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H1 witnessed second highest half-yearly residential sales volume in 9.5 years: Knight Frank India

H1 witnessed second highest half-yearly residential sales volume in 9.5 years: Knight Frank India

According to Knight Frank India’s ‘India Real Estate H1 2023’ report, India’s residential market started in 2023 on a relatively stable note. In the first half of the year (January to June 2023), there were sales of 0.16 million units, which is 1% lower compared to the same period in the previous year (YoY). However, it is worth noting that this sales volume is the second-highest in almost ten years.

The report highlights that the year-on-year growth in residential sales has plateaued in H1 2023 compared to the strong double-digit growth observed in the preceding four half-yearly periods. Despite this plateau, the residential sector managed to sell 156,640 units in H1 2023, showing a marginal decrease of 1% YoY but a 1.7% increase compared to H2 2022.

The revival in demand for residential properties can be attributed to low-interest rates and comparatively low residential prices. These factors stimulated buyer interest and contributed to sustaining the sales levels even as interest rates rose.

It’s important to note that this information is based on the Knight Frank India report, which provides insights into the ongoing developments and trends in the residential and office segments across the top eight cities in India.
According to the ‘India Real Estate H1 2023’ report by Knight Frank India, there were 173,364 new residential unit launches in the first half of 2023, representing an 8% year-on-year (YoY) increase.

This indicates a growth in the number of new projects being introduced to the market compared to the same period in the previous year.
The premium residential segment experienced growth across cities in H1 2023. This suggests increased demand for higher-end residential properties during this period.

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Interestingly, the demand for mid-segment homes surpassed the demand for affordable segment homes in H1 2023. This indicates a shift in buyer preferences towards mid-range residential properties.

Although the market has seen an increase in inventory, the consistently high sales volumes in H1 2023 have decreased the Quarters to Sell (QTS) level. QTS measures the number of quarters it would take to sell the existing inventory at the current sales pace. During this period, the QTS level decreased from 7.8 to 6.7 quarters, indicating that the sales pace has improved and properties are being sold at a faster rate.

These findings provide insights into the trends and dynamics of the residential market in the first half of 2023, as reported by Knight Frank India.
In H1 2023, the residential market in India recorded sales of 156,640 units, which is 1% lower compared to the same period in the previous year. However, despite this marginal decrease in annual growth, the demand for residential properties remained consistently high throughout H1 2023. It is worth noting that the sales volume in H1 2023 was the second highest in almost 10 years, indicating a strong performance in the market.

The report also highlights that the residential industry is consolidating, with stronger developers acquiring residential developments. These developers have demonstrated resilience in navigating the economic challenges posed by the pandemic.

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When analyzing specific markets, the volume scorecard in H1 2023 presents a mixed bag of results. Hyderabad, NCR (National Capital Region), Kolkata, and Chennai experienced positive growth in sales, indicating a healthy demand for residential properties in these cities. On the other hand, Bengaluru and Mumbai witnessed sales that were near a decade high, suggesting a significant surge in demand in these markets.

In terms of new launches, key markets saw steady activity. Pune and Bengaluru stood out with double-digit growth in the number of new projects being launched, indicating the strong development pipeline in these cities.
These insights from the report shed light on the performance of the residential market in H1 2023, including sales volumes, market consolidation, and the trends observed in different cities.

Among the top 8 markets in India, Mumbai accounted for the highest sales volume in H1 2023, with 40,798 home units sold. This represents 26% of the total sales in these markets. Following Mumbai, the NCR (National Capital Region), Bengaluru, and Pune ranked second, third, and fourth in terms of sales volume during the same period.
In terms of annual percentage increment, Hyderabad experienced a 5% year-on-year (YoY) increase in sales, with a sales volume of 15,355 units.

There has been a notable shift in the sales distribution across different price segments. The share of homes priced at INR 10 million (INR 1 crore) and above increased from 25% in H1 2022 to 30% in H1 2023. This can be attributed to rising prices and the desire of homebuyers to upgrade to larger living spaces with better amenities.

Additionally, the share of homes in the price range of INR 5-10 million (INR 50 lakh – INR 1 crore) has surpassed that of the affordable home segment, which includes homes priced below INR 50 lakh. The percentage of sales in the mid-segment category grew from 35% in H1 2022 to 38% in H1 2023. Meanwhile, the affordable segment witnessed a decrease from 40% in H1 2022 to 32% in H1 2023.

Overall, the market is now evenly balanced between the three segments, with sales shares ranging between 30% and 38%. This indicates a more balanced distribution of sales across different price segments in H1 2023.
These findings highlight the sales volumes, market rankings, and the changing distribution of sales across price segments in the residential market during the first half of 2023, as reported by Knight Frank India.

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According to the Knight Frank India report, residential prices across all markets in India experienced year-on-year (YoY) increases ranging from 2% to 10%. Larger volume markets such as Mumbai, Bengaluru, and NCR (National Capital Region) saw notable growth, with price increases of 6%, 5%, and 5%, respectively. This marks the second time since H2 2015 that prices have grown YoY across all markets.

Shishir Baijal, Chairman and Managing Director of Knight Frank India, commented on the strong residential sales in the first half of 2023. He noted that the momentum in the market is being driven by mid and premium-segment homebuyers who have the desire and financial capability to purchase properties.

However, the affordable housing segment has experienced a deceleration in volume and a significant decline in market share.
Despite an increase in home loan rates during the early months of the year, demand remained robust in the mid and premium segments, highlighting the enduring strength of the market. Baijal expects the market to continue gaining traction throughout the remainder of the year, fueled by a promising pipeline of new project launches and high consumer enthusiasm.

Amit Goyal, Managing Director of India Sotheby’s International Realty, shared his views on the report, emphasizing the sustained growth of the residential market since 2020. He believes the minor moderation in the June 2023 quarter is a temporary pause, primarily due to a decline in ready-to-move-in inventory in prime locations. Goyal anticipates continued growth in home sales, driven by strong end-user demand and a gradual return of investors, particularly in the high-end and luxury segments.

Atul Banshal, Director-Finance of Omaxe Ltd, cited various factors contributing to the current bullish market, including pent-up demand, increased focus on home ownership post-pandemic, and the overall revival of the Indian economy. The Reserve Bank of India’s decision to pause the repo rate hike in recent monetary policy meetings has also contributed to positive sentiments. Banshal expects the sales momentum to continue in the second half of the year, supported by regular and festive demand.

These statements from industry experts reflect the positive sentiment regarding the residential market in India, emphasizing strong sales, sustained growth, and optimism for the future.

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