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Healthy Transactions Hold Hope

Torbit - October 02, 2022 - - 0 |

The third quarter of this year has seen a fairly good growth with both commercial and residential sector registering  healthy transactions numbers. The residential sector has seen 15% yearly growth, a 20% rise in regards to the quarterly average sales observed during the 2019  pre-pandemic times while the commercial market saw 7 quarter high in leasing volumes of 16.1 msf  at 7 quarter high with a yearly growth of 29%, surpassing the pre-pandemic quarterly average of 2019 by 6%.

A recent Knight Frank India report  for the third quarter of 2022 says  that NCR recorded office transactions of 2.4 mn sq ft, registering 23% YoY growth in Q3 2022. This is the second highest office transaction volume recorded across eight Indian cities during the quarter. With 1.7 mn sq ft of new office completions, the city accounted for 13% of the total space delivered across leading eight markets during the quarter. The office markets rental value remained stable. NCR recorded sales of 11,014 home units which translated into 21% YoY growth. Residential launches also remained robust with 10,265 units getting added to the market; registering a growth of 14% YoY during the quarter. At an average price increase of 8% YoY, NCR recorded the second highest YoY growth in prices across leading eight Indian cities during Q3 2022.

NDIAN COMMERCIAL MARKET SUMMARY: Q3 2022 (JULY TO SEPTEMEBER 2022

The commercial market in India recorded 7-quarter high in leasing volumes in Q3 2022. Growing by 29% YoY, transaction volumes stood at 16.1 million square feet  across top eight cities in India during Q3 2022. The transaction volumes have surpassed the pre-pandemic quarterly average of 2019 by 6%. In line with occupier demand, 13 mn sq ft of new office was completed, a 9% increase in YoY terms in Q3 2022. Rentals have also been either stable or witnessed a marginal growth in sequential terms across the top eight cities over the past two quarters.

OFFICE MARKET SUMMARY

  Office Transactions New Completions
City Q3 2021

MN SQ FT

Q3 2022 MN SQ FT % Change (YoY) Q3 2021

MN SQ FT

Q3 2022 MN SQ FT % Change (YoY)
Bengaluru 4.3 7.3 71% 4.0 4.9 20%
NCR 2.0 2.4 23% 1.1 1.7 63%
Mumbai 1.2 2.1 82% 0.2 0.6 273%
Chennai 1.6 1.8 12% 0.2 1.1 374%
Hyderabad 2.1 0.8 -60% 2.2 3.3 51%
Pune 1.0 0.7 -27% 2.5 1.4 -45%
Ahmedabad 0.3 0.7 117% 1.1 0.1 -95%
Kolkata 0.1 0.3 105% 0.6 -100%
Total 12.5 16.1 29% 11.9 13.0 9%

Source: Knight Frank India 

MARKET WISE RENTAL MOVEMENT

City YoY Change QoQ Change
Bengaluru 13% 0%
Pune 9% 0%
Hyderabad 7% 2%
Chennai 5% 2%
Mumbai 4% 0%
Ahmedabad 0% 0%
NCR 0% 0%
Kolkata 0% 0%

Source: Knight Frank India 

According to Shishir Baijal, Chairman and Managing Director, Knight Frank India the consistent growth in leasing volumes along with stable to growing rents depicts the strength of the office market. Large scale hiring in the last 18 months, especially in the IT/ ITeS sector and  implementation of return to office policies  by companies is creating incremental office space demand. This is further complemented by pent up demand from 2020 – 21 which together are propelling office space demand. The momentum seen in the year so far points at annual volumes that could match the record levels seen in 2019.

INDIAN RESIDENTIAL MARKET SUMMARY: Q3 2022 (JULY TO SEPTEMEBER 2022

The residential sector saw an annual growth of 15% in Q3 2022 to 73,691 housing units across top eight cities in the country from 64,010 in Q3 2021. This is a 20% rise in regards to the quarterly average sales observed during the pre-pandemic times of 2019. While the sales volumes remain robust, they have dipped by 8% compared to the preceding quarter. Considering the steady upward trajectory that sales have stayed on over the past four quarters, this modest dip is not a matter of concern. The demand momentum was strong in Q3 2022 with sales in all markets, with the exception of Kolkata, growing on a YoY basis. Similar robust activity was observed in new launches growing 15% YoY to 69,687 units in Q3 2022. All markets saw average price increase in the range of 3% to 10% YoY during this period. This also marks the third quarterly period of consistent YoY growth in prices across all markets. The strong uptick in sales also brought the Quarters to sell (QTS) level down to 7.1 quarters from 10.3 quarters in Q3 2021.

RESIDENTIAL MARKET SUMMARY

  Sales Launches
City Q3 2021 Q3 2022 % Change (YoY) Q3 2021 Q3 2022 % Change (YoY)
Mumbai 15,942 21,450 35% 12,136 18,079 49%
Bengaluru 11,337 13,013 15% 8797 11250 28%
NCR 9,101 11,014 21% 8,983 10,265 14%
Pune 9,565 10,899 14% 8,615 7,463 -13%
Hyderabad 5,987 7,900 32% 9,256 11,000 19%
Ahmedabad 1,607 3,887 142% 4,257 6,188 45%
Chennai 3,610 3,685 2% 3,795 3,912 3%
Kolkata 6,861 1,843 -73% 3,128 1,531 -51%
Total 64,010 73,691 15% 58,967 69,687 18%

Source: Knight Frank India 

RESIDENTIAL PRICE MOVEMENT

City YoY Change QoQ Change
Bengaluru 10% 1%
NCR 8% 1%
Pune 6% 0%
Mumbai 6% 0%
Chennai 6% 1%
Hyderabad 6% 1%
Kolkata 4% 0%
Ahmedabad 3% 0%

Source: Knight Frank India

Shishir Baijal, Chairman and Managing Director, Knight Frank India observes that all real estate asset classes have been on the recovery path over the past few quarters; however, the recovery in the residential segment was the swiftest and most substantial. While the increasing interest rates will impact affordability, underlying need for homeownership remains strong. We do not believe that home loan rates approaching 2019 levels will be enough to subdue market momentum significantly. The performance of the broader economy and homebuyer sentiment will have a greater bearing on market traction for the remainder of the year as it dictates homebuyer income levels and demand much more directly

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