BANGALORE RESIDENTIAL REPORT 2Q08

OVERVIEW Bangalores residential market continued to witness stabilization in rentals across all micro-markets, while capital values increased marginally in a few micro-markets since the last quarter. The state government announced various infrastructure projects like elevated roads to improve connectivity within the city, which would create new corridors with potential land parcels for residential developments. North Bangalore, especially, gained significant importance (with the Bangalore International Airport at Devanahalli becoming operational), with the state government providing the necessary support infrastructure by improving connectivity to the CBD. Many projects were launched in this micro-market over the last few years from reputed developers like Renaissance Holdings, Shobha Developers, Bearys Properties & Developers and Godrej Properties, among others. While a few of these projects are already operational, others are expected to come into the market by end-2009. RENTAL VALUES Rentals for mid-range residential developments in June recorded the highest values in the central locations due to a lack of new projects being launched by prime developers. The south east micro-market, however, continued to witness rental corrections in the range of 4-11% in this quarter. The excess supply of all grades of developments, the emergence of newer residential locations and the sudden shift in interest towards north Bangalore have impacted the eastern micro-markets to a large extent. The rising rate of inflation and the current cash crunch has led to stabilization in rentals across most areas, barring a few projects in both high-end and mid-range sectors since the first quarter. CAPITAL VALUES Capital values for mid-range projects also remained constant since the first quarter; showing marginal appreciation over the last six months in a few micro-markets like the central locations (1-3%). In case of the highend segment, central and off central locations witnessed a marginal increase due to limited availability of land parcels and new projects. OUTLOOK The coming quarter is not likely to witness any major changes in either capital or rental values in Bangalores residential sector. The current economic scenario and the volatile stock market situation have changed the outlook for investment options in this sector. The market now is suited for long term investors; more so for end-users rather than for investors looking at short-term capital gains. Developers too are getting cautious, constraining supply by holding back new project launches and slowing down existing projects due to a lack of funds for execution. As indicated in the previous quarter, Whitefield, Sarjapur Road, Outer Ring Road and Bannerghatta Road have an abundance of existing and upcoming residential developments of various grades, leading to excess supply. Capital values are likely to remain stagnant across all regions in the coming months, but are expected to weaken in the above mentioned micro-markets. KEY TRANSACTIONS
PROPERTY LOCATION TYPE Lease AREA. 2,250 sq.ft. 2,682 sq.ft. VALUE (INR) 80,000 pm 10,250,000

RESIDENTIAL RENTAL VALUES

LOCATION HIGH-END Central South Off Central East North MID-END Central East South East South North South West Off Central Off Central North West RENTAL VALUES / MTH
INR

% GROWTH
3 MONTH 6 MONTH

SHORT TERM TREND

150,000 - 400,000 80,000 - 100,000 100,000 - 120,000 100,000 - 500,000 100,000 - 200,000 100,000 - 120,000 20,000 - 30,000 20,000 - 25,000 30,000 - 50,000 20,000 - 30,000 20,000 - 35,000 5,0000 - 80,000 20,000 - 30,000 20,000 - 30,000

0% 0% 0% 0% 0% 0% -6% 0% 0% 0% 0% 0% 0% 0%

0% 0% 0% 0% 0% 0% -11% -4% 0% 0% 0% 0% 0% 0%

RESIDENTIAL CAPITAL VALUES

LOCATION HIGH-END Central South Off Central East North MID-END Central East South East South North South West Off Central Off Central North West
Note:

VALUES / SQ.FT.
INR

% GROWTH
3 MONTH 6 MONTH

SHORT TERM TREND

15,000 - 20,000 8,000 - 10,000 7,000 - 8,000 7,000 - 10,000 6,000 - 8,000 6,000 - 8,000 3,000 - 4,000 3,000 - 5,000 5,000 - 7,000 3,000 - 4,000 3,000 - 4,500 4,000 - 6,000 4,000 - 6,000 4,500 - 6,000

0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%

3% 1% 1% 1% 2% 3% 1% 1% 1% 2% 1% 0% 1% 1%

For high-end projects, premium/luxury apartments/villas with an area of approximately 3,000 - 5,000sq.ft. have been considered For mid-range projects, apartments with an area of approximately 1,700 - 2,500 sq.ft. have been considered Key to Locations Central: Brunton Road, Artillery Road, Ali Askar Road, Cunningham Road Off Central: Cox Town, Frazer Town, Banaswadi, HRBR, Benson Town, Richards Town East: Marathhalli, Whitefield, Airport Road North: Hebbal, Bellary Road, Yelahanka, Dodballapur Road South: Koramangala, Jakkasandra South West: Jayanagar, J P Nagar, Kanakpura Road, Bannerghatta Road, BTM Layout, Banashankari South East: Sarjapur Road, Outer Ring Road, HSR Layout North West: Malleshwaram, Rajajinagar
LEGEND
Market Rising Market Falling Market Stagnant, likely to Strengthen Market Stagnant, likely to Weaken Market Stagnant

Unfurnished apartments Cunningham Road Apartment with terrace area (600 sq.ft.)

Bannerghatta Road Sale

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