Residential launches in Mumbai grew by 22% (YoY) in H1 2019 Knight Frank Report
Mumbai, July 9, 2019: Knight Frank India launched the 11th edition of its flagship half-yearly report - India
Real Estate. The report
presents a comprehensive analysis of the residential
and office market performance across
eight cities for the period January – June
2019 (H1 2019). The report findings establish that office space market experienced decadal
high (half yearly) volume in supply
and transactions in H1 2019. Office supply increased by 31% year-on-year (YoY) to 2.2
mn sq m (23.9 mn sq ft) in the current analysis period, the highest
level achieved in this decade. While
transactions were recorded at 2.6 mn sq m (27.4 mn sq ft) higher by 26%
YoY in H1 2019. Co-working space providers have taken up
approximately 0.37 mn sq m (4.0
mn sq ft) of office space
during H1 2019, a 42% growth over H1
2018.
Residential unit launches in H1 2019 increased
by 21% year-on-year (YoY) to 0.11
mn units while sales grew by a steady 4% YoY to 0.13 mn
units. The residential market witnessed growth in supply as well as sales
for the third consecutive half year period, both hitting their highest level
since demonetisation during H2 2016.
RESIDENTIAL
MARKET HIGHLIGHTS FOR TOP 8 CITIES
·
Regulatory
environment boosts market volumes; H1 2019 saw launch new units rise by 21% YoY to 107,143 units while sales grew by a steady
4% YoY to 133,317 units.
·
51% of launches during H1 2019 have occurred in
the ticket sizes under INR 5 mn (INR 50 lakhs) and 78% under INR 10 mn (INR 1 Cr) as developers’ keenly focus
on affordable housing and lower ticket size as they are demand appropriate.
·
NCR and Kolkata saw
a drop in unit launches in H1 2019 while supply volumes in Ahmedabad vaulted by
a massive 157% for the same period. Hyderabad and Bengaluru grew by 47% and 34%,
respectively.
·
The all India
sales improved by 4% in H1 2019 making this the third consecutive quarter to
record sales improvements. The trends conclusively show a general arrest of a
declining trend that can well be the inflection point leading to growth of
sales in the market.
·
The Mumbai
residential market recorded the largest sales volume among all the cities, the
most YoY growth was experienced by NCR at 10% during H1 2019.
·
The Kolkata
residential market experienced poor traction both in volumes of launches and
sales that declined by 90% and 30% respectively. This is
primarily due to the procedural delays caused by the West Bengal Housing
Industry Regulatory Authority and the pronounced dependence of developers on
the distressed NBFC sector.
·
Weighted
average prices have stagnated across cities with Mumbai, Pune and Chennai
seeing prices fall by a further 3%,
4% and 3% YoY,
respectively. Hyderabad
continues to see exceptional price growth at 9% YoY due to the high proportion of ready
inventory and very little supply coming online during 2018.
·
During the last
four years, the growth in residential prices in most of the top eight cities of
India has been below retail inflation growth and the gap has progressively
increased since H1 2016. This has helped keep the end-user interested and arrested the downward
sales momentum as compared to launches. Hyderabad has been the only market to
buck the trend and recorded residential price growth over the retail inflation
level.
·
Unsold inventory
across top eight markets recorded a decline of 9% YoY in H1 2019. While
Hyderabad saw a decline of 67% in unsold inventory, Mumbai was the only market
to record an increase with inventory overhang increasing by 14%.
INDIA RESIDENTIAL MARKET SNAPSHOT
|
City
|
Launch
|
Units Sold
|
Unsold Inventory
|
||||||
|
H1 2018
|
H1 2019
|
% change (y-o-y)
|
H1 2018
|
H1 2019
|
% change (y-o-y)
|
H1 2019
|
% change (YoY) H1 2019
|
||
|
Mumbai
|
35,974
|
43,822
|
22%
|
32,412
|
33,731
|
4%
|
1,36,525
|
14%
|
|
|
NCR
|
9,123
|
7,846
|
-14%
|
18,047
|
19,852
|
10%
|
1,30,001
|
-18%
|
|
|
Bengaluru
|
15,556
|
20,894
|
34%
|
25,802
|
28,225
|
9%
|
85,387
|
-14%
|
|
|
Pune
|
14,100
|
21,396
|
52%
|
16,451
|
17,364
|
6%
|
31,650
|
15%
|
|
|
Chennai
|
6,523
|
7,762
|
19%
|
8,585
|
8,979
|
5%
|
17,810
|
-21%
|
|
|
Hyderabad
|
3,706
|
5,430
|
47%
|
8,313
|
8,334
|
0%
|
4,265
|
-67%
|
|
|
Kolkata
|
6,393
|
627
|
-90%
|
6,591
|
4,588
|
-30%
|
34,575
|
-11%
|
|
|
Ahmedabad
|
1,323
|
3,398
|
157%
|
8,087
|
8,212
|
2%
|
10,049
|
-50%
|
|
|
All India
|
91,739
|
1,11,175
|
21%
|
1,24,288
|
1,29,285
|
4%
|
4,50,263
|
-9%
|
|
Shishir Baijal,
Chairman and Managing Director, Knight
Frank India said “The
concerted efforts by the government and the incentives given have resulted in
substantial demand in affordable housing which has resulted in an overall boost
to residential sales. This also seems to be in line with the government vision
for “Housing for All.”
OFFICE
MARKET HIGHLIGHTS FOR TOP 8 CITIES
·
Supply increased to
a decadal high 2.2 mn sq m (23.9 mn sq ft) recording a rise of 31% YoY.
·
Transaction
levels also recorded a similar decadal high of 2.6 mn sq m (27.4 mn sq ft) for
space transacted in a single period during H1 2019 due to demand from IT/ITeS
and Co-working spaces.
·
Bengaluru hits
historic high in transactions as well as supply during H1 2019 with
transactions hitting 8.3 mn sq. m. while supply increased by over 100% at 7.6
mn sq. m. in H1 2019.
·
Average rental
values across the eight cities grew at by 10% YoY during H1
2019.
Ahmedabad experienced the maximum YoY rental growth of 14.3%, while Bengaluru
and Hyderabad grew at 13.5% and 11.3% YoY respectively.
·
The IT/ITeS
sector accounted for 35% of all transactions in H1 2019 as compared to
the 28% in H1 2018 whereas, share of BFSI declined 13% in H1 2019 as
compared to 18% in H1 2018 as Non-Banking Financial Companies’ (NBFCs) and banks
with higher NPAs to curb expansion plans and liquidate non-core assets.
·
Co-working
space providers have taken up approximately 0.37 mn sq m (4.0 mn sq ft) constituted about 15% of all transactions across top eight cities during H1 2019, a substantial
increase of 42% over H1 2018.
·
Strong demand
scenario in office market keeps the vacancy stable at 13% in H1 2019, compared
to a year ago. Southern markets record single digit vacancy rates, with
Bangalore showcasing the lowest vacancy rate at 4% n H1 2019
INDIA OFFICE MARKET SNAPSHOT
|
City
|
New Completions
|
Transactions
|
||||
|
H1 2018
|
H1 2019
|
% change (yoy)
|
H1 2018
|
H1 2019
|
% change (yoy)
|
|
|
Mumbai
|
4.4
|
1.9
|
-56%
|
2.9
|
4.6
|
61%
|
|
NCR
|
3.6
|
5.9
|
64%
|
3.4
|
3.8
|
11%
|
|
Bengaluru
|
3.7
|
7.6
|
107%
|
6.5
|
8.3
|
27%
|
|
Pune
|
2.7
|
1.5
|
-44%
|
3.9
|
3.8
|
-1%
|
|
Ahmedabad
|
0.9
|
2.6
|
192%
|
0.5
|
0.6
|
25%
|
|
Chennai
|
1.2
|
0.3
|
-76%
|
1.8
|
1.9
|
6%
|
|
Hyderabad
|
1.7
|
4.0
|
129%
|
2.7
|
3.8
|
43%
|
|
Kolkata
|
0.1
|
-
|
NA
|
0.2
|
0.6
|
188%
|
|
India
|
18.2
|
23.9
|
31%
|
21.8
|
27.4
|
26%
|
SECTOR-WISE
SPLIT OF TRANSACTIONS
|
Industry
|
H1 2018
|
H1 2019
|
|
BFSI
|
18%
|
13%
|
|
IT/ITES
|
28%
|
35%
|
|
Manufacturing
|
14%
|
12%
|
|
Other Services
|
40%
|
40%
|
Note: BFSI includes BFSI support services
Shishir
Baijal, Chairman and Managing Director,
“Double digit rental growth in five out of
eight markets reiterates the underlying strength of Indian office market.
The
spurt in demand for higher end roles in the Artificial Intelligence and data
security domains have led to a welcome and significant 59%
YoY
increase in demand from the IT/ITeS sector during H1 2019.
Co-working spaces continue to drive
transaction volumes and influence occupier demand”
About Knight Frank: Knight
Frank LLP is the leading independent global property consultancy. Headquartered
in London, Knight Frank has more than 18,170 people operating from over 523
offices across 60 markets. These figures include
Newmark Grubb Knight Frank in the Americas, and Douglas Elliman Fine Homes in
the USA. The Group advises clients ranging from
individual owners and buyers to major developers, investors and corporate
tenants. For further information about the Company,
please visit www.knightfrank.com. In
India, Knight Frank is headquartered in Mumbai and has more than 1,000 experts
across Bangalore, Delhi, Pune, Hyderabad, Chennai, Kolkata and Ahmedabad. Backed
by strong research and analytics, our experts offer a comprehensive range of
real estate services across advisory, valuation and consulting, transactions (residential,
commercial, retail, hospitality, land & capitals), facilities
management and project management. For more information,
visit http://www.knightfrank.co.in/
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