Home sales in Bengaluru see 10% YoY rise in 2019 while launches rise by 23%: Knight Frank

Bengaluru, January 07, 2020: Knight Frank India today launched the 12th edition of its flagship half-yearly report - India Real Estate: H2 2019 - which presents a comprehensive analysis of the residential and office market performance across eight major cities for the July-December 2019 (H2 2019) period. The report showed that home sales has saw a 10% rise to 48,076 units in 2019, While the home launches in Bengaluru increased by a healthy 23% to 33,772 units. The city also experienced a rise in the weighted average prices for the city by approximately 6% Y-o-Y.

Bengaluru retained its premier position across the top eight cities of India in office leasing in 2019, registering a volume of 1.42 mnsq m (15.25 mnsqft) and accounting for a 25% share of the overall leasing volumes across these markets. It also registered the highest leasing volume in the past decade in 2019. New office supply in the city managed to outpace leasing, albeit marginally, for the first time in the past nine years at 1.49 mnsq m (16.05 mnsqft).

Home launches in Bengaluru increased by a healthy 23% YoY to 33,772 units in 2019, and by 9% to 12,878 units in H2 2019.

·         Homes with ticket sizes of INR 2.5–5.0 million (INR 25-50 lakh) garnered 45% share of the total new launches in H2 2019, as developers adapt to homebuyers becoming increasingly price sensitive post regulatory restructuring.

·         South Bengaluru garnered the maximum share of 37% in the total launch pie in H2 2019 as a number of residential projects were launched in peripheral locations.

·         Home sales in Bengaluru sales increased by 10% to 48,076 units in 2019, and by a similar clip to 19,851 units in H2 2019.

·         South Bengaluru saw the highest quantum of homes sold in H2 2019 followed by East Bengaluru.

·         As buyers remain wary, ready-to-move-in inventory gained traction, which also resulted in heightened enquiries for products with ticket sizes less than INR 5.0 million (INR 50 lakh).

·         Weighted average home price across Bengaluru rose by 6% YoY and stood at INR 53,572/sq m (INR 4,977/sqft).

·         Unsold inventory in Bengaluru reduced by 15% YoY to 78,414 units in H2 2019 on healthy sales momentum in ready projects, right price tag and developer focusing on clearing unsold stock.

·         The quarters-to-sell (QTS) for Bengaluru scaled down to 7 quarters in 2019, from 10.3 quarters in 2018, which is indicative of a healthy market moving towards recovery.

Shantanu Mazumder, Senior Branch Director, Bangalore, Knight Frank India, said, “The momentum of home sales was slow in H1 2019 due to lack of clarity on the new GST rates for under-construction projects, but as the dust settled, buyer sentiments seem to have improved in H2 2019. The focus of home buyers is largely skewed towards projects that are either ready to occupy or nearing completion as they find it difficult to contribute towards both – home rental expenses and home loan EMIs. Affordable housing will be the preferred route for developers in 2020 as well, backed by several government initiatives. The QTS has improved in 2019, and with homes below INR 50 lakh gaining greater traction, the QTS is expected to fall further, leading to further recovery in the market."

Office leasing in Bengaluru in 2019 was the highest in the last decade at 1.42 mnsq m (15.25 mnsqft) registering a 13% YoY growth. The city noted 0.65 mnsqft (6.98 mnsqft) of leasing volume in H2 2019, clocking a marginal 1% YoY rise.

·         Bengaluru retained its top position across the top eight cities of India in office leasing in 2019, accounting for a 25% share of the overall volume.

Outer Ring Road (ORR) market, comprising areas such as Hebbal ORR, Marathahalli ORR and Sarjapur Road ORR, remained the most preferred office destination accounting for 51% of the total leasing volume in H2 2019.

·         Bengaluru’s office market registered an average deal size of 5,249 sq m (56,503 sqft) in H2 2019, denoting a YoY decline of 14%; although the number of office transactions jumped by 73% to 123.

·         IT/ITeS sector continued to dominate the gross leasing activity in H2 2019, accounting for a 51% share.

·         Co-working sector's share in overall leasing activity increased to 9% in H2 2019 on the back of robust demand from established as well as new co-working operators.

·         New office supply in the city in 2019 managed to outpace leasing, albeit marginally, for the first time in the past nine years at 1.49 mnsq m (16.05 mnsqft).

·         Outer Ring Road (ORR) and Peripheral Business District (PBD) East accounted for about 40% and 33% share of total supply, respectively.

·         With substantial growth in new completions, Bengaluru's vacancy level increased marginally from 4.3% in H2 2018 to 4.8% in H2 2019, redirecting the downward trend that was prevailing for the last two years.

·         Weighted average monthly office rentals in Bengaluru saw a steady 8% YoY growth in H2 2019 to INR 861/sq m/month (INR 80/sqft/month).

Shantanu Mazumder, Senior Branch Director, Bangalore, Knight Frank India, said, "Bengaluru has been one of the top office markets not only in India but in the entire Asia Pacific region. The large quantum of new supply in the city is expected to ease the limited vacancy levels of certain micro-markets and also support the strong occupier demand. Bengaluru's office rental values have been on a steady rise given that occupiers are ready to pay premium rental rates for quality office spaces in Grade A buildings. While more supply will be infused in the forthcoming periods, demand is expected to keep gross leasing positive as the information and technology sector continues to grow."


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