The Indian residential market saw significant growth in Q1 of 2023, due to a combination of factors like conducive government policies, infrastructure growth, and robust launches, an analysis by commercial real-estate services company JLL showed.
As many as 62,000 housing units were sold in the top cities in India in the first quarter of 2023, with Bengaluru leading the market in terms of quarterly sales, with a 21 percent share, closely followed by Mumbai, with a 20.9 percent share.
Bengaluru, Mumbai, and Pune together account for 61 percent of the quarterly sales.
These three markets have also witnessed heightened activity in terms of new launches.
Pune contributed 19.4 percent to the quarterly sales. Delhi NCR has also posted healthy sales numbers, primarily on the back of robust launches by established developers, particularly in Gurgaon, JLL’s analysis has showed.
Across the top seven cities of India, sales of residential units went up by 15 percent, compared to the previous quarter and 20 percent, compared to the same quarter last year.
The premium segment, with apartments priced above Rs 1.5 crore, saw a 22 percent share in overall sales, reflecting a rising demand for bigger homes with good amenities and support infrastructure. To meet this demand, developers are increasingly focusing on premium and luxury housing, accounting for 27 percent of new launches, the analysis showed.
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Affordable housing segment falls
While the share of premium apartments priced above Rs 1.5 crore has increased from 18 percent to 22 percent from Q1 of 2022 to Q1 of 2023, the Rs 50-75 lakh category still makes up one-fourth of the quarterly sales.
However, the share of affordable apartments priced below Rs 50 lakh in quarterly sales have decreased from 22 percent in Q1 of 2022 to 18 percent in Q1 of 2023.
Ten months ago, it was easier for people to buy homes. But now, things are harder because interest rates for loans have gone up, and residential prices in India's top seven cities have increased by 4-12 percent compared to last year. The rise in prices is seen across the spectrum of projects that have high demand and less ready-to-move inventory. Even new phases of existing housing projects are being launched at higher prices, the analysis showed.
In the first quarter of 2023, an additional 7,800 residential units were sold in the plots and villa categories in the top seven cities. Most of the sales activity was concentrated in the southern cities of Bengaluru, Chennai, and Hyderabad.
Project launches
As far as launches are concerned, in the first quarter of 2023, 75,000 residential units were launched, the highest number in over a decade and close to the previous high of 82,757 units in 2012.
The top seven cities saw an increase in new launches, with developers taking advantage of robust sales, thanks to the resilience seen in the Indian economy. Compared to the previous quarter, new launches in Q1 of 2023 increased by 19 percent. Mumbai had the most launches (22.5 percent), followed by Pune (21.8 percent) and Hyderabad (18.5 percent).
Most of the new launches were in the premium segment, which include apartments priced above Rs 1.50 crore, accounting for 27 percent of all launches.
Developers have shifted their focus to the premium and luxury segments due to the high demand for larger homes offering better lifestyles. Unsold inventory across the seven cities increased by 2.8 percent on a quarter-on-quarter (QoQ) basis as new launches outpaced sales.
Mumbai, Bengaluru and Hyderabad together account for 63 percent of the unsold stock. An assessment of years to sell (YTS) shows that the expected time to liquidate the stock has declined from 2.9 years in Q4 of 2022 to 2.7 years in Q1 of 2022 -- an indication of robust sales growth.
Q1 of 2023 sees significant growth
"In Q1 of 2023, the residential sector in India experienced significant growth and became a prominent contributor to the country's economy. The recovery trend since last year has brought about a remarkable revival in the market, with quarterly sales exceeding all historical peaks and continuing to grow. This growth has been fuelled by a collective effort of all stakeholders, who swiftly adapted to changing consumer preferences. As branded developers stepped up their game and delivered supply, both residential sales and launches reached unprecedented levels. The sales of over 62,000 units in the first quarter of this year signify a new era in the evolution of the residential market, with new benchmarks being set,” said Siva Krishnan, Head – Residential Services, India, JLL.
“Despite a 250 basis-point increase in the repo rate by the RBI since May 2022, the residential sector has shown a strong growth in the first quarter of 2023. Sales figures indicate that the affordable, mid, and premium segments are all performing well. Delhi NCR and Mumbai have seen the maximum sales for apartments priced over Rs 1.5 crore and have also had significant launches in the premium segment. This has led to record sales for some new launches by renowned developers,” said Samantak Das, Chief Economist, and Head Research & REIS, India, JLL.
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