaishali

and Vasundhara. This internal development

will further strengthen connectivity of

Ghaziabad to Noida and East Delhi, hence

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

Raj Nagar Extension region. Due to its good

connectivity, NH 24 Crossing Republic has

the potential of establishing itself as a strong

residential corridor in the Ghaziabad market.

Noida is a well planned city, with ample work

opportunities available within the region.

Noida Sector 18 Market, the Centrestage Mall,

the Great India Place and a few other retail

malls add to Noida’s status as a

cosmopolitan location. Noida has witnessed

substantial real estate growth on account of

the IT/ITES sector growth. Due to limited

availability of larger land parcels in Noida,

group housing developments have been

restricted to newer locations in Sectors 44, 50,

51, 52, 62 and approved residential sectors on

the Noida-Greater Noida Expressway. Fresh

residential supply of 6,000 units, equating to

10.76 mn.sq.ft., are expected to come up in

Noida by the end of 2011. This forms about

7% of the total supply expected to enter the

NCR market by the end of 2011. 90% of this

expected supply will be evenly distributed

amongst 2, 3 and 4-BHK units.

Out of the total expected supply by 2011, a

major share is accounted for by premium

segment housing. Celeste Towers by

Assotech, Amrapali Sapphire by

Amrapali Group, Forest Spa and Grandwoods

by OMAXE Group and Mahagun Maple are a

few of the upcoming projects categorized

under premium housing. The first half of

2009 witnessed the launch of Jaypee Group's

Aman in Sector 151 and Unitech's Uni Homes

in Sector 117, both of which are categorized

under the affordable segment.

In terms of urban infrastructure planning,

Noida has been an exemplary town. Aspects

like connectivity, power supply and water

supply have been the prime focus of

development authorities. The DND Flyway and

Taj Expressway are major transportation

nodes. The Noida Greater Noida Expressway

has facilitated several group housing

developments and has prompted developers

to explore new residential sectors along the

expressway.

Bestech Park View, Gurgaon

Unit-Wise Distribution of Supply 2009-11

Figure 6

Studio - 0%

1 BHK - 1%

2 BHK - 30%

2 ½ BHK - 2%

3 BHK - 43%

3 ½ BHK - 7%

4 BHK - 15%

Till 2011

Ghaziabad is

expected to

witness a

fresh inflow

of about

25,000 units,

equating to

33.54 mn.sq.ft

of residential

Till 2011, a

total of

about 22,000

units,

equating to

34.27 mn.sq.ft.

of fresh

residential

supply, is

expected in

FaridabadNoida, many private developers have

explored the region for group housing

developments. Mohan Nagar, Raj Nagar and

Kavi Nagar are old residential locations,

where residential formats are predominantly

builder floors and plotted developments.

Locations like Ramprastha Colony,

Q3 2009

residentialmarket

BPTP's Parklands is the largest project in the

region. Projects like New Heights and The

Forest by OMAXE Group, La-Vista and

KLJ Green by KLJ Group, ERA Landmark by

ERA Group, The Jade by Uppals and Chloris by

Mahindra Lifesapce are part of the upcoming

supply in Faridabad.

Various infrastructure projects in and around

Faridabad are under construction and will act

as a growth impetus for the market. Under the

JNNRUM Scheme, Faridabad has been

granted Rs.25 billion for urban infrastructure.

Construction of the Badarpur Flyover will help

in freeing the Badarpur border area from

congestion faced by travellers, thereby

facilitating smooth flow of traffic. This

development will make residential projects

on NH 2 an attractive option. Construction of

the Delhi Metro Project in Faridabad is

underway. The resultant improved

connectivity from Faridabad to CBD regions of

Delhi will also benefit the region. Developers

can foresee great potential for growth in the

Nehar Par area, hence maximum fresh supply

is planned in this region. Sectors 70-89 of the

Nehar Par region are in close proximity to the

Eastern Periphery Expressway, which

connects Ghaziabad, Noida, Faridabad and

Palwal, hence establishing it as a major

industrial corridor. Besides this, the

Haryana Urban Development Authority

(HUDA) is actively participating in

construction of sector roads within the

Nehar Par region (Sectors 70-89), which will

improve internal connectivity. As per the new

master plan, Sectors 70-74 are earmarked as

semi-commercial zones and Sector 79 is

earmarked as a complete commercial zone.

Development of these zones will attract a lot

of catchment for residential sectors in the

Nehar Par area. The Faridabad-Palwal belt is

to be developed as an industrial zone under

the Delhi Mumbai Industrial Corridor (DMIC)

project as a part of the Phase I development.

Ghaziabad, along with Faridabad, forms the

core of industrial townships across the NCR

market. Due to its proximity to Delhi and

Ghaziabad

Indirapuram, Vaishali and Vasundhara have

been the heart of group housing

development. A number of retail

developments around Indirapuram and the

region's close proximity to Noida Sector 62,

the emerging commercial hub, have led to

Indirapuram, Vaishali and Vasundhara

gaining in popularity.

Till 2011, Ghaziabad is expected to witness a

fresh inflow of about 25,000 units, equating

to 33.54 mn.sq.ft of residential space, spread

across locations like Indirapuram, Vaishali,

Vasundhara, Raj Nagar extension and

NH 24 Crossings Republic. 40% of this

supply will be accounted for by 3-BHK units

and 46% by 2-BHK units. Out of the total

supply expected by 2011, about 51% is

expected to be available in 2011 and about

32% in 2010. The total supply will comprise a

mix of affordable as well as premium projects.

Projects like the Exotica Elegance and

ATS Advantage in Indirapuram,

Express Greens and Park Sapphire in Vaishali

and Gardenia Green and Gardern Glamour in

Vasundhara are a few premium segment

projects in Ghaziabad.

Raheja Atlantis, Gurgaon

Due to availability of cheap land parcels on

NH 58, Raj Nagar Extension and

NH 24 Crossings Republic have been

explored by a number of developers for

affordable projects.

From a macro prospective, Ghaziabad will

witness a number of infrastructure

developments which will benefit the region

as a whole. The Delhi Metro Project has been

approved for extension in Ghaziabad, which

will improve its connectivity with various

locations across the NCR. The work on this

network is already underway. The project is to

be developed in three phases, connecting

various locations like Vaishali, Indirapuram

and Ghaziabad new bus stand to locations

like Rajiv Chowk and Mehrauli in Delhi. The

estimated travel time between Vaishali and

Indirapuram to Rajiv Chowk is about

20 minutes. On the Delhi-Ghaziabad border,

work on the Anand Vihar rail junction is being

carried out. This mega rail junction will be

larger than all other rail junctions across the

NCR, and hence, Ghaziabad will witness

increased rail mobility. This development will

improve the attractiveness of Ghaziabad as a

residential and industrial location. Locations

like Indirapuram, Vaishali and Vasundhara

also enjoy proximity to Noida’s Sector 62,

which is an upcoming commercial hub. A

multilateral flyover is under construction at

Gazipur Chowk, which is close to new zones

of Ghaziabad, namely Indirapuram, Vaishali

and Vasundhara. This internal development

will further strengthen connectivity of

Ghaziabad to Noida and East Delhi, hence

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

Raj Nagar Extension region. Due to its good

connectivity, NH 24 Crossing Republic has

the potential of establishing itself as a strong

residential corridor in the Ghaziabad market.

Noida is a well planned city, with ample work

opportunities available within the region.

Noida Sector 18 Market, the Centrestage Mall,

the Great India Place and a few other retail

malls add to Noida’s status as a

cosmopolitan location. Noida has witnessed

substantial real estate growth on account of

the IT/ITES sector growth. Due to limited

availability of larger land parcels in Noida,

group housing developments have been

restricted to newer locations in Sectors 44, 50,

51, 52, 62 and approved residential sectors on

the Noida-Greater Noida Expressway. Fresh

residential supply of 6,000 units, equating to

10.76 mn.sq.ft., are expected to come up in

Noida by the end of 2011. This forms about

7% of the total supply expected to enter the

NCR market by the end of 2011. 90% of this

expected supply will be evenly distributed

amongst 2, 3 and 4-BHK units.

Out of the total expected supply by 2011, a

major share is accounted for by premium

segment housing. Celeste Towers by

Assotech, Amrapali Sapphire by

Amrapali Group, Forest Spa and Grandwoods

by OMAXE Group and Mahagun Maple are a

few of the upcoming projects categorized

under premium housing. The first half of

2009 witnessed the launch of Jaypee Group's

Aman in Sector 151 and Unitech's Uni Homes

in Sector 117, both of which are categorized

under the affordable segment.

In terms of urban infrastructure planning,

Noida has been an exemplary town. Aspects

like connectivity, power supply and water

supply have been the prime focus of

development authorities. The DND Flyway and

Taj Expressway are major transportation

nodes. The Noida Greater Noida Expressway

has facilitated several group housing

developments and has prompted developers

to explore new residential sectors along the

expressway.

Bestech Park View, Gurgaon

Figure 6

Studio - 0%

1 BHK - 1%

2 BHK - 30%

2 ½ BHK - 2%

3 BHK - 43%

3 ½ BHK - 7%

4 BHK - 15%

Till 2011

Ghaziabad is

expected to

witness a

fresh inflow

of about

25,000 units,

equating to

33.54 mn.sq.ft

of residential

Till 2011, a

total of

about 22,000

units,

equating to

34.27 mn.sq.ft.

of fresh

residential

supply, is

expected in

FaridabadNoida, many private developers have

explored the region for group housing

developments. Mohan Nagar, Raj Nagar and

Kavi Nagar are old residential locations,

where residential formats are predominantly

builder floors and plotted developments.

Locations like Ramprastha Colony,

Q3 2009

residentialmarket

As connectivity concerns have been

addressed, residential sectors along the

expressway are expected to gain greater

visibility. Besides, commercial developments

on the expressway will aid more real estate

activity. Work on an under pass at

Rajnigandha Chowk is also underway. As this

junction is an important entry node to Noida,

the development will improve mobility within

Noida.

Greater Noida is the extension of the

development format of Noida. The region has

been identified as a future institutional and

commercial zone in the NCR. Availability of

larger land parcels has facilitated developers

to explore the region for extensive group

housing development. Till 2011,

Greater Noida is expected to witness a fresh

supply of about 11,200 units, equating to

20.62 mn.sq.ft. of residential space. This is

about 12 % of the total supply planned across

the NCR. Approximately 58% of the total

supply expected in Greater Noida over the

next two years will enter the market in 2011,

and half of the total expected supply will be

accounted for by 3-BHK units.

The city's potential for development is being

tapped by most Grade A developers across

the NCR. Projects by Jaypee Group,

OMAXE Group, Unitech, Supertech, Eldeco,

Niti Shree Group and Parsvnath constitute a

major share of the upcoming supply. The

Jaypee Greens, a golf course project by

Jaypee Group, E-Homes by

Designer Arch Infrastructure, Panorama and

Palacia by Parsvnath Group, Palm Green by

Omaxe and Horizon and Cascades by

Unitech Group are a few key upcoming

projects in the region.

The infrastructure planning of Greater Noida

is similar to that of Noida. Road connectivity

aspects, provision of water and power

facilities have been the areas of focus in the

development plan. As per the New Master

Plan, about 13% of the total land available in

Greater Noida

Greater Noida is to be used for development

of transportation facilities. Greater Noida

enjoys connectivity advantages as it is linked

to Delhi by the Taj Expressway. According to

the New Master Plan, Greater Noida will be

connected to NH 24 by a 60 meter wide road,

which will facilitate inter region trade. A

130 meter wide road links the north and

south zones of Greater Noida. The road

passes through the ZITA, Pi, Rio and Sigma

Sectors, improving their connectivity with all

the locations within Greater Noida and

thereby making them more attractive for

residential development. There are

designated commercial and institutional

sectors like the Knowledge Park I- IV and

Ecotech Zones. Besides the commercial

zones, a number of retail developments are

also making the region attractive. Malls like

the Ansal Plaza, OMAXE Arcade and

NRI City Centre are proving to be emerging

shopping destinations in the region. As

sectors Alpha, Beta, Pi and Sigma are closer

to these commercial and retail developments,

they are preferred residential locations.

Due to the economic slowdown, locations

across Delhi have witnessed price correction

in the past six to eight months. Post Central

Assembly elections, the markets have been

Capital & Rental Profile

stable in terms of residential prices.

Locations like Jor Bagh, Chanakyapuri and

Golf Links command highest capital values

across Delhi. Average value of a property in

these locations is approximately

Rs.38,000-45,600/sq.ft. South Delhi

locations like Friends Colony,

New Friends Colony and Defence Colony

currently command average capital values in

the range of Rs.11,500-19,500/sq.ft. A notable

decline in capital rates in the Delhi

micro-markets has been observed in Greater

Kailash I & II, where current rates represent a

20% decline from Q1 2008 peak levels. The

micro-markets of Dwarka and Rohini

command average capital values in the range

of Rs.3,800-6,000/sq.ft and

Rs.3,000-6,000/sq.ft.

Rentals for 2 BHK apartments in Jor Bagh and

Golf Links range from a minimum of

Rs.150,000 to a maximum of Rs.250,000 per

month. Rentals for 2 BHK apartments in

Chanakyapuri range from Rs.150,000 to

Rs.200,000 per month. South Delhi locations

like New Friends Colony and Friends Colony

command rentals in the range of Rs.35,000 to

Rs.65,000 per month for 2 BHK units. Based

on the aforementioned capital and rental

values across Delhi, the average annual

rental yield for the residential segment within

Delhi is about 3.65%.

Gurgaon

In the last couple of years Gurgaon has been

dominated mainly by premium segment

housing. Due to the global economic

slowdown and a decline in demand from

investors to end users, developers in

Gurgaon have shifted focus to affordable

projects. Locations like DLF Phase I-IV and

Sushant Lok I-III command capital values in

the range of Rs.2,625-7,250/sq.ft, and

locations in Golf Course Road command

average capital values in the range of

Rs.4,200-7,000/sq.ft. . The initial asking rate

for a few upcoming projects by DLF and

Salcon Group on Golf Course Road is in the

range of Rs. 9,000-10,000 /sq.ft. The

Caitriona, located on NH-8, is priced as high

as Rs.12,500/sq.ft. Locations like

Extended Golf Course Road and Sohna Road

are emerging as reasonably priced locations,

with capital values ranging between

Rs.2,600-4,550/sq.ft.

Due to thriving commercial activity in

Gurgaon, certain locations within this market

attract strong rental housing demand.

Rentals for 2 BHK units are in the range of

Rs.13,000- 20,000 per month in

DLF Phase I-IV and Rs.21,000-28,000 per

month on M.G. Road. 2 BHK apartments on

Golf Course Road command rental values in

the range of Rs.17,000-21,000 per month. The

same unit types in locations like Sushant Lok,

command lower rentals in the range of

Rs.10,000-15,000 per month. Due to its

strong rentals and relatively low capital

values, Gurgaon exhibits a relatively strong

annual rental yield of 4.7%.

Capital values in Faridabad range from

Rs. 1,725-6,000/sq.ft. Residential zones in

Old Faridabad and on Suraj Kunj Road

command capital values in the range of

Rs.3,250-6,000/sq.ft. Residential apartments

Faridabad

on NH 2, due to their advantageous location,

command capital values ranging from

in Sectors 70-89 are affordable and relatively

lesser priced as compared to other locations

in Faridabad. The Nehar Par area commands

capital values in the range of

Rs. 1,725-2,400 /sq.ft.

2 BHK rentals in Sectors 18 & 19 in

Old Faridabad range from

Rs.6,500-8,000 per month. The same unit

types in posh sectors like Sector 21 C & D

command rental values in the range of

Rs.10,000-15,000 per month. New sectors like

Sectors 36 to 45 are relatively less expensive

in terms of rental values and rentals for 2 BHK

units in these locations range from

Rs.6,000-8,000 per month. Suraj Kund Road

links Faridabad to Delhi and Gurgaon and

commands premium rentals for 2 BHK units

ranging from Rs.10,000- 15,000 per month,.

Low rental values in locations like

Old Faridabad and few sectors like

Sector 36-45 in Faridabad drive a low average

Capital values in Old Ghaziabad locations

like Raj Nagar and Mohan Nagar are in the

range of Rs.2,000-6,000/sq.ft. Indirapuram,

Vaishali and Vasundhara command capital

values ranging from Rs.2,200-3,000/sq.ft.

Affordable locations like Crossings Republic

and Raj Nagar Extension command capital

values in the range of Rs.1,700-2,400/sq.ft.

Ghaziabad

DLF The Aralias, Gurgaon

in Greater

Kailash I & II,

current

capital rates

represent a

20% decline

from Q1 2008

peak levels

350000

Figure 7

Residential Rental Values (2 BHK)

300000

250000

200000

150000

100000

Minimum Maximum

NCR Peak to Trough to Sep'09

Trough Change Sep'09 Change (Rs./sq.ft.)

Chanakyapuri -2% 0% 43,240

Jor Bagh 0% 0% 43,200

Golf Links 0% 0% 41,560

Greater Kailash I & II -20% 1% 13,000

Ghaziabad (Vaishali, Indirapuram -21% 0% 2,391

Vasundhara, Raj Nagar Extension)

Gurgaon -26% 5% 4,683

Noida -19% 0% 4,450

Greater Noida -27% 0% 2,150

Faridabad -10% 0% 3,628

Table 1

Average Residential Capital Value Trend

Q3 2009

residentialmarket

As connectivity concerns have been

addressed, residential sectors along the

expressway are expected to gain greater

visibility. Besides, commercial developments

on the expressway will aid more real estate

activity. Work on an under pass at

Rajnigandha Chowk is also underway. As this

junction is an important entry node to Noida,

the development will improve mobility within

Noida.

Greater Noida is the extension of the

development format of Noida. The region has

been identified as a future institutional and

commercial zone in the NCR. Availability of

larger land parcels has facilitated developers

to explore the region for extensive group

housing development. Till 2011,

Greater Noida is expected to witness a fresh

supply of about 11,200 units, equating to

20.62 mn.sq.ft. of residential space. This is

about 12 % of the total supply planned across

the NCR. Approximately 58% of the total

supply expected in Greater Noida over the

next two years will enter the market in 2011,

and half of the total expected supply will be

accounted for by 3-BHK units.

The city's potential for development is being

tapped by most Grade A developers across

the NCR. Projects by Jaypee Group,

OMAXE Group, Unitech, Supertech, Eldeco,

Niti Shree Group and Parsvnath constitute a

major share of the upcoming supply. The

Jaypee Greens, a golf course project by

Jaypee Group, E-Homes by

Designer Arch Infrastructure, Panorama and

Palacia by Parsvnath Group, Palm Green by

Omaxe and Horizon and Cascades by

Unitech Group are a few key upcoming

projects in the region.

The infrastructure planning of Greater Noida

is similar to that of Noida. Road connectivity

aspects, provision of water and power

facilities have been the areas of focus in the

development plan. As per the New Master

Plan, about 13% of the total land available in

Greater Noida

Greater Noida is to be used for development

of transportation facilities. Greater Noida

enjoys connectivity advantages as it is linked

to Delhi by the Taj Expressway. According to

the New Master Plan, Greater Noida will be

connected to NH 24 by a 60 meter wide road,

which will facilitate inter region trade. A

130 meter wide road links the north and

south zones of Greater Noida. The road

passes through the ZITA, Pi, Rio and Sigma

Sectors, improving their connectivity with all

the locations within Greater Noida and

thereby making them more attractive for

residential development. There are

designated commercial and institutional

sectors like the Knowledge Park I- IV and

Ecotech Zones. Besides the commercial

zones, a number of retail developments are

also making the region attractive. Malls like

the Ansal Plaza, OMAXE Arcade and

NRI City Centre are proving to be emerging

shopping destinations in the region. As

sectors Alpha, Beta, Pi and Sigma are closer

to these commercial and retail developments,

they are preferred residential locations.

Due to the economic slowdown, locations

across Delhi have witnessed price correction

in the past six to eight months. Post Central

Assembly elections, the markets have been

stable in terms of residential prices.

Locations like Jor Bagh, Chanakyapuri and

Golf Links command highest capital values

across Delhi. Average value of a property in

these locations is approximately

Rs.38,000-45,600/sq.ft. South Delhi

locations like Friends Colony,

New Friends Colony and Defence Colony

currently command average capital values in

the range of Rs.11,500-19,500/sq.ft. A notable

decline in capital rates in the Delhi

micro-markets has been observed in Greater

Kailash I & II, where current rates represent a

20% decline from Q1 2008 peak levels. The

micro-markets of Dwarka and Rohini

command average capital values in the range

of Rs.3,800-6,000/sq.ft and

Rs.3,000-6,000/sq.ft.

Rentals for 2 BHK apartments in Jor Bagh and

Golf Links range from a minimum of

Rs.150,000 to a maximum of Rs.250,000 per

month. Rentals for 2 BHK apartments in

Chanakyapuri range from Rs.150,000 to

Rs.200,000 per month. South Delhi locations

like New Friends Colony and Friends Colony

command rentals in the range of Rs.35,000 to

Rs.65,000 per month for 2 BHK units. Based

on the aforementioned capital and rental

values across Delhi, the average annual

rental yield for the residential segment within

Delhi is about 3.65%.

Gurgaon

In the last couple of years Gurgaon has been

dominated mainly by premium segment

housing. Due to the global economic

slowdown and a decline in demand from

investors to end users, developers in

Gurgaon have shifted focus to affordable

projects. Locations like DLF Phase I-IV and

Sushant Lok I-III command capital values in

the range of Rs.2,625-7,250/sq.ft, and

locations in Golf Course Road command

average capital values in the range of

Rs.4,200-7,000/sq.ft. . The initial asking rate

for a few upcoming projects by DLF and

Salcon Group on Golf Course Road is in the

range of Rs. 9,000-10,000 /sq.ft. The

Caitriona, located on NH-8, is priced as high

as Rs.12,500/sq.ft. Locations like

are emerging as reasonably priced locations,

with capital values ranging between

Rs.2,600-4,550/sq.ft.

Due to thriving commercial activity in

Gurgaon, certain locations within this market

attract strong rental housing demand.

Rentals for 2 BHK units are in the range of

Rs.13,000- 20,000 per month in

DLF Phase I-IV and Rs.21,000-28,000 per

month on M.G. Road. 2 BHK apartments on

Golf Course Road command rental values in

the range of Rs.17,000-21,000 per month. The

same unit types in locations like Sushant Lok,

command lower rentals in the range of

Rs.10,000-15,000 per month. Due to its

strong rentals and relatively low capital

values, Gurgaon exhibits a relatively strong

Capital values in Faridabad range from

Rs. 1,725-6,000/sq.ft. Residential zones in

Old Faridabad and on Suraj Kunj Road

command capital values in the range of

Faridabad

on NH 2, due to their advantageous location,

command capital values ranging from

in Sectors 70-89 are affordable and relatively

lesser priced as compared to other locations

in Faridabad. The Nehar Par area commands

capital values in the range of

Rs. 1,725-2,400 /sq.ft.

2 BHK rentals in Sectors 18 & 19 in

Old Faridabad range from

types in posh sectors like Sector 21 C & D

command rental values in the range of

Rs.10,000-15,000 per month. New sectors like

Sectors 36 to 45 are relatively less expensive

in terms of rental values and rentals for 2 BHK

units in these locations range from

Rs.6,000-8,000 per month. Suraj Kund Road

links Faridabad to Delhi and Gurgaon and

commands premium rentals for 2 BHK units

ranging from Rs.10,000- 15,000 per month,.

Low rental values in locations like

Old Faridabad and few sectors like

Sector 36-45 in Faridabad drive a low average

Capital values in Old Ghaziabad locations

like Raj Nagar and Mohan Nagar are in the

range of Rs.2,000-6,000/sq.ft. Indirapuram,

Vaishali and Vasundhara command capital

values ranging from Rs.2,200-3,000/sq.ft.

Affordable locations like Crossings Republic

and Raj Nagar Extension command capital

values in the range of Rs.1,700-2,400/sq.ft.

Ghaziabad

DLF The Aralias, Gurgaon

in Greater

Kailash I & II,

current

capital rates

represent a

20% decline

from Q1 2008

peak levels

350000

Figure 7

300000

250000

200000

150000

100000

Minimum Maximum

NCR Peak to Trough to Sep'09

Chanakyapuri -2% 0% 43,240

Jor Bagh 0% 0% 43,200

Golf Links 0% 0% 41,560

Greater Kailash I & II -20% 1% 13,000

Ghaziabad (Vaishali, Indirapuram -21% 0% 2,391

Vasundhara, Raj Nagar Extension)

Gurgaon -26% 5% 4,683

Noida -19% 0% 4,450

Greater Noida -27% 0% 2,150

Faridabad -10% 0% 3,628

Table 1

Q3 2009

residentialmarket

In the recent past, several projects

commanding low capital values have been

launched in emerging locations like

NH 24 Crossings Republic and

NH 58 Raj Nagar Extension.

Indirapuram, Vaishali and Vasundhara are

the most sought after residential rental

locations in Ghaziabad. Rental Values for

2 BHK units in Indirapuram range from

types in Vaishali and Vasundhara command

somewhat cheaper rentals in the range of

Rs.6,500-9,500 per month. The average

annual rental yield for properties in these

locations is around 4.1%.

As a major share of group housing

developments across Noida are in the

premium segment, property prices till the

recent past have been quite high. Due to the

recent launch of a few affordable housing

projects, capital values in Noida have gone

below Rs.3,000/sq.ft. As of today, locations

across Noida command capital values in the

range of Rs.2,800-6,000/sq.ft. Due to the

economic downturn, demand for housing

dried out in Noida. Apart from weakening of

demand, the launch of affordable projects

across various sectors along the

Noida-Greater Noida Expressway contributed

to this price correction.

Rental values in Noida vary according to the

location as well as property type. 2 BHK

apartments in locations like Sector 44, 50, 51,

52 and 62 command rental values ranging

from Rs.12,000-18,000 per month. Rental

rates for 2 BHK apartments on the expressway

are in the range of Rs.8,500- 14,000 per

month. The average annual rental yield for

residential development in Noida is about 4%.

In terms of capital values, Greater Noida is

more affordable as compared to Noida. The

market commands average capital values in

the range of Rs.1,900-3,000/sq.ft. depending

on the location of the project and the grade

that the developer falls into. Currently,

Jaypee Group's Golf Course project is the

most expensive under construction project in

the region and has apartments in the range of

Rs.5,400-9,000 /sq.ft.

Rentals for 2 BHK apartments in the

Greater Noida market range from

Rs.6,000- 10,000 per month. The same unit

types command rental values ranging

between Rs.6,000-8,500 per month in

Sectors Alpha and Beta, and Rs.8,000-10,000

per month in Sectors Phi and Chi. Sector Pi,

where substantial construction activity is

visible, fetches 2 BHK rentals in the range of

Rs.7,000-10,000 per month. Due to

Greater Noida's rental market being relatively

immature, the average annual rental yield in

this market is relatively low at 3.2%.

On a macro level, the Central Government is

consistently focusing on providing fiscal

incentives to ensure a stable liquidity level

within the economy. Measures are being

taken continually so as to ensure creation of

demand. In the month of July, the RBI further

reduced the reverse repo rate by about

Greater Noida

City Outlook

275 basis points, bringing it down to as low

as 3.25%. This step was been taken to ensure

higher liquidity levels and enhance the

lending capacity of banks. On a more micro

level, within the NCR, funds have been

allocated and are being utilised for physical

infrastructure developments. Issues

pertaining to connectivity, water and power

supply and social security are being

addressed by the regional development

authorities on a priority basis. Infrastructure

projects planned in Gurgaon, Noida,

Greater Noida, Faridabad and Ghaziabad are

expected to provide substantial and

sustainable growth to the residential

segments in these locations.

Developers across the NCR market have

identified a sustainable demand for

affordable housing projects. Newer sectors

across the region are being explored to create

products that are designed to serve end-user

demand. Residential zones in new planned

sectors of Gurgaon (76-113), the Nehar Par

area of Faridabad, NH 24- Crossings Republic

in Ghaziabad, residential sectors on the

Noida-Greater Noida Expressway and

designated residential pockets in

Greater Noida are already witnessing

affordable housing construction. These

residential zones are foreseen as prime

growth zones, provided the regional

authorities meet the physical infrastructure

requirements. Even Noida and Gurgaon,

hitherto prime residential locations, are

witnessing affordable housing development.

This affordable housing trend can be

attributed to the real estate sector slump,

which forced developers to restructure

projects to cater to lower income end-user

demand. 34 Pavilion, developed by

Supertech Group in Noida Sector 34, is an

example of such a restructured project. The

potential success of the affordable housing

push could change the profile of prices and

supply that has been witnessed across the

NCR market in recent years.

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.

Table 2

NCR Major Infrastructure Developments

The residential segment in the NCR has

shown some signs of recovery in the last

quarter. Market enquiries have picked up and

are yielding conversions, as is evidenced by a

drastic increase in home loan disbursements

during the last three months. Although

demand is picking up, its pace is not as fast

as anticipated. End-users are looking for

affordable options. Hence, developers should

focus on meeting end-user demand and

creating affordable products rather than

maximizing profits. The public sector will

have a huge role to play in the development

of affordable housing. Developers will need

to be provided with tax subsidies and on the

demand front, meaningful interest rate

subsidies will have to be provided.

Given the general stability of markets around

Delhi and the minimal supply expected in this

part of the NCR until 2011, it is reasonable to

expect residential prices in Delhi to remain

relatively stable or even increase if demand in

the region significantly increases due to

better internal connectivity. In Gurgaon, since

the start of Q2 2009, prices have been very

stable and in some cases are reflecting a

slight increase, although the latter is more

project and developer specific rather than an

overall trend. Given that Gurgaon will account

for over a third of the supply expected across

the NCR until the end of 2011, it is unlikely

that noteworthy price increases will be

witnessed in this market down the road.

Over the last 3-4 months, most micro-markets

across the NCR have shown price stability,

which reflects a period of consolidation

following the storm of the realty slump. Prices

appear to have bottomed out and although

price declines are largely in the past, it is too

early to project price increases in a particular

market. Since a large portion of the upcoming

supply in NCR over the next 3 years will hit

the market in 2011, one would expect price

volatility to start around that period as well.

Several infrastructure initiatives around the

NCR are expected to boost residential options

through augmenting connectivity and de-

congesting traffic within certain locations. If

consumers are attracted to hitherto small

markets around the NCR due to better

infrastructure, the subsequent de-congestion

of demand in the region could alleviate the

upward pressure on prices in locations like

Gurgaon and Noida, which are becoming

increasingly attractive residential

Due to

declining

demand,

Ghaziabad has

witnessed a

correction of

about 24%

since peak

levels in 2008

destinations and are thus vulnerable to

exaggerated price appreciation.

Given the

general

stability of

markets

around Delhi

and the

minimal supply

expected,

prices in delhi

are expected

to remain

relatively

stable

Q3 2009

residentialmarket

In the recent past, several projects

commanding low capital values have been

launched in emerging locations like

NH 24 Crossings Republic and

NH 58 Raj Nagar Extension.

Indirapuram, Vaishali and Vasundhara are

the most sought after residential rental

locations in Ghaziabad. Rental Values for

2 BHK units in Indirapuram range from

types in Vaishali and Vasundhara command

somewhat cheaper rentals in the range of

Rs.6,500-9,500 per month. The average

annual rental yield for properties in these

locations is around 4.1%.

As a major share of group housing

developments across Noida are in the

premium segment, property prices till the

recent past have been quite high. Due to the

recent launch of a few affordable housing

projects, capital values in Noida have gone

below Rs.3,000/sq.ft. As of today, locations

across Noida command capital values in the

range of Rs.2,800-6,000/sq.ft. Due to the

economic downturn, demand for housing

dried out in Noida. Apart from weakening of

demand, the launch of affordable projects

across various sectors along the

Noida-Greater Noida Expressway contributed

to this price correction.

Rental values in Noida vary according to the

location as well as property type. 2 BHK

apartments in locations like Sector 44, 50, 51,

52 and 62 command rental values ranging

from Rs.12,000-18,000 per month. Rental

rates for 2 BHK apartments on the expressway

are in the range of Rs.8,500- 14,000 per

month. The average annual rental yield for

residential development in Noida is about 4%.

In terms of capital values, Greater Noida is

more affordable as compared to Noida. The

market commands average capital values in

the range of Rs.1,900-3,000/sq.ft. depending

on the location of the project and the grade

that the developer falls into. Currently,

Jaypee Group's Golf Course project is the

most expensive under construction project in

the region and has apartments in the range of

Rs.5,400-9,000 /sq.ft.

Rentals for 2 BHK apartments in the

Greater Noida market range from

Rs.6,000- 10,000 per month. The same unit

types command rental values ranging

between Rs.6,000-8,500 per month in

Sectors Alpha and Beta, and Rs.8,000-10,000

per month in Sectors Phi and Chi. Sector Pi,

where substantial construction activity is

visible, fetches 2 BHK rentals in the range of

Rs.7,000-10,000 per month. Due to

Greater Noida's rental market being relatively

immature, the average annual rental yield in

this market is relatively low at 3.2%.

On a macro level, the Central Government is

consistently focusing on providing fiscal

incentives to ensure a stable liquidity level

within the economy. Measures are being

taken continually so as to ensure creation of

demand. In the month of July, the RBI further

reduced the reverse repo rate by about

Greater Noida

City Outlook

275 basis points, bringing it down to as low

as 3.25%. This step was been taken to ensure

higher liquidity levels and enhance the

lending capacity of banks. On a more micro

level, within the NCR, funds have been

allocated and are being utilised for physical

infrastructure developments. Issues

pertaining to connectivity, water and power

supply and social security are being

addressed by the regional development

authorities on a priority basis. Infrastructure

projects planned in Gurgaon, Noida,

Greater Noida, Faridabad and Ghaziabad are

expected to provide substantial and

sustainable growth to the residential

segments in these locations.

Developers across the NCR market have

identified a sustainable demand for

affordable housing projects. Newer sectors

across the region are being explored to create

products that are designed to serve end-user

demand. Residential zones in new planned

sectors of Gurgaon (76-113), the Nehar Par

area of Faridabad, NH 24- Crossings Republic

in Ghaziabad, residential sectors on the

Noida-Greater Noida Expressway and

designated residential pockets in

Greater Noida are already witnessing

affordable housing construction. These

residential zones are foreseen as prime

growth zones, provided the regional

authorities meet the physical infrastructure

requirements. Even Noida and Gurgaon,

hitherto prime residential locations, are

witnessing affordable housing development.

This affordable housing trend can be

attributed to the real estate sector slump,

which forced developers to restructure

projects to cater to lower income end-user

demand. 34 Pavilion, developed by

Supertech Group in Noida Sector 34, is an

example of such a restructured project. The

potential success of the affordable housing

push could change the profile of prices and

supply that has been witnessed across the

NCR market in recent years.

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.

Table 2

NCR Major Infrastructure Developments

The residential segment in the NCR has

shown some signs of recovery in the last

quarter. Market enquiries have picked up and

are yielding conversions, as is evidenced by a

drastic increase in home loan disbursements

during the last three months. Although

demand is picking up, its pace is not as fast

as anticipated. End-users are looking for

affordable options. Hence, developers should

focus on meeting end-user demand and

creating affordable products rather than

maximizing profits. The public sector will

have a huge role to play in the development

of affordable housing. Developers will need

to be provided with tax subsidies and on the

demand front, meaningful interest rate

subsidies will have to be provided.

Given the general stability of markets around

Delhi and the minimal supply expected in this

part of the NCR until 2011, it is reasonable to

expect residential prices in Delhi to remain

relatively stable or even increase if demand in

the region significantly increases due to

better internal connectivity. In Gurgaon, since

the start of Q2 2009, prices have been very

stable and in some cases are reflecting a

slight increase, although the latter is more

project and developer specific rather than an

overall trend. Given that Gurgaon will account

for over a third of the supply expected across

the NCR until the end of 2011, it is unlikely

that noteworthy price increases will be

witnessed in this market down the road.

Over the last 3-4 months, most micro-markets

across the NCR have shown price stability,

which reflects a period of consolidation

following the storm of the realty slump. Prices

appear to have bottomed out and although

price declines are largely in the past, it is too

early to project price increases in a particular

market. Since a large portion of the upcoming

supply in NCR over the next 3 years will hit

the market in 2011, one would expect price

volatility to start around that period as well.

Several infrastructure initiatives around the

NCR are expected to boost residential options

through augmenting connectivity and de-

congesting traffic within certain locations. If

consumers are attracted to hitherto small

markets around the NCR due to better

infrastructure, the subsequent de-congestion

of demand in the region could alleviate the

upward pressure on prices in locations like

Gurgaon and Noida, which are becoming

increasingly attractive residential

Due to

declining

demand,

Ghaziabad has

witnessed a

correction of

about 24%

since peak

levels in 2008

destinations and are thus vulnerable to

exaggerated price appreciation.

Given the

general

stability of

markets

around Delhi

and the

minimal supply

expected,

prices in delhi

are expected

to remain

relatively

stable

Q3 2009

residentialmarket

Mumbai

Market Review

The Mumbai market has witnessed a

transition in the profile of residential

developments over the past two years. This

can be attributed to the fluctuations and

uncertainty caused by the impact of the

global slowdown on the financial capital of

the country.

Home to the Reserve Bank of India, the

National Stock Exchange and the Bombay

Stock Exchange in addition to numerous

multinational companies entering the Indian

market, this city has seen a change in

demographic profiles and thus a shift in

residential trends. In the past few years,

factors such as double income families,

higher disposable income and easy

availability of home loans have encouraged

buyers to aspire for a higher level of luxury,

be it in the heart of Mumbai or the outskirts.

This correspondingly led to a shift in the type

of apartments being constructed and 2 and

3-BHKs with additional amenities became the

focus of most developers.

While the city has grown northwards to the

Western Suburbs, Extended Suburban and

Central Suburbs, the micro-market of Navi

Mumbai to the east of Mumbai has seen a

substantial level of development.

In Q1 and Q2 2008, the fluctuating stock

market as well as high interest rates affected

sentiments of both developers and buyers.

The auction of two residential plots and one

commercial plot in BKC in March 2008 was

one of the few important signs that depicted

changing market dynamics. While the

commercial plot received no bids, the

residential plots were auctioned at a much

higher price than predicted. However, post

the closure of Q1 2008, winning bidders

expressed their inability to pay for the land

and requested an extension till the end of the

year. In Q2 2008, both the smaller as well as

some of the larger developers began facing

problems in funding. Although developers

held on to prices that were commanded

earlier, evidence of them feeling the pinch

included delayed possession and freebies

that were offered to prospective buyers.

During Q3 2008 builders were optimistic that

the festive season would spark residential

demand. However, the market failed to pick

up. High interest rates coupled with inflated

prices and the anticipation of further

reduction in prices resulted in people

delaying plans of buying a home. With a view

to lessen the burden faced by buyers as well

as to encourage construction of affordable

housing for the masses, public sector banks

offered various packages with lowered

interest rates for loans upto Rs.2 million.

Simultaneously, the increasing cost of

construction, high interest rates and the

inability of developers to reduce prices in

prime areas due to high land costs resulted in

a change in marketing strategy. A number of

developers started reconfiguring larger

housing units to small ones in order to sell

their current projects, while others began

developing affordable housing projects in

order to attract the middle and lower income

customers.

Besides affordable housing projects that

were located outside the city or in the

suburbs, 'semi-luxury' apartments were also

introduced in the market. These units offered

a reduced area but with modern amenities

and facilities. Also, the semi-luxury units

were located in easily accessible areas.

By the end of Q4 2008, Mumbai's residential

market had witnessed a noticeable correction

in prices across all types of residential

developments, and consequently new units

types emerged. While Studio apartments and

1-BHK apartments had become virtually non-

existent in the last few years, developers

revised plans of constructing larger 2 and

3BHKs in favour of smaller units across the

city. This was expected to target end-users

rather than speculative investors, as was the

trend earlier. Both the government as well as

private players set out to develop projects

emphasising affordability for all income

categories. During the last few months of

2008, various attempts were made to

stimulate residential demand in the city.

In order to reduce the demand-supply

mismatch among the masses the

Maharashtra Housing and Area Development

Authority (MHADA) sold applications for

affordable housing units in various pockets

of the city for individuals under all income

categories. In addition to this, the Mumbai

Metropolitan Regional Development Authority

(MMRDA) announced its tie up with a private

developer to build around 6,000 tenements

in Karjat. This Public Private Partnership (PPP)

model was implemented under the rental

housing project of the authority with a view to

help decongest the city over the next five

years. The state government also issued a

notification clearing a Floor Space Index (FSI)

of 2.5 for housing schemes targeted at the

Economically Weaker Sections (EWS), Low

Income Groups (LIG) and Middle Income

Groups (MIG). The permissible FSI for land

developed for the HIG segment remains as

per Development Control Regulations. The

aforementioned factors have combined to

usher in a different developmental trend

within the city.

As access to fresh funding in 2009 remained

constricted, the construction timelines of

most developers fell behind schedule. Many

projects have been stalled, and some

developers have changed the type of units

being constructed and are even cancelling

plans of developing projects in the near

future. During the first half of the year, there

continued to be lower demand for apartments

in comparison to what was witnessed in the

past two years. Despite developer incentives

such as reduced down payment, rebates on

stamp duty, customised apartments and free

parking slots, sales remained muted. Most

buyers started driving a hard bargain as they

were aware that developers were not in a

position to hold their prices for too long.

Currently, the Mumbai residential market can

be divided into 6 micro-markets, namely the

Island city, the Western Suburbs, the Central

Suburbs, the Extended Suburbs, Thane and

Current Scenario

Navi Mumbai. In all these markets will

witness an infusion of approximately 80.61

mn.sq.ft, comprising around 72,906 units of

new residential space by the end of 2011. Out

of the total upcoming supply, 46% will be

available in 2010. This can be attributed to

the delay caused to most projects that were

estimated to be completed in 2008 and 2009.

This micro-market can be divided into two

sub-markets i.e. South Mumbai which

includes locations like Malabar Hill,

Carmichael Road, Napeansea Road, Cuffe

Parade, Colaba and Altamount Road and

Central Mumbai locations like Lower Parel,

Worli, Prabhadevi and Mahalaxmi.

South Mumbai locations are considered to be

the prime markets. While there is virtually no

space for large scale developments in South

Mumbai, one or two projects that fall under

this micro-market are extremely high end

residential developments. Most of these

properties command a premium price due to

the stunning sea-view that they offer, their

close proximity to the traditional CBD and

off-CBD locations of Nariman Point, Fort,

Ballard Estate and Churchgate and the fact

that the supporting infrastructure is excellent.

The Island City

Unlike South Mumbai which is one of the

oldest residential micro-markets for Grade A

developments, the central Mumbai locations

have come to the fore only in the last decade.

Most of these developments have sprung up

on erstwhile mill lands.

The Island city developments largely consist

of 2,3 and 4-BHK apartments with average

sizes of 1,300 sq.ft., 2,300 sq.ft. and 3,700

sq.ft. respectively, and demand for these

units emanates primarily from NRIs and HNIs.

The 2 and 3BHKs comprise 42 % and 35% of

the market share respectively.

(in No. of units)

Figure 8

Island City - 6%

Western Suburbs - 37%

Extended Suburbs - 7%

Central Suburbs -13%

Thane - 19%

Navi Mumbai - 18%

Some notable developments include Mittal

Grandeur by Mittal Builders at Cuffe Parade,

Vivarea by K Raheja Corp. at Mahalaxmi and

RNA Mirage by RNA Corp. at Worli. In all

around 8.24 mn.sq.ft. of new residential

space is estimated to be added to the Island

City over the next three years and will

contribute around 4,732 units. Factors like

the Bandra-Worli Sea Link are also expected

to stimulate growth of these corridors due to

the improved connectivity to the Suburban

Business Districts of BKC and Andheri.

Figure 9

2000016785

In total

around 72,906

units,

equating to

80.61 mn.sq.ft.

of new

residential

space, will be

infused in the

mumbai market

by end-2011

by end-2008

developers

revised plans

constructing

larger 2 and

3 BHKs in

favour of

smaller units

across the

Q3 2009

residentialmarket

Mumbai

Market Review

The Mumbai market has witnessed a

transition in the profile of residential

developments over the past two years. This

can be attributed to the fluctuations and

uncertainty caused by the impact of the

global slowdown on the financial capital of

the country.

Home to the Reserve Bank of India, the

National Stock Exchange and the Bombay

Stock Exchange in addition to numerous

multinational companies entering the Indian

market, this city has seen a change in

demographic profiles and thus a shift in

residential trends. In the past few years,

factors such as double income families,

higher disposable income and easy

availability of home loans have encouraged

buyers to aspire for a higher level of luxury,

be it in the heart of Mumbai or the outskirts.

This correspondingly led to a shift in the type

of apartments being constructed and 2 and

3-BHKs with additional amenities became the

focus of most developers.

While the city has grown northwards to the

Western Suburbs, Extended Suburban and

Central Suburbs, the micro-market of Navi

Mumbai to the east of Mumbai has seen a

substantial level of development.

In Q1 and Q2 2008, the fluctuating stock

market as well as high interest rates affected

sentiments of both developers and buyers.

The auction of two residential plots and one

commercial plot in BKC in March 2008 was

one of the few important signs that depicted

changing market dynamics. While the

commercial plot received no bids, the

residential plots were auctioned at a much

higher price than predicted. However, post

the closure of Q1 2008, winning bidders

expressed their inability to pay for the land

and requested an extension till the end of the

year. In Q2 2008, both the smaller as well as

some of the larger developers began facing

problems in funding. Although developers

held on to prices that were commanded

earlier, evidence of them feeling the pinch

included delayed possession and freebies

that were offered to prospective buyers.

During Q3 2008 builders were optimistic that

the festive season would spark residential

demand. However, the market failed to pick

up. High interest rates coupled with inflated

prices and the anticipation of further

reduction in prices resulted in people

delaying plans of buying a home. With a view

to lessen the burden faced by buyers as well

as to encourage construction of affordable

housing for the masses, public sector banks

offered various packages with lowered

interest rates for loans upto Rs.2 million.

Simultaneously, the increasing cost of

construction, high interest rates and the

inability of developers to reduce prices in

prime areas due to high land costs resulted in

a change in marketing strategy. A number of

developers started reconfiguring larger

housing units to small ones in order to sell

their current projects, while others began

developing affordable housing projects in

order to attract the middle and lower income

customers.

Besides affordable housing projects that

were located outside the city or in the

suburbs, 'semi-luxury' apartments were also

introduced in the market. These units offered

a reduced area but with modern amenities

and facilities. Also, the semi-luxury units

were located in easily accessible areas.

By the end of Q4 2008, Mumbai's residential

market had witnessed a noticeable correction

in prices across all types of residential

developments, and consequently new units

types emerged. While Studio apartments and

1-BHK apartments had become virtually non-

existent in the last few years, developers

revised plans of constructing larger 2 and

3BHKs in favour of smaller units across the

city. This was expected to target end-users

rather than speculative investors, as was the

trend earlier. Both the government as well as

private players set out to develop projects

emphasising affordability for all income

categories. During the last few months of

2008, various attempts were made to

stimulate residential demand in the city.

In order to reduce the demand-supply

mismatch among the masses the

Maharashtra Housing and Area Development

Authority (MHADA) sold applications for

affordable housing units in various pockets

of the city for individuals under all income

categories. In addition to this, the Mumbai

Metropolitan Regional Development Authority

(MMRDA) announced its tie up with a private

developer to build around 6,000 tenements

in Karjat. This Public Private Partnership (PPP)

model was implemented under the rental

housing project of the authority with a view to

help decongest the city over the next five

years. The state government also issued a

notification clearing a Floor Space Index (FSI)

of 2.5 for housing schemes targeted at the

Groups (MIG). The permissible FSI for land

developed for the HIG segment remains as

per Development Control Regulations. The

aforementioned factors have combined to

usher in a different developmental trend

within the city.

As access to fresh funding in 2009 remained

constricted, the construction timelines of

most developers fell behind schedule. Many

projects have been stalled, and some

developers have changed the type of units

being constructed and are even cancelling

plans of developing projects in the near

future. During the first half of the year, there

continued to be lower demand for apartments

in comparison to what was witnessed in the

past two years. Despite developer incentives

such as reduced down payment, rebates on

stamp duty, customised apartments and free

parking slots, sales remained muted. Most

buyers started driving a hard bargain as they

were aware that developers were not in a

position to hold their prices for too long.

Currently, the Mumbai residential market can

be divided into 6 micro-markets, namely the

Island city, the Western Suburbs, the Central

Suburbs, the Extended Suburbs, Thane and

Current Scenario

Navi Mumbai. In all these markets will

witness an infusion of approximately 80.61

mn.sq.ft, comprising around 72,906 units of

new residential space by the end of 2011. Out

of the total upcoming supply, 46% will be

available in 2010. This can be attributed to

the delay caused to most projects that were

estimated to be completed in 2008 and 2009.

This micro-market can be divided into two

sub-markets i.e. South Mumbai which

includes locations like Malabar Hill,

Carmichael Road, Napeansea Road, Cuffe

Parade, Colaba and Altamount Road and

Central Mumbai locations like Lower Parel,

Worli, Prabhadevi and Mahalaxmi.

South Mumbai locations are considered to be

the prime markets. While there is virtually no

space for large scale developments in South

Mumbai, one or two projects that fall under

this micro-market are extremely high end

residential developments. Most of these

properties command a premium price due to

the stunning sea-view that they offer, their

close proximity to the traditional CBD and

off-CBD locations of Nariman Point, Fort,

Ballard Estate and Churchgate and the fact

that the supporting infrastructure is excellent.

The Island City

Unlike South Mumbai which is one of the

oldest residential micro-markets for Grade A

developments, the central Mumbai locations

have come to the fore only in the last decade.

Most of these developments have sprung up

on erstwhile mill lands.

The Island city developments largely consist

of 2,3 and 4-BHK apartments with average

sizes of 1,300 sq.ft., 2,300 sq.ft. and 3,700

sq.ft. respectively, and demand for these

units emanates primarily from NRIs and HNIs.

The 2 and 3BHKs comprise 42 % and 35% of

the market share respectively.

(in No. of units)

Figure 8

Island City - 6%

Western Suburbs - 37%

Extended Suburbs - 7%

Central Suburbs -13%

Thane - 19%

Navi Mumbai - 18%

Some notable developments include Mittal

Grandeur by Mittal Builders at Cuffe Parade,

Vivarea by K Raheja Corp. at Mahalaxmi and

RNA Mirage by RNA Corp. at Worli. In all

around 8.24 mn.sq.ft. of new residential

space is estimated to be added to the Island

City over the next three years and will

contribute around 4,732 units. Factors like

the Bandra-Worli Sea Link are also expected

to stimulate growth of these corridors due to

the improved connectivity to the Suburban

Business Districts of BKC and Andheri.

Figure 9

2000016785

In total

around 72,906

units,

equating to

80.61 mn.sq.ft.

of new

residential

space, will be

infused in the

mumbai market

by end-2011

by end-2008

developers

revised plans

constructing

larger 2 and

3 BHKs in

favour of

smaller units

across the

Q3 2009

residentialmarket

Western Suburbs

Over the years, residential demand for the

western suburban locations of Bandra, Khar,

Santacruz, Juhu, Andheri, Vile Parle,

Jogeshwari, Goregon, Malad, Borivali,

Kandivali and Mira Road has increased. This

can be attributed to the fresh supply

available and comparatively low prices

commanded in comparison to those of the

Island City. In addition to this, the shift of

many multi-national companies to the SBD of

BKC, Andheri-Kurla Road and Malad has

resulted in many employees preferring

accommodation here.

Western Suburban locations can be broadly

classified under two categories. Locations

such as Bandra, Khar, Santacruz and Juhu are

considered to be prime locations. Most of the

residential supply here consists largely of

redevelopment projects located on inner

lanes. These projects comprise 2,3 and

4-BHK apartments contributing 33%, 43%

and 20% of the total upcoming supply in

these areas. Andheri is another location that

has gained prominence as a prime residential

market over the past few years. This belt is

generally preferred by the higher income

group and upper middle income group.

Further north of Andheri, locations like

Goregaon, Malad, Kandivali and Mira Road

have a significant amount of construction

underway. Due to the availability of larger

land parcels and cheaper land cost, rates in

these locations are relatively lower and are

hence favoured by the middle class. Projects

here largely consist of 2,2.5 and 3-BHK

configurations. Owing to improved

infrastructure facilities on the whole, capital

values commanded on the western side of

these locations are relatively higher than

those on the eastern side. However, over the

past few years various infrastructure

initiatives have improved connectivity to and

within the eastern parts thus increasing the

level of interest in these locations. The

western suburbs are expected to infuse

maximum supply in the Mumbai micro-market

by the end of 2011 contributing a supply of

30.82 mn.sq.ft.

This would add a total of 26,611 units.

Prominent developments will include JVPD1

by Mayfair Housing in Vile Parle (W) , Runwal

Symphony by Runwal Group in Santacruz (E)

and Samarpan Royale by Kanakia

Construction Pvt. Ltd in Borivali (E). The

recent opening of the Bandra-Worli Sea Link

has led to better connectivity between the

Central Business Districts of South Mumbai

and the Western Suburbs and decreased

travel time to various locations. This will

enable further growth along this corridor.

Locations such as Naigaon, Vasai and Virar

on the far flung north western belt are

considered extended suburbs of the city.

These locations have been gaining

prominence among the middle class and

lower middle class. The availability of huge

and cheap land parcels has encouraged

construction of large townships in these

areas. A combination of these affordable

rates and ample open green spaces within

these complexes have been 'pull' factors for

Extended Suburbs

most home buyers. However, while

connectivity does exist, it is not as developed

as that in the western suburban locations and

there is a considerable amount of time spent

in travel. This coupled with factors such as

frequent power cuts and irregular water

supply has therefore proved to be a large

deterrent. Currently, to circumvent these

problems most of the newer developments

have made provisions to provide 24-hour

water supply as well as generator backups

within the complexes.

A noticeable trend across projects in these

locations is the higher availability of 1-BHKs

as well. Totally 4,950 number of units will be

added to this micro-market over the next

three years, contributing around 3.4 mn.sq.ft.

of new residential space. These will consist of

mainly 1 BHK and 2 BHK apartments which

contribute 33% and 47% with an average size

of 580 sq.ft and 843 sq.ft. respectively. Mittal

Enclave by Mittal Builders in Naigoan (E) and

Balaji Complex by Lotus Group in Virar (W) are

two important projects that are under-

construction in this micro-market.

South Mumbai

UPCOMING

1. Lower Parel

2. Vashi

3. Kharghar

4. Panvel / New Panvel

5. Khoparkhairane

6. Nerul

7. Kamote

8. Ghatkopar (W)

EXISTING

1. Malabar Hill

2. Carmichael Road

3. Napeansea Road

4. Cuffe Parade

5. Colaba

6. Worli / Prabhadevi

7. Mahalaxmi

8. Bandra (W)

9. Khar (W)

10. Santacruz (W)

11. Juhu

North Mumbai

EXISTING

1. Andheri (W)

UPCOMING

1. Andheri (E)

2. Goregaon (E) & (W)

3. Kandivali (W)

4. Kandivali (E)

5. Malad (W)

6. Malad (E)

7. Borivali (W)

8. Borivali (E)

9. Mira Road

10. Vasai / Naigaon / Virar

11. Powai

12. Bhandup

13. Mulund

14. Thane

15. Airoli

Q3 2009

residentialmarket

Western Suburbs

Over the years, residential demand for the

western suburban locations of Bandra, Khar,

Santacruz, Juhu, Andheri, Vile Parle,

Jogeshwari, Goregon, Malad, Borivali,

Kandivali and Mira Road has increased. This

can be attributed to the fresh supply

available and comparatively low prices

commanded in comparison to those of the

Island City. In addition to this, the shift of

many multi-national companies to the SBD of

BKC, Andheri-Kurla Road and Malad has

resulted in many employees preferring

accommodation here.

Western Suburban locations can be broadly

classified under two categories. Locations

such as Bandra, Khar, Santacruz and Juhu are

considered to be prime locations. Most of the

residential supply here consists largely of

redevelopment projects located on inner

lanes. These projects comprise 2,3 and

4-BHK apartments contributing 33%, 43%

and 20% of the total upcoming supply in

these areas. Andheri is another location that

has gained prominence as a prime residential

market over the past few years. This belt is

generally preferred by the higher income

group and upper middle income group.

Further north of Andheri, locations like

Goregaon, Malad, Kandivali and Mira Road

have a significant amount of construction

underway. Due to the availability of larger

land parcels and cheaper land cost, rates in

these locations are relatively lower and are

hence favoured by the middle class. Projects

here largely consist of 2,2.5 and 3-BHK

configurations. Owing to improved

infrastructure facilities on the whole, capital

values commanded on the western side of

these locations are relatively higher than

those on the eastern side. However, over the

past few years various infrastructure

initiatives have improved connectivity to and

within the eastern parts thus increasing the

level of interest in these locations. The

western suburbs are expected to infuse

maximum supply in the Mumbai micro-market

by the end of 2011 contributing a supply of

30.82 mn.sq.ft.

This would add a total of 26,611 units.

Prominent developments will include JVPD1

by Mayfair Housing in Vile Parle (W) , Runwal

Symphony by Runwal Group in Santacruz (E)

and Samarpan Royale by Kanakia

Construction Pvt. Ltd in Borivali (E). The

recent opening of the Bandra-Worli Sea Link

has led to better connectivity between the

Central Business Districts of South Mumbai

and the Western Suburbs and decreased

travel time to various locations. This will

enable further growth along this corridor.

Locations such as Naigaon, Vasai and Virar

on the far flung north western belt are

considered extended suburbs of the city.

These locations have been gaining

prominence among the middle class and

lower middle class. The availability of huge

and cheap land parcels has encouraged

construction of large townships in these

areas. A combination of these affordable

rates and ample open green spaces within

these complexes have been 'pull' factors for

Extended Suburbs

most home buyers. However, while

connectivity does exist, it is not as developed

as that in the western suburban locations and

there is a considerable amount of time spent

in travel. This coupled with factors such as

frequent power cuts and irregular water

supply has therefore proved to be a large

deterrent. Currently, to circumvent these

problems most of the newer developments

have made provisions to provide 24-hour

water supply as well as generator backups

within the complexes.

A noticeable trend across projects in these

locations is the higher availability of 1-BHKs

as well. Totally 4,950 number of units will be

added to this micro-market over the next

three years, contributing around 3.4 mn.sq.ft.

of new residential space. These will consist of

mainly 1 BHK and 2 BHK apartments which

contribute 33% and 47% with an average size

of 580 sq.ft and 843 sq.ft. respectively. Mittal

Enclave by Mittal Builders in Naigoan (E) and

Balaji Complex by Lotus Group in Virar (W) are

two important projects that are under-

construction in this micro-market.

South Mumbai

UPCOMING

1. Lower Parel

2. Vashi

3. Kharghar

4. Panvel / New Panvel

5. Khoparkhairane

6. Nerul

7. Kamote

8. Ghatkopar (W)

EXISTING

1. Malabar Hill

2. Carmichael Road

3. Napeansea Road

4. Cuffe Parade

5. Colaba

6. Worli / Prabhadevi

7. Mahalaxmi

8. Bandra (W)

9. Khar (W)

10. Santacruz (W)

11. Juhu

North Mumbai

EXISTING

1. Andheri (W)

UPCOMING

1. Andheri (E)

2. Goregaon (E) & (W)

3. Kandivali (W)

4. Kandivali (E)

5. Malad (W)

6. Malad (E)

7. Borivali (W)

8. Borivali (E)

9. Mira Road

10. Vasai / Naigaon / Virar

11. Powai

12. Bhandup

13. Mulund

14. Thane

15. Airoli

Q3 2009

residentialmarket

Home-Lake Lucerene by Supreme Universal in

Powai. Approximately 11.16 mn sq.ft.is

expected to be added to this micro-market by

end of 2011 adding a total of around 9,408

units. Infrastructure initiatives like the Metro-

Rail Project, the Mumbai Mono-Rail Project

and the Santacruz-Chembur Sea Link are

expected to lead to further developments

along this corridor, with locations like Wadala,

Chembur and Ghatkopar experiencing a

higher interest level.

Thane has witnessed extensive large-scale

developments over the last few years. This is

primarily due to the availability of larger land

parcels that have been freed by the closure

and relocation of many industries. Its

proximity to Mumbai, as well as improving

infrastructure, such as its connectivity to the

Western Suburbs via the Thane Gorbunder

Road have also been factors instrumental in

propelling growth in this micro-market. Most

developments here include high-rises in self

sustained townships which have led to its

emergence as a new residential market for

the middle segment.

Majority of the developments here consist of

1, 2 and 3 BHKs with an average size of 613

sq.ft., 952 sq.ft. and 1,380 sq.ft. respectively.

Prominent among them are Hiranandani

Meadows-Amanda & Amanda B by

Hiranandani, Ackruti Greenwoods by Ackruti

and Siddhachal VI by Kalpataru. Over the

next three years around 12.94 mn.sq.ft. of

new residential space comprising

approximately 13,820 number of units are

expected to be added to this micro-market.

This micro-market has grown extensively over

the last few years with significant

developments having taken place in the last

three years. Vashi, Kharghar, Airoli and Nerul

are few important locations that have

witnessed maximum developments in Navi-

Mumbai. Vashi was one of the first few

markets to come into the limelight due to its

Navi Mumbai

proximity to the Mumbai-Pune Express way as

well as connectivity to Mumbai via the Vashi

Bridge. This also encouraged the growth of

various commercial and retail developments

that occurred simultaneously. The

establishment of Vashi in this micro-market

led to the subsequent development of other

pockets as well. These included the locations

of Kharghar and Nerul with concentrated

developments along the Palm Beach Marg.

The Palm Beach stretch extends from Vashi to

Belapur, and runs parallel to the Thane Creek.

Most of these developments also offer an

unrestricted view of the same. As a result,

values in these locations have appreciated

significantly during the boom period

experienced in the last few years. This factor

coupled with various other developments and

infrastructure initiatives has also led to areas

such as Airoli, Ghansoli, Sanpada and Panvel

gaining prominence.

Most developments here include 2 BHKs

contributing 67% to the total units entering

this micro-market.

Figure 10

Studio - 1%

1 BHK - 11%

1 ½ BHK - 2%

2 BHK - 48%

2 ½ BHK - 10%

3 BHK - 23%

3 ½ BHK - 1%

4 BHK - 3%

5 BHK / Penthouses - 1%

In all, these locations are estimated to infuse

approximately 14 mn.sq.ft. and a total of

13,385 units by the end of 2011. One of the

most notable constructions includes Ellora

Castle by Ellora Group in CBD Belapur which

is considered to be the most high-end project

in this micro-market. It would comprise a

5-BHK apartment on each floor and the total

cost of each flat would soar over Rs.10 million.

Over the next few years various infrastructure

developments like the Mumbai-Monorail

Project as well as the proposed construction

of a new international airport in the Kopar-

Panvel area are expected to have a positive

impact on the transformation of the Navi-

Mumbai micro-market.

The Mumbai residential capitial values have

witnessed a wide range of fluctuations in the

commanded prices since 2008. During Q1

2008, prime locations of South Mumbai,

Worli, Bandra as well as Central Mumbai saw

a stabilisation of prices as well as a marginal

drop in a few areas. Simultaneously, other

locations such as the Goregaon-Borivali

stretch, Vashi, Mulund, Sion and Chembur

continued to observe an appreciation of

prices. In Q2 2008, builders across all

micro-markets started hiking prices once

again. However, while they stepped-up their

prices, they also started including freebies in

an effort to maintain commanded prices.

Despite these efforts, most developers

succumbed to the economic pressure and in

Central Suburbs

Over the last few years, due to various

commercial developments on LBS Marg as

well as Powai, central suburban locations

have been witnessing heightened residential

construction activity as well as demand.

Factors such as widening of LBS Marg,

construction of the Eastern Express Highway

and flyovers on this major artery have

resulted in the transformation of a

neighbourhood with less prospects to that of

a favourable one. Locations in this

micro-market include Sion, Wadala, Chembur,

Powai, Mulund, etc. These markets are

preferred not only by the middle class group

but also by investors due to the level of

appreciation in capital values witnessed

especially in Powai and Mulund.

Most of the residential projects here

comprise 2BHKs apartments which account

for 38% of the total upcoming units in the

Central Suburbs. A few notable projects

include Lodha Imperia by Lodha Group in

Bhandup (W) and Nirmal Galaxy- Polaris by

Nirmal Lifestyle in Mulund (W) and Lake

Q3 2008, rates across the board decreased

by 2-15%. The Goregaon to Borivali stretch

and Thane remained an exception to this. Q4

2008 brought no respite to these negative

sentiments. While prices in prime locations

such as South Mumbai, Worli and Bandra

stabilised, other locations saw a further drop

varying from 5-30% where the maximum

decrease occurred in the Goregaon-Borivali

stretch, Ghatkopar (E), Mulund as well as

some Central Mumbai locations.

Q1 2009 continued to see downward

spiralling prices, however by Q2 2009, most

markets started to stabilise with Bandra

displaying signs of a mild recovery. By Q3

2009, all the micro-markets have shown an

increase in prices with prime locations

displaying maximum recovery. Currently,

residential rental yields in Mumbai range

between 3-6%. South Mumbai, Worli and

Bandra have a rental yield around 6%.

Rentals for 2 and 3-BHKs in South Mumbai

range from a minimum of Rs.925,000 to a

maximum of Rs.450,000 per month. Rentals

for 2 and 3-BHKs in Bandra range from

Rs.150,000-420,000 per month.

Figure 11

350000

200000

300000

250000

150000

100000

Minimum Maximum

The western

suburbs are

expected to

infuse

maximum

supply in the

Mumbai micro-

market by the

end of 2011

contributing a

supply of 30.82

mn.sq.ft.

Mumbai Peak to Trough to Sep'09

South Mumbai (Grade A) -7% 15% 57,500

South Mumbai (Grade B) -5% 35% 35,000

Worli (Grade A) -11% 21% 35,000

Worli ( Grade B) -10% 11% 25,000

Bandra (W) -21% 18% 22,500

Andheri (W) -22% 22% 11,000

Ghatkopar (E) -33% 0% 5,500

Thane -24% 16% 5,500

Vashi -31% 11% 5,000

Mulund -26% 10% 5,500

Powai -19% 15% 9,750

Bhandup -22% 3% 5,000

Sion / Chembur -33% 7% 7,500

Central Mumbai -42% 20% 10,500

(Parel, Sewri, Byculla)

Table 3

apartments

contribute

67% to the

total no. of

units entering

the navi

mumbai micro-

markets

Q3 2009

residentialmarket

Home-Lake Lucerene by Supreme Universal in

Powai. Approximately 11.16 mn sq.ft.is

expected to be added to this micro-market by

end of 2011 adding a total of around 9,408

units. Infrastructure initiatives like the Metro-

Rail Project, the Mumbai Mono-Rail Project

and the Santacruz-Chembur Sea Link are

expected to lead to further developments

along this corridor, with locations like Wadala,

Chembur and Ghatkopar experiencing a

higher interest level.

Thane has witnessed extensive large-scale

developments over the last few years. This is

primarily due to the availability of larger land

parcels that have been freed by the closure

and relocation of many industries. Its

proximity to Mumbai, as well as improving

infrastructure, such as its connectivity to the

Western Suburbs via the Thane Gorbunder

Road have also been factors instrumental in

propelling growth in this micro-market. Most

developments here include high-rises in self

sustained townships which have led to its

emergence as a new residential market for

the middle segment.

Majority of the developments here consist of

1, 2 and 3 BHKs with an average size of 613

sq.ft., 952 sq.ft. and 1,380 sq.ft. respectively.

Prominent among them are Hiranandani

Meadows-Amanda & Amanda B by

Hiranandani, Ackruti Greenwoods by Ackruti

and Siddhachal VI by Kalpataru. Over the

next three years around 12.94 mn.sq.ft. of

new residential space comprising

approximately 13,820 number of units are

expected to be added to this micro-market.

This micro-market has grown extensively over

the last few years with significant

developments having taken place in the last

three years. Vashi, Kharghar, Airoli and Nerul

are few important locations that have

witnessed maximum developments in Navi-

Mumbai. Vashi was one of the first few

markets to come into the limelight due to its

Navi Mumbai

proximity to the Mumbai-Pune Express way as

well as connectivity to Mumbai via the Vashi

Bridge. This also encouraged the growth of

various commercial and retail developments

that occurred simultaneously. The

establishment of Vashi in this micro-market

led to the subsequent development of other

pockets as well. These included the locations

of Kharghar and Nerul with concentrated

developments along the Palm Beach Marg.

The Palm Beach stretch extends from Vashi to

Belapur, and runs parallel to the Thane Creek.

Most of these developments also offer an

unrestricted view of the same. As a result,

values in these locations have appreciated

significantly during the boom period

experienced in the last few years. This factor

coupled with various other developments and

infrastructure initiatives has also led to areas

such as Airoli, Ghansoli, Sanpada and Panvel

gaining prominence.

Most developments here include 2 BHKs

contributing 67% to the total units entering

this micro-market.

Figure 10

Studio - 1%

1 BHK - 11%

1 ½ BHK - 2%

2 BHK - 48%

2 ½ BHK - 10%

3 BHK - 23%

3 ½ BHK - 1%

4 BHK - 3%

In all, these locations are estimated to infuse

approximately 14 mn.sq.ft. and a total of

13,385 units by the end of 2011. One of the

most notable constructions includes Ellora

Castle by Ellora Group in CBD Belapur which

is considered to be the most high-end project

in this micro-market. It would comprise a

5-BHK apartment on each floor and the total

cost of each flat would soar over Rs.10 million.

Over the next few years various infrastructure

developments like the Mumbai-Monorail

Project as well as the proposed construction

of a new international airport in the Kopar-

Panvel area are expected to have a positive

impact on the transformation of the Navi-

Mumbai micro-market.

The Mumbai residential capitial values have

witnessed a wide range of fluctuations in the

commanded prices since 2008. During Q1

2008, prime locations of South Mumbai,

Worli, Bandra as well as Central Mumbai saw

a stabilisation of prices as well as a marginal

drop in a few areas. Simultaneously, other

locations such as the Goregaon-Borivali

stretch, Vashi, Mulund, Sion and Chembur

continued to observe an appreciation of

prices. In Q2 2008, builders across all

micro-markets started hiking prices once

again. However, while they stepped-up their

prices, they also started including freebies in

an effort to maintain commanded prices.

Despite these efforts, most developers

succumbed to the economic pressure and in

Central Suburbs

Over the last few years, due to various

commercial developments on LBS Marg as

well as Powai, central suburban locations

have been witnessing heightened residential

construction activity as well as demand.

Factors such as widening of LBS Marg,

construction of the Eastern Express Highway

and flyovers on this major artery have

resulted in the transformation of a

neighbourhood with less prospects to that of

a favourable one. Locations in this

micro-market include Sion, Wadala, Chembur,

Powai, Mulund, etc. These markets are

preferred not only by the middle class group

but also by investors due to the level of

appreciation in capital values witnessed

especially in Powai and Mulund.

Most of the residential projects here

comprise 2BHKs apartments which account

for 38% of the total upcoming units in the

Central Suburbs. A few notable projects

include Lodha Imperia by Lodha Group in

Bhandup (W) and Nirmal Galaxy- Polaris by

Nirmal Lifestyle in Mulund (W) and Lake

Q3 2008, rates across the board decreased

by 2-15%. The Goregaon to Borivali stretch

and Thane remained an exception to this. Q4

2008 brought no respite to these negative

sentiments. While prices in prime locations

such as South Mumbai, Worli and Bandra

stabilised, other locations saw a further drop

varying from 5-30% where the maximum

decrease occurred in the Goregaon-Borivali

stretch, Ghatkopar (E), Mulund as well as

some Central Mumbai locations.

Q1 2009 continued to see downward

spiralling prices, however by Q2 2009, most

markets started to stabilise with Bandra

displaying signs of a mild recovery. By Q3

2009, all the micro-markets have shown an

increase in prices with prime locations

displaying maximum recovery. Currently,

residential rental yields in Mumbai range

between 3-6%. South Mumbai, Worli and

Bandra have a rental yield around 6%.

Rentals for 2 and 3-BHKs in South Mumbai

range from a minimum of Rs.925,000 to a

maximum of Rs.450,000 per month. Rentals

for 2 and 3-BHKs in Bandra range from

Rs.150,000-420,000 per month.

Figure 11

350000

200000

300000

250000

150000

100000

Minimum Maximum

The western

suburbs are

expected to

infuse

maximum

supply in the

Mumbai micro-

market by the

end of 2011

contributing a

supply of 30.82

mn.sq.ft.

Mumbai Peak to Trough to Sep'09

South Mumbai (Grade A) -7% 15% 57,500

South Mumbai (Grade B) -5% 35% 35,000

Worli (Grade A) -11% 21% 35,000

Worli ( Grade B) -10% 11% 25,000

Bandra (W) -21% 18% 22,500

Andheri (W) -22% 22% 11,000

Ghatkopar (E) -33% 0% 5,500

Thane -24% 16% 5,500

Vashi -31% 11% 5,000

Mulund -26% 10% 5,500

Powai -19% 15% 9,750

Bhandup -22% 3% 5,000

Sion / Chembur -33% 7% 7,500

Central Mumbai -42% 20% 10,500

(Parel, Sewri, Byculla)

Table 3

apartments

contribute

67% to the

total no. of

units entering

the navi

mumbai micro-

markets

Q3 2009

residentialmarket

Outlook

With an increase in city limits, Mumbai will

continue its vertical and horizontal growth.

While affordable housing projects are

increasingly gaining momentum, these are

still restricted largely to far-flung locations

like Mira Road, Vasai, Virar, Thane,and Nerul.

This is primarily due to high land costs within

city limits. Though attempts have been made

by developers to provide smaller unit sizes in

locations closer to the city centre, affordable

projects in most areas of the Island City and

the Bandra-Juhu belt would require the

advent of a Public Private Partnership (PPP)

model.

Over the next few year, attempts by the

Maharashtra Housing & Area Development

Authority (MHADA) to provide affordable

housing should help to alleviate middle

income end user demand. An example of this

is the Mumbai Metropolitan Regional

Development Authority’s (MMRDA) endeavour

to build around 6,000 tenements in Karjat

under the rental housing scheme. The state

government's stipulation of a Floor Space

Index (FSI) of 2.5 for housing schemes for the

Groups (MIG) is also expected to encourage

private developers to target these segments.

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.

Table 4

Mumbai Major Infrastructure Developments

Both the government as well as private

players are striving to improve connectivity to

and thus further the development of western,

extended as well as central suburban

locations of the city. Navi Mumbai, for

example, is expected to witness increased

residential growth due to various initiatives

that will increase its connectivity to Mumbai

as well as the IT, manufacturing and

educational hub of Pune. Various

infrastructure initiatives around Mumbai will

help to de-congest the city by providing the

means for people to access more affordable

locations.

Over the past quarter, rates across Mumbai

micro-markets have increased marginally due

to an improvement in sales inquiries and

conversions and the optimism generated

during the festive season. Because quoted

rates are still in excess of what the majority of

end-user demand is willing to pay, the

aforementioned price increases could yet

prove transient. In the next few years,

locations like Navi Mumbai, Thane, Mulund,

Ghatkopar and Chembur are expected to see

a price appreciation of 10-15% due to various

infrastrstructure initiatives and commercial

developments as well as a mix of both luxury

and affordable housing.

While demand around Mumbai has increased

in comparison to that witnessed during the

recent slump, it is still moving at a sluggish

pace. Demand in the market primarily

comprises affordable and premium buyers,

and the former account for a substantial

chunk of demand. Although developers are

now targeting this demand segment, the

public sector will also have a key role to play

in this intiative. Developers and consumers

need to be aided by tax and interest rate

subsidies respectively.

While various initiatives are anticipated to

boost growth along different corridors,

problems such as delayed approvals remain a

logistical hindrance. If such issues are

addressed, as is expected through the soon

to be introduced real estate regulator bill,

by Q2 2009,

most markets

started to

stabilize with

Bandra

displaying

signs of a

mild recovery

Mumbai’s transformation from a congested

city to a desirable residential location could

be greatly accelerated.

Over the past

quarter, rates

across

Mumbai micro-

markets have

increased

marginally

due to an

improvement

in sales

inquiries and

conversions

and the

optimism

generated

during the

festive season