H1 2016, a recap
- A recovery predictedINDIA
REAL ESTATEJULY – DECEMBER 2016
CHENNAI
CHENNAIREAL ESTATE
H1 residential recap
LAUNCHES CRASH 36%, SALES FALL BY 7% YoY IN H1 2016
We further predicted a 9% fall in launches and 1% growth in sales for
H2 2016, but Chennai suffers a setback as launches & sales
tumble in H2 2016
New launches drop 18%; while sales decline by 12%
Half yearly trend in launches and sales
H2 2011 H2 2012 H2 2013 H2 2014 H2 2015 H2 2016 -
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
14,
724
16,
747
8,0
15
7,3
18
5,8
54
4,8
00
Launches
H2 2011
H2 2012
H2 2013
H2 2014
H2 2015
H2 2016
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
12,
682
14,
961
10,
424
10,
343
8,7
92
7,7
37
Sales
-18%
-12%
Overall, the city witnessed a fall in new launches –
West Chennai experiences maximum dip in share
All micro-markets except the South lose share YoY
Zone wise half yearly share of launches
Central North South West0%
10%
20%
30%
40%
50%
60%
4%
13%
29%
54%
2%
10%
52%
36%
H2 2015 H2 2016
Units launched
H2 2015 - 5850
H2 2016 - 4800
While demand slackens in the city, Central Chennai sees a
growth in share
Central micro-market sees increase in demand due to supply spike in early 2016
Zone-wise split of sales during H2 2016
Central North South West0%
10%
20%
30%
40%
50%
60%
70%
7%2%
59%
32%
11%4%
58%
28%
H2 2015 H2 2016
Sales
H2 2015 - 8790
H2 2016 - 7740
Pronounced fall in H2 2016 has pulled the annual numbers to
below 2015 performance
New launches plummet 29%; Sales witness a relatively restrained decline of 9%
Yearly trend in launches and sales
LAUNCHES
-29%
SALES
2010 2011 2012 2013 2014 2015 2016 -
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
28,
741
37,
041
37,
079
24,
846
18,
695
14,
956
10,
615
2010 2011 2012 2013 2014 2015 2016 -
5,000
10,000
15,000
20,000
25,000
30,000
35,000
19,
936
28,
013
29,
422
24,
444
20,
556
17,
882
16,
187
-9%
A little less than 2 years to offload the unsold inventory
Chennai market health – Quarters to sell and unsold inventory
Unsold inventory stands at 30,926 units
Jun-1
4
Aug-14
Oct-14
Dec-14
Feb-15
Apr-15
Jun-1
5
Aug-15
Oct-15
Dec-15
Feb-16
Apr-16
Jun-1
6
Aug-16
Oct-16
Dec-16
4.0
5.0
6.0
7.0
8.0
9.0
10.0
6.8 6.7 7.0
7.6 7.9
7.7 7.6
6.9 7.4
6.8 7.3
Impact of Demonetisation
New launches grow by 15% in Q4 2016 YoY; Sales decline by 31%Quarterly trend of new launches and sales
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 -
1,000
2,000
3,000
4,000
5,000
6,000
7,000
5,311
6,066
2,435
4,882
3,986
5,116
4,391
1,464
2,326
3,489 3,120
1,680
4,515
5,697
5,087 5,256
3,929
5,162 5,451
3,341
5,070
3,380
5,416
2,321
New Launches Absorption
No o
f uni
ts
Q4 revenue loss for both State exchequer and industry
Average # units sold in Q4 2014 & Q4 2015 4,299
# Units sold in Q4 2016 2,321
46% fall in sales
Notional REVENUE LOSS to real estate industry
INR 1,100 cr
State government notional LOSS ON STAMP DUTY
INR 50 cr
Key takeawaysLaunches go downhill, sales weaken YoY in H2 2016
Price growth could enter negative territory, especially in the premium segment
Demonetization brings residential market to a standstill
Uncertainty likely to continue for the next quarter
Reduction in home loan interest rates, RERA, GST and ‘possible’ tax benefits in the upcoming budget likely to bring in a ‘feel good factor’
among buyers
Office market
CHENNAI OFFICE MARKET SCALES NEW HEIGHTS IN H2 2016
2016 remains strong at par with 2015 transaction levels
Yearly transactions & new completion
2010 2011 2012 2013 2014 2015 20160
1
2
3
4
5
6
7
8
4.6 4.5
7.5
6.5
4.2
2.1
0.5
5.1 5.6
3.3 3.5 4.0
5.1 5.3
New Completions Transactions
H2 2016 sees transaction volumes at five-year highs; contrastingly, new completions
at a 5 year lowHalf yearly transactions & new completion
2012 H2 2013 H2 2014 H2 2015 H2 2016 H2 -
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0 4.4
3.2
2.0
1.2
0.2
2.1 2.4
2.2
3.1 3.3
New Completions Transactions
Vacancy on a steady decline with SBD at 4% - Transaction activity strong and
new completions on a constant declineHalf yearly vacancy rate
2013 H2 2014 H2 2015 H2 2016 H20.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
25.7% 24.4%
19.3%
12.4%
Vacancy
mn
sq ft
Rentals gain momentum owing to space crunch
Half yearly weighted average rental trend
2013 H2 2014 H2 2015 H2 2016 H2 42
44
46
48
50
52
54
56
47.0
49.5
51.7
54.5
Wt. Avg. Rent
mn
sq ft
IT/ITeS sector continues to hold the fort in H2 2016
IT/ITeS leads with big ticket transactions while manufacturing sector sees increase in share
Sector wise transactions
BFSI IT/ITES Manufacturing Other Service sectors0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
27%
36%
18% 19%
13%
43%
26%
18%
H2 2015 H2 2016
The OMR is the biggest gainer as both business districts on this stretch had the only viable options
available for occupiers during H2 2016Micromarket-wise transactions
CBD SBD PBD Ambattur SBD OMR PBD OMR & GST0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
9%14%
26%
20%
31%
10%13%
2%
35%
40%
H2 2015 H2 2016
% S
hare
Key takeaways
H2 2016 transaction levels hit a five-year high
New completions plummet, leading to rise in rentals in key markets
The PBD OMR and GST business district sees vacancy levels nearly halve YoY to 26% in H2 2016
Download the complete report from the link below:bit.ly/IREH216-SS