NCR has about six years of unsold residential inventory – ET RealEstate

NEW DELHI: Builders in the National Capital Region (NCR) are finding it difficult to sell-off their properties. The “age of unsold inventory”, the number of quarters for which the unsold inventory of a market or micro-market has existed there, is 23.5 quarters in NCR, according to a recent report by Knight Frank India.

It is distantly followed by Chennai with age of unsold inventory here being 15.5 quarters and Bengaluru with 15 quarters.

At current situation it will take over one year to exhaust the unsold inventory in NCR. The quarters-to-sell (QTS) inched up from 11.7 quarters in 2019 to 13.8 quarters in 2020. This was mainly because of a dip in sales velocity during the pandemic. A lower QTS indicates a healthier market.

Home sales dipped 50% in overall 2020 to about 21,234 units while in H2 2020 they fell by 31% to 15,788 units. In 2020, Greater Noida accounted for 39% of the total residential sales followed by Gurugram at 29%. Ghaziabad comprised 16% of the residential sales whilst Noida accounted for 14% of the same. The remaining 2% came from Delhi and Faridabad.

In 2020, the weighted average residential prices in NCR corrected by 4% over 2019. In H2 2020, nearly 58% of total sales belonged to the category of ticket sizes greater than Rs 50 lakh. There hasn’t been much divergence in this trend when compared to the H1 2020 or H2
2019 period.

Only 9,824 residential units were launched across NCR in 2020, the lowest in the past 11 years. Due to the lockdown in H1 2020, developers refrained from introducing new residential supply in the market, which caused the annual launches to decline by 57% year-on-year.

NCR has about six years of unsold residential inventory
“New launches are not being preferred as the region is already reeling under substantial unsold inventory and developers prefer to offload existing stock. Though the buyer has started taking decisions, he is still very risk averse at present. A perceptional trust deficit is playing on the buyer psyche, and therefore, developers having a better track record are being considered currently,” said Mudassir Zaidi, executive director (North), Knight Frank India.

Gurugram continued to account for the lion’s share of new launches in 2020. It comprised 47% of the total, followed by Greater Noida at 20%, Ghaziabad at 19%, Noida at 11% and Faridabad at 3%.

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Net absorption of office spaces dips 44% in 2020: JLL India – ET RealEstate

NEW DELHI: In 2020, the net absorption of office spaces in top seven cities dipped by 44% when compared to 2019, according to JLL India. In 2019 the net absorption crossed 46 million sq ft while in 2020 it has reached about 25.82 million sq ft.

In the Jan-March 2020 quarter the net absorption was 8.80 million sq ft which saw a drastic drop in the following two quarters: 3.32 million sq ft in Apr-Jun 2020 and 5.43 millon sq ft in Jul-Sep 2020 quarter. In Oct-Dec quarter, however, the absorption improved to 8.27 million sq ft, according to JLL research.

Hyderabad led the pack with the highest net absorption in Q4 2020. While the southern markets of Bengaluru and Hyderabad accounted for more than 50% of the net absorption in Q4 2020, maximum increase in net absorption (when compared to Q3 2020) was witnessed in Mumbai, Delhi NCR and Chennai.

The increase in net absorption was driven by pre-commitments in new completions during the quarter. 56% new completions were already pre-committed.

While IT/ITeS continues to form a majority proportion, leasing activity is being driven by increased demand for office spaces from sectors such as e-commerce, healthcare and FMCG.

JLL India feels work-from-home concept which has been adopted as an alternative by corporate during 2020 could be, at best, a supplement to the traditional way of working from office and could impact the office market demand by an estimated up to 20% in the medium to long term.

This dip will be counter-balanced by increasing demand for office spaces from emerging sectors like healthcare, e-commerce and data centres.

On an annual basis, new completions across the top 7 cities dipped by 30% to about 36.34 million sq ft in 2020 as compared to 51.62 million sq ft in 2019. New completions during the October-December quarter were recorded at 12.78 million sq ft.

“The year 2021 is expected to witness close to ~38-40 million sq ft of new completions, while net absorption is likely to hover around 32-35 million sq ft,” said Dr. Samantak Das, chief economist and head of research & REIS, India, JLL.

Occupiers, however, continue to review their real estate portfolios and are adopting consolidation and optimisation strategies through the year. The relatively subdued net absorption levels could not keep pace with new completions. This resulted in overall vacancy increasing from 13.5% in Q3 2020 to 14% in Q4 2020.

Office rents in 2020 remained stable across the major office markets in India. With stable rental values, range-bound vacancy levels and limited upcoming Grade A supply across key markets, the office market in India continues to be landlord favorable. Hence, reduction of headline rents is not a popular phenomenon and rents are expected to remain stable in the short to medium term.

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Mumbai looks to work from bigger, cheaper homes – ET RealEstate

MUMBAI: Home buyers in Mumbai are dreaming big. Affordability and the ongoing pandemic-induced need for bigger homes is pushing the average ticket size of property deals in the country’s commercial capital up by 50-100%.

Average ticket sizes have grown to Rs 1.5-2 crore in the city up from around Rs 1 crore before the pandemic, developers and industry insiders say. The contrast is not only with respect to the average ticket size in the country’s most expensive property market, but also with regards to actual per sq ft prices that is allowing buyers to consider higher configurations.

“Homebuyers’ rising preference for relatively bigger homes is coinciding with the price benefit they are receiving and is leading to rise in average ticket size in Mumbai. While prices have eased, configuration of apartments being bought by homebuyers have moved higher marginally,” said Ram Naik, Executive director, The Guardians Real Estate Advisory.

Realty developers until recently have been aligning their offerings with market demand and shrinking apartments to make them affordable. However, the price drop and the need for bigger apartments has made them think again.

While other property markets like Delhi, National Capital Region, Bangalore, Pune and Hyderabad are also witnessing the rising preference among homebuyers for bigger houses, the trend is getting amplified in Mumbai that is known for compact configurations.

“People are looking to upgrade to bigger homes due to work from home and online education coupled with the record low housing loan rates, price correction and stamp duty benefit. This is the best situation one can be in terms of buying a property,” said Himanshu Parekh, property consultant operating in south and central part of Mumbai.

According to him, the rising preference for bigger size apartments is visible across segments including luxury homes that are also selling faster.

“Conclusion of deals for luxury apartments in Mumbai was taking time until now. But the pace has increased significantly over the last two months,” Naik said, adding that the firm has sold over 75 premium apartments worth Rs 300 crore in Sion locality of central Mumbai.

Bigger apartments are being favoured across the city’s micro-markets such as Mulund, Ghatkopar, Kanjur Marg and Chembur and western suburbs of Borivali, Kandivali and Goregaon and not just in central Mumbai.

“Post Covid-19, the bigger size apartments and apartments with balconies have come back in great demand. We have to manage good balance between the apartment size and ticket size to satisfy the customers’ new requirement wherein home has become the most secure place and investment as well,” said Rajeeb Dash, Chief Sales & Marketing Officer, SD Corp, a Shapoorji Pallonji and Dilip Thacker Group company.

According to him, the company’s both recent launches at central Mumbai’s Sewri and western suburb of Kandivali are seeing rising enquiries and sales of bigger size apartments.

The average size of new urban apartments being launched has gone up since the last few months, as homebuilders have also started reacting to the fact that people are spending more time at home.

By the third quarter of 2020, one-bedroom apartments in most urban areas increased to an average 500 square feet, up from around 400 square feet in March 2019, when the affordable luxury was in boom, brokers said.

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Housing launches across top seven markets witness sequential spike in Q4, up 112%: Report – ET RealEstate

MUMBAI: The improvement in housing sales momentum in the last few months has managed to renew business confidence among real estate developers as indicated by the rising project launches activity across the country.

The ongoing fourth quarter has witnessed launch of 26,785 new residential units, more than twice the launches seen in the previous quarter that ended in September. Hyderabad property market dominated the new launches accounting for nearly 40% of the overall launches during the quarter and Bengaluru followed with over 16%, showed a JLL India report.

However, the new launches are still restricted when compared to the pre-COVID levels as more developers across markets are focussing on completion of their under-construction projects and clearing existing inventory.

While the overall sequential jump in launches is 112%, property markets of Bengaluru and Delhi-NCR have seen a substantial increase in launches at 304% and 221% rise respectively during the quarter.

The business confidence is rising given the rising sales activity. Top seven key Indian cities saw sales recovery gains of more than 50% in 2020 with Hyderabad, Mumbai and Delhi NCR gaining maximum foothold as compared to 2019. In Hyderabad, the Western Suburbs accounted for more than 70% of the overall sales, while in Mumbai, sales were driven by Thane and Navi Mumbai, with a combined contribution of over 50%. In Delhi-NCR, Noida and Ghaziabad accounted for nearly 80% of the sales.

“GDP in the July-September quarter of 2020 showed higher than expected recovery. During the same quarter, the housing market showed some initial signs of recovery as well, with sales increasing by 34% on a sequential basis. In the backdrop of issues like job security and fall in income levels, this uptick in sales was a significant achievement. The fourth quarter has witnessed a 51% improvement in residential sales, and not just that, the improvement has been evenly spread among all seven cities,” said Ramesh Nair, CEO and Country Head, India, JLL.

He believes the housing market is set to chart a new chapter of growth in 2021, fuelled by affordability, reinforced desire to own a house and renewed interest from certain buyer segments such as non-resident Indians (NRIs).

On an annual basis, overall launches across the top seven cities dipped by 31% to about 95,000 units in 2020. Development focus on mid and affordable segments continued during the quarter with more than 80% of the new launches in the sub Rs 1 crore category.

Moving ahead, the focus on this price segment is expected to continue with developers trying to reap benefits of strong pent-up demand in this segment. Most of the new launches in the southern markets of Bengaluru, Chennai and Hyderabad were in the sub Rs 1 crore category.

According to Samantak Das, Chief Economist and Head of Research & REIS, India, JLL, as the sector shows signs of recovery, prominent developers are expected to be at an advantage and capture a greater share of the market.

Given that the affordable and mid-segments below Rs 1 crore continue to witness maximum sales traction, select developers are also reviewing their projects to make them more aligned to buyers, both in terms of product and price, he said while adding that buyers are unwilling to take any risks and are showing higher preference for completed projects, or projects where significant construction is underway.

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