7 November 2012
Update
Real Estate
MCHI Expo highlights: Surge in launches led by easing of approvals
Mumbai poised for sales uptick over 2HFY13, but no sign of price correction
We attended the 20th Mumbai Property Expo, organized by the Maharashtra Chamber of
Housing Industry (MCHI). Interestingly, this Expo was held after a hiatus of 12 months (instead of
the normal frequency of 6 months), indicative of the prolonged lull in Mumbai real estate sector
with very few new launches owing to approval hurdles and regulatory uncertainties. We surveyed
50-60 projects and interacted with lenders to get a sense on new launches, buyers' interest and
available freebies/discounts to update our views on the Mumbai market.
Our key takeaways
Early signs of market revival:
Higher participation by developers, surge in offered projects, and uptick in new launches are
key positives, signifying improvement in approval process.
Basic "unaffordability" continues:
Quoted prices are up 15-25% YoY; completion premium is at ~20%; Festive discount is
limited. In sum, price-based affordability is yet to improve.
25-75bp reduction in mortgage rates:
Competitive mortgage rates are down 25-75bp; Waivers are on offer.
Immediate price correction unlikely:
Very few projects are on ready possession; average 6-12 month delay in old projects;
completion skewed towards FY15 or later - a harbinger of no immediate price correction.
Higher developers' participation a key positive surprise
Spillover impact was visible with strong participation of over 120 developers v/s
usual participation of 60-80 developers in last two Expos.
Along with developers, there were almost 20 banks and housing finance
companies including SBI, HDFC, Citi, Axis, and LIC Housing Finance.
Some prominent developers were conspicuous by their absence: Oberoi Realty,
DB Realty, Indiabulls Real Estate, Ackruti City to name a few.
There is a sharp increase in projects offered outside Mumbai as well, possibly to
tap investors' demand.
Spurt in fresh projects after a lull of 12 months; suggests easing approval
hurdles
A sizable number of new launches were visible along with strong marketing of
various upcoming projects to gauge buyer interest. It bolsters our expectation of
improvement in approval process post adoption of new DCR (Development
Control Rules) by developers. Still, some projects on offer had approvals pending
for 6-8 months.
Even as projects were widely distributed across locations, we found higher number
of new launches and upcoming projects in Western and Central suburbs along
with Thane.
While fresh projects would offer much-awaited options to the home buyers, given
the launch pipeline (based on our market survey), we sense a potential surge in
supply in a few locations like Goregaon, Malad, Andheri, Mulund, and Thane. This
should lead to possible pressure on prevailing prices in these micro-markets going
ahead, if demand remain sub-optimal.
Sandipan Pal
(Sandipan.Pal@MotilalOswal.com); +9122 3982 5436
Investors are advised to refer through disclosures made at the end of the Research Report.

Real Estate
Location mix of Expo projects (%): Central, Western suburbs and Thane rules the roost
South Central Mumbai
Central
Suburbs
Western
Suburbs
Extended
Suburbs
Average basic unit cost* in Mumbai continue to surprise (INR m)
* excluding stamp duty, registration, parking and PLC charges
Source: MCHI, MOSL
Trend towards transparent pricing; limited festive discounts
Rising number of developers have started quoting prices based on carpet area as
against common practice of quoting on super built-up area, viz, Godrej Properties,
Hiranandani, Bhoomi Realty, Rajesh Lifespaces, etc. In our view, this is a positive
step towards greater transparency. Select developers were quoting on a ticket-
size basis inclusive of all charges (parking, registration, etc).
No major discounts or freebees were under offer from developers, barring a few
20:80 schemes such as Nahar group project (Chandivali) and Ruparel project
(Chembur).
Basic "unaffordability" continues - quoted prices up 15-25% YoY; completion
premium at ~20%
Prices for unsold old projects (displayed in October 2011 Expo) were up 10-30%
across locations. The escalation is strong in Western and Central suburbs (10-
25%), but sharpest in extended suburbs and Thane (20-33%). However, Central
Mumbai prices remain broadly unaltered owing to weak demand.
We find ready-possession projects are commanding ~20% premium over under-
construction projects or new launches by the same developers at similar location.
Average ticket size (excluding PLCs and registrations, duty and taxes) for basic 2-
BHK apartment in Mumbai stood upward of INR11m; even places like Thane,
Panvel, Airoli and Dahisar are fast approaching the "INR10m mark".
7 November 2012
2

Real Estate
Average residential prices (INR/sf) in key micro markets compared with Oct-11 prices
South Central
Mumbai
Western
Suburbs
Central
Suburbs
Extended Suburbs
and Navi Mumbai
Project-mix as per delivery schedule (%) and other key indicators (pricing premium for advance
projects, average delay etc)
Source: MCHI, MOSL
Few ready possession projects; completion skewed towards FY15 or later
- expect no immediate price correction
There were very few ready possession projects; a high proportion of deliveries
were skewed beyond FY15. Of our surveyed projects, almost 72% were scheduled
for completion FY15 or after, 16% in FY13/14, and only 12% for ready possession.
We found 6-12 months of delay in delivery timeline of several old projects, mostly
explained by approval delays and execution stretched given liquidity stress.
Delays in completion and fewer delivery schedules in FY13-14 suggest no
immediate price correction, as pressure on developers to sell existing projects is
that much lower.
Competitive mortgage rates down 25-75bp; various waivers on offer
Among major banks and housing finance companies, mortgage rates are down 25-
75bp, along with discount offers on processing fees to encourage decision-making.
Average loan-to-value (LTV) ratio offered stood at 80-85% of overall cost (including
registration and stump duty).
Average home loan rate stood at 10.5% for >INR7.5m of loan amount.
7 November 2012
3

Real Estate
Lending details of key financial institutions (%)
Bank
SBI
HDFC
AXIS Bank
LIC HF
Citi Bank
ICICI Bank
HSBC
Oct-11 Nov-12 Processing days
10.5
10.15
20-25
10.5
10.25
7-8
11.75
10.5
4-5
11.0
10.75
10.5
11.0
10.75
10.5
10.25
10.75
10-15
15
4-5
NA
Other benefits
50% of processing fees (0.12% of loan amount)
60% off on processing fees/11.75% fixed rate/ EMI
waiver
Lower processing fees (15K for loan amount >
INR7.5m)
0.25% of processing fees; Current a/c benefits
Cash back on EMI
Source: MCHI, MOSL
Bottomline: Underlying demand seems strong; new projects should bolster
sales; prices should hold
We sensed healthy interest level across buyers for all segments going by the rush
of visitors. Therefore, despite no price rationalization, we expect faster decision-
making by fence-sitters on the back of pick-up in new launches, driving uptick in
sales volume over 2HFY13.
Mumbai being a high beta market, uptick in sales momentum should meaningfully
improve the outlook for Mumbai-centric real estate players, viz, Oberoi, HDIL,
IBREL, Mahindra Lifespaces, Godrej, etc. Potential softening of interest rates is an
added booster.
Despite upcoming supply, we do not expect price correction in the near future
given lack of ready possession projects and delayed execution. On the contrary,
revival in demand could push prices for select projects further up. We expect
affordability to improve only through time correction.
We expect new launches to pick up over 2HFY13 (msf)
...leading to revival in sales momentum
Source: Liases Foras, MOSL
7 November 2012
4

Real Estate
Inventory level at elevated level
Registration data - Sales (nos.)
Source: Liases Foras, Industry
Illustrative project list (Figures are based on our interaction with developers at MCHI Expo)
Delivery/
delayed
Delivery
2015
Base Ticket
Size (INR m)
2BHK
23
Locations
Project Name
Developers
Parel
Veda
Omkar Realtors
Average
Sion-Bandra-Kurla
BKC
Signia Isles
Sunteck Realty
BKC crossing
Omkar Meridina
Omkar Realtors
Wadala (E)
Ajmera i-land
Ajmera Realty
Kurla (W)
Kohinoor City
Kohinoor Group
Average
Western suburbs
Malad (W)
Jaysagar
Kabra group
Malad (E)
Omkar Altamonte I Omkar developer
Goregaon (E)
Ekta Tripolis
Ekta World
Goregaon (W)
Sunetck City
Sunteck
Goregaon (W)
Aurum
Kabra Group
Chandivali
Water Lilly,
Nahar Amrit Sakti
White Lilly
Kandivali (E)
Oasis
Acme Group
Santacruz (E)
Borivali (E)
Borivali (E)
Borivali (W)
Borivali (W)
Average
Runwal Symphony
Bhoomi Garden II
Signia High
Aura Biplex
Nalanda
Runwal Group
Ekta World
Sunteck realty
Bhoomi Realty
and Nilkamal Group
Kabra Group
Oct-11
-
Oct-12
16,500
Appreciation (%)
NA
0
5
NA
9
3
5-10
NA
NA
NA
32
NA
9
24
8
17
NA
NA
NA
10-25
May-15
Jun-15
Jun-15
Dec-13
40,000
-
15,300
11,150
42,000
15,500
16,650
11,500
NA
22
20
14
20
11
10
13
12
12
11
10
12
10
14
13
11
Source: MCHI, MOSL
Aug-13
Jun-15
Jun-15
Nov-15
Mar-15
Oct-13/Dec-14
Dec-2013/
Dec-2014
Mar?15
Jun-15
Mar?15
Dec-14
Mar-15
-
-
-
9,500
-
11,000
8,500
12,000
9,000
-
-
-
11,500
10,950
13,500
12,500
13,000
12,000
10,500
13,000
10,500
14,500
13,650
11,500
7 November 2012
5

Real Estate
Central suburbs / Extended suburb projects
Delivery/
delayed
Delivery
Base Ticket
Size (INR m)
Appreciation (%)
2BHK
35
NA
11
9
NA
4
16
NA
NA
NA
32
36
14
18
NA
NA
10-30
12
14
11
11
13
12
12
19
11
14
14
15
11
21
34
13
13
Locations
Project Name
Central suburbs
Mulund (W)
Zenith
Mulund (W)
Monte Vista
Mulund (W)
US Open
Mulund (W)
Turquoise
Mulund (W)
Omega
Mulund (W)
Runwal Anthurium
Mulund (W)
Runwal Greens
Mulund (W)
Raj Altezza
Vikhroli
Mayfair Hilcrest
Vikhroli
Raj Splendour
Ghatkopar (W) Orchard Residency
Ghatkopar (W) Kalpataru Aura
Bhandup (W)
Kalpataru Crest
Chembur
Oculus
Chembur
Serenity
Chembur
Orion
Average
Thane, Kalyan, New Mumbai
Kalyan (W)
Lifestyle City
Thane (W)
Dosti Vihar
Thane (W)
Imperia
Thane (W)
Siddhachal
Thane (W)
Kalpataru Hills
Thane (W)
Rodas Enclave
Thane (W)
Garden City
Thane (W)
Urbania
Dombivali (E)
Casa Rio
Dombivali (E)
Casa Bella Gold
Dombivali (E)
Casa Rio Gold
Panvel
Riverside
Panvel
Marathon Nexzone
Airoli
Signia Oceans
Average
Developers
Gundecha
Marathon
Nirmal Lifestyle
Nirmal Lifestyle
Nirmal Lifestyle
Runwal Group
Runwal Group
Rajesh Lifesapces
Mayfair Housing
Rajesh Lifesapces
Runwal Group
Kalpataru Const.
Kalpataru Const.
Ekta
Godrej Properties
Ruparel Realty
Oct-11
Oct-12
11,570
13,500
10,000
10,000
11,500
10,750
10,750
16,200
9,750
12,350
12,500
13,500
9,225
16,500
16,250
11,500
Ready Possession 8,600
Mar-13
-
Dec-15
8,991
Dec-14/Jun-15
9,198
Dec-16
-
Apr-13/Mar-14
10,300
Jun-14/Mar-15
9,300
Dec-14
Jun-15
-
Nov-14
-
Ready Possession 9,500
Ready Possession 9,900
Oct-15
8,100
Oct-14/Dec-2014
14,000
NA
-
Jun-15
-
Nirmal Lifestyle
Dosti group
Dosti group
Kalpataru Const.
Kalpataru Const.
Hiranandani
Runwal Group
Rustomjee Group
Lodha Group
Lodha Group
Lodha group
Kalpataru Const.
Marathon Realty
Sunteck Realty
Dec-13/Jun-14
Mar-2014/Dec-2015
Jun-2014/Dec-2016
Jun-13
Jun-14
Mar-15/Jun-15
Dec-15
Jul-12
Mar-13
Ready Possession
Dec-13/Jun-14
Ready Possession
Jun-15
Jan?13
3,798
6,900
6,600
6,750
5,850
8,000
6,000
7,700
4,040
3,930
3,420
5,300
-
7,200
4,550
8,250
8,500
8,100
6,900
9,600
7,100
10,300
4,990
4,888
4,680
6,100
4,400
8,500
20
4
20
7
29
7
20
7
18
6
20
8
18
6
34
9
24
4
24
4
37
4
15
5
NA
4
18
7
20-30
6
Source: MCHI, MOSL
Comparative Valuations
Company
DLF
Unitech
IBREL
HDIL
Anant Raj
Phoenix Mills
Mah Life
GPL
Oberoi Realty
Prestige
JPIN
Rating
Buy
Buy
Buy
Neutral
Buy
Buy
Buy
Neutral
Buy
Buy
Buy
CMP
211
26
63
105
89
218
411
617
280
166
49
P/E (x)
FY13E
FY14E
23.6
19.6
31.9
19.8
14.9
10.3
8.2
5.9
17.9
13.6
27.0
14.2
12.7
12.1
35.9
23.1
18.0
11.3
26.2
16.8
7.3
6.8
P/B (x)
FY13E
FY14E
1.3
1.3
0.7
0.6
0.4
0.4
0.4
0.4
0.7
0.6
1.8
1.6
1.3
1.2
3.1
2.8
2.2
1.9
2.4
2.1
1.0
0.9
RoE (x)
FY13E
FY14E
5.5
6.3
1.7
2.7
2.6
3.6
5.1
6.6
3.8
4.8
6.5
11.2
10.5
10.0
9.0
12.7
12.9
17.9
9.6
12.8
15.2
14.3
EV/EBITDA (x)
FY13E
FY14E
15.7
12.3
40.5
24.6
10.3
8.2
5.5
4.0
16.1
11.6
17.8
10.7
10.4
9.7
32.1
20.2
12.9
7.4
13.6
10.0
7.6
6.0
7 November 2012
6

Real Estate
N O T E S
7 November 2012
7

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