Bangalore Property Market Grows - Mumbai and Gurgaon

Among the key residential markets, only Bangalore showed a growth in TTM sales run-rate (7% y/y to 63mn sq ft), compared to the steep decline seen in other large markets: Mumbai (-46% to 19mn sq ft), Gurgaon (-20% to 48mn sq ft) and Chennai (-15% to 34mn sq ft). The reasonable ticket size, strong demand for the right product and a conducive regulatory and execution environment contributed to strong numbers.Bangalore saw sharp growth in launches throughout 2012 (72mn sq ft), keeping inventory high, which ensured pricing in the market remained competitive validating our thesis on a virtuous cycle of demand-driven rather than speculative growth in the Bangalore market.Bangalore witnessed 13% y/y rise in pricing by October 2012.

We believe that Bangalore will remain the best play in India real estate during 2013. This will reflect in the impressive growth across all segments – residential (premium/ mid-income), office, retail and hospitality.

Our analysis of the latest property market data (October 2012) paints a resilient picture of the Bangalore market versus the dismal conditions elsewhere, especially in other key markets such as Gurgaon and Mumbai.

Residential Property - Bangalore + Chennai Trends

Like the Delhi NCR market, Bangalore Residential Property market witnessed a Flat Quarter with barely any price hikes. Here is the Latest Residential property Prices in Bangalore - Central (Brunton Road, Artillery Road, Ali Askar Road, Cunningham Road), East (Marathalli, Whitefield, Airport Road), South East (Koramangala, Jakkasandra), Off Central (Vasanth Nagar, Richmond Town, Indiranagar) and North West (Malleshwaram, Rajajinagar)

Chennai witnessed some QoQ hikes in residential prices in the following areas - Rajiv Gandhi Salai, Velachery and Anna Nagar as shown below

Residential Trends - Delhi NCR + Mumbai

Here is a Snapshot of the Latest Residential Capital Values  / Prices in Mumbai  and in comparison to a Year ago based on QoQ in the following areas - South Central (Altamount Rd., Malabar Hill, Napeansea etc) , Central (Worli, Prabhadevi, Lower Parel / Parel) ,North (Bandra (W), Khar (W), Santacruz (W), Juhu , Far North (Andheri (W), Malad, Goregaon) and the North East (Powai).

Residential Property prices in Delhi NCR in the Last Quarter Have Remained Flat or Subdued. Here is a comparison of price variation on a QoQ basis in the following areas -South East (New Friends Colony, Kalindi Colony, Ishwar Nagar), South Central (Safdarjung Enclave, Sarvapriya Vihar, Panchsheel), Gurgaon and Noida

Mumbai Residential Market - Going Slow

South-central Mumbai has seen a glut of new (or upcoming) launches over the last two years (e.g., Lodha 3-4 msf + 4msf NTC mills; IBREL 3-4msf; DB 3-4 msf; OBER 2msf), totaling a significant 15+ msf. However, most of these projects have been delayed (on regulatory or other factors), and are planned to be 60-100 stories tall (implying long completion cycle of 5-7 years). Sales volumes have been sluggish so far.

The lack of new deliveries would likely steadily push residential rentals up (still 8-10% below 2008 peak) over the next 2-3 years, which in turn could continue to lift the value of already high ready to move in stock. The situation should normalize with the delivery of the under-construction supply (five years). List of Recent Launches in Greater Mumbai / Bombay by prominent Builders and the Current Ongoing Rate Per Square Feet

• Worli Blu IBREL Worli South / Central Mumbai ~42,000
• Orchid Crown - Tower C DB Realty Prabhadevi South / Central Mumbai ~26,000
• Wadhwa Dadar Wadhwa Dadar South / Central Mumbai 25,500
• Crescent Bay L&T + Omkar Parel South / Central Mumbai 17,000
• Lodha Elisium Lodha Wadala South / Central Mumbai 16,500
• Lodha Venezia Lodha Parel South / Central Mumbai 19,980
• Meredia Omkar Kurla South / Central Mumbai 15,500
• Godrej Serenity Godrej Chembur South / Central Mumbai ~16,500
• Alta Monte - Tower C Omkar Malad Western Suburbs 10,500
• The Nest Wadhwa Andheri Western Suburbs 17,100
• Sunteck City Sunteck Goregaon Western Suburbs 12,500
• Runwal Greens - Phase 3 Runwal Mulund Eastern Suburbs 9,300
• Godrej Platinum - Tower 3 Godrej Vikhroli Eastern Suburbs ~14,800

India’s Top Residential Destinations To Invest In

According to Knight & Frank Residential real estate will emerge as a promising asset class during the next 5 years with estimated price appreciation ranging from 91% - 145%. With property options starting as low as Rs.15 lakh, investors with a limited budget can also participate in this opportunity. Listed below are some of the key findings of the latest report India’s Top Residential Destinations To Invest In by Knight Frank India.

Areas and properties in Mumbai - Ulwe, Wadala, Chembur Areas in Delhi NCR - Nodia Extension, Dwarka Expressway Hingewadi, Tathawade and Ravet in Pune are set to boom Medavakkam in Chennai and Hebbal in Bengaluru

BUY Land Where Gandhi Family Buys for Maximum Appreciation

This Tip is for the HNI who wish to Speculate in the Real Estate Market. Uesterday, India Against Corruption members have unearthed the nexus between DLF and Robert vadra [Son in law of Sonia Gandhi]. Robert has amassed Rs 1,000 Cr of Real Estate which includes some Land Bank. So Real Estate Speculators can BUY Lands near Robert Vadra's and Get Rich Qucikly. Here is list of Land Parcels owned by Robert Vadra's Company,

1. Land in Bikaner - Search Bikaner Sub-Registrar's Office and see where "North India IT Parks Pvt. Ltd." has bought 161 Acres of Land in the City and you can start gobbling the neighboring parcels
2. Search Bikaner's Sub-Regisrrar office for Lands Owned by these companies Real Earth Estates Pvt. Ltd., Sky Light Realty Private Ltd., Sky Light Hospitality Private Ltd and bUY Land in the Vicinity for jackpot.
3. Investment by Gandhi Family in Manesar - Sky Light Hospitality Private Ltd is the Official Land Owner
4. Palwal - Sky Light Realty Private Ltd is the Holding company of Land for Gandhi Family
5. BUY Land in Hassanpur in the vicinity where Real Earth Estates Pvt. Ltd has bought land
6. BUY Land in Mewat (Haryana) wherever Real Earth Estates Pvt. Ltd is holding land

These are Speculative Investments in Nature and are meant for HNIs or Super Rich Individuals Only. Looks like Robert Vadra wanted to Develop an IT Park and a SEZ in Bikaner.

Bangalore - Mid-Size Apartments Rule the Roost

Ears on the Ground Survey indicate to us that that mid-ticket size products are best for the market and this is which has seen the most volume absorption. We could define mid ticket size units as those in the ticket size of Rs5-10m. This segment provides a good combination of investment-worthiness, rental yield and end-user demand. In terms of area, this means unit sizes of 1,800-2,500sft apartments and, in terms of rate, a range of Rs4,000-5,000 psft.

The buyer segment (10-year work experience in IT/ITES sector) has on an average household gross income of Rs1.2-Rs1.8m. This makes price in terms of the household income in the range of 4-5x, which is an affordable pricing bracket in our view.

Over the past couple of years, we have seen a slew of launches in the premium-housing segment with ticket size of Rs30m+, primarily focused in the new-emergent areas of North Bangalore. Observers believe that the market for luxury launches is weak and they have not seen good absorption.

The buyer base comprises primarily of IT professionals looking to invest surplus cash. At the other end of the spectrum is the Delhi-NCR market, which is entirely broker investor driven, dependent on bulk sales. The Mumbai market is between the two extremes. In the Bangalore market, developers do not bulk-sell to a committed broker-investor base. Rather, they depend upon branding and word-of-mouth from existing buyers to attract new buyers.

Bangalore has developers that are focusing on affordable housing (Purvankara Provident, Value Budget Housing Company) and they have started to offer viable products. However, their scalability and execution challenges are yet to be tested over the longer run.

Robust Sales for Sobha Developers

Management has targeted pre-sales of Rs20 bn and 3.75 mn sqft for FY13. The company has reported Rs10.1 bn (up 28% yoy) and 1.78 mn sqft of presales in the first half of the year, which is traditionally the weaker half. We believe Sobha has maintained its robust sales growth through periodic launches and entry into new markets. Sobha is poised to launch 6 mn sqft in the upcoming 4 quarters in several locations in Bangalore, Thrissur, Pune, and Mysore.

Average prices increased to Rs5,575/sqft in 2QFY13 from Rs5,196/sqft in 2QFY12, up 7%. However pricing declined 3% qoq due to increased sales in Thrissur (lower pricing), while sales in Gurgaon (higher pricing) were flattish qoq.

In 2QFY13, Sobha sold 0.59 mn sqft in Bangalore, 0.14 mn sqft in Gurgaon, 0.12 mn sqft in Thrissur, and 0.1 mn sqft combined in Chennai, Coimbatore, Mysore and Pune. Qoq growth of 13% was driven by strong growth in Thrissur (168% qoq) and Bangalore (14% qoq).