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Published on 7/10/2020 4:23:57 PM | Source: Emkay Global Financial Services Ltd

In Q3CY20, residential launches and sales are at 50% of the pre-Covid level; office space absorption at 30% of pre-Covid level: Emkay Global

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Below is the Views On In Q3CY20, residential launches and sales are at 50% of the pre-Covid level; office space absorption at 30% of pre-Covid level: Emkay Global

According to a Pre-Festive channel check report of Emkay Global Financial Services, residential unit sales have recovered to 50% of the pre-Covid levels. This is primarily driven by historically low financing rates, upfront discounts and regulatory reliefs on stamp duty charges. Investment demand is yet to recover and city-centric sales are being driven largely by younger customers in the age bracket of 32-38 years.

In H1CY20, residential launches are down 46% yoy to 60,489 units; except for Kolkata (+37%), all other major cities are down 30-80% yoy. Continuing in line with the past trends, 58% of new launches were in the <Rs5mn category.

It is noted that the investor demand for apartments is currently missing from the market and the share of affordable housing in sales is down by 300bp to 47% in H1CY20.

In the commercial real estate segment, the supply is reported to be down 27% yoy to 1.6mn sqm for H1CY20. The supply is impacted severely in every city (down 50-90%) except Mumbai (+90% due to low base in last year) and Chennai (+11x due to one single property being completed). The demand is down 37% yoy for H1CY20.

On the absorption levels, in Q3CY20, it is reported to be 30% of pre-Covid-19 level; down 17-50% across all cities.

Occupiers such as co-working, media and telecom are the worst hit. IT is a large consumer of the commercial space and it has been in a wait-and-watch mode despite the sector doing very well; IT is overall one-third of the total demand and demand is down 23% yoy.

On the overall sector outlook, the stimulus to the sector has not been given on the demand side but large positive stimulus given to the supply side which will benefit selective strong players in the market. Mortality within smaller and weaker players is expected to be higher.

 

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