'Housing demand at 6-year high in Q3 2023 across top 8 cities'

The residential real estate segment registered its best quarter in six years in terms of sales volume for the three-month period ended September 2023 at 82,612 units, as per a report by property consultancy Knight Frank India on Wednesday.

Amongst the eight top markets under review, Kolkata saw a staggering 105% jump in annual sales during the quarter. Bengaluru on the other hand featured at the bottom of the chart with a meagre 1% growth.

The mid-premium and luxury housing segments saw a further rise in sales momentum during the quarter, with a 36% and 35% share, respectively. In contrast, the affordable housing bracket saw its share reduce to 29%, from 36% in Q3 2022, owing to surging prices, increasing home loan rates and the lingering effects of the Covid-19 pandemic.

“The affordable segment has been severely affected, necessitating further interventions to stimulate demand and enhance development viability,” said Knight Frank India Chairman and Managing director, Shishir Baijal, adding that the decline is worrisome as traditionally it has been the largest buying segment, crucial for long-term industry growth.

The report suggested greater interest subsidies, lower down payments and longer loan tenures as remedies to battle the visible stress in the segment.

New launches during the quarter witnessed a 23% annual increase at 85,549 units, leading to a corresponding increase in unsold inventory. This however does not stand out as a cause of concern as the ‘quarter to sale’ period fell to 6.5 versus 7.1 in Q3 2022.

Furthermore, the weighted average prices appreciated in all the eight markets, in tandem with year-on-year demand growth, the report highlighted.

The commercial segment recorded office space transactions to the tune of 16.1 million square feet during the July-September quarter, reflecting a 17% year-on-year growth.

Global capability centres led the demand on this front with a 44% share, followed by India facing businesses (37%), flex spaces (11%) and third party IT services (8%).

“GCCs are increasingly drawn to India due to its cost-effective labour force and robust infrastructure, with cities like Bengaluru, Hyderabad and Chennai offering improved transportation and business parks,” reasoned Thirumal Govindraj, who is a senior managing director at RMZ Corp, adding that India’s abundant talent pool, especially in IT, engineering and finance, perfectly aligns with the needs of GCCs.

Supply of office space during the period under review stood at 11.5 million square feet, with Hyderabad accounting for 46% of this delivery.