Notional revenue loss of Indian real estate industry for the quarter ended December, 2016 stands at ₹22,600 crore and the notional loss on stamp duty for State governments for the same quarter is ₹1,200 crore, according to a Knight Frank India report.

In residential sector, sales volume and launches fell by 23 per cent and 46 per cent between July and December 2016. Number of units sold and launched were 1 lakh units and 68,700 units, respectively. For the same time period in 2015, units sold and launched stood at 1.4 lakh and 1.3 lakh respectively.

In the fourth quarter alone sales volume dropped by 40 per cent and launches fell by 61 per cent compared to the fourth quarter of 2015 due to demonetisation. Number of units sold in the fourth quarter was 40,936 units as opposed to 73,769 units for the same quarter last year.

The centre banned high value notes ₹500 and ₹1,000 from circulation in November 2016. This has affected the real estate industry as it saw dip in demand and launches last year.

For the first time since 2013 new launches and sale declined by 17 per cent and 7 per cent respectively compared to 2015 in Bengaluru. NCR is the most affected market and witnessed de-growth in demand and supply by 29 per cent and 73 per cent respectively.

Unlike the residential market, office space demand is steady despite demonetisation and lack of supply, the report stated. Transactions fell by 12 per cent to 20.4 million sq ft between July and December 2016 from 23.2 million for the same period in 2015.

Speaking to media persons at the launch of ‘India real estate: Residential and Office report for July-December 2016’ report, Kanchana Krishnan, Director – Chennai, Knight Frank India said despite the prediction that 2016 will fare better than 2015, demonetisation has created a short-term disruption in the real estate industry. “The country saw the lowest sales and property launches in 2016 since the global financial crisis in 2008,” Krishnan said.

“We expect demand will be subdued in beginning of 2017. With many policy changes like GST bill expected, we hope the market will revive,” she added.

Chennai market

In case of Chennai, for the quarter ended December 2016, notional revenue loss to real estate industry is ₹1,100 crore and State government notional loss on stamp duty for the same quarter is ₹50 crore.

The city saw a 29-per-cent drop in launches, and 9-per-cent drop in sales, between July and December 2016. Few reasons for the drop were political uncertainty and impact of the December 2015 floods, the impact of which the city felt in beginning of 2016.

This was coupled with demonetisation that was announced in November 2016. Around 4,800 units were launched during 2016, an 18-per-cent drop compared to 2015. South Chennai accounted for over half the units launched during H2 2016, with healthy development interest in location such as Kelambakkam, Ottiambakkam, Mahindra World city and Siruseri. West Chennai, which did well last year in affordable housing segment, experienced a huge dip in sales in later half of 2016.

But office space continues to grow in Chennai. The city saw 5.3 million sq ft transaction in office space in second half of 2016 compared to 5.1 million sq ft transaction in 2015.

But supply grew only by 0.5 million sq ft. Majority of this demand came from big tickets transactions that took up large office spaces like General Electric, Astra Zeneca and Philips. IT and ITeS continues to be driver in office space, though manufacturing sector’s share is increasing.

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