20230704-莱坊-India_Real_Estate_Residential_and_Office_Market_H1_2023_78页_1mb

India Subcontinent Real Estate H1 2023 Summary

Overall Market Overview

• India emerged as a fastest-growing large economy, positioning itself as a potential alternative to China.
• The economy maintained momentum despite global challenges, with India’s GDP forecast at 7% for FY 2023-24 and 6.5% for 2024.
• Office space remained resilient, with residential demand recovering steadily post-pandemic. The weighted average growth in residential and office prices across major cities was moderate, primarily driven by demand resilience and construction cost pressures.
• Post-pandemic suburbanization trends continued, with demand shifting to peripheral regions like NCR, Bengaluru, and others.

Residential Market

• 9-Yr High Sales: Total residential sales volume reached 0.16 mn units in H1 2023 (1.3% YoY).
• Mid-Segment Dominance: Sales volumes in the INR 5-10 mn price bracket rose from 36% to 38% YoY, overshadowed by affordable segments which saw a slight contraction post-pandemic.
• Infrastructure Drives Growth: Peripheral regions like NCR, Bengaluru, and Pune witnessed significant launches, boosted by improved connectivity and real estate-friendly policies.
• Price Growth: Prices increased steadily across cities (ranging from 2% to 10%). Mumbai, Bengaluru, and NCR recorded higher annual growth (6-5%) compared to other cities.
• Inventory & Value: Unsold inventory increased by 7% YoY to 0.47 mn units. Quarters-to-Sell (QTS) reduced from 7.8 to 6.7 quarters, indicating faster absorption.

Office Market

• Resilient Leasing: Total office leasing volumes reached 0.3 mn sq m, with some cities recording YoY declines offset by healthy demand in others. Flex spaces and India-facing businesses continued to drive leasing activity.
• Rental Stability: Average rentals increased slightly YoY, with most cities experiencing stable or marginal growth. Grade A spaces in major business districts saw upward revisions.
• Vacancy Decline: Vacancy levels dropped significantly across most cities, indicating strong demand and healthy absorption.
• End-Use: India-facing businesses and GGCs remained dominant, while flex spaces saw increased adoption, particularly in tech hubs.

City-Specific Highlights

• Mumbai: Steady sales in residential markets (40k units), resilience in commercial space leasing.
• NCR: Gurugram emerged as a launch hotspot, with Peripherals (Noida, Gurgaon) leading in sales & rentals.
• Bengaluru & Pune: Residential demand stable in central areas but pushed by affordability shifts post-pandemic.
• Kolkata: Stamp duty relaxations supported sales growth, aided by high rental demand.
• Hyderabad: Prices rose significantly (10%), fueled by land scarcity and higher demand for commercial spaces.
• Ahmedabad: Residential growth slowed but mid-segment maintained dominance; office markets experienced a sharp YoY dip temporarily.

Key Trends Across Cities

• Post-pandemic migration to cities with strong IT and business districts (Bengaluru, Pune, NCR, etc.), increasing demand in Peripheral markets.
• Greater adoption of hybrid work models normalizing some commercial space needs but flexible formats flourishing.
• De-risking in sector dominance with BFSI and Healthcare sectors stepping into commercial roles after pandemic-induced job losses in IT.
• Infrastructure development (metros, expressways) boosting demand in previously unserved peripheries.

Conclusion

India’s real estate market demonstrated robustness and adaptability amid global headwinds. While growth moderated in the face of inflation and higher interest rates, pent-up demand from a jobs-led recovery supported continued activity across most submarkets. Careful risk judgement is required given potential slowdowns, but aligning investments with infrastructure-driven growth corridors remains promising.