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Knight Frank India Residential launches witness a comeback in Chennai in H1 2018


Chennai, July, 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).

Office Takeaways:

  • 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 

Residential Takeaways:

  • 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.”

 

 

 

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