Knight Frank India Real Estate Outlook Jan-June 2014
Mumbai, August 26, 2014:
Knight Frank India today launched its flagship half yearly analysis report -
India Real Estate Outlook. It presents a comprehensive analysis
of the residential and office market performance of the Mumbai
Metropolitan Region for the period between January–June 2014.
Residential market takeaways:-
·
Demand within the Mumbai Metropolitan Region dropped by a whopping 25% in H1 2014 in comparison with the same period last year
·
Buyers
continued to sit on the fence for the most part of H1 2014 in
anticipation that the new and stable leadership at the Centre
would revive the ailing economy
·
The
QTS ratio for the MMR has more than doubled in the last ten quarters,
from being 5 in December 2011 to 12 in June 2014, implying
that the unsold inventory will take almost three years to sell
·
Four
important transit infrastructure projects have come up within the
Mumbai city limits, which may redefine the property market dynamics
of the entire metropolitan region.
·
Although
2014 would witness a decline of 15% in new launches to 92,845 housing
units, it would be a trend reversal year for absorption,
which will increase by 8% to 80,022 units.
Office market takeaways:-
·
The
absorption of office space, at 2.5 mn sq. ft. declined by 34% in H1
2014 over H1 2013 owing to the general elections which resulted
in corporates adopting a noncommittal attitude towards taking up office
space during the first half
·
With
developers deferring fresh launches to adjust to the changed market
conditions, new project completions dropped by 25% in H1 2014
in comparison with the same period last year
·
In comparison with H1 2013, when the market vacancy stood at 22.3%, the vacancy in H1 2014 increased marginally
·
The
manufacturing sector has emerged as the largest demand driver, with a
contribution of 48% in H1 2014, leaving behind the BFSI and
IT/ITeS sectors at 15% and 12% respectively.
Speaking about the findings, Dr. Samantak Das, Chief Economist & Director-
Research, Knight Frank India said “Over
the last 2–3 years, India’s economic health had deteriorated, and the
situation of the Mumbai Metropolitan Region (MMR) residential property
market was no different. The
shrinking size in terms of demand and supply confirms the misfortune of
the region’s residential market. However,
with a new, stable government at the centre, stakeholder sentiment
has witnessed a remarkable improvement. The first budget under the
leadership of Mr. Narendra Modi offered several positive surprises to
the realty sector, with special focus on housing that
will benefit the Mumbai realty market, with peripheral areas being the
biggest beneficiaries.
“As
for the office market, government initiatives for improving business
sentiments, along with impetus
on real estate FDI and REITs, will bode well for the country’s
financial capital. This is expected to revive the absorption in office
space over the next six months”.