Residential demand at six-year high, records sales of 82,612 units in Q3 2023: Knight Frank India
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In its latest report India
Real Estate Q3 2023, premier real estate consultancy, Knight Frank India cited that the leading eight residential markets
in India continued to show strong growth momentum. During Q3 2023 (July
September 2023), these markets saw a surge in demand with sales of 82,612 residential
units recording a growth of 12% YoY. In volume terms Q3 2023 recorded a six-year
high in quarterly sales volumes.
The mid and the high end category of residential properties see a
further rise in sales momentum in Q3 2023. While properties costing over than
INR 10 mn saw a YoY rise of 39%, the mid segment at INR 5 10 Mn saw a rise of
14% YoY in Q3 2023. A total of 28,642 units costing over INR 10 mn were sold in
this quarter followed by homes costing INR 5 10 mn that was recorded at 29,827
units. The affordable segment, or homes less than INR 5 mn saw a YoY decline of
10% to be recorded at 24,143 units.
Developers responded to this strong demand by increasingly launching
new projects. A total of 85,549 new residential units were launched in Q3 2023
registering a growth of 23% YoY. Price levels in all markets across India grew
in tandem with demand with Hyderabad seeing the most significant rise at 11%
YoY, due to an increased focus on premium properties.
Sales were prominently skewed towards mid and premium price segments. The current Quarters to Sale (QTS) level of 6.5 quarters, significantly better than the 7.1 level a year ago, signified an improving demand dynamic in the residential real estate market of the country.
Demand Supply Economics: Sales velocity maintained, Supply levels significantly elevated
The momentum in residential sales has sustained even as an inflationary environment forced the Researve Bank of India (RBI) to push up the Repo Rate by 250 bps to 6.5% earlier this year, a level not exceeded since 2016. Despite that, the Indian residential market achieved sales of 82,612 units across the eight cities at a growth of 12% YoY. Kolkata saw the highest growth at 105% YoY, largely due to a pronounced base effect caused by the market transitioning into the RERA environment during Q3 2022. Among the larger markets, NCR stood out with a 27% growth in sales during the quarter. Sales volumes in Pune grew by 20% YoY while the rest of the markets experienced steady single digit growth during the quarter.
The underlying fabric of the market has altered significantly with the mid and premium segments constituting the bulk of sales while affordable segment witnessing a decline in volume.
Below INR 5 mn
The share of the INR 5 mn (INR
50 lakhs) and below ticket-size has deteriorated from 36% with sales of 26,831
units in Q3 2022 to 29% with sales of 24,143 units in Q3 2023. The trio effect
of increasing prices, home loan rates and the comparatively adverse impact of
the pandemic in this segment continued to weigh down on demand. This is the first time that the
quarterly sales share of this segment has been eclipsed by that of the mid as
well as premium segments. The current sales share of 29% is a far cry from the
54% levels in 2018.
Incidentally, the most
expensive residential market in the country, Mumbai, which would find maximum
traction for the affordable segment witnessed an annual de-growth of 2.6% YoY
in this category during the quarter. The affordable housing sales declined from
10,198 units in Q3 2022 to 9,930 units in Q3 2023 in Mumbai.
Between INR 5-10 mn
With a sales share of 36%,
the highest volume of residential sales has been recorded in the ticket size of
INR 5-10 mn or mid-residential segment. Sales in this ticket-size category has
recorded an annual growth of 14% at 29,827 units during Q3 2023. Bengaluru
(6,879), Pune (6,086) and Mumbai (5,360) together accounted for more than 60%
of sales in the ticket-size between INR 5 mn to 10 mn.
INR 10 mn & above
Consistent with an upward trend seen in the past seven quarters, the share of sales in the INR 10 mn (INR 1CR) and above ticket-size or premium segment grew significantly to 35% in Q3 2023 compared to 28% a year ago. In Q3 2023, this ticket size category witnessed a growth of 39% YoY to 28,642 housing unit sales from 20,591 in Q3 2022. With sales of 8,075 units, NCR constituted 28% of the sales volume which is highest in the premium segment in the country. NCR is followed by Mumbai and Bengaluru at 7,018 units and 4,770 units, respectively.
Demand Analysis by Ticket Size (Q3 2022 vs Q3 2023
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