MARKETBEAT

OFFICE SNAPSHOT
MUMBAI, INDIA
A Cushman & Wakefield Research Publication

Q1 2012

ECONOMY
Preliminary estimates by the Central Government suggest that Indias GDP growth rate will be 6.9% for fiscal year 2011-2012, compared to 8.4% in 20102011. The slowdown in the GDP growth rate was mainly due to the effects of the global economic uncertainty including the concerns on fiscal sustainability in Europe, coupled with poor performance of the agricultural and manufacturing sectors in the local economy. However, the Government has committed itself to predict a GDP growth of 7.6% (+/- 0.25%) in the coming fiscal year (2012-2013). There has been an improved flow of foreign direct investments in the preceding months of 2012, perhaps an indication of the year ahead. Predictions of a better economic environment in the U.S. and the Euro zone are expected to impact the Indian markets favorably. IT/ITeS and domestic BFSI majors in the country have already indicated plans to grow, thereby indicating a strong demand for office space during the year.

Vacancy has remained largely stable at 20.6% at almost the same level as the last quarter. In the CBD however, vacancy increased to 14.3% as most occupiers moved out to other locations. Despite healthy absorption and growth in enquires, rentals have remained stable due to availability of space options across all micro markets.

OUTLOOK
Fresh supply of approximately 2.35 msf is expected to be infused in the next quarter. Rentals across all micro markets are likely to remain stable during this time owing to competitive pressure from upcoming supply. BKC is expected to witness increased transaction activity in the coming quarter as its prominence has risen over the CBD. STATS ON THE GO
1Q12 Overall Vacancy Grade A CBD Rents Absorption (sf) 20.6% 275 1,423,282 Q-O-Q CHANGE 1.45% 0 323,282 Y-O-Y CHANGE 33.67% -8.3% 35.5% 12 MONTH OUTLOOK

RESILIENT DEMAND & REDUCED PRECOMMITMENTS

The commercial office market in Mumbai regained some momentum in the first quarter of 2012. The city recorded an absorption level of approximately 1.4 million square feet (msf) spread across all micro markets. This is an increase of 30% over the last quarter. The BFSI sector remained the highest demand driver with nearly 27% of share in absorption. The growth trend of absorption levels in the IT/ITeS sector also remained buoyant. The market however, witnessed reduced pre-commitments since companies preferred to take up space in ready developments due to high availability. Quite a few large deals were executed during the quarter. However, demand for space in the range of 6,000 square feet (sf) to 40,000 sf was dominant. Absorption was concentrated in BKC (29%) followed by Thane-Belapur Road (23%) and Lower Parel (19%). Locations along the Western Express Highway like Goregaon and Malad, which mainly included BFSI captive units, garnered high levels of interest among corporates due to large talent pools in surrounding residential catchments and easy accessibility.

ECONOMIC INDICATORS
INDIA GDP Growth CPI Growth Industrial Production WPI Growth
SOURCE: RBI & Central Statistics Office, India *Q-O-Q Change ** Y-O-Y Change, Dec 2011

2011 6.9% 7.7%* 4.4** 6.9%*

2012F 7.6%** 8.2%* 5.8** 6.3%**

2013F 8.6% 7.0% 4-5% 6.0%

GRADE A CBD RENTAL VS. VACANCY RATES

STABLE VACANCY RATE OWING TO REDUCED SUPPLY

Supply remained subdued during the first quarter of 2012 and was recorded at 1.44 msf, which is 47% less than the last quarter. Interestingly, 42% of the additions during the first quarter pertain to office developments for non-IT companies in contrast to the trend where they contributed just 10% of supply in the previous quarter. Several projects across Lower Parel, Andheri and ThaneBelapur Road were delayed due to modest demand and pending approvals.

MUMBAI MARKET STATISTICS

SUBMARKET INVENTORY OVERALL VACANCY RATE UNDER CONSTRUCTION YTD CONSTRUCTION COMPLETIONS 0 98,000 0 0 331,500 0 250,000 0 757,500 0 1,437,000 YTD ABSOPTION GRADE A AVERAGE NET RENT (INR/SF/MTH) 4Q11* 275 260 170 280 115 90 85 65 40 45 275** 1Q12* 275 260 170 280 115 90 85 65 40 45 275** US$ SF/YR 1Q12* $64.37 $60.85 $39.79 $65.54 $26.92 $21.06 $19.89 $15.21 $9.36 $10.53 $64.37** EURO SF/YR 1Q12* 48.55 45.90 30.01 49.43 20.30 15.89 15.01 11.48 7.06 7.94 48.55**

CBD Worli Lower Parel Bandra-Kurla Andheri-Kurla Powai Malad Vashi Thane-Belapur Road Thane TOTALS
** GRADE A CBD Rentals

8,297,163 4,472,019 11,201,339 8,983,256 22,859,443 6,202,708 10,435,239 3,288,500 9,624,723 5,024,813 90,389,203

14.3% 14.6% 21.3% 4.0% 25.8% 4.5% 15.1% 15.9% 26.2% 25.0% 20.6%

120,000 474,250 3,026,000 5,040,000 4,756,921 0 2,721,042 950,000 1,688,666 2,620,000 21,396,879

0 7,677 272,800 415,500 242,918 37,000 84,500 20,887 332,000 10,000 1,423,282

* REFLECTS ASKING RENTALS All rentals are quoted for Warm Shell, which includes core facility, high-side air-conditioning and 100% power backup Conversion Rate: US$1= INR 51.27 and Euro 1 = INR 67.97

MARKET HIGHLIGHTS
SIGNIFICANT 1Q12 LEASE TRANSACTIONS BUILDING Crescenzo Synergy Mindspace Marathon Futurex SIGNIFICANT 1Q12 SALE TRANSACTIONS BUILDING Marathon Futurex MARKET Lower Parel BUYER Israel Consulate PURCHASE PRICE (US$) 5 mill SQUARE FEET 12,500 MARKET Bandra-Kurla Complex Airoli Lower Parel TENANT Sahara Cognizant Loreal BUILDING CLASS A A A SQUARE FEET 300,000 150,000 71,000

SIGNIFICANT 1Q12 CONSTRUCTION COMPLETIONS BUILDING Everest Infotech Park-2 Filix Lodha Supremus MARKET Thane-Belapur Road Bhandup Worli TENANT NA NA NA SQUARE FEET 577,500 156,000 98,000 COMPLETION DATE 1Q12 1Q12 1Q12

SIGNIFICANT 1Q12 PROJECTS UNDER CONSTRUCTION BUILDING The Capital Rupa Solitaire First International Financial Centre Oberoi Commerz II MARKET Bandra-Kurla Complex Thane-Belapur Road Bandra-Kurla Complex Goregaon TENANT NA NA NA NA SQUARE FEET 1,100,000 1,250,000 506,000 680,000 COMPLETION DATE 2Q12 2Q12 3Q12 3Q12

* RENEWAL - NOT INCLUDED IN LEASING ACTIVITY STATISTICS

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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. 2012 Cushman & Wakefield, Inc. All rights reserved.