Cushman & Wakefield Research

MARKETBEAT
RETAIL SNAPSHOT
PUNE, INDIA
A Cushman & Wakefield Research Publication

Q2 2012

ECONOMY
India's GDP growth slumped to a nine-year low, growing at just 5.3% during the first quarter as against the government forecast of 7.6%. Inflation peaked in May, rising to 7.55% (WPI). Also, the fall in rupee to a record low of Rs57.15 against the US dollar has raised import price pressures. A slowdown in the Indian economy, especially against the backdrop of crisis in the European Union led to the Central Bank's decision to cut the repo rate by 50 bps to 8% in April 2012. Meanwhile, Standard & Poor downgraded India's rating from stable to negative in April, followed by Fitch doing the same in June. Considering the current state of the economy, it is expected that the Central Government will bring in some reforms so that the economy regains its stability soon. Stalled and much awaited reforms like FDI in multi-brand retail may come back to the forefront. ECONOMIC INDICATORS
NATIONAL GDP Growth CPI Growth Private Final Expenditure Growth
Sources: IMF & Government of India

2011 6.5% 8.6% 6.5%

2012F 7.5% 8.2% NA

2013F 8.6% 7.0% NA

PRIME RETAIL RENTS ­ JUNE 2012
MAIN STREETS MG Road JM Road FC Road Koregaon Park Aundh Bund Garden Road MALLS MG Road Bund Garden Road / Koregaon Park Ganeshkhind Road Nagar Road INR PER EURO PER SF/MTH SF/YR 325 350 210 150 150 150 54.3 58.4 35.1 25.0 25.0 25.0 US$ PER SF/YR 68.2 73.5 44.1 31.5 31.5 31.5 US$ PER SF/YR 37.8 30.4 14.7 29.4 Q-O-Q CHANGE 8.3% 7.7% 0.0% 0.0% 0.0% 0.0% Q-O-Q CHANGE 0.0% 0.0% 0.0% 0.0% Y-O-Y CHANGE 8.3% 16.7% 5.0% 0.0% 20.0% 0.0% Y-O-Y CHANGE 0.0% 3.6% 0.0% 0.0%

STABLE DEMAND PERSISTS
Though the overall mall vacancy in Pune was lower over the last quarter, it is still relatively high as a result of the substantial new supply that has entered in the last two to three quarters. Meanwhile, the unavailability of high quality space options on prime high streets such as MG Road, JM Road and in Koregaon Park has continued pushing the retailers to explore other competitive locations within the city. Due to its proximity to several residential localities and IT districts, Aundh continued to attract more retailers looking for expansion.

INR PER EURO PER SF/MTH SF/YR 180 145 70 140 30.1 24.2 11.7 23.4

RENTAL ESCALATION IN PRIME HIGH STREETS
High streets have continued to attract retailers primarily due to higher visibility, better footfalls and proximity to residential catchments. This has led to rental escalations by 7% to 9% in areas such as MG Road and JM Road. Aundh has witnessed high demand from apparels, food and beverage and furniture stores during this quarter. With continued availability of substantial mall space, mall rentals have remained stable across most micro markets. Major international brands such as The Collective, Calvin Klein, FCUK and Nautica have established their presence in the malls during the quarter.

Note: Values are quoted on carpet area for ground floor properties of vanilla retailer

SIGNIFICANT LEASING TRANSACTIONS
PROPERTY Koregaon Park Plaza Koregaon Park Plaza Amanora Town Centre LOCATION Koregaon Park Koregaon Park Hadapsar TENANT Shopper Stop The Collective TJ's Breworks SQUARE FEET 40,500 8,700 5,000

SIGNIFICANT PROJECTS UNDER CONSTRUCTION
PROPERTY Seasons Mall LOCATION Hadapsar SQUARE FEET 700,000 COMPLETION DATE 4Q12

OUTLOOK
The city is expected to witness an infusion of 700,000 square feet (sf) in the upcoming quarter in Hadapsar. Except for a few high street destinations, most of Pune's retail market is expected to witness stable market conditions in the second half of the year.

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