India’s residential real estate market is experiencing a surge in activity, fueled by a robust economy and growing demand for luxury living. A new report by Knight Frank, titled “India Real Estate: Residential and Office (January – June 2024), revealed that the first half of 2024 (H1 2024) witnessed a significant jump in residential unit sales across India’s top eight cities, including Mumbai, Delhi-NCR, Bengaluru, Pune, and Hyderabad. Compared to the same period last year, sales rose by an impressive 11 per cent, marking the highest sales velocity in 11 years.
A total of 173,241 units were sold during this period, signifying a strong appetite for homeownership.
Luxury takes centre stage:
The report reveals a fascinating trend – a shift in buyer preferences towards premium properties. Homes priced at Rs 1 crore (₹10 million) and above saw a significant rise in sales, accounting for a substantial 41% of total sales in H1 2024. This is a significant jump from just 30% in H1 2023, highlighting a growing desire for luxurious living spaces.
Source: Knight Frank India
Mumbai remained the largest residential market with sales at 47,259 units. In fact the city’s housing market is experiencing a golden age, with sales reaching a 13-year high in the first half of 2024. This boom is driven by a surge in demand for luxury properties, with sales of homes priced over Rs 10 million skyrocketing by 117% compared to last year. While overall sales have grown by a healthy 16%, there’s a concern that the increasing focus on luxury could be squeezing out the affordable housing segment.
““Mumbai’s primary residential market has recorded the highest half-yearly sales volume since H1 2012 with a remarkable 16% year-on-year growth. The premium segment has nearly doubled its share of total sales, yet the affordable segment continues to hold strong. This notable growth in Mumbai’s residential real estate is attributed to a favourable economic climate, rising disposable incomes, a growing preference for larger homes, and it is further aided by Government initiatives under the PMAY scheme to construct 3 cr houses,” said Gulam Zia, Senior Executive Director at Knight Frank India.
Mumbai was followed by NCR with sales of 28,998 units and Bengaluru with 27,404 units. These three cities together constituted 59% of the total residential sales during the year.
Mumbai registered the highest sales of 47,259 units demonstrating a 16% on-year growth during the period. Kolkata witnessed the highest home sales growth, in terms of percentage, at 25% followed by Ahmedabad at 17%.
The sales share of residential properties priced at Rs 50 lakh and below dropped to 27% from 32% a year ago.
The demand for affordable housing (under ₹5 million) has been stagnant for the past five years, despite a strong overall market. This segment has seen a 6% YoY decline in sales, unlike other categories. This could be due to rising property prices, higher interest rates, and the pandemic’s harsher impact on these buyers. In contrast, there’s a clear shift towards premium properties (over ₹10 million) with an 8% YoY growth. Developers are catering to this change by launching more luxury apartments, evident in the increased share of such launches (from 36% to 47% in a year).
“The residential market has recorded a significant rise of 11% YoY anchored by the premium category, that formed 34% of all sales in H1 2024. Concurrently, India’s status as one of the fastest-growing large economies has positively impacted office demand, with record-high transaction volumes in H1 2024 registering a 33% rise YoY with India facing businesses and GCCs taking the lead positions in transactions. Based on our expectation of continued stability in the socio-economic and political conditions and the current trajectory of growth, we anticipate a strong finish to the year 2024 with both residential and commercial office transactions noting record highs,” said Gulam Zia, Senior Executive Director at Knight Frank India.
The report also presents positive indicators regarding overall market health. The “quarter-to-sell” (QTS) level, which represents the time required to liquidate existing inventory, has significantly improved. It has fallen to a healthy 5.9 quarters (18 months) across the eight markets, compared to 9.5 quarters in H1 2021. Notably, the QTS level for the premium category is even better, at 5.1 quarters, suggesting a strong demand for luxury properties and minimal inventory concerns in this segment.
First Published: Jul 05 2024 | 11:13 AM IST