Housing sales rose 60 per cent annually in January-June this year across eight major cities at 1,58,705 units, the highest half-yearly demand in nine years, mainly driven by lower base effect as well as mortgage rates, according to Knight Frank India.
Housing sales stood at 99,416 units in the first six months of 2021, the consultant said in its 17th edition of half-yearly report 'India Real Estate: Residential and Office Market H1 2022', which was released on Wednesday through a webinar.
Knight Frank India highlighted that the residential sector has recorded a 9-year high sales volume in January–June 2022. The previous high was recorded in the first half of 2013, when sales were at 1,85,577 units.
The consultant has listed several factors for the increase in housing sales such as homebuyers' need to upgrade primary lifestyle, low interest rates on home loans and comparatively low home prices to the pre-pandemic levels.
The renewed need for home ownership sparked by the COVID pandemic is also driving sales.
Housing prices increased across all markets in the range of 3–9 per cent year-on-year (YoY). This also marks H1 2022 as a period in which prices have grown in YoY terms across all markets for the first time since the second half of 2015.
Shishir Baijal, Chairman and Managing Director, Knight Frank India said, "Home buying has witnessed a strong rebound since the advent of the pandemic and continues despite inflationary concerns in the economy."
Giving the breakup of housing sales city-wise, Knight Frank said that housing sales in Mumbai rose 55 per cent to 44,200 units in January-June 2022, from 28,607 units in the year-ago period.
For the period under review (H1 2022 vs H1 2021), Delhi-NCR saw more than two-fold jump in sales to 29,101 units from 11,474 units, while sales of residential properties in Bengaluru grew by 80 per cent to 26,677 units from 14,812 units.
As per the report, Pune witnessed a 25 per cent rise in sales to 21,797 units, from 17,474 units, whereas housing sales in Chennai rose 21 per cent to 6,951 units from 5,751 units.
Hyderabad saw 23 per cent growth in sales to 14,693 units from 11,974 units, while Kolkata witnessed a 39 per cent rise in sales to 7,090 units from 5,115 units.
During January-June this year, housing sales in Ahmedabad rose 95 per cent to 8,197 units, from 4,208 units in the corresponding period of the previous year.
On the supply side, the new launches increased 56 per cent to 1,60,806 units, from 80,566 units during the period under review.
Strong growth in sales velocity, has led to a modest decline in unsold inventory to 4,40,117 units in H1 2022.
Moreover, the strong uptick in sales also brought the quarters-to-sell (QTS) level down to 7.8 quarters from 10.9 quarters in the first six months of 2021. This means that builders need nearly 8 quarters to sell their unsold inventories at the current sales velocity.
Talking about office market, Knight Frank India mentioned that leasing jumped over two-fold to 25.3 million square feet in January-June this year, from 12.25 million square feet in the year-ago period, indicating the potential of the market on the back of a waning pandemic and the promise of a sustained economic recovery.
"The robust performance delivered by the office market during H1 2022 has set the tone for 2022. Physical occupancy levels are rising as more companies want their employees to return to office," Baijal said.
At the same time, he said hiring across many sectors has picked up as India's economic growth continues. "With the current pace of leasing, we expect the year 2022 to see leasing volumes close to the peak of 2019 and exceed in the next year," Baijal added.
He noted that the focus amongst occupiers for this year will remain on flexibility, in leasing terms to allow real-time expansion and contractions indicating a strong year for managed office spaces.
New completions of office space also picked up significantly with 24.1 million square feet getting delivered in H1 2022, a 61 per cent growth annually.
On rental value, Bengaluru and Pune office markets recorded maximum annual increase in rents at 13 per cent and 8 per cent, respectively, mostly due to higher demand and lack of Grade A space.
Hyderabad, Mumbai and NCR also witnessed moderate increase in their rental values, whereas the rental values in Chennai, Ahmedabad and Kolkata remained stable.