H1 2016, a recap

- A recovery predictedINDIA

REAL ESTATEJULY – DECEMBER 2016

PUNE

PUNEREAL ESTATE

H1 residential recap

LAUNCHES DROP BY 32%, SALES REMAIN STEADY WITH 1% YOY

GROWTH IN H1 2016

We predicted 12% growth in launches and 4% growth in sales for H2 2016, but Pune suffers a setback

as launches & sales tumble in H2 2016

New launches plunge by 38%; Sales decline by 19%

Half yearly trend in launches and sales (units)

H2 2011

H2 2012

H2 2013

H2 2014

H2 2015

H2 2016

-

5,000

10,000

15,000

20,000

25,000

30,000

22,

694

24,

513

24,

652

16,

700

18,

135

11,

300

Launches

-38%

H2 2011 H2 2012 H2 2013 H2 2014 H2 2015 H2 2016 -

5,000

10,000

15,000

20,000

25,000

30,000

20,

804

24,

895

17,

858

20,

150

20,

740

16,

800

Sales

20%

-19%

Drastic fall in H2 2016 has pulled the annual numbers to below 2015 performance

New launches dip by 35%; Sales at a relatively restrained decline of 10%

Yearly trend in launches and sales (in units)

2010 2011 2012 2013 2014 2015 2016 -

10,000

20,000

30,000

40,000

50,000

60,000

39,

881

45,

725

48,

017

38,

795

34,

869

36,

264

32,

488

2010 2011 2012 2013 2014 2015 2016 -

10,000

20,000

30,000

40,000

50,000

60,000

43,

675

54,

147

55,

971

45,

372

33,

583

30,

897

20,

013

-35%-10%

Overall, the city witnessed a fall in new launches –

East and West Pune experience maximum dip in their share

South accounts for almost one-third of the launches and North also sees growth

Micro-market wise half yearly share of launches

Central East West North South0%

5%

10%

15%

20%

25%

30%

35%

1%

30% 32%

15%

22%

6%

21%

28%

16%

28%

H2 2015 H2 2016

While demand slackens in the city, North leads the share in sales

Affordable supply and proximity to the major employment hubs drive the demand in North

Zone-wise split of sales during H2 2016

Central East West North South0%

5%

10%

15%

20%

25%

30%

35%

1%

26%

30%

18%

24%

2%

28%

23%27%

21%

H2 2015 H2 2016

QTS on a continuous downfall since December 2014 –

1.4 years to offload the unsold inventoryPune market health – Quarters to sell and unsold inventory

Unsold inventory at 49,720 units in 2016

Jun-1

4

Sep-14

Dec-14

Mar-15

Jun-1

5

Sep-15

Dec-15

Mar-16

Jun-1

6

Sep-16

Dec-16

5

6

7

8

7.0 7.3 7.4

7.1

6.8

6.4 6.5

6.3 6.2

5.8 5.8

No.

of Q

uart

ers

Impact ofDemonetization

Pune hit hard - New launches plunge by 64% in Q4 2016 YoY; Sales decline by 35%

Quarterly trend of new launches and sales

2,000

4,000

6,000

8,000

10,000

12,000

8,583 8,300 8,900

7,800

6,670 6,092

8,705 9,430

4,531 4,182

7,900

3,400

7,219 7,500

9,500

10,650

8,543 6,980

10,992 9,748

7,687 8,001

10,500

6,300

Launches Sales

No

of u

nits

Q4 revenue loss for both State exchequer and industry

Average # units sold in Q4 2014 & Q4 2015 10,200

# Units sold in Q4 2016 6,300

38% fall in sales

Notional REVENUE LOSS to real estate industry

INR 2,000 cr

State government notional LOSS ON STAMP DUTY

INR 100 cr

Key takeawaysLaunches go downhill, sales weaken YoY in H2 2016

Affordable prices attracting buyers in its peripheral markets such as Chakan, Chikhali and Talegaon

Demonetization brings residential market to a standstill

Uncertainty likely to continue for the next quarter

Reduction in home loan interest rates, RERA, GST and ‘possible’ tax benefits in the upcoming budget likely to bring in a ‘feel good factor’

among buyers

Office market

PUNE OFFICE MARKET SEES SIGNIFICANT FALL IN

TRANSACTIONS IN H2 2016

Transactions fall in 2016 in the face of supply crunch

Yearly transactions & new completion

2010

2011

2012

2013

2014

2015

2016

-

1

2

3

4

5

6

4.23.6

2.2

3.6

2.5 2.7 2.5

3.73.2 3.0

4.04.5

5.5

3.8

New completion Transactions

mn

sq ft

H2 2016 witnesses transactions at three-year low; new completions see a marginal rise

Half yearly transactions & new completion

H2 2012 H2 2013 H2 2014 H2 2015 H2 2016 -

1

2

3

4

1.3 1.2

0.5

1.1 1.2 1.6

1.2

2.4

3.3

1.8

NEW COMPLETION TRANSACTIONS

mn

sq ft

Vacancy on a steady decline and currently at 8%; Transactions consistent, new completions restrained

Half yearly vacancy rate

H2 2013 H2 2014 H2 2015 H2 2016 5%

10%

15%

20%

25%

21%

16%

11%8%

Rentals gain momentum owing to space crunch

Half yearly weighted average rental trend

H2 2013 H2 2014 H2 2015 H2 2016 30

40

50

60

70

41

47

5660

Rs/

sq ft

/mon

th

IT/ITeS sector continues to hold the fort in h2 2016

IT/ITeS leads with big ticket transactions Sector wise transactions

IT/ITeS BFSI* Manufacturing Other Services0%

10%

20%

30%

40%

50% 47%

23%18%

12%

44%

33%

14%10%

H2 2015 H2 2016* Includes support services

SBD East witnessed a sharp jump in its share of the total transaction volume, as most of

the big deals took place in this micro-marketMicromarket-wise transactions

CBD & Off-CBD SBD East SBD West PBD East PBD West0%

10%

20%

30%

40%

50%

60%

70%

80%

8%

47%

20%

8%17%

7%

69%

12%5% 7%

H2 2015 H2 2016

Key takeaways

H2 2016 witnesses transactions at three-year low on the back of supply constraints

new completions dip, leading to rise in rentals in key markets

IT/ITeS leads with big ticket transactions

Download the complete report from the link below:bit.ly/IREH216-SS