JLL Views on Indian Residential Market

According to Jones Lang Lasalle - JLL, pan-India new launches have been falling steadily to now 30k units in F2Q17 and sales have stabilized at 36-38k units/quarter. Overall, projects with a good brand name and good locations are selling well, with premium pricing, like Godrej Trees (Rs18k psf ). Upcoming city markets include Chennai, Hyderabad and Ahmedabad. Also, developers are launching their projects in phases as opposed to their failed attempts at one-time launches seen three years ago.

Mumbai's eastern suburbs (GPLs Trees and OBER's Mulund) are doing better than western suburbs. Ready but unsold inventory is low – a mere 1.46% in Mumbai, 2.5% in Bangalore and ~5% on an average in other cities. Grade A companies are already RERA compliant, having financial discipline and good governance.

Pan-India residential prices have stagnated in the last two years, but are most likely to appreciate 5-6% in the next two years (inflation-linked). Mumbai based Ekta Developers recently sold its project of 700 units in Virar by offering a 20% discount (received 14,000 applications).

Commercial & Retail
Upcoming office completions will add 110msf in the next three years, wherein two-thirds of new completions will be composed of good office space having the right infrastructure, price and specifications. The remaining one third of upcoming assets will not have the same location-infra mix and hence could show high vacancy rates. Some 40% of office space is currently being leased to IT companies, and the balance of demand is being driven by pharma, consultancy and BFSI.

Top city choices include Bangalore (under 5% vacancy), followed by Pune, Hyderabad (under 10% vacancy.) and Chennai (10% vacancy.) Gurgaon prime is relatively better than Delhi and Mumbai prime markets. Due to low availability of office space in Bangalore and Hyderabad, forward contract bookings
for built-to-suit facilities have increased substantially. Central Business District is driving the office market in India due to convenient connectivity to residential areas.