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India property-
Office leasing strong
Office leasing data for 1QCY11 shows that leasing volumes have
remained stable YoY after posting record levels in mid-CY10. Absorption
also exceeded supply for the first time in three years leading to strength
in rentals up 4-12% YoY. While a higher base has led to a small decline in
hiring by tech majors, guidance for FY12 is strong. Bengaluru continues
to lead the leasing activity which would be a positive for the city
developers viz. Sobha. Within large caps, we prefer DLF which is well
positioned to enjoy the office leasing upturn.
Office absorption exceeds supply for first time in 3 years
Office leasing data from Cushman & Wakefield shows that across India office
absorption has increased a small 2% YoY to 7.2m sf in 1QCY11.
Absorption, though was down 15% QoQ, partly on lower supply – down 35% QoQ.
Absorption outstripped supply (6.2m sf in 1Q) for the first time in 3 years.
Absorption rate (absorption to supply ratio) rose to 116% from 80% in CY10.
Rising absorption rate led to a QoQ decline in vacancy rates in Bengaluru, Chennai
and Kolkata. NCR vacancy rates were up marginally; Mumbai being stable.
Rentals have started gaining traction
Stable vacancy rates have led to firmness in rentals across more locations.
Rentals for IT offices/SEZs rose across board in Bengaluru by 2-6% QoQ and were
up 2-3% QoQ in NCR as well. Overall rentals have increased by c.10% since their
2009-10 lows in Bangalore and NCR.
Higher supply in Mumbai has kept CBD rentals from rising with the supply
inundated Lowe Parel micro market reporting a decline in rentals.
Most other CBD’s – NCR, Bengaluru, Chennai, Kolkata – saw 2-5% rise in rentals.
IT hiring down on high base but outlook remains strong
Combined net hiring by Infosys, Wipro and TCS for 1QCY11 was reported at 17,635
down 13% QoQ and 9% YoY.
Decline has come on a higher base (1HCY is seasonally weaker; 1Q10 was a
demand revival quarter) and we expect hirings to increase YoY in 2011.
Infosys and TCS have upped their hiring targets for FY12 by 33% and 20%
respectively indicating sustained confidence in IT industry demand trend.
Good leasing pace by UCP; Prefer DLF
Unitech Corporate Park (UCP LN, properties 40% owned by Unitech) reported
leasing of 1.55m sf of office properties between Oct'10 and Mid Apr-11.
The 2HFY11 rate of leasing at 0.7m sf/ quarter is 5 times higher than FY10 leasing
rate and 54% higher than 1HFY11 leasing rate.
In a sign of increased confidence, UCP said that it will accelerate ongoing
development as well as re-start work on sites where it had been stopped earlier.
Stable leasing volumes and potential for a sustained rise in rentals makes us prefer
property stocks with an exposure to commercial sector.
DLF, with 4.3m sf leased in 9MFY11, is our preferred pick on the theme. Faster
leasing also improves visibility on DAL listing later in FY12.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
India property-
Office leasing strong
Office leasing data for 1QCY11 shows that leasing volumes have
remained stable YoY after posting record levels in mid-CY10. Absorption
also exceeded supply for the first time in three years leading to strength
in rentals up 4-12% YoY. While a higher base has led to a small decline in
hiring by tech majors, guidance for FY12 is strong. Bengaluru continues
to lead the leasing activity which would be a positive for the city
developers viz. Sobha. Within large caps, we prefer DLF which is well
positioned to enjoy the office leasing upturn.
Office absorption exceeds supply for first time in 3 years
Office leasing data from Cushman & Wakefield shows that across India office
absorption has increased a small 2% YoY to 7.2m sf in 1QCY11.
Absorption, though was down 15% QoQ, partly on lower supply – down 35% QoQ.
Absorption outstripped supply (6.2m sf in 1Q) for the first time in 3 years.
Absorption rate (absorption to supply ratio) rose to 116% from 80% in CY10.
Rising absorption rate led to a QoQ decline in vacancy rates in Bengaluru, Chennai
and Kolkata. NCR vacancy rates were up marginally; Mumbai being stable.
Rentals have started gaining traction
Stable vacancy rates have led to firmness in rentals across more locations.
Rentals for IT offices/SEZs rose across board in Bengaluru by 2-6% QoQ and were
up 2-3% QoQ in NCR as well. Overall rentals have increased by c.10% since their
2009-10 lows in Bangalore and NCR.
Higher supply in Mumbai has kept CBD rentals from rising with the supply
inundated Lowe Parel micro market reporting a decline in rentals.
Most other CBD’s – NCR, Bengaluru, Chennai, Kolkata – saw 2-5% rise in rentals.
IT hiring down on high base but outlook remains strong
Combined net hiring by Infosys, Wipro and TCS for 1QCY11 was reported at 17,635
down 13% QoQ and 9% YoY.
Decline has come on a higher base (1HCY is seasonally weaker; 1Q10 was a
demand revival quarter) and we expect hirings to increase YoY in 2011.
Infosys and TCS have upped their hiring targets for FY12 by 33% and 20%
respectively indicating sustained confidence in IT industry demand trend.
Good leasing pace by UCP; Prefer DLF
Unitech Corporate Park (UCP LN, properties 40% owned by Unitech) reported
leasing of 1.55m sf of office properties between Oct'10 and Mid Apr-11.
The 2HFY11 rate of leasing at 0.7m sf/ quarter is 5 times higher than FY10 leasing
rate and 54% higher than 1HFY11 leasing rate.
In a sign of increased confidence, UCP said that it will accelerate ongoing
development as well as re-start work on sites where it had been stopped earlier.
Stable leasing volumes and potential for a sustained rise in rentals makes us prefer
property stocks with an exposure to commercial sector.
DLF, with 4.3m sf leased in 9MFY11, is our preferred pick on the theme. Faster
leasing also improves visibility on DAL listing later in FY12.
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