Agencies, New Delhi
Real estate market suffered a huge jolt in India as homes launches in 2017 plummeted by staggering 78pc from the peak of 2010. According to a report by Knight Frank India all cities witness fall in launches in comparison to previous years, but Hyderabad was worst hit.
Knight Frank report said that volume of new projects entering the market in the second half of 2017 stood at approximately one-fourth of the supply levels in 2015. Launches were below the demonetisation-hit second half (H2) of 2016.
According to Knight Frank India eighth edition of its flagship half-yearly report – India Real Estate at 84 per cent, Hyderabad records steepest fall in launches. Other IT/ITeS dominated markets such as Pune (58 per cent), Bengaluru (37 per cent), Chennai (33 per cent) also witnessed massive drop in launches.
It said that the sales struggle across markets in which Bengaluru saw downtrend of 34 per cent. Mumbai (19 per cent) and NCR (21 per cent) see a spike on a demonetisation base effect. Bengaluru, in particular, recorded negative growth in both launches (-37 per cent) and sales (-34 per cent) for the first time in H2 2017. Hyderabad also recorded the decadal low in home launches.
The weighted average prices fell by an average of 3 per cent across cities with Pune witnessing the highest decline of 7 per cent year on year (YoY) followed by Mumbai at 5 per cent YoY. Markets high on ready to move inventory such as Hyderabad and Ahmedabad saw prices move up 3 per cent and 2 per cent respectively.
As far as office spaces are concerned, new completions increase by 7 per cent in 2017 but not at par with occupiers’ demand. Supply in H2 2017, 13 per cent up YoY. Transactions maintain a steady momentum.
Technology sector headwinds and supply crunch was responsible for subdued growth.The report said that the want of quality office stocks was glaring in turbulence-hit IT/ITeS dominated markets such as Bengaluru (3 per cent), Pune (6 per cent) and Hyderabad (5 per cent).
While the share of the office market held by the tech business tapered from 39 per cent in H2 2016 to 37 per cent in H2 2017, the Other Services sector captured more than one-third of transactions recorded in the second half of 2017.
Co-working service providers an emerging phenomenon until the beginning of 2017 fortified its position by taking up approximately 1.3 million sq ft office space in H2 2017.
The report said that except Mumbai that saw surprise new supply of office stock, strong rental growth was recorded across other office markets. While Mumbai saw flat YoY rental growth, Hyderabad and Bengaluru experienced the strongest rental growth at 8.5 per cent and 9.2 per cent YoY respectively.
Commenting on the situation, Shishir Baijal, Chairman & Managing Director, Knight Frank India said, “2017 was been packed with uncertainty, volatility and long-term promise of new opportunities.
While a battery of reforms tested industry stakeholders, the new paradigm of transparency and consolidation achieved in the process should pave the way for healthy momentum in the near future. Until the end of 2017, India’s residential sector had shrunk to a fraction of its size in less than a decade.”
“Nevertheless the near standstill triggered by demonetisation seems to have tapered with time. At the same time stakeholders are growing in confidence with the gradual acceptance of structural reforms such as the Real Estate (Regulation and Development) Act, 2016,” he said.
Accoring to Mr Baijal, the Industry however, is still grappling to navigate its way through the new tax regime post the introduction of the Goods and Services Act. Meanwhile, select markets wherein RERA has matured have witnessed developers re-launch projects at attractive prices which led to an uptick in sales volumes in 2017.
The strategic switch in developers’ approach has led to a price reduction is most markets. All in all it is a buyers’ market today. And, we hope the momentum to hold steady in the near future.”