Residential launches witness a comeback in Chennai in H1 2018: Knight Frank India
Author(s): City Air NewsMs. Kanchana Krishnan, Director Knight Frank – Chennai. ~Paucity of quality office space leads to strong rental growth~ Chennai, July 25, 2018: Knight Frank India today launched the ninth edition of its flagship...
~Paucity of quality office space leads to strong rental growth~
Chennai, July 25, 2018: Knight Frank India today launched the ninth edition of its flagship half yearly report - India Real Estate. It presents a comprehensive analysis of the residential and office market performance of Chennai for the period January– June 2018(H1 2018).
· Inadequate supply continues to limit transaction numbers; Chennai saw just 0.42 mnsq m (4.5 mnsq ft) of supply since H1 2015 compared to the 1.4 mnsq m (14.6 mnsq ft) of transaction volume
· Transaction levels experience 9% YoY dropcompared to the healthy 10% growth in supply
· Average rentals grow by 4.5% yoy; growth was strong across business districts with SBD locations such as Perungudi, Guindy and Taramani continue to witness above-average rental growth.
· Vacancy level hovers around 11% over past 12 months; occupier demand continually outstrips supply
· Other Services sector gains significantly; share of IT/ITeS sector continues to weaken
· Comeback of residential launches with 8% annual upswing; 6,520 units launched in H1 2018 were the highest number of launches in a single period in the past 3 years; significant increase in launches due to right-sizing and right-pricing in under INR 5 mn ticket size
· Prices decline by 4% YoY as developers dole out aggressive discounts to lighten inventory load
Sales recover from H2 2017 lows and end H1 2018 at 3% lower than year ago; marketing campaigns highlighting RERA compliancy, PMAY eligibility and Completion Certificate help developers regain buyers’ trust
With a Project Life Cycle of lessthan 6 years, QTS (Quarters-to-Sell) continues to hover around6 quarters in H1 2018. Innovative marketing and aggressive discounts on priceshelp stem the decline in sales
Speaking about the findings, Kanchana Krishnan, Director – Chennaisaid,“The Chennai office market that has beenreeling under an acutesupply crunch over thepast 3 years has seen some respite in H1 2018 with the supply scenario easing somewhat with 10% growth in new completions.The paucity of quality office spacealsoled to a strong rental growth.
The residential real estate market, on the other hand,has begun on a positive note as H1 2018 shows the promise of a potential recovery in residential market volumes. H1 2018 saw the highest number of units launched in a single period during the past three years and the persistent drop in sales was largely muted as well, compared to the preceding period.”