this week's edition
Welcome to Indian CRE Weekly! In this edition, I bring you a comprehensive summary of the most significant developments in the Q2 2023 residential market. Sales and supply have soared to decadal highs, bolstered by a surge in consumer confidence and favorable economic conditions. As we look ahead, experts predict a downward trend in repo rates, further fueling the growth of the real estate sector. Additionally, we delve into the capital flows observed in H1 2023 and explore various valuation methods for Commercial Real Estate (CRE).
Q2 Residential Market Update, Pan India:
Sales: The Indian housing market continued its bullish trend in the second quarter of 2023, with quarterly housing sales reaching their highest level in the past decade. Sales increased by 36% year-on-year, to approximately 1,15,100 units across the top 7 cities. MMR and Pune accounted for 51% of total sales, with Pune recording a 65% yearly jump.
Supply: New launches also increased in the quarter, by 25% year-on-year, to approximately 1,02,600 units. MMR and Pune again saw the maximum new supply, accounting for 63% of the total new launches across the top 7 cities. Individually, the two cities saw 31% and 29% yearly increase in their new supply, respectively.
In terms of budget segments, mid-segment homes priced INR 40 - 80 lakh continued to dominate new supply with 31% share, followed by premium (INR 80 lakh – INR 1.5 Cr) and affordable segments (<INR 40 lakh) with 27% and 19% share, respectively.
Aided by robust sales, existing housing inventory declined by 2% yearly in Q2 2023 across the top 7 cities. As on Q2 2023 end, the available inventory stood at over 6.14 lakh units. NCR witnessed highest yearly decline of 21%, followed by Bangalore which declined by 12% and Kolkata by 11%.
Price Growth(Basic selling price on Built-up Area): As for residential property prices across the top cities, there was a quarterly increase in the range of 1-4% in Q2 2023 and a yearly rise ranging from 6% to 10% compared to the same period in 2022. This increase can be attributed to the higher costs of construction raw materials and a general surge in demand.
The residential market is being predominantly driven by listed and large developers, indicating a solid industry foundation. While there are risks such as rising costs and potential interest rate hikes, the current situation is well-managed and housing demand remains stable.
Source: ANAROCK
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Q2 Capital flows:
H1 2023 recorded a total of $3.7 billion in Investment inflows, that’s 75% total inflows Received for the year 2022.?
Out of $3.7 billion, Office took the large share of the pie, by attracting $2.7 Billion or 74% of total inflows. Residential, Industrial, and Alternatives received 12,9,4% respectively.?
Source: Colliers
Commercial Real Estate Valuation: Primarily, CRE is valued using two Income methods:
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Have a Great week!