The Indian residential market recorded a nine-year high in sales volume during the first half of 2022.Residential sector sales saw an annual growth of 60% in H1 of 2022 to 158,705 units across the top eight cities in the country, a Knight Frank India report for H1 2022 said. The previous high was recorded in H1 of 2013 at 185,577 units. Total launches were also at an eight-year high and breached the pre-pandemic level in the first half of 2022, with 160,806 units launched.
Office space transactions in the country have seen a 107% year-on-year growth during H1 2022 to 25.3 million square feet. The country was on track to achieve the 50 million sq ft mark for the full year. The share of co-working space has increased to 17% from 10% during the first half of 2021. The completion volume too has been the highest since the pandemic began, with a 61% year-on-year growth to 24.1 million sq ft completed.
Shishir Baijal, chairman and managing director, Knight Frank India, said despite all the headwinds, they were bullish about the 2022 performance of the realty sector in India. Even if the interest rates shoot up, it will not deter homebuyers, he said. Similarly, rising occupancy levels in offices had driven demand for office space. The supply of Grade A offices was drying up with the post-pandemic flight to quality, he said. This demand was now spilling into Grade B and C office spaces, he said at the launch of the Knight Frank India half-yearly report, ‘India Real Estate: Residential and Office Market H1 2022’.
Bengaluru drove the demand for office space with a 117% year-on-year rise to 7.7 million sq ft, followed by the NCR at 4.1 million sq ft, which was a 69% year-on-year growth. The Pune market grew by 187% to 3.3 million sq ft. Office rentals have increased by 13% in Bengaluru, 8% in Pune and 3% in Hyderabad. Office vacancy levels are reducing across the country, with the highest reduction in Pune with only 11.9% vacancy, followed by Bengaluru at 12.3% and Hyderabad and Chennai at 13.7% and 13.3%, respectively.
Baijal said the office space growth was driven by an increase in the physical occupancy levels as more companies wanted their employees to return to office. At the same time, hiring across many sectors has picked up. “With the current pace of leasing, we expect the 2022 leasing volumes close to the peak of 2019 and exceed in the next year. The focus among occupiers for this year will remain on flexibility, in leasing terms, to allow real-time expansion and contractions indicating a strong year for managed office spaces,” he said.
The Knight Frank report said residential prices recorded strong growth across all cities during the first half of the year. The share of sales in the `1 crore and above ticket-size grew significantly from 20% in H1 2021 to 25% in H1 2022. This was attributed to the homebuyers’ need to upgrade to larger living spaces with better amenities, and to the fact that pandemic-induced income disruptions did not impact higher income categories as they did for the others, the report said.
Mumbai’s sales volume of 44,200 home units accounted for 28% of the total sales among the top 8 markets, the highest among all markets. In terms of annual percentage increment, the NCR witnessed an increase of 154% y-o-y sales volume of 29,101 units. The NCR also accounted for the second-largest share of sales amongst the eight markets of the country. Bengaluru had a sales growth of 80% 26,667 units. Prices increased across all markets in the range of 3-9% y-o-y.
