Hyderabad among few Indian cities to see real estate resurgence in Q4
Hyderabad, Pune and Chennai saw a spike in QoQ transacted volumes during Q4 2020 at 459 per cent, 640 per cent, 919 per cent and 227 per cent respectively. Vacancy levels have been the lowest in markets
Hyderabad: Office markets in the top eight cities of India recorded transactions of 22.2 mn sq ft in the July December 2020 period, whereas new completions were recorded at 17.2 mn sq ft in the same period. The transactions grew by a massive 271 per cent in Q4 2020 to 17.5 mn sq ft as against 4.7 mn sq ft in Q3 2020.
Pre-commitments contributed 24 per cent of the total transacted volume of 1.63 mn sq m (17.5 mn sq ft) in Q4 2020, according to Knight Frank India, in its latest report, India Real Estate: H2 2020.
The year began on a high note with office leasing achieving 96 per cent of the quarterly average of 2019 in Q1 2020. However, the government-imposed lockdown to combat the pandemic, led to temporary economic inactivity and translated into a sharp fall in office leasing activities in Q2 2020.
With the return to normality, gross leasing revived to 31 per cent of the quarterly average of 2019 in Q3 2020, eventually surging to a staggering 115 per cent in Q4 2020.
Growth drivers
Bengaluru, Hyderabad, Pune and Chennai saw a spike in QoQ transacted volumes during Q4 2020 at 459 per cent, 640 per cent, 919 per cent and 227 per cent respectively. Vacancy levels have been the lowest in markets such as Hyderabad and Bengaluru.
In terms of the share of sectoral occupiers, information technology (IT/ITeS) sector including data centres dominated with a 41 per cent share in H2 2020, followed by BSFI and manufacturing sectors with 16 per cent each, while other services and co-working sectors recorded 17 per cent and 10 per cent respectively.
Shishir Baijal, CMD, Knight Frank India says, “With the possibility of a viable vaccine being made available soon, occupiers have renewed their search for expansion opportunities as evidenced by the strong transaction activity in Q4 2020.”
Residential sales
The Knight Frank report notes that home sales in India’s top eight cities was recorded at 94,997 units during H2 2020. As the country moved towards normality, residential sales reached almost 54 per cent of the 2019 quarterly average with 33,403 units during Q3 2020 and recovered to almost 100 per cent of pre-Covid levels at 61,593 units in Q4 2020.
Homes priced over Rs 50 lakhs made up approximately 57 per cent of the total sales during H2 2020. While new home launches were lower in H2 2020 by 23 per cent YoY at 86,139 units, Q4 2020 witnessed significant growth of 77 per cent QoQ at 55,033 units.
The second half of 2020 saw a residential sale revival due to certain specific reasons. Firstly, a correction in values made purchase of homes across all major markets highly attractive. Secondly, home loan rates reduced to a multidecadal low which made fence sitters, especially those with sound financials, take advantage and make their purchase. Thirdly, as a direct result of the pandemic, the need and desire to own houses that took care of buyers’ requirements influenced purchase decisions.
The report revealed that sales in the Rs 50 lakhs plus category constituted 57 per cent of all sales in H2 2020 showing a growth trend and leaving behind the affordable category at 43 per cent, as buyers of the affordable category were far more impacted by the pandemic induced economic uncertainties.
Housing launches
New launches were also on the road to revival as most high-volume markets saw developers announcing new projects, since demand trends were seen to be highly encouraging. Both Mumbai and Pune saw an identical 121 per cent QoQ rise in new launches. The leader on the board with over 480 per cent QoQ rise was Hyderabad.
With total launches across the country at 1,46,628 units, launches were lower by 34 per cent YoY in 2020, and while unsold inventory levels improved, sluggish sales velocity in mid-2020 led Quarters to Sell (QTS) to rise to an average of 10.1 quarters.
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