Residential sales at 54,000 units in Q4 2022: Hits a yearly decade high: JLL

The residential sector witnessed a robust demand revival in 2022 with the year registering a decadal high in-home sale with 215,000 units across the top seven cities (Mumbai, Delhi NCR, Bengaluru, Hyderabad, Chennai, Kolkata, and Pune) according to JLL’s Residential Market Update – Q4 2022. It is almost like the 2010 sales of 216,762 units. Comparing the yearly numbers, the sales in 2022 increased by 68% Year -on -Year (Y-o-Y) with more than 50,000 units sold in each of the four quarters of 2022. The historic high sales numbers are significant keeping in mind the rise in mortgage rates, property prices, and global headwinds during the year. Despite all these challenges, consumer sentiments remained positive, and the residential market has set new benchmarks in 2022 after two COVID-impacted years. Bengaluru, Hyderabad, Mumbai, and Pune have achieved the highest sales post-2008 thus witnessing remarkable growth. Delhi NCR and Kolkata have recorded the highest sales post-2014.

Coming Home of residential sales

Bengaluru and Mumbai jointly led the annual sales in 2022 as they clocked more than 46,000 units (22% share each) followed by Delhi NCR at 38,000 units (18% share). It is interesting to note that Kolkata, along with the two bigger markets of Mumbai, and Bengaluru witnessed the highest yearly growth in sales.

Bengaluru, Mumbai & Delhi NCR contribute more than 60% of sales in 2022

Sales (No of units) 2021 2022 Y-O-Y Growth (%) % Share in 2022
Bengaluru 27,118 46,649 72% 22%
Chennai 7,847 9,318 19% 4%
Delhi NCR 23,109 38,356 66% 18%
Hyderabad 15,787 24,263 54% 11%
Kolkata 7,183 14,619 104% 7%
Mumbai 25,368 46,779 84% 22%
Pune 21,652 35,682 65% 17%
India 128,064 215,666 68% 100%

Note: Mumbai includes Mumbai city, Mumbai suburbs, Thane city, and Navi Mumbai

Data includes only apartments. Rowhouses, villas, and plotted developments are excluded from our analysis

Source: Real Estate Intelligence Service (REIS), JLL Research

Quarterly sales numbers (October-December) improved by 16% in Q4 2022 as compared to Q4 2021. However, sequentially it was down by 5% as there was a cautious approach and delayed decision-making observed in the last month of the year by prospective home buyers due to the global headwinds and uncertainty in the economic conditions. It is important to note that in the second half of the year (H2 2022), sales accounted for 51% share of the overall sales in 2022.

“The high sales volumes in H2 2022 show that sales were still robust despite the recent challenges underlining the strength of the residential market in India and the increasing importance of home ownership post-pandemic. The Indian residential market is expected to sustain its growth momentum in 2023 while dealing with the challenges of global headwinds and higher interest rates. Moreover, the momentum inhibitor looks to be a temporary one as India has a resilient domestic economy and robust macroeconomic fundamentals,” said Siva Krishnan, Managing Director and Head, Residential Services, India, JLL. As is the case with yearly sales, Bengaluru and Mumbai are jointly leading the quarterly sales with a 21% share followed by Pune having an 18% share. Interestingly Pune, Hyderabad, and Delhi NCR have exhibited increased sales volume in the second half of the year driven by quality launches in prime as well as emerging growth corridors.

Residential Sales marginally down on a quarterly basis

Sales (No of units) Q4 2021 Q3 2022 Q4 2022 Q-o-Q Growth (%) Y-O-Y Growth (%)
Bengaluru 12,180 11,994 11,203 -7% -8%
Chennai 2,696 2,128 2,222 4% -18%
Delhi NCR 8,532 10,660 8,987 -16% 5%
Hyderabad 4,503 6,990 7,824 12% 74%
Kolkata 3,311 4,367 2,499 -43% -25%
Mumbai 7,012 11,487 11,479 0% 64%
Pune 8,512 9,032 9,848 9% 16%
India 46,746 56,658 54,062 -5% 16%

Mumbai includes Mumbai city, Mumbai suburbs, Thane city, and Navi Mumbai

Data includes only apartments. Rowhouses, villas, and plotted developments are excluded from our analysis

Source: Real Estate Intelligence Service (REIS), JLL Research

Premium segment gains momentum

The robust sales witnessed in the residential market is seen across all price segments including the affordable, mid, and premium segment. Almost half of the sales witnessed in 2022 came from apartments in the price bracket of up to INR 75 Lakh. The sales momentum also remained strong in the premium segment as apartments in the INR 1.5 crore plus price tag had a share of 19% in the overall sales recorded in 2022. There is rising demand for bigger homes with good amenities and support infrastructure. It is interesting to note that the share of the affordable segment in annual sales in 2022 has declined as compared to the previous year. The share of apartments priced below INR 50 Lakh in total annual sales has declined from 28% in 2021 to 22% in the current year. On the other hand, the share of the premium segment (priced above INR 1.5 crore) has seen an increase from 10% to 19%.

The affordability synergy that was prevailing six months back has been facing some challenges. There has been a rise in residential prices across the top seven cities of India in the range of 4-11%Y-o-Y along with home loan interest rate that has moved up by around 200 bps in the last 7-8 months. The increase in prices is seen across the spectrum of projects that have high demand and less ready-to-move inventory. New phases of existing projects are also getting launched at higher prices.

“While affordability is likely to be dented, job stability and economic growth will continue to provide the necessary impetus to homebuying activity. Also, it is expected that measures will be taken by various stakeholders to combat inflationary pressures. As the developers are taking cognizance of the buyers’ preferences and focusing on developing or launching projects that are more relevant and aligned with the evolving customer requirements, the residential market is expected to carry forward the growth momentum witnessed in the past year” said Dr Samantak Das, Chief Economist, and Head Research & REIS, India, JLL. Another 27,000 residential units in the plots and villa categories were sold in 2022 across the top seven cities. Most of the traction was seen in the southern cities of Bengaluru, Chennai, and Hyderabad.

New launches in 2022 on a surge

Residential launches in 2022 at 247,000 units are the highest in over a decade and next to the previous high of 281,000 units in 2010. Encouraged by robust sales and strong economic fundamentals, developers launched residential projects across the top seven cities of India. Compared with the previous year, new launches in 2022 witnessed a growth of 81% y-o-y. Most of the launches were witnessed in Mumbai (26%) followed by Hyderabad (22%). Bengaluru and Pune jointly had a share of 20%. More than 40% of the launches were in the price bracket between 75 Lakh-1.5 Crore. Premium segment apartments in the price bracket of above INR 1.50 crore saw a sizeable 21% share in the year.

Launches (No of units) 2021 2022 Y-O-Y Growth (%) % Share in 2022
Bengaluru 22,838 48,412 112% 20%
Chennai 7,033 7,111 1% 3%
Delhi NCR 15,482 13,554 -12% 5%
Hyderabad 36,367 55,232 52% 22%
Kolkata 9,194 10,342 12% 4%
Mumbai 22,442 63,600 183% 26%
Pune 23,382 49,027 110% 20%
India 136,738 247,278 81% 100%

Mumbai includes Mumbai city, Mumbai suburbs, Thane city, and Navi Mumbai

Data includes only apartments. Rowhouses, villas, and plotted developments are excluded from our analysis

Source: Real Estate Intelligence Service (REIS), JLL Research

Unsold inventory increased by 1.8% Q-o-Q in Q4 2022
As of Q4 2022, unsold inventory across the seven cities increased by 1.8% on a Q-o-Q basis as new launches outpaced sales. Mumbai, Bengaluru, and Hyderabad together account for 63% of the unsold stock. An assessment of years to sell (YTS) shows that the expected time to liquidate the stock has declined from 3.1 years in Q3 2022 to 2.9 years in Q4 2022, an indication of robust sales growth

Outlook: India’s residential market has been on an unprecedented upcycle in 2022 with affordable synergies and the growing importance of home ownership. We have now entered the territory of rising interest rates and global headwinds. As a result, affordability is likely to be impacted further in 2023. Price pressures and moderate-income growth are further likely to create a temporary glitch for affordability, though it should remain attractive and second only to the highest affordability levels seen in 2021. Sales momentum is likely to sustain in 2023 on the expectations of moderating inflation supporting a reversal in repo rate hikes. Moreover, likely measures from stakeholders such as longer loan tenures and attractive pricing deals will keep buyers’ affordability levels within comfort.

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