The residential sector recorded sales of 156,640 housing units in the first half (January to June) of 2023.
The highest growth on an annualised basis was recorded in Hyderabad at 5 percent, while Mumbai and Bengaluru saw a decline of 8 percent and 2 percent, respectively.
Housing prices in Hyderabad grew by 10 percent year-on-year, the highest among all markets, according to a report from real estate consultancy Knight Frank.
The share of sales of homes costing Rs 1 crore and above grew from 25 percent in the first half 2022 to 30 percent in H1 2023. This can be attributed to rising prices and homebuyers’ need to upgrade to larger living spaces with better amenities.
The biggest development was the share of homes in the Rs 50 lakh to Rs 1 crore bracket, eclipsing that of the affordable home segment priced below Rs 50 lakh, the Knight Frank report said.
The percentage of sales in the mid-segment category grew 38 percent in H1 2023, compared with 35 percent a year earlier. The affordable segment saw a dip from 40 percent in H1 2022 to 32 percent in H1 2023. The market is evenly balanced between the three segments with the share of sales now ranging between 30 and 38 percent.
Overall housing sales numbers were marginally lower by 1 percent year-on-year (January – June 2023) but 1.7 percent higher compared to the second half of 2022. While low interest rates and comparatively low residential prices served to spark a revival in demand, the residential sales level sustained even as interest rates rose, the Knight Frank report said.
New launches stood at 173,364 units, up 8 percent on-year. While the market is carrying more inventory, the consistently high sales volumes in H1 2023 have pushed down the quarters to sell (QTS) level from 7.8 to 6.7 during this period, the report said.
QTS measures the number of quarters required to exhaust the unsold inventory, which has reduced for most markets. It is the lowest for Pune, followed by Bengaluru and Chennai. Generally, a lower QTS level denotes greater sales traction and better market health.
Mumbai’s sales volume of 40,798 home units accounted for 26 percent of the total sales among the top eight markets, the highest among all markets. Delhi-NCR, Bengaluru and Pune stood second, third and fourth respectively in terms of sales witnessed in H1. The growth leader in percentage terms, Hyderabad saw a sales volume of 15,355 units, the report said.
Prices increased across all markets in the range of 2 to 10 percent year-on-year with some of the larger volume markets of Mumbai (6 percent), Bengaluru (5 percent), and Delhi-NCR (5 percent) registering notable growth. This also marks H1 2023 as a period in which prices have grown on a yearly basis across all markets for the second time since H2 2015.
“Residential sales have been strong in most markets during the first half of 2023. The main drivers of market momentum are mid and premium segment homebuyers, who possess both the desire and financial capability to purchase a home.
On the other hand, the fallout of headwinds has been the affordable housing segment, which has seen a deceleration in its volume as well as market share declining significantly,” said Shishir Baijal, chairman and managing director, Knight Frank India.
India-facing (35%) and flex (26%) accounted for the largest share of office space demand
Office space demand was resilient with 26.1 million sq ft (msf) being transacted during H1 2023, a growth of 3 percent growth over the previous year in terms of volume. In fact, the momentum seemed to be increasing toward the end of the period as 14.8 msf was transacted in Q2 2023, the highest quarterly tally since Q1 2021, the report said.
Transaction volumes in Chennai and Delhi-NCR grew the most at 104 percent and 24 percent, respectively during the period. Bengaluru with 7.0 msf constituted 27 percent of the area transacted. Delhi-NCR with 5.1 msf was a distant second whereas Chennai and Mumbai with 4.5 msf and 3.2 msf took the third and fourth, spot respectively, the report said.
Flex spaces accounted for 26 percent, global capability centres 25 percent and third-party IT services 14 percent of the total volume transacted in H1 2023. Third-party IT services have come down largely due to hybrid work and budget cuts by clients. Other service sector companies such as those from the healthcare, education and e-commerce segments constituted approximately 49 percent of these India-facing businesses while BFSI and manufacturing companies accounted for 28 percent and 13 percent of the same.
Rents grew in the range of 1 percent to 3 percent for most markets with rents in Kolkata increasing by 10 percent year-on-year due to very limited supply coming up since the pandemic hit in H1 2020, the report added.
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