New Delhi: Neither rising interest on home loans and housing prices nor global economic headwinds seem to have deterred Indians from investing in real estate this year. Reports from real estate firms show a strong demand for homes in 2023, with the April-June quarter registering all-time high sales in Indian cities.
According to a report by real estate services provider ANAROCK Property Consultants, about 1,15,100 units were sold in Q2 2023 across the top seven cities — a 36 percent year-on-year increase from about 84,940 units sold during the same period last year.
The seven cities included in the report are Pune, Hyderabad, Bengaluru, Mumbai Metropolitan Region (MMR), National Capital Region (NCR), Chennai and Kolkata.
“Despite spiralling home loan rates in the recent past and global economic headwinds including layoffs by several large and small corporates, the bull run in the Indian housing market continued in the second quarter of the year,” the report released Wednesday said.
Another research report by real estate brokerage firm PropTiger.com, showing lower sales numbers for the same period, said that — “underscoring the resilience of the housing market” — sales of residential units saw 8 percent growth to 80,250 units in the April-June quarter across eight major cities: Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, Delhi-NCR (Gurugram, Noida, Greater Noida, Ghaziabad and Faridabad), MMR (Mumbai, Navi Mumbai & Thane) and Pune.
According to the report, the sales in these cities stood at 74,320 units in the same period last year.
Anuj Puri, chairman at ANAROCK, told ThePrint that home ownership has become a compelling priority for Indians post-pandemic.
“Those who went into a wait-and-watch mode late in 2022 or early this year due to the anticipated slowdown in India amid global headwinds are now increasingly coming forward to take the plunge,” he said.
India’s economic health is faring far better than most western nations and the confidence of home buyers remains upbeat, he said.
“Besides, a majority of new launches in the recent past are by branded and listed developers. This has also boosted confidence,” Puri said, adding that the housing market is yet to feel the impact of the global economic headwinds and the home loan rate hike early this year.
“Home loan rates have definitely seen a notable increase in the last one year post RBI’s successive hike in repo rates to tackle inflation,” he said. “The home loan rates back in the same period last year started from 6.7 percent onwards while presently they start from 8.7 percent, depending on the banks, tenure, loan amount, and other factors.”
Vikas Wadhawan, group chief financial Officer of REA India and business head PropTiger.com, said in a statement that the driving factors behind the uptick in housing sales over the last two years are pent-up demand from the COVID-affected period, growing appetite for homeownership, revival in the economy post-pandemic, and the evolving need for more spacious homes.
REA India is the parent firm of PropTiger.com, Housing.com and Makaan.com.
“We anticipate that the upward trend will persist, making the 2023 calendar year even better than the previous year in terms of sales performance,” he said.
According to ANAROCK, MMR and Pune accounted for over 51 percent of the total sales in the top seven cities — with Pune witnessing the highest yearly jump at 65 percent. As many as 58,770 units were sold in these cities, it said.
Pune and MMR were also the only two cities to see a quarter-on-quarter rise in housing sales — 4 percent and 10 percent respectively — while other cities saw some dip.
However, on a yearly basis, all cities saw a significant jump, the report showed.
While Pune saw the highest growth with 20,680 units being sold in Q2 2023, NCR was the only city to see single-digit yearly growth of 7 percent to nearly 16,450 units. Housing sales in Kolkata increased by 20 percent over Q2 2022, with approximately 5,780 units sold, and MMR and Bengaluru saw housing sales increase by 48 percent and 31 percent, with about 38,090 units and 15,050 units sold.
For Chennai, housing sales were up 44 percent to 5,490 units and for Hyderabad they increased 21 percent to 13,570 units.
On the other hand, according to the PropTiger.com report, sales fell by 19 percent year-on-year in Bengaluru (to 6790 units), in Chennai to 5 percent (to 3,050 units), in Delhi-NCR to 28 percent (to 3,230 units), in Hyderabad to 3 percent (to 7,680 units) and in Kolkata to 40 percent (to 1,940 units).
Meanwhile, the overall 8 percent growth in housing sales was supported by 17 percent growth in Ahmedabad (to 8450 units), 16 percent growth in Mumbai (to 30,260 units) and a 37 percent rise in Pune (to 18,850 units), according to PropTiger.com.
“During Q2 2023, 15 percent of the residential units sold were classified as ready-to-move-in, while the remaining 85 percent were still under construction. The majority of sales, comprising 27 percent, were concentrated in the price range of INR 45-75 lakh, closely followed by the price range of over INR 1 crore, which accounted for 25 percent of the overall sales,” the report said.
Mid-segment homes priced between Rs 40 lakh and Rs 80 lakh remain mostly widely available — according to ANAROCK, they continue to dominate new supply with 31 percent share, followed by premium (Rs 80 lakh–Rs 1.5 crore) and luxury segments (>Rs 1.5 crore) with 27 percent and 23 percent share. It also added that average residential property prices across the top seven cities increased in the range of 6-10 percent in Q2 2023 when compared to Q2 2022, mainly due to increases in the prices of construction raw materials and an overall rise in demand.
FY 24 growth pegged at 8-10 percent
A report by research agency CRISIL, released last week, said that residential real estate developers across the top six cities — MMR, NCR, Bengaluru, Pune, Kolkata, and Hyderabad — are expected to clock 8-10 percent sales growth this calendar year, despite rising interest rates and home prices in 2022.
“Buoyant residential demand across the mid, premium and luxury segments had resulted in robust sales growth in the past two fiscals. Leverage and credit profiles of real estate developers had strengthened, too, and should sustain over the medium term,” the research agency had said.
Healthy economic growth and offices continuing with hybrid working models are keeping demand for residential real estate steady this year, especially for bigger and premium residences, Aniket Dani, director of CRISIL Market Intelligence & Analytics had said in a statement. He added that this demand was expected to hold firm at 8-10 percent despite rising in interest rates and capital values.
“The demand momentum is expected to continue on the back of inventory being at comfortable levels of around three years of sales on an average as against 4.5+ years before the pandemic. Developers, therefore, are on a stronger footing with greater confidence on new launches getting absorbed in line with incremental demand,” Dani added.
Investments by institutional investors in real estate
Another report released Wednesday by real estate firm JLL India found that institutional investors continued to have faith in the Indian real estate sector “despite the global headwinds including uncertainty over economic growth and geopolitical tensions” with a rise in investment inflow.
The report added that the country’s real estate sector has attracted over $2.9 billion worth of investments across 22 deals during the first half (H1) of 2023 (January-June) — a marginal increase from $2.8 billion in H1 2022.
“Average deal size of investments increased by 17 percent to $134 million compared to $115 million, an aggregate of the year 2022. Investment pattern continues to be robust and expected to cross $5 billion in CY 2023, which has been the annual trend pre-Covid and in 2022,” it said.
The report further added that during the first half of 2023, a significant increase was seen in the domestic capital to 44 percent of the total investment, compared to 18 percent in 2022. The largest amount of investment has come from the Asia-Pacific region with a 74 percent share of the total foreign investments, while the remainder was from the Americas.
The residential sector attracted investment of $512 million across nine deals — an increase of 19 percent compared to H1 2022.
“NCR led the share in the investment pie at 44 percent followed closely by MMR at 39 percent. 56 percent of investments in the residential sector were received via domestic players,” the JLL India report said.
(Edited by Uttara Ramaswamy)
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