All India - Real Estate Report H2 2016 Presentation
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Transcript of All India - Real Estate Report H2 2016 Presentation
H1 2016, a recap
- A recovery predictedINDIA
REAL ESTATEJULY – DECEMBER 2016
H1 2016 - A RECAPResidential sales jumped by 7% YoY
A RECOVERY WAS PREDICTED FOR H2
Sales trend across Mumbai, NCR, Pune, Bengaluru, Chennai, Hyderabad, Kolkata, Ahmedabad
H1 2013 H1 2014 H1 2015 H1 2016 110,000
120,000
130,000
140,000
150,000
160,000
170,000
180,000
190,000 185,797
139,295
126,616
135,016
No.
of U
nits
H1 sales recovery in Mumbai kept the residential market buoyantBarring NCR, other cities also witnessed positive growth in sales
Q3, the start of the festive season began on a positive note Run-rate was above the average sales of previous 10 quarters
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 20160
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
70,2
94
69,0
00
65,9
21
74,6
06
68,9
43
57,6
73
68,4
08
72,9
33
68,1
29
66,8
87
68,7
34
Num
ber o
f uni
ts
Our prediction therefore was that, H2 2016 would be better than H2 2015
4% INCREASE IN SALES ESTIMATED FOR H2 AT
THE CLOSE OF H1
But, the DEMONETISATION move pulled down the last quarter sales across all cities
Q1 2016 Q2 2016 Q3 2016 Q4 20160
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
68,1
29
66,8
87
68,7
34
40,9
36
40% fall
Despite one-third of Q4 being the festive season, sales for the quarter fell by 40%
…even, launches were impacted
Q1 2016 Q2 2016 Q3 2016 Q4 20160
10,000
20,000
30,000
40,000
50,000
60,000
70,000
58,5
63
48,5
57
44,3
85
24,3
16
45% fall
Q4 2016 could not maintain the launch run-rate of the previous three quarters
Num
ber o
f uni
ts
The fall in Q4 was intense, H2 2016 ended below H2 2015
H2 2013 H2 2014 H2 2015 H2 20160
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
187,
614
154,
233
126,
865
68,7
02
143,
441
140,
527
141,
341
109,
159
Launches Sales
NCR is hardest hit, followed by Bengaluru and MumbaiHyderabad least impacted
23% fall YoY
46% fall YoY
Num
ber o
f uni
ts
All cities have witnessed a crash including the usually resilient Bengaluru
2010 2011 2012 2013 2014 2015 20160
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
480,
424
466,
422
458,
228
420,
105
319,
659
244,
065
175,
822
361,
483
368,
568
359,
308
329,
238
279,
822
267,
957
244,
686
Launches Sales
2016 ends at launches and sales lowest since GFC
9% fall28% fall
Num
ber o
f uni
ts
Impact of Demonetisation
A huge fall in launches and supply in Q4 2016
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
89,094
76,332
83,641
70,593 68,943
48,257
64,092 62,773 58,563
48,557 44,385
24,316
70,294 69,000 65,921
74,606 68,943
57,673 68,408
72,933 68,129
66,887 68,734
40,936
Launches Sales
Num
ber o
f uni
ts
Q4 revenue loss both for the State exchequer and industry
Average # units sold in Q4 2014 & Q4 2015 73,769
# Units sold in Q4 2016 40,936
45% fall in sales
Notional REVENUE LOSS to real estate industry INR 22,600 cr
State government notional LOSS ON STAMP DUTY
INR 1,200 cr
What next?Demand needs to be revived
Making residential units more affordableTime correction already happened
Q1-2013
Q2-2013
Q3-2013
Q4-2013
Q1-2014
Q2-2014
Q3-2014
Q4-2014
Q1-2015
Q2-2015
Q3-2015
Q4-2015
Q1-2016
Q2-2016
Q3-2016
Q4-2016
95
100
105
110
115
120
125
130
Inde
x va
lue
(Q1
2013
= 1
00)
BengaluruCPI
HyderabadMumbai
Pune
Chennai
NCR
Kolkata
Ahmedabad
For the first time Bengaluru residential price growth is below CPI growth
Price Index
Mumbai, NCR and Bengaluru are ABOVE the Knight Frank affordability benchmark of 4.5
House price to annual income ratio
2010 – 112016 – 9
MUMBAI BENGALURU NCR
2012 – 7.82016 – 5.4
2010 – 62016 – 5
Cities becoming more affordable due to time correction with Bengaluru and NCR getting closer to the
benchmark
Will the magic of 8 work this time?
In 2009, housing sales increased by 18% YoY when mortgage rates dipped to 8.25%
Sales growth momentum sustained in 2010 as well with 51% growth YoY
With the expectation of rates coming down below 8.50% in the next six months…
Other drivers to boost demand
Likely tax incentives in Union budget
Strict implementation of RERA within the stipulated time period Residential sector to become transparent;
Buyer confidence to get a boost; Institutional participation to increase
2017
A lot of churning likely to happen in 2017 due to implementation of various policy changes
It will be important to see HOW DEVELOPERS RECALIBRATE their businesses to the changing environment and,
whether BUYERS CAPITALISE THE OPPORTUNITY
of various reforms and change their status quo position of “wait and watch”.
…difficult to crystal gaze
Things to watch out for
…to infuse the “feel good factor” which is extremely important for the revival of the industry
Affordable segment to bounce back first
RERA & GSTLower home loaninterest rate
Benami Transactions (Prohibition) Amendment
Act, 2016Remonetisation
Likely fiscal benefits for taxpayers in Union
Budget
With RERA, unaccounted cash being removed, enforcement of Benami Transactions (Prohibition)
Amendment Act, and GST in place…
the way real estate will run will define a new paradigm for the
industry
Office market
2016 OFFICE DEMAND HOLDING STEADY,
CONSISTENT WITH 2015 LEVEL
From the peak of 2011, new completions drop by 37% leading to
stagnation in transaction volume
2010 2011 2012 2013 2014 2015 20160
5
10
15
20
25
30
35
40
45
50
41.2
46.0 43.7
35.3 36.5 35.5
29.0
36.7 36.9
30.433.6
38.641.1 40.6
mn
sq ft
34% rise between 2012 and 2016
37% drop between 2011 and 2016
Yearly trend of new completions transactions
H2 2016 witnessed maximum fall in office space completion;
transaction faces supply crunch in spite of strong demand
Transaction declined by 12% YoY in H2 2016; Mumbai and Pune experienced
the highest decline
H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 0
5
10
15
20
25
17.
1
19.
5
15.
7
18.
7
19.
0
10.
1
17.
9
20.
7
17.
9
23.
2
20.
2
20.
4
New completion Transactions
mn
sq ft
Half yearly trend of new completions and transactions
Vacancy levels reacha record 9-year low
Vacancy levels fall to 13.4% in H2 2016 from their 2012 peak of 20% with Pune and
Bengaluru in single digitVacancy trend
2008 2009 2010 2011 2012 2013 2014 2015 201612%
14%
16%
18%
20%
22%
16%
20%
13%
Relevant vacancy is below 5%
Rentals on the rise with NCR and Mumbai leading at 14% and 16% growth YoY
Rental trend
Mumbai NCR Bengaluru Pune Chennai Hyderabad 20
40
60
80
100
120
140
104
64 52 56 52
42
121
73
58 60 55
47
H2 2015 H2 2016
Rs/
sq ft
/mon
th
16%
14%
IT/ITeS remains the major occupierIndustry-wise share in transactions
IT/ITeS BFSI (Including support service)
Manufacturing Other services0%
10%
20%
30%
40%
50%
60%
46%
13%18%
23%
49%
14% 17%21%
H2 2015 H2 201623.2 mn sq ft 20.4 mn sq ft
Key takewaysTransaction volume is facing a challenge across all
cities due to supply crunch in spite of strong demand from occupiers
2017 - Not much new supply on the anvil; rentals will be on a continuous rise
President-elect Trump’s policy and outcome of Brexit are likely to decide the growth trajectory of the office
market
Download the complete report from the link below:bit.ly/IREH216-SS