Volume of office space transacted in the city saw 6%increase (YoY)in H1 2019:Knight Frank Report
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.”
About Knight Frank:
Knight Frank LLP is the leading independent global property consultancy. Headquartered in London, Knight Frank has more than 18,170 people operating from over 523 offices across 60 markets. These figures include Newmark Grubb Knight Frank in the Americas, and Douglas Elliman Fine Homes in the USA. 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 http://www.knightfrank.co.in/
