RESEARCH

KnightFrank.com

Q3 2009
Residential
Market
Review
Knight Frank

HIGHLIGHTS
! 367,000 units, equating to roughly 533 mn.sq.ft. of residential space, are
expected to come up across the 7 major cities by the end of 2011

! 75% of this supply will be accounted for by 2 and 3 BHK units, indicating a shift
by developers to smaller units

! The prevailing trend of rising prices, which is largely down to the improving
economic climate and resurgent middle income end-user demand, is as of now
more developer and project specific as opposed to a general market trend

! Developers are now more cognizant of affordability, and are reducing unit sizes
and the scale of amenities in order to reach out to the sizeable middle income
consumer segment
Q3 2009
residential
market
Review
EDITORIAL
Figure 1
Pan India Estimated Supply 2009-11
400000
350000
300000
No. of residential units
250000
226093
200000
150000 138054
100000 88039
50000
0 spiraling interest rates, the prime residential
2009
2010
Year
Supply
Source: Knight Frank Research
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.
02
Chronology of the Residential
Slump
Q2 2008- Point of Inflection
Just as in Mumbai, where transactions during
366837
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
140744 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
2011
market largely maintained price levels due to
continued interest from HNIs and NRIs.
Cumulative Supply Certain developers, even prominent ones,
began to feel the pinch of relatively tighter
liqudiity and delayed possession of
apartments.
Q3 2008- Start of the Decline
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%.
Q4 2008- Eye of the Storm
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.
KnightFrank.com
• 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.
Q1 2009- Decline Continues
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.
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
Although
developers
attempted to
hold prices by
offering
incentives to
potential
buyers, end
users and
investors sat
on the fence
anticipating
further price
decreases
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.
Q3 2009- Green Shoots of Recovery
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.
03
Q3 2009
residential
market
Review
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.
Lessons Learnt
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
04
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
even after the
price
correction of
the past year,
residential
prices across
the country
remain
significantly
higher than
2009 inflation
adjusted
rates
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.
KnightFrank.com
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.
Note: Maps included are not to scale (Source: Google Maps).
The Way Forward socially conscious path, a path that is
essential in order to avoid the formation of a
From now until the end of 2011, approximately property price bubble such as the one that
367,000 units, equating to roughly derailed the US real estate sector.
533 mn.sq.ft. of Grade A residential supply,
Figure 2
are expected to crop up in the seven major
cities around India. Of this unit supply, NCR
Distribution of Pan India Supply 2009-11
(in No. of units)
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 Chennai - 9%
of current project completion schedules. The Bengaluru - 10%
struggles of the past year dramatically halted NCR - 25%
the progress of India's real estate sector. The Hyderabad - 15%
Kolkata - 7%
advent of a stable central government and a
Mumbai - 20%
general improvement in India's financial
Pune - 14%
climate has stabilised the sector and
Source: Knight Frank Research
reinvigorated the residential market, which is
Figure 3
witnessing increased enquiries and rising
Unit-Wise Distribution of Pan India
prices once again. As the real estate sector
Supply 2009-11
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. Studio - 1%
1 BHK - 3%
However, a city like Mumbai needs to look at
1 ½ BHK - 3%
how to better utilise existing land. The
2 BHK - 36%
potential benefits of such an initiative are 2 ½ BHK - 4%
evidenced by the successful utilisation of the 3 BHK - 39%
NTC mill lands in Mumbai for commercial 3 ½ BHK - 2%
development. India's residential market is 4 BHK - 7%
now set to embark on a different and more 5 BHK Penthouse - 3%
Source: Knight Frank Research
05
Q3 2009
residential
market
Review

This prominent development prompted This resulted in a rise in enquiries and

NATIONAL developers to explore peripheral locations of

Gurgaon and Noida for primarily residential
conversion rates, thereby gradually
stabilizing the residential market in the NCR.

CAPITAL development. The partly operational and

rapidly growing network of the Current Scenario
Delhi Metro Project is also providing a growth

REGION impetus to the NCR. An efficient

communication system within the region has
The NCR market will witness approximately
92,000 units, equating to 160.16 mn.sq.ft. of

(NCR) augmented the attractiveness of peripheral fresh supply of residential space. Out of the

areas which, due to cheap land cost are total upcoming supply, 57% will be available

relatively more affordable. in the year 2011. This reflects the stalling of a
Figure 4
few commenced projects and the lack of
Distribution of Supply 2009-11
The middle of the year 2008 saw the first announced new projects over the last year
(in No. of units)
impact of the recent global economic due to the residential market slump.
slowdown on Indian real estate, especially
Figure 5
across NCR. Low liquidity levels and tight
Estimated Supply 2009-11
credit conditions on the supply side, coupled
100000
with job insecurity and low demand 92202
90000
sentiments on the consumer side, negatively
80000
impacted the NCR residential market. The
consequent drop in demand led to a number 70000
No. of residential units

of announced projects being phased out and 60000

56186

postponed. To improve demand across the 50000

NCR market, developers resorted to offering 40000

36016
lucrative benefits like discounted car parking 30000 26391
Noida - 7%
and club membership along with the 20000
Greater Noida - 12%
Ghaziabad - 27% apartment. Schemes like payment of EMI on 10000 9625

Faridabad - 24% and from possession were also offered as a

0
Gurgaon - 29% measure to surge demand. Larger sized
2011
2009

2010

Delhi - 2% premium housing was being restructured into

Source: Knight Frank Research
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.
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.
Year
Supply Cumulative Supply
Source: Knight Frank Research
Delhi
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.

06
KnightFrank.com

Delhi & Ghaziabad

14

8
10

2
4
11
9

13
5

12

Delhi is visible in the region. Locations like Rao Tula Ram Marg, and near Munirka. This
EXISTING Model Town, Khyber Pass, Subhash Nagar network of flyovers on Outer Ring Road will
and Shivaji Marg are currently witnessing de-congest traffic in South Delhi.
1. Chanakyapuri
private developer activity. Projects like the
2. Jor Bagh
EMMAR MGF's Commonwealth Games Village Gurgaon
3. Golf Links
near Mayur Vihar and Victoria Gardens by The IT/ITES sector has been the most
4. Greater Kailash I & II M2K Developers in Model Town will be part of important driver for the real estate sector in
5. Defence Colony the upcoming supply by the year 2011. Gurgaon, and has been supported by the
6. Pritampura
growth impetus from banking & finance,
A lot of infrastructure initiatives are underway
7. Preet Vihar automobile and strategic consulting firms.
across Delhi and will boost the demand and
8. Mayur Vihar Infrastructure initiatives planned as per the
catchment for various residential colonies.
9. Friends Colony new approved Master Plan 2021
Proximal locations will benefit from
10. Janakpuri areprompting developers to explore new
development of the ongoing
11. Dwarka locations in Gurgaon for residential
Delhi Metro Project. The Commonwealth
development. Approximately 26,500 units,
12. Vasant Kunj Games, to be held in Delhi in 2010, will
equating to 58.23 mn.sq.ft. of fresh supply,
13. Hauz Khas benefit locations like Sarita Vihar, Jasola,
will be infused into the market till 2011.
14. Ghaziabad Friends Colony, New Friends Colony,
Around two thirds of this supply will be
Mayur Vihar, Preet Vihar and I.P. Extension. In
accounted for by 3 and 4-BHK units, thereby
Two-thirds of this supply will come under the east Delhi, work on the flyover at Anand Vihar
reflecting the positive prognosis for premium
3-BHK category, indicating that developers in bus stand is also under way. The flyover will
sector housing in Gurgaon despite the
the region are optimistic about premium not only ease traffic at the junction, but also
property slump of the past year.
segment demand once the residential market improve connectivity to east Delhi locations
picks up. Due to unavailability of larger land like Dilshad Garden. Three flyovers are also Gurgaon will have the maximum share of
parcels within Delhi, not much development being constructed at Nelson Mandela Marg, about 29% of supply across the NCR by 2011.

07
Q3 2009
residential
market
Review

Gurgaon and Faridabad

1
3 4

2
5

3 1

1 2

Gurgaon
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
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
Faridabad
EXISTING
Approximately
1. Springfield Colony
2. New Sectors 21 C & D
26,500 units,
3. Old Faridabad equating to
4. Suraj Kund Road
58.23 mn.sq.ft.
both high end premium and low cost
affordable homes. Projects like Caitriona by of fresh
Ambience Developer & Infrastructure Pvt. Ltd.
on NH 8, Magnolias and The Belaire by DLF,
supply, will be
Verandas by Salcon Group on
Golf Course Road, Palm Springs and
infused into
Palm Drive by EMMAR MGF and Garden II and
The Residences by Unitech Group are a few
the gurgaon
premium projects under construction in
Gurgaon. Projects like the Atharva and
market till 2011
Vedaanta by Raheja Group, ILD Espire Green various locations in Gurgaon. The
by ILD Group and Eden Towers by the Delhi-Mumbai Industrial Corridor (DMIC) is
Ramprastha Group are under construction in one of the key infrastructure initiatives in the
the new planned sectors in Gurgaon. new Master Plan. As per the Investment Plan
under DMIC, the Manesar Bawal investment
A number of infrastructure initiatives across
region is being developed in Phase I.
Gurgaon are expected to bring to the fore

08
KnightFrank.com

Noida and Greater Noida

Noida and Greater Noida
UPCOMING
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
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,
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
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
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.

09
Q3 2009
residential
market
Review
Raheja Atlantis, Gurgaon
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
10
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
Ghaziabad, along with Faridabad, forms the
core of industrial townships across the NCR
market. Due to its proximity to Delhi and
Till 2011, a
total of
about 22,000
units,
equating to
34.27 mn.sq.ft.
of fresh
residential
supply, is
expected in
Faridabad
Noida, 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,
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.
Figure 6
Unit-Wise Distribution of Supply 2009-11
Studio - 0%
1 BHK - 1%
2 BHK - 30%
2 ½ BHK - 2%
3 BHK - 43%
3 ½ BHK - 7%
4 BHK - 15%
5 BHK Penthouse - 2%
Source: Knight Frank Research
KnightFrank.com

Due to availability of cheap land parcels on Raj Nagar Extension region. Due to its good group housing developments have been
NH 58, Raj Nagar Extension and connectivity, NH 24 Crossing Republic has restricted to newer locations in Sectors 44, 50,
NH 24 Crossings Republic have been the potential of establishing itself as a strong 51, 52, 62 and approved residential sectors on
explored by a number of developers for residential corridor in the Ghaziabad market. the Noida-Greater Noida Expressway. Fresh
affordable projects. residential supply of 6,000 units, equating to
Noida 10.76 mn.sq.ft., are expected to come up in
From a macro prospective, Ghaziabad will
Noida is a well planned city, with ample work Noida by the end of 2011. This forms about
witness a number of infrastructure
opportunities available within the region. 7% of the total supply expected to enter the
developments which will benefit the region
Noida Sector 18 Market, the Centrestage Mall, NCR market by the end of 2011. 90% of this
as a whole. The Delhi Metro Project has been
the Great India Place and a few other retail expected supply will be evenly distributed
approved for extension in Ghaziabad, which
malls add to Noida’s status as a amongst 2, 3 and 4-BHK units.
will improve its connectivity with various
cosmopolitan location. Noida has witnessed
locations across the NCR. The work on this Out of the total expected supply by 2011, a
substantial real estate growth on account of
network is already underway. The project is to major share is accounted for by premium
the IT/ITES sector growth. Due to limited
be developed in three phases, connecting segment housing. Celeste Towers by
availability of larger land parcels in Noida,
various locations like Vaishali, Indirapuram Assotech, Amrapali Sapphire by
and Ghaziabad new bus stand to locations Amrapali Group, Forest Spa and Grandwoods
like Rajiv Chowk and Mehrauli in Delhi. The
Till 2011 by OMAXE Group and Mahagun Maple are a
estimated travel time between Vaishali and
Indirapuram to Rajiv Chowk is about
Ghaziabad is few of the upcoming projects categorized
under premium housing. The first half of
20 minutes. On the Delhi-Ghaziabad border,
work on the Anand Vihar rail junction is being
expected to 2009 witnessed the launch of Jaypee Group's
Aman in Sector 151 and Unitech's Uni Homes
carried out. This mega rail junction will be
larger than all other rail junctions across the
witness a in Sector 117, both of which are categorized
under the affordable segment.
NCR, and hence, Ghaziabad will witness
increased rail mobility. This development will
fresh inflow In terms of urban infrastructure planning,
Noida has been an exemplary town. Aspects
improve the attractiveness of Ghaziabad as a
of about like connectivity, power supply and water
residential and industrial location. Locations
supply have been the prime focus of
like Indirapuram, Vaishali and Vasundhara 25,000 units, development authorities. The DND Flyway and
also enjoy proximity to Noida’s Sector 62,
which is an upcoming commercial hub. A equating to Taj Expressway are major transportation
nodes. The Noida Greater Noida Expressway
multilateral flyover is under construction at
Gazipur Chowk, which is close to new zones 33.54 mn.sq.ft has facilitated several group housing
developments and has prompted developers
of Ghaziabad, namely Indirapuram, Vaishali
and Vasundhara. This internal development of residential to explore new residential sectors along the
expressway.
will further strengthen connectivity of
Ghaziabad to Noida and East Delhi, hence space
making the zone more attractive for home
buyers. A flyover is also under construction at
Mohan Nagar Chowk. It is being constructed
with the aim of improving connectivity to NH
58. As various projects are under way at
Raj Nagar Extension, the GDA is taking ample
steps to improve connectivity to this new and
developing zone. A link road, connecting
NH 58 to the residential zone at
Raj Nagar Extension, is under construction.
Besides the Link Road, the GDA has also
started work on sector roads within the
Bestech Park View, Gurgaon

11
Q3 2009
residential
market
Review
As connectivity concerns have been
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
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
12
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.
Capital & Rental Profile
Delhi
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
Table 1
Average Residential Capital Value Trend
NCR Peak to
Trough Change
Chanakyapuri -2%
Jor Bagh 0%
Golf Links 0%
Greater Kailash I & II -20%
Ghaziabad (Vaishali, Indirapuram -21%
Vasundhara, Raj Nagar Extension)
Gurgaon -26%
Noida -19%
Greater Noida -27%
Faridabad -10%
Source: Knight Frank Research
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%.
Trough to Sep'09
Sep'09 Change (Rs./sq.ft.)
0% 43,240
0% 43,200
0% 41,560
1% 13,000
0% 2,391
5% 4,683
0% 4,450
0% 2,150
0% 3,628
KnightFrank.com

Figure 7 locations in Golf Course Road command
Residential Rental Values (2 BHK) average capital values in the range of
350000
Rs.4,200-7,000/sq.ft. . The initial asking rate
300000 for a few upcoming projects by DLF and
Salcon Group on Golf Course Road is in the
250000 range of Rs. 9,000-10,000 /sq.ft. The
Caitriona, located on NH-8, is priced as high
Rs./month
on NH 2, due to their advantageous location,
command capital values ranging from
Rs.3,500-4,200/sq.ft. Residential apartments
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

200000
as Rs.12,500/sq.ft. Locations like Rs. 1,725-2,400 /sq.ft.
150000 Extended Golf Course Road and Sohna Road
2 BHK rentals in Sectors 18 & 19 in
are emerging as reasonably priced locations,
100000 Old Faridabad range from
with capital values ranging between
Rs.6,500-8,000 per month. The same unit
50000 Rs.2,600-4,550/sq.ft.
types in posh sectors like Sector 21 C & D
0 Due to thriving commercial activity in command rental values in the range of
Gurgaon
Ghaziabad

Faridabad
Noida

Greater Noida

Chanakyapuri/Jor Bagh/Golf Links

Greater Kailash I & II/Defence

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
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

Minimum
Source: Knight Frank Research
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
in Greater
Maximum
the range of Rs.17,000-21,000 per month. The
same unit types in locations like Sushant Lok,
Extended Golf Course Road and Sohna Road
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%.
Faridabad
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
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
annual rental yield of 3.8%.
Ghaziabad
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.

Kailash I & II,

current
capital rates
represent a
20% decline
from Q1 2008
peak levels DLF The Aralias, Gurgaon

13
Q3 2009
residential
market
Review
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
Rs.8,500-12,000 per month. The same unit
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%.
Noida
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
Due to
declining
demand,
Ghaziabad has
witnessed a
price
correction of
about 24%
since peak
levels in 2008
14
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%.
Greater Noida
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%.
City Outlook
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
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.
KnightFrank.com
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
Table 2
NCR Major Infrastructure Developments
Project Status
Western Peripheral Expressway Under Construction
Gurgaon Metro Project Under Construction
6-Lane Badarpur Flyover Under Construction
Eastern Periphery Expressway Under Construction
Yamuna Expressway Under Construction
Noida Metro Project Operational
Source: Knight Frank Research
overall trend. Given that Gurgaon will account destinations and are thus vulnerable to
for over a third of the supply expected across exaggerated price appreciation.
the NCR until the end of 2011, it is unlikely
that noteworthy price increases will be
witnessed in this market down the road.
Given the
Over the last 3-4 months, most micro-markets general
across the NCR have shown price stability,
which reflects a period of consolidation stability of
following the storm of the realty slump. Prices
appear to have bottomed out and although
markets
price declines are largely in the past, it is too
early to project price increases in a particular
around Delhi
market. Since a large portion of the upcoming
supply in NCR over the next 3 years will hit
and the
the market in 2011, one would expect price
volatility to start around that period as well.
minimal supply
Several infrastructure initiatives around the expected,
NCR are expected to boost residential options
through augmenting connectivity and de- prices in delhi
congesting traffic within certain locations. If
consumers are attracted to hitherto small
are expected
markets around the NCR due to better
infrastructure, the subsequent de-congestion
to remain
of demand in the region could alleviate the
upward pressure on prices in locations like
relatively
Gurgaon and Noida, which are becoming
increasingly attractive residential
stable
Remarks
This development will lend greater visibility to the nearby Pataudi Road in
Gurgaon.
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
This development will reduce travel time across the Delhi-Faridabad border
by about 20 minutes, thus increasing accessibility of the Nehar Par region
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
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
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.
15
Q3 2009
residential
market
Review
Mumbai
Figure 8
Distribution of Supply 2009-11
(in No. of units)
Island City - 6%
Western Suburbs - 37%
Extended Suburbs - 7%
Central Suburbs -13%
Thane - 19%
Navi Mumbai - 18%
Source: Knight Frank Research
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.
16
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.
by end-2008
developers
revised plans
of
constructing
larger 2 and
3 BHKs in
favour of
smaller units
across the
city
KnightFrank.com

In order to reduce the demand-supply Figure 9 Unlike South Mumbai which is one of the
mismatch among the masses the Estimated Supply 2009-11 oldest residential micro-markets for Grade A
Maharashtra Housing and Area Development 80000 developments, the central Mumbai locations
72906
Authority (MHADA) sold applications for 70000
have come to the fore only in the last decade.
affordable housing units in various pockets Most of these developments have sprung up
60000
of the city for individuals under all income on erstwhile mill lands.
No. of residential units

50293
categories. In addition to this, the Mumbai 50000
The Island city developments largely consist
Metropolitan Regional Development Authority
40000
of 2,3 and 4-BHK apartments with average
(MMRDA) announced its tie up with a private 33508
30000 sizes of 1,300 sq.ft., 2,300 sq.ft. and 3,700
developer to build around 6,000 tenements
22613 sq.ft. respectively, and demand for these
in Karjat. This Public Private Partnership (PPP) 20000
16785
units emanates primarily from NRIs and HNIs.
model was implemented under the rental
10000 The 2 and 3BHKs comprise 42 % and 35% of
housing project of the authority with a view to
0 the market share respectively.
help decongest the city over the next five

2011
2009

2010

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.
Current Scenario
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
Supply
Year
Cumulative Supply
Source: Knight Frank Research
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.
The Island City
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.
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
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.

17
Q3 2009
residential
market
Review

South Mumbai

11 5

8
7

10
2

6
1

7
4

1
3

Western Suburbs has gained prominence as a prime residential

UPCOMING
market over the past few years. This belt is
1. Lower Parel Over the years, residential demand for the
generally preferred by the higher income
2. Vashi western suburban locations of Bandra, Khar,
group and upper middle income group.
Santacruz, Juhu, Andheri, Vile Parle,
3. Kharghar
Jogeshwari, Goregon, Malad, Borivali, Further north of Andheri, locations like
4. Panvel / New Panvel
Kandivali and Mira Road has increased. This Goregaon, Malad, Kandivali and Mira Road
5. Khoparkhairane
can be attributed to the fresh supply have a significant amount of construction
6. Nerul available and comparatively low prices underway. Due to the availability of larger
7. Kamote commanded in comparison to those of the land parcels and cheaper land cost, rates in
8. Ghatkopar (W) Island City. In addition to this, the shift of these locations are relatively lower and are
many multi-national companies to the SBD of hence favoured by the middle class. Projects
EXISTING BKC, Andheri-Kurla Road and Malad has here largely consist of 2,2.5 and 3-BHK
1. Malabar Hill resulted in many employees preferring configurations. Owing to improved
2. Carmichael Road accommodation here. infrastructure facilities on the whole, capital
3. Napeansea Road values commanded on the western side of
Western Suburban locations can be broadly
4. Cuffe Parade these locations are relatively higher than
classified under two categories. Locations
those on the eastern side. However, over the
5. Colaba such as Bandra, Khar, Santacruz and Juhu are
past few years various infrastructure
6. Worli / Prabhadevi considered to be prime locations. Most of the
initiatives have improved connectivity to and
7. Mahalaxmi residential supply here consists largely of
within the eastern parts thus increasing the
8. Bandra (W) redevelopment projects located on inner
level of interest in these locations. The
lanes. These projects comprise 2,3 and
9. Khar (W) western suburbs are expected to infuse
4-BHK apartments contributing 33%, 43%
10. Santacruz (W) maximum supply in the Mumbai micro-market
and 20% of the total upcoming supply in
11. Juhu by the end of 2011 contributing a supply of
these areas. Andheri is another location that
30.82 mn.sq.ft.

18
KnightFrank.com

North Mumbai
10

7
8

3
4

14
5
6

2
13

12 15

1
11

This would add a total of 26,611 units.
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.
Extended Suburbs
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
most home buyers. However, while
UPCOMING
connectivity does exist, it is not as developed
1. Andheri (E)
as that in the western suburban locations and
there is a considerable amount of time spent 2. Goregaon (E) & (W)
in travel. This coupled with factors such as 3. Kandivali (W)
frequent power cuts and irregular water 4. Kandivali (E)
supply has therefore proved to be a large 5. Malad (W)
deterrent. Currently, to circumvent these 6. Malad (E)
problems most of the newer developments
7. Borivali (W)
have made provisions to provide 24-hour
8. Borivali (E)
water supply as well as generator backups
9. Mira Road
within the complexes.
10. Vasai / Naigaon / Virar
A noticeable trend across projects in these 11. Powai
locations is the higher availability of 1-BHKs
12. Bhandup
as well. Totally 4,950 number of units will be
13. Mulund
added to this micro-market over the next
14. Thane
three years, contributing around 3.4 mn.sq.ft.
15. Airoli
of new residential space. These will consist of
mainly 1 BHK and 2 BHK apartments which
EXISTING
contribute 33% and 47% with an average size
1. Andheri (W)
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.

19
Q3 2009
residential
market
Review
Figure 10
Unit-Wise Distribution of Supply 2009-11
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%
Source: Knight Frank Research
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
20
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
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.
Navi Mumbai
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
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.
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.
KnightFrank.com

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
Figure 11 Q3 2008, rates across the board decreased
Residential Rental Values (2 BHK) by 2-15%. The Goregaon to Borivali stretch
350000 and Thane remained an exception to this. Q4
2008 brought no respite to these negative
300000
sentiments. While prices in prime locations
250000 such as South Mumbai, Worli and Bandra
stabilised, other locations saw a further drop
Rs./month

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
200000
varying from 5-30% where the maximum
150000 decrease occurred in the Goregaon-Borivali
stretch, Ghatkopar (E), Mulund as well as
100000
some Central Mumbai locations.
50000
Q1 2009 continued to see downward
0 spiralling prices, however by Q2 2009, most
markets started to stabilise with Bandra
South Mumbai (Grade A)

South Mumbai (Grade B)

Worli (Grade A)

Worli (Grade B)

Bandra (W)

Powai
impact on the transformation of the Navi-
displaying signs of a mild recovery. By Q3
Mumbai micro-market.
2009, all the micro-markets have shown an
increase in prices with prime locations
Capital & Rental Profile displaying maximum recovery. Currently,
The Mumbai residential capitial values have residential rental yields in Mumbai range
Minimum Maximum
witnessed a wide range of fluctuations in the between 3-6%. South Mumbai, Worli and
Source: Knight Frank Research
commanded prices since 2008. During Q1 Bandra have a rental yield around 6%.
2008, prime locations of South Mumbai, prices. In Q2 2008, builders across all Rentals for 2 and 3-BHKs in South Mumbai
Worli, Bandra as well as Central Mumbai saw micro-markets started hiking prices once range from a minimum of Rs.925,000 to a
a stabilisation of prices as well as a marginal again. However, while they stepped-up their maximum of Rs.450,000 per month. Rentals
drop in a few areas. Simultaneously, other prices, they also started including freebies in for 2 and 3-BHKs in Bandra range from
locations such as the Goregaon-Borivali an effort to maintain commanded prices. Rs.150,000-420,000 per month.
stretch, Vashi, Mulund, Sion and Chembur Despite these efforts, most developers
continued to observe an appreciation of succumbed to the economic pressure and in
2 bhk
Table 3
Average Residential Capital Value Trend apartments
Mumbai Peak to Trough to Sep'09
Trough Change Sep'09 Change (Rs./sq.ft.) contribute
South Mumbai (Grade A) -7% 15% 57,500
South Mumbai (Grade B) -5% 35% 35,000 67% to the
Worli (Grade A) -11% 21% 35,000
Worli ( Grade B) -10% 11% 25,000 total no. of
Bandra (W) -21% 18% 22,500
Andheri (W) -22% 22% 11,000 units entering
Ghatkopar (E) -33% 0% 5,500
Thane -24% 16% 5,500 the navi
Vashi -31% 11% 5,000
Mulund -26% 10% 5,500 mumbai micro-
Powai -19% 15% 9,750
Bhandup -22% 3% 5,000 markets
Sion / Chembur -33% 7% 7,500
Central Mumbai -42% 20% 10,500
(Parel, Sewri, Byculla)
Source: Knight Frank Research

21
Q3 2009
residential
market
Review
by Q2 2009,
most markets
started to
stabilize with
Bandra
displaying
signs of a
mild recovery
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
Economically Weaker Sections (EWS), Low
Income Groups (LIG) and Middle Income
Groups (MIG) is also expected to encourage
private developers to target these segments.
22
Both the government as well as private Mumbai’s transformation from a congested
players are striving to improve connectivity to city to a desirable residential location could
and thus further the development of western, be greatly accelerated.
extended as well as central suburban
locations of the city. Navi Mumbai, for
example, is expected to witness increased
Over the past
residential growth due to various initiatives
that will increase its connectivity to Mumbai
quarter, rates
as well as the IT, manufacturing and
educational hub of Pune. Various
across
infrastructure initiatives around Mumbai will
help to de-congest the city by providing the
Mumbai micro-
means for people to access more affordable
locations.
markets have
Over the past quarter, rates across Mumbai
increased
micro-markets have increased marginally due
to an improvement in sales inquiries and
marginally
conversions and the optimism generated
during the festive season. Because quoted
due to an
rates are still in excess of what the majority of
end-user demand is willing to pay, the
improvement
aforementioned price increases could yet
prove transient. In the next few years,
in sales
locations like Navi Mumbai, Thane, Mulund,
Ghatkopar and Chembur are expected to see
inquiries and
a price appreciation of 10-15% due to various conversions
infrastrstructure initiatives and commercial
developments as well as a mix of both luxury and the
and affordable housing.
While demand around Mumbai has increased
optimism
in comparison to that witnessed during the
recent slump, it is still moving at a sluggish
generated
pace. Demand in the market primarily
comprises affordable and premium buyers,
during the
and the former account for a substantial
festive season
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,
KnightFrank.com

Table 4
Mumbai Major Infrastructure Developments
Project Status Remarks
Bandra-Worli Completed This project is 5.6 kms long and connects from the intersection of Western Express Highway
Sea Link and SV Road at the Bandra end to Khan Abdul Gaffar Khan Road at the Worli end.
It has helped to de-congest the daily traffic problems experienced at the Mahim junction
for those commuting from South Mumbai to various suburban locations. Traffic congestion at
the Worli end is still posing a problem to commuters.
Western Freeway Planning This project has been further split into 2 phases:
Sea Link Project Phase II-A will extend from Worli to Haji Ali
Phase II-B will extend from Haji Ali to Nariman Point
This project will create a diversion for traffic on the sea link, and will thus increase traffic
speed and reduce delays at intersections at the Worli end of the sea link.
Eastern Freeway Under Construction Phase 1-The four-lane Eastern Freeway Project, which starts near the Chhatrapati Shivaji
Project Estimated Completion Museum, will stretch till the Mumbai Port Trust road before joining the Eastern Express
2012 Highway via the Anik-Panjrapole link road, near Wadala.
Phase 2-The second phase will will link the Anik-Panjrapole link road with Ghatkopar.
Vehicles that travel northeast from Fort take the D N Road-J J Flyover-Dr B R Ambedkar Road
route, which takes almost an hour, to reach Sion. The Eastern Freeway is expected to reduce
this travel time by around 40 minutes and alleviate the pressure on existing roads.
Due to resulting better connectivity, locations like Mulund and Ghatkopar and other central
suburban locations will see increased residential demand.
Metro Rail Project Under Construction Phase 1 includes the Versova - Andheri – Ghatkopar stretch, which is around 11.07 km.
Estimated Completion Stations Include Versova - D.N. Nagar - Azad Nagar – Andheri – WEH – Chakala - Airport Road
2011 - Marol Naka – Sakinaka - Subhash Nagar - Asalpha Road – Ghatkopar. This will be followed
by work on the 38.24 km Colaba - Bandra – Charkop stretch and the 13.37 km Bandra - Kurla
– Mankhurd stretch
This project will help provide East-West rail based connectivity to the Central and Western
suburbs, and thus will facilitate a smooth and efficient interchange between suburban rail
system and the MRT System at the Andheri and Ghatkopar stations. It will also provide rail
based access to the MIDC, SEEPZ and commercial developments in Andheri.
Santacruz Chembur Under Construction The Santacruz Chembur Link Road is an important arterial road that will connect the Western
Link Road Express Highway (WEH) and the Eastern Express Highway (EEH). It will stretch 6.45 km and
will commence from Dr. Hans Bhugra Junction on the WEH in Santacruz East, run east,
skirt the Vidyanagari Campus (Mumbai University at Kalina) on its south and meet Lal
Bahadur Shastri (LBS) Marg after crossing Mithi River Bridge.
This two-deck bridge will enable vehicles to cover the stretch between Santacruz and
Chembur in 17 minutes, while currently it takes about 2 hours.
Mumbai Mono Rail Under Construction Pilot Project- 20 kms monorail system from Sant Gadge Maharaj Chowk – Wadala
Project Estimated Completion – Chembur station.
2011 This mono rail system is being implemented with the intention of supporting the public rapid
transit system. Also, it will serve to decrease travel time in those areas where it is impossible
to provide direct access to the public rapid transit system and where the widening of existing
narrow roads is not possible.
Source: Knight Frank Research

23
Q3 2009
residential
market
Review
Pune
Figure 12
Distribution of Supply 2009-11
(in No. of units)
North and North West - 38%
West and South West - 16%
South and South East - 17%
East and North East - 28%
Central - 1%
Source: Knight Frank Research
Market Review
The residential market of Pune has
undergone a considerable change over the
past two years. This is largely due to the
ripple effects of global slowdown and the
subsequent impact on various industries
within the city.
While the main commercial drivers in Pune
include the engineering and automobile
sector on one side, the presence and growth
of the IT/ITES sectors have also had a positive
effect on the growth of the economic and real
estate sectors of the city over the past few
years. In the past two years, the Pune
residential market has continued to grow in a
radial pattern, although the extent and pace
of development has varied. This has been
due to the different demographic profiles of
various regions. The north western locations
of the city have been largely impacted due to
their proximity to the manufacturing hubs in
Pimpri-Chinchwad, Bhosari, Chakan and the
IT and pharmaceutical/chemical industries in
Hinjewadi.
24
These north-western locations also enjoy
their proximity to the Mumbai-Bangalore
Highway. In the eastern part of the city,
locations close to the corridor of Hadapsar
and Kharadi have witnessed substantial
growth due to the development of these IT
hubs as well as that of Magarpatta City.
During Q1 2008, the Pune market was
relatively buoyant despite the global
economic slowdown. However, the cascading
effects of various developments resulted in
this market receiving a severe blow, similar, if
not worse than that faced by the metros and
mini-metros across the country. During Q2
2008, the manufacturing and real estate
sector faced problems not only due to the
general slowdown but also because of the
anti-north Indian tirade which left migrant
workers fleeing the state of Maharashtra. This
had a tremendous effect especially on the
industrial belt of Pune-Nashik where the
workforce declined by almost 30-35%, thus
increasing the cost of labour. Many
companies were forced to halt their routine
production, manufacturing and construction
activities till alternate arrangements were
available. Q3 and Q4 2008 offered no respite
to the negative sentiments that prevailed in
2010 will
witness the
maximum
infusion of
supply,
accounting
for 44% of the
total
expected by
end-2011
the market. News of the Satyam scandal
largely affected the IT/ITES sector which is
one of the main drivers of the Pune real
estate market. Though the brunt of the
slowdown did not completely affect the top
5-10 developers, the smaller developers in
the city started to feel the pressure. The need
for affordable and low cost housing now
dawned on the minds of developers. As a
boost to the Low Income Group (LIG), during
August 2008, the city-based Naiknavre
Developers handed over 237 LIG flats in
Hadapsar to the Pune Municipal Corporation
(PMC) free of cost.
Current Scenario
With the real estate situation taking a beating
in the year 2008, developers in Pune have
started re-strategising in order to increase
residential demand. In the early half of 2009,
realising that job security is uppermost on
the minds of home buyers, the Promoters and
Builders Association of Pune began devising
a three-month relief package to address the
EMI portion for the period in case of job loss.
In addition to that, members in the builders
association were asked to reduce prices to
the maximum possible extent in order to
stimulate demand. Some developers also
offered price guarantee schemes. In case
prices dipped after the booking was made,
but before possession, the sale amount
would be revised accordingly.
Currently, the Pune residential market can be
divided into 5 sets of zones. The North and
North- Western Zone, the West and
South-Western Zone, the South and
South-Eastern Zone, the East and
North-Eastern Zone and the Central Zone. In
all these zones will witness an infusion of
approximately 53,176 units, adding around
54.27 mn.sq.ft. of new residential space. The
year 2010 will witness the maximum infusion
of supply accounting for around 44% of the
total. This can be attributed to the fact that
most of the under construction projects were
delayed.
KnightFrank.com
Figure 13
Estimated Supply 2009-11
60000
50000
No. of residential units
40000
30000
22190
20000
14563
10000
0
2009
Year
Supply
Source: Knight Frank Research
North and North-Western Zone
This zone consists of the northern locations
of Pimpri-Chinchwad, Aundh, Aundh Annex
(Pimple Nilkah, Pimple Saudagar) and north-
western locations like Wakad, Baner and
Pashan. The important connecting road to
these locations include NH 4, Kalewadi Main
Road, Baner Road, Pashan Sus Road, Pashan
Road and the Mumbai-Pune Bypass Road.
This region which was primarily driven by the
industrial belt of Pimpri-Chindhwad, Bhosari,
Chankan and the IT hub of Hinjewadi
continues to be influenced by these sectors.
In addition to this, their proximity to the
financial hub of Mumbai and connectivity to
the Mumbai- Bangalore Highway also known
as the Mumbai-Pune Bypass Road has led to
the increased demand across this corridor.
Locations in this zone are currently
witnessing a great deal of construction where
the project profile varies from ultra-luxurious
apartments and villas to affordable schemes.
Of these, 2-BHKs account for around 48% of
the total supply expected in this zone, while
3 BHKs account for around 35%. The average
sizes of these 2 and 3-BHK units are
1,082 sq.ft. and 1,534 sq.ft. respectively. A
few notable developments in this zone
include Rajaveer Palace by G K Developers in
Aundh Annexe (Pimple Saudagar) and Swiss
County by Rama Group in Wakad Annexe. In Approximately 52% of the upcoming
all around 22.51 mn.sq.ft. is expected to apartments consist of 2- BHKs with an
enter the north and north-western zone by average size of around 1005 sq.ft. This zone
53176 end-2011 . This includes around 20,307 units also has a large predominance of 1 and 3
in this zone that will be added to the market. BHKs which account for 14% and 25% of the
total supply in the south and south-western
36753 West and South-Western Zone region. A few important projects include
Important residential locations like Bavdhan, Eisha Erica by Eisha Group in Dhayari,
Kothrud, Karve Nagar, Warje, Malwadi and Nanded City by Magarpatta City Project at
Dhayari are included in this zone. The main Sinhagad Road and Nyati Esplanade by Nyati
16423
connecting roads include Karve Road, Paud Group in Bavdhan. Approximately 8.50
Road, Sinhagad Road and the Mumbai-Pune mn.sq.ft. of new residential space is expected
Bypass Road. to enter this zone by end-2011.
2011
2010
Kothrud and Karve Nagar are established South and the South-Eastern Zone
residential micro-markets in the south-west
The locations considered in this zone
Cumulative Supply and due to the extent of existing
comprise Wanwadi, Pisoli, Kondwa, NIBM and
development, there is very little scope for
Katraj. Most developments in these areas are
further construction activity. However, there
not organised and consist of mainly old
are a few re-developments taking place in
structures. In the internals roads
certain pockets within these locations. To the
redevelopments are taking place and these
west, the location of Bavdhan has come into
constructions are mainly undertaken by
the limelight in the past two-three years. This
smaller developers.
location has sparse existing developments
Figure 14
and is currently undergoing a high level of
Unit-Wise Distribution of Supply 2009-11
construction particularly around 3 km from
Chandini Chowk just 5-10 minutes away from
the highway. The demand for this location
can be attributed to the relatively lower rates
currently prevalent here in comparison to
many other upcoming western locations. It
also enjoys proximity to the established
market of Kothrud and the Mumbai-Bangalore
Highway. Further south of Pune the location
of Dhayari is also witnessing considerable
developments. Despite the presence of
substantial housing stock, there is further
scope for construction due to the availability Studio - 1%
of sizeable land parcels there. Most of the 1 BHK - 10%
developments here are dominated by 1 ½ BHK - 2%
two-three major players. 2 BHK - 47%
2 ½ BHK - 6%
The locations of Sinhagad Road, Karve Road 3 BHK - 31%
and Dhayari account for a major share of the 3 ½ BHK - 2%
total development underway in the west and 4 BHK - 1%
5 BHK / Penthouses - 1%
south-west zone. In all, this zone has an
expected 8,435 units that will be added to the Source: Knight Frank Research
market over the next three years.
25
Q3 2009
residential
market
Review

Pune

7
2

3
8

2
1
3
1
4

6 5

However, there are a few upcoming large Vista by K Raheja Corp in NIBM, Kumar Palms
UPCOMING
developments by prominent developers in by Kumar Properties Construction &
1. Bavdhan
and around the Kondwa and NIBM locations. Biotechnology at Kondwa and Olive-Simply
2. Aundh / Aundh Annexe The important connecting roads for this zone Divine by Mindspace Realty Pvt. Ltd. at Katraj.
3. Baner include NH 4, Swami Vivekanand Road, Currently the ROB at Phursungi has reduced
4. Hadapsar Kondwa Road, NIBM Road and Vitthal Rao traffic congestion and improved connectivity
5. Kondhwa Shivankar Road . between Hadapsar and Kondhwa via

6. Dhayari Phursungi. This along with the route

Of the total supply expected to enter the
connecting Saswad Road to the Katraj
7. Viman Nagar south and south-eastern zone, the Kondwa
Kondhwa Bypass has led to developments in
8. Kharadi and NIBM micro-markets are expected to
Undri, Pisoli, Mohammadwadi, Kondhwa,
witness maximum supply. Most of the
Handewadi, etc.
developments here consist of 2 and 3-BHKs
EXISTING
with an average size of 1,069 sq.ft. and East and the North-Eastern Zone
1. Kothrud
1,522 sq.ft. respectively. 2-BHKs account for
2. Koregaon Park Locations such as Hadapsar and Manjiri in
42% of the supply in this zone, 2.5-BHKs and
3. Deccan the east and Mundhwa, Kharadi, Wadgaon
3-BHKs account for 14% and 32%
Sheri, Viman Nagar, Wagholi and Kalyani
respectively. Though the prices in these
Nagar in the north east are important
locations are relatively low and newer
residential micro-markets in this zone. Of
developments are Grade A, the inner
these markets, locations like Kalyani Nagar,
connectivity and condition of the roads are
Wadgaon Sheri and Viman Nagar are the
very poor. Around 9,057 units, adding
established residential micro-markets with
5.85 sq.ft. in all are expected to enter this
very little scope for large scale developments.
micro-market during 2009-11. Some notable
developments in this region include Raheja

26
KnightFrank.com

Central Zone Developments in Koregaon Park, Annexe. In

Comfort Zone, Baner Road
On the other hand micro-markets such as
Kharadi, Hadapsar and Magarpatta City are
witnessing extensive developments. This is
primarily due to the high level of demand
generated mostly from those employed in the
IT/ITES hubs of Hadapsar, Magarpatta and
Kharadi. Also, proximity to the Pune airport
at Lohegaon has stimulated demand along
the Airport and New Airport Road in the north-
east of the city. The important connecting
roads for this region include the Pune-
Sholapur National Highway, Mundhwa Road,
Kharadi Bypass, Nagar Road, New Airport
Road and Airport Road.
Deccan, Wanerwadi, Model Colony, Senapati
Bapat Road, Shivaji Nagar, Wakdewadi, Boat
Club Road, Bund Garden Road, Koregaon
Park, Camp, Swargate and Navi Peth form the
traditional residential micro-markets of Pune.
Since the development of Pune was radial in
nature, locations like Shivaji Nagar, Deccan
Camp and Swargate form the central
business districts of the city and this has
resulted in residential developments in and
around these micro-markets. Although there
is virtually no scope for large scale
developments, these locations continue to
command a premium price. This is largely
due to the fact that although the upcoming IT
Hubs of Hinjewadi, Kharadi and Hadapsar
exist, a large share of retail and commercial
activity in still concentrated in the central
micro-markets. Also, accessibility to the
IT/ITES hubs and various industries in the
north, west and east is comparatively easier
due to the improved connectivity within the
heart of the city.
Most of the projects are premium and consist
mostly of 2-BHK, 3-BHK and 4-BHK
apartments accounting for 44%, 44% and
12% of the total supply in this zone. Also
construction of bungalow developments is
also very prominent in the inner lanes of
these locations. A notable project in this zone
is Ganga Orchard by Goel Ganga
total approximately 0.5 mn sq.ft. of new
residential space is expected to be added to
this market from 2009-2011 contributing
around 321 residential units.
Capital & Rental Profile
Capital values across the Pune residential
market have been relatively stable over the
past one year, despite minor fluctuations
across certain micro-markets. The market as a
whole witnessed a rise in prices from January
2008- July 2008 where capital values reached
the peak. Post this, prices across all
micro-markets were relatively stable till
December 2008. From Q1 2009 however,
residential capital values began declining,
with a few markets witnessing a13-19%
correction in Q1 alone. Q2 2009 brought
mixed sentiments across the markets. Rates
in some markets continued to fall marginally,
while others remained stable and a few
markets displayed mild signs of recovery. In
Q3 2009 however, most of the markets have
displayed an increase in quoted prices while
a few markets continue to exhibit stable
prices.
Currently the rental yield across locations
varies between 3-7%. Koregaon Park, Boat
Club Road and Bhavdhan display a 5% rental
yield.

Kharadi and Hadapsar are the largest

contributors to the upcoming supply Table 5
expected to enter the eastern and Average Residential Capital Value Trend
north-eastern zone by end-2011. Most of the Pune Peak to Trough to Sep'09
developments consist of townships due to Trough Change Sep'09 Change (Rs./sq.ft.)
availability of large land parcels. These Koregaon Park -19% 0% 8,500
developments largely consist of 2 and 3-BHK Boat Club Road -29% 0% 8,500
apartments with an average size of 1,007 Deccan -6% 0% 7,250
sq.ft. and 1,600 sq.ft. respectively. A few Sopan Baug / Uday Baug -13% 21% 4,250
notable developments in this zone include Aundh -1% 1% 5,250
Runwal Seagul by Runwal Housing in Hadapsar -20% 0% 3,800
Hadapsar and Mystique Moods by Kothrud -19% 0% 4,375
Naiknavare Developers Pvt. Ltd. in Viman Vimanagar -10% 13% 4,250
Nagar. This zone is expected to see an Wanorie -3% 7% 3,750
additional supply of around 16.90 mn.sq.ft. Kondhwa - Undri -11% 5% 3,250
by end-2011, adding a total of approximately Source: Knight Frank Research
15,056 units.

27
Q3 2009
residential
market
Review

Figure 15
Residential Rental Values (2 BHK)
40000

35000

30000

25000
Rs./month

20000

15000

10000

Rajaveer Palace - Pimple Saudagar, Aundh Annexe

5000

0 locations such as Pimple Saudagar, Wakad, This is primarily due to the high level of
Koregaon Park

Boat Club Road

Kalyaninagar

Aundh

Hadapsar

Vimanagar

Kondhwa - Undi

Karve Road

Bavdhan

Baner

Pimple Nilakh, Rahatani, Sanghvi and Aundh. commercial development in the eastern zone.
This is expected to augment the The Hadapsar Saswad-Loni Kalbhor Road has
attractiveness of micro-markets in the north helped to ease vehicular access to IT Parks at
western zone, which as a result are expected Hadapsar, Kharadi and Phursungi. This,
Minimum Maximum to witness a price appreciation of 10-15% over coupled with the pilot project of the The Bus
the next two years. Rapid Transit System along the Hadapsar-
Meanwhile Sopan Baug/Uday Baug,
Swargate-Katraj corridor, has reduces travel
Hadapsar and Undri/Kondwa have a 4% Southern locations like Undri-Kondwa, NIBM
time to and from these locations. Various
rental yield. Deccan, Kalyani Nagar and and Dhayari are also expected to gain
other proposed projects under the
Aundh have a 3% rental yield while Baner momentum in terms of residential
MSRDC- Pune City Integrated Road
commands the highest yield of 7%. development over the coming years, and
Development Project are expected to
consequently could witness a price increase
accelerate growth along this corridor.
Outlook of 8-10% during this period. Low capital
values, improved connectivity via the While Q1 2009 witnessed price declines, Q2
The Pune residential market has witnessed
Mumbai-Pune Bypass and various proposed and Q3 witnessed signs of recovery in certain
increased activity in the past few years. The
infrastructure projects such as the Metro Rail markets. This trend is expected to continue in
rapid and diverse growth of the city’s demand
Project are all expected to contribute to the the next quarter, and price stabilisation is
base augurs well for the growth prospects of
aforementioned growth. The proximity of expected to continue into Q1 2010. Although
various zones across the city. The increasing
Kondwa and NIBM to the IT/ITES hubs of most buyers are willing to purchase a home,
prominence of the city, coupled with the
Hadapsar, Magarpatta and Kharadi, coupled they are still very cautious and far more price
initiation of several infrastructure projects, is
with the various infrastructure initiatives sensitive than they were during the boom
expected to further promote residential
under the MSRDC - Pune City Integrated Road period. This change in demand psyche,
development in the city. The north and north-
Development Project, will also boost coupled with the aforementioned
western zones will contribute a substantial
residential development in these locations. infrastructure initiatives that will de-congest
chunk of the total supply estimated to be
The ROB at Phursungi has reduced traffic the city and improve access to peripheral
infused in the city by the end of 2011,
congestion and improved connectivity locations, is expected to keep residential

In the north-western part of the city, the between Hadapsar and Kondhwa. This, along prices in Pune largely in check for the

Wakad- Aundh Road is most frequently used with the route connecting Saswad Road with foreseeable future

for Mumbai-Pune travel. In addition to this, it Katraj Kondhwa Bypass, has promoted

is also used to reach the Rajiv Gandhi development in Undri, Pisoli,

Infotech Park at Hinjewadi. The widening of Mohammadwadi, Kondhwa, Handewadi .

this road under the MSRDC-Pune City

Locations like Hadapsar, Kharadi and
Integrated Road Development Project is
Magarpatta, which are important markets in
expected to improve connectivity not only
the East and North-eastern zone, also exhibit
between Mumbai and Pune, but also to other
good development potential.

28
KnightFrank.com

Table 6
Pune Major Infrastructure Developments
Project Status Remarks
Bus Rapid Transit Planning/Pilot The ambitious plan over the next few years is to have a whopping 100 km. BRT network.
System Projects Completed The work on the first phase will cost Rs.650 million, and will be funded by the Jawaharlal
Nehru National Urban Renewal Mission of the central government.
Pilot Project 1- Currently operational along the Hadapsar-Swargate-Katraj Corridor
Pilot Project 2- Currently operational on the Solapur-Bhairoba Nallah stretch
The markets that have been impacted by the pilot projects are Hadapsar, Swargate, Katraj,
Bibwewadi and Sahakar Nagar. Traffic congestion has eased, thereby reducing travel time.
MSRDC - Pune City This Rs.2.6 billion project includes 33 developments in all. These developments include 6
road Integrated Road improvement projects, 9 railway over bridges, the widening of 1 railway over bridge, 2 river
Development Project over bridges and 15 flyovers. These roadways will decrease traffic congestion at major
junctions .The completion of some of the aforementioned work has already eased traffic and
prompted the development of contiguous locations. A few examples of ongoing
developments include :-
Completed at University Flyover at University + Senapati Bapat Road- Traffic congestion along University Road, Ashok
Nagar, Gokhale Nagar, Model Colony, etc. has eased and this has led to an increase in
residential and retail development. It has also reduced the travel time from central Pune to
peripheral locations like Aundh, Baner, Pimple Saudagar, Hinjewadi, etc. and has thus
increased the reach of the central micro-markets.
In progress Wakad Aund Road Widening- This road is used to travel from Mumbai to Pune or vice versa.
It is also used to reach Rajiv Gandhi Infotech Park at Hinjewadi. Vehicular movement in
locations such as Pimple Saudagar, Wakad, Pimple Nilakh, Rahatani, Sanghvi and Aundh
will improve significantly, and this is expected to improve residential demand in these
locations, particularly from employees of the Rajiv Gandhi Infotech Park in Hinjewadi.
In progress Baner Road Widening-This is expected to stimulate demand for retail , office and residential
space in locations such as Baner, Aundh and Pashan.
Metro Rail Project Planning - Estimated The 3 routes that have been identified are Warje-Chinchwad (via Karve Road, Jangli Maharaj
Completion 2012 Road, Shivajinagar and Pune-Mumbai Road), Shivaji Nagar- Kalyani Nagar (via Raja Bahadur
Mill Road and Pune-Ahmednagar Road) and Agriculture-Swargate (via Shivaji Nagar via
Shivaji Road)
The Metro Corridors planned within Pune will reduce road traffic and improve connectivity
to various regions that are currently not easily accessible. Examples of such regions are
Warje, located in southwest Pune, and Chinchwad, located in northwest Pune.
90’ Wide Ring Road Proposed It includes 2 roads that connect Somatne Phata to Pune City (South) and Lohegaon (North) to
Wadki. These roads will pass through Mamurdi, Kiwale, Chincholi, Nigdi, Talawade, Chikhli,
Moshi, Wadmukhwadi, Charholi, Nirgudi, Wadgaon Shinde, Lohegaon, Wagholi, Manjri
Khurd, Loni Kalbhor, Phursungi, Wadki, Urali Devachi, Undri, Pisoli, Katraj, Kondhwa
Budhruk, Nimbalkarwadi, Shindewadi, Ambegaon Khurd, Dhayari, Wadgaon, Khurd, Warje,
Bhugaon, Lande, Jambhe, Mahlungi and Maan.
This development will benefit both Pune and Pimpri-Chinchwad by reducing congestion
on major arterial roads and improving connectivity within the city. The Ring Road will also
connect software parks in the east and northwest of the city. As this development will also
improve connectivity of the peripheral regions with the central region, development in
peripheral regions could prosper.
Source: Knight Frank Research

29
Q3 2009
residential
market
Review
BEngalUrU
Figure 16
Distribution of Supply 2009-11
(in No. of units)
CBD - 1%
North - 26%
South - 39%
East - 26%
West - 8%
Source: Knight Frank Research
Market Review
The residential market of Bengaluru had
shown a steady property growth from 2007 to
mid 2008 which was particularly true for
premium properties. Significant factors which
influenced its growth were, demand for high
quality residential units and increasing
disposable income among the denizens. The
city administration had taken various steps to
further residential growth while formulating
the City Development Plan (CDP-2015) for
Greater Bengaluru. The Plan has proposed an
upward revision of FAR limits up to 2.5 and
development of satellite towns around the
city. To support real estate growth the State
Government had commenced infrastructure
developments such as the construction of the
Bengaluru Metro Railway Service, the
elevated highway at Electronic City, the
Bengaluru- Mysore Infrastructure Corridor- an
expressway to the Bengaluru International
Airport Limited (BIAL) at Devanahalli and
widening of the existing roads. All these
proposed and ongoing developments are
expected to play an important role in
spreading residential development across
the city.
30
to target the end user driven middle class
In the segment. The government on its part has
facilitated the reduction of interest rates and
aftermath of lowered stamp duty charges to encourage
the residential buyers.
slowdown, Current Scenario
The residential market in Bengaluru is
very limited currently stabilising. Although some
micro-markets are witnessing a price
projects have correction, it is less prominent now. In the
aftermath of the slowdown, very limited
been projects have been announced in the city and
announced in most of the projected supply would be a
result of the spill over from earlier residential
the city and developments. More mature residential
markets are currently witnessing a revival
most of the with steady capital price appreciation since
the last quarter whereas capital values in
projected other residential markets have stabilised.
Knight Frank Research estimates that the city
supply would will witness a residential supply of about
38,000 units translating to approximately
be a result of 72 mn.sq.ft. between 2009 and 2011. While
53% of this supply will be in form of 3 BHK
the spillover apartments, 2 BHK apartments will constitute
30% of the total supply. The southern zone at
from earlier 39% share, will be the largest contributor to
the supply, whereas northern and eastern
residential zones will contribute about 26% each to the
supply.
developments Figure 17
Estimated Supply 2009-11
The global economic crisis brought about a
40000
slowdown in the residential market around 37773
mid 2008. In a bid to encourage sagging 35000 34151
consumer confidence, private and 30000
nationalized banks lowered home loan rates
No. of residential units
25000
during the last few months of 2008, although
the impact was marginal. The reduced 20000 18458
absorption in the residential market forced 15693
15000
many developers to provide discounts in a
10000
bid to push sales. As a result of the slowdown
most residential projects which were under 5000 3622
development have either been deferred or
0
stalled in lieu of the reduced demand for
2011
2009
2010
premium properties. This has shifted the
Year
focus from premium housing to affordable
Supply Cumulative Supply
housing projects over the past year, primarily
Source: Knight Frank Research
KnightFrank.com

Bengaluru

11

6
2 1
3
4 8
1 3

2
7

5
7
8
10

The CBD continues catering to the demand are the fastest developing zones in the city.
UPCOMING
from the high income segment whereas the The high population density in these zones
1. Whitefield
suburbs are catering to the middle and upper can be attributed to the presence of IT hubs
2. Marathahalli middle class segments by offering larger in these locations.
3. Basavnagar residential units with standard amenities
4. Bannerghatta Road such as power back up, clubhouses, sports Central Business District (CBD)
5. BTM Layout facilities and open spaces. Residential market in central Bengaluru
6. Hebbal comprises Palace Cross Road, Richmond
Based on its geographical pattern, the
7. Sarjapur Road Road, Lavelle Road, Infantry Road,
Bengaluru residential market can be divided
8. Outer Ring Road Cunningham Road and Brunton Road. Few
into the following zones namely the CBD,
residential projects are coming up here due
9. Banasawadi Bengaluru North, Bengaluru South,
to unavailability of land and even these offer
10. HSR Layout Bengaluru East and Bengaluru West. The CBD
few apartments. Furthermore, redevelopment
11. Yelahanka or the Central Business District represents the
of old buildings into those with contemporary
most prominent residential locations in the
facilities, catering mostly to HNIs is also
EXISTING city. This zone is largely saturated with little
taking place in this micro-market. The higher
1. Vijayanagar opportunity for further development .The
income segment constitutes the primary
2. Magadi Road prime demand for this zone comes from the
demand segment in the CBD.
high income segment. Bengaluru West
3. Rajajinagar
comprises well established old residential This micro-market is estimated to witness a
4. Ulsoor
pockets in the city. Bengaluru North is the supply of about 450 units constituting
5. Koramangala
zone where most residential development approximately 1.2 mn.sq.ft. during 2009 and
6. Seshadripuram activity is being focused. The residential 2010.
7. Jayanagar demand for this zone is primarily investor
8. Indiranagar driven. Bengaluru South and Bengaluru East

31
Q3 2009
residential
market
Review

Figure 18
Bengaluru East
Unit-Wise Distribution of Supply 2009-11 Knight Frank
Residential layouts in Bengaluru East are
Research located at Indira Nagar, Airport Road, Frazer
Town, Cooke Town, Lingarajpuram,
estimates that Marthahalli Juction, HRBR Layout, Banaswadi,
Old Madras Road, KR Puram, Brookefields,
the city will Hoodi and Whitefield. This region is
witnessing a varied mix of developments
witness a ranging from apartments to villas and row
houses. This zone has a strong concentration
residential of the IT/ITES segment. The economic
slowdown has affected this zone the most as
supply of its residential development is directly
dependent on IT/ITES growth. The IT sector
1 BHK - 2%
2 BHK - 30%
about 38000 employees and NRI segment are driving the
2 ½ BHK - 3% demand for upcoming residential units in this
3 BHK - 53% units, zone. Brigade Group is coming up with a
3 ½ BHK - 1%
huge integrated township called Metropolis
4 BHK - 6% translating along the Whitefield Road. In the vicinity of
5 BHK/Penthouses/Villa - 5%

Source: Knight Frank Research to the IT corridor, a large number of residential

projects are being developed at Brookefields,
Most of the upcoming supply is due to the
spill over from last year. Prominent
approximately Hoodi and Hobli. Total Environment is coming
up with a high end residential apartment
developers like Nitesh Estates, Purvankara
and Embassy Group are coming up with
72 mn.sq.ft. complex in Whitefield called Windmills of the
Mind which is expected to entice HNIs.
customised high-end apartments over the
next two years, viz. the Nitesh Canary Wharf,
between 2009 Approximately 18 mn.sq.ft.of residential
space or 9,800 units is under construction
Purva Grande and Embassy Habitat
respectively.
and 2011 here and is expected to be ready for
occupancy by 2011.
prominent residential project which has come
Bengaluru North up in this zone. This region will witness a

Residential market in Bengaluru North supply of approximately 10,000 residential

consists of locations like Sadashivnagar, units translating into 20 mn.sq.ft. by 2011.

Jayamahal, RT Nagar, Hebbal, Bellary Road, Owing to the state of under development in

Yelahanka, Dollars Colony, Dasarahalli, the region, the proportion of end users is low.

Tumkur Road and Jalahalli. The international Therefore, the residential demand in this

airport at Devanahalli along with the region is predominantly investor driven.

improved connectivity to the city through the

An important infrastructure development in
four-lane Bellary Road are the key drivers for
the north zone is the under construction
rapid developments in this region.
elevated highway connecting Yelahanka to
Availability of large land parcels has led to
the city. Further, development of an internal
proposed development of theme based
ring road in Yelahanka will improve the
luxurious villa developments as well as huge
connectivity within the micro-market. The
integrated township projects which are yet to
Bengaluru Mysore Infrastructure Corridor
take off. Mumbai based developer B Raheja
(BMIC), which would provide connectivity to
has come up with its maiden high-end
this location from the south, is expected to
residential project Pebble Bay at Dollars
increase its development potential ,
Colony. Godrej Woodsman Estate is another
particularly in the residential sector. Purva Fountain Square, Marathahalli

32
KnightFrank.com
In Bengaluru
South,
prominent
recovery has
been
witnessed in
Koramangala,
where prices
have
increased by
36% post the
economic
slump
The development of the Outer Ring Road
(ORR) has improved the accessibility of
eastern locations like Sarjapur Road,
Marathahalli and Varathur.
Bengaluru West
Malleswaram, Seshadripuram, Rajajinagar,
Vijaynagar and Magadi Road are the
prominent residential locations of Bengaluru
West. Being one of the oldest residential
catchments in the city, this zone mainly
consists of individual houses and bungalows.
Scarcity of land has reduced the scope for
new residential development and hence, only
few projects are coming up in this
micro-market. The prominent projects are
Mantri Greens by the Mantri Group at
Malleswaram and a 40 acre self-contained
enclave by the Brigade Group called Brigade
Gateway located at Malleswaram-Rajajinagar.
Dubai based company ETA Star also made
their entry into Bengaluru with their project
'The Gardens' coming up at Magadi Road.
Residential development of about 5 mn.sq.ft.
constituting 2,900 units will be ready for
occupation by 2011.
Bengaluru South
In Bengaluru South, the residential expanse
spreads across Koramangala, Hosur Road,
Bannerghatta Road, Sarjapur Road, Outer
Ring Road, HSR Layout, Jayanagar, JP Nagar,
Banashankari, Kanakapura Road and
neighbouring locations. This zone represents
locations which are fast emerging as
potential residential destinations in the city.
The availability of land, strong infrastructure
development and presence of the middle
income segment as a pull factor, have
contributed to the development of this zone.
Among the current residential projects, there
is a high concentration along the Sarjapur
Outer Ring Road due to its proximity to the IT
corridor. Adarsh Group has launched an
integrated township project Adarsh Palm
Retreat sprawling across 200 acres, while
Sobha Group has several projects lined up
along the Outer Ring Road. In anticipation of
the upcoming Knowledge City and BMIC
project, prominent developers like Brigade,
Mantri and Purvankara have positioned their
projects along the Kanakpura Road. DLF has
made its foray into the city with Westend
Heights at Bannerghatta Road. An estimated
residential development of 28 mn.sq.ft. or
14,600 units by 2011 make this micro-market
Table 7
Average Residential Capital Value Trend
Bengaluru Peak to
Trough Change
M.G. Road -34%
Koramangla -24%
Indira nagar -38%
Malleshwaram -11%
J.P. Nagar -6%
Basavangudi -13%
Rajaji Nagar -15%
Banswadi -29%
Source: Knight Frank Research
the largest contributor to the city's housing
supply.
The elevated highway project between Silk
Board intersection and Attebelle will enhance
the connectivity of Electronic City and
surrounding locations on Hosur Road with the
city. This will improve the potential of
residential locations around Electronic City.
Another important project that is expected to
benefit this micro-market is the Bengaluru
Mysore Infrastructure Corridor (BMIC).
Expected to be ready by 2011, this project will
increase the micro-market's accessibility to
the western zone of the city. Expected by
2012, the development of the first phase of
the awaited Bengaluru Development
Authority- Peripheral Ring Road (BDA-PRR),
will work in favour of the residential
development in this micro-market. The
BDA-PRR will increase the locations
connectivity to the eastern zone.
Capital & Rental Profile
The economic slowdown resulted in a
correction of residential capital and rental
values in the city. However, the market is
witnessing stabilisation now and some
prominent residential locations are
witnessing an appreciation in capital values.
During the slump Bengaluru had witnessed
correction in capital values in almost all the
residential locations.
Trough to Sep'09
Sep'09 Change (Rs./sq.ft.)
47% 14,000
36% 6,750
23% 6,350
20% 6,000
15% 4,300
5% 5,250
4% 4,850
3% 3,500
33
Q3 2009
residential
market
Review
Even the premium residential location of CBD
like M.G. Road witnessed the brunt of the
slowdown, correcting by almost 34% from the
2008 average peak prices of Rs.13,000-
16,000/sq.ft. to Rs.7,000-12,000/sq.ft in Q1
2009. Converse has also been true for this
premium market, which recovered in prices
by almost 47% during the last six months
between March'09 to September'09 as the
sentiments turned positive and the economic
activity in the country witnessed
improvement. Another prominent location of
Indira Nagar also witnessed a sharp
correction of about 38% from the peak until
March'09, when prices reached the bottom.
However, with the turn of events, this market
has also seen an up move in prices by about
23% between March'09 and September'09.
In Bengaluru East the capital values remain
lower than other micro-markets due to an
oversupply of residential units. Locations like
Whitefield have been witnessing capital rates
which vary from Rs.2,300-3,500/sq.ft., which
is lower than most developed residential
locations in other micro-markets.
Whitefield witnessed a correction of about
13% during the slump. But, now it has
stabilised and has undergone a marginal
price increase of 4% in the March'09 to
September'09 period. However, on account of
large supply in the next 2 years, the prices are
not expected to move up considerably in this
micro-market.
In West Bengaluru, the residential capital
L&T South City, Bannerghatta
34
values have been steady over the past year.
It is a result of the relative saturation of this
micro-market. Locations in the west like
Malleshawaram have capital rates ranging
from Rs.5,000-7,000/sq.ft. During the
slowdown, this micro-market had seen a
correction of 11% in capital values, but with a
turnaround in sentiments, the prices in this
market have increased by 20%.
Bengaluru South has been witnessing
relatively strong residential development.
The capital values range from
Rs.5,500-8,000/sq.ft. in prime locations like
Koramangala and vary between
Rs.3,000- 5,600/sq.ft. in residential pockets
further south like JP Nagar. This variance in
rates can be attributed to differential
development across locations in the south.
Capital values in Koramangala declined by
almost 25% during the slump. But, the
recovery was better in Koramangala market,
where prices increased by 36% post the
economic slump. In fact, currently the prices
are at new peak levels here.
The residential rental values in the middle
income segment had witnessed a drop in the
fourth quarter of 2008. This segment
witnessed an average drop by 10% across all
micro-markets except in off-central locations
of Vasanth Nagar, Richmond Town,
Indiranagar, Cox Town, Frazer Town,
Banaswadi and Benson Town. The maximum
rental decline took place in the mid-range
micro-markets of Whitefield and
Marathahalli. Bengaluru has witnessed some
changes in the city's infrastructure, such as
the relocation of the airport, which has
negatively impacted rental values of
properties near the Old Airport Road and
Indiranagar. Also, most of apartments that
were launched in 2006-07 are ready for
possession now, adding to the supply which
far exceeds the demand. The economic
slowdown has also played its part in bringing
down the rental values as most of the
apartments are occupied by IT employees and
as the spending power has shrunk, tenants
are looking for better deals exerting further
pressure on the rental market. In order to
combat the weak market sentiment,
apartment owners are now offering discounts
to retain/attract tenants. Locations such as
Sarjapur Road, Outer Ring Road and HSR
Layout (south-east), Whitefield, Marathahalli
and Airport Road in the east, and
Bannerghatta Road in the south are
witnessing oversupply, whereas the North
Bengaluru rental market has seen a slight
hype in the recent past owing to proposed
upcoming developments in the area.
However, the overall slowdown in the real
estate market has resulted in a rental
correction in the north market.
Figure 19
Residential Rental Values (2 BHK)
160000
140000
120000
100000
Rs./month
80000
60000
40000
20000
0
Koramangala
Indiranagar
Sarjapur Road
Hebbal
Bannerghatta Road
BTM Layout
Minimum Maximum
Source: Knight Frank Research
KnightFrank.com

This market has not witnessed any significant
rental transactions in the recent past.
In Bengaluru, while the premium rental
markets like the Central Business District
(CBD) as well as the off-CBD locations are
witnessing few transactions, the middle
income markets are witnessing regular rental
transactions. In the CBD, locations like
Rajbhavan Road, Lavelle Road, Richmond
Town and Langford Town are witnessing high
demand for rental property and the rates
range from Rs.60,000-200,000 for a 2-BHK
apartment, However, in off CBD locations like
Frazer Town, Cox Town and Ulsoor locations,
where supply is abundant, the rentals are
lower at Rs.25,000-60,000 for a 2-BHK
apartment.
Locations with steady mid-market rentals
include Rajbhavan Road, Vasanth Nagar,
Malleshwaram, Sadashivanagar,
Koramangala, Indiranagar, Madiwala,
Cambridge Layout, Ulsoor and Domlur. In
South Bengaluru, established residential
locations like Koramangala have rentals
which range from Rs.45,000-150,000
whereas locations further south of
Bannerghatta Road and BTM layout have
rentals ranging between Rs.14,000-35,000
for a 2-BHK apartment.
Localities towards East Bengaluru such as
Whitefield, Marathahalli and Brookefield,
have a relatively lower rental demand for both
mid and premium markets. The rentals in
these locations range from Rs.12,000-30,000
for a 2-BHK apartment.
The rental market in West Bengaluru is
primarily serviced by independent houses
with locations like Malleshwaram having
rentals ranging from Rs.10,000-20,000 for a
2-BHK independent house. In North
Bengaluru prominent residential locations
like Hebbal have rental values ranging from
Rs.15,000-30,000 for a 2BHK apartment.
Without much variance, the residential rental
yield across all mentioned micro- markets are
in the range of 3-4% per annum.
Outlook
The residential market of Bengaluru has
witnessed heightened activity in the past few
years. With the increasing prominence of the
city, several infrastructure projects that will
have a bearing on the growth of its real estate
development have been initiated. The
prominent emerging residential markets are
located towards the eastern and southern
parts of the city.
The stretch extending from Electronic City in
the south towards Varathur in the east is
expected to be the strongest contributor to
residential development over the next 2-3
years. This stretch includes prominent
locations like Kanakpura Road and Sarjapur
road.
Electronic City and its surrounding locations
like Mysore Road have a presence of strong
office development, predominantly IT space.
Its connectivity to the city is expected to
improve once the elevated highway is
completed. The Bengaluru Mysore
Infrastructure Corridor (BMIC) cuts across this
micro-market which would increase its
accessibility towards the western parts of the
city. The development of the Bengaluru
Development Authority -Peripheral Ring Road
(BDA-PRR) will increase its connectivity
towards the east. Once the elevated highway
is operational, this micromarket will have
better accessibility to prominent retail
locations in the area namely Forum and Total
Mall. These developments are expected to
make the micro-market more attractive for
residential development.
Bannerghatta Road in the south is expected
to be another prime destination for

Table 8
Bengaluru Major Infrastructure Developments
Project
Elevated Highway between
Silk board intersection and Attebelle
Bengaluru Development
Authority -Peripheral Ring Road (BDA-PRR)
Bengaluru Mysore
Infrastructure Corridor (BMIC)
Source: Knight Frank Research
Status
Expected completion in 2010
Expected completion of Ist
phase in 2012
Expected competion in 2011
Remarks
Will provide faster connectivity from Electronic city to
Koramangala thereby reducing travel time. This is expected to
increase the residential potential of locations around Electronic
City
The first phase would improve the connectivity towards
the north eastern parts of the city comprising of locations from
Tumkur Road to Hosur Road which would connect Bellary Road,
Old Madras Road, Varthur Road and Sarjapura Road
Will provide good connectivity to Mysore thereby increasing the
residential potential of locations like Bidadi. It would provide
better accessibilty to the south western micro-markets in
Bengaluru .The four-lane expressway is expandable to six-lane,
and alternatively the 10-mtr median can be used for a metro rail
system or a high-speed train network that could connect the
entire area of the project. Plans have been incorporated into the
project for providing inter-modal stations along the expressway
for future use of rail network.

35
Q3 2009
residential
market
Review

has made it accessible from most prominent However, with the turnaround in economic
The stretch locations in the city. Presence of retail activity these premium markets reaped the
establishments such as Total Mall , More maximum benefit by witnessing increase in
extending Supermarket and Reliance Fresh would help capital values by 25-45% in the last 6 months
in further residential growth. These locations i.e. March'09 and September'09. In the
from are also in relative close proximity to the BDA southern zone, the residential prices have
PRR and have a presence of strong residential bottomed out with a few micro-markets also
Electronic catchment. witnessing a marginal price increase of
5-10%. However, a large proportion, of about
City in the Locations like Yelahanka and Doddabelapur
40% of the city's supply, which is due to
in the north are expected to witness
come up in this zone will prevent meaningful
south residential development for the lower and
price increases in the medium term.
middle income category. The strong
towards industrial development in the region and the
lack of proper dwelling units have increased
Varathur in the prospect of residential development. An
elevated highway connecting Yelahanka with
the east is the city is currently under construction.
Moreover, an internal ring road will be built in
expected to be Yelahanka, improving connectivity within the
micro market. A portion of the BMIC also cuts
the strongest across this location providing acessibilty to

contributor South Bengaluru. Doddabelapur is well

connected to the city by the recently

to residential constructed airport highway. It is also in

close proximity to the Bengaluru International

development Airport Limited (BIAL) which has intensified

residential development in the area. As of

over the next now, it lacks organised retail establishments

and proper social infrastructure facilities like

2-3 years hospitals and schools, but is expected to

develop over the next few years.

residential development over the coming

An evident trend in the last year has been the
years. Lower capital values and the presence
buyers' preference for completed projects
of strong residential catchment around this
and the ones offering value for money.
micro-market will be beneficial for its growth.
Developers also responded by offering
Its close proximity to the BMIC corridor and
payment schemes that are deferred until
the BDA-PRR, is expected to improve its
possession. Affordable housing projects
accessibility towards the northern and
targeting the middle income segment will see
western parts of the city.
a larger representation in the residential

The location is in close proximity to Hosur developments in the city. Government

Road which connects it to the city and also initiatives like reduction in stamp duty to 6%

has the presence of established retail will also provide relief to the sector.

locations like Big Bazaar and Forum Mall.

The economic slump adversely affected the

Micro-markets like Sarjapur Road, real estate development, which witnessed a

Marathahalli and Varathur are witnessing price correction of 25-35% even in the prime

ample office space development. The locations like M.G.Road, Koramangala and

development of the Outer Ring Road (ORR) Indira Nagar.

36
KnightFrank.com
hyderabad
Figure 20
Distribution of Supply 2009-11
(in No. of units)
Central - 4%
West - 65%
East - 12%
North - 13%
South - 6%
Source: Knight Frank Research
Market Review
The residential market in Hyderabad, which
was primarily driven by the IT/ITES industry,
has undergone a noticeable change in
development trend since 2005. Proactive
government initiatives, growth of the IT,
Pharma and Biotech sectors and the
inception of SEZs, Industrial Parks and IT
campuses all contributed to the residential
boom in Hyderabad. This rapid development,
along with the sudden demand for quality
housing, has seen the entry of many national
and international developers into the local
market. Thus, over a span of 2-3 years,
Hyderabad has witnessed extensive growth
of premium and luxury segment housing,
gated communities and villas. This, coupled
with speculative buying, caused property
prices in Hyderabad to escalate to
unaffordable levels, thus reducing the buying
capacity of the MIG segment across
Hyderabad. The global economic slowdown
adversely impacted the demand for housing
in the Hyderabad residential market, where a
lack of interest by end-users and investors
led to a decline in property prices.
Meanwhile, high supply in face of this
reduced demand has created a demand-
supply mismatch in the luxury housing
segment.
In the last decade, considerable interest has
been generated in the residential segment
near the Hitech City area. Real estate
development has picked up considerably in
areas near the IT investment destinations
such as Madhapur, Kondapur and
Gachibowli. Till the year 2000, residential
development was concentrated in
Himayatnagar, Kukatpally, Secunderabad
and Dilsukhnagar, while premium
development came up in Banjara Hills,
Begumpet, Jubilee Hills and Marredpally.
With saturation and low land availability in
these areas, development shifted to locations
such as Kukatpally, Nizampet, Miyapur,
Chandanagar, Kondapur and Kompally, all of
which have greater land availability. With the
entry of international majors into the
residential housing market of Hyderabad, the
development of large gated communities,
townships, and individual houses in
suburban areas of Hyderabad is prominent.
Current Scenario
The global financial meltdown in the last
quarter of 2008 has changed the approach of
developers, who over the last year have
shifted focus from premium to affordable
housing. From 2009 to 2011, residential
space supply of approximately 53,000 units,
which equates to roughly 87 mn.sq.ft. of
residential space, are expected to crop up
around Hyderabad and will be evenly
distributed across 2010 and 2011. Of the total
expected supply until the end of 2011,
approximately 50% will be accounted for by
3-BHK units and 30% by 2-BHK units. This
reflects a shift to a more practical approach
towards housing by developers, who due to
the realty slump have become averse to the
idea of luxury accommodation and are
scaling down unit sizes. Notable projects that
comprise upcoming supply are The Iconia,
located at Kondapur, Aparna Sarovar and
Aparna Cyber Commune in Gopannapalli,
Nagarjuna Residency in Gachibowli,
Sky Lounge in Hitech City and
Aditya Sunshine in Kothuguda. Locations in
the Madhapur-Gachibowli Corridor,
Kukatpally and Miyapur should remain
preferred residential locations because of
their proximity to work destinations.
Figure 21
Estimated Supply 2009-11
60000
53288
50000
No. of residential units
40000
36876
30000
19675
20000 17201 16412
10000
0
2011
2009
2010
Year
Supply Cumulative Supply
Source: Knight Frank Research
Central Zone
The central zone comprises areas like
Begumpet, Maredpally, Somajiguda,
Himayatnagar, Chikkadpally,
Srinagar Colony, Banjara Hills and Jubilee
Hills, all of which cater to higher income
groups as well as the upper middle- income
segment. Residential demand in this zone is
primarily driven by government officials,
businessmen, corporate office employees,
BPOs and NRIs, all of whom prefer this area of
Hyderabad due to its good connectivity to
other locations and proximity to shopping
malls, schools, colleges, hospitals and other
facilities. The total estimated supply which
will enter this zone by the end of 2011 is
approximately 2,100 units, which equates to
approximately 2.5 mn.sq.ft. Of this, 18% will
enter the market by the end of 2009, with
10% expected in 2010 and the majority 72%
expected in 2011.
37
Q3 2009
residential
market
Review

Hyderabad
10

1 7

6
3

9
9 5
4
2
8

6 2 3

The fact that the bulk of supply in this zone Assembly, Secretariat, Gandhi Bhavan,
UPCOMING will crop up in 2011 reflects the slump the Osmania Medical College, Malakpet,
1. Medchal realty sector has experienced over the past Dilsukhnagar, Chikkadpalli and Ramnagar.
2. Nanakramguda year or so. The upcoming supply will be

3. Nallagandha/Tellapur evenly distributed between 2 and 3-BHK Western Zone

units. A few notable upcoming premium
4. Manikonda The western zone comprises locations like
projects in this zone are RRS Towers at
5. LB Nagar Kukatpally, Madhapur, Miyapur,
Raj Bhawan Road, expected to be ready by
6. Kokapet/Narsingi Nanakramguda, Ameenpur, Gopannapalli,
the end of 2009, and Janapriya Metropolis,
Nallagandla, Gachibowli, Hitech City,
7. Shamirpet priced between Rs.2-3 million and expected
Kothaguda, Kondapur and Shankarpally. The
8. Uppal to be available in 2011.
total estimated supply entering this zone by
9. Gopanpalli
the end of 2011 will be approximately 32,500
The increasing traffic congestion in
units, which equates to 62 mn.sq.ft. and
EXISTING Hyderabad has led to identification of three
renders the western zone the largest
1. Banjara Hills high density corridors for construction of a
contributor to residential supply in
mass rapid transit system. The first corridor,
2. Jubilee Hills Hyderabad by the end of 2011. Of this total,
approximately 30 km. long and covering
3. Srinagar Colony 35% will enter the market by the end of 2009,
27 stations, will stretch from Miyapur to
4. Madhapur with another 35% expected in 2010 and the
LB Nagar. The second corridor, approximately
5. Hitech City/Kondapur remaining 30% expected in 2011.
15 km. in length, will stretch from
6. Kukatpally Housing Board Approximately 50% of the upcoming supply
Secunderabad to Falaknuma and will cover 16
will be accounted for by 3-BHK units, with
7. Miyapur stations. The third corridor, approximately 27
2-BHK units accounting for 20% and 4-BHK
8. Begumpet km. in length and including 23 stations, will
units a further 10%.
9. Maredpally (East/West) stretch from Nagole to Shilparamam. The
proposed metro will comprise areas like
10. Kompally
Erragadda, Sanjeevareddy Nagar, Punjagutta,

38
KnightFrank.com
North western regions like Bachupally,
Nizampet and Pragati Nagar feature
development of villas and row houses,
whereas Gachibowli, Madhapur and parts of
Kukatpally primarily feature high-end
residential apartments. Demand in this
region is end user driven and a majority of the
upcoming supply will cater to people working
for IT firms in and around Hitech City and
Gachibowli. Residential demand in the
western zone is boosted by its proximity to
work places, upcoming retail development
and supporting infrastructure in the form of
connecting railway stations, the National
Highway and the Express Highway that
connects to the airport. Future residential
development in this zone will be boosted by
the ongoing development of the financial
district at Gachibowli. The impact of the realty
slump is reflected by the fact that several
projects which were launched in 2007 and
were supposed to be completed by 2010 are
behind schedule. An example of this is
Maytas Hill County, situated at Bachupally,
which has come to a standstill. Prominent
projects launched in 2009 include
Lodha Belleza, located at Kuktpally,
Botanika, which is situated near Botanical
Figure 22
Unit-Wise Distribution of Supply 2009-11
1 BHK - 1%
2 BHK - 30%
2 ½ BHK - 3%
3 BHK - 49%
4 BHK - 7%
5 BHK Penthouse - 3%
Villas - 7%
Source: Knight Frank Research
Gardens in Kondapur, and Celestia, a
residential-cum-commercial project located
near the financial district. The recently
launched Rainbow Vistas, by
Ashoka Developers near Kukatpally, and
Manjeera Diamond, by Manjeera Group near
Tellapur, are examples of the slowly shifting
focus towards affordable housing.
The P V Narsimharao Elevated Expressway,
stretching from Mehdipatnam to Aaramghar,
is one of the biggest infrastructure projects in
Hyderabad. This 11.6 km. expressway, which
has been operational since this past October,
is aimed at improving connectivity between
the city and the international airport. Another
benefit of this development is that traffic at
Mehdipatnam will get de-congested, thus
providing an alternate route to access
Shamshabad airport.
Northern Zone
This zone represents the second largest
contributor to Hyderabad's residential
supply, with approximately 6500 units,
equating to approximately 11 mn.sq.ft. of
residential space, expected to enter the
market by the end of 2011. Of this total, 35%
will enter the market by the end of 2009, with
another 30% expected in 2010 and the
remaining 35% expected in 2011.
Approximately 50% of the upcoming supply
will be accounted for by 3-BHK units and 25%
by 2-BHK units. This zone is the second most
preferred residential destination and is
primarily investment driven due to its good
infrastructure facilities and proximity to the
cantonment area. High-rise developments are
not permitted due to the location’s proximity
to Hakimpet airport. Large-scale construction
activity in the north zone is being witnessed
in Kompally, Qutbullapur, Nagpur Highway,
Yapral and Shamirpet. Future demand for
Grade A projects in this zone will be
strengthened by the development of the
biotechnology sector at Shamirpet. The realty
slump has impacted projects like Casa
Estabana and Grand Ville, which although
commenced in 2008 have slowed down due
Indu Fortune Fields, Near Hi-Tech City
to fears pertaining to declining premium
segment demand. Major projects currently
under way in this region include Arcadia and
Gardenia Towers, both expected to be
available in 2011 and Prakruthi Nivas,
expected to be completed imminently.
Eastern Zone
The eastern zone comprises locations such as
Uppal, Nacharam, Mallapur, Kapra,
Cherlapalle, Pocharam, Kuntloor, Rampally
and Ghatkesar. The total estimated supply
which will enter this zone by the end of 2011
is approximately 6,500 units, equating to 7
mn.sq.ft. of residential space. Of this total, a
meagre 15% will enter the market by the end
of 2009, with another 50% expected in 2010
and the remaining 35% expected in 2011.
Approximately two-thirds of the upcoming
supply by the end of 2011 will be accounted
for by 2-BHK units. This could be indicative of
cautious developers who realize the value of
smaller and more affordable units going
forward. The eastern zone is yet to take off as
a residential location due to its predominant
composition of chemical, pharmaceutical and
biochemical industries, leading to pollution
and unpleasant living conditions. Upcoming
IT/ITES projects like Arena Town Centre could
boost demand in this zone.
39
Q3 2009
residential
market
Review
Some of the major projects underway here are
May Flower Heights at Nacharam,
Nilgiri Homes and Emerald Heights at
Pocharam, Sky City at Indira Nagar and
Arena Town Centre, which is being developed
by NSL Group and is an IT/ITES SEZ with
residential, retail and hospitality
components. Affordable housing is gaining
prominence and the AP government has come
up with a project called Sadbhavana, which
comes under the Rajiv Swagruha Corporation
that caters to the mid-income segment in
Pocharam.
In terms of infrastructure initiatives, Phase II
of the Outer Ring Road, which is under
construction, will improve the traffic situation
and connectivity in the eastern zone.
Phase II B, which will extend from Patancheru
to Pedda Amberpet Junction, is expected to
be grounded in October 2009. The extended
circuit will also connect areas such as
Dundigal, Medchal (towards the north),
Thumkunta (near Shamirpet towards the
north east) and Keesara and Ghatkesar
Junctions (near Pocharam towards the east).
Southern Zone
The southern zone encompasses locations
such as Malakpet, Attapur, Upparpally,
Saidabad, Santoshnagar, Rajendranagar and
Shamshabad. The total estimated supply
which will enter this zone by the end of 2011
is approximately 2,500 units, which equates
to 4.2 mn.sq.ft of residential space. Of this
total, 55% will enter the market by the end of
2009, with another 35% expected in 2010 and
Table 9
Average Residential Capital Value Trend
Hyderabad Peak to
Trough Change
Banjara Hills -24%
Jubilee Hills -8%
Srinagar Colony -14%
Begumpet -23%
Secundrabad -19%
Madhapur -43%
Gachibowli -39%
Source: Knight Frank Research
40
the remaining 10% expected in 2011.
2 and 3-BHK units will account for roughly
60% of this upcoming supply, with the
remainder being accounted for by a decent
share of 4-BHK, 5-BHK and villa units. This
could reflect a positive prognosis for
premium and luxury housing in this particular
zone. With the development of
Shamshabad International Airport and other
developments like SEZs, Hardware Park and
Fab City, this zone has been growing as a
residential location in recent times. Physical
infrastructure development towards the
international airport could further boost
residential demand in this zone. Most of the
projects in this zone are by local developers
and a majority of the development is
characterized by residential layouts and
plots. A couple of notable projects in this
zone are MAK Banyan Tree Retreat and
Sunshine Valley Gated Community.
Phase II A of the Outer Ring Road, which is
expected to be completed by June 2010, is a
noteworthy infrastructure initiative in the
southern zone. The development will stretch
from Shamshabad to Pedda Amberpet
Junction, and will augment access to
Srisailam Highway and
Nagarjunasagar Highway.
Capital & Rental Profile
Central Zone
In general, capital values across the central
zone declined marginally during the realty
slump, although rates in Banjara Hills
Trough to Sep'09
Sep'09 Change (Rs./sq.ft.)
17% 6,000
0% 6,000
0% 4,500
0% 3,750
8% 3,500
0% 3,150
0% 2,900
Figure 23
Residential Rental Values (2 BHK)
40000
35000
30000
25000
Rs./month
20000
15000
10000
5000
0
Secundrabad
Srinagar Colony
Begumpet
Jubilee Hills
Banjara Hills
Madhapur
Gachibowli
Kukatpally
Mivapur
Uppal
Minimum Maximum
Source: Knight Frank Research
declined by an average of 25% from peak
levels observed in Q2 2008. Currently, prices
in Banjara Hills and Jubilee Hills range from
Rs.5,000 to Rs.7,500 per sq.ft. Rental values
in the central zone dropped considerably by
20-25% during the realty slump as consumers
turned cautious and curbed budgets due to
the tough economic climate of the past year.
Average rentals for 2 BHK units in the
central zone currently range from a minimum
of Rs.15,000 per month to as high as
Rs.40,000 per month. Given prevailing
capital values in this zone, these rentals
equate to a rental yield of about 3%.
Western Zone
Western zone locations like Kondapur,
Miyapur and Kukatpally witnessed declining
prices to the tune of 10-20% during the realty
slump. Capital values in the market of
Madhapur have declined by an average of
43% from 2008 peak values. As the western
zone is highly concentrated with IT/ITES
employees, rentals here have declined by an
average of 10-12% on account of job and pay
cuts. Currently, rentals in the western zone for
2 BHK units range from Rs.5,000 per month to
Rs.15,000 per month. The average rental yield
in this zone is about 4%.
KnightFrank.com

Northern Zone Southern Zone Developers are now aware of the importance
of the affordability factor and have been
Although capital values in the northern zone The southern zone has seen a marginal
taking measures to reach out to middle and
declined by an average of 10-20% from 2008 decline in rental and capital values as there is
lower income buyers. Over the past year,
peak levels, the development of no existing social infrastructure. Capital
prominent developers have been re-
ICICI Knowledge Park, SP Biotech and values in this zone range from
modelling premium units and launching the
premium institutes like BITS Pilani and other Rs.2,200-3,500/sq.ft. and rental values for
same as affordable units. In addition to this,
engineering institutes have boosted 2 BHK units range from Rs.5,000 to Rs.15,000
several developers have been offering to pay
residential demand in the region during the per month. The rental yield in this zone is
EMIs on the behalf of buyers until
past year. Construction of the elevated approximately 2%.
possession. The promising future for
expressway from Paradise to Shamirpet,
affordable housing is reflected by the fact
which was postponed, will on completion Outlook that absorption rates in affordable segment
boost residential demand in the region.
Residential decline in Hyderabad was projects like the Waterfront Project, located at
Currently, capital values for apartments and
inevitable given the decline over the past Shamirpet have been healthy. Key developers
villas range between Rs.1,499-5,000/sq.ft.
year of the IT/ITES sector, which is a key leading the affordable housing initiative
and rentals for 2-BHK units range from
demand driver for the city's residential include Janapriya, Modi Builders, Prajay and
Rs.10,000 to Rs.20,000 per month. Given the
market. Capital values in major Obili. Luxury segment activity has been scant
above, the rental yield in the northern zone
micro-markets like Banjara Hills, Jubilee Hills, in recent times and can be expected to
equates to approximately 4%.
Madhapur and Gachibowli have declined by continue in this vein as needs of the middle
an average of 15-30 % over the past year. income consumer assume increasing focus.
Eastern Zone
However, declining raw material and land Over the next couple of quarters, residential
The eastern zone witnessed a negligible prices around Hyderabad can be expected to
prices, home loan rate concessions and the
decline in rental and capital values as it was remain stable if not slightly increase. In
formation of a stable government have
not over-exposed to demand from the addition to this, the onset of the festive
helped stabilise the residential market in
flagging IT/ITES sector. Capital values in the season is expected to witness significant
India, Hyderabad included. Going forward,
region currently range from residential investment from locals as well as
increasing focus on affordable housing can
Rs.1,500-3,500/sq.ft. and rental values for NRIs. Over the course of the next couple of
be expected. While there is a demand for
2 BHK units range from Rs.5,000 to Rs.15,000 years, prices in western zone locations like
housing within the range of Rs.1.5-3.5 million
per month. The rental yield in this zone is Kukatpally, Madhapur, Miyapur, and
with unit sizes ranging between
approximately 4%. Gachibowli could remain stagnant due to the
700-1,500 sq.ft., there is a shortfall of
projects that cater to the mid-income large quantum of 32,500 units of supply
segment. expected to crop up around the western zone
until the end of 2011.
Table 10
Hyderabad Major Infrastructure Developments
Project Status Remarks
Outer Ring Road Phase I- Remaining 4 Phase I from Gachibowli to Shamshabad will increase connectivity
Phase I & Phase II lanes to be completed by to residential locations such as Narsingi and APPA Junction
May 2010
Phase II A to be Phase II A will stretch from Narsingi to Patancheru &
completed by June 2010 Shamshabad to Pedda Amberpet
Phase II B expected to be
grounded in October 2009
P. V. Narsimharao Operational 11.6 Kms expressway aimed at augmenting connectivity between the city and
Elevated Expressway international airport. Traffic at Mehdipatnam has been de-congested, improving
from Mehdipatnam connectivity within the inner city and providing an alternate route to access
to Aaramghar Shamshabad Airport
Metro Rail Project Tendering process ongoing Mass rapid transit system to cover three high density corridors and will
Project expected to commence augment access to established residential markets like Erragadda, Sanjeevareddy
in the 2nd quarter of 2010 Nagar, Punjagutta, Malakpet, Dilsukhnagar, Chikkadpalli and Ramnagar
Source: Knight Frank Research

41
Q3 2009
residential
market
Review
Chennai
Figure 24
Distribution of Supply 2009-11
(in No. of units)
CBD - 1%
North - 6%
South - 68%
West - 25%
Source: Knight Frank Research
Market Review
The residential real estate market of Chennai
had shown a steady rise between 2005 and
mid 2008. This market was predominantly
driven by a strong potential for growth in
real estate. Factors which influenced its
growth were perceived demand for premium
housing units and growth of the IT/ITES
sector in the city. The Chennai Metropolitan
Development Authority (CMDA) on its part
encouraged real estate development by
promoting Rajiv Gandhi Salai as a prominent
IT destination and Sriperumbudur as an
electronic and manufacturing hub. This
resulted in increased residential
development towards the south and west of
the city with locations like GST Road and Rajiv
Gandhi Salai, Ponamallee High Road gaining
prominence. Prominent infrastructure
development work like commencement of the
Outer Ring Road which would connect
prominent locations in the western and
southern parts of the city, completion of the
flyover at Kathipara Junction and
development of road connectivity to locations
along the GST Road have increased the
spread of residential development in the city.
42
Figure 25
From mid 2008, the effects of the global
economic slowdown had a direct impact on Estimated Supply 2009-11
the growth of residential development in the 35000
32742
city. The slowdown in the manufacturing and
30000
IT/ITES sectors led to an unprecedented
uncertainty among the working class. This 25000
No. of residential units
dampened the demand for premium housing
20000
and consumers started postponing house
16562 16180
purchase decisions. Most residential 15000
projects, which were under development, had
10000
either been deferred or stalled. A perceptible 8567 7995
shift of focus from premium housing to 5000
affordable housing projects was observed,
primarily to tap the housing demand from 0
2011
2009
2010
the middle income segment. Towards the end
of 2008, Government took several measures Year
to boost the demand in the economy. Private Supply Cumulative Supply
and nationalised banks have reduced their Source: Knight Frank Research
interest rates on home loans and most of the catchments namely CBD, Chennai North,
developers in the city are ready to accept Chennai South, and Chennai West. The CBD
payments from home buyers after the represents the most prominent residential
structure has been constructed. But these locations in the city which include the old
measures are yet to create a strong impact on well established residential pockets of
increasing residential sales.
Current Scenario
the city will
The residential sector in Chennai is currently witness a
recovering from a price correction of close to
20% over the past year. There have been supply of
limited new residential developments in the
city and most of the upcoming supply would about 33,000
be a result of the spill-over from earlier
developments. Capital values in most residential
residential micro-markets are stabilizing.
Knight Frank Research estimates that the city
units,
will have a residential supply of about 33,000
residential units amounting to approximately
amounting to
45 mn.sq.ft. by 2011. About 68% of these
upcoming housing units will come up in the
approximately
southern zone. Of the total supply, the share
of 3 BHK apartments will be 55%. The CBD or
45 mn.sq.ft. of
the Central Business District continues to
cater to the high income segment whereas
residential
the middle income segment would prefer the
suburban and peripheral locations as they
supply, by the
are more economical. end of 2011
Chennai can be geographically divided into
four zones based on its residential
KnightFrank.com

Chennai

4
6
3

2 1
2

5
4
5

6
7

10

Chennai. This zone is saturated with little
UPCOMING
room for development. The prime demand for
1. Ambattur
this zone comes from the high income
2. Porur segment. Chennai North is in a nascent stage
3. Vandalur of residential development and is expected to
4. Sriperumbudur contribute significantly once the focused
5. Thiruvanmiur residential development activity commences
residential projects in this zone. Most of the
emerging supply is in the form of
redevelopment projects either by remodelling
or redeveloping existing residential units into
apartments with contemporary features. Most
of these apartments have limited number of
units due to development constraints. These

6. Velachery in locations within this zone. Chennai West units predominantly cater to the high income
and Chennai South consist of locations which segments. During 2009-11, the new
7. Perungudi
are rapidly developing in terms of residential residential supply in this zone is expected to
8. Pallavaram
space. The presence of both office and retail be a little over 300 units translating to
9. Tambaram
space has attracted the residential approximately 0.6 mn.sq.ft., which reflects
10. Karapakkam development, which is predominantly the level of saturation. Prominent developers
occupied by end users. In addition to the well like Appaswamy Real Estate, Lancor Holdings
placed social infrastructure like schools and and Vijayshanthi Builders are developing
EXISTING
hospitals, these zones have a good high-end projects in the CBD.
1. Thyagaraja Nagar connectivity.
2. Mylapore The prominent projects are West Hills in

Central Business District (CBD) Saidapet, Coral in T-Nagar and Pebble in

3. Royapettah
Numgambakkam. Chaitanya Developers is
4. Chetpet The CBD predominantly comprises the
coming up with two projects on Boat Club
5. Adyar eastern parts of the city. Residential markets
Road namely Satyanarayana Avenue and
6. Vadapalani in eastern Chennai include Nungambakkam
ABM Avenue. Most of these projects are
7. Nandanam Thyagaraya Nagar (T-Nagar), Mylapore,
expected to be completed within two years
R. A. Puram and Alwarpet. Paucity of land has
8. Besant Nagar from now.
resulted in limited development of new

43
Q3 2009
residential
market
Review
Figure 26
Unit-Wise Distribution of Supply 2009-11
1 BHK - 6%
2 BHK - 32%
2 ½ BHK - 2%
3 BHK - 55%
3 ½ BHK - 0%
4 BHK - 2%
5 BHK/Penthouses/Villa - 3%
Source: Knight Frank Research
Chennai North
The residential market in Chennai North
consists of locations like Tondiarpet, Padi,
Ayanavaram, Purusawakam, Madhavaram,
Red-Hills and Ennore. The residential market
in the northern part of Chennai is relatively
under-developed as compared to other parts
of the city. This belt has predominantly been
home to small-scale industries like textiles
and chemicals. A majority of the people
residing in these areas are from the lower
income group and this is reflected in the
housing development pattern with the dearth
of Grade A developments in this zone. The
lack of proper social infrastructure like
schools, health care facilities, entertainment
avenues, is the prime cause of the relative
underdevelopment. Water supply continues
to be a problem in these locations while
power supply is sporadic, the road
connectivity is good but accessibility of
interior locations is a problem. Prominent
projects in this location include Lumbini
Square by True Value Homes in
Purusawakam, Orchid Springs by Alliance
Infrastructure at Padi and Esplanade by
Emaar MGF at Tondiarpet.
44
This region is expected to come up with a (NH-45) to Tiruvottiyur Ponneri Panjetty (TPP)
supply of approximately 2,100 housing units will improve the connectivity of this micro-
constituting 3 mn.sq.ft. by 2011. The market with the southern zone of the city.
residential demand is currently driven by the Sriperumbudur will also benefit from the
low income segment. proposed airport development towards the
NH-4.
Chennai West
Anna Nagar, Porur, Moggapair,
Chennai South
Sriperumbudur and locations on Mount In Chennai South, the prime residential space
Poonamallee Road constitute the prime spreads across Adayar, Besant Nagar,
residential locations towards Chennai West. Velachery, locations off Rajiv Gandhi Salai
The western zone consists of locations that like Sozhlinganallur, Kelambakkam, Padur,
are amongst the upcoming areas in Chennai. Seruseri, and locations across GST Road like
The saturation of land banks in the CBD has Tambaram, Pallikarnai, Vandalur and
seen the movement of residential Maraimalai Nagar.
development towards the west due to its
proximity to important roadways like NH-4, its
inherently strong residential catchment, Majorly
presence of schools health care facilities,
restaurants and educational centres, major affected
electronic and manufacturing industries in
this zone. The western zone is expected to markets
add about 8,100 housing units constituting
12 mn. sq.ft. to the existing residential supply include
by 2011. The setting up of the electronic
hardware corridor at Sriperumbadur by the
Central
government has resulted in increasing
interest in residential development in this
locations like
zone. Multinationals like Hyundai, Nokia, Dell
and Samsung have set up their units in these
Guindy, where
locations and this is expected to further
contribute to the increase in demand for
prices have
residential space. This zone is primarily
expected to cater to demand coming from the
corrected by
manufacturing sector. Prominent residential
19% from peak
projects expected to be available within the
next two years include Metrozone by The levels, and
Ozone Group, Shyamala by Ceebros, Sky City
by Dugar Housing and Infinity by Vijayshanti Vadapalani,
Builders.
Major developments that are expected to
where prices
come up in this zone include the
development of the satellite town along the
have
Poonamallee High Road. This satellite town to
be developed by the Tamil Nadu Housing
corrected by
Board (TNHB) would have the requisite 20% from peak
physical and social infrastructure. Similarly,
the six lane ORR project connecting Vandalur levels
KnightFrank.com

This zone represents locations which are Table 11

viewed amongst the prime upcoming Average Residential Capital Value Trend
residential destinations in the city. The Chennai Peak to Trough to Sep'09
Trough Change Sep'09 Change (Rs./sq.ft.)
development of the IT corridor along Rajiv
Egmore/Kilpauk -5% 7% 5,600
Gandhi Salai and concessions given by the
Boat Club 0% 0% 16,000
government in promoting this industry have
Poes Garden -7% 4% 14,250
indirectly led to the growth of residential
T Nagar -2% 11% 7,750
markets in locations around this micro-
R A Puram -3% 6% 9,000
market. The availability of land and
Ashok Nagar -2% 9% 6,000
development of both social and physical
Guindy -19% 14% 4,150
infrastructure like the four lane expressway,
Vadapalani -20% 0% 3,600
MRTS system, hotels like Asiana and Fortune,
Source: Knight Frank Research
educational institutes like Sathyabama
College, hospitals like Lifeline over the past
prominent residential locations in the CBD upcoming residential projects and capital
couple of years have accelerated the growth
vary from Rs.6,500-17,000/sq.ft. The values varying between Rs.3,000-5,700/sq.ft.
of residential space in this zone. With 68%
prominent markets like Poes Garden and While the rental markets in the high end
share of the total residential unit supply, this
T-Nagar, which do not have scope for segment continued to decline since
micro-market accounts for the largest
significant new supply, remained resilient to mid-2008, the mid end rental markets
contribution to housing supply in the city.
the real estate slump. Hence, the price remained stable. It can be primarily attributed
About 22,000 residential units translating to
correction from 2008 peak remained at a to households seeking economical dwelling
approximately 30 mn.sq.ft. of housing space
maximum of 5% in these locations. These units due to the slump in the market, causing
is expected to come up in this zone by 2011.
markets also witnessed a smart recovery in a demand side pressure. Since mid-2008 the
A majority of this supply will hit the market in
prices as the economic environment rentals have dropped by about 15% for the
2011. Prominent projects in the zone include
improved, witnessing an up move in prices by high end segment and approximately 5% in
Estancia by Arun Excello, Mantri Synergy by
about 10% between March'09 and the mid end segment.
Mantri Developers, Upscale by Hiranandani,
September'09. In Chennai South the capital
Swanlake by Puruvankara, Pushpadhruma by The rental values in prime suburban locations
values remained lower than other
Marg Developers and the upcoming like Adayar, Besant Nagar, Mylapore range
micro-markets due to a large supply of
residential project by L&T. Most of these from Rs.60,000-150,000 for a 2-BHK
residential units. Locations across Rajiv
projects have been under development over apartment.
Gandhi Salai and GST Road have been
the past one year and the delay in their
witnessing capital rates which vary from
execution is reflective of the low market Figure 27
approximately Rs.2,500 -3,500/sq.ft. Chennai
sentiment. Residential Rental Values (2 BHK)
West, which represents emerging residential
160000
pockets, is witnessing capital values in the
Capital & Rental Profile range of Rs.7,000-8,500/sq.ft. in Anna Nagar 140000

The economic slowdown has resulted in lower and Rs.2,000-3,000/sq.ft. in locations further 120000
capital and rental values for the residential west like Sriperumbudur. This variance in
100000
sector. The residential capital values across rates can be attributed to differential
Rs./month

Chennai, which witnessed a correction in the development across locations in the west. 80000

range of 5-20% from peak until
September '09 are currently stabilizing.
Central locations like Guindy that corrected
by 19% and Vadapalani that corrected by
Chennai North has a dearth of proper
60000
residential development with just a couple of
40000
prominent projects which are slated to be
ready over the next two years. The capital 20000

20% from peak until September'09 were values in the north zone range between
0
amongst the locations that witnessed the Rs.1,500-2,000/sq.ft. in locations like
Adayar

R A Puram

Santome

Alwarpet

Velachery

Cholemedu

Pallikarnal

Moggapir

major brunt of the slump. The capital values Madhavaram and Red Hills. Purusawakam
in these locations range between and Tondiarpet are the two micro-markets in
Rs.3,200-5,100/sq.ft. The capital values of the north zone with a couple of premium Minimum Maximum

Source: Knight Frank Research

45
Q3 2009
residential
market
Review
growth of
residential
development
is expected to
be towards
the western
and southern
quadrants of
the city
On the other hand, in peripheral locations
towards the south like Rajiv Gandhi Salai and
GST Road rentals are much lower ranging
from Rs.15,000-30,000 for a 2-BHK
apartment. For locations in the west which
are now considered good residential markets
like Anna Nagar, the rentals range from
Rs.20,000-60,000 for a 2-BHK apartment,
whereas emerging western locations like
Moggapair and Sriperumbudur command
much lower rentals varying between
Rs.8,000-15,000 for a 2-BHK independent
house. Towards the north there is a dearth of
quality residential dwelling units most of
which are developed to cater to the low
income segment. Locations closer to the
coast-line command higher rentals such as
Santhome, which is currently witnessing
rental values between Rs.45,000-120,000 for
a 2-BHK house. The Chennai residential
micro-markets are not very disparate in terms
of the rental yields. The residential rental
yields in the city remain in the range of
3-4% p.a.
Outlook
The residential market in Chennai is at the
cusp of a change with the demand for cost
effective housing units dominating the city's
residential space. There is a perceptible
46
change in the behavioural pattern of
consumers. A couple of years back, most city The prominent
developers focused on developing premium
housing whereas today there is a gradual markets like
shift towards value oriented residential units.
The changed market scenario and consumer Poes Garden
behaviour would make it necessary to
reposition and restructure the premium and T-Nagar,
projects.
which do not
This would mark a shift from catering to the
high end segment like second home buyers, have scope
NRIs and HNIs to the middle income segment.
Incentive offers like a proposed additional FSI for
for such projects would go a long way in
furthering residential development for the significant
middle income segment. The changed market
dynamics have also prompted developers to new supply,
focus on value housing whereby they
concentrate on providing basic amenities, remained
like uninterrupted power and water supply,
rather than clubs and swimming pools. This
resilient to
can be witnessed in some of the recently
announced residential projects by prominent
the real
developers in the city.
estate slump
The residential development is expected to
grow towards the western and southern Ambattur is poised to be a prominent
quadrants of the city. Micro-markets such as micro-market for residential development in
GST Road and Rajiv Gandhi Salai in the south near future. The Madras-Tiruvallur Highway
and locations like Sriperumbudur, Ambattur (MTH Road or NH 205) now known as CTH
and areas off Mount Poonamallee Road Road, passes through Ambattur and the
towards the west are expected to generate Chennai-Kolkata Highway is just about 7 km.
strong residential interest over the next from the place making it a strategic location.
3-4 years.
Central Park South, Rajiv Gandhi Salai
KnightFrank.com

The new Chennai Bypass Road between
Maduravoyal and Madhavaram would pass
through Ambattur Industrial Estate. The
completed first phase of the Bypass Road
connects NH45 with NH4. The second phase,
under construction, would connect NH4 with
NH5 and NH205 via Ambattur Industrial
Estate. The Chennai Central-Arakkonam
railway line passes through Ambattur and has
a railway station at Ambattur.
Suburban broad gauge EMU trains operate
daily from Chennai Central and Chennai
Beach to Avadi, Tiruvallur, Arakkonam and
Tiruttani via Ambattur.
By rail, Ambattur is 30 minutes from Chennai
Central, 20 minutes from Perambur and
10 minutes from Villivakkam. Many fast EMU
locals (suburban trains) towards Tiruvallur,
Avadi and Tiruttani halt at Ambattur railway
station. In addition to this Ambattur is
expected to provide for a strong influx of
IT/ITES space making it a preferred
residential location.
Poonamallee High Road which extends up to
Sriperumbudur in the west is another
micro-market where residential development
is expected to increase over the next couple
of years. The Tamil Nadu Housing Board
(TNHB) is expected to develop a satellite town
in this location as a part of their city
development plan. It would have all the
required social infrastructure facilities like
schools, healthcare centres, parks and
shopping complexes along with basic
infrastructure like roads, electricity and
drinking water. The six lane ORR project
which will connect Vandalur (NH-45) to
Tiruvottiyur Ponneri Panjetty (TPP) Road is
expected to provide better connectivity of this
micro-market towards the south of the city.
Sriperumbudur with its strong industrial
presence is expected to spawn residential
development. The proposed airport on the
NH-4 is also expected to entice residential
development towards Sriperumbudur.
In the south, micro markets like GST Road
and Rajiv Gandhi Salai are expected to
develop into prominent residential locations
in the future. The presence of the prominent
IT and hospitality developments in these
micro-markets is expected to translate into
bigger residential developments over the
next 2-3 years. The proposed ORR is expected
to provide better connectivity to these
locations from the western parts of the city.
Satellite towns have also been proposed in
these locations .The development of the
MRTS in Velachery and Rajiv Gandhi Salai
would further increase the attractiveness of
these locations. The relatively lower cost of
residential units in these locations has
contributed to an increase in the affordable
housing projects in these micro-markets.
The relaxation of costal regulation zone
construction rules is likely to generate a
renewed interest of developers and investors
along the East Coast Road. Rajiv Gandhi Salai
would witness pricing pressure on account of
large supply and lack of social infrastructure,
which in turn would shift the focus to GST
Road that boasts of a relatively stronger
physical and social infrastructure in this
region. The sustenance of the residential
sector for the next couple of years would
primarily depend on tapping into the end
user market by providing them with products
which cater to their preferences.

Table 12
Chennai Major Infrastructure Developments
Project
100 ft Bypass road connecting
Madhuravoyal and Madhavaram
Outer Ring Road (ORR) from
Vandalur to Tiruvottayur
Velachery MRTS Railway station
Source: Knight Frank Research
Status Remarks
Expected to be completed The Chennai Bypass is a fully-access controlled expressway that
in 2010 interconnects four national highways. The first phase is 19 km six lane
fully access controlled carriageway from Tambaram on the Grand Southern
Trunk Road(NH 45) to Maduravoyal which lies on the Chennai -Bangalore
NH4. A 3-tier interchange has also been constructed at the starting point at
Irumbuliyur Highways around Chennai. Constructed as part of the National
Highway Development Project to decongest the city of transiting vehicles,
the expressway interconnects NH45, NH4, NH205 and NH5.The second
phase include extending the bypass by 13 km from Maduravoyal to
Madhavaram on the Chennai - Kolkata NH5. It also includes 2 interchanges.
A clover-leaf grade separator at Maduravoyal Junction and a trumpet
interchange at Madhavaram where the bypass phase II ends.
Expected completion of The 62-km Chennai Outer Ring Road project, proposed on the outskirts
1st phase -2012 of the Chennai Metropolitan Area, aims at decongesting traffic and to
enable dispersal of urban growth. The ORR will connect Vandalur (NH
45) to Tiruvottiyur Ponneri Panjetty (TPP) road. The project will come up
in four stages. The six-lane ORR will include a provision for a 22-metre
wide corridor for public transport
Expected to be completed Through rail network it will increase the connectivity of OMR and
in 2009 Velachery to the city centre.

47
Q3 2009
residential
market
Review
KOLKATA
Figure 28
Distribution of Supply 2009-11
(in No. of units)
Central & South Central - 3%
East - 55%
West - 10%
North - 11%
South - 21%
Source: Knight Frank Research
Market Review
The residential real estate market of Kolkata,
the capital city and commercial centre of
Eastern India, has witnessed a significant
change in its skyline over the past two-three
years. The staid brick structures of the city
have made way for multi-towered high-rises,
ushering in a modern era governed by fast
paced technology and a changed lifestyle.
This may be attributed to the growth of the
IT/ITES sector in the city, marked by high pay
packages, thereby leading to increased
consumerism and investments in the real
estate sector. Nuclear families with
requirements for modern apartment lifestyles
have become the order of the day Kolkata.
However, the enthusiasm witnessed in the
residential market of the city took a beating
with the global economic turmoil dampening
developers' spirits, who had undertaken
several high profile residential projects,
mostly in Rajarhat, in the eastern part of the
city. Majority of the projects, launched two
years back, had to extend their completion
timelines due to the tight liquidity condition
of the developers. The positive factor
observed in the city's residential market was
48
Figure 29
that, unlike other cities across the country,
the rate of decline in residential prices Estimated Supply 2009-11
witnessed in the city was much lower as 30000
compared to other metros. This may be owing
25000 24750
to the fact that the Kolkata market was not
speculative in terms of residential demand.
20000
No. of residential units
Besides, proactive government measures to
curb disorganised real estate development by 14270
15000
way of entering into joint ventures with
11430 10480
developers also aided in keeping the prices 10000
in check, thereby avoiding a steep decline.
The end-user driven market has assured that 5000
2840
although the overall sales growth rate has
come down, the volume of sales has 0
2011
2009
2010
remained the same. Not surprisingly, majority
of the demand for residential property Year
emanated from the middle income segment Supply Cumulative Supply
of the city. Diminution was noted in the Source: Knight Frank Research
demand for apartments in the higher income At present, the prime residential locations of
groups. Kolkata are concentrated in the central and
south-central part of the city. Up market
Current Scenario addresses in the city include CBD locations
like Park Street and Camac Street and south-
The Kolkata residential market over the past
central locations like Gurusaday Road,
year has shown considerable resistance to
Jodhpur Park, Gole Park and Lake Garden.
the overall slowdown in the real estate sector.
These locations can be termed as established
While the slump in property prices in Tier I
residential markets with very less scope for
cities was in the range of 25-40% and above,
new development. Besides, southern city
the average decline in Kolkata was about
locations like New Alipore, Rashbehari,
10-18%. Not much slackening of demand for
Tollygunge and Gariahat are other popular
residential property was seen in the city
residential destinations in Kolkata, the most
despite increase in construction cost and a
expensive being Ballygunge and Alipore.
dull share market.
However, in the last two quarters of 2008,
around 24,750
Kolkata's residential market registered a
lower growth rate as compared to the
units,
previous year. The demand in the real estate
sector had touched peak levels between
translating
January-March 2008. This was post the real to roughly 32
estate boom of 2007 in the city's residential
sector. According to industry sources, mn.sq.ft. of
residential property sales had registered a
growth of nearly 30-40% in 2007 which residential
dwindled by 10-15% in 2008. On a positive
note there has been a gradual revival in space to
transactions during the last two quarters,
with the demand for residential property come up in
primarily subsisting in the middle price
range. the city
KnightFrank.com

Kolkata

1
4

5
1

2 7
4 3

UPCOMING launched their projects in these suburban the Kolkata Metro Project, the residential
locations. Howrah, too, has seen its share of zones in these micro-markets will continue to
1. Rajahart
residential real estate development in the attract end-users and investors alike. Besides
2. Behala
recent few years. By the end of the year 2011, the infrastructure and connectivity
3. Maheshtala
around 24,750 residential units, translating advantages, the central and south-central
4. Bata Nagar to roughly 32 mn.sq.ft. of residential space is parts of the city also enjoy the benefits of
5. Kona Expressway estimated to be operational in the city. matured office and retail markets, which act
6. Garia as a major catchment factor for the
7. Jessore Central & South-Central Kolkata residential segment.

Central Kolkata has predominantly been the

EXISTING
1. Ballygunge
2. Alipore
3. Tollygunge
4. Lake Town
5. Bhawanipur
During the past three years, extensive
residential real estate development was
undertaken in the suburban locations of the
city, particularly in Rajarhat in the east,
Jessore Road in the north and towards Behala
further down south. A number of leading
national and international developers have
Amongst the key residential projects in the
seat of administration with a number of
region, a note can be made of the recently
government offices located here. The
completed high-end project Oasis by the Fort
residential pockets in this micro-market have
Group at Panditya Road. At present, around
typically been termed as some of the most
620 residential units are underway which are
preferred locations in the city. Despite the
scheduled to be completed by end-2011,
dearth of sufficient land parcel in the area,
adding around 1.6 mn.sq.ft. of residential
which has restricted the development of new
space to the central Kolkata market. Of the
projects, demand for residential property has
units under construction, about 38% are
always been high. As with Central Kolkata,
2-BHK units while 52% comprise 3-BHK units.
the South-Central locations of the city will
Important upcoming residential projects in
continue to be sought-after residential
this location include Merlin Regency and
markets, primarily on the grounds of good
Srijan Heritage Park, launched by Kolkata-
connectivity. Being linked to all corners of the
based developers Merlin Group and Srijan
city by means of a well developed road
Properties respectively.
network and a rail connection supported by

49
Q3 2009
residential
market
Review
North Kolkata
The northern part of the city, comprising
locations like Madhyamgram, Barasat and
Jessore Road, is discerned by a number of
low-rise apartment blocks. Of late, this region
has emerged as a much favoured residential
destination for the mid-income category. With
a number of infrastructure initiatives
underway, the region is expected to witness
significant residential demand in the
forthcoming years. The widening of Jessore
Road to 6 lanes will substantially reduce the
traffic congestion on route to the city's
central locations. Besides, Jessore Road will
also be connected to the main road in
Rajarhat, thereby providing swifter
communication between the two micro-
markets. With the Belghoria Expressway also
under construction and Jessore Road's
linkage to NH-34, North Kolkata will emerge
as an important inter-region trade corridor in
the near future.
On the real estate development front, major
activity is observed on Jessore Road because
of its proximity to the airport. Developments
like Aponaloy by Reside Group and Diamond
City North by Diamond Group, both located
on Jessore Road, are some of the noteworthy
residential projects in the region which
became operational in the past year. Another
important project Fortune City by Fortune Park
in the north,
major activity
is observed
on Jessore
Road because
of its
proximity to
the airport
50
Figure 30
East Kolkata
Unit-Wise Distribution of Supply 2009-11
The eastern part of Kolkata, primarily
comprising Rajarhat, Salt Lake and parts of
the Eastern Metropolitan Bypass (EM Bypass)
has been proclaimed as the new face of
Kolkata realty in recent years. This region has
attracted the maximum number of real estate
developers, both national and international,
to launch their projects. While Salt Lake
Sector V served to be the IT hub of the city,
residential developments in this
micro-market enjoyed proximity to the airport
and good connectivity with other parts of
1 BHK - 3% Kolkata. The development in this region,
2 BHK - 40% particularly Rajarhat, was triggered by the
3 BHK - 47% unlocking of large land parcels by the
4 BHK - 9%
government (HIDCO), with an objective of
5 BHK & Above - 1%
decongesting the city.
Source: Knight Frank Research
While the year 2006-07 saw the launch of
Housing at Madhyamgram was also several high profile residential
completed in 2008. Srijan Midlands by Srijan developments, slated for completion by the
Realty, with over 360 units, is one of the end of 2008 and 2009, only a handful
prominent upcoming residential projects on projects have actually been completed.
Jessore Road. Another key project Avani Significantly, most of these completed
Oxford by Avani Estates is underway in Lake projects are not fully occupied despite
Town. The project Orbit Skyview by the Orbit considerable bookings in majority of them.
Group, located between BT Road and The reason behind the unoccupied
Northern Avenue, is approaching completion apartments can be attributed to limited
and is expected to be fully operational in development of social and physical
Q1 2010. In the recent months, Barasat, the infrastructure in the region.
district headquarters of 24 Parganas North,
have been increasingly coming up as an
attractive location for affordable housing.
A number of residential projects by local
developers are currently underway, notable
amongst them being Larica Township by the
Larica Group, Fortune Township by the
Fortune Park housing and Pushpakalay by
Pushpakalay Residents Group.
By the end of 2011, this northern
micro-market is estimated to witness the
infusion of around 4.1 mn.sq.ft. of new
residential space. Approximately 2,760 units
are in the pipeline, of which around 45%
belong to the 3-BHK category, followed by
42% consisting of 2-BHK units.
Diamond Heights, Chetla Road
KnightFrank.com
The construction delay witnessed by various
commercial and retail projects in the region,
is also an important factor leading to low
occupancy levels in residential developments
in Rajarhat. The retail developments in
particular, were expected to cater to the
residential catchment and hence a delay in
their completion has hampered residential
activity in the region. However, with the
economy stabilising and developers
resuming construction activity, completion of
these projects is expected in the next few
years. The state authorities are also taking
positive steps towards addressing the issue
of transportation and social infrastructure
within Rajarhat. Work on the cancer specialty
hospital by the TATA Group is in progress
while Delhi Public School has already started
its branch in the region.
Meanwhile, various physical infrastructure
initiatives are underway in Rajarhat which are
expected to boost residential demand in the
region. On its completion, the Airport Link
Road, connecting Action Area II, will lead to
reduced travel time and allow easy access
from Rajarhat to the airport. Besides, an ultra
modern bus terminal is being constructed in
Rajarhat. This terminal will effectively connect
Rajarhat to various parts of the city, primarily
towards the CBD and South Kolkata
locations. Also, to improve the intra-region
connectivity, the state authority HIDCO, is
focusing on constructing sector roads within
Rajarhat. On completion these infrastructure
initiatives, , shall play a major role in
attracting prospective home owners to the
region.
The slump in the market notwithstanding,
Rajarhat still accounts for around 45% of the
total residential space (mn.sq.ft.) by
end-2011.
This considerable amount of supply in the
pipeline can be attributed to the extended
completion timelines for many large scale
residential developments. A note can be
made of the Uniworld City Project by Bengal
Unitech whose 3,000 apartments were
scheduled to have been completed by the
end of 2009, but are now expected to be The eastern
ready in 2010. Delay in its completion
however did not dampen the marketing region has
strategists and Q2 2009 saw the launch of
another set of residential towers, Vistas, in attracted the
the 100-acre township project. This year also
witnessed the launch of Eden Court, maximum
portending Tata Housing's foray into the
city's realty sector. Despite the slowdown number of
observed in Rajarhat's residential market, the
project consisting of 330 units has been
real estate
promoted as upper mid-end and is scheduled
to be available by 2011. Meanwhile,
developers,
developers are trying hard to differentiate
their products based on lifestyle amenities.
both national
As one of the strategies, Elita Garden Vista, a
1,278-unit high-rise project by Keppel Magus
and
has been promoted as premium living,
offering an 'international lifestyle' with
international
Homes, Whirlpool Homes, Aqua Homes and
various amenities ranging from tennis courts,
Farm Bungalows.
a multi-purpose plaza to landscaped
gardens. Another high profile residential
In order to provide balance to the residential
project in the region, the WBIDFC promoted
profile of the developments in Rajarhat,
Sankalpa has launched its second phase in
which at present seem highly skewed
Action Area I in Rajarhat. It has the unique
towards the upper mid-end and high-end
proposition of being the only residential
segment of the society, the West Bengal
tower in the midst of commercial
Housing Board has taken the welcome step of
developments in Rajarhat Action Area I. Due
allotting construction of 12,000 LIG and
to its location attractiveness; Sankalpa is one
8,000 MIG units on 150 acres of land in
of the most expensive residential options in
Rajarhat to the Shapoorji Pallonji Group. The
the micro-market. Besides the high-rise
first phase of the project Shukhobrishti is
towers, there are a number of operational
almost ready and around 1,500 LIG units are
villa projects in Rajarhat. These include the
expected to be ready for possession this year.
much-promoted Vedic Village, launched as a
In the coming two years, Rajarhat is expected
spa-cum-resort with options to purchase villa
to witness the completion of over 11,000
properties such as Lake Front Villas, Eco
residential units.
Ravi Rashmi, Rajahart
51
Q3 2009
residential
market
Review
Of the total number of upcoming units, 40%
will be 2-BHK units with around 47% in the 3-
BHK category and the rest comprising 4-BHK
and above.
Meanwhile, EM Bypass is another stretch with
a number of real estate developments. Silver
Spring, the condominium development by
Bengal Silver Spring Project consisting of
520 units, is an important residential project
along the EM Bypass which became fully
operational in 2008. This micro-market,
owing to its existing infrastructure and good
connectivity has higher price ranges as
compared to its adjacent market of Rajarhat.
Notably, the prices are in an upper bracket
along the eastern part of the stretch and
witnessing a gradual decline as one moves
down south towards Garia. This can be
attributed to the demographic profile of the
residents. At present, a number of high
profile residential projects are being
undertaken off EM Bypass. Amongst them, a
note can be made of Active Acres, by Ruchi
Realty, comprising 6 towers of 19 floors each
with a variety of modern amenities and Ideal
Lakeview, a 180-unit project by the Ideal
Group which is scheduled to be ready in
2010. Ambuja Upohar, by Bengal Ambuja, is
another key project located off EM Bypass
with 11 planned towers of 19 and 17 storeys.
Besides these high-end projects along the
EM Bypass, there are a number of smaller
affordable projects southwards. Of these, a
mention can be made of Sunny Valley by
Sunny Promoters.
In all, around 1,985 residential units are
under development along the EM Bypass.
They will contribute about 2.58 mn.sq.ft. of
residential space by the end of 2011. Of
these, 42% shall consist of 2 BHK units and
45% of 3 BHK units.
West Kolkata
The western part of the city comprising
Howrah, on the other side of the river Hoogly,
has always been considered to be somewhat
hinterlands by the residents. Real estate
52
development, till recently, had not taken off Altogether, the western region accounts for
as with the development in other parts of the almost 10% of the total number of residential
city. However, with a number of infrastructure units by 2011, translating to around
initiatives in place and with better 4.25 mn.sq.ft.
connectivity across the river Hoogly, the
South Kolkata
region has attracted a number of developers
to set up their projects. Typically South Kolkata has been the city's
most preferred residential destination owing
Kona Expressway in Howrah can be
to its proximity to the metro railway stations
considered to be one of the emerging
and the bypass connector. This part of the
residential markets in Kolkata. The region is
city has an equitable mix of high-end and
well connected to Kolkata's CBD by means of
mid-end living, some of the most expensive
NH-34 and the second bridge over the
residential locations include Ballygunge and
Hooghly river, known as Vidya Sagar Setu.
Alipore, while locations like Garia, Behala
A key development under construction in the
and pockets along the D.H. Road primarily
region is the 108-acre Kolkata Logistics
comprise affordable housing. Residents of
International City. The facility is the first of its
the city generally prefer this micro-market for
kind in the city, providing integrated state-of-
their accommodation needs due to the well
the-art services related to logistics,
developed social infrastructure and
warehousing, wholesale and retail trading,
connectivity. The entertainment industry
truck parking and trans-loading operations.
located in Tollygunge is home to several well
With the completion of the project, the region
known clubs, the most famous being the
will act as a prominent belt for inter-region
113-year old Tolly Club.
trade and warehousing facility. Residential
development in Kona Expressway includes Besides, South Kolkata has a number of
the 390-acre Kolkata West International City prestigious educational institutes and retail
by the Indonesia-based Salim Group along markets, which have been instrumental in
with Kolkata Metropolitan Development attracting home-buyers as well as developers
Authority (KMDA) and Singapore-based to launch their projects here.
Universal Group. Almost 90% of the work has
been completed in the first phase of the
township, which at present is offering row
house developments. Other upcoming
residential developments along the Kona
Kona
Expressway include The Gateway by Unitech
and an affordable housing project by the
Expressway in
Ganges Group. At present, this expressway is
facing considerable traffic bottleneck in the
Howrah can
evenings, which is expected to be sorted with
the completion of another set of 4-lanes to be
be considered
introduced along the stretch.
one of the
It remains to be seen whether the upcoming
developments in Howrah are able to
emerging
persuade the mindset of the city's residents
in relocating to the other side of the river.
residential
Nonetheless, if bookings in the Kolkata West
International City are to be believed, the
markets in
transition has already been set in motion.
Kolkata
KnightFrank.com
extension of
the Kolkata
Metro to
further down
south has
addressed the
connectivity
concerns of
commuters
from Garia,
Narendrapur
and Sonarpur
Meanwhile, with the extension of the Kolkata
Metro further down south, connectivity
concerns of commuters from Garia,
Narendrapur and Sonarpur have been
addressed effectively. On account of this
development various developers have
launched affordable housing projects in
Narendrapur and Sonarpur.
Notable residential developments in this
region include the 35-storied South City
Complex by South City Projects on Prince
Anwar Shah Road, which are touted to be the
highest residential towers in eastern India,
while Genexx Valley at Behala Chowrasta is
another large-scale residential development
consisting of over 2,000 units. Amongst the
key upcoming projects, a mention can be
made of Diamond City South by the Diamond
Group in Tollygunge and the distinctive
Kolkata Riverside Township Project at
Batanagar by Riverbank Holdings. The 262
acre Kolkata Riverside Project, located along
the river Ganges, will have various amenities
like an organised transport hub, a multi-
specialty hospital, golf course, sports club,
international standard school, mall space, IT
office space and a 5-Star hotel. While
booking is open for the first phase of
residential development, the entire project is
scheduled to be operational by the end of
2014.
On the other hand, a number of affordable
housing projects have come up along the
Narendrapur-Sonargaon belt. Mayfair Greens
by Mayfair Housing and Sherwood Estate by
PS Group and Srijan are a few notable
residential developments in Narendrapur.
Another key mid-range residential project
that can be mentioned is Eden Realty
promoted Eden City at Maheshtala.
Overall, South Kolkata is estimated to
witness a supply infusion of around
6.8 mn.sq.ft. of residential space, translating
approximately to 5,200 units, by end-2011. Of
the total number of units, 40% belong to the
2-BHK category while 48% are 3-BHK units.
Capital & Rental Profile
The residential market in Kolkata has proved
to be comparatively resilient to the market
downturn which can be attributed to the
relative absence of speculative buyers. While
property prices in prime locations continue to
witness an upward trend, they have
stagnated to last year's level in suburban
markets due to the dearth of investments. For
instance, in Rajarhat prices have remained
constant between Rs. 2,500-3,000/sq.ft. for
almost two quarters now, although
construction cost has risen by about 25%
Table 13
Average Residential Capital Value Trend
Kolkata Peak to
Trough Change
Ballygunge -5%
Alipore -11%
South of Park St. -10%
Behala -14%
New Town Rajarhat -31%
Salt Lake -13%
Source: Knight Frank Research
during the last six months. Over the last
2-3 years, residential property prices in
Rajarhat had shot up by over 50%. In the face
of economic recession, this location
witnessed the steepest decline of around
15-30% during the period September 08-09,
amongst all micro-markets in the city. In
contrast, prime locations like Ballygunge and
Alipore have seen a considerable hike in
property prices. While prices in these
locations at the end of 2007 ranged from
Rs.7,000-10,000/sq.ft., they increased to
Rs.10,000-13,000/sq.ft. in 2009. This incline
in prices may be attributed to the limited
availability of real estate options, successful
retail and commercial projects and improved
connectivity.
Upcoming residential locations in the south
like Behala witnessed some amount of price
decline as well. While prices in these
southern markets had peaked around
Rs.2,800/sq.ft. in Q2 2008, they declined by
14% during Q2 2009. However, of late, the
market has shown signs of slight upturn with
buyers evincing interest in house purchase.
The rental market in Kolkata, at present, is
primarily led by the IT expatriates in the city.
Besides, Kolkata being the regional
headquarter for most banks, there is the need
to accommodate a sizeable number of
employees from the banking industry as well.
The steel and mining industry too has its
demand for rented accommodations in the
city.
Trough to Sep'09
Sep'09 Change (Rs./sq.ft.)
5% 10,000
9% 9,000
2% 5,500
4% 2,500
2% 2,650
0% 3,500
53
Q3 2009
residential
market
Review

Figure 31 Rs.15,000-35,000 for 2 and 3-BHKs. Further

Residential Rental Values (2 BHK) down south, rentals exist between While
45000 Rs.5,000-10,000 in Behala and around
40000 Rs.8,000-12,000 in Jadavpur. The rental property
market in Kolkata, still at an evolving stage,
35000
is expected to strengthen in the forthcoming prices in prime
30000
years with an increase in the number of
locations
Rs./month

25000
corporates in the city.
20000
continue to
15000 Outlook
10000
The Kolkata real estate market, which showed witness an
5000 signs of sluggishness in the last two
0 quarters, is expected to look up positively in upward trend,
the next few months. Consumer sentiments
EM Bypass

Garia

Behala

Jadavpur

Prince Anwar Shah Road

Salt Lake
Ballygunge / Alipore

they have
Rajarhat

are being revived with the lowering of home

loan interests, albeit gradually and investor
interest in the city's real estate is being
stagnated in
renewed. Industry sources have pegged an
Minimum Maximum increase in bank credit to home buyers by
the suburban
Source: Knight Frank Research almost 60% in the last 3-4 months. This
reasonably faster upturn, as compared to
markets due
Not surprisingly, the residential markets in
the vicinity of the city's CBD have the highest
other metro cities, can be attributed to the
stable and steady character of the city's
to a dearth
rental values. Locations like Loudon Street,
Park Street and residential pockets along the
property market. According to industry
sources, the number of real estate
of investment
AJC Bose Road have rentals ranging from transactions in the city's residential segment,
transit and an extension of the proposed
Rs.100,000-175,000 for a premium 2-BHK which had dipped by 50% in September
east-west metro corridor in future. Thus,
apartment. Prime residential markets in the 2008, have now recovered by about 30%.
completion of the basic infrastructure
south like Ballygunge and Alipore demand
With sales picking up, developers are now development in the region will expectedly
high rentals as well which are in the range of
mulling over launching new projects. take another 3-4 years. At present, residents
Rs.75,000-125,000 for premium 2-BHK
However, non-availability of land has become face the problem of commuting due to lack of
apartments. Average minimum rentals in
a major problem in the path of the state's real proper transportation facilities. Besides, the
these markets are around Rs.40,000.
estate development. On the other hand, area does not have any Panchayat or
Meanwhile, the rental market in Salt Lake has given the quantum of residential units in the corporation body yet. Hence, the newly
picked up remarkably in the last few years pipeline, there exists the potential threat of formed Newtown Development Authority
owing to its proximity to the IT hub of Salt an oversupply situation in the key upcoming should look at developing all parts of the
Lake Sector V. At present, a 2-BHK in this market of Rajarhat. The issue of area more homogenously.
micro-market has average rentals of around non-occupancy in completed projects still
Not surprisingly, given the economic
Rs.12,000 while a 3-BHK charges looms large, the reasons being inadequacy of
slowdown, only a limited number of projects
approximately Rs.30,000. Rental values basic infrastructure such as internal roads,
have been announced in the last few months.
along the EM Bypass range between electricity, sewage, drinking water, transport,
Developers and other market players term
Rs.10,000-40,000 for 2 and 3-BHK units, market place and security. Of the five
this lull as maturing of the market rather than
depending upon the eastward or southward proposed sectors in the area, only Action
a slowdown.
direction of the location on the stretch. Of Area I has been provided with electricity; the
late, Prince Anwar Shah Road, which has others currently run on generators. Action While prices in most locations have remained
become prominent on the city's residential Area II is expected to be provided with power constant in the past few months, they are
scene owing to the South City Complex, offers soon. There are also plans to connect the expected to firm up in the next few months by
rental accommodation within area with the main city through a light rail around 8-10%.

54
KnightFrank.com
An important point which came out during the
residential market study on the upcoming
supply is the increasing preference for 2 and
3-BHK units over other larger formats. Around
40% of the total upcoming supply falls under
2-BHK and 47% under the 3-BHK category.
This reflects on the changing socio-set up of
the city's residents. Kolkata has come a long
way from the city known for its expansive
families with extended family members all
living under one roof, typically a 4-BHK or
even a 5-BHK tenement. Modern amenities
and facilities feature prominently while
choosing a residential project. However, the
price needs to be kept under control as the
market is very cost sensitive.
Presently, due to limited land supply in the
heart of the city, peripheral locations on
Jessore Road and Kona Expressway as well as
in locations like Madhyamgram, Narendrapur,
Sonarpur, Batanagar and Maheshtala are
being explored for residential development.
Connectivity and transportation issues being
some of the major concerns associated with
Table 14
Kolkata Major Infrastructure Developments
Project
Kolkata Logistics International City
Rajarhat Airport Link Road
Jessore Road - Rajarhat Connector
Extension of Kolkata Metro Garia
Widening of Jessore Road to 6 Lanes
Four-lane road between Garia and
Baruipur
Flyover between EM Bypass and
VIP Road near Ultadanga crossing
Flyover on VIP Road between
Dum Dum Park and Jora Mandir
East-West Metro Corridor project
between Salt Lake and Howrah
Source: Knight Frank Research
these somewhat distant locations, various
initiatives are being taken by the concerned given the
government authorities to make these
locations attractive for home buyers. quantum of
As apparent from the table of infrastructure residential
initiatives, Jessore Road in the north, Rajarhat
in the east, EM Bypass in the east and south- units in the
east and Howrah in the west, are expected to
emerge as the preferred residential markets pipeline, there
in the near future. With the ongoing
infrastructure in place, these markets will exists the
offer the home-buyer improved connectivity
to various parts of the city. Besides, these potential
markets have a sizeable amount of
residential space in the pipeline which is
threat of an
scheduled to be completed in the next
two-three years.
oversupply
situation in
Rajarhat
Status Remarks
Under Construction This is a 108 acre development on Kona Expressway. On completion the
region will emerge as a prominent belt for inter region trade and warehousing
facility.
Under Construction Connecting Rajarhat to the Airport from Action Area II, the project will allow
commuters from Rajarhat easy access to the airport, hence reducing travel
time.
Under Construction It will act as a swift transit channel between the two micro-markets.
Completed This 8.07 km. stretch from Tollygunge to Garia has improved connectivity and
reduced travel time for commuters from Garia, Narendrapur, Sonarpur and all
major business centres in Kolkata.
Under Construction With the widening of the Jessore Road to 6 lanes, transit time to Kolkata - CBD
regions will substantially reduce.
Under Construction This 12 km. road will link EM Bypass to Baruipur, thereby improving
connectivity between the locations.
Under Construction On completion, the flyover will aid in diverting heavy traffic on EM Bypass-VIP
Road from the Ultadanga crossing junction.
Proposed This twin flyover flanking VIP Road from Dum Dum Park over Baguihati and up
to Telghoria bus stand would be a help to daily commuters.
Under Construction From Salt Lake the 14.67 km. route will run through eastern and central
Kolkata. Between Mahakaran and Howarh railway station, it will run under
100 ft. of the Hooghly river (first underwater metro in India).
55
Q3 2009
residential
market
RESEARCH
Review

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