Chennai: Knight Frank India today launched the 16th edition of its flagship half-yearly report – India Real Estate: H2 2021 – which presents a comprehensive analysis of the residential and office market performance across eight major cities for the July-December 2021 (H2 2021) period.
RESIDENTIAL MARKET UPDATE: H2 2021 (JULY – DECEMBER 2021)
- The Chennai residential market has been on a steady path to recovery with sales momentum gradually increasing since H2 2020 to culminate into 6,206 units in H2 2021, a 9% growth in YoY terms.
- 7,360 units were launched in H2 2021 which translates to a 98% YoY growth in supply levels, as developers gauged the changing mood of the market.
- Sales were concentrated in the south and west micro-markets, and together accounted for 91% of the total sales during the period. The south locations along the OMR and GST roads continue to garner most homebuyer interest at 51% while the more affordable locations such as Porur, Valasaravakkam and Poonamalle toward the west accounted for 34%.
- In H2 2021, the share of projects with ticket sizes of > INR 10 million increased to 23% of the total sales from 18% in H2 2020.
- While the growth in sales has been encouraging in H2 2021, this has also been accompanied by price growth of 7% YoY.
- Residential demand is largely focused on the ready-to-move-in properties and has caused the average age of inventory in Chennai to reduce to 14.3 quarters in H2 2021 compared to 15.5 quarters in the year ago period.
Srinivas Anikipatti, Senior Director- Tamil Nadu & Kerala at Knight Frank India said, “The pandemic infused need for upgrading the family’s primary residence and to accommodate work and study from home requirements has encouraged home sales in the mid and higher-priced ticket size segment. The fast-improving sentiments and recent price recovery are encouraging indicators and we expect market volumes to pick-up in the near to medium term.”
COMMERCIAL MARKET UPDATE: H2 2021 (JULY – DECEMBER 2021)
- The Chennai office market has recovered well from the second wave in H1 2021 with transaction volumes in H2 2021 bouncing back 123% since then. Similarly, the average transactions’ size also rose 81% during the same reference period.
- The 0.16 mn sq m (1.8 mn sq ft) of office spaces delivered in 2021 were 47% lower YoY. Gateway Office Parks and Urban Square delivered on the Old Mahabalipuram Road (OMR) constituted 65% of the 0.09 mn sq m (0.9 mn sq ft) space completed during H2 2021. They were also two of the largest projects delivered during the period.
- The manufacturing sector was the most active during H2 2021 accounting for 0.10 mn sq m (1.1 mn sq ft) or 44% of the total area transacted during the period.
- The Information Technology sector accounted for 0.05 mn sq m (0.5 mn sq ft) or 20% of the space transacted during H2 2021 compared to 64% in H2 2020.
- The increasing need for flexibility has boosted demand for managed office spaces over the course of 2021. While the IT sector deferred its leasing activity, it was the primary driver for the rise in the co-working/ managed office sector’s transactions during the year. The 0.03 mn sq m (0.30 mn sq ft) taken up by the sector during H2 2021 translates to a share of 11%, the highest since H1 2019.
- 36% of the space transacted in H2 2021 took place in the SBD OMR at locations such as Perungudi, Kandanchavadi and Taramani. RMZ Millenia and Varalakshmi Tech Park accounted for 65% of the transactions in the SBD OMR due to two leases signed by Trimble and Saipem during H2 2021. The SBD ranked close behind the SBD OMR in terms of share of transactions, at 33%. 58% of the transactions in the SBD occurred in Guindy and Manapakkam.
Srinivas Anikipatti, Senior Director- Tamil Nadu & Kerala at Knight Frank India said, “Even though the transaction levels have remained subdued during the year, the market has observed an uptake in leasing activity in the second half of the year. Price value have also stabilised in the 6-month period. There are early signs of recovery and the market is expected to see an upward curve in the office transaction volumes in the medium to long term.”