News: Commercial realty absorption in first three quarters of 2019 surpasses entire 2017 leasing: Report-01-10-2019
Updated On: Oct 01, 2019
Residential sales in first nine months inches closer to pre-demonetisation levels.
MUMBAI: Commercial real estate has continued to witness robust demand during the first nine months of 2019 pushing the pan-India net absorption by 40% to over 33 million sq ft, surpassing the performance of entire year of 2017 and 2018. Last two years had witnessed net absorption of 28.7 million sq ft and 33.2 million sq ft, respectively.
he third quarter of July-September has seen the net absorption rising 105% from a year ago to nearly 11 million sq ft. With the current pace, the net absorption is likely to surpass the historical benchmarks well beyond 40 million sq ft by the end of the year, showed a JLL India report.
The country also witnessed stronger new completion during January to September 2019 period with a growth of 42% in new office space addition from a year ago to 36 million sq ft. More significantly, the new completions in the first nine months of the current year have already surpassed the levels witnessed in the last three years.
“India’s regulatory scenario relating to REIT (Real Estate Investment Trust) has come a long way and is now a piece of established machinery for investors and occupies. As result, office segment offers big incentives for investors and occupiers in terms of returns and savings, respectively. The market is now headed for tremendous growth. The year 2019 is expected to set new benchmarks in terms of new completions,” said Ramesh Nair, CEO & Country Head, JLL India.
Among all prime markets in the country, Hyderabad topped the chart in net absorption and new completions, registering a 36% and 44% market share, respectively, on the two parameters during the July-September quarter. Bengaluru and Delhi-NCR market followed Hyderabad in net absorption and new completions. At the same time, quality commercial supply continued to be constrained within Mumbai.
“The office market across the top seven cities in India has performed really well in 2019…Investors, domestic and foreign alike have been chasing investment ready commercial assets and development opportunities in top cities. The demand in the office market is expected to grow at a similar momentum for the next few years,” said Samantak Das, Chief Economist and Head of Research & REIS, JLL India.
While the pace of leasing in co-working segment remained muted during the quarter ended September, space taken up by operators increased to 13% of the overall leasing during January to September 2019 as compared to 10% seen during the corresponding period the last year.
Residential performance
After witnessing a revival of sorts in 2018 housing sales have witnessed a growth of 14% in the first nine months (January-September) of 2019 as compared to the corresponding period in 2018.
However, housing sales during the period couldn’t touch the levels seen in the pre-demonetisation era, when nearly around 120,000 units were sold across the top seven markets.
Compared to this, the top seven markets during the first nine months of this year witnessed a sale of around 115,000 units. Mumbai, Bengaluru and Delhi NCR continued to account for 60% of the total sales during the period.
The third quarter of 2019 saw a 1% on-year decline in residential sales across top 7 cities to 36,826 units, while new launches witnessed 4% decline. Except for Mumbai and Delhi NCR, all the other cities witnessed a dip in new launches. Mumbai and Bengaluru continued to dominate new launches and formed more than 60% the overall launches during the quarter.
Existing unsold inventory has come down as a result of a steady momentum in sales and drop in launches across the top seven markets.
