“With most regions witnessing a surge in prices, Ind-Ra expects the pre-sales growth to moderate to 8% to 10% yoy in FY25. Inventory levels have also risen over FY24 in the premium and luxury segment, as launches increased encouraged by the sharp rise in sales and realisations,” says Mahaveer Shankarlal Jain, Director, Corporate Ratings, Ind-Ra.

Figure 1

Housing Price Rise Appears Sustainable: Ind-Ra expects the prices to have been higher 22% yoy at end-FY24 and would be subdued at around 5% yoy for FY25, due to the base-effect and large amount of new launches planned.  With most of the old-stock cleared and existing inventory largely liquidated along with a continued pick-up in demand and spike in commodity prices due to geopolitical tensions, prices surged by almost 14% yoy in FY23 along with an increase in land prices and rental yields.

Figure 2

Demand Shifting towards Mid- & Upper-mid Income Segments from Luxury and Premium Segments: Ind‑Ra expects the mid-income and upper mid-income segments, which emerged as the leading consumer segments in 9MFY24 (30% and 28% of the overall home sales respectively), to continue to witness a strong buyer interest. While the premium and luxury segments witnessed sharp demand growth in 9MFY24, Ind-Ra expects them to cool down due to the high base as the unsold inventory levels remain elevated and are the highest over the past five years.

Tier II and III Cities to Report Significant Growth: Renewed government focus on developing infrastructure and improving connectivity across new cities, with mega projects such as highways, airports, metros, and digitisation, is likely to stimulate the development of Tier II and III cities and generate substantial growth.  While the relatively new markets of Thiruvananthapuram, Guwahati, Rajkot and Ranchi market are witnessing exponential growth in housing, Outer MMR, Surat, Vadodara, Jaipur, Nashik, Chandigarh and Bhopal forming over 60% of the market in terms of the units sold, grew at a CAGR by 14% during 2021-2023.

Affordability Levels Marginally Dip in FY24, Likely to Sustain in FY25: A series of repo rate hikes of 250bp over FY23 had a sharp impact on affordability, challenging the demand dynamics in the affordable segment as it led to lower disposable incomes among the target customers. Coupled with higher mortgage rates, reduced loan eligibility, and an increase in down payments, this resulted in a steep decline in demand for the affordable segment. With prices expected to further increase over FY25, albeit moderately, affordability levels are likely to remain challenging, leading to deferment in purchases. Developers have also responded to the situation by reducing the supply of affordable inventory.

Bipolarisation Could Moderate with Improvement in Non-Tier I Players’ Performance: Tier I players had been gaining market share through FY21 to FY23, as homebuyers across the top tier cities continued to prefer established and reputed players. However, as the affordability dipped and buyers looked for alternatives to premium priced apartments and houses by Tier I players, the performance of other players improved. While Ind-Ra expects Tier I residential players to continue to lead and generate strong sales, considering the market consolidation in their favour and goodwill & brand recognition among customers, such consolidation is expected to moderate.

Figure 3

Also Read: Fast Lane to Comfort: Residential Boom along Mumbai’s Western Express Highway 

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The report also observed that while the pan India residential supply increased 1.9% YoY, it recorded a marginal decline of 0.9% QoQ as new project launches slowed down, and the focus is on selling existing inventory. However, cities including Noida (20.8%) and Greater Noida (17.6%) demonstrated an increase in residential supply (QoQ). As a result of demand and supply mismatch, the average pan India property rate increased 13.9% YoY and 2.3% QoQ.

Elaborating on the trends, Sudhir Pai, CEO, Magicbricks commented, “Several multilateral agencies have projected that the Indian economy will grow by 6-7% in FY’ 23, despite the global slowdown. The recent Union Budget has also introduced several encouraging initiatives, including substantial allocations to PMAY and UIDF, which have set the wheels in motion for facilitating employment opportunities and infrastructure development. Given the under-served demand for home-ownership in the affordable and mid-range segment, we are optimistic about the growth trajectory for residential demand in the coming quarters as well. We anticipate that the market will stabilise, supplemented by new projects and expedited delivery of under-construction properties, which will open up new avenues for investment and innovation.”

The above parameters represent QoQ change in Jan-March 2023

The report further observed that the pan-India average rates of ready-to-move-in properties increased 9.3% YoY, and average prices of under-construction properties increased 15.3% YoY.

Also Read: Metros continue to dominate residential real estate market in CY22 over other cities

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• Residential demand increased YoY across cities including Mumbai (52.1%), Noida (35.8%), Gurugram (34.5%) and Bengaluru (33%)
• Pan-India average rate increased 13.9% YoY
• Residential supply increased YoY across cities including Mumbai (13.4%), Bengaluru (8.4%), Chennai (2.9%) and Delhi (2.1%)

The Indian residential market demonstrated resilience and overall growth in 2022, observed Magicbricks’ PropIndex Report for October-December, 2022. According to the report, the aggregate residential demand (searches) increased 19% YoY led by major cities such as Mumbai (52.1%), Noida (35.8%), Gurugram (34.5%), Delhi (14.8%) and Bengaluru (33%).

The report further observed that the average rate increased 13.9% YoY and the cumulative supply (listings) grew 2.7% YoY. Noida (13.7%), Greater Noida (12.3%), Hyderabad (11. 7%) and Thane (8.1%) witnessed the highest increase in average rate YoY; and Mumbai (13.4%), Bengaluru (8.4%) and Thane (4.1%) saw the highest YoY increase in residential supply. The report also observed that 2 and 3 BHK units were the most preferred across these 12 cities. While cities like Kolkata, Chennai, Hyderabad continue to see a surge in demand for affordable units, other big metro cities like Bengaluru, New Delhi and Mumbai are attracting demand for mid-segment residences.

Elaborating on the trends, Sudhir Pai, CEO, Magicbricks commented, “In 2022, residential demand, supply and prices recovered, and the year bode well for both under-construction and ready-to-move-in houses. Despite consecutive hikes in the Repo Rate and home loan rates in the past quarters, end-users remained keen on home buying, encouraging developers to accelerate new project launches while delivering their existing projects. Overall, we are optimistic that the residential demand will be largely sustained in 2023 as well.”

The report further observed that the pan-India average rates of ready-to-move-in properties increased 9.0% YoY, and average prices of under-construction properties increased 15.3% YoY.

Also Read: Godrej Properties to develop a Residential Group Housing project in Gurugram

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Residential Real Estate

Housing sales remained upbeat throughout 2022, and the current sales momentum will sustain at least into the first quarter of 2023. Thereafter, much will depend on forces other than the desire for homeownership, such as additional repo rate hikes and property price increases. 2022 saw the repo rate go up by almost 225 bps, and home loan interest rates lost no time in going up concurrently.

So far, the rate hikes have had only a marginal impact on residential absorption. While more affordable housing buyers stepped back from purchase decisions, mid-income and luxury homes sales were not markedly affected. However, there is a tolerance limit even to the most upbeat sentiment.

Readings from ANAROCK’s most recent Consumer Sentiment Survey clearly indicated that if home loan interest rates rise above 9.5% mark, we can expect to see considerable housing demand contraction.

2023 will continue to witness controlled new launches in most of the top cities. The launch trend in 2022 was calculated caution, with developers refraining from putting more inventory on the market than it could reasonably absorb – especially in already abundantly supplied markets.

To illustrate, NCR – a market once notorious for chronic oversupply – saw restricted new supply, which played a major role in reducing unsold inventory there. Since this cautious approach worked well in 2022, it will certainly continue in 2023.

An imminent US recession in 2023, if it unfolds as seems possible now, will impact housing demand in India at least marginally. Reduced flows of IT/ITeS work outsourced to India and further layoffs will leave their mark on residential absorption here. Apart from the fact that IT employees contribute a sizeable chunk of the housing demand here, hawkish Federal rates have a visible impact on Indian stock markets.

Reduced stocks earnings suppress the appetite for discretionary spending and making long-term financial commitments, especially in the cost-intensive housing sector that stays afloat on home loans. Developers have already factored in this possibility, causing them to hold an even tighter rein on new supply until more clarity emerges.

Ready-to-move-in housing will continue to draw most of the demand in 2023. The focus of buyers opting for new launches will not waver from projects by leading and listed players.

Commercial Real Estate

The fate of the Indian commercial real estate sector hands in a fine balance in 2023. The forecast here is cloudy with chances of sunshine.

A global recession would have several direct and considerable repercussions on the Indian commercial office market. This sector depends heavily on expansion by domestic and international corporates.

To understand how a recession in 2023 would affect this sector, it is necessary to understand what makes it tick. Currently, 70% of offices in this country are occupied by foreign companies who focus on cost advantages like sub-dollar rentals for good quality Grade A offices, and almost 80% lower operating cost per full-time employee in India compared to the tier II cities in the US.

2020 was obviously a dull year for the Indian commercial office markets, but the supply and demand picked up in 2021 with 21% and 34% growth respectively over the previous year. 2022 was also upbeat during the first half.

However, from H2’22 onwards, the pall of a threatening recession in the US caused many RFPs (Request for Proposals) to be deferred as the large global corporates wanted a better perspective on the future before leasing new offices.

By the end of the 3rd quarter of his year, the number of Grade A office leases across the top 7 cities is down by 6–10% over 2021. The pace of decreased leases has increased with each passing quarter. The last quarter of 2022 has been marked by increasing caution and reticence by MNC occupiers.

A recession in the US in 2023 will compound this caution and would slow down MNC leasing even further. However, though the number of leases is declining, the deals that were concluded in 2022 showed that occupiers are confident about the future and are taking positions that are leading to an increase in rentals.

The average chargeable area per deal for 9M 2022 is almost at par with the previous year as well as 2019. The average lease term for deals concluded in 9M 2022 is 3 months higher than in 2021. Evidently, occupiers are taking long positions. Average rentals for concluded deals have rose 7-10% in the first nine months of 2022 compared to the previous year.

This bipolar backdrop of negative and positive dynamics means that 2023 will be a year for watching the Indian commercial real estate sector very closely.

Also Read: Real Estate’s Budget Expectations – 2023-24 

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Residential sales peak in Jan-Sept 2022 exceeding the pre-pandemic annual number

On a sequential basis, sales improved by 7% during Q3 2022 with 56,658 units sold. In fact, this is the highest quarterly sales post-Q4 2010 (sales stood at 59,825 units in Q4 2010).

“We have witnessed a pick-up in sales due to enhanced consumer confidence amidst the steady revival of the Indian economy depicting the immense growth potential of the residential market. Projects launched by reputed developers witnessed good traction by end users. The larger markets of Bengaluru and Mumbai led the sales in the quarter contributing 41% of the total quarterly sales as they also saw substantial launches. This was followed by Delhi NCR which contributed 19% of the quarterly sales. If we analyze the quarterly sales growth data, except Mumbai all the cities have seen an increase in sales as compared to the previous quarter,” said Siva Krishnan, MD & Head of Residential Services, India, JLL.

Bengaluru and Mumbai propel the quarterly residential sales by 7%

Mumbai includes Mumbai city, Mumbai suburbs, Thane city, and Navi Mumbai

Data includes only apartments. Rowhouses, villas, and plotted developments are excluded from our analysis

The strong consumer demand is manifesting itself in the form of strong sales in the affordable and mid categories as well as in the premium segment. While 51% of the sales in Q3 2022 came from the apartments in the price bracket of up to INR 75 Lakh, it is also pertinent to note that apartments in the INR 1.5 crore plus price tag had a considerable share of 19%. The healthy offtake of units in the premium segment manifests the rising demand for bigger homes with good amenities.

“Due to cost-push inflation and robust demand, there is a rise in residential prices with the capital value showing a 3-11% Y-o-Y increase across all cities. New launches have also entered the market at higher prices in some cities. Hyderabad witnessed the maximum appreciation in prices to the tune of 11% on a yearly basis while in Pune prices increased by around 3%. Also, the increase in the repo rate has resulted in an increase in mortgage rates. However, the interest rate after this hike would be still below what the homebuyers had to pay 8 to 9 years back. We believe that home loan interest rates inching towards 9% and above may result in moderation of housing sales growth in the medium term,” said Dr. Samantak Das, Chief Economist, and Head Research & REIS, India, JLL. 

New launches continue to see an uptick

With the festive season around the corner, developers continued to launch residential projects to tap into the growing demand by home buyers. The top 7 cities under consideration witnessed new launches of 62,000 apartment units in Q3 2022, an increase of 3% Q-o-Q. The majority of the launches were witnessed in Hyderabad (27%) followed by Bengaluru (23%) and Mumbai which had a share of 21%. More than half of the launches were in the price bracket between INR 50 Lakh-1 crore. Premium segment apartments in the price bracket of above INR 1.50 crore saw 11% of the launches in the quarter.

New launches on a surge

Mumbai includes Mumbai city, Mumbai suburbs, Thane city, and Navi Mumbai

Data includes only apartments. Rowhouses, villas, and plotted developments are excluded from our analysis

Unsold inventory increases by 1.3% Q-o-Q in Q3 2022

In Q3 2022, unsold inventory across the seven cities increased by 1.3% on a Q-o-Q basis as new launches outpaced sales. Mumbai, Bengaluru, and Delhi NCR together account for 63% of the unsold stock. An assessment of Years To Sell (YTS)  shows that the expected time to liquidate the stock has declined from 3.6 years in Q2 2022 to 3.1 years in Q3 2022, an  indication of robust sales growth  

Looking ahead: Strong growth ahead

The residential market’s inherent strength and the rising importance of home ownership will lead to its continued growth momentum. With the upcoming festive season, both launches and sales are expected to see an uptick. Apart from the affordable and mid-segment, the traction is expected to take place in the premium segment as well backed by launches by established developers in prime locations. The growing need for home ownership and a stable employment scenario is likely to drive the housing demand. The preference of buyers for developers with a proven track record will increase transparency and drive the sector’s next phase of growth. On the downside risk, the affordability synergy which was prevailing six months back has been facing some challenges. The home loan interest rate in the last six months has gone up by around 130-140 bps. Moreover, the residential price is facing upward pressure due to cost-push inflation. We believe, that this may play out to be a sentiment disruptor for home buyers albeit on a temporary basis.

Also Read: Offices in Mumbai can save ₹175 cr power bills annually by switching to greener air conditioning: JLL

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By Varun Singh

COVID-19 has changed the outlook of the world, even when it comes to the real estate industry as people are now seeking properties that lay emphasis on green practices. JP Infra Mumbai Private Limited, a prominent real estate developer in Mumbai, has gone one step ahead by undertaking the Japanese technique of Miyawaki forest to raise a natural urban forest within the ~11,000 square feet premises in its iconic project, JP North Garden City (NGC) in Mira Road. With the plantation of more than 3200 trees of 52 varieties of plant species, the urban forest will help to curb pollution, and improve air quality along with the quality of life of the residents.

Being the first developer in Mira-Bhayandar to incorporate an urban forest as an integral part of its project, JP Infra is promoting various environmental & green initiatives toward sustainable living owing to World Environment Day.

Talking about the need for sustainable homes,  Deepak Nair, Head, Marketing, JP Infra Mumbai Private Limited, said, “While formulating this project, our constant endeavor is to connect our customers with nature while offering a peaceful environment that fosters better mental health, sustainability and well-being. The natural urban forest in JP North Garden City is designed in such a way that the residents will experience their lives amidst nature. JP Infra has always been cognizant of its responsibilities towards the society and conscious about the environment, hence we are taking green initiatives believing the fact that there is no future without nature. We will continue to take green initiatives since we believe that home extends to life. It’s important to coexist and build a correlation with nature.”

Actress Bhagyashree Patwardhan, who was part of the inaugural event, said, “We are witnessing a drastic climate change and deforestation remains one of the main reasons for this. We also have urban areas which lack adequate green space. JP Infra’s initiative to build a natural urban forest inside a residential project remains a unique effort and proves hugely beneficial to its residents. It is a huge relief to see a natural forest in the midst of a massive project at JP North Garden City, Mira Road. JP Infra is leading the way in adapting to a sustainable lifestyle. I am delighted to be a part of this initiative.”

In collaboration with Afforestt, an enterprise on a mission to bring back lost forests we will see the emergence of a natural forest in NGC, using the Miyawaki technique for planting trees that grow into a 30 times denser forest in just two to three years. The technique consists of six steps that begin with a survey of the soil to assess physical texture, organic carbon, soil pH, and other factors. It also helps to lower the temperature, make the soil nutritious, support local wildlife, and improve air quality by lowering the carbon footprint.

The massive JP North Garden City includes an urban forest & 16 lifestyle themed gardens such as Fruit Garden, Herbs & Spice Garden, Zen Garden, Butterfly Garden, Maze Garden, Sensory Garden, Senior Citizen Garden, Yoga/ Meditation Garden, Community Garden, and many more. These planned green spaces are the critical places for social well-being with the help of social integration, participation, and engagement.

JP Infra clearly exemplifies the critical role that real estate plays in driving and advancing sustainability, which is a top priority across the world. This includes not only energy conservation, but also resource use, environmental impact, and residential living conditions. 

Among the many green elements that homebuyers seek today when investing in communities, is increased green cover. Shubhendu Sharma, Founder, Afforestt shared, “This forest of life has the most authentic mix of indigenous species. Which means, that as the forest grows all forms of life will start coming back to it, you will be able to spot the birds, bees and butterflies which are otherwise not seen in urban spaces due to loss of their host trees. I congratulate the visionary leadership at JP Infra for such an initiative. It will provide the residents clean air and a calm and noise-free space to relax and unwind in nature, within the premises.”

With more than half of India’s 2030 building stock yet to be built, the real estate industry has enormous potential to go green and reduce the ever-increasing operational energy requirements to reduce carbon emissions. And JP Infra Mumbai Private Limited has just shown how to do that with its iconic urban forest residential project in North Garden City.

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By Varun Singh

A pick-up in housing demand across most cities and skyrocketing prices of raw materials for almost 2 years, led to YoY increase in housing prices, surpassing pre-covid levels across all 8 metro cities (Delhi, Mumbai, Kolkata, Pune, Hyderabad, Chennai, Bengaluru, and Ahmedabad) , according to the first edition of the Housing Price-Tracker report, jointly conducted by CREDAI, Colliers, and Liases Foras.

As per the report, the average residential prices in India rose 4% YoY during Q1 2022 after a prolonged slowdown, indicating that the residential market is on its path to recovery. While Delhi-NCR saw the highest YoY change with a noteworthy 11.3% surge in housing prices, prices in Bengaluru and MMR on the other hand remained largely stable. However, New Mumbai and western suburbs (beyond Dahisar) saw a 9-10% increase in prices on a YoY basis. Additionally, overall unsold inventory across the country declined marginally by 1% as demand improved for 7 consecutive quarters owing to by low loan rates and largely stable prices, even while all 8 cities saw an increase in prices.

Hyderabad and Ahmedabad also recorded a substantial YoY increase in prices with 9% & 8% respectively while Delhi-NCR led the charts in this aspect. Kolkata also recorded a 6% jump whereas Pune witnessed a 3% jump in its YoY increase in prices. However, MMR accounted for the highest share of unsold inventory, followed by Delhi-NCR and Pune.

Pan India residential prices Q1 2022

Harsh Vardhan Patodia, President of CREDAI National stated, “Price hike has been an ongoing issue, but we are pleased with the finance minister and the government’s intervention to control the rise in the cost of raw materials and in turn control inflation as the Indian economy had stayed resilient while grappling the strains of cost inflation of raw material prices in the last 18 months. Measures to reduce import duties on steel products, iron ore, and steel intermediaries, will provide a breakthrough for bolstering the availability of raw materials domestically, cool off the prices of steel products, and help tide the rise in prices of projects, strengthening consumer sentiment. Lowering custom duties on coal products will further aid the production of cement and shall help control the skyrocketing prices of cement.”

Patodia further added, “It will be important to capitalize on the current situation and help the sector back to a U-shaped recovery and the reduction in prices of fuel tax to pre-covid levels will provide an added impetus to help all sectors agnostic of their business and it’s respective consumers. Going forward, we suggest the state government cut down on state duties on fuel too to have a direct impact on the rise in inflation. CREDAI sincerely hopes that manufacturers will pass on the price cuts to end-users. This will help the real estate developers negate increased construction costs over the last 2 years, which will only help prospective homebuyers.”

Bengaluru sees the steepest drop in unsold inventory

In Q1 2022, Bengaluru noted the steepest drop in unsold inventory by 23% YoY. Residential demand in the technology-led city has climbed as the pandemic saw technology companies and startups performing well. Prices in the city have been stable for over a year.

After Bengaluru, Kolkata and Pune witnessed the next steep decline in unsold inventory with a 15% and 11% descent on a YoY basis, portending a recovery in demand. On the other hand, unsold inventory in Hyderabad increased 41% YoY. The rise in unsold inventory comes on the back of an increase in launches in the city. Most of the unsold inventory was seen in under-construction projects.

“It is exciting to see India’s residential market performing well and beating market expectations after so many years. End-users have faith in the market, and we expect credible developers to see higher sales this year as end-users are discerning about the reputation of the developer. There can be a meaningful increase in prices over the next 6-9 months in the range of 5-10%, across most of the markets. We can also see more activity in the high-end segment, in addition to the affordable segment” said Ramesh Nair, Chief Executive Officer, India and Managing Director, Market Development, Asia, Colliers.

MMR sees demand returning

MMR, which accounts for the highest unsold inventory at 32% saw stable unsold inventory in the last one year. At a time when the region saw significant new launches, stable unsold inventory signifies a revival in demand in the market. In terms of unsold inventory, central suburb extension accounts for 26% of the unsold inventory with the majority share in the price range of INR5,000-7,500 per sq feet.

“Jan-March quarter 2022 witnessed the new launches back to the pre-covid level. The coming quarters see an increasing flow of new launches. The fresh supply will induce an improvement in volumes. Thus, the sales will continue to grow despite the recent increase in the interest rates”, concluded Pankaj Kapoor, Managing Director, Liases Foras.

Also Read: Residential demand in Mumbai increases 15.2 percent

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Housing demand (searches) in Mumbai grew 15.2% while supply (listings) grew 3.8% QoQ, revealed Magicbricks PropIndex Report Q1’ 2022. The report further observed that in Mumbai, smaller-sized 1 and 2 BHK apartments dominated the homebuyers’ preference and cumulatively accounted for 69% of the demand and 73% of the supply, during the period. The demand and supply for 2 BHK configurations accounted for 40% and 42%, respectively.

Navi Mumbai exhibited a similar trend with demand for 2 BHKs accounting for 48% of the total demand and 46% of the total supply in Q1 2022. In Thane, smaller configuration homes continued to dominate the housing market with 1 and 2BHK units comprising 78% of the total demand and supply, and 2 BHK constituting a demand share of 43%.
The report further identifies Malad and Kandivali as the residential hotspots in Mumbai during the quarter. While the overall upsurge in housing demand and supply in Mumbai was majorly driven by regulatory initiatives like the reduction of construction premium charges by half; western suburb localities such as Andheri, Borivali-Dahisar, Goregaon, and regions beyond Mira Road witnessed the highest demand and supply during the quarter due to proximity to commercial office spaces, affordable pricing, and construction of the metro line.

Speaking from the demand perspective in the region, Shraddha Kedia-Agarwal, Director, Transcon Developers said, “The Malad-Kandivali location is one of Mumbai’s popular suburbs that enjoy excellent connectivity and a robust social infrastructure. The suburbs’ skyline has completely transformed with several high-rises that offer stunning views of the natural and splendid surroundings in the region. The location also enjoys excellent connectivity to Bandra-Worli Sea Link, Western Express Highway along with both domestic and international airports. With Metro rail being partially operational, and other infrastructural developments like the GMLR and the coastal road in progress, it is definitely emerging as a prominent realty destination.”

New Panvel, Kharghar, Airoli, Taloja, Vashi, Kamothe, and Nerul were observed to be the most preferred localities in Navi Mumbai due to their connectivity to the rest of MMR. In Thane, localities such as Ghodbunder road and Dombivali continued to be the preferred micro-markets supported by factors such as connectivity, good amenities, and better access to employment hubs.

Rajat Rastogi – Executive Director, Runwal Group said, “The Thane-Dombivli location is the fastest growing micro-market in the Mumbai MMR region, the locality has witnessed considerable growth in residential real estate. Due to the upcoming infrastructure and connectivity with Mumbai & Navi Mumbai; it is fast becoming the preferred choice of first time home buyers. Also, the Work-from-Home concept allowed the potential home-buyers to opt for bigger homes in this region whilst staying close to the city.”

The report predicts an onward trajectory for 2022 due to external stimuli such as digitization of land records, and increased allocation of INR 48,000 crores under PM Awas Yojna and PM Gati Shakti that are expected to further strengthen infrastructure and boost investments in the real estate sector.

Also Read: Kalpataru launches residential project, in Baner, Pune

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By Varun Singh

Housing demand (searches) in Mumbai grew 15.2% while supply (listings) grew 3.8% QoQ, revealed MagicbricksPropIndex Report Q1’ 2022

The report further observed that in Mumbai, smaller-sized 1 and 2 BHK apartments dominated the homebuyers’ preference and cumulatively accounted for 69% of the demand and 73% of the supply, during the period. The demand and supply for 2 BHK configurations accounted for 40% and 42%, respectively.

Navi Mumbai exhibited a similar trend with demand for 2 BHKs accounting for 48% of the total demand and 46% of the total supply in Q1 2022. In Thane, smaller configuration homes continued to dominate the housing market with 1 and 2BHK units comprising 78% of the total demand and supply, and 2 BHK constituting a demand share of 43%.

Commenting on the trend, Sudhir Pai, CEO, Magicbricks shared, “Across India, increasing project completions, attractive offers from developers, supportive policies and improving employment opportunities have boosted buyer-confidence in the real-estate industry. While the present geopolitical situation is impacting the supply chain and input costs, we expect the momentum gained thus far to continue across demand and supply backed by new launches tailored to the evolving needs of consumers and all-time low home loan interest rates. In Mumbai, the suburbs of the city continue to be hotspots of demand driven by infrastructure development. These trends signal optimism and a stable outlook for the industry for the coming quarters.”

The report further identifies Malad and Kandivali as the residential hotspots in Mumbai during the quarter. While the overall upsurge in housing demand and supply in Mumbai was majorly driven by regulatory initiatives like the reduction of construction premium charges by half; western suburb localities such as Andheri, Borivali-Dahisar, Goregaon, and regions beyond Mira Road, witnessed the highest demand and supply during the quarter due to proximity to commercial office spaces, affordable pricing, and construction of the metro line.

In Navi Mumbai, New Panvel, Kharghar, Airoli, Taloja, Vashi, Kamothe, and Nerul were observed to be the most preferred localities, due to their connectivity to the rest of MMR. In Thane, localities such as Ghodbunder road and Dombivali continued to be the preferred micro-markets supported by factors such as connectivity, good amenities, and better access to employment hubs.

The report predicts an onward trajectory for 2022 due to external stimuli such as digitisation of land records, increased allocation of INR 48,000 crores under PM AwasYojna andPMGati Shakti that are expected to further strengthen infrastructure and boost investments in the real estate sector.

Also Read: CSMT’s Original Glory To Be Restored By This Month

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By Varun Singh

Activity in India’s residential real estate segment has seen a further increase in the first three months of the year 2022 as record low home loan interest rates fuel consumer enthusiasm along with government-sponsored subsidy programmes.

According to a report by online real estate portal PropTiger.com, which is part of REA India that also owns Housing.com & Makaan.com, home sales and new launch numbers have shown a year-on-year growth in the period between January and March, 2022.

The report by the Gurgaon-headquartered company shows 70,623 units were sold in Q12022 as compared to 66,176 units sold in Q12021, registering 7% YoY growth. The improvement in terms of new supply was significantly higher, with a YoY growth of 50% in new launches during the same period. A total of 79,532 units were launched in Q1 2022 as compared to 53,037 units in Q1 2021.

The markets covered in the quarterly report, titled Real Insight Residential – January-March 2022, include Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, Mumbai Metropolitan Region, Delhi-National Capital Region and Pune.

“India’s housing sector is again emerging as a bright spot in the country’s economy, helping it spring out of the pandemic-induced slowdown. With further normalization of activity in the months to follow, we expect greater positive changes,” said Dhruv Agarwala, Group CEO, PropTiger.com, Housing.com & Makaan.com.

79% sales in Q1 reported in under-construction segment

In a quarter during which the demand for housing units priced in the range of Rs 45-75 lakh was the highest, Mumbai and Pune had the biggest share in housing sales, with their combined share standing at 56% in the overall sales.

Even though the recent joint consumer survey conducted by the group company of REA India, Housing.com and Industry body NAREDCO, found that 57 per cent of potential homebuyers would prefer to buy a ready-to-move-in (RTMI) property, 79% of the sales during the quarter ended in March was seen in the under-construction category, mainly because of the price advantage this segment offers over the ready to move in segment.

Half the cities show decline in launches

The MMR market did the heavy lifting in terms of new supply in the quarter ended March 31, demonstrating a 246% increase YoY. The stellar performance by this market was mainly responsible for an overall good performance of the housing market on this parameter as four of the eight markets covered in the analysis showed a decrease in new launches. Cities where new launches showed a decline during the March quarter include Ahmedabad, Chennai, Delhi-NCR and Kolkata.

Property prices climb too

As expected, housing price growth also accelerated during the quarter, with every market covered in the analysis showing an upwards movement in average rates of new properties. Most of this increase in rates can be attributed to the hike in prices of building materials.

The sharpest uptick in property prices was registered in Chennai, where average rate of properties has undergone a 9% appreciation in the past one year, the report shows. Pune and Ahmedabad followed this southern market closely in terms of price increase, with both markets witnessing an 8% rise in their average property rates.

Agarwala is of the opinion that house ownership may become pricier with various government-funded subsidy schemes coming to an end in March this year. This price appreciation would be further compounded by rising home loan rates if the RBI were to hike the benchmark lending rate, which may well be on the cards given inflationary pressures.  So far, the country’s central bank has maintained the repo rate— to which home loan interest rates in India are linked— at 4%.

Housing inventory increases marginally amid higher supply numbers

As activity in housing supply picked up pace, housing inventory swelled slightly, at an annual rate of 4%. Builders in India are sitting on an unsold stock consisting of 7,35,852 units as on March 31, 2022. This number stood at 7,05,344 units at the end of March 2021. With an individual share of 35% and 16%, respectively, Mumbai and Pune continue to contribute the most to this national housing inventory.

However, inventory overhang— the estimated period builders are likely to take to sell off their unsold stock— has declined to 42 months as against 47 months a year ago, primarily because of higher demand for housing.  Delhi NCR has the highest inventory overhang while Bangalore and Kolkata have the lowest.

Also Read: Stamp Duty extension to boost Real Estate

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