Knight Frank India today launched the eighth edition of its flagship half-yearly report - India Real Estate.

Bengaluru, January 10, 2018: Knight Frank India today launched the eighth edition of its flagship half yearly report - India Real Estate. It presents a comprehensive analysis of the residential and office market performance of Bengaluru for the period July – December 2017 (H2 2017).

Residential Takeaways:

• The unsold inventory has come down by 10% YoY in H2 2017, courtesy competitive pricing in a sluggish market. However, the quarter-to-sell (QTS) graph indicates that India’s IT capital would take more than two years to offload unsold homes in the city. 
•  New projects dwindled by a 37% YoY in H2 2017 as developers’ focus shifting on two primary aspects – fast tracking delivery of under construction projects and compliance to RERA. 
•  Although the weightage average price fell by 5% in H2 2017, home sales plummeted by 34% during the same period.
•  Is it a good time to buy a house in Bengaluru? Developers’ focus on fast tracking delivery of under construction projects coupled with marketing campaigns at IT parks, widespread promotion of RERA registered projects, discounts on base selling price and , festive period freebies and the drop in average weightage price are collectively wooing buyers.
•  Neighbourhoods such as Sarjapur Road, Kanakpura Road and Devanahalli were among the pick of residential micro markets. Upcoming metro connectivity to Whitefield has pushed absorption pace of residential units in this location.  
• 

Office Takeaways:

• With total transaction volume of 5.91 mn sq.ft at a rate of 12% YoY growth, Bengaluru reaffirmed its top position as the leading office market among eight cities
• Small office spaces in vogue. More than eight out of 10 office deals comprise space take up of less than 50,000 sq. ft.
• While the average deal size shrunk by 37% YoY in H2 2017, the total number of deals rose by more than 80% during the same period
• The share of the IT/ITeS sector shrunk to 44% of the gross leasing in H2 2017, 20% lower than the space consumed in H2 2016
• Bengaluru office markets records staggering weighted rental growth of 9. YoY

Speaking about the findings, Shantanu Mazumder, Senior Branch Director – Bengaluru said,“Bengaluru’s residential market has been impacted by a variety of factors impacting both demand and supply. Residential sales have witnessed a 34% YoY decline in H2 2017 over H2 2016. On the launches front, though the declining trend began since 2014, the rate of decline was never as
marked as in 2017 as the new supply nosedived by a mammoth 71% from the peak witnessed in 2013. North and South zones have witnessed maximum curtailment of new launches registering aYoY decline of 66% and 52%, respectively, in H2 2017, as developers put new project launches on the
backburner whilst they prioritised RERA compliance. On a YoY basis too, overall city launches declined by 37% in H2 2017. Competitive pricing coupled with a sharp decline in new launches in 2017 has worked in the favour of Bengaluru developers; as a result, the unsold inventory has gradually declined by 10% YoY in H2 2017. In terms of micro-markets Sarjapur Road, Kanakpura
Road, Thanisandra and Devanahalli have been the buyers’ choice; however, with the metro construction in full swing, Whitefield too has picked up pace.

In H2 2017, the total transaction volume was noted at 5.91 million sq ft registering a 12% YoY growth over H2 2016. This high transaction volume reaffirms Bengaluru’s top position as the leading office market across the top eight cities. Of all the micro markets, Outer Ring Road (ORR) continued
to fare well in terms of occupier stickiness accounting for 47% of total transactions in H2 2017 thereby recording a massive YoY growth of 83% over H2 2016. Despite limited new supply and low vacancy, the absolute quality of office assets kept occupiers interested in leasing any new spaces that became available in this micro market. An interesting trend that emerged during H2 2017 was the dominance of smaller deal sizes in the total transaction volume with 82% of the total number of deals belonging to a space take up of less than 50,000 sq ft. The IT/ITeS sector accounted for 44% of gross leasing in H2 2017, 20% lower than the space consumed in H2 2016. Amidst automation and
reskilling challenges, cautious hiring prevailed in this sector thus deterring the expansion momentum. E-commerce, on the other hand, emerged as a surprise frontrunner for space consumption accounting for a 16% share in total transaction volume. Co-working operators, too, continued expanding footprint accounting for a 6% share in H2 2017 leasing volume. ORR also accounted for 69% of the 4.4 million sq ft of new supply in H2 2017 which was well received by occupiers and eased the supply crunch in this belt, albeit in the short-term.”

About Knight Frank:
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In India, Knight Frank is headquartered in Mumbai and has more than 1,000 experts across Bangalore, Delhi, Pune, Hyderabad, Chennai, Kolkata and Ahmedabad. Backed by strong research and analytics, our experts offer a comprehensive range of real estate services across advisory, valuation and consulting, transactions (residential, commercial, retail, hospitality, land & capitals), facilities management and project management.