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Cushman’s latest quarterly data release point towards a moderate to
improving physical pricing trends in most markets with rents now starting
to outpace capital value appreciation. This in our view is healthy, as
rental being a 100% "end user" market is finally catching up to capital
value, though there is still a 10-20% appreciation gap that needs to be
bridged on a one year basis . This catch then needs to sustain for a year
more and may hence cap pricing upside across most markets
Residential, rents are outpacing capital values –
o Pricing in general across major metros has improved +4% QoQ/
10% YoY. Mumbai has been flat while NCR and Bangalore
have seen strong price growth at +7% Q/Q.
o Rental growth (+10-18%) at the margin seem to be outpacing
capital value growth across markets (ex Mumbai), resulting in
yield expansion. Except for high end market in Mumbai most
markets have seen a strong growth here
o Launch activity has picked up over the last 2 months in NCR and
Mumbai (given some easing of approvals process). Over the
next 3 months, however these are likely to moderate as we enter
a seasonally weak period
Office- Supply is matching demand thus keeping rents stable
o Vacancy levels in general are high at 15-17% levels across
markets. Hence even though absorption has been improving
for a year now, pricing hasn’t improved.
o Mumbai has the highest office space vacancy at 24% followed
by NCR at 16%. Bangalore however is the only market seeing
reducing vacancy numbers which are now down to 12% vs.
16% , six months back
Retail- Not so “oversupplied” now
o Rents have not improved in almost any location but at the
margin, trend is likely to be positive in Bangalore and
Mumbai. 2011/12 may actually be the peak of retail supply
after which it should start moderating across most markets.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Cushman’s latest quarterly data release point towards a moderate to
improving physical pricing trends in most markets with rents now starting
to outpace capital value appreciation. This in our view is healthy, as
rental being a 100% "end user" market is finally catching up to capital
value, though there is still a 10-20% appreciation gap that needs to be
bridged on a one year basis . This catch then needs to sustain for a year
more and may hence cap pricing upside across most markets
Residential, rents are outpacing capital values –
o Pricing in general across major metros has improved +4% QoQ/
10% YoY. Mumbai has been flat while NCR and Bangalore
have seen strong price growth at +7% Q/Q.
o Rental growth (+10-18%) at the margin seem to be outpacing
capital value growth across markets (ex Mumbai), resulting in
yield expansion. Except for high end market in Mumbai most
markets have seen a strong growth here
o Launch activity has picked up over the last 2 months in NCR and
Mumbai (given some easing of approvals process). Over the
next 3 months, however these are likely to moderate as we enter
a seasonally weak period
Office- Supply is matching demand thus keeping rents stable
o Vacancy levels in general are high at 15-17% levels across
markets. Hence even though absorption has been improving
for a year now, pricing hasn’t improved.
o Mumbai has the highest office space vacancy at 24% followed
by NCR at 16%. Bangalore however is the only market seeing
reducing vacancy numbers which are now down to 12% vs.
16% , six months back
Retail- Not so “oversupplied” now
o Rents have not improved in almost any location but at the
margin, trend is likely to be positive in Bangalore and
Mumbai. 2011/12 may actually be the peak of retail supply
after which it should start moderating across most markets.
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