Residential sales in H2 2017 were 19% better than H2 2016: Knight Frank

Key highlights:

• Residential sales in H2 2017 were 19% better than demonetisation-hit H2 2016
• Sales volumes recorded in the whole of 2017 also rose by 3% YoY
• New office space supply hit double digits for the first time since 2012, 76% higher YOY

Presenting a comprehensive analysis of residential and office market performance of MMR for the period July–December 2017 (H2 2017), Knight Frank India launched the eighth edition of its half yearly report today. 

On residential takeaways, the estate agency said that residential sales in H2 2017 were 19% better than demonetisation-hit H2 2016. Sales volumes recorded in the whole of 2017 also rose by 3% YoY.
         
"Homes launches in H2 2017 plummeted by 23% YoY and as developers’ focus shifted towards completing existing projects. From an annual perspective 2017 saw 32% fewer launches YoY and new projects and same was down by staggering 83% from peak in 2010," the report said.

For the first time in this decade, Mumbai witnessed a decline in quoted prices. The weighted average prices were down 5% YoY in 2017.

According to the Knight Frank India, the developers are offering bouquet of sops such as 24-month rent assurance, stamp duty waivers, no floor rise charges and other preferential location charge, gifts, etc. Collectively discounts add up to 11–12%.

"Unsold inventory in 2017 came down by 25% YoY indicating a healthier QTS of 7.9 quarters as compared to more than two years until the end of 2016," it added. 
 
Further on office takeaways, it says, new office space supply hit double digits for the first time since 2012, 76% higher YOY; vacancy levels see a marginal rise to 20.2% in 2017; demand in peripheral markets pull office leasing by 6% in 2017; co-working demand had a big role in the jump in transactions in H2 2017. 

This segment has been emerging as a new occupier category similar to the e-commerce wave of 2014–15 in Bengaluru.
 
Dr Samantak Das, chief Economist & national director – research, said, “For the first time in this decade the Mumbai market has experienced a drop in residential prices. Unlike the conventional narrative developers cut down prices to offload their unsold inventory. The base price has come down by 5% which translates into an effective price benefit of 11-12% for buyers. This includes bouquet of incentives such as waivers on stamp duty, floor rise and assured rental schemes."

"In addition we have observed that the retail inflation has been growing higher than the city price which provides an additional benefit to buyers as far as house price is concerned. The trend stems from the periodic deterioration of the market’s health with launches coming to a grinding halt," Das said. 

Das said that "in terms of sales, the Mumbai market recorded 19% uptick in H2 2017 over the demonetisation-hit same period last year, however overall sales volumes reflect a declining pattern." 

"The office market has witnessed newfound buoyancy with new completions recording double digit growth for the first time since 2012. While peripheral markets continued to attract occupiers, new-age businesses such as co-working space providers have fortified their presence,” he added.