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The first quarter of 2024 saw a 9 per cent rise in home sales at 86,345 units across top eight cities in India, while office leasing rose 43 per cent to 16.2 million square feet, according to Knight Frank India’s quarterly update on the sector.
India is one of the few sweet spots for the real estate sector, while global conditions are still challenging and it is a slow path to recovery, Knight Frank said in its update.
In India, people are still buying houses in large numbers with sales growth slightly ahead of supply growth. In absolute terms, 93,254 units were launched in the first quarter, a rise of 7 per cent year-on-year.
The office market was driven by demand from global capacity centres (GCCs) which had seen a sudden rebound over the last few months after a muted beginning.
Residential sales
Mumbai witnessed the highest growth during the quarter. According to Knight Frank’s data, 23,743 units were sold in the quarter, a rise of 17 per cent year-on-year. The next two best performing markets were Hyderabad and Pune.
The National Capital Region, the second largest in volume terms after Mumbai, saw a 1 per cent up move in the quarter, while Bengaluru saw a fall of 2 per cent.
On a sequential basis, the sales were almost flat with a downward bias and Mumbai, NCR, Bengaluru, and Pune reported a fall in sales.
With the exception of Mumbai and Kolkata, all other cities saw an increase in residential supply. Chennai saw the highest growth at 89 per cent, while in Ahmedabad the growth was only 1 per cent.
Also read: Mumbai property registrations up 6.8% in March
The increased demand for homes has resulted in inventory depletion at 5.9 quarters to sell compared to 6.7 quarters year ago. The unsold inventory level has however increased due to new launches. It was at 480,420 units at the end of March.
More homes have been sold in the price category of over ₹1 crore. This could be due to a rise in prices. In the year ago quarter, the majority of home sales were in the ₹50 lakh-₹1 crore band.
Prices have increased by 2-13 per cent over one year period, with Hyderabad seeing the most growth and Ahmedabad the least. Sequentially, the rise has been 1-4 per cent, with Mumbai and Ahmedabad not witnessing any change.
Office demand
India may likely end 2024 with record leasing volumes, per Knight Frank India’s Chairman and Managing Director Shishir Baijal.
With the exception of Kolkata and Bengaluru, all other cities reported robust growth in office lease transactions.
Hyderabad witnessed a rise of 261 per cent, while Pune reported a 146 per cent growth in leasing volume. Kolkata saw a fall of 9 per cent and Bengaluru was flat.
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There’s not enough new supply of office coming in and this is reflected in the numbers. In the quarter under review, only 1.2 msf of office stock was completed and this has remained more or less stagnant at this level over the quarters.
The gap in supply and demand has led to buoyancy in office rents. Bengaluru, Mumbai and NCR have seen 4-5 per cent growth in rents. There also has been a marginal reduction in vacancy levels though it is still above 15 per cent.
Likely reduction in interest rates, expected towards the second half of the year, will improve sentiments both in the residential and office markets, the report said.
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