Residential and office segment of Mumbai Metropolitan Region (MMR) have recorded worst fall in the second half (H2) of 2016 on the back of the government's demonetisation drive and other economic events resulting in fall in sales volume and new launches in the fourth quarter (Q4) of last year, said a latest report by Knight Frank India.  

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Knight Frank India on Tuesday released sixth edition of its half-yearly report on real estate titled 'India Real Estate' which covered property markets of eight cities across India. 

According to the findings of Knight Frank India, the residential sector of the MMR witnessed a blow during the period between July to December 2016. 

The residental segment of MMR saw new launches and sales plummeting by 53% and 26%, respectively in H2 2016.

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The findings showed that the sales in the residential market in MMR plunged by 50% to 8,617 units while launches declined by 77% to 2,617 units in the fourth quarter (Q4) of 2016. 

Demonetisation: Residential market witnesses worst fall in H2 2016, says Knight Frank India

"The office market saw a marginal slide of 6% year-on-year (y-o-y) in transaction in 2016 and this has brought a pause on the growth momentum of last three years. The major reason for this slowdown in transaction may be attributed to the limited supply in the region," Das said. 

Events like demonetisation, Brexit, US Presidential election and US Federal rate hike have resulted in uncertainites among investors in the office space . 

Suburban Business District West (SBD West), Peripheral Business District (PBD) and Suburban Business District Central (SBD Central) recorded the largest contribution to the office demand during the period while Central Mumbai and Bandra Kurla Complex (BKC) faced dip in transaction share due to supply shortage, cited the Knight Frank India report.

The findings further said that shrinking new completions and lower vacancy level resulted in rise in office rents whereby Bandra Kurla Complex (BKC) and Central Mumbai recorded 6% increase in rentals in the second half (H2) of 2016 over the second half (H2) of 2015 followed by SBD West at 5%. 

"Vacancy at the city level is on a decline and sought after business districts like BKC and Lower Parel experience a vacancy of sub 5%. Because of steady demand and limited supply, rentals have jumped by 16% year-on-year (y-o-y) during H2 2016,” Das added.

The property consultancy firm has predicted the uncertainty will continue till the next quarter of 2017.

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