MARKETBEAT

OFFICE SNAPSHOT
MUMBAI, INDIA
A Cushman & Wakefield Research Publication

Q4 2013

The Indian economy gained some momentum during the July-September quarter of FY201314 as the GDP growth rate was recorded at 4.8%, compared to 4.4% witnessed during the preceding quarter. Similarly, the activity in the construction sector also picked up and registered a growth of 4.3%, compared to 2.8% in the last quarter. During its mid-quarter policy review in October, the Reserve Bank of India raised the Repo Rate by 25 basis points to 7.75% to tame inflation that has been inching higher, as the Wholesale Price Index (WPI) rose from 4.6% in May 2013 to a 14-month high of 7.5% in November 2013. However, in the recent policy review announced in December, the key policy rates were kept unchanged to maintain a balance between inflation and growth. The Indian currency gained against the US Dollar and has been trading in the range of INR61-62 per US Dollar, up from the record lows of INR67-69 in September 2013. It is believed that Indias economic growth will improve in the second half of FY2013-14 due to a rise in exports and the proposal for investments in infrastructure projects that have been cleared by the Cabinet Committee.

ECONOMIC OVERVIEW

OUTLOOK
A new supply of 3.3 msf is expected to become operational in the first quarter of 2014 in micro-markets such as Goregaon, Kurla, Dadar and Vikhroli. Net absorption is expected to remain stable with a healthy take-up expected in suburban and peripheral locations such as Andheri, Thane-Belapur Road and the eastern suburbs. The high quantum of upcoming supply is likely to result in increased vacancy levels, which will put pressure on rental values in select micromarkets of Mumbai. STATS ON THE GO
Q4 2012 Overall Vacancy Net Asking CBD Rents (INR/sf/month) YTD Net Absorption (sf) 19.8% 275.4 5,670,489 Q4 2013 19.4% 275.8 4,512,899 Y-O-Y 12 MONTH CHANGE FORECAST -0.4% 0.0% -20.4%

NET ASKING RENTAL VS. VACANCY RATES

350 300

24% 20% 16% 12% 8% 4% 0%

2009 2010 2011 2012 2013

SUBDUED SUPPLY AND TRANSACTION ACTIVITY

Mumbai witnessed an overall net absorption of approximately 1.13 million square feet (msf) during the fourth quarter of 2013, of which the majority was in Grade A developments, a quarter-on-quarter decline of 1%. The net absorption was concentrated in the submarkets of Thane-Belapur Road (31%), Lower Parel (24%), Malad/Goregaon (18%) and Thane (17%). The IT-ITeS sector continued to have the highest share in demand, followed by education, FMCG and logistics sectors. Overall supply in the city during the quarter was 974,000 sf, of which approximately one-third was in Grade A developments. Approximately 51% of the new supply was from an IT-SEZ development located on Thane-Belapur Road. Although this supply was more than double of the previous quarter, the total supply for 2013 declined to less than half of 2012, as developers consciously delayed completions to achieve adequate occupancy rates in their projects.
INR/sf/month

250 200 150

CBD NET ASKING RENTAL RATE CBD VACANCY RATE

SBD NET ASKING RENTAL RATE SBD VACANCY RATE

PRE-COMMITMENT VS. NET ABSORPTION

6,000 5,000 4,000 3,000 2,000 1,000 0

sf (thousands)

2,669

1,513

940

1,026

5,748

4,744

5,282

5,670

804

DECLINING VACANCIES IN KEY MICRO-MARKETS

With supply during the quarter lower than net absorption, Grade A vacancies declined to 19.4% from 20.2% in the previous quarter. However, the rental values remained stable in most locations of Mumbai, except Malad/Goregaon and Thane-Belapur Road where weighted average rents appreciated in the range of 5-6% with new developments quoting higher rentals.

2009

2010

2011

2012

YTD 2013

PRE-COMMITMENT

NET ABSORPTION

4,513

MUMBAI SELECT MICRO-MARKET STATISTICS

SUBMARKET ALL GRADES** CBD SBD Worli Lower Parel Andheri-Kurla*** Powai Malad/Goregaon Vashi Thane-Belapur Road Thane TOTALS GRADE A CBD SBD Worli Lower Parel Andheri-Kurla*** Powai Malad/Goregaon Vashi Thane-Belapur Road Thane TOTALS 2,116,814 6,002,946 1,015,000 7,408,646 9,280,748 5,877,576 9,058,690 1,417,500 10,874,100 4,125,977 64,724,128 9.9% 19.4% 14.9% 15.1% 26.0% 5.3% 20.1% 13.7% 22.5% 19.9% 19.4% 51,642 331,232 3,500 521,611 1,056,114 315,071 1,134,801 61,296 1,436,879 510,400 5,549,336 0 2,788,540 1,050,000 1,218,000 4,282,968 0 3,501,000 300,000 5,724,180 850,000 27,244,688 0 0 0 210,000 1,012,945 0 1,425,890 0 910,000 150,000 4,132,343 51,642 254,832 3,500 471,268 579,525 183,406 899,657 35,000 1,400,879 510,400 4,512,899 275.44 284.92 230.42 160.34 110.20 95.3 85.45 65.00 40.41 45.34 122.44 275.10 285.12 230.40 160.42 110.20 95.30 90.20 65.18 43.10 45.34 122.82 $53.36 $55.30 $44.69 $31.11 $21.37 $18.48 $17.49 $12.64 $8.36 $8.79 $23.82 39.01 40.43 32.67 22.75 15.63 13.51 12.79 9.24 6.11 6.43 17.42 11,071,269 7,509,129 3,927,982 11,068,292 23,627,520 6,127,708 14,351,910 3,188,500 14,878,974 6,015,813 114,644,350 9.9% 17.7% 15.5% 16.0% 22.5% 4.3% 17.0% 14.6% 20.7% 23.1% 18.6% 79,375 331,232 7,500 579,611 1,201,016 316,171 1,134,801 61,296 1,448,879 510,400 5,820,571 0 2,788,540 1,288,000 1,348,000 6,665,344 154,000 3,890,275 450,000 6,527,846 1,566,800 34,709,405 INVENTORY OVERALL VACANCY RATE YTD LEASING ACTIVITY UNDER CONSTRUCTION YTD CONSTRUCTION COMPLETIONS 0 0 0 540,000 1,012,945 0 1,425,890 0 910,000 150,000 4,707,343 YTD NET ABSORPTION WTD. AVG. RENTAL RATE (INR/SF/MTH)* 3Q13 79,375 254,832 4,500 521,268 654,025 184,506 899,657 35,000 1,412,879 510,400 4,702,732 224.83 200.32 185.30 125.21 80.10 86.40 77.35 65.32 35.30 35.15 109.42 4Q13 224.83 200.28 185.24 125.20 80.10 86.40 79.20 65.32 36.40 35.20 109.78 US$ SF/YR 4Q13* $43.61 $38.85 $35.93 $24.28 $15.54 $16.76 $15.36 $12.67 $7.06 $6.83 $21.29 EURO SF/YR 4Q13* 31.88 28.40 26.27 17.75 11.36 12.25 11.23 9.26 5.16 4.99 15.57

*Reflect weighted average, warm shell asking rental rates that includes core facility, high-side air conditioning and 100% power back-up **All Grades - includes all Grade A and select properties of other grades in prime office micro markets ***Certain spaces given to retail establishments, under litigation etc have been removed from the stock Conversion rate: US$ 1 = 61.87 INR and Euro 1 = 84.63 INR. Totals include micro-markets not represented above CBD Ballard Estate, Colaba, Churchgate, Fort & Nariman Point SBD Bandra-Kurla Complex. Renewal not included in leasing activity statistics. Net absorption refers to the incremental new space take-up. Numbers for the fourth quarter are based on market information collected until 9th December 2013

MARKET HIGHLIGHTS Significant Q4 2013 Lease Transactions

BUILDING Gigaplex SEZ Nesco IT Park SUBMARKET Thane-Belapur Road Malad//Goregaon TENANT Accenture MSCI BUILDING CLASS A A SQUARE FEET 300,000 126,280

Significant Q4 2013 Construction Completions

BUILDING Synergy Mindspace Building 9 Lodha Supremus SUBMARKET Thane-Belapur Road Thane TENANT BUILDING CLASS A A SQUARE FEET 500,000 150,000

Significant Projects Under Construction

BUILDING Kohinoor Square SUBMARKET Central Mumbai TENANT COMPLETION DATE Q1 2014 SQUARE FEET 1,390,000

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For more information, contact: Siddhart Goel National Head - Research Tel: +91 22 6657 5555 siddhart.goel@ap.cushwake.com

This report contains information available to the public and has been relied upon by Cushman & Wakefield on the basis that it is accurate and complete. Cushman & Wakefield accepts no responsibility if this should prove not to be the case. No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. 2013 Cushman & Wakefield, Inc. All rights reserved.