Bangalore + Chennai + Hyderabad Property Update

Excerpts from Citigroup Research on key takeaways of property visits in South India.

• Residential property sales are down 25-40%.
• Prices are holding for tier-I's, but small players and secondary market prices down 15-20%. Small Developers the worst hit.
  
• Construction delays of 8-12mth, softening demand and rising costs have pushed back supply across asset classes by at least a 1-yr.

Bangalore Property Update:
Housing sales are down 25-30%, residential prices (Rs~3500/sqft) still holding with yields of mere 3-4%; more pressure seen on apts with ticket size of Rs6.5-10m. Focus shifts to North, while South and East remain oversupply zones. Slow progress on infrastructure projects a major cause of concern.

Chennai Property Update:
Muted demand in residential; Delay in govt. approvals and wait for new master plan has pushed
back most project launches, supply time-lines and resulted in sales cancellations.

Hyderabad Property Update:
Worst hit amongst South Indian Cities pushing out the speculators. Residential sales down 30-40% and IT space requirements have also softened; land prices are down 25-30% as well from peak. New entrants, small developers worst hit in this slowdown. Progress on road/infra projects the only silver lining.