Knight Frank India has launched the sixth edition of its flagship half yearly report – India Real Estate. It presents a comprehensive analysis of the residential and commercial market of Mumbai Metropolitan Region (MMR) for the period July-December 2016 (H2 2016).
- Big blow to the residential sector with both launches and sales plummeting by 53 per cent and 26 per cent respectively in H2 2016.
- Demonetisation disrupts market sentiment in Q4 2016; sales plunge by 50 per cent to 8,617 units and launches by 77 per cent to 2,617 units.
- New launches and sales in the premium segment decline by 69 per cent and 16 per cent respectively in H2 2016 compared to H2 2015.
- Premium markets of South Mumbai and Central Mumbai worst hit with sales lower by 54 per cent and 41 per cent respectively in H2 2016 compared to H2 2015; Thane and Peripheral Central Suburbs at 37 per cent and 28 per cent relatively better off.
- Unsold inventory level comes down steadily from a peak of 213,742 units in H1 2014 to 154,699 units in H2 2016.
Mumbai office space
- Mumbai’s office market sees a decline in both new completion and transactions in H2 2016 compared to H2 2015. New completion at 1 million sq ft was lower by 73 per cent; transactions dipped by 34 per cent to 3.3 million sq ft.
- Occupiers grapple with the uncertainties posed by demonetisation, Brexit, US Presidential election and Federal rate hike.
- BFSI and manufacturing sectors lead demand taking up large office spaces in PBD and SBD West.
- SBD West, PBD and SBD Central see the largest contribution to the office demand during H2 2016; Central Mumbai and BKC face dip in transaction share due to supply shortage.
- Shrinking new completions and lower vacancy level push up office rents; BKC and Central Mumbai rentals higher by 6 per cent in H2 2016 over H2 2015 followed by SBD West at 5 per cent.
Speaking about the findings, Dr Samantak Das, Chief Economist & National Director-Research, Knight Frank India
, said, “H1 (January-June 2016) raised hopes for the MMR residential market and we predicted H2 2016 on a growth trajectory. But H2 2016 suffered a setback with launches and sales down by 53 per cent and 26 per cent YOY respectively. The major reason of this fall can attributed to the demonetisation move. In fact, the last quarter (Q4 2016) witnessed a steep 39 per cent decline in sales YOY, resulting in the MMR residential sales in 2016 being at its worst in the last seven years. We believe that uncertainties will prevail till the next quarter.”
Hr further added, “The office market saw a marginal slide of 6 per cent YOY in transaction in 2016, and this has brought a pause on the growth momentum of the last three years. The major reason for this slowdown in transaction may be attributed to the limited supply in the region. Vacancy at the city level is on a decline and sought after business districts like BKC and Lower Parel experience a vacancy of sub 5 per cent. Because of steady demand and limited supply, rentals have jumped by 16 per cent YOY during H2 2016.”