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All India Real Estate Report H1 2017 Presentation
The real estate market in India experienced significant declines in residential launches and sales during the first half of 2017, reaching a decade low. Demonetisation and regulatory changes shifted focus towards affordable housing, with 71% of new launches priced below INR 50 lakh. Despite a drop in overall sales, the market showed signs of recovery in affordable housing segments, indicating potential for future growth.
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All India Real Estate Report H1 2017 Presentation
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- 2. RESIDENTIAL RECAP 20162 2016 launchesand sales at a decadal low • Demonetisation and its effects
- 3. KEY FINDINGS RESIDENITAL H120173 Affordable housing a structural change; 71% launches in less than INR 50 lakh category vis a vis 52% a year ago Launches crash 41% - reach lowest level in 7 years 596,044 unsold inventory in top 8 cities– 17% drop from peak of H2 2014 Sales down by 11% YoY – lowest first-half sales in the last 5 years
- 4. 236,084 222,144 232,491 187,614 165,426 154,233 117,200 126,865 107,120 68,702 62,738 H1 2012 H22012 H1 2013 H2 2013 H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 4 Jan - Feb Demonetisation hangover May - June RERA compliance Developers cautious Unsold inventory pressure Launches come to a grinding halt – down 73% from H1 2013 Note: The top 8 cities are Mumbai, NCR, Bengaluru, Pune, Chennai, Hyderabad, Kolkata and Ahmedabad Top 8 cities half yearly trend in launches Launches down by 41% in H1 2017 YoY (-9% sequentially)
- 5. 5 NCR & Ahmedabadworst hit in launches 24,450 17,462 24,281 8,713 5,815 5,700 11,891 8,809 9,740 9,273 13,395 11,300 4,800 5,900 9,093 5,200 15,763 4,800 14,026 7,905 6,035 2,571 9,764 1,874 Mumbai NCR Bengaluru Pune Chennai Hyderabad Kolkata Ahmedabad Numberofunits H1 2016 H2 2016 H1 2017 City-wise half-yearly launches Ahmedabad and NCR down 79% and 73% YoY respectively Chennai out of slumber, increases 4% YoY Sequentially, Mumbai picks up close to 62% albeit lower by 36% YoY
- 6. 6 Resurrection of affordable housingTop 8 cities ticket-size split of launches Affordable housing a structural change with commensurate supply side response A significant chunk of new launches below INR 50 lakh – 71% vis-a-vis 52% H1 2016 H2 2016 H1 2017 <2.5 mn 17% 20% 36% 2.5-5 mn 35% 39% 35% 5-7.5 mn 22% 20% 14% 7.5-10 mn 10% 11% 6% >10 mn 10% 6% 8% >20 mn 6% 4% 1% 71%52%
- 7. 7 NCR, Pune, Ahmedabad, Kolkatadrive affordable housing revival 0% 20% 40% 60% 80% 100% Mumbai NCR Bengaluru Pune Chennai Hyderabad Kolkata Ahmedabad < Rs 2.5 mn Rs 2.5-5 mn Rs 5-7.5 mn Rs 7.5-10 mn Rs 10-20 mn > Rs 20 mn Ticket-size split of launched units in H1 2017 Around 80% of launches in NCR, Pune, Ahmedabad and Kolkata in the sub INR 50 lakh category
- 8. 8 Sales not asbadly hit as launches YoY 139,295 140,527 126,616 141,341 135,016 109,158 120,755 - 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 Numberofunits Note: The top 8 cities are Mumbai, NCR, Bengaluru, Pune, Chennai, Hyderabad, Kolkata and Ahmedabad Top 8 cities half yearly trend in sales Sales down by 11% YoY but up sequentially by same margin post demonetisation •Government thrust towards affordable housing •Freebies and discounts whip up sales of ready inventory •Sentiments among buyers up owing to RERA
- 9. 9 Sequentially, sales inall cities have improved City-wise half-yearly sales NCR and Kolkata most hit, down 26% and 22% YoY respectively Pune, Chennai and Hyderabad witness growth YoY 34,971 23,092 26,220 15,688 8,450 7,700 10,339 8,556 25,403 16,913 20,309 16,800 7,737 7,289 7,308 7,400 32,077 17,188 21,210 17,480 8,850 7,901 8,109 7,941 Mumbai NCR Bengaluru Pune Chennai Hyderabad Kolkata Ahmedabad H1 2016 H2 2016 H1 2017
- 10. 10 Time correction already happened Residentialprice index Across 8 cities, residential price index lower than Consumer Price Index (CPI) 95 100 105 110 115 120 125 130 Indexvalue(Q12013=100) CPI Mumbai NCR Bengaluru Pune Chennai Hyderabad Kolkata Ahmedabad
- 11. 11 Pan India unsoldinventory lowest in the last 4 years Trend of all India unsold inventory and QTS Unwinding of unsold inventory from drastic fall in launches Less than 3 years required to offload existing unsold inventory 7.4 8.2 9.0 10.1 11.3 11.5 11.3 11.3 11.3 520,000 540,000 560,000 580,000 600,000 620,000 640,000 660,000 680,000 700,000 720,000 740,000 - 2.0 4.0 6.0 8.0 10.0 12.0 14.0 H1 2013 H2 2013 H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 Unsoldinventory(no.ofunits) QTS Unsold inventory (RHS) QTS
- 12. 12 NCR the worstmarket – over 4 year inventory Inter-city comparison on unsold inventory Smaller metros like Pune and Hyderabad have relatively less inventory pressure Unsold units Quarters-to-sell Mumbai 138,653 8.8 NCR 180,370 17.8 Bengaluru 114,064 10.0 Pune 40,141 4.5 Chennai 28,110 6.6 Hyderabad 22,658 5.9 Kolkata 39,114 10.6 Ahmedabad 32,934 7.7 Top 8 cities 596,044
- 13. 13 Affordable housing comesto rescue of the beleaguered real estate sector Lowest first-half sales and launches in the last 5 years SUMMARY
- 14. OFFICE RECAP 201614 2016 officetransactions at 40.6 mn sq ft at par with 2015, the highest since 2009
- 15. KEY FINDINGS H1 201715 Co-working operatorsshow traction with around half a million sq ft taken up across Bengaluru, Pune and NCR Transactions down 10% YoY in H1 2017, new completions lower by 5% At 12%, vacancy levels at the lowest since 2012 when it was 21% Industry headwinds, supply crunch affect IT sector transactions; share down to 39% vis- à-vis 43% a year ago
- 16. 17.9 20.7 17.9 23.2 20.2 20.6 18.1 0 5 10 15 20 25 H1 2014H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 mnsqft 16 Transactions decline 10% YoY in H1 2017 Most cities face a supply crunch for the country’s largest occupier – IT/ ITeS Transactions decline 10% YoY Note: The top 6 cities are Mumbai, NCR, Bengaluru, Pune, Chennai and Hyderabad Top 6 cities ha trend of transa
- 17. 17 Top 6 citieshalf yearly trend of new completions In H1 2017, new completions lower by 5% Developer inclination towards residential segment over the last few years a major cause 17.1 19.5 15.7 18.7 19.0 10.1 17.9 0 5 10 15 20 25 H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 mnsqft
- 18. 18 Top 6 citieshalf-yearly trend of vacancy level At 12%, vacancy levels at the lowest level since 2012 when it was 21% 18.5% 17.5% 16.7% 15.6% 15.1% 13.3% 12.4% 12% 14% 16% 18% 20% 0 5 10 15 20 25 H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 mnsqft
- 19. 19 City wisetrend Except Mumbai and NCR, other cities facing low vacancy level Even prime locations in NCR and Mumbai are in single digit All cities except Mumbai had lower completion compared to demand 21.9% 17.7% 3.8% 7.9% 10.8% 9.0% 0% 5% 10% 15% 20% 25% 0 1 2 3 4 5 6 7 8 9 Mumbai NCR Bengaluru Pune Chennai Hyderabad mnsqft New completions Transactions Vacancy (RHS)
- 20. 20 Industry-wise transaction split IT sector,the backbone of Indian office market, facing business challenges IT industry headwinds, share down to 39% vis-a-vis 43% a year ago Co-working operators show traction with around 0.5 mn sq ft taken up across Bengaluru, Pune and NCR H1 2016 H2 2016 H1 2017 BFSI 12% 13% 12% IT/ITeS 43% 49% 39% Manufacturing 16% 17% 18% Other Services 29% 21% 31%
- 21. 21 Industry headwinds, dearthof relevant supply affect India’s largest occupier – IT/ITeS Vacancy lowest since GFC SUMMARY
- 22. 22 A slew ofthe most disruptive reforms in independent India became a reality in a span of a few months. Described by many as the Brahmastras against black economy in an unorganised industry, demonetisation, RERA, the Benami Prohibition Act and the recently rolled out GST have time and again pushed the already sluggish market to the brink. But we believe that these were corrective measures long due to transform real estate into a robust, transparent and thriving sector. The short-term hiccups grappling the industry would eventually fade away and bear rich dividends in the future. Shishir Baijal, Chairman & Managing Director “ ”
- 23. INDIA REAL ESTATE JANUARY – JUNE2017 23 This report is published for general information only and not to be relied upon in anyway. Although high standards have been used in the preparation of the information analysis, views and projections presented in the report, no responsibility or liability whatsoever can be accepted by Knight Frank for any loss or damage resultant from any use of, reliance on or reference to the contents of this document. As a general report this material does not necessarily represent the view of Knight Frank in relation to particular properties or projects. Reproduction of this report in whole or in part is not allowed without prior written approval of Knight Frank to the form and content within which it appears.