Real Estate Crashed After Demonetization: Knight Frank Report  

The drop in sales between October and December has led to a notional revenue loss of Rs 22,600 crore to the real estate industry in Mumbai alone. - Sakshi Post

Mumbai: Apartment sales in the Mumbai Metropolitan Region (MMR) in the second half of 2016 have been the worst in the last seven years, according to the Mumbai Real Estate report released by global property consultant, Knight Frank, on Tuesday.

"This is largely due to demonetisation in the last quarter, which has brought the residential market to a standstill,'' said Samantak Das, chief economist and national director, Knight Frank India. "This is the weakest annual performance in MMR since 2010,'' he said. The drop in sales between October and December has led to a notional revenue loss of Rs 22,600 crore to the real estate industry in MMR and Rs 1,200 crore notional loss on stamp duty to the state government, said the report. "The last quarter witnessed a 39% decline in sales year-on-year,'' Das added.

According to the Knight Frank India Real Estate Report (July-December 2016), the National Capital Region was the hardest hit by demonetisation, followed by Bengaluru, Mumbai and Hyderabad.

In Mumbai, residential project launches dropped by 53% and sales by 26% in the second half of 2016 compared to the corresponding period in 2015. The report said 25,403 apartments were sold in the second half of 2016 compared to 34,135 during the same period in 2015. Premium market (luxury flats) also did not see any growth in the second half of 2016. In this segment, there was no new launch in South Mumbai last year.

In western suburbs, launches of premium residential projects dropped by 78℅ in the second half of 2016 compared to the same period in 2015. In Central Mumbai, flat sales dropped by 41℅ in second half of 2016 from the corresponding period in 2015.

However, residential market in Thane, Mulund, Vikhroli, Badlapur, Karjat was less hit in the second half 2016. In Navi Mumbai, sales decreased by 26% while in Thane it dropped by 20%.

The report also said that a flat in MMR costs nine times the average annual household salary as against the industry benchmark of 4.5 to 5 times. Knight Frank estimates an annual household salary in Mumbai last year at Rs 14 lakh and average flat price at Rs 1.26 crore. In 2010, the average price of a flat in Mumbai was 11 times the annual household salary.

In the office segment, transactions dipped by 6% in 2016 compared to the preceding year, thereby putting the brakes on the momentum of the last three years. In BKC and Central Mumbai, vacancy levels were under 2%.

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