DTZ BENGALURU OMB Q2 09

Forenquiriesonthisreport,pleasecontact:PriyankarBhikshu,AssociateDirector,Consulting&ResearchTel:[phone]E-mail:[e-mail]erviceenquiries,pleasecontact:HughHamilton,Director-CorporateServicesTel:[phone]E-mail:[e-mail]relieduponasabasisforenteringintotransactionswithoutseekingspecific,qualified,professionaladvice.Whilstfactshavebeenrigorouslychecked,DTZcantakenoresponsibilityforanydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport.Informationcontainedhereinshouldnot,inwholeorpart,bepublished,reproducedorreferredtowithoutpriorapproval.AnysuchreproductionshouldbecreditedtoDTZResearch.(c)DTZResearchbengaluruupdateofficemarketbriefQ22009GradeAofficemarketstatisticsNote:Baserentsreflectaveragewarmshellrents.Occupancycostisrentplusalloutgoingswhereoutgoingsincludefixedmaintenancechargesapplicableasperlocalmarketnorms.*ReflectoccupancycostchangescomparedtoQ408(notaccountingforexchangeratefluctuations)**RestofPBDincludesthetotalstockandvacancystatisticsofPBDSouth(HosurRoad,ElectronicCity,BannerghattaRoadandMysoreExpressway)aswellasYelahankainthenorth.Exchangerate:US$1=INR47.8Moredeals,anearlysignofimprovingconfidence?Q209witnessednewsupplytothetuneof1.2millionsqft(msft),whichisthelowestquarterlysupplyrecordedinovertwoyears.About90%ofthissupplywasaccountedforbynon-SEZspaceintheSBD,whileCBDandoffCBDsawnonewsupply.ThelimitedcontributionofPBDmarketsinnewsupply(justover10%oftotalsupply)canbeattributedtothedelayincompletionofsomeofthelargeunderdevelopmentprojectsinthemarket.Q209witnessedareversaloftheprogressivedeclineinquarterlyabsorptionwitnessedthroughthepastfewquarters,recordinga50%jumpoverQ109,butat1.2msft,theabsorptionwasstill30%lowerthantheaveragequarterlyabsorptionsince2008.Inspiteoftheglobaleconomiccrisis,someoftheITfirms,especiallyR&DfirmsintheITsector,haveshowntheirlongtermcommitmenttothecitybytakinguplargebuilt-to-suitspaces.Thetotalvacancyincommercialofficespacestoodatastaggering16.3msft,whichismorethan22%ofthetotalstockof73.8msftattheendofQ209.PBD(Whitefield)micromarketrecordedthehighestvacancylevelwithover6.1msftremainingvacantinthearea.Eventhoughtheabsorptionhasimprovedduringthequarter,itisstillexpectedtotrailthequarterlysupplybyalargemargininthecomingquarters,resultingincontinuedincreaseinvacancylevelsthroughtheyear.GradeAofficerentals(2005-Q22009)Source:DTZResearchTherentalintheCBDandoffCBDmicromarketsdeclinedmarginallyby3%to7%duetothecontinuedchurningofoccupiersduringthebeginningofthequarter,buthasstabilizedtowardstheend.TheSBDandPBDmicromarketswithstoodthedownwardpricepressurebetter,withthedevelopersseeinglimitedscopeforfurthercorrection.Unlikeearlierestimates,onlyabout30%oftheexpectedsupplyofover3.7msft,cametothemarketduringthequarter,withthecompletionoftherestgettingpushedintothelatterhalfoftheyear.Theexpectedsupplyfortheremainderoftheyearcurrentlystandat6.7msft,withworkatsomeofthenoteddevelopments,includingBrigadeSummit(966,400sqft)andKalyaniPlatina(350,000sqft)inPBDWhitefieldandWorldTechnologyCentre(570,000sqft)inPBDORRnearingcompletion.ThecommercialspaceintheCBD&offCBDareacontinuetowitnessrationalizationaswellasconsolidation/relocationofspacebyfirmslookingforwaystocuttheircosts,resultinginincreasingvacancylevelsinthesemarketsinspiteoftheincreasingnumberofsmallertransactionsandlimitednewsupply.Supplyandtakeup(Q22008–Q22009)Source:DTZResearchRecenttransactionsCiscosignedadealfor600,000sqftatCessnaBusinessPark,PBDORRSonyleased60,000sqftatVrindavanTechVillage,PBDORRUdayaTVleased60,000sqftatPrestigeWaterford,CBDAircelleased32,000sqftatHMVibhaTowers,SBDTotalstock(sqm)Vacancy(%)Baserent(INR/sqft/mo)Occupancycost(US$/sqft/yr)%change(fromJan09)*6monthforecastCBD408,53915.067520.08-15.79-OffCBD222,08412.206016.62-18.75-Suburban1,931,95810.574512.55-4.76-PBD(ORR)1,790,18419.294011.30-7.22-PBD(Whitefield)1,683,84733.71226.78-5.26-RestofPBD**817,86838.30226.78-5.26-Overall6,854,47922.1637.5710.69-8.08-India•