- NCR sees a 67% rise in annual home sales
- Average residential prices across markets grow 4 -7% YoY
- Bengaluru and NCR dominate office leasing with 14.5 mn sq ft and 8.9 mn sq ft transactions
MUMBAI: Knight Frank India, in their latest report, noted that 312,666 residential units were sold across the top eight[1] markets of India in 2022 (Jan – Dec) registering a growth of 34% year on year (YoY). New home launches also witnessed a significant rise of 41% YoY in 2022 with the addition of 328,129 units in 2022. Mumbai led residential sales in 2022 with 85,169 units, followed by the National Capital Region (NCR) (58,460) and Bengaluru (53,363).
The office sector in India saw a strong recovery in demand despite the geopolitical challenges, recording gross office leasing of 51.6 million square feet (mn sq ft), a rise of 36% YoY. New office space completions also grew by 28% YoY to 49.4 mn sq ft in 2022. In terms of the office space demand, Bengaluru led with 14.5 mn sq ft followed by NCR with 8.9 mn sq ft transacted area during the year 2022.
Shishir Baijal, Chairman and Managing Director, of Knight Frank India said, “For the first time in over a decade we have seen simultaneous growth in all major real estate segments. Office, residential, warehousing, and retail, all registered a significant increase in activities in 2022. Factors like change in attitude towards home ownership, return to work, increased hiring, and proliferation of e-commerce, etc. backed by economic stability, allowed India’s real estate sector to benefit last year. This pace of growth is expected to largely remain in the new year owing to continued domestic economic growth. Having said that, India will have to remain cautious of the global geopolitical and economic challenges as that can cast a shadow on the pace of growth for India.”
Knight Frank India today launched the 18th edition of its flagship half-yearly report – India Real Estate: 2022 – which presents a comprehensive analysis of the residential and office market performance across eight major cities for the July-December 2022 (H2 2022) period.
ALL INDIA RESIDENTIAL UPDATE: H2 2022 (JULY – DECEMBER 2022)
SALES VELOCITY STRENGTHENED DESPITE RISING HOME LOAN RATES
2022 can be considered a watershed year for the residential sector across the top eight cities of India as after a significant period of decline, there was a substantial rise in sales, setting new decadal benchmarks. Annual sales saw a rise of 34% YoY with sales of 312,666 units recorded at a 9-year high.
Encouraged by this sales velocity, launches also saw a commensurate rise in 2022. A total of 328,129 units were launched across the eight markets registering a rise of 41% YoY. Mumbai remained the largest market by volume both in terms of sales as well as new launches, followed by National Capital Region (NCR) and Bengaluru. Apart from Kolkata, which saw a slowdown in sales of residential by 10% YoY in 2022, all markets registered growth in both sales as well as new launches.
In terms of 12-month residential price change, Mumbai, NCR, Bengaluru, and Pune registered increments of 7% each. Chennai and Hyderabad witnessed a significant increment of 6% while Kolkata and Ahmedabad witnessed an increment of 4%. A marginal rising in prices is a positive indication of a strengthening market but remained benign so far as impact is concerned as demand was adequately met by supply keeping market dynamics stable.
Commenting on the residential sector performance for the year 2022, Shishir Baijal, Chairman and Managing Director, of Knight Frank India said, “The residential sector was an exceptional story of growth in 2022, as, despite numerous inflictions, the pace of growth remained largely intact. This momentum is the result of a definitive shift in attitude in favor of home ownership that has ignited the latent demand. The shift is so strong that despite some worsening in affordability on account of rising home loan interest rates, sales momentum has remained buoyant. Demand for homes has been further strengthened by continued economic growth, financial and income stability, and moderately growing prices. Further, we estimate the pace of sales to remain unchanged in the new year, as most parameters are expected to remain favorable, including levels of inflation that are expected to start stabilizing by mid of 2023.”
MARKET SUMMARY: TOP EIGHT INDIAN CITIES
| SALES | LAUNCHES | |||||||
| City | H2 2022 | YoY % Change (H2 2022 | 2022 | YoY % Change (2022) | H2 2022 (YoY change) | YoY % Change (H2 2022) | 2022 (YoY change) | YoY % Change (2022) |
| Mumbai | 40,969 | 19% | 85,169 | 35% | 42,968 | 26% | 90,434 | 29% |
| NCR | 29,359 | 24% | 58,460 | 67% | 34,507 | 96% | 63,233 | 207% |
| Bengaluru | 26,686 | 15% | 53,363 | 40% | 22,197 | 29% | 43,420 | 42% |
| Pune | 21,613 | 9% | 43,410 | 17% | 21,247 | 6% | 38,640 | -5% |
| Chennai | 7,297 | 18% | 14,248 | 19% | 7,846 | 7% | 15,416 | 21% |
| Hyderabad | 16,353 | 32% | 31,046 | 28% | 22,491 | 18% | 43,847 | 23% |
| Kolkata | 5,819 | -37% | 12,909 | -10% | 5,644 | 6% | 12,330 | 64% |
| Ahmedabad | 5,865 | 25% | 14,062 | 58% | 10,424 | 24% | 20,809 | 42% |
| All India | 153,961 | 15% | 312,666 | 34% | 167,323 | 30% | 328,129 | 41% |
MARKETS REMAIN STRONG IN H2 2022 DESPITE REGULAR RISE IN HOME LOAN RATES
H2 2022 (July – December 2022) was the second-best half-yearly period following H1 2022 in terms of sales volume in the last 18 half-year blocks (9 years). Housing sales across the top eight markets in India were recorded at 153,961 units in H2 2022, registering a 15% YoY growth. With central banks raising policy rates to fight inflation and making mortgages more expensive, residential markets in India saw a marginal sequential decline in volumes. Similarly, 167,323 units were launched during H2 2022 registering a 30% YoY growth in H2 2022.
Mumbai registered the highest sales of 40,969 units accounting for 19% YoY growth in H2 2022. Hyderabad witnessed the highest home sales growth (in terms of percentage growth) at 32% YoY followed by Ahmedabad at 25% while NCR and Mumbai grew at 24% and 19% YoY respectively. Kolkata was the only market to record a slowdown in sales. With steady momentum in sales volumes in H2 2022, residential prices also grew in the range of 1% to 3% across markets in H2 2022 compared to H1 2022. Bengaluru and Mumbai recorded 3% rise in average residential prices while prices in Kolkata remained stable during the period.
RESIDENTIAL PRICE MOVEMENT
| City | H2 2022 in INR/ sq m (INR/ sq ft) | 12-month change | 6-month change |
| Mumbai | 7,367 | 7% | 3% |
| NCR | 4,490 | 7% | 1% |
| Bengaluru | 5,511 | 7% | 3% |
| Pune | 4,293 | 7% | 1% |
| Chennai | 4,300 | 6% | 1% |
| Hyderabad | 4,984 | 6% | 1% |
| Kolkata | 3,351 | 4% | 0% |
| Ahmedabad | 2,900 | 4% | 1% |
The high-end and mid-segment housing gained a share in sales at the cost of the affordable segment in 2022, indicating some impact of deteriorating affordability in the price-sensitive segment. However, sales volume in the affordable category also improved in comparison to the past period. The share of sales in the INR 5 -10 mn segment grew from 35% in H2 2021 to 37% in H2 2022 while units above INR 10 mn also witnessed growth from 23% in H2 2021 to 28% in H2 2022. Conversely, the share of sales for units below INR 5 mn category witnessed a decline from 42% in H2 2021 to 35% in H2 2022. The strong uptick in sales also brought the Quarters to Sell (QTS) level down to 7.2 quarters from 10.2 quarters in H2 2021.
ALL INDIA OFFICE UPDATE: H2 2022 (JULY – DECEMBER 2022)
2022 RECORDS SECOND BEST YEAR FOR OFFICE TRANSACTIONS
Top office markets of India registered total gross leasing activities of 51.6 mn sq ft in 2022 which was higher by 36% YoY over last year. This is historically the second-best year for office transaction volume with the peak achieved in 2019. While the last quarter of the year was marred with some uncertainty owing to global economic disruptions, the stronger domestic economic environment allowed the office market to remain buoyant. Additionally, as more corporations push for return-to-work policy, demand for office has been steadily rising.
New completions have also seen a rise in 2022 with 49.4 Mn sq ft of new office space delivered recording a YoY rise of 28%. Bengaluru (15.6 mn sq ft), Hyderabad (11.2 mn sq ft), and NCR (7.9 mn sq ft) were the top markets to receive new office spaces.
Shishir Baijal, Chairman and Managing Director, of Knight Frank India said, “The office market has made a significant recovery in 2022 despite concerns of a looming recession in the developed economies. The evolution of the office as an enabler of productivity continued with more corporations recalling their staff to the office. The addition of staff, especially by Indian corporations also added to office space demand in 2022. However, occupiers increasingly favored flexibility which in turn has helped managed office spaces to record substantial growth in 2022. The uncertainty in the global economies is expected to continue for a couple of more quarters which can cause sentiments to remain subdued while corporations work towards realigning around the same, post which we can expect an uptick in leasing activities. Having said that, the domestic economy is expected to remain in growth mode which should help office space maintain a healthy momentum.”
MARKET SUMMARY: TOP EIGHT INDIAN CITIES
| Space Transactions (in Mn Sq Ft) | New Completions (in Mn Sq Ft) | |||||||
| City | H2 2022 | YoY % Change (H2 2022 | 2022 | YoY % Change (2022) | H2 2022 | YoY % Change (H2 2022) | 2022 | YoY %Change (2022) |
| Mumbai | 3.4 | 59% | 6.4 | 69% | 1 | -73% | 2 | -59% |
| NCR | 4.8 | 20% | 8.9 | 39% | 5.4 | 152% | 7.9 | 53% |
| Bengaluru | 6.8 | -22% | 14.5 | 19% | 9.8 | 45% | 15.6 | 31% |
| Pune | 2.8 | 6% | 6.2 | 61% | 1.7 | -61% | 6.7 | -8% |
| Ahmedabad | 0.9 | 24% | 2.2 | 88% | 0.1 | -91% | 1.4 | -42% |
| Chennai | 3.5 | 29% | 5.6 | 44% | 1.4 | 45% | 4.4 | 150% |
| Hyderabad | 3.5 | -20% | 6.7 | 12% | 6 | 56% | 11.2 | 145% |
| Kolkata | 0.6 | 1% | 1.1 | 42% | 0 | – | 0.2 | 70% |
| Total | 26.3 | 2% | 51.6 | 36% | 25.3 | 7% | 49.4 | 28% |
STEADY TRANSACTION PACE CONTINUED IN H2 2022
Despite significant headwinds, especially in Q4 2022, 26.3 mn sq ft of office space was transacted during H2 2022 compared to 25.3 mn sq ft during H1 2022. On a year-on-year basis, H2 2022 observed a marginal growth of 2% in comparison to 25.9 mn sq ft in H2 2021. Office space completions also witnessed a similarly modest growth of 7% YoY with 25.3 mn sq ft of new offices added during H2 2022.
Bengaluru continued to dominate office leasing with 6.8 mn sq ft of transactions recorded in H2 2022. Mumbai saw the highest growth percentage transactions growth in H2 2022 (in terms of percentage growth) with 59% YoY followed by Chennai and Ahmedabad at 29% YoY and 24% YoY, respectively.
Office completions also saw modest growth in line with transactions in H2 2022. Bengaluru registered 9.8 mn sq ft of new office spaces completions, accounting for 39% of the new addition in H2 2022, whereas NCR recorded the highest (in terms of percentage growth) with 152% YoY growth in new office completions in H2 2022.
INDIAN OFFICE MARKET SUMMARY
CO-WORKING AND OTHER SERVICE SECTORS GAIN SHARE OF OFFICE SPACE LEASING IN 2022
Other service sectors (which include e-commerce, education, healthcare, and logistics companies among others) accounted for the highest share at 30% followed by Information Technology (IT) sector at 22% of the total space transacted during H2 2022. Co-working sector also witnessed considerable growth in the share of total transactions from 18% in H2 2021 to 21% in H2 2022. The occupier’s perspective of office space as an enabler of productivity rather than just an asset continues to solidify and favors the increasing consumption of coworking premises as they are acknowledged as experts in the domain of workspace delivery.
The manufacturing sector recorded a decline in the share of total transactions from 21% in H2 2021 to 12% in H2 2022. The jump seen in this sector in 2021 was an exception to the rule. It saw the scale mainly because of a few large transactions. This year the market has adjusted itself to its long-term range of 12% – 15% share.
SECTOR WISE TRANSACTION SPLIT (H2 2021 and H2 2022)
OFFICE RENTALS STRENGTHEN ACROSS MARKETS
Rental levels were stable or grew across all markets in H2 2022, marking it as the second half-yearly period since H1 2019 that this has occurred. Bengaluru and Pune office markets grew the most during H2 2022 at 11% and 7% YoY respectively.
MARKET-WISE RENTAL MOVEMENT
| City | H2 2022 in INR/ sq ft | 12-month change | 6-month change |
| Bengaluru | 81 | 11% | 0% |
| Pune | 72 | 7% | 1% |
| Hyderabad | 65 | 6% | 2% |
| Chennai | 61.2 | 5% | 2% |
| Mumbai | 110 | 3% | 0% |
| NCR | 83.7 | 2% | 3% |
| Ahmedabad | 40.1 | 0% | 0% |
| Kolkata | 34.8 | 0% | 0% |
[1] Mumbai, National Capital Region (NCR), Bengaluru, Hyderabad, Chennai, Pune, Ahmedabad, Kolkata
 registering a growth of 34% year on year (YoY). New home launches also witnessed a significant rise of 41% YoY in 2022 with the addition of 328,129 units in 2022. Mumbai led residential sales in 2022 with 85,169 units, followed by the National Capital Region (NCR) (58,460) and Bengaluru (53,363).){kind=link}