Knight Frank India Real Estate H2 2016

Hyderabad: Knight Frank India today launched the sixth edition of its flagship half yearly report - India Real Estate. It presents a comprehensive analysis of the residential and office real estate market of Hyderabad for the period July to December 2017 (H2 2016).

Key Residential Takeaways:
• New launches witness growth of 3% while sales drop by 6% during H2 2016 compared to H2 2015
• Hyderabad observes decline in new launches and sales by 49% and 21% respectively in 2016; falls from a peak of more than 22,700 units in new launches and 19,000 units in sales during 2012
• Unsold inventory levels drop to its lowest level in the last six years to 28,088 units in H2 2016
• Demonetisation move creates a major dent on the residential market in Q4 2016; sales plunge by 40% to 3,034 units
• West Hyderabad remains the preferred market, largely because buyers have a preference for ready to move in properties closer to the office hubs with 60% of home sales
• Hyderabad’s premium market experiences a substantial 56% YoY de-growth in launches in H2 2016

Key Office Takeaways:
• H2 2016 records one of the highest transaction volumes at 3.2 mn sq ft
• The Hyderabad office market witnesses its highest yearly office space transaction in 2016
• Vacancy ranges between 9–10% on a stock of 57.3 mn sq ft in the Hyderabad market
• New completions remain tepid at 2.2 mn sq ft in H2 2016
• Share of the other services sector drops drastically to 3%, in H2 2016 compared to 39% during the same period in 2015; approximately 130,000 sq ft of space taken up by Red Bricks in Nanakramguda is the biggest transaction in this sector

Speaking about the findings, Gulam Zia, Executive Director - Advisory, Retail and Hospitality, Knight Frank India said “The Hyderabad residential market withered over the last five years after peaking in 2012. While the city observed more than 22,700 units in new launches and 19,000 units in sales during 2012, these numbers have fallen by 49% and 21% respectively since then. The reduction in new launches and relatively stable sales volume helped in rebalancing the market to a great extent as the unsold inventory level dropped to its lowest level in the last six years.

However, demonetisation disrupted the market sentiment and created a major dent on the residential market in Q4 2016 which saw sales plunge by 40%. In terms of micro markets, West Hyderabad attracts most of the development interest in the city, as its residential ethos and proximity to IT/ITeS and BFSI sector hubs such as HITEC City and Gachibowli continue to attract young IT employees that form the bulk of the city’s workforce. We believe that the 2016 would have been marginally better than 2015 had it not been for the demonetisation move, as the sales numbers for the first nine months were showing positive trend.

The Hyderabad office market witnessed its highest yearly office space transaction in 2016. Nearly 6 mn sq ft of office space was transacted during the year, which was 31% higher than the 4.6 mn sq ft mark achieved in 2015. Hyderabad boasts excellent infrastructure, both existing as well as planned. It is also the most affordable residential market among the country’s top seven cities, which has been instrumental in attracting a large talent pool. The recently-unveiled Telangana IT Policy offers a number of incentives for the expansion of the IT/ITeS sector in the state, which will impact Hyderabad positively. The state government is also focusing strongly on attracting new investments to Telangana.”

Link : https://kfcontent.blob.core.windows.net/research/659/documents/en/india-real-estate-july-to-december-2016-4324.pdf