Wednesday, January 11, 2017

During July-December 2016, residential sales across top 8 cities dip 23%: Knight Frank - The Economic Times

MUMBAI: Residential property sales in Mumbai Metropolitan Region have declined 26% during the second half of 2016 as the demonetisation disrupted the market sentiment in fourth quarter of the year, said a Knight Frank report. New residential launches during the period also slipped 53% from a year ago.

In the quarter ending December, sales plunged by 50% to 8,617 units and launches by 77% to 2,617 units. New launches and sales in the premium segment declined 69% and 16% from a year ago, respectively during the second half of 2016.

Premium markets of South Mumbai and Central Mumbai were the worst hit with sales declining 54% and 41% respectively between July-December. Thane and Peripheral Central Suburbs at 37% and 28% decline were relatively better off, the report said.

Unsold inventory levels have come down steadily from a peak of 213,742 units in first half of 2014 to 154,699 units in the second half of 2016.

"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% and 26% YOY respectively," said Samantak Das, Chief Economist & National Director - Research, Knight Frank India. "The major reason of this fall can attributed to the demonetisation move. In fact, the last quarter (Q4 2016) witnessed a steep 39% 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."

Mumbai's office market witnessed a decline in both new completion and transactions during the second half of 2016. New completion at 1 million sq ft was lower by 73%, while transactions dipped by 34% to 3.3 million sq ft.

Shrinking new completions and lower vacancy level have pushed up office rents with Bandra-Kurla Complex and Central Mumbai moving up 6% in the second half of 2016.

"The office market saw a marginal slide of 6% YOY in transaction in 2016 and this has brought a pause on the growth momentum of 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%. Because of steady demand and limited supply, rentals have jumped by 16% YOY during H2 2016," Das added.
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