Residential sales grows by 61% YoY in 2021; records sales of 38,030 housing units during the year: Knight Frank India

Emerges as the second largest residential market in the country in 2021

Bengaluru witnesses 71% of office leasing activity in second half of 2021; annual leasing holds steady at 12.23 mn sq ft: Knight Frank India

Achieves highest transacted volumes in a half-yearly period in H2 2021

Mumbai, January 5 2022: In a year marred by pandemic and lockdown, Bengaluru has shown resilience in the performances of both office and residential asset classes during the year 2021. In their latest report, Knight Frank India noted that Bengaluru’s commercial market has maintained its supremacy with decadal high share of 32% of the total office volume transactions in the country in the CY2021. The total office transactions for the calendar year 2021 stood at 12.23 mn sq ft. New completions in 2021 for office space was recorded at 11.94 mn sq ft, higher by 27% over the preceding year. Residential Sector had an unprecedented year of growth with sales rising by 61% year on year (YoY) to be recorded at 30,030 housing units. New launches also saw a significant rise of 54% YoY with the addition of 30,607 units in 2021.

Knight Frank India today launched the 16^th edition of its flagship half-yearly report – India Real Estate: H2 2021 – which presents a comprehensive analysis of the residential and office market performance across eight major cities for the July-December 2021 (H2 2021) period. The report highlights that Bengaluru witnessed 8.7 mn sq ft of office space transactions in H2 2021 out of which 4.4 mn sq ft were leased in Q4 2021. This scripts a remarkable office market recovery in H2 201 on account of transacted volumes being the highest ever for any half-yearly period.

On the aspect of rentals, though the city witnessed a decline of 9% in 12-month period, the average transacted rent value moved up by 1% in 6-month period, again exhibiting the resilience of the office assets in H2 2021. The Information Technology sector continued to be main driver for the Bengaluru office market. With transaction share of 39%, Business district of Outer Ring Road continues to be the dominant office market in the city.

Even in the residential performance, Bengaluru remained at the forefront by recording a strong surge of 104% (YoY) in home sales for the period July-December 2021. The city witnessed sales of 23,218 housing units in H2 2021 from which 11,881 were home sales in Q4 2021. The total number of home sales in the CY 2021 was seen at 38,030 units, making Bengaluru the second largest residential market in the country. The average price was reported to be INR 5,150 per sq ft.

South Bengaluru remained the largest market accounting for 38% sales. North Bengaluru recorded the fastest sales growth of 134% YoY during H2 2021. With the preference of bigger apartments, mid and high-end (INR 5 mn and above) constituted 68% of the homes sales in H2 2021.

OFFICE MARKET UPDATE: H2 2021 (JULY – DECEMBER 2021)

• Despite the headwinds of pandemic and recent Omicron worries that delayed return to office, Bengaluru maintained its supremacy in India office transactions. Marking a phenomenal recovery, the office market in Bengaluru recorded a 15% YoY increase in leasing activities taking the total to 8.7 mn sq ft in H2 2021.
• Recovering from the initial pandemic hiccups, construction activity across projects is back to normal levels. Strong completions of 11.9 mn sq ft, second highest level in a decade, has been delivered in 2021 marking an increase of 26.7% YoY.
• ORR continues to be the dominant market with 39% transaction share followed by PBD North, PBD East and SBD at 17%, 15% and 15% respectively during H2 2021. With increased deal activity in Hebbal, Yelahanka and Thanisandra Road, the PBD North business district has seen its share increasing meaningfully compared to past periods.
• The need for flexibility in workspace strategy, a key feature associated with co-working spaces, has ensured that this occupier group accounted for 19% of transactions in 2021 – a significant jump over the 12% share during 2020. In Q4 2021 particularly, co-working operators took up 42% of space, buoyed by the strong interest shown by their enterprise clients. The Information Technology sector, which is the main driver for the Bengaluru office market taking up 39% transactions share throughout the year, continues to enjoy robust business momentum.

BENGALURU OFFICE MARKET SUMMARY

Note: 1. 1 square metre (sq m) = 10.764 square feet (sq ft)

Source: Knight Frank Research

Shantanu Mazumder, Executive Director – Bengaluru at Knight Frank India said, “Bengaluru’s commercial market activity has seen a positive upswing in the last two quarters of the year. The city is the preferred commercial hot spot for the office occupiers in the country.  Preparing for manpower and infrastructure capabilities to secure global IT projects, the Indian IT sector made record hiring amid the pandemic, and this will serve as dry powder for office demand when the Omicron uncertainty subsides.”

RESIDENTIAL MARKET UPDATE: H2 2021 (JULY – DECEMBER 2021)

BENGALURU RESIDENTIAL MARKET SUMMARY

Note: 1 square metre (sq m) = 10.764 square feet (sq ft)

Source: Knight Frank Research

Source: Knight Frank Research

• Residential market which saw a strong period of Q1 got temporarily impacted in Q2 owing to the play out of the second wave of COVID-19. Moving into H2 2021, the rapid scale up of vaccination drives led to sales growth of 131% and 83% YoY in Q3 and Q4, respectively.
• On the back of a strong second half performance, Bengaluru residential market witnessed a 61% YoY jump in sales to 38,030 units in CY 2021. Launches improved by 54% YoY to 30,607 units in 2021 as developers launched new projects, buoyed by strong end user demand and reducing inventory position. In H2 2021, launches improved 89% YoY to 17,218 units.
• With improved demand supply dynamics in the market and a positive homebuyer outlook, the average price level increased by 4.4% YoY during Q4 2021.
• South Bengaluru remained the largest market accounting for 38% sales followed by North at 30% and East at 26% in H2 2021. However, North Bengaluru recorded the fastest sales growth of 134% YoY during H2 2021. South and East micro-markets saw growth of 127% and 59% respectively.
• Mid and high-end ticket size segments (INR 5 mn and above) saw their share rising from 65% in H2 2020 to 68% in H2 2021 as consumers preferred bigger apartments and better projects to accommodate increased space and lifestyle requirements.

Shantanu Mazumder, Executive Director – Bengaluru at Knight Frank India said, “We observe that Omicron related developments towards the end of Q4 2021 have thus far not had any material influence on home buyer decision making, and sales momentum across segments remains strong. Mid and high-end ticket size residential products were the preferred choice of the homebuyers.

Although the price increase was broad based across ready and under construction properties, it was more prominent in new project launches. With sales level ahead of launches in each successive year since 2015, unsold inventory has fallen to its lowest level in the last 10 years.”