Sales volume and new launches fell by 23% and 46% each in the second half of 2016, a report by real estate consultancy Knight Frank has revealed. The fourth quarter of 2016, saw a significant drop by 44% year-on-year and new launches fell by 61%, it added. “The fall in Q4 was intense – H2 2016 ended below H2 2015. The year 2016 ended, with launches and sales being at their lowest since the global financial crisis,” Shishir Baijal, chairman and MD of Knight Frank India said, in a statement.
“Political stability, regulatory environment, enhanced infrastructure, strong investments, approval to the GST bill and amendments to REITs, led us to the feeling that the year would end on a high note. However, the demonetisation move pulled down the last quarter sales across all cities,” he added. Further, the real estate sector has witnessed a notional loss to the tune of Rs 22,600 crores, in the top eight cities. The government has witnessed a loss of Rs 1,200 crores, by way of stamp duty revenue loss in the residential segment, the report said.
See also: Q3 2016: Apartment sales outdo new launches for the first time, since 2008
Source: Knight Frank Research
- The National Capital Region (NCR) was the most affected, witnessing a de-growth in demand and supply, by 29% and 73%, respectively.
- The Mumbai Metropolitan Region (MMR) saw launches plummet by 53% and sales by 26%, the report said.
- Bengaluru, which is seen as a resilient market, saw a fall for the first time since 2013, with new launch and sales declining by 17% and 7% year-on-year, respectively.
The report noted that uncertainty is likely to continue in the next quarter.
“It will be important to see how developers recalibrate their business to the changing environment and whether buyers can capitalise on the opportunity from various reforms and change,” it said.
In comparison to residential, the office market grew, with 2016 office demand holding steady in the top six cities and remaining consistent with the 2015 level, the report noted.