India housing supply up 8% YoY, sales dip 1% in H1 2023: Knight Frank

The top eight real estate markets in India saw residential launches grow 8 per cent year-on-year to 1,73,364 units between January - June 2023, according to a new report released by property consultancy Knight Frank India on Tuesday.

Sales volume in the segment stood at 1,56,640 units, the highest in 9.5 years after H1 2022. The premium housing segment (Rs 1 crore and above) grew to occupy a 30 per cent share in sales as the mid-segment (Rs 50 lakh - Rs 1 crore) eclipsed the affordable bracket (below Rs 50 lakh) to gain a 38 per cent share during the period.

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“For the mid and premium segment, it is interesting to note that demand remained robust despite the increase in home loan rates during the first few months of the year, which highlights the enduring strength of the market,” said Shishir Baijal, Chairman and Managing Director, Knight Frank India.

Prices increased across all the eight markets - between 2 per cent – 10 per cent YoY - with Mumbai (6 per cent), Bengaluru (5 per cent) and the National Capital Region (5 per cent) registering notable growths.

While the market is currently carrying a higher stock of unsold inventory, consistently high sales volumes in H1 2023 have reduced the quarters-to-sell period from 7.8 to 6.7 quarters going forward.

The office segment on the other hand sustained demand momentum with a 3 per cent year-on-year growth at 26.1 million square feet in transactions, led by India facing businesses of global companies (35 per cent), flexible workspaces (26 per cent) and global capability centres (25 per cent).

Supply volumes in the office segment however dropped by approximately 25 per cent YoY in H1 2023, which in turn moderated vacancy to 16.4 per cent from 17 per cent in H1 2022. Bengaluru and NCR accounted for 57 per cent of the total space delivered during the period under review.

“The strengthening economic fundamentals provide a solid foundation for the office market especially to the growth of India facing businesses which are expected to sustain demand throughout 2023,” noted Baijal.

The flexible workspace bracket which has seen a consistent rise in demand over the past few years witnessed record high demand during the period, the report highlighted. Furthermore, while office rents grew in the range of 1 per cent to 3 per cent for most markets, Kolkata saw a 10 per cent YoY surge on the back of limited supply since the Covid-19 pandemic.