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BENGALURURESIDENTIAL & OFFICEJULY – DECEMBER 2017
2
RESIDENTIAL RECAP H1 2017
· Bengaluru market
restrained in H1 2017, witnessed
a marginal increase of 5% in
launches and 4% in sales
sequentially
Tall unsold inventory
Ambiguity over RERA
3
34,438
63,261 67,773
78,300
68,134
45,590
37,676
22,410
2010 2011 2012 2013 2014 2015 2016 2017
41% YoY
Annual launches
Launches on backburner;
timely delivery
developers’ focus
No
. o
f u
nits
4
35,545
32,589
21,400
24,190 24,281
13,395 14,026
8,384
H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 H2 2017
37% YoY
Half-yearly launches
RERA implementation in
Karnataka in H2 2017
pulled back launches
No
. o
f u
nits
Share of homes in the INR 5-10 mn
witnesses substantial increase
5
INR H2 2016 H2 2017
<2.5 mn 2% 2%
2.5-5 mn 64% 51%
5-7.5 mn 18% 25%
7.5-10 mn 6% 17%
10-20 mn 6% 2%
>20 4% 3%
Ticket sizes that saw
maximum change in H2 2017
Sub INR 5mn account for
majority of launches
Slowdown in IT/ITeS
overcast buyer sentiment
RERA registered projects
in vogue
6
28,318
41,944
50,692
57,366 55,701
50,083 46,529
34,546
2010 2011 2012 2013 2014 2015 2016 2017
26% YoY
Annual sales
Policy reforms prolong
gestation period for
sales closures
No
. o
f u
nits
Demand shifting to ready-to-
occupy products
7
25,522
28,445 27,849
20,309
13,336
H2 2013 H2 2014 H2 2015 H2 2016 H2 2017
Half-yearly sales
Sales in H2 2017
shrink by 34% YoY
No
. o
f u
nits
• Sarjapur Road and Kanakpura
Road still enticing buyers
• North and South zones record
27% and 43% YoY sales decline
Maximum sales decline in South Bengaluru
CENTRAL
23 units
-54% YoY51 units
9% YoY
EAST
23 units
-54% YoY3,977 units
-26% YoY
NORTH
23 units
-54% YoY2,715 units
-27% YoY
WEST
23 units
-54% YoY1,122 units
-27% YoY
SOUTH
23 units
-54% YoY5,471 units
-43% YoY
Homefests, discount on base
selling prices and freebies
rampant
9
3,830
4,185 4,585
4,780
4,850 4,589
-
1,000
2,000
3,000
4,000
5,000
6,000
Q4 2012 Q4 2013 Q4 2014 Q4 2015 Q4 2016 Q4 2017
-5%
YoY
Weighted average
prices have reduced
by 5% across
Bengaluru, first time
in this decade
70
80
90
100
110
120
130
140
CPI Bengaluru
Price divergence
widens
10
CPI
BENGALURU
Residential prices decline by
5% compared to an inflation
growth of 5.5% in 2017
11
Bengaluru is within the
Knight Frank Affordability
Benchmark* of
4.5(*house price to income ratio)
2017
4.42010
5.6
Unsold inventory and QTS
12
Unsold
inventory
Quarters-to-
sell
Age of
inventory
H1 2014 105,359 7.0 7.2
H2 2014 100,968 7.5 7.5
H1 2015 105,525 8.0 8.5
H2 2015 98,734 7.9 8.9
H1 2016 96,195 8.0 9.0
H2 2016 121,248 9.3 10.4
H1 2017 114,064 10.0 11.4
H2 2017 109,112 10.6 13.0
QTS highest since 2014
More than 2.5 years to
offload existing
inventory
CENTRAL
EAST
NORTH
WEST
SOUTH
Unsold units
23,863
QTS 11.6
Age 14.1
Unsold units
25,066
QTS 8.1
Age 12.2
Unsold units
50,265
QTS 11.9
Age 12.7
Unsold units
351
QTS 7.3
Age 13.6
Unsold units
9,567
QTS 10.1
Age 13.8
South suffering on QTS due to
oversupply of residential units
than other micro-markets
East seeing traction
in sales closures due
to improving
infrastructure
Age and QTS in quarters
KEY FINDINGS
01 03
02 04
14
Launches dwindle by
37% YoY in H2 2017
• 71% decline from peak in 2013
• Focus shifts to project completion and RERA compliance
• 5 % drop
Unsold Inventory down
by 10%
• Over 2 years to clear stock
• Age increases from 7.5 in 2014 to 13 quarters today
Sales see a 40% decline
from peak in 2013
• Policy reforms prolong gestation period for sales closures
For the first time in this decade,
Bengaluru sees a decline in
weighted average prices
15
Transactions fell by 5%
Dearth of ready office spaces
Space take-up by co-working
companies emerged as a trend
OFFICERECAP H1 2017
Supply crunch continues to prevail
Rentals under pressure due to lack of
newly constructed spaces
16
7.4 7.2 7.5
8.5
9.5
8.1
-
2.0
4.0
6.0
8.0
10.0
12.0
2012 2013 2014 2015 2016 2017
Yearly new completions
in m
nsq
ft
New completions shrink
by 15% YoY
Eases supply crunch momentarily
but still lags behind occupier demand
Policy reforms in residential hit
commercial constructions
17
4.1
3.3
1.7
5.5
3.0
4.5
4.0
4.5
6.0
3.5 3.7
4.4
H12012
H22012
H12013
H22013
H12014
H22014
H12015
H22015
H12016
H22016
H12017
H22017
Half-yearly new completions
Supply uptrend of 24%
YoY in H2 2017
in m
nsq
ft
New sectors more than
compensate for slowdown in
space take up by IT/ITeS sector
18
9.40 9.5010.40
11.10 11.4011.70
2012 2013 2014 2015 2016 2017
3% YoY
Yearly transactions
Highest transaction
volume recorded in a
decade
in m
nsq
ft
19
6.0
3.4
4.7 4.9
6.0
4.4
6.1
5.0
6.1
5.3
5.8 5.9
H1 2012 H2 2012 H1 2013 H2 2013 H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 H2 2017
Half-yearly transactions
Transactions in H2
2017 strengthens
by 12% YoY
in m
nsq
ft
Steep decline in vacancy in
ORR and Whitefield, while
locations like Yelahanka and
Electronics City have double
digit vacancy
20
14.0%
10.0%
8.0%
6.0%
3.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
2013 2014 2015 2016 2017
Vacancy
Want of space and
healthy demand
momentum push
vacancy levels further
12 month change
City level rental growth
at 9%; low vacancy
pushing rentals up
INR 65-90/sq ft/month
15%
INR 38-48/sq ft/month
5%
INR 75-130/sq ft/month
11%
INR 35-45/sq ft/month
0%
INR 60-85/sq ft/month
-4%
ORR
PBD EAST
CBD & OFF CBD
SBD
PBD SOUTH
22
Industry H2 2017 H2 2016
BANKING, FINANCIAL
SERVICES &
INSURANCE
9% 9%
IT/ITeS 44% 62%
MANUFACTURING 12% 4%
OTHER SERVICES 35% 25%
Cautious hiring and automation headwinds slows down expansions in IT/ITeS sector
Sub-sectors in other Services such as E-
commerce and Co-working garner 16% and
6% of total transaction volume in H2 2017
KEY FINDINGS
01 03
02 04
23
New supply higher by
24% YoY
• Demand overshadows supply growth
Vacancy at an all-time low
at 3%
• Supply crunch brings existing spaces under severe pressure
Co-working and e-commerce
outshine IT/ITeS demand
• IT/ITeS shrinks to 44%
City transaction volume at
10-year high
• Outer Ring Road continues to lure occupiers.
New supply in H2 2017 reduces burden on
existing spaces in short-term
24
BENGALURU
Otherwise resilient Bengaluru residential market
records sharp sales de-growth in H2 2017
In office segment, Bengaluru records decadal high
transactions in 2017
