Residential unit sales, office transactions in Ahmedabad recover in second half of 2020: Knight Frank India

NE BUSINESS BUREAU

AHMEDABAD, JAN 6

Stating that there has been a stamp duty reduction by the Maharashtra Government that has resulted in better results in Mumbai without any loss to the govt, as the reduction has been compensated by the rising numbers in sales, the association of the developers can initiate such talks with the Government of Gujarat to replicate the same in the state, a senior official of the company said.

Residential unit sales and office transactions in Ahmedabad recovered by 58 percent and 66 percent, respectively, in the second half of 2020 compared to the first half, according to a report by Knight Frank India.

Knight Frank India today launched the 14^th edition of its flagship half-yearly report – India Real Estate: H2 2020 – which presents a comprehensive analysis of the residential and office market performance across eight major cities for the July-December 2020 (H2 2020) period.

The residential unit sales and office transactions also saw a significant improvement during the fourth quarter of 2020 compared to the previous quarters of the year in Ahmedabad, which emerged as the most affordable market among the top-8 cities in India, as per the report released on Wednesday.

However, annually, sales of residential units and office transactions registered a decline of 61 and 15 percent, respectively, in 2020, said the international property consultant in the report.

Compared to the first half of 2020, launches of new residential projects improved 81 percent in the second half of the year, even though annual launches of new projects declined 36 percent to 7,372 as compared to 11,487 launches in 2019, said the report.

As for office transactions, due to the coronavirus-induced lockdown, completion of new projects witnessed a slight dip of three percent in the second half of 2020 to 2.5 million square feet, compared to 2.6 million sq ft in the first half, it said.

However, compared to 2019, 2020 saw a five percent jump in completion of office spaces, it said.

Half-yearly sales of residential units recovered 58 percent in the second half of 2020 to 3,986 units, compared to 2,520 units in the first half of 2020.

The sales had dropped 70 percent in the first half of 2020 as compared to the second half of 2019, it said.

At the same time, annual sales in 2020 declined considerably to 61 percent to 6,506 units compared to 16,713 units in 2019.

But, the share of affordable housing sustained to 31 percent in the second half of 2020, compared with 27 percent in the year-ago period, it said.

Recovery in sales of residential units can be due to improving business environment, visibility of vaccines, low home loan rates, and price discounts, said the report.

Stamp duty cuts like the one applied by the Maharashtra government could have further improved sales, it added.

“While Ahmedabad is the most affordable market among the top-8 cities, residential demand has still been adversely impacted by the loss of livelihood and the threat of potential income disruption,” said Knight Frank India Branch Director (Ahmedabad) Balbirsingh Khalsa.

He, however, added that the resumption in business activity, low home loan rates, and aggressive negotiations by developers have caused a significant pick-up in demand towards the end of the year.

Responding to a query on stamp duty reduction, Balbirsingh Khalsa said, “There has been a stamp duty reduction by the Maharashtra Government that has resulted in better results in Mumbai without any loss to the govt, as the reduction has been compensated by the rising numbers in sales. The Government. of Gujarat should also look into this, and replicate the same at least for the next 6 months (Jan to June 2021) till the numbers improve. The association of the developers can initiate such talks with the Government of Gujarat.”

In terms of office transaction, there was a 15 percent annual decline to 1.3 million square feet in 2020, compared with 1.5 million sq ft a year ago.

At the same time, the city registered a recovery of 66 percent in transactions in the second half of 2020 compared to the first half, even though it remains lower compared to the second half of 2019, said the report.

Quarterly also, the fourth quarter of 2020 witnessed a spike in transaction compared to the first three quarters, riding on latent demand.

Lockdown increased office vacancy rate to 45 percent in 2020; and with this, the rent dropped to Rs 41.1 per sq ft compared to Rs 43 per sq ft, it said.

OFFICE MARKET HIGHLIGHTS OF AHMEDABAD

QUARTER SNAPSHOT

        Source: Knight Frank Research

RESIDENTIALMARKET HIGHLIGHTS OF AHMEDABAD

QUARTER SNAPSHOT

        Source: Knight Frank Research