[ecis2016.org] Various policy decisions by the government of India, have caused a slump in the residential real estate market, with launches falling to the lowest level in seven years, according to Knight Frank’s India Real Estate (H1 2017) report
The residential real estate market has witnessed its lowest first-half sales and launches in the last five years, along with a resurgence of the affordable housing sector in H1 2017, says a report titled ‘India Real Estate, January-June 2017’, by Knight Frank India. In the office segment, H1 2017 vacancy levels were at the lowest since the global financial crisis, even though the IT/ITes sector took a hit, according to the seventh edition of the flagship half-yearly report. The report presents a comprehensive analysis of the residential market across eight cities (Mumbai, NCR, Bengaluru, Pune, Chennai, Hyderabad, Kolkata and Ahmedabad) and the office market performance across six cities (Mumbai, NCR, Bengaluru, Pune, Chennai and Hyderabad).
You are reading: Residential property sales fall to lowest in 5 years: Knight Frank report
Key findings: Residential real estate market
- Launches crash 41 per cent; lowest in seven years. Sales volume down by 11 per cent YOY; lowest first-half sales in the past five years.
- The residential market had barely come out of the demonetisation shock, when the need for RERA compliance put the brakes on a large section of new projects.
- Barring Chennai, new projects dried up in all the eight cities. NCR and Ahmedabad were worst hit, with launches plummeting by 73 per cent and 79 per cent, respectively. Sequentially, Mumbai picks by close to 62 per cent, albeit lower by 36 per cent YOY. Chennai was the only market to record a marginal four per cent YOY rise in launches.
- Sales were down by 11 per cent YOY but up by the same margin, over the demonetisation-hit H2 2016. The government thrust towards affordable housing, widespread discounts on ready inventory and improved sentiments among buyers, courtesy RERA, drove sales volumes.
- H1 2017 witnesses the resurrection of affordable housing across India, with 71 percent of the launches under the Rs 50-lakh price segment, up from 52 per cent during the same period last year. NCR, Kolkata, Pune and Ahmedabad, drove the revival of affordable housing projects, with around 80 per cent of launches in these cities in the sub-Rs 50-lakh segment.
- At 5,96,044 units, unsold inventory was at the lowest across the eight cities in H1 2017, albeit owing to the shrinking market size. NCR was the worst market, with over four years of inventory. There has been a surge in inventory in the ‘ready for possession’ category.
Half-yearly launches and sales trend
City-wise half-yearly sales
Read also : All about Indore Development Authority (IDA)
“Launches have been hit more than sales. Developers are giving priority to completion of projects and becoming RERA-compliant, which eventually will augur extremely well for the industry. On the price front, Mumbai, like other cities, is undergoing a time correction. Going forward, since Maharashtra is one of the front runners in having a RERA regulator in place, we believe that this city may come out of the hiccups of policy interventions soon,” said Samantak Das, chief economist and national director – research, Knight Frank India.
Inter-city comparison on unsold inventory
Read also : Government promulgates IBC ordinance, home buyers to be treated as financial creditors
Speaking about the report, Shishir Baijal, chairman and managing director, Knight Frank India said, “Some of the most path-breaking reforms in independent India, came to force in quick succession over a span of a few months. Described by many as the battery of reforms against black economy in an unorganised sector, brave policy decisions such as demonetisation, the Real Estate (Regulation and Development) Act, 2016, the Benami Transactions (Prohibition) Amendment Act, 2016 and the recently rolled out Goods and Services Tax (GST), have pushed the already sluggish residential market to the brink. However, we believe that these corrective measures were long due, to transform real estate into a robust, transparent and thriving industry. The short-term hiccups grappling the sector would eventually fade away and bear rich dividends in the future.”
Key findings: Office market
- Office transactions fell by 10 per cent to 18.1 million sq ft in H1 2017. The five per cent decline in supply saw 17.9 million sq ft added to the office space inventory.
- At 12 per cent, vacancy levels were at the lowest since 2012 when it was 21 per cent. Except Mumbai and NCR, vacancy levels remained low in other cities. Vacancy levels at prime CBDs in Mumbai and NCR were in single digits.
- Average rental values across six cities grew at 7 per cent YOY during H1 2017. While Mumbai saw flat YOY rental growth, Hyderabad and Bengaluru experienced the strongest rental growth at 14 per cent and 8 per cent YOY, respectively.
- The IT/ITeS sector witnessed a fall in share to 39 per cent in H1 2017, from 43 percent in the same period a year ago. Co-working space operators showed traction, with around 0.5 million sq ft taken up across Bengaluru, Pune and NCR.
City-wise new completion, transactions and vacancy levels during H1 2017
“The commercial real estate sector has been the most dependable segment of the overall market. However, some recent geopolitical disruptions in the advanced economies had a bearing on office transactions, even as the country continues to grapple with shrinking commercial real estate. However, the investment environment is changing and we expect a radical difference in the office landscape, on the back of institutional funds foraying into the sector,” Baijal added.
Source: https://ecis2016.org/.
Copyright belongs to: ecis2016.org
Source: https://ecis2016.org
Category: Lifestyle
