“The impact can be gauged by the fact that sales and launches have capitulated by 84 per cent and 90 per cent YoY in the April – June 2020 quarter of the calendar year 2020 (Q2-2020) across the eight markets under review. NCR, Chennai and Hyderabad had near zero sales during this period, while developers were forced to postpone launches across markets due to labour unavailability and the well anticipated drop in demand,” the
A similar trend was witnessed across the office market. Office demand and supply, according to Knight Frank, came to a near standstill during the April – June 2020 quarter of calendar year 2020 (Q2-2020) with total transactions and project completions falling 79 per cent year-on-year (YoY) during this period.
“Transactions in H1-2020 fell by a massive 37 per cent YoY to 17.2 million sq. ft., the steepest in a decade. Demand fell the most in Pune and NCR markets at 47 per cent and 45 per cent respectively, while Mumbai transaction volumes fell by a comparatively modest 17 per cent YoY due to two big ticket leases totaling 1.8 million sq. ft. that amounted to almost half of Mumbai’s total transactions and salvaged an otherwise disastrous period. Bengaluru and Hyderabad office market transactions fell by 42 per cent and 43 per cent, respectively,” the Knight Frank
For now, Shishir Baijal, chairman and managing director at Knight Frank India does not expect a sharp recovery in the residential segment, while the recovery in the office segment, he says, will depend on how the pandemic plays out over the next few quarters.
“For the residential segment, I don't expect a V-shaped recovery. The demand needs to pick up first for this segment to stabilise and then recover. A recovery in the office segment, on the other hand, will happen only when employees resume going to the office,” Baijal said.
‘Work from home’ culture sees vacancy levels rise
As India adopted the work from home (WFH) culture over the past few months, office vacancy levels across these metros saw an uptick with most companies
letting go of the leased spaces to save on cost. Office rentals in this backdrop across these markets also witnessed a drop with the NCR recording the sharpest fall of 8.8 per cent to Rs 844 per (square metre) sq. mt. per month. At an aggregate level, the combined vacancy level across these markets moved up to 14.1 per cent in H1-2020, as compared to 12.7 per cent in the corresponding period in 2019.
“Bengaluru accounted for almost 56 per cent of the space surrendered during H1-2020. Kolkata and Ahmedabad which are the smallest and relatively less established markets among the eight under review saw vacancy level jump the most, by 9 and 8 percentage points YoY respectively to 41 per cent and 42 per cent by the end of H1 2020,” the Knight Frank report said.