New Delhi, January 20, 2017: Knight Frank India today launched the sixth edition of its flagship half yearly report – India Real Estate. It presents a comprehensive analysis of the residential and office market of NCR for the period July to December 2016 (H2 2016).
Key Residential Takeaways:
· NCR witnesses a de-growth in demand and supply by 29% and 73% respectively, compared to the same period in 2015
· New launches dwindle to 26,735 units in 2016 registering a Y-o-Y 58% drop from 2015
· Sales register a Y-o-Y 18% drop ; festive season also fails to infuse life in the dull market as sales decline to 40,000 units
· Demonetisation brought short term challenges in Q4 2016 resulting in 73% drop Y-o- Y in new launches and sales volume plunges down to 53% Y-O-Y in same period
· The QTS of NCR has remained unchanged since the past six quarters and stands at 17 quarters and the unsold inventory stands at approximately 192,758 units as of December 2016
NCR Office Takeaways:
· Project delays dry up office supply in NCR; new completions have dropped to an all- time low. A mere of 4.6 mn sq ft of new completions entered the office market in 2016 as opposed to 11.5 mn sq ft in 2015
· Demand holds steady and the office market clocks 7.3 mn sq ft in 2016
· Sector analysis of NCR office market indicates other sectors is at 36% followed by manufacturing and IT/ITeS at 28% each in terms of transactions
· Gurugram took up 63% of the total transaction pie of 3.8 mn sq ft with 57% of the total 107 deals in H2 2016 and yet again emerged as the most preferred business district
· Lack of new office space have pushed rental values from Rs.64 per sq ft in H2 2015 to Rs. 73 per sq ft in H2 2016 registering a sharp Y-o-Y increase of 14%
NCR New Completion and Transaction of Office Space:
Speaking about the finding, Rajeev Bairathi, Executive Director & Head – Capital Markets, Knight Frank India said “The NCR residential market has been under pressure and 2016 was no different. The market has been in a downward slide, since 2010, with every passing year hitting a new low. In H2 2016, the market witnessed de-growth in demand and supply by 29% and 73%, respectively, compared to the same period in 2015. Piling up inventory, lack of consumer confidence due to litigations and infrastructure delays are some of the major factors that have decelerated new launches in NCR. These factors coupled with partial implementation of RERA in H1 2016 set the sluggish market in a twirl again as new launches came to a standstill and developers rushed to complete pending projects. The market did start giving indications of marginal recovery in Q3 2016 owing to developments like project deliveries, reduction in prices and improving infrastructure in places like Noida Extension and Noida–Greater Noida Expressway. However, the demonetisation move dealt a huge blow to the NCR realty market and the Q4 2016 numbers are a testament to this. As the sales number for the first nine months had shown an optimistic trend, we believe that 2016 would have been at par with 2015 had it not been for the demonetisation move.
The NCR office market maintained its annual appetite and clocked 7.3 mn sq ft at the end of 2016, making it at par with 2015. The overall slump in the real estate sector plagued the office market as well with new completions dropping to an all-time low. Good news is that IT/ITeS which was on a decline for the past one year has made a comeback due to robust leasing from occupiers like IBM, Genpact and TCS. Gurugram holds the largest share in H2 2016 transactions followed by SBD Delhi and Noida. With vacancy at an all-time low since 2012 due to lack of quality office space, there is an upward pressure on rentals. Micro- markets of Gurugram, such DLF Cyber City and Golf Course Road, and Noida, such as Noida– Greater Noida Expressway and Sector-62, are expected to witness significant upward pressure on price.”
Corporate Comm India(CCI Newswire)
