MumbaiRealEstate

Macrostressunabated
November17,2011 Kejal Mehta kejalmehta@plindia.com +91-22-66322246 Dhrushil Jhaveri dhrushiljhaveri@plindia.com +91-22-66322232

Sales registrations down 25% YoY at 4,633 RBI indicating a pause in monetary tightening, however, monetary easing in our view is still some time away Group buying website listings indicate a ~10-15% price correction across micro markets mainly in projects that are 3-4 years from completion Lease registrations down 3% MoM to 8,106

Salescontinuetolanguish;macrostresscontinues
Sales registrations for the month of October 2011 are down 25% YoY, to 4,633 levels. However on a MoM basis, registrations are up 12% on account of Shraadh falling in the month of Sept (13-27 Sept). Sales registrations have continued to languish at ~4500 levels for the last few months on the back of a worsening macro-economic environment for the real estate sector. Although RBI has indicated a pause in monetary tightening at its latest monetary policy announcement in October, we believe resumption of monetary easing is still some time away. Especially considering the sticky nature of inflation we are currently witnessing. Our channel checks indicate that the festive season has received a tepid response contrary to builders expectations of a revival in sales. Thus, a stretched balance sheet, tight liquidity environment and a sharp slowdown in sales are proving to be a triple whammy for developers in the current environment.

BSESensexv/sBSERealEstate
BSE Realty SENSEX Mumbai (Ex DB Realty)

180 130 80 30

Dec-09

Dec-10

Jun-10

Jun-11

Source:Bloomberg,PLResearch

Also, we are not seeing many deals on the Private Equity front, despite PE being one of the few remaining sources of finance for the sector. This is mainly on account of the high 20-30% IRRs demanded by these funds. In a recent deal, Redfort capital has invested Rs250 cr in Omkar realtors slum rehab project in Malad. On the pricing front although we are still not seeing a meaningful reduction in prices, some of the listings on group buying websites are indicating a ~10-15% correction in prices across micro markets. However, these price reductions mainly pertain to projects that are at least 3-4 years from completion. In terms of lease transactions October number stood at 8,106, a growth of 23% YoY, however flat (-3%) on a MoM basis. Lease registrations too have slowed down to ~8000 levels from the 9500+ levels seen in Mar-July 2011.

Sep-09

Sep-10

Aug-08

Aug-09

Aug-10

Aug-11

Oct-08

Oct-09

Oct-10

Apr-09

Apr-10

Feb-09

Feb-10

Dec-08

Dec-09

Dec-10

Feb-11

Apr-11

Source:DGRMumbai,PLResearch
Prabhudas Lilladher Pvt. Ltd. and/or its associates (the 'Firm') does and/or seeks to do business with companies covered in its research reports. As a result investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of the report. Investors should consider this report as only a single factor in making their investment decision. Please refer to important disclosures and disclaimers at the end of the report

Oct-11

Jun-09

Jun-10

Jun-11

StockPerformance (%) 1M Sensex (1.5) BSERealEstate (8.9) Ajmera Realty (12.9) Godrej Properties (0.3) HDIL (24.3) Hubtown (5.1) Indiabulls Real Est. (8.5) Oberoi Realty (4.9) Orbit Corporation (12.6) Peninsula Land (8.1) Phoenix Mills (2.5) Sunteck Realty 11.4

Mar-10

Mar-11

Sep-11

6M (7.5) (21.8) (32.6) (2.7) (53.3) (10.6) (41.9) (2.6) (38.1) (31.2) (1.2) 25.9

12M (15.6) (49.7) (57.2) (3.6) (68.4) (60.2) (64.6) (17.3) (71.2) (34.7) (13.9) (43.1)

Exhibit1: Trailing3monthSalesRegistrationsinMumbai
25,000 23,000 21,000 19,000 17,000 15,000 13,000 11,000 9,000 7,000 5,000

(nos)

SectorUpdate

(nos)

(nos)

100%

150%

200%

50%

0%

-50%

10,000

12,000

10,000

2,000 -

4,000

6,000

8,000

2,000

4,000

6,000

8,000

March 17, 2010

Source:DGRMumbai,PLResearch Source:DGRMumbai,PLResearch Exhibit2: Trailing3monthYoY%growth Exhibit6: RegistrationofLeaseAgreementsinMumbai Exhibit4: RegistrationofSaleDeedagreementsinMumbai
Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11
43% 63% 81% 100% 128% 143% 140% 122% 106% 74% 37% 16% 9% -1% -6% -12% -19% -24% -24% -25% -28% -23% -21% -21% -28% -26% -24%

Source:DGRMumbai,PLResearch
(YoYgr.) (YoYgr.)

10% 20% 30% 40% 0% -30% 100% 50% 0% -50% -20% -10% 150% 200%

Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11

15% 5%

25%

35%

-25%

-15%

-5%

Source:DGRMumbai,PLResearch
9% 9% 11% 10% 12% 16% 2% 20% 18% 7% 26% 15% 21% 10% 12% 17% 3% -19% 7% 0% 20% 34% 12% 11% 19% 4% 23% 23% 32%

Source:DGRMumbai,PLResearch
Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11

Source:DGRMumbai,PLResearch

Exhibit3: Trailing3monthLeasesYoY%growth
10% 10% 11% 12% 10% 12% 13% 15% 18% 17% 21% 15% 15% 13% 11% 0% 5% 6%

Exhibit5: YoY%growthinSaleDeedregistrations

Exhibit7: YoY%growthinLeaseAgreementregistrations

Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11

28% 38% 65% 97% 85% 122% 178% 123% 113% 128% 79% 22% 19% 9% -1% -13% -3% -20% -29% -21% -22% -30% -30% -1% -27% -31% -25% -22% -25%

Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11

19% 20% 16% 14% 8% 14% 11% 15% 16%

Mumbai Real Estate

(YoYgr.)
100% 150% 200% 50% 0% -100% -50% 100% 150% 200% 50% 0% -50%

March 17, 2010

(YoYgr.)
11% 0% 11% 39% 41% 54% 70% 79% 37% 64% 68% 8% -19% 5% -20% -23% 15% 13% -5% -23% -3% -32% -44% -22% -9% -12% 107% 146% 87%

Source:DGRMumbai,PLResearch
Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11
31% 47% 79% 99% 94% 125% 185% 144% 125% 141% 79% 20% 12% 0% -3% -12% -4% -21% -30% -26% -26% -34% -32% -1% -26% -27% -26% -24% -27%

Source:DGRMumbai,PLResearch
Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11

Exhibit10: MumbaiSuburbSaleDeedRegistrations

Exhibit8: MumbaiIslandCitySaleDeedRegistrations

(YoYgr.)
40% 30% 20% 10% 0% -10% -20% -30%
0% 11% 9% 13% 12% 12% 12% 7% 19% 16% 28% 17% 22% 24% 12% 17% -20% -1% 10% 36%

Source:DGRMumbai,PLResearch
Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11
23% 36% 2% 10% 10% 8% 6% 23% 31%

Source:DGRMumbai,PLResearch

(YoYgr.)

250% 200% 150% 100% 50% 0% -50% -100%

9% -3% -5% 12% 45% 13% 21% 29% 11% 19% 7% 17% -66% 17% 16% 30% -18% 11% -12% 1% 18% -10% 27% 14% -6% 21% -15% 228%

Exhibit11: MumbaiSuburbLeaseAgreementRegistrations

Exhibit9: MumbaiIslandCityLeaseAgreementRegistrations

Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11

Mumbai Real Estate

Mumbai Real Estate

Prabhudas Lilladher Pvt. Ltd. 3rd Floor, Sadhana House, 570, P. B. Marg, Worli, Mumbai-400 018, India Tel: (91 22) 6632 2222 Fax: (91 22) 6632 2209 RatingDistributionofResearchCoverage

70% 60% %ofTotalCoverage 50% 40% 30% 20% 10% 0% Buy Accumulate Reduce

57.8%

20.4%

19.7% 2.0% Sell

Accumulate Sell TradingSell UnderReview(UR) : : : : Outperformance to Sensex over 12-months Over 15% underperformance to Sensex over 12-months Over 10% absolute decline in 1-month Rating likely to change shortly

PLsRecommendationNomenclature
BUY Reduce TradingBuy NotRated(NR) : : : :

Over 15% Outperformance to Sensex over 12-months Underperformance to Sensex over 12-months Over 10% absolute upside in 1-month No specific call on the stock

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March 17, 2010