chennai press release - knight frank india real estate (jan-jun 2017)
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News Release
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Chennai residential market overcomes demonetisation gloom: Knight Frank India
Chennai, July 5, 2017: Knight Frank India today launched the seventh 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 2017 (H1 2017).
Residential Takeaways:
2017 began on a positive note with sales and launches seeing a modest recovery
A significant chunk of new launches took place below INR 50 lakh – indicating an emphasis
on the affordable housing sector
The share of projects launched with an average ticket size under INR`50 lakh has expanded
from 39% in H1 2016 to 69% in H1 2017, while the share of those projects with average
ticket sizes under INR75 lakh has grown from 52% to 89% during the same period
Pallavaram, Mahindra World City, Siruseri, Pudupakkam, Navalur, Thalambur and
Shollinganallur in South saw maximum developments
Southern and western Chennai together accounted for a massive 96% of the residential
products coming online during H1 2017
Unsold inventory levels have plummeted nearly 30% over the last 2 years to 28,110 unit
Residential price growth has been weakening in the Chennai residential market and H1 2017
prices were in line with this trend, growing by a modest 1% YoY.
Chennai market trends – Half-yearly
Source: Knight Frank Research
3,900
4,100
4,300
4,500
4,700
4,900
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2,000
4,000
6,000
8,000
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12,000
H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017
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sq f
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Launches Absorption Wt. Avg. Price (RHS)
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Office Takeaways:
Lack of viable office supply continues to hamstring the market – transactions drop 4% YoY in
H1 2017
Despite three-fold increase in new completions it is much below the market appetite
Vacancy levels plummet to 10.8% in H1 2017 on account of low supply of quality office
spaces
TheIT/ITeS sector continues to be the largest consumer in the Chennai office space market
and accounted for 0.7 mn sq ft of office space transactions in H1 2017.
The OMR attracted 55% of the demand during H1 2017 as occupiers took up space in the
relatively lower priced SBD OMR, PBD OMR and GST business districts
The PBD OMR and GST business districts that had vacancy levels as high as 50% at the end of
2015, has seen this number steadily come down under 20% in H1 2017
Rentals grew by 6% during H1 2017. The PBD OMR business district saw the strongest rental
growth at 8%
Chennai office space stock and vacancy levels – half yearly trend
Source: Knight Frank Research
Speaking about the findings, Kanchana Krishnan, Director – Chennai said, “2017 began on a positive note with sales and launches seeing a modest bounce back. A 14% growth in sales during H1 2017 compared to the preceding period clearly indicates the transient impact of the demonetisation drive. Increasing commercial office space demand is a good indicator for employment growth in any region and points at increasing incomes and a consequent requirement of new housing units for the growing workforce. A deeper analysis of the ticket size split of units launched since H1 2016 clearly depicts a strong supply-side response to the changing tastes of
0%
5%
10%
15%
20%
25%
30%
0
10
20
30
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50
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2014 H1 2014 H2 2015 H1 2015 H2 2016 H1 2016 H2 2017 H1
mn
sq
ft
Stock Occupied Stock Vacancy
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consumers as developers have progressively increased launches in lower ticket sizes over the past three periods. While the city’s residential market has overcome the demonetisation gloom, it remains to be seen if the current bounce is the beginning to a more sustained recovery.
The Chennai office space market could not maintain the momentum in transactions that it had gained over the last three analysis periods that culminated with H2 2016 experiencing the highest transaction volumes in history. Paucity of quality office space caused the current period to witness a drop in transaction activity with H1 2017 recording 1.9 mn sq ft of transactions while only 1.1 mn sq ft of new office space came online. While the IT/ITeS sector continues to be the largest consumer in the Chennai office space market, the market has seen a rise in share from BFSI and other services sectors. However, the share of IT/ITeS and manufacturing sectors has dipped in H1 2017 since most built-to-suit deals are scheduled for 2019.”
About Knight Frank Knight Frank LLP is the leading independent global property consultancy. Headquartered in London, Knight Frank has more than 14,000 people operating from 413 offices across 60 countries. The Group advises clients ranging from individual owners and buyers to major developers, investors and corporate tenants. For further information about the Company, please visit www.knightfrank.com.
In India, Knight Frank is headquartered in Mumbai and has more than 1,000 experts across Bangalore, Delhi,
Pune, Hyderabad, Chennai, Kolkata and Ahmedabad. Backed by strong research and analytics, our experts
offer a comprehensive range of real estate services across advisory, valuation and consulting, transactions
(residential, commercial, retail, hospitality, land & capitals), facilities management and project management.
For more information, visit www.knightfrank.co.in.
For further information please contact:
Aanchal Shetty (Knight Frank) AVP - Corporate Marketing & Communication +91 99305 42661 [email protected]
Daniel Rabe +91 9500055980 [email protected]