Knight Frank India Report Launch (January- June 2019)

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(from left) Mr. Swapan Dutta, Branch Director Kolkata, Mr. Sougata Roy, Senior Director & Mr. Manavendra Bhowmick, AVP, Operations & Facilities Management of Knight Frank India were at the H1 Report launch of Knight Frank India.
(from left) Mr. Swapan Dutta, Branch Director Kolkata, Mr. Sougata Roy, Senior Director & Mr. Manavendra Bhowmick, AVP, Operations & Facilities Management of Knight Frank India were at the H1 Report launch of Knight Frank India.

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 188increase (YoY) in H1 2019Knight Frank Report

Kolkata, July 9, 2019: Knight Frank India today launched the 11th edition of its flagship half-yearly report – India Real EstateThe 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 30and reached its lowest over the past decade to 4,588 from 6,591 in H1 2018.

· Being an enduser driven market, the citylevel weighted average residential pricing in Kolkata saw a correction of 2to cost Rs34,735 per sq m (Rs. 3,227 per sq ft) in H1 2019 from Rs 35, 447 per sq m (Rs. 3,293 per sq ftin H1 2018.

· The unsold inventory declined by 11YoY in H1 2019 mainly due to curtailing new residential supply in the primary market.

· The Quarterstosell (QTSfor 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 UttarparaThe 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 34in residential sales due to good sales traction for the projects in the affordable housing segmentThis micro market was followed bNorth Kolkata garnering a share of 21%, Rajarhat at 18%, West Kolkata at 17%, East Kolkata at 9and 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 22YoY despite the downturn in the city’s overall sales volume.

Swapan Dutta, Branch DirectorKolkata, Knight Frank India, said, “Slow economic growth and procedural delays have been the major factors that have led to a subdued H1 this yearWith launches, sales and even weighted average of residential downsizing, the road to recovery for the Kolkata market looks afarRestructuring of West Bengal Housing Industry Regulatory Authority and aligning it with the vision of the Central Government could benefit the citys 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 DirectorKolkata, Knight Frank India said, In Kolkata, the office space demand is largely driven by enquiries for only small sized space takeup and huge office space takeup or transactions above 4,645 sq m (50,000 sq) ft are infrequentTenants 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 rentalsFor the longterm growth of real estate development, the state government is required to bring in more businessfriendly policies encouraging and facilitating large corporates to set up base in Kolkata and negate the perception about uncertainty in business ecosystem.