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Impact of RERA seems to be kicking in the real estate sector with new launches crashing to a seven-year low by 41 per cent. The sales volumes to have been down by 11 per cent year-on-year, according to a Knight Frank report.
The report indicates that for the first half from January to June 2017, barring Chennai new projects dried up in all the eight cities. NCR and Ahmedabad were worst hit with launches plummeting by 73 per cent and 79 per cent respectively. Sequentially, Mumbai picks by close to 62 per cent, albeit lower by 36 per cent on year-on-year basis. Chennai was the only market to record a marginal four per cent rise on a year on year basis in launches.
Government thrust towards affordable housing, widespread discounts on ready inventory and improved sentiments among buyers, courtesy RERA, drive sales volumes.
The first half witnesses the resurrection of affordable housing across India with 71 per cent of the launches under the Rs 50 lakh price segment, up from 52 per cent during the same period last year. NCR, Kolkata, Pune and Ahmedabad drive the revival of affordable housing projects with around 80 per cent of launches in these cities in the sub Rs 50 lakh segment.
At 5,96,044 units, unsold inventory was at the lowest across the eight cities in H1 2017, albeit owing to the shrinking market size. NCR was the worst market with over four years of inventory. There has been a surge in inventory in the ‘ready for possession’ category.
The report also pointed that office transactions fell by 10 per cent to 18.1 mn sq ft in H1 2017. The five per cent decline in supply saw 17.9 mn sq.ft added to the office space inventory. At 12 per cent, vacancy levels were at the lowest since 2012 when it was 21 per cent. Except Mumbai and NCR, vacancy levels low in other cities. Vacancy levels at prime CBDs in Mumbai and NCR in single digits.
Average rental values across six cities grew at seven per cent year on year during H1 2017. While Mumbai saw flat Y-O-Y rental growth, Hyderabad and Bengaluru experienced the strongest rental growth at 14 per cent and 8 per cent Y-O-Y respectively.
IT/ITeS sector witnesses a fall in share to 39 per cent in H1 2017 from 43 per cent in the same period a year ago. Co-working space operators show traction with around 0.5 mn sq ft taken up across Bengaluru, Pune and NCR.
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