Chennai, July 9, 2019:Knight Frank India today launched the 11thedition of its flagship half-yearly report – India Real Estate. The report presents a comprehensive analysis of the residential (across eight cities) and office (acrosseight cities) market performance for the period January – June 2019 (H1 2019). The report findings establish that the number of residential launches in Chennai increased by 19% in H1 2019 to 7,762from 6,523 in H1 2018. The housing units sold saw an increase of 5% in H1 2019 to 8,979from 8,585in H1 2018.
Chennai’s office market witnessed 6% increase in volume of office space transacted in H1 2019 to 0.2mnsq m (1.9mnsqft) from 0.2mnsq m (1.8 mnsqft) in H1 2018.Increased co-working activity is driving office space absorption in H1 2019 and has contributed to the growth in share of the Other Services sector, from 34% in H1 2018 to 61% in H1 2019.
RESIDENTIAL MARKET HIGHLIGHTS OF CHENNAI:
• Launches grew by 19% year-onyear (YoY) during H1 2019on the back of the Tamil Nadu Combined Development Regulations (TNCDR) and Building Rules, 2019 notification of February 2019. Of the total launches, 74% belong to the sub-5 mn category.
• Sales sawa modest growth of 5% YoY in H1 2019 on the back of the demand for affordable housing units.
• Residential prices have corrected by 3% (YoY) in H1 2019 to INR 47,110/sq m (INR 4,377/sqft) from INR 48,567/sq m (INR 4,512/sqft) in H1 2018
• Unsold inventory came down by 21% (YoY)in H1 2019 to 17,810 housing units from 19, 027 housing units in H1 2018. Suppressed launches in 2018 result in a net decrease in unsold inventory.
• The Quarters-to-sell (QTS) level also trended slightly lower for the same reason and stood at 4.5 at the end of H1 2019.
• The present water crisis in Chennai has been slowing down construction activity and could eventually result in six-to-nine-month project delays.
Joseph Thilak, Senior Director – Occupier Solutions, Chennai, Knight Frank Indiasaid, “The Chennai residential market is showing modest signs of recovery with a considerable growth in launches and a slow but steady momentum in sales. The ‘rightsizingandrightpricing’ trendisareflectionofprevalentmarketneeds, mostly the sub-5 mn category, and is asignificantboosttotheaffordablehousingsegment. Theongoingwatercrisisis,atpresent,thebiggestchallengefordevelopers.”
OFFICE MARKET HIGHLIGHTS OF CHENNAI:
• The Chennai office market recorded 6%(YoY) growth in transactions,a positive growth for the first time since H1 2017.
• Supply crunch continues as office space completions recorded a 76% drop YoY in H1 2019.
• Weighted average rentals remainedsteady at a modest 3.5 % YoY growth across the market.
• Stable demand from Chennai occupiers has helped keep vacancy levels steady at 10.2% for H1 2019.
• The demand for co-working spaces in Chennai has significantly increased in the last one year and as of H1 2019, co-working holds a 24% share in the total transactions pie of Chennai office market as compared to a mere 3% in H1 2018.
• Three of the top five transactions, in terms of transacted area in H1 2019, are by co-working players, bringing to light the fact that these players are,at present, major drivers of office space absorption in Chennai.
• Share of IT/ITeS sector’s office space consumption declined to 29% in H1 2019 after a brief recovery in H2 2018 while BFSI sector accounted for only 2% of the office space transacted during the period.
Joseph Thilak, Senior Director – Occupier Solutions, Chennai, Knight Frank Indiasaid, “The Chennai office market is showing definite signs of market stability. Transaction numbers have seen a positive growth for the first time since H1 2017. Increased activity in the co-working industry has significantly contributed to the growth of Chennai’s office market. However, inadequacy of quality supply continues to remain the biggest challenge.”