>India Property (CITI)

Per Sq Ft Portable

· Mall rentals decline 12/19% QoQ in 4Q2008 — C&W data suggests NCR and Hyd witnessed the sharpest decline in rentals at 19% and 13% resp while main street rentals fell most in Mumbai (24%), Chennai (21%) and Delhi (18%). 4Q vacancy in Mumbai and NCR was high at ~15%. We see more risks to rentals with most retailers re-negotiating and scaling down expansion plans (Fig 19).

· 2008 Mall supply below est; pronounced slowdown in 4Q — JLL data highlights actual aggregate mall supply in Mumbai, NCR, Bangalore and Chennai was 60% lower than est. supply at the beginning of the year (Fig 7). The supply slowdown was more pronounced in 4Q vs. 3Q for four key cities largely due to liquidity and absorption issues delaying mall completions.

· Derivative action in property stocks — Real estate stocks with Unitech in particular have seen a build up of fresh long positions. Unitech and DLF saw rollovers of 76% and 70% resp. vs. 69% for Nifty (Fig 20). On stocks, short positions in DLF have reduced with rollover costs down MoM, while in Unitech some long positions were left to expire, triggering a rally in cash market; long positions in HDIL and IBREL have largely been rolled over.

· Trikona Trinity Capital a casualty of property slowdown — Shareholders of the AIM-listed real estate fund invested in several projects in India have passed a resolution to dispose of all assets and return the capital. We see this as a sign of distress and more such events could further add to liquidity crunch.

· News — 1) DLF cuts Gurgaon prices; 2) Sicom acq 0.27% stake in Parsvnath through invocation of promoter pledged equity; 3) 53% of homes built in 6- key cities since 2007 unsold; and 4) Dec’08 FDI fell 62% MoM to US$44m.

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