Vacancy at four year high of 14.1%
MUMBAI: Knight Frank India, in its latest report, India Real Estate: H1 2020observes that the office segment in the top eight citieswitnessed a historic decline in terms of both transactions and new completions.In H1 2020, office transactions declined by 37% YoY to 1.6 mnsq m (17.2 mnsq ft), the lowest in the last 10 years. New completions were lower by 27% YoY to 1.6 mnsq m (17.3 mnsq ft). Despite the low volume of transaction and supply, the weighted average rental for theeight cities reported a growth of 4% YoY in H1 2020 to INR 896/ sq m/ month (INR 83/ sq ft/ month). Information Technology (IT) dominated with 43% of the overall sector-wise transactions in the Indian office market.
After two years of steady demand, the home sales in the top eight cities of India declined by a significant 54% YoY to a decadal low of 59,538 units during H1 2020 with sales mostly concentrated in the first quarter of the calendar year. About 47% of home sales were in residential properties below INR 5 mn pricing category. New home launches also reported a massive drop of 46% YoY to 60,489 units in the same period. The unprecedented disruptions caused by the on-going pandemic stalled the economy in Q2 2020. The lockdown resulted in a complete shutdown of all activity in the real estate industry and caused sales to fall a massive 84% YoY to 9,632 units in Q2 2020 while sales of 49,905 units were reported in Q1 2020. Number of new home launches recorded in Q1 2020 was 54,905 units; whereas, the number saw a sharp drop to 5,584 units in Q2 2020
Shishir Baijal, Chairman and Managing Director, Knight Frank India said, “With the economic uncertainties creating significant headwinds, we expect the office space take-up to remain cautious. Most occupiers are expected to hesitate in committing to expansion in the current market scenario and may delay their leasing decisions for later. Occupiers are also devising the best formula for office occupancy for their near – term future to accommodate the impact of COVID – 19 and lockdown such as social distancing, restriction in movement, etc. For the office market, it will be a wait and watch till a more permanent solution to this pandemic is found.”
Rajani Sinha, Chief Economist, and National Director Research, Knight Frank said, “After recording robust growth in the last few years, the office market in Q2 2020 has got hit by the COVID 19 crisis. While the office supply fell in this period due to the prolonged lockdown, leasing activities also took a hit as corporates deferred their expansion plans. The vacancy levels have increased making the market more tenant-friendly.”
The flagship report – India Real Estate: H1 2020 that was launched today is the 13th edition of the report. It presents a comprehensive analysis of the residential and office market performance across eight major cities for the January-June 2020 (H1 2020) period.
OFFICE MARKET HIGHLIGHTS FOR TOP8 CITIES ININDIA
INDIA MARKET SNAPSHOT
ANNEXURE: SECTOR-WISE SPLIT OF TRANSACTIONS
ANNEXURE QUARTERLY SPLIT OF COMPLETIONS
ANNEXURE: QUARTERLY SPLIT OF TRANSACTIONS
RESIDENTIAL MARKET HIGHLIGHTS FOR TOP 8 CITIES
Rajani Sinha, Chief Economist, and National Director, Research, Knight Frank India said, “The residential sector has got severely hit by the COVID 19 crisis. Given the economic uncertainties, consumers are hesitant to commit to a big-ticket purchase like housing. Launches have also got hit as the developers struggle with supply bottlenecks in the form of labor, raw material, and credit availability. While the quoted residential prices have fallen marginally, the effective price fall is in the range of 8-12% and even more in some cases, if we take into account the indirect discounts being offered. Another positive is that home loan rates are at a historical low, which will provide some support to the market as and when the economic situation normalizes.”
Shishir Baijal, Chairman and Managing Director, Knight Frank India said, “The residential real estate sector which was already going through a rough patch has got severely hit by the current crisis. With income uncertainty for the future, demand for housing will take a hit. While the RBI has announced much-required liquidity injecting measures and cut in policy interest rates, there is an urgent need for the Government to come up with some demand boosting measures for the real estate sector.
Shishir further continued, “As the second moratorium period ends in August, we hope that the government will make positive interventions such as the one-time restructuring of loans for developers as well as the extension of the moratorium for retail loans (at least for home loans) to ensure liquidity and low defaults.”
ANNEXURE: Q1 AND Q2 2020 NEW LAUNCHES
ANNEXURE: Q1 AND Q2 2020 SALES
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