Housing sales may have increased by 14 percent in the first nine months of the year but are yet to reach pre-demonetisation levels. The office segment, on the other hand, witnessed robust 40 percent growth in net absorption during the same period at 33 mn sq ft, according to a new report.
Residential sales failed to touch the levels seen in the pre-demonetisation era, when nearly 120,000 units were sold across the top seven markets, JLL's India Real Estate Market Update Q3 2019 said.
Compared to this, the top seven markets during the January-September period of this year witnessed a sale of around 115,000 units, it said. Mumbai, Bengaluru and Delhi-NCR continued to account for 60 percent of the total sales during the period.
During the July-September quarter of 2019 (Q3), sales momentum remained the same as compared to the corresponding period of 2018. Existing unsold inventory has come down as a result of a steady momentum in sales and drop in launches across the top seven markets, the report said.
The third quarter of 2019 saw a moderate decline in new launches of 4 percent on a year-on-year basis. Except for Mumbai and Delhi NCR, all the other cities witnessed a dip in new launches in the third quarter of 2019. Mumbai and Bengaluru continued to dominate new launches and formed more than 60 percent the overall launches during the quarter.
"The revival seen in housing sales in 2018 has been maintained during 2019 as well. Developers have been focusing on the timely delivery of already launched projects and have been trying to clear their unsold inventory. Since the beginning of the year, several measures including a cumulative 110 bps rate cut have been announced to help the sector revive and grow. While banks are yet to fully transmit the rate cuts by a corresponding reduction in lending rates, this has strengthened consumer sentiment. We hope that developers will be able to register good sales during the festive season," said Ramesh Nair, CEO & Country Head, JLL India.
New launches in mid and affordable segments down
The report also said that developers have continued to concentrate on the mid and affordable segments. However, new launches in these segments came down in most of the cities, mainly attributable to the already existing substantial number of under construction units in these segments.
Office absorption likely to surpass 40 mn sq ft by the end of the year
The office segment witnessed strong leasing, registering a jump of 40 percent during the same period as compared to the corresponding period in the previous year, the report added.
The third quarter has only strengthened the growth narrative set out at the beginning of this year. Nearly 11 mn sq ft of Grade A office space was absorbed during the third quarter (July-September), increasing the overall countrywide net absorption by 40 percent to about 33 mn sq ft in the first nine months of the year. To put things into perspective, 2017 and 2018 witnessed net absorption of 28.7 mn sq ft and 33.2 mn sq ft respectively in the entire year.
With the current pace, the net absorption is likely to surpass 40 mn sq ft by the end of the year.
Hyderabad topped the chart in net absorption and new completions, registering a 36 percent and 44 percent market share, respectively, on the two parameters during the July-September quarter. Bengaluru and Delhi-NCR market followed Hyderabad in net absorption and new completions. At the same time, quality commercial supply continued to be constrained within Mumbai.
“The demand in the office market is expected to grow at a similar momentum for the next few years,” said Samantak Das, chief economist and Head of Research & REIS, JLL India.
Co-working leasing remains muted
As for the leasing in co-working segment, it remained muted during the third quarter of 2019. The space taken up by operators increased to 13 percent of the overall leasing during January to September 2019 as compared to 10 percent seen during the corresponding period the last year, the report said.