79,126 homes sold across top 8 cities, 11.3 msf office space leased in Q4 22-23: Knight Frank

The Delhi-NCR market witnessed stable demand. Sales grew marginally by 2 percent YoY to 15,392 units. New launches grew by a more substantial 14,486 units, a 12 percent growth YoY.

The quarter January-March 2023 saw home sales touch 79,126 units despite the rise in interest rates and home prices. At 20,300 units, Mumbai clocked the highest sales, followed by Delhi-NCR at 15,392 units, Bengaluru at 13,390, and Pune at 10,368 units, a report by Knight Frank said on April 3.

As for commercial property, 11.3 million square feet (msf) of office space was leased during this time. Bengaluru led this segment with 3.5 msf of office space being leased in these three months, followed by NCR (2.6 msf), and Mumbai (2.2 msf). The three largest markets accounted for 73 percent of the area transacted and saw positive growth in year-on-year (YoY) terms, the report said.

Bengaluru was the most active market in this quarter and accounted for 31 percent of the total area transacted during the period. The IT-dominated markets of Chennai, Hyderabad, and Pune saw sales and leases decline in YoY terms during the quarter.

New commercial completions added 4.6 msf in Q4 FY22-23. This was led by NCR,  which saw a fresh supply of 2 msf, followed by Bengaluru with 1.3 msf of new office spaces.

Rents have risen across eight key cities during Q4. Kolkata saw the maximum growth with nine percent YoY rise in rental values, followed by Hyderabad, Bengaluru, and Chennai, all of which rose by 5 percent YoY.

Flex spaces continued to be the preferred choice  and comprised 29 percent of the transacted space during Q4 22-23. Flex space operators were particularly active in Bengaluru as the city accounted for a hefty 50 percent of the total space transacted in this segment.

Service sector companies took up 30 percent of the space transacted during the period, while the IT and BFSI sectors accounted for 16 percent each. The IT sector’s back-to-office transition has led to an increase in actual physical occupancy across markets. It is expected that the sector’s share of transactions will approach its long-term quarterly average of 35-40 percent once the return to office is complete, the report said.

Residential market

In terms of growth, Hyderabad and Chennai were the highest at 19 percent and 8 percent, respectively. The report also noted that all the top markets saw a rise in average residential prices in YoY terms, with prices in Bengaluru jumping 7 percent, while Mumbai, Chennai, and Hyderabad rose 5  percent each, the report said.

Mumbai recorded sales of 20,300 new homes in Q4, the highest among the top eight markets. While still robust, sales were 6 percent lower YoY compared to 2022 when the impending metro cess implementation — among other reasons — boosted sales volumes. Besides, Mumbai is the most unaffordable market in India and the recent spate of price increases and rate hikes will be felt more acutely here.

In Hyderabad, demand grew despite rate hikes and concerns around economic slowdown. The 8,300 units sold during the quarter constituted a 19 percent growth in YoY terms. A total of 10,986 new units were launched, translating to a 7 percent YoY growth.

The Delhi-NCR market witnessed stable demand. Sales grew marginally by 2 percent YoY to 15,392 units. New launches grew by a more substantial 14,486 units, a 12 percent growth YoY, the report said.

All cities posted a YoY growth in per square foot (sq ft) prices. At 7 percent, prices grew the most in Bengaluru, followed by Mumbai at 6 percent. Hyderabad and Chennai each saw a 5 percent jump in prices, the report added.

In Q4 22-23, 79,126 new homes were sold across the top eight cities, 1 percent higher than Q4 21-22. Sales volumes across most markets remained flat in YoY terms. Sales grew the most in Hyderabad at 19 percent YoY, while slipping slightly in the larger markets of Mumbai and Bengaluru, at -6 percent and -2 percent YoY, respectively.

More units were launched in Q4 than sold. With 87,299 new units added, launches registered a growth of 12 percent YoY. Yet again, at 25,735, Mumbai saw the largest volume of new units launched in Q4. Pune recorded fresh launches of 11,540 units,  a jump of 25 percent YoY. At 12,073 units, Bengaluru registered 19 percent growth YoY in new units launched. While NCR witnessed a 12 percent rise (14,486 units), Ahmedabad 8 percent (5,349 units), Hyderabad 7 percent (10,986 units) , and Chennai 6 percent (3,952). Kolkata was the only market where new launches declined by 8 percent (3,172 units).

Consistent with the upward trend seen in the past few quarters, the share of sales of the Rs 1 crore-plus category grew significantly to 29 percent in Q4 22-23 compared to 25 percent a year ago. This can be attributed to the homebuyer’s need to upgrade to larger living spaces with better amenities. The share of home sales in the Rs 50 lakh to Rs 1 crore category grew 38 percent in Q4  from 35 percent a year ago.

The share of the sub-Rs 50 lakh segment, however, shrank from 41 percent in Q4 FY 21-22 to 32 percent in Q4 22-23, as rising prices and a relatively larger impact of the pandemic on homebuyers in this segment continued to weigh on demand, the report said.

Unsold inventory increased 6 percent YoY as fresh development activity has intensified. However, this is not much of a concern as the Quarters-to-Sell (QTS) level has dropped to 7.2 quarters in Q4  on the back of heightened sales, compared to 9.1 a year ago, the report said.

“The residential market remained resilient in the face of rising interest rates and prices as sales levels were sustained. The need for home ownership continues to drive demand even as the homebuyer’s ability to purchase has come under pressure over the past few months. The mid and premium segments have emerged as out performers in this market and can be expected to drive volumes for the remainder of 2023 as well,” said Shishir Baijal, Chairman and Managing Director, Knight Frank India.