Thursday, July 6, 2017
RERA, Demonetisation Gloom and Unsold Stock Cripple Launches in Bengaluru: Knight Frank India
Knight Frank India has launched the seventh edition of its flagship half yearly report - India Real Estate. It presents a comprehensive analysis of the residential and office market performance of Bengaluru for the period January – June 2017 (H1 2017).
· Bengaluru residential market continued to be restrained in H1 2017 and witnessed a marginal increase of 5% in new launches and 4% in sales over the figures in H2 2016
· Despite the slight improvement, the number of new launches in H1 2017 lagged behind H1 2016 by 42%and sales lagged by 19% during the same period
· Factors such as RERA, demonetisation hangover and considerable unsold stock played a major role in constricting the market
· A significant chunk of new launches in H1 2017 lies in the INR 25-50 lakh range, a welcome development given the government’s focus on the affordable housing sector
· South Bengaluru continues to lead in both new launches and sales, courtesy its healthy congregation of large IT hubs, and is preferred by both the local populace and expatriate population.
· Bengaluru records 5.8 mnsqft of office space transactions in H1 2017, depicting moderate activity,as compared to previous years. New completions at 3.7 mnsqfttake a hit.
· Tepid growth in the IT/ITes sector, stiff competition from other cities and a dearth of ready office spaces are some of the major factors leading to the dip in transactions
· While IT/ITeSsector continued to drive Bengaluru office market in H1 2017, a prominent development observed during this period is the quantum of office space taken up by co-working space operators
· Vacancy rates, which had been declining steadily over the years owing to consistent transactions and restrained new completions, continued on its downward movement and are presently at 4%
· The ORR office market, which has been struggling in the past few quarters on account of dearth of ready to occupy space, saw its share increase in H1 2017 owing to a slew of big ticket transactions
Speaking about the findings,Shantanu Mazumder, Director – Bengaluru said,“Until recently recognized as one of the most resilient residential markets in the country, today the market is reeling under pressure. However, things have started looking up slightly in 2017 and although the figures are still restrained, marginal improvements were observed in the number of new launches and sales at 5% and 4% respectively in H1 2017 on a YoY basis. A significant chunk of new launches in H1 2017 lies in the INR 25-50 lakh range, a welcome development given the government’s focus on the affordable housing sector. Moreover, the inclusion of Bengaluru in the Smart City list is expected to have a far reaching impact on the residential market in the forthcoming years, as that would lead to improved infrastructure in the city. This would, in turn, add to the overall attractiveness and brand image of Bengaluru as a residential market.