Knight Frank India has announced the launch of the seventh edition of its flagship half-yearly report – India Real Estate which presents a comprehensive analysis of the residential (across eight cities) and office (across six cities) market performance for the period January – June 2017 (H1 2017).
The launches were crashed nearly 41%, lowest in seven years, while Sales volume was down by 11% YOY, lowest first-half sales in the past 5 years.
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The residential market had barely come out of the demonetisation shock when the need for RERA compliance put breaks on a large section of new projects.
NCR and Ahmedabad were the worst hit with launches down by 73% and 79% respectively. While, Mumbai picks by close to 62%, albeit lower by 36% YOY and Chennai was the only market to record a marginal 4% YOY rise in launches
Sales down by 11% YOY but up by the same margin over the demonetisation-hit H2 2016. Government thrust towards affordable housing, widespread discounts on ready inventory and improved sentiments among buyers courtesy RERA drive sales volumes.
H1 2017 witnesses the resurrection of affordable housing across India with 71% of the launches under the Rs. 50 lakh price segment up from 52% during the same period. NCR, Kolkata, Pune and Ahmedabad drive the revival of affordable housing projects with around 80% of launches in these cities in the sub Rs. 50 lakh segment.
The Office transactions slipped by 10% to 18.1 mn sq ft in H1 2017. The 5% decline in supply saw 17.9 mn sq.ft added to the office space inventory
At 12%, vacancy levels were at the lowest since 2012 when it was 21%. Except Mumbai
and NCR, vacancy levels low in other cities. Vacancy levels at prime CBDs in Mumbai and
NCR in single digits
Average rental values across six cities grew at 7% YOY during H1 2017. While Mumbai
saw flat YOY rental growth, Hyderabad and Bengaluru experienced the strongest rental
growth at 14% and 8% YOY respectively
Speaking on the occasion, Shishir Baijal, Chairman & 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 the black economy in an unorganised sector, brave policy decisions such as demonetisation, the Real Estate (Regulations and Development) Act, 2016, the Benami Transactions(Prohibition) Amendment Act, 2016 and the recently rolled out Goods and Services Tax Act GST) have time and again pushed the already sluggish residential market to the brink. The short-term hiccups grappling the sector would eventually fade away and bear rich dividends in the future.
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. But 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.”