Indian Residential Market Grew 84% in Q4 2020: Knight Frank India

outh of Gurgaon – Reasons For Market’s Appeal As Residential Destination

The year 2020 will forever be known for the COVID-19 pandemic and the challenges it threw at us. However, 2020 will also be recognised as the year the Indian real estate industry showed a lot of resilience in the face of these challenges. A number of government-driven initiatives were certainly helpful in doing so. The H2 2020 India Real Estate report by Knight Frank India, a leading international property consultancy, highlights the increase in sales in the country’s main residential markets. Similarly, the office market also performed stunningly despite the initial period of inactivity following the imposition of lockdown measures.

Residential Market Performance

The 14th edition of Knight Frank India’s flagship half-yearly report provides insight into the residential and office market across 8 Indian cities. According to the report 95,000 residential units were sold in H2 2020 across the country’s top 8 cities. 61,593 units were sold in Q4 2020 as against 33,403 units during Q3 2020, thus recording 54% QoQ growth and achieving a recovery of almost 100% of pre-COVID levels. Almost 57% of the sale of homes in H2 2020 were made up by homes priced above Rs. 50 lakhs.

Residential Performance of MMR
Residential Performance of MMR (Source: Knight Frank India)

In the Mumbai Metropolitan Region (MMR), a number of factors contributed to this city’s residential market recording a growth of 10% YoY to 30,042 units in H2 2020. A reduction in Stamp Duty combined with the historic lows of interest rates on home loans as well as a host of discounts and offers propelled this surge. Demand fuelled by the festive season also helped fuel the rise in demand. An interesting observation has been the growth in demand for bigger homes driven by the fact that people now find themselves needing the additional space due to the changed dynamic of working from home.

Gulam Zia, Executive Director – Valuation & Advisory, Retail & Hospitality, Knight Frank India said, “The stamp duty cut has emerged as an undisputed win-win situation for all stakeholders. Homebuyers in the mid and higher income groups have made most of this lower stamp duty window with relatively expensive markets of MMR and luxury segments recording the highest jump in sales after the cut. We believe that this momentum is likely to continue till the lower stamp duty regime exists.”

Office Market Performance

According to this latest report the office market in the top eight cities recorded transactions of 22.2 mn sq ft in the July – December 2020 period. While there was temporary inactivity in Q2 due to the lockdown, as normalcy returned gross leasing revived to 31% of the quarterly average of 2019 in Q3 2020, eventually surging to a staggering 115% in Q4 2020. 

Performance of India Office Market
Performance of India Office Market

The office transactions in Q4 2020, across 8 Indian cities, grew by a massive 271% to 17.5 mn sq ft as against 4.7 mn sq ft in Q3 2020. Bengaluru, Hyderabad, Pune and Chennai contributed to this surge with transacted volumes of 459%, 640%, 919% and 227% respectively. Across H2 2020 Bengaluru saw a surge of 8% YoY to 7.5 mn sq. ft. in leasing activities.

On the other hand, while Mumbai’s residential market performed relatively well, its office market witnessed a very tepid year on the whole. This was expected as 2019 was an exceptionally good year which saw record high transactions of office leasing. However, despite a very slow year, H2 2020 saw business districts like BKC and off-BKC witness growth in leasing volumes of 32% YoY to 0.3 mn sq ft, while Central Mumbai, comprising Parel, Lower areas, Parel, Dadar, Prabhadevi witnessed growth of 24% YoY to 0.09 mn sq ft registered growth.

Rajani Sinha, Chief Economist and National Director Research, Knight Frank said “There has been a very strong resurgence in office demand in Q4 2020, despite most corporates adopting to Work From Home during the pandemic. Going forward, as things return to normalcy, corporates will experiment with hybrid work models. So even while they give more flexibility to the employees to work from anywhere, that will not result in lower office demand.”

Knight Frank Affordability Index
Knight Frank Affordability Index (Source: Knight Frank India)

Specific takeaways from the H2 2020 India Real Estate report by Knight Frank India:

  • The government’s various policy interventions helped revive the real estate sector. These initiatives include the cut in repo rates, extension of RERA timeline, one year extension for NBFC loans to commercial real estate projects in select cases, and more specifically the reduction in stamp duty in Maharashtra.
  • Across markets, in home sales, Mumbai and Pune lead the way with the highest volume of sales driven in large part due to the stamp duty cut in the state.
  • The mid and high-end segments performed much better as the perception of bigger homes grew. With more people working from home the appreciation for additional space has grown.
  • There has been a further correction in prices across most markets with Mumbai and Pune witnessing the biggest 4 year changes at -16% and -17%, respectively.
  • Home loan rates are at a multi-decade low while Knight Frank’s affordability index is at the best decadal level. 
  • In the office sector, there has been a resurgence in office demand despite remote working gaining prominence. Pre-commitment activity remains strong.
  • QoQ office transactions improved across markets with Bengaluru, Hyderabad, Pune and Chennai witnessing 459%, 640%, 919% and 227% growth, respectively.

Extension and the addition of New Lines to Namma Metro – Phase 2

On 20 October 2011, the first Bangalore metro line ran from Baiyyappanahalli to Mahatma Gandhi Road for a distance of 6.7 kilometers heaved a sigh of relief. After hearing so much about Delhi, Kolkata, Mumbai, Chennai, Bangalore had one for itself. Let’s know more about the networks, constructions and the controversies the Bangalore Metro is surrounded by.

Bangalore Metro, Source: Google Images

An Overview of Namma Metro

Bangalore Metro Rail Corporation Limited (BMRCL) is a joint venture of Government of India and the Government of Karnataka. It is a Special Purpose Vehicle entrusted with the responsibility of implementation of Bangalore Metro Rail Project.

The Bangalore Metro began its operations in October 2011. Since then, it has turned into the lifeline for a large number of commuters in Bangalore. The air-conditioned metro trains have provided commuters the key to a fast, safe, comfortable and reliable journey. The metro system is designed for a maximum train speed of 80 km/hr. but the trains are allowed to commercially run at a speed of not more than 67.50 km/hr.

Source: Google Image

Namma Metro: Phase 2 Network

The Union cabinet has approved the Phase 2 extension of Namma metro on 30th January 2014. This has paved the way for the city to have a metro network covering 114 km.

Phase 2 spans a total length of 72.095 km and will have 61 stations. 13.79 km is underground (including 12 stations), 0.48 km at grade and 57.825 km is elevated. Phase 2 includes the construction of two new lines and extension of two Phase – 1 corridors.

Complete Map of Phase 2 & 2A, Source: Google Image

Phase 2: Line 1 – Green Line [BIEC – Anjanapura], North – South Line

The Southern Green Line will be the extension of Reach 4 from Yelachenahalli to Anjanapura Township along the Kanakpura Road. The extension work began in October 2016 and is expected to be completed by August 2020. It covers a total of 5 stations for a distance of 6.29 kilometers.

Namma Metro Work-in-Progree, Source: Google Image

The Northern Green Line will be extended from Hesaraghatta Cross to Bangalore International Exhibition Center (BIEC) on Tumkur Road. This extension, also known as Reach 3C, covers a distance of 3.77 km and will have a total of 3 stations. Land acquisition issues delayed the construction which finally began in June 2017 and is expected to be completed by March 2023. Once completed, there will be 32 stations on the Green Line – 13 are currently operational.

Phase 2: Line 2 – Purple Line [Whitefield – Kengeri]

The Purple Line currently runs from Mysore Road in the west to Baiyappanahalli in the east. In Phase 2 this line will be extended further east and west.

The Western Purple Line will be extended from Mysore Road to Kengeri (8.81 km) and includes a total of 6 stations. Construction work on this extension of the Purple Line is happening in two parts Reach 2A – from Mysore Road to Pattanagere and Reach 2B – from Pattanagere to Kengeri. It is expected to be completed by December 2020.

The eastern extension of the Purple Line will be from Baiyappanahalli to Whitefield. This 15.5 km elevated stretch which will include 13 stations. The work is split into two packages – Reach 1A from Baiyappanahalli to Visvesvaraya Industrial Area and Reach 1B from Kundalahalli to Whitefield (7.21 km).

For the construction of Reach 1A and Reach 1B, around 270 buildings were demolished. The Bangalore Metro Rail Corporation Limited spent an estimated Rs.849 crore to acquire these properties.

Phase 2: Line 3 – Yellow Line [RV Road – Bommasandra]

The construction of the Yellow Line from R V Road to Bommasandra Line was split into three packages.

  1. The construction of 6.418 km stretch from Bommasandra to Hosa Road station includes five stations i.e Bommasandra, Hebbagodi, Huskur Road, Electronic City-II and Electronic City-I and also includes the construction of the depot entry line to Hebbagodi depot.
  2. The construction of 6.38 km stretch from Hosa Road to HSR Layout includes Hosa Road, Basapura Road, Chikkabegur, Munneshwara Nagar, Oxford College, HSR Layout stations. The estimated cost of these two projects is Rs. 1,750 crore.
  3. For the next 6.34 km, the estimated cost is Rs.797.29 crore. Central Silk Board, BTM Layout, Jayadeva Hospital, Ragigudda, RV Road are the stations included in this.

The Yellow Line construction is expected to compete by March 2023.

Phase 2: Line 4 – Red Line [Nagawara – Gottigere]

A new line will be constructed under Phase 2 which will pass through the Electronic City and will be fully elevated. Gottigere to Nagawara Red Line is the second new line which will cover 21.25 km of length. This line is mostly (13.79 km) underground also has a 6.98 km elevated and 0.48 km at-grade sections. This line connects 18 stations, of which 12 stations are underground and 6 are elevated. The estimated cost of this project. Red Line project split into five packages from Reach 6 – UG – P1 to Reach 6 – UG – P4 and elevated section.

  1. Reach 6 – UG – P1: Dairy Circle – Vellara Junction
  2. Reach 6 – UG – P2: Vellara Junction – Cantonment
  3. Reach 6 – UG – P3: Cantonment – Venkateshpura which includes 3 stations.
  4. Reach 6 – UG – P4: Venkateshpura – Nagawara.
  5. Elevated Section: The construction includes 7.5 km elevated area from Gottigere to Swagath Road which includes five stations and car depot on the 34-acre plot in Kothanur.

Land required for the construction of the Red Line is around 50 hectares. The land acquisition has been completed. A total of 690 trees will be cut to build the line – 438 trees for the elevated section and 252 trees for the underground stretch.

Phase 2A: Line 5 – Blue Line [Silk Board – K.R. Puram (ORR)]

In September 2016, it was announced that a new line of 17 kilometers connecting Silk Board with K.R. Puram would be included in Phase 2 of the project which is categorized as Phase 2A. The line is proposed to have 13 stations and will be called Outer Ring Road Metro (ORR Metro). The estimated cost for this line is Rs.4,202 crore. The ORR Metro will have interchange stations with the extended Purple Line at K.R. Puram.

Finance and Funding

For Phase 2 of Namma Metro, the Karnataka Government approved a budget of Rs.27,000 crore in January 2012. The estimated total cost for Phase II is around Rs.26405 crore. In October 2018, Deputy Chief Minister G Parameshwara stated that the cost of Phase 2 would be around Rs.32,000 crore (US$4.5 billion).

The expected cost of land acquisition is Rs.5,000 crore. Around Rs.15,000 crore, the cost of the project will be funded by the State and Central Government. The State and Central Governments will bear 30% and 20% of the total project cost of Phase 2 respectively. The balance amount will be obtained through senior term loans. The Bangalore Metro Rail Corporation Limited is permitted to raise through loan up to Rs.9,000 crore. The Asian Development Bank ($250 million), Agence Francaise De Development (AFD) (Rs. 1,600 crore) and European Investment Bank (Rs. 3,700) agreed to sanction loan.

Acquisition of land – Hurdle and Possession:

The Karnataka Industrial Areas Development Board is responsible for acquiring land for Phase II. For the Phase II of the project, a total of 102.02 hectares (252 acres) of land is acquired. Bangalore Metro Rail Corporation Limited spend Rs.5000 crore on land acquisition. Most of the land has been acquired and the work has already been started for metro line(s). Gottigere-Nagawara is slow progress in construction.

In February 2019, acquisition of forest land in Kadugodi – finally, the Bangalore Metro Rail Corporation Limited has cleared a major hurdle by acquiring the forest land in Kadugodi. It was the biggest hassle for BMRC Limited.

Environmental loss: To build a network of elevated corridors that will span the length and breadth of the city, a total of 3,281 trees will have to be felled and 22,082 trees pruned.

Impact of Namma Metro on Real Estate Market of Bangalore

Godrej Air at a walkable distance from Garudacharpalya Metro Station, Source: Google Image

As there is an extension of Purple and Green line and also an addition of Yellow Red and Blue line in Phase 2, Whitefield and Outer Ring Road(ORR) will be connected as part of Phase 2 (Whitefield and Electronic City) and Phase 2A (ORR). As per the observation, real estate activities increase around 2 years prior to the completion of a metro line in terms of better connectivity and results in price appreciation. However, a sharp appreciation in the price and the rental value is observed only after the operation of the line starts. The completion of Phase 2 and Phase 2A of Namma Metro will lead to a multi-fold increase in ridership and will result in an increase in rental values.

To Conclude:

Namma Metro, Source: Google Image

The metro has a total length of 72.095 kilometers. Phase 2 of Bangalore Metro will include three more lines which are Red Line, Yellow Line, and Blue Line. These three lines will be connected with 61 more stations. It’s hard to wait for this visionary master plan to come in the operation which will help lakhs of commuters and also it will reduce the dust, noise, pollution, and traffic which is very annoying for the everyday commuters.

Mantri Developers

Mantri Webcity: Artistic impression of the project | image credit: web
Mantri Webcity: Artistic impression of the project | image credit: web

Mantri Developers was founded in 1999 by Mr. Sushil Mantri. In the following two decades the group has carved a niche for itself as an industry benchmark for quality, customer focus, robust engineering, in-house research, uncompromising business ethics and transparency in its business. The company has over 20 million sq. ft. under various stages of construction in residential, retail, office, hospitality, and townships in the high-growth urban centres.

 Content created after actual site visits

“The Now or Never Sale” by Sobha Limited – Know all about it at the EXPO!

SOBHA Now or Never Sale

SOBHA Limited is a backward integrated firm that has a Pan India presence across 25 cities in 13 states and also a strong presence in the Middle East. SOBHA Limited has a diverse portfolio which helps them develop quality projects across the country. SOBHA Limited has products that range from 1 BHK apartments to lavish villas.

In an attempt to dive into the commercial real estate assets’ space, SOBHA City Mall became operational in December 2015 within the SOBHA City development – the first and largest integrated township in Thrissur, Kerala.  This project was their first step towards organized retailing.

Having  fulfilled the dreams of home buyers since decades, it isn’t surprising that SOBHA has earned several laurels over the years. Last year SOBHA Limited had been recognised as the top real estate brand in social media in India and fourth in the construction and engineering space worldwide. Not only that, they have also been voted as The Most Trusted Brand by customers in a pan-India survey by track2realty.

Bangalore, has always welcomed migrants with both hands. The ‘Silicon Valley of India’ is not only bustling with IT professionals but a lot of pensioners and retirees as well. This has led to even more investment opportunities in this city. SOBHA Limited has hosted some of their prominent projects across Bangalore. SOBHA Forest Edge, SOBHA Lake Garden, SOBHA Palm Court and SOBHA Arena to name a few.

Sobha HRC Pristine

SOBHA recently launched HRC Pristine in Jakkur, Bangalore with RERA registration. The project is close to Kempegowda International Airport, IT hubs, world-class hospitals, international schools and leisure avenues. It offers 3 and 4 bed luxury apartments, row houses and penthouses. In 2018 the company pre-launched SOBHA Lake Garden – an ultra-luxurious and high-rise residential project in KR Puram.

In an unstable real estate market SOBHA has maintained a reputation of offering and delivering quality homes. Once again the company is back with its successful ‘Now or Never Sale’. Choose from the best of its residential offerings across the country – from plots to row houses, villas to flats. Across a wide price range, the unbeatable quality of a SOBHA home now comes at a reduced rate for just 2 days. The 2, 3, 4 BHK apartments, villas and plots range from Rs. 85 lakhs onwards and there are great offers for spot bookings.

Know more about the discounts being offered in the expo that will be held at the Shangri-La Hotel in Bengaluru on 9 and 10 February 2019.

For more information please follow the link:

http://sobhamarketing.com/properties/sobha-now-or-never-sale/

Vaishnavi Group

Vaishnavi Oasis, Kanakapura
Vaishnavi Oasis, Kanakapura

Vaishnavi Group began their real estate journey in the year 1998. In the following two decades the group has developed a solid brand awareness by developing landmark residential and commercial structures for which it has won numerous industrial awards and accolades. Recognised as one of the leading real estate brands in Bangalore, Vaishnavi Group has developed over 5 million sq. ft of commercial and residential space, over 4 million sq. ft is currently under development and over 2 million sq. ft in various stages of planning.

 Content created after actual site visits

Bangalore Realty Market Is Self-Correcting To Meet Homebuyer’s Demand

Bangalore has emerged as the most preferred real-estate markets in India, over the last 10 years. There are numerous reasons for this, such as the booming IT industry and growing infrastructure. However, the most crucial aspect of homebuying is cost, and buying a home in Bangalore is relatively economical when one compares it to the exorbitant realty markets of Mumbai and Delhi-NCR where one has to break the bank in order to pay mind-boggling sums of money – at least 1 crore or more – to buy a decent sized home in these cities.

Having said that, Bangalore’s housing market, like all other urban markets, faces similar socio-economic challenges including income disparity. Hence, a better understanding of the segmentation of the market with respect to the budget will enable builders and investors to be able to tap into this housing market.

We quizzed random prospective home-buyers in Bangalore to understand how much their budget for an apartment and their preferred location. In the process, we recorded over 6000 responses. Our findings are documented in the following graphs and they tell an interesting story which goes much deeper than what initially meets the eye.

Budget of a Homebuyer in Bangalore

63% of the respondents were looking for apartments in the 50 lakh to 1 crore range. About 23% have a budget that is less than 50 lakh. Altogether, a staggering 86 out of 100 respondents have a budget of less than 1 crore. This is in sharp contrast with what the market offers as projects built by reputed builders are priced at 70 lakh or above.

Budget of homebuyers in Bangalore
Budget of homebuyers in Bangalore

This has contributed to a disparity between demand and supply. Perhaps, this explains why most housing markets in India have a large share of unsold inventories piling up every year. A recent survey conducted in (H2) 2017 by real estate consultants JLL paints a similar picture, “as many as 70,000 residential units remain unsold across Bangalore in 2017.”

Budget Range of Bangaloreans – 2 & 3 BHKs

In terms of a budget for 2 BHK & 3 BHK apartments, our research revealed that 73 out of 100 buyers are looking to invest 55 lakh or lesser in order to buy a 2 BHK apartment. Whereas, in order to acquire a 3 BHK flat, 76 out of 100 buyers are looking to invest a maximum of 80 lakh. In fact, the apartments developed by big builders are priced at least 35%-50% more than the expected price of homebuyers. This disparity is a strong indicator of the largely ignored socio-economic reality of the people living in metropolises in India.

It should be noted that a larger quantum of residential housing demand is in the lower ticket range (55 lakh or lesser – 2 BHK) & (80 lakh or lesser – 3 BHK). Developers would profit by catering to this huge market by optimally designing their development strategies.

Locational Preference of Homebuyers in Bangalore

 

Preferred location of homebuyers in Bangalore
Preferred location of homebuyers in Bangalore

 

With respect to location, trends of previous years continue to remain the same in 2018. South Bangalore, home to the IT sector, accounts for almost half the share (46.6%) of preferences for localities in Bangalore. Meanwhile, North and East Bangalore appear to be the next preferred destinations at 21.7% and 21.5% respectively. West Bangalore with suburbs like Rajajinagar, Vijaynagar accounted for the last significant part of the pie at 10%. Central Bangalore is a commercial hub and home to some of the most posh and expensive residential areas like MG Road, Lavelle Road, Vittal Mallya Road and Richmond Road. Being the most developed zone in Bangalore, residential projects in these localities are scarce and even those are pricey, and hence accounted for a meagre 0.3% of sales.

Ray of Hope for the Real Estate Market

The trichotomy of demonetisation, RERA Act & GST has transformed the real-estate market. The positive effects of these government initiatives took some time to reflect on the market, as buyers played the waiting game in 2017.

2018 has been the year of consolidation, as builders have increasingly started recognizing the needs of the market by launching affordable homes (upto 40 lakhs) and mid-range segments (less than 80 lakh) to meet various demands. The Knight Frank report on housing trends in 2018 (H1) notes this trend, “60% of new launches in Bangalore in H1 2018 were in the 25-50 lakh bracket.”

Developers are now competing aggressively to highlight RERA compliance, availability of occupational certificate (OC), PMAY eligibility and ready-to-move-in projects in the 40-75 lakh segment, thus highlighting the effects of RERA & PMAY CLSS initiatives on the developers and the real-estate market.

What Lies Ahead for the Real Estate Market in Bangalore?

Bangalore, with a current population of 12.5 million, is booming. It is home to a large number of working class people, and is the 5th largest contributor to India’s GDP. Government initiatives such as RERA Act, and PMAY-CLSS with a vision of ensuring ‘Housing for All’ by 2022, are facilitating the entry of first time homebuyers to the market. There is a significant section of the population that’s looking for budget and affordable homes in the city. Developers should look to tap into this section while paying close attention to homebuyers’ limited budgets and designing projects under PMAY-CLSS schemes which have a wider appeal.

To conclude, what was once an unorganized market marred by uncertainty, inconsistency and lack of transparency is now more regulated, transparent, responsive and consumer-oriented. However, the transformation of the sector can only be complete once the builders and investors understand the requirement of the customers (in terms of size and pricing of homes) and accordingly match supply to the demand. This in turn would reduce the number of unsold inventories, thus aiding developers, and self-correct an erroneous market. The signs of change are undeniable.

The details displayed on the website are for informational purposes only. Information regarding real estate projects including property/project details, floor area, location data has been sourced from multiple sources on best effort. Nothing contained herein shall be deemed to constitute legal advice, solicitations, marketing, offer for sale, invitation to acquire by the developer/builder or any other entity. You are hereby advised to visit the relevant RERA website before taking any decision based on the contents displayed on the website.

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