Cushman & Wakefield Research

MARKETBEAT
OFFICE SNAPSHOT
AHMEDABAD, INDIA
A Cushman & Wakefield Research Publication

Q2 2012

ECONOMY
India's GDP growth in the last quarter of January ­ March 2012 was recorded at a lower than expected 5.3% as compared to 9.2% during the same period last year. Thus, the GDP growth rate for the year 2011 to 2012 was recorded at 6.5%, the lowest in the last three years. The sluggish growth was mainly due to the poor economic performance of the manufacturing sector. The services sector on the other hand, recorded an annual growth of 9.4%. Foreign Direct Investment (FDI) during the last quarter of the fiscal year was recorded in excess of US$12.3 billion (Department for Industrial Policy & Promotion, India), significantly higher than US$3.4 billion during the same period last year. The rupee has devalued by about 12.3% this quarter and by about 27.3% since last year, to touch its nadir so far.

STATS ON THE GO
2Q12 Overall Grade A Vacancy CBD Rents
* sf per month

19.0 % INR. 38*

Q-O-Q Y-O-Y CHANGE CHANGE 12.1% 76.52% 0% 5.5%

12 MONTH OUTLOOK

ECONOMIC INDICATORS
INDIA GDP Growth CPI Growth Unemployment 2011 6.5% 8.6% 9.8% 2012F 6.5% 8.8% 9.5% 2013F 6.1% 7.5% 9.3%

Source: RBI, Central Statistics Office, India & Roubini

DECLINE IN ABSORPTION
After a positive absorption trend in the last quarter, leasing activities for commercial office space recorded a decline of approximately 18% over the previous quarter. The city recorded a Grade A absorption rate of approximately 174,213 square feet (sf) during the quarter. No pre-commitments were recorded during the quarter. Grade B space absorption for the quarter stood at 67,000 sf. Prahladnagar and S.G. Highway have emerged as the preferred commercial districts on account of favourable infrastructure facilities, with both contributing close to 61% of total absorption in this quarter. The quarter did not witness any Grade A supply, though Grade B did witness 500,000 sf supply in Prahladnagar. ALL GRADES CBD RENTAL VS.CBD VACANCY RATES
39 38 37 INR/sf/mth 36 35 34 33 32 31 30 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 CBD rent CBD Vacancy Rate 0% 2% 4% 6% 8%

STABLE RENTALS ACROSS ALL MICROMARKETS
Rentals have remained stable during the quarter. This stability can be attributed to high vacancy levels and large upcoming supply. The city recorded a vacancy of 9.7% across all grades for the second quarter of 2012 registering an increase of 1% over the previous quarter, due to additional supply and poor absorption. The lack of infusion of new Grade A commercial space can be attributed to the drop in vacancy levels by 12.1% over the quarter.

OUTLOOK
As most Grade A developments are nearing completion, the city is expected to witness fresh supply of approximately 1.8 million sf (msf) in the second half of the year. This is likely to exert a downward pressure on the rentals across all micro markets due to the prevailing high vacancy. However, the CBD markets are likely to witness a marginal increase in rental values due to limited availability.

AHMEDABAD SELECT MARKET STATISTICS
SUBMARKET INVENTORY OVERALL VACANCY RATE UNDER CONSTRUCTION YTD CONSTRUCTION COMPLETIONS YTD ABSORPTION AVERAGE NET RENT (INR/SF/MTH) US$ SF/YR 1Q12* $7.98 $7.35 $7.14 $7.14 $7.14 $7.35 $7.56 $7.56 $7.56 $7.56 EURO SF/YR 1Q12* 6.34 5.84 5.68 5.68 5.68 5.84 6.01 6.01 6.01 6.01

1Q12* ALL GRADES ** C.G. Road Ashram Road S.G. Highway Satellite Road Prahladnagar TOTALS GRADE A S.G. Highway Satellite Road Prahladnagar TOTALS 850,000 480,000 1,479,350 2,809,350 31.2% 17.7% 12.5% 19.0% 2,896,455 800,000 1,022,000 7,591,455 0 0 0 0 205,000 101,000 34,000 340,000 36 36 36 36 2,126,800 554,350 2,694,921 1,636,806 2,641,351 12,506,271 3.5% 4.5% 11.2% 8.9% 8.7% 9.7% 143,000 0 2,738,455 1,150,000 1,022,000 8,841,455 0 0 0 0 500,000 1,400,000 47,140 0 212,600 127,000 46,000 432,740 38 35 34 34 34 35

2Q12* 38 35 34 34 34 35 36 36 36 36

* Reflect weighted average, core shell asking rental rates ** All Grades - includes all Grade A and select properties of other Grades in prime office micro markets Conversion rate: US$ 1 = INR 57.15 and Euro 1 = INR 71.87

MARKET HIGHLIGHTS
SIGNIFICANT 2Q12 LEASE TRANSACTIONS BUILDING Independent Corporate House 637 ISCON Elegance MARKET Prahladnagar Prahlad Nagar Prahlad Nagar TENANT Megha Engineering Deutsche Bank Texas Instruments BUILDING CLASS A A A SQUARE FEET 27,000 6,000 2,477

SIGNIFICANT 2Q12 CONSTRUCTION COMPLETIONS BUILDING Siddhivinayak MARKET Prahladnagar TENANT SQUARE FEET 500,000 COMPLETION DATE 2Q12

SIGNIFICANT 2Q12 PROJECTS UNDER CONSTRUCTION BUILDING Shapath 5 Shapath Hexa
* Renewal not included in leasing activity

MARKET S.G. Road S.G. Road

TENANT NA NA

SQUARE FEET 250,000 160,000

COMPLETION DATE 4Q12 4Q12

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