Property values continue to remain stable
Largest quantum of new launches observed in the mid-end category; mainly in cities such as Delhi NCR, Chennai and Mumbai
Expectations of an economic turnaround were belied with GDP growth slowing down to about 4.7% for the financial year 2013–14, marking it as the second straight year with below 5% growth. Agriculture grew at 6.3% quarter-on-quarter, while manufacturing growth dipped to a low of about 1.4% quarter-on-quarter. A persistent global economic slowdown hemmed in India’s exports sector as well, further hindering growth prospects.
A bright streak, however, was the emergence of a stable political dispensation at the Centre, with a propensity to welcome investments and usher in economic reforms. For the Union Budget lined up later in July, the new government is aiming at relaxing FDI guidelines, providing clarity on tax reforms, supporting industrial growth, and aiming at large scale infrastructure creation. The central bank also took cues from the altered political environment and maintained status quo in its latest monetary policy review in May, while cutting the SLR by 50 bps and releasing funds worth ₹ 39,000 crore into the market. It is widely expected that the new government shall soon allow the entry of REITs as investment vehicles, permit 100% FDI in e-commerce and infrastructure, while providing tax incentives to the realty sector at large.
Housing market update
Homebuyers and investors who were planning to invest in property, have been expecting positive policy changes that in turn are likely to boost the housing segment, going forward. In line with the preceding months, the largest quantum of new launches were observed in the mid-end category; mainly in cities such as Chennai, the Delhi NCR, Mumbai, and Bangalore. Residential activity remained subdued in Hyderabad and Kolkata during the month; while locations such as Whitefield/ Kanakpura/Harlur Main Road (Bangalore), Gurgaon/Greater Noida (Delhi NCR), Andheri/ Goregaon/Kandivali (Mumbai), and Porur/Perungudi/Guindy/ Padur (Chennai) witnessed significant development. Capital values remained largely stable.
Office space update
Even though commercial leasing activity picked up marginally in the month of May, appreciating by about 6% q- o- q, the quantum of leased space touched its peak for 2014 so far. Demand was observed for small to mediumsized office spaces for most part, even though the leasing quantum was driven by a few large transactions in Bangalore, Chennai, Hyderabad and Pune — contributing about 70% to the entire space transacted during May.
Bangalore remained the largest contributor to office space demand, followed by Pune and the Delhi NCR; representing about 66% of the total space transacted during the month. Occupier interest remained strong in micro-markets such as the Outer Ring Road and Whitefield in Bangalore, the IT Corridor and Extended IT Corridor in Hyderabad, Yerwada in Pune, and the peripheral regions of the Delhi NCR (e.g. Gurgaon). Sectors such as IT, BFSI, manufacturing, telecommunications and pharmaceuticals continued to drive demand for office space.