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Home sales surge 92% in Q3, office space demand grows in sync: Knight Frank report

The total office space absorbed across major cities was at 12.5 million sq. ft in the third quarter, representing 168% year-on-year growth

Home sales have recorded a 92 percent growth in volume over the last one year with 64,010 units being delivered in the third quarter of 2021, according to an agency study.

Hyderabad and Kolkata have seen the strongest recovery to the pre-COVID levels in terms of sales as well as launches, the report by Knight Frank India said.

India’s office transactions also recorded a strong quarterly growth in the third quarter of 2021, despite a more severe second wave of COVID infections and the looming threat of a third wave keeping a large section of the working population working out of their residences.

The total office space absorbed across major cities was at 12.5 million sq ft in the third quarter, representing a 168 percent year-on-year growth, according to Knight Frank’s Office Market Update-Q3, 2021, the report.

The stamp duty cut in West Bengal caused sales in Kolkata to spike 75 percent over the last year to 6,861 housing units in the third quarter. Bengaluru has also seen a strong rebound in line with healthy growth in the IT sector.


Despite the withdrawal of the stamp duty cut window, Mumbai and Pune markets have continued their sales momentum after a brief dip in the COVID-hit second quarter of 2021.

New residential unit launches increased 90 percent year-on-year to 58,967 units in Q3. A significant recovery compared to 27,232 residential unit launches and 27,453 residential unit sales in the previous quarter, said a report by Knight Frank India titled, India Real Estate Update (July – September 2021), which analyses the residential and office market performances across eight major cities for the third quarter.

The weighted average prices across markets remained stable in the third quarter of 2021 and did not decline compared to the preceding quarter. The Chennai, Hyderabad and Kolkata markets saw prices increase marginally on a year-on-year basis during the quarter.

Stamp duty cuts have proved to be an effective demand stimulant in the case of Mumbai, Pune and Kolkata where the state governments have applied a broad-based cut across ticket sizes in the primary market.

On the supply side, developers have pursued an aggressive pricing strategy over the year with spot discounts, financing deals, stamp duty waivers and other freebies to entice buyers, the report said.

The total residential sales of the top eight markets under review during Q3 2021 reached 104 percent of 2019 quarterly average. Similarly, residential launches in Q3 2021 improved 106 percent from the 2019 quarterly average. Demand momentum was strong across markets during the quarter under review with all markets reporting a YoY growth in sales. Mumbai and Bengaluru, which account for over half the inventory in the market, saw sales grow 109 percent and 131 percent over the previous corresponding period.

The share of sales in the ticket size Rs 5-10 million grew 35 percent in third quarter 2021 compared to 32 percent a year ago. This can be attributed to the homebuyers’ need to upgrade to larger living spaces with better amenities. The share of home sales in the under Rs 5-million ticket size category dropped to 43 percent in Q3 2021 from 45 percent a year ago as the income disruptions caused by the pandemic were more keenly felt by the lower income demographic, the report said.

“There has been an exciting improvement in sales and launches in Q3 2021. Sales momentum that picked up in the beginning of the year has sustained in Q3 2021. The market seems to have factored in the very low likelihood of a complete lockdown as was seen last year due to the ample availability of the COVID vaccine. Comparatively lower residential prices, attractive interest rates and higher household savings rate over the past year should support housing demand going forward,” said Shishir Baijal, Chairman and Managing Director, Knight Frank India.

 With the upcoming festive season, the market is gearing up for new project launches and consumers are likely to reciprocate. While financial stress remains a significant factor for developers across markets, homebuyers’ preference for Grade-A developers and their access to cheaper credit has positioned them well in this recovering market,” he said.

“Stamp duty cuts were a significant intervention applied by several state governments to spark a sharp recovery in sales volumes. These measures have convinced the fence sitters to make the home buying decision. Going forward with the economy improving, interest rate remaining low and overall affordability improving, the sweet spot for home buying will be sustained,” said Rajani Sinha, Chief Economist and National Director – Research, Knight Frank India.

Office market witnesses incremental activity

The report mentioned that in 2021 (January –September 2021) office markets witnessed an incremental activity of 13 percent in transactional volume and 6 percent growth in new office completions compared to corresponding period of the last year.

With corporate India taking significant steps toward resuming work from office, increasing rate of vaccinations along with fewer restrictions on mobility, improved the business environment and aided a recovery to market traction levels seen in pre-pandemic times, the report said.

The total office transactions of the eight India markets in Q3 2021 have improved and reached 83 percent of the 2019 quarterly average level.

Among the larger markets, Chennai, Bengaluru, and National Capital Region (NCR) recorded highest recovery in third quarter 2021 with transactions reaching the level of 123 percent, 112 percent and 93 percent respectively of the quarterly average of the year 2019.

The Information Technology sector was the largest consumer of space during the quarter and took up 34 percent of the space transacted. The heightened transaction activity from this sector is an extremely encouraging driver for office demand as it is the most prolific occupier category in the office market. Occupiers also took up nearly 23,500 co-working seats across the eight markets during the quarter, the highest this year, the report said.
Moneycontrol News
first published: Oct 4, 2021 04:21 pm

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