Mumbai Real Estate: Slackness Across Segments

MumbaiRealEstate
Slacknessacrosssegments
September21,2012 Kejal Mehta kejalmehta@plindia.com +91-22-66322246 Pratik Shah pratikshah@plindia.com +91-22-66322256 BSESensexv/sMumbaiRealEstate
BSE Realty SENSEX Mumbai (Ex DB Realty)
Sales registerations slip 3rd month in a row; 5% MoM
Rates unchanged, RBI maintains its anti-inflationary stance FDI in retail to provide impetus to leasing as investments kick-in
SlidefromJuneonwardscontinues
The slide in Mumbai sales registrations numbers that started from June has continued in August as well with a 5% MoM decline and a 2% YoY decline. The absolute decline from the peak of May stands at 13%. The lack of new launches, sticky prices coupled with high interest rates are of no help to home sales. The stressed affordability equation continues amid high property prices.
130
80
30
Sep-10
Sep-11
Dec-10
Dec-11
Mar-11
Mar-12
Sep-12
Jun-11
Jun-12
Lease registrations, though higher by 10% on a YoY basis, on a MoM basis continued to decline by 6% post the 17% decline witnessed last month. The slowdown in commercial real estate is clearly visible from these numbers. The recent reforms announced by the government as a part of its fiscal consolidation program, though unlikely to have an immediate positive impact, are quite critical for
Source:Bloomberg
StockPerformance (%) 1M Sensex 2.6 BSERealEstate 5.2 Ajmera Realty & Infra (4.2) Godrej Properties 4.9 HDIL 1.2 Hubtown (3.4) Indiabulls Real Estate 8.4 Oberoi Realty (0.5) Orbit Corporation (1.7) Peninsula Land 10.6 Phoenix Mills 6.2 Sunteck Realty (4.1)
an initial boost to the economy. This however, needs to be followed up by several

6M 4.2 (5.5) (12.6) (13.8) (18.0) (11.2) (21.9) (11.1) (18.7) 9.7 (14.5) (12.0) 12M 7.5 (5.4) (23.0) (16.7) (26.1) (14.6) (17.0) 3.5 25.6 (10.0) (13.4) 6.7
other policy actions across spheres. The opening up of FDI in multi-brand retail could provide impetus to commercial leasing over a slightly long term period as investments start to roll. The RBI, in its recent monetary statement, though acknowledged the governments reforms process, however reiterated its anti-inflationary stance by only cutting CRR by 25bps to infuse liquidity and keeping other policy rates unchanged. The onset of the festive season could see a bit of cheer for residential sales, however these will percolate down to monthly registration numbers post November given the lag in registrations.
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SectorUpdate
Lease registrations too continue on its downward trajectory
September 21, 2012

(nos)
25,000 23,000 21,000 19,000 17,000 15,000 13,000 11,000 9,000 7,000 5,000 10.5 12.5 2.5 4.5 6.5 8.5
Dec-02 Jun-03 Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12
RBI repo rate HDFC Bank Home Loan Floating rate
Source:PLResearch,Bloomberg
Source:DGRMumbai,PLResearch
Exhibit2: HomeloanrateversusRBIreporate
Exhibit1: Trailing3monthSalesRegistrationsinMumbai
Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12
Mumbai Real Estate
100%
150%
200%
(nos) (nos)
50%
0%
-50%
10,000
12,000
2,000
4,000
6,000
8,000
8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 -
September 21, 2012

Source:DGRMumbai,PLResearch Source:DGRMumbai,PLResearch Exhibit3: Trailing3monthSalesYoY%growth Exhibit7: RegistrationofLeaseAgreementsinMumbai Exhibit5: RegistrationofSaleDeedagreementsinMumbai
Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12
Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12
106% 74% 37% 16% 9% -1% -6% -12% -19% -24% -24% -25% -28% -23% -21% -21% -28% -26% -24% -23% -18% -14% -11% -8% -2% 0% 2% -1% -2%
(YoYgr.)
70% 60% 50% 40% 30% 20% 10% 0% -10% -20% -30% 20% 40% 60% 80% 0% -40% -20%
(YoYgr.)
100%
79% -19% 7% 0% 12% 11% 19% 4% 58% 20% 34% 32%
15% 5%
25%
35%
-25%
-15%
26% 15% 21% 10% 12% 17% 3% 23% 23% 1% 10% 6% 5% 10% 13% 12% -2% 10%
22% 19% 9% -1% -13% -3% -20% -29% -21% -22% -30% -30% -1% -27% -31% -25% -22% -25% -20% -9% -13% -11% -1% 5% -1% 3% -6% -2%
0%
Exhibit4: Trailing3monthleasesYoY%growth
-5%
18% 17% 21% 15% 15% 13% 11% 5% 6%
Exhibit6: YoY%growthinSaleDeedregistrations
Exhibit8: YoY%growthinLeaseAgreementregistrations
19% 20% 16% 14% 8% 14% 11% 15% 16%
Mumbai Real Estate
5% 7% 7% 9% 12% 8% 7%
33% 23% 18%
(YoYgr.)
100% 80% 60% 40% 20% 0% -20% -40% -60% 100% 80% 60% 40% 20% 0% -20% -40%
79% 37% 8% -19% 5% -20% -23% 15% 13% -5% -23% -3% -32% -44% -22% -9% -12% -6% -5% -11% -19% -8% 7% -8% 7% -2% 5% 64% 68% 79%
September 21, 2012

(YoYgr.) May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12
20% 12% 0% -3% -12% -4% -21% -30% -26% -26% -34% -32% -1% -26% -27% -26% -24% -27% -23% -10% -13% -9% 0% 4% 0% 2% -7%
Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 (YoYgr.)
Exhibit11: MumbaiSuburbSaleDeedRegistrations
Exhibit9: MumbaiIslandCitySaleDeedRegistrations
(YoYgr.)
20% 40% 60% 80% 0% -40% -20%
250% 200% 150% 100% 50% 0% -50% -100%

-66% 19% 7% 17% 17% 16% 30% -18% 11% -12% 1% 18% -10% 27% 14%
28% 17% 22% 24% 12% 17% -1% -20% 36% 10% 23% 36% 2% 10% 10% 8% 6% 23% 31% 9% 11% 64%
Exhibit12: MumbaiSuburbLeaseAgreementRegistrations
Exhibit10: MumbaiIslandCityLeaseAgreementRegistrations
228% -6% 21% -15% 27% -63% 22% 6% 1% 7%
Mumbai Real Estate
6% 5% 11% 15% 13% 4% 10%
-2% 5% -38% 9%
Mumbai Real Estate
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Accumulate Sell TradingSell UnderReview(UR) : : : : Outperformance to Sensex over 12-months Over 15% underperformance to Sensex over 12-months Over 10% absolute decline in 1-month Rating likely to change shortly
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September 21, 2012

Mumbai Real Estate: Slackness Across Segments

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Mumbai Real Estate: Slackness Across Segments

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MumbaiRealEstate

Sales registerations slip 3rd month in a row; 5% MoM

an initial boost to the economy. This however, needs to be followed up by several

Lease registrations too continue on its downward trajectory

September 21, 2012