2023-05-07-莱坊-India_Real_Estate_Residential_and_Office_Market_H2_2022_88页_2mb

Summary of Knight Frank India Real Estate Report: Office and Residential, July - December 2022

Despite geopolitical tensions and high inflation limiting global recovery, India's real estate market achieved robust growth in 2022. Residential sales reached a nine-year high, with affordability remaining a key concern despite declining in most cities except Mumbai. Gold coast developments and hybrid work trends drove demand, but rising interest rates and input costs tempered optimism. Office markets recovered strongly, particularly in cities like Bengaluru and NCR, supported by resilient IT and BFSI sectors. Managed offices and co-working spaces gained prominence due to workplace flexibility needs. Supply-led inventories improved due to high sales velocity. Below is a detailed cities-wise summary.

Residential Market Trends

• National Trends:

  • Sales volumes surged, with residential units at a nine-year peak (9.0 million sq m) supported by mid and premium segments.
  • Prices across all cities grew by 4-7% YoY as demand remained strong despite interest rate hikes.
  • Unsold inventory increased slightly, but the Quarters to Sell (QTS) indicator improved from 10.2 to 7.2 quarters, indicating better absorption.

• Ticket Size Analysis:

  • Demand shifted from low-ticket (<5 mn INR) to mid-price segments, with the share of sales in the INR 5-10 mn category increasing from 35% to 37%.
  • High-ticket segments (>10 mn INR) saw a further expansion in sales share.

• Affordability:

  • The Knight Frank Affordability Index declined across cities due to higher mortgage costs and prices.
  • Ahmedabad emerged as the most affordable market (EMI-to-income ratio: 22%), while Mumbai was the least affordable at 53%.

Office Market Trends

• National Trends:

  • Office transactions recorded a 36% YoY growth, with completions growing by 28%. India's office market recovered despite global economic headwinds.
  • Co-working spaces accounted for 57% of transactions, driven by hybrid work adoption.

• Sector-wise Demand:

  • The IT sector led demand, contributing 26-30% of transactions, while BFSI and other services sectors saw moderate growth.

• Vacancy and Rents:

  • Vacancy rates improved, falling from 21% in H1 2021 to 14-19% in 2022.
  • Average rental rates increased across cities, boosted by stable occupier demand and limited new supply.

City-wise Analysis

Mumbai:

• Sales grew by 35% YoY, with prices rising 7%.
• Office transactions doubled (69% YoY), driven by IT and co-working demand.
• High vacancy rates (19.6%) remained a challenge despite robust leasing.

NCR:

• NCR, especially Gurugram and Noida, saw 67% sales growth and 53% completion growth.
• Co-working spaces dominated transactions (+152% YoY in completions).
• Prices increased 7%, driven by IT and manufacturing sector demand.

Pune:

• Pune recorded 17% sales growth, with prices up 7%.
• Office transactions jumped 61% YoY, driven by IT and manufacturing sectors in key sub-markets like Hinjewadi and Kharadi.
• Co-working spaces saw a 46% share of transactions, reflecting hybrid work adoption.

Bengaluru:

• Sales increased 40% YoY, with prices rising 7%.
• Office vacancies improved to 14.1%, with rental growth of 11%.
• The IT sector reduced space take-up due to growth consolidation, but demand remained strong in peripheral areas like Outer Ring Road.

Hyderabad:

• Sales grew 27.7%, with prices increasing 5.6% YoY.
• Office vacancies declined to 15.4%, driven by IT and other service sectors.
• Nizampet and IT corridors emerged as growth hubs.

Kolkata:

• Sales dropped 10% YoY, impacted by stamp duty relief ending.
• Office transactions fell, but QTS improved from 7.3 to 6.1 quarters.

A summary of key affordability data and national trends is provided below:

Key Contacts and Author Team

• Research Authors: Vivek Rathi (VP), Yashwin Bangera (Senior VP), Reshmi Panicker (Exec Director)
• Advisory & Valuation: Gulam Zia, Rajeev Vijay, Saurabh Mehrotra
• Capital Markets: Viral Desai
• Contact information provided for all divisions (Office, Research, etc.) is available in the report’s footer.

The report concludes that despite global headwinds, India's real estate market demonstrated resilience, driven by affordability recovery, workplace flexibility trends, and strong demand in key economic hubs.