2010 Global Market Report - NAI Commercial Real Estate

Delhi, Gurgaon, IndiaHyderabad, Pradesh, IndiaContactNAI Collaborators India+91 11 4668 7000Country DataArea (KM 2 )GDP Growth (%)GDP 2009 (US$ B)GDP/Capita (US$)Inflation Rate (%)UnemploymentRate (%)Interest Rate(%)1334.35.36%$1,242.65$1,032.718.66%7.32%4.75%Population (Millions) 1203.28The current real estate inventory in India is estimated to beworth US $15 billion and anticipated to develop at the rateof 25% annually in the coming decade due to the boomingeconomy, favorable demographics and liberalized ForeignDirect Investment (FDI) regime. Economic recovery during2010-2011 is likely to revive the interest of foreign investorsin India’s real estate market. Despite the global economicdownturn, India has been able to retain its position as apreferred investment destination.The economy is regaining momentum, with India adding upto 40 million SF of office space by the end of 2009. Thehuge addition of new supply is expected to result in acorrection. The CBD witnessed a rise in vacancy levels dueto high rental rates, limited and poor quality of buildings,relocation of companies to more cost effective options orlease renegotiations. As a result, the CBD witnesseda correction in rental rates back to more realistic levels.Outlying areas are becoming more viable anddemand is increasing due to better Metro connectivity.Upcoming areas like Saket & Jasola, witnessed the deliveryof a large amount of new office space, thereby escalatingthe vacancy level. Even Gurgaon and Noida witnessed anupsurge in the vacancy level due to an increase in the supplyand the completion of various projects, along with availabilityof sublease options, thus keeping downward pressure onthe rental rates.The residential sector witnessed a fall due to the globaleconomic outlook in 2009, but is expected to pick up in2010 due to a shortfall of over 25 million new homes, mostlyin the low and middle-income groups, leading to pricesmoving higher. Delhi’s retail market was slow in 2009 withjust 10% of the transactions happening in the last fewmonths. India’s retail market is expected to see the additionof over 1 million SF with 100 new malls.Revival is on its way in the real estate market, spurred byprice corrections, new launches and lowering of interestrates. The commercial market has also started showingsigns of revival, driven by a spurt in office space resulting inmore conversions taking place in CBD and PBD areas withinitial rise in demand for less costly premises. Though mostof the deals that happened were of relocation. The officemarket is showing visible signs of renewal in demand.ContactNAI Hyderabad+91 40 233105712Country DataArea (KM 2 )GDP Growth (%)GDP 2009 (US$ B)GDP/Capita (US$)Inflation Rate (%)UnemploymentRate (%)Interest Rate(%)1334.35.36%$1,242.65$1,032.718.66%7.32%4.75%Population (Millions) 1203.28With a projected growth ratio of around 7%, India is makingprogress towards becoming one of the leading economiesin the world over the next several years. Hyderabad, the fifthlargest city in the country, is on the radar for top IT, Pharmaceuticaland Aviation conglomerates in the world. NAIHyderabad expects robust growth in 2010.With a stable Government in place, the Hyderabad market isexpected to stabilize and grow quickly over the next few yearsdue to a strong commitment from the Governmentto improve basic infrastructure and connectivity. Majorinfrastructure projects such as the 262 KM Outer Ring Road(ORR), 13.5 KM elevated expressway, 22 KM eight laneexpressway connecting Gachibowli to Shamshabad, MetroRail and Shamshabad International Airport have been instrumentalin making Hyderabad one of the leading cities in India.Commercial real estate transactions have seen a substantialincrease post elections and are expected to stabilize withbetter occupancy rates in the coming months. The postelection months have seen a rush in the end user market inthe segment of 2 BHK and 3 BHK with sales happening inthe mid-market segment of prices between US $1.5 millionto US $5 million. The retail market in Hyderabad hasnot seen a material increase or decrease in the past fewquarters due to limited availability of new retail space andthe current market slump. Despite the announcement ofmore than 50 malls and retail buildings during the boomperiod, only a few malls in Prasads, City Center, and GVKhave been successfully operational. Inorbit (the largest mallin South India) and Night Bazar at Shilparamam are scheduledfor launch in the near future.The overall market scenario in Hyderabad is expected to bepositive in the Corporate, IT, Pharmaceutical, medium costresidential and Warehousing sectors. Negative trends areexpected in Land, Investment and Retail segments.Delhi At A GlanceRENT/SF/YRRENT/SF/YRLow High Low High VacancyDOWNTOWN OFFICENew Construction (AAA)Class A (Prime)Class B (Secondary)SUBURBAN OFFICENew Construction (AAA)Class A (Prime)Class B (Secondary)INDUSTRIALBulk WarehouseManufacturingHigh Tech/R&DRETAIL$$$$$$$$$67.0060.0025.0029.0040.0021.003.004.004.00$$$$$$$$$73.0080.0053.0053.0053.0033.005.0012.0012.00$$$$$$$$$67.0060.0025.0029.0040.0021.003.004.004.00$$$$$$$$$73.0080.0053.0053.0053.0033.005.0012.0012.0025.0%10.0%15.0%50.0%20.0%50.0%50.0%40.0%40.0%DowntownNeighborhood Service CentersCommunity Power Center$ 40.00N/AN/A$ 160.00N/AN/A$ 40.00N/AN/A$ 160.00N/AN/A20.0%N/AN/ARegional Malls$ 13.00 $ 67.00 $13.00 $ 67.00 20.0%Solus Food StoresN/A N/A N/A N/A N/ADEVELOPMENT LAND Low/Acre High/Acre Low/Acre High/AcreOffice in CBDLand in Office ParksLand in Industrial ParksOffice/Industrial Land - Non-parkRetail/Commercial LandResidential$ 120.00 $ 180.00 $ 120.00 $180.00$ 7,000,000 $ 14,000,000 $ 7,000,000 $ 14,000,000$ 2,800,000 $ 8,400,000 $ 2,800,000 $ 8,400,000$ 1,100,000 $ 1,900,000 $ 1,100,000 $ 1,900,000$ 18,000,000 $ 19,000,000 $ 18,000,000 $ 19,000,000$ 250,000 $ 800,000 $ 250,000 $ 800,000Hyderabad At A GlanceConversion 50 Rs = 1 US$ RENT/M2/MONTH US$ NET RENT/SF/YEARLow High Low/SF High/SF VacancyDOWNTOWN OFFICERs 7,750.00 Rs 12,917.00 $ 15.56 $ 25.94 N/ANew Construction (AAA)Class A (Prime)Class B (Secondary)SUBURBAN OFFICENew Construction (AAA)Class A (Prime)Class B (Secondary)INDUSTRIALRs 6,458.00Rs 5,167.00Rs 6,458.00Rs 5,813.00Rs 3,875.00Rs 1,162.00Rs 11,625.00Rs 9,688.00Rs 9,042.00Rs 7,750.00Rs 5,813.00Rs 2,325.00$$$$$$12.9710.3712.9711.677.782.33$$$$$$23.3419.4518.1515.5611.674.67N/AN/AN/AN/AN/AN/ABulk WarehouseManufacturingHigh Tech/R&DRs 1,292.00Rs 1,550.00RsRs2,583.003,229.00$$2.593.11$$5.196.48N/AN/ARETAILDowntownRs 12,917.00Rs 9,688.00Rs 32,292.00Rs 16,146.00$$25.9419.45$$64.8432.42N/AN/ANeighborhood Service Centers Rs 7,750.00 Rs 9,688.00 $ 15.56 $ 19.45 N/ACommunity Power CenterRegional MallsRs 7,750.00N/ARs 11,625.00N/A$ 15.56N/A$ 23.34N/AN/AN/ADEVELOPMENT LAND Low High Low/SF High/SFOffice in CBDLand in Office ParksRs 435,600,000Rs 290,400,000Rs 580,800,000Rs 363,000,000$ 9,414,307.33$ 6,276,204.88$12,552,409.77$ 7,845,256.11Land in Industrial Parks Rs 96,800,000 Rs 145,200,000 $ 2,092,068.29 $ 3,138,102.44Office/Industrial Land - Non-park Rs 72,600,000 Rs 121,000,000 $ 1,569,051.22 $ 2,615,085.37Retail/Commercial Land Rs 338,800,000 Rs 435,600,000 $ 7,322,239.03 $ 9,414,307.33ResidentialRs 193,600,000 Rs 290,400,000 $ 4,184,136.59 $ 6,276,204.882010 Global Market Report ■ www.naiglobal.com31