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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