Report On Indian Real Estate, April To June 2022
Theaverage"asks"acrossthetopeightTier 1citiesincreasedQoQintheApr Jun2022 quarterduetotherisingresidentialdemand.Duetotheresumptionofofficespaceuse,the tendencyforhomeleasingalsoincreased,avoidinganincreaseinaveragerent.Thetrend ofhomepurchasesinIndia'stopeightmetroareascontinueduninterrupteddespite internalandinternationaldisturbancesincludingtheongoingUkraine Russiacrisis,rising buildingcosts,andfrequentincreasesinreporates.
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ThedesireforhomeownershipincreasedsteadilyovertheApril June2022quarter,as seenbydouble-digitQoQincreasesinsitevisitsandinquiries.Punetooktheleadwitha roughly150percentriseininquiries,andBangalorecloselyfollowedwithaQoQincrease ofalmost140percent.Nevertheless,Mumbai&DelhiNCR,whichtogetheraccountedfor morethanhalfofallhousetransactionsduringthestudyquarter,continuedtohavethe highestconversionrates.
DuetosignificantCapexdeploymentandinfrastructureimprovements,housingsupplyin metroareasincreasedbyover60%QoQinApril June2022.Nearly800housingsocieties wereregisteredundervariousRealEstateRegulatoryAuthorities(RERA),withMumbai aloneaccountingformorethan50%ofthemarket.Punecameinsecondplacewithabout 194projectlaunches.Chennaitookhomealmost15%oftheentireshare,withthesouthern marketsgrabbingcloseto24percent.However,therewereonlyafewnewregistrationsin DelhiNCRforthequarterendinginJune2022.
Despiteanincreaseinsupply,theremaininginventoryasofJune2022fellbyroughly3 5 percentQoQtoreachalmost6.25lakhunits.Asaresult,althoughbarely,averagehome valuesroseacrossthemajorityofmetroareas.
Intheinvestigatedperiod,thehomerentaltrendthathadbeenrevivedintheprevious quarterkeptgainingstrength.Thedemandforrentalsincreasedasmorebusinesses startedusingwork from homepoliciesagainandascollegesresumedregularoperations. Thiswasencouragingforthelandlordcommunity,whicheithertooknoactionorraised monthlyrentalratesbycloseto5 8percentyearoveryear.
Market Movers
Repo rate increased by 90 basis points
Thebaserateincreasedby90basispoints(bps)to4.9percentasaresultofthereporate's twoconsecutiveincreasesinMayandJune2022.Althoughthechangewasanticipatedin reactiontotheeconomy'sspirallinginflation,itislikelytoslightlyraisethecostsofhome developmentandbuying.
In metro cities, the percentage of halted projects is decreasing.
Thepercentageofunfinishedprojectsacrossthemetrocitiesdecreasedfrom5.17lakh unitsinDecember2021to4.8lakhunitsinMay2022,despitetheSWAMIHFundandState ownedNBCCoverseeingthedelayedhousingprojects.Themajorityofunitswere completedinthecityofDelhiNCR,which,togetherwithMumbaiMetropolitanRegion (MMR),alsoaccountsforover80%oftheprojectsthathavereachedastandstill.
1.2 million Dwellings have been approved under PMAY-U.
Morethan1.22croredwellingshavebeenapprovedbythecentralgovernmentaspartof thePradhanMantriAwasYojana Urban(PMAYU).Around60lakhhomeshavebeen finishedanddelivered,whileoveronecroredwellingshavebeengrounded.Incomparison tothe17lakhapprovedhomes,UttarPradeshhascompletednearly10lakhresidences, placingitinfirstplaceamongallStates.Withmorehomesgettingauthorised,thereare proposalstoextendtheprogrammeinmetropolitanareasbytwoyears.
Infrastructure improvement to spur real estate growth
TheCenterhaslaunchedanumberofinfrastructureprojectsthroughoutStatesinaneffort tobuilda$5trillioneconomyby2025.Forinstance,11projectsinTamilNaduthatare financedbytheUnionGovernmenthavebeenannounced.The262kmlongBangalore ChennaiExpresswayisalsoincludedinthis.Alongwithnumerousroadexpansionprojects, Bangalorewillalsounveil150technologicalclusters.TheApril2022startofthewater conservationprojectAmritSarovarwillaidintherevitalizationof50,000waterbodiesin variousStates,andthesoilandsiltwillbeusedfortheconstructionofmultiplerailand roadprojects.Theseinitiativesworkingtogetherwillopenuptremendousrealestate prospects.
Outlook for Commercial Real Estate
Whencomparedtothesamemonthlastyear,officespaceleasingincreasednearlytwofold acrossthetopsevencitiesinMay2022.Pre commitment&termrenewalswereincluded intheoverallleasingactivity,withMumbaiandBangaloreaccountingforthemajorityof thetransactions.
Intermsofofficespacevacanciesacrossmetroareas,DelhiNCRcontinuedtoleadwith over28percent.AsofJune2022,Pune,Chennai,andBangalorehavethelowestvacancy rates,rangingfrom8.5to11.25percent.Thecitieswiththelowestlevelsofvacancy accountforalmost108millionsqftoftotalGradeAofficespacestockthatisplannedor underdevelopment,whereasDelhiNCRhas26millionsqftofvacantofficespace.
CoworkingbusinesseshaveacceleratedtheirleasingofGradeBfacilitiesvacatedbythe epidemic.Inordertomeettheenormousdemandfromcorporationsandunicorns,the operatorsrenovatedtheseroomsinaccordancewithpost-pandemicnorms.Operators wereabletotakeadvantageofdiscounts,anddevelopersreceivedguaranteesofrentals.By 2022 2024,unicorns startupsvaluedat$1billion willleaseabout8.1millionsquare feetofofficespacespreadacrosssixmajorcities.Theofficespaceusedbyunicorns,which iscurrentlysevenmillionsquarefeet,isanticipatedtodoubleby2024.
Important Points: Pan India
ThetrendofhomeownershipshowndurabilityinApr Jun2022,despiteanincreasein viruscasesandinflationarypressure.Intotal,thetopeightmetroareassoldalmost80,000 units.WhileoverallsalesslightlydecreasedQoQ,Chennai&KolkataexperiencedaQoQ lossofalmost15%.
Resalehouses,whichareexemptfromtheGoods&ServicesTax(GST),orcommunities thatwerealmostfinishedwerefavouredbyhomebuyersinordertoavoidpossession delays.WiththeexceptionofBangalore,residentialstylesfor3BHKsexperiencedalittle declinewhilehomesstructuredas2BHKscontinuedtogainpopularity.Althoughthe desiretoacquireapropertywasnotsignificantlyaffectedbytheincreaseinthereporate, consumertastesclearlychanged.
Themid-incomesegmenthousingsocietiessellingunitsintherangeofRs40lakhtoRs1 croreweresecondintermsofmarketshareduetobuildersandpurchasers'increased attentiononhomesunderRs45lakh.Whileapartmentsinresidentialsocietieswithstate of the artfacilities&amenitiesbyGrade Adevelopershadthemostinquiries,independent housesandresidentialplotswerestillpreferred.
InJan. Mar.2022,therewere500projects,includingphases;inApr. Jun.2022,therewere about800projectlaunches.Duringthestudyperiod,MahaRERAreceivedregistrationsfor morethan600oftheseresidentialprojects.Pune,DelhiNCR,andBangaloreestimateda fallof1-3percentYoY;howeverthepercentageofnewsupplyinMumbaiincreasedfrom 35percentayearearliertoroughly50percentinQ22022.Ahmedabadexperiencedthe mostannualdeclineof16percent.
Searchesforrentalshavedramaticallyincreasedyearoveryear.Asaresult,averagerental pricesincreasedinplaceslikePune,Mumbai,andAhmedabad.Hyderabadsawadeclinein rentalrates,butotherwiseBangalore,DelhiNCR,Kolkata,andChennaisawstableaverage housingrents.Similartothebuyingmarket,housingsocietieswithtwobedroomssawthe mostdemand.Inthemidstoftheongoinghybridworkculture,tenantsmainlychooseto rentpremisesatreasonablepricesinremoteplaces.
Conclusion
ThehousingmarketinTier 1citiesisslowlyrecoveringafterhittinganunparalleledlowin thepasttwoyears.Whilethecirclerateincreasesandtherevisedreporateshavebeen roadblocksinareaslikePune,Mumbai,andcertainportionsofDelhi,theyarethoughttobe temporarygiventheinflationarypressure.Accordingtoindustryveterans,thehousing sectorisshowingaK-shapedrecoveryafterfallingintochaoslastyearasaresultofa labourshortageandadisturbedsupplychainthatsloweddevelopment.Evenwhilethe increaseinconstructioncostsisunquestionablyamajorobstacle,thingsareimproving.