IBEF: October 09, 2020
During July to September (Q3), the amount of home sales across eight major cities in India jumped by 2.5 times to 33,403 units compared to 9,632 in the previous quarter, Knight Frank India said on Thursday.
Compared to 5,584 units in Q2, new residential unit launches increased by 4.5 times to 31,106 units, it said. Moreover, in six of the eight markets, the weighted average prices observed a year-on-year decline of three to seven per cent.
As developers in these mainly end-user markets retained pricing power in a favourable demand-supply scenario, Hyderabad and Bengaluru were the only markets that experienced a price rise of four and three percent, respectively.
Mr Shishir Baijal, Chairman and Managing Director, Knight Frank India, said, “Developers have been focusing on liquidating inventory and homebuyers inclined to purchase ready assets has translated into reduced unsold inventory levels in this quarter”.
The additional drive by the state government in the form of reduced stamp duty has helped in demand generation and revenue generation for the state government for markets such as Mumbai and Pune. Moving forward, for developers, the festival season would be critical.
Mr Baijal said, "This may prove to be an opportune time for end-users with the adequate financial stability to make their investments. The near-term outlook on sales continues to depend on the speed and trajectory of recovery in the economy in months ahead".
On the other hand, there was a good recovery in gross office leasing across these cities, recording 80% growth to 0.44 million square metres in Q3.
With transactions hitting the level of 57%, 43% and 42%, respectively, of the quarterly average of 2019, Chennai, National Capital Region (NCR) and Mumbai reported greater recovery.
New completions also improved to 29% of the quarterly average for 2019. Ahmedabad was the only market to record higher new office completions in terms of new completions in Q3, at 125% of the 2019 quarterly average pace.
The recovery in office transactions and new completions in terms of rental prices enabled rental values to remain stable in Bengaluru (4%), followed by Hyderabad (2%), Chennai (0.5%) and Pune with growth of zero percent year-on-year.
Ms Rajani Sinha, Chief Economist and National Director for Research at Knight Frank India, said while work from home as a concept has proved to be an effective business continuity measure, occupiers are expected to look at office space usage more strategically. "This will lead to further innovation in effect to include aspects like social-distancing, health benefits and sustainability as well as preparedness for future contingencies. We expect the momentum of the transaction to accelerate soon."
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.