NE BUSINESS BUREAU
AHMEDABAD, JULY 16
Housing sales in Ahmedabad declined 69 percent during January-June period to 2,520 units from 8,212 units – the lowest in 10 years – as demand crashed after the imposition of the coronavirus pandemic-led lockdown late March, according to property consultant Knight Frank.
Office transactions in Ahmedabad saw a 16% YoY decline to 0.5 mnsqft in H1 2020. The city also saw a decline of 2% YoY to 2.6 mnsqft in new office completions. The Ahmedabad market has reported a decrease in the weighted average transacted rental by approximately -12% YoY in H1 2020. One deal leased at Vejalpur accounted for 41% of the entire area transacted during H1 2020, the report added.
Knight Frank India on Thursday launched the 13th edition of its flagship half-yearly report – India Real Estate: H1 2020 – which presents a comprehensive analysis of the office and residential market performance across eight major cities for the January-June 2020 (H1 2020) period.
Balbirsingh Khalsa, National Director – Industrial & Logistics, Knight Frank India said, “Ahmedabad office market is still evolving, compared to cities like Mumbai, Bengaluru, and NCR. With the necessary physical infrastructure in place, developers have committed to meet the requirements of companies either moving into the city or expanding their existing presence. However, the COVID-19 pandemic has caused vacancy to spike, and weakened occupier sentiment has depressed transacted rentals during H1 2020. The intensity of the pandemic will define a market trajectory in times to come.”
The report stated that the home sales in Ahmedabad residential market had witnessed a decline of 69% YoY to 2,520 units in H1 2020. Whereas, the home launches in Ahmedabad saw a 23% YoY decline to 2,627 units. The city also experienced a marginal decline in the weighted average prices to 1.9% YoY. Sales fell across micro-markets in Ahmedabad during H1 2020 with the steepest fall observed in the south at 84% YoY and north at 66%.
In its flagship report – India Real Estate: H1 2020 – released on Thursday, Knight Frank India said that housing sales in eight major cities of the country cities – Delhi-NCR, Mumbai, Kolkata, Chennai, Bengaluru, Pune, Hyderabad, and Ahmedabad -declined 54 percent during January-June period to 59,538 units while housing sales fell 27 percent in January-March to 49,905 units. The sales plunged 84 percent in April-June to 9,632 units as the lockdown affected demanded badly. Delhi-NCR, Chennai and Hyderabad had near-zero sales during the second quarter of the calendar year.
When asked “Even after 3 months, all malls still remain closed in Ahmedabad. Rental rates have come down drastically. Will it become normal by November or Diwali?”, Balbirsingh Khalsad. National Director Industrial & Logistics and Branch Director – Ahmedabad, said, “In the short run malls are seeing a shift towards pure revenue share models with retailers. Retailers in turn are tapping the customer base of their existing stores through strict social distancing measures, focussed sales slots, and even using e-sales channels to drive sales.
In China, UK, and other European countries, with tapering of COVID-19 cases, customers have returned back to malls. Consumer demand in Ahmedabad remains robust. Hopefully, as the COVID-19 situation normalises across Ahmedabad, malls should regain footfall and sales.”
“After two years of steady demand, the home sales in top eight cities of India declined by a significant 54 per cent year-on-year (YoY) to a decadal low of 59,538 units during H1 2020 with sales mostly concentrated in the first quarter of calendar year,” Knight Frank India said.
Housing sales in H1 of 2019 stood at 1,29,285 units.
New home launches reported a drop of 46 percent to 60,489 units during the January-June period of this year.
The weighted average prices have also fallen across most cities in H1 2020 with NCR, Pune and Chennai saw the most correction at 5.8 percent YoY, 5.4 percent YoY, and 5.5 percent YoY, respectively.
Information technology sector driven markets of Hyderabad and Bengaluru witnessed price growth of 6.9 percent and 3.3 percent during the same period.
About 47 percent of home sales in January-June 2020 were in below Rs 50 lakh pricing category.
Knight Frank India CMD Shishir Baijal said, “The residential real estate sector which was already going through a rough patch has got severely hit by the current crisis. With income uncertainty for the future, demand for housing will take a hit.”
While the Reserve Bank of India (RBI) has announced much-required liquidity injecting measures and cut in policy interest rate, there is an urgent need for the government to come up with some demand boosting measures for the real estate sector, he added.
“As the second moratorium period ends in August, we hope that the government will make positive interventions such as the one-time restructuring of loans for developers as well as the extension of the moratorium for retail loans (at least for home loans) to ensure liquidity and low defaults,” Baijal said.
According to the data, housing sales in Delhi-NCR fell 73 percent to 5,446 units during January-June 2020 from 19,852 units in the corresponding period of the previous year.
Sales in Chennai fell 67 percent to 2,981 units from 8,979 units, while Bengaluru saw a 57 percent decline to 12,177 units from 28,225 units.
Mumbai witnessed a decline of 45 percent to 18,646 units from 33,731 units and Pune saw a fall of 42 percent to 10,049 units from 17,364 units.
Sales in Hyderabad were down 42 percent at 4,782 units from 8,334 units, while demand in Kolkata went down by 36 percent to 2,937 units from 4,588 units.
Rajani Sinha, Chief Economist, and National Director, Research, Knight Frank India said, “Given the economic uncertainties, consumers are hesitant to commit to a big-ticket purchase like housing. Launches have also got hit as the developers struggle with supply bottlenecks in the form of labour, raw material, and credit availability.”
While the quoted residential prices have fallen marginally, the effective price fall is in the range of 8-12 percent and even more in some cases, if we take into account the indirect discounts being offered, she said.
