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New residential launches come to a standstill in H1 2019; sales continue to decline YoY: Knight Frank Report
Volume of office space transacted in city saw 188% increase (YoY) in H1 2019: Knight Frank Report
Kolkata, July 9, 2019: Knight Frank India today launched the 11th edition of its flagship half-yearly report – India Real Estate. The report presented a comprehensive analysis of the residential (across eight cities) and office (across eight cities) market performance for the period January – June 2019 (H1 2019). The report findings established that the number of residential launches in Kolkata witnessed a massive drop of 90% in H1 2019 to 627 from 6,393 in H1 2018.
Interestingly, in terms of volume office space transactions, Kolkata recorded the healthiest period with year on year growth of 188% to 0.06 mn sq m (0.63 mn sq ft) in H1 2019.
RESIDENTIAL MARKET HIGHLIGHTS OF KOLKATA:
· The number of residential launches in Kolkata dropped by 90% in H1 2019 to 627 from 6393 in H1 2018.
· In H1 2019, housing unit sales also took a dip of 30% and reached its lowest over the past decade to 4,588 from 6,591 in H1 2018.
· Being an end–user driven market, the city–level weighted average residential pricing in Kolkata saw a correction of 2% to cost Rs. 34,735 per sq m (Rs. 3,227 per sq ft) in H1 2019 from Rs 35, 447 per sq m (Rs. 3,293 per sq ft) in H1 2018.
· The unsold inventory declined by 11% YoY in H1 2019 mainly due to curtailing new residential supply in the primary market.
· The Quarters–to–sell (QTS) for Kolkata climbed down from 12.2 in H1 2018 to 11.3 in H1 2019
· Sales in affordable housing projects are picking up momentum in West Kolkata locations such as Howrah, Rishra, Konnagar and Uttarpara. The lower inventory base coupled with good sales traction has led to a low QTS of 6.3 quarters in H1 2019.
· South Kolkata accounted for the maximum share of 34% in residential sales due to good sales traction for the projects in the affordable housing segment. This micro market was followed bNorth Kolkata garnering a share of 21%, Rajarhat at 18%, West Kolkata at 17%, East Kolkata at 9% and Central Kolkata at 1%.
· Residential sales volume particularly remained low in East Kolkata and Rajarhat. On the other hand, the western micro market emerged as an exception to witness an upward sales movement with 22% YoY despite the downturn in the city’s overall sales volume.
Swapan Dutta, Branch Director–Kolkata, Knight Frank India, said, “Slow economic growth and procedural delays have been the major factors that have led to a subdued H1 this year. With launches, sales and even weighted average of residential downsizing, the road to recovery for the Kolkata market looks afar. Restructuring of West Bengal Housing Industry Regulatory Authority and aligning it with the vision of the Central Government could benefit the city‘s real estate market.”
OFFICE MARKET HIGHLIGHTS OF KOLKATA:
· The city recorded massive increase of 188% in volume of office space transacted in city which jumped to 0.06 mn sq m (0.63 mn sq ft ) from 0.02 mn sq m (0.22 mn sq ft) in H1 2018.
· In H1 2019, the vacancy rate in the city recorded at 32% which stood at 31% in H1 2018.
· In H1 2019, the maximum take-up was noted by the information technology and information technology enabled services (IT/ITeS) with a share of 61% of the overall leasing activity.
· In H1 2019, Banking, Financial Services and Insurance sector garnered 35% of the total space transacted in the city, while Manufacturing and Other Services sectors accounted for the remaining 2% each.
· Peripheral Business District-1 (PBD – 1) (Salt Lake City) garnered a 53% share of the total gross leasing pie in H1 2019 and is currently the major employment hub of Kolkata.
· PBD-2 (Rajarhat New Town) held a share of 45% in the overall leasing volume and recorded an increase of 468% (YoY) over H1 2018.
· The weighted average office rentals remained at-par with the 1% growth in H1, 2019 at Rs.393 sq m per month (Rs. 37 sq ft per month) from Rs.391 sq m per month (Rs.36 sq ft per month) in H1 2018.
· Kolkata’s office market comprised an average deal size of 1,726 sq m (18,578 sq ft) in H1 2019 as smaller leasing requirements remained in vogue. However, the number of deals in Kolkata’s office market shot up by 183% from 12 deals in H1 2018 to 34 in H1 2019 which is a good sign as it indicates an increase in occupier demand.
Swapan Dutta, Branch Director–Kolkata, Knight Frank India said, “In Kolkata, the office space demand is largely driven by enquiries for only small sized space take–up and huge office space take–up or transactions above 4,645 sq m (50,000 sq) ft are infrequent. Tenants remain hesitant because of uncertainty in the business ecosystem and in the absence of large IT sector occupiers, it is difficult to attract companies despite low rentals. For the long–term growth of real estate development, the state government is required to bring in more business–friendly policies encouraging and facilitating large corporates to set up base in Kolkata and negate the perception about uncertainty in business ecosystem.“
