India housing sales: Commercial space soars, but residential demand stutter

Compared with other property consultants, Knight Frank has reported lowest rise in housing sales during 2018 at 6 percent.

Residential launches were 75 percent higher in 2018 compared to previous year, with 1.8 lakh houses being added to the market.

Of the overall launches, 60 percent were priced under Rs 50 lakh, reinforcing the trend that affordable housing continues to drive growth.

But price growth was muted last year. Mumbai saw weighted average prices fall for the second straight year, with the second half of the year seeing prices lower by 7 percent than the second half of 2017, as per the report.

Hyderabad led price growth with a 7 percent increase while NCR and Bengaluru showed modest growth. Pune, Kolkata and Chennai saw a fall in weighted average price levels compared to 2017.

Recovery in the Indian residential real estate market has faced many roadblocks in the last few years, with demonetisation and GST dampening sentiment. In 2018, early signs of recovery were countered by the NBFC liquidity crisis, and while launches saw a year-on-year increase for the first time this decade, sales numbers didn't quite keep pace.

Knight Frank, in its report, said that affordability has improved significantly since 2010, with Mumbai's affordability index level dropping by 4 percent, but the age of inventory has also increased.

In contrast, demand for commercial office space continued to pick up, with leasing activity crossing 46 million square feet, a 12 percent growth over last year, said the report.

Bengaluru led the way with leasing volumes at 13.4 million square feet. Leasing by co-working spaces was in focus yet again, and saw a rise of 52 percent in the second half of 2018 compared to the same time period in 2017.