The average “asks” across the top eight Tier-1 cities increased QoQ in the Apr-Jun 2022 quarter due to the rising residential demand. Due to the resumption of office space use. The tendency for home leasing also increased, avoiding an increase in average rent. The trend of home purchases in India’s top eight metro areas continued uninterrupted despite internal and international disturbances including the ongoing Ukraine-Russia crisis, rising building costs, and frequent increases in repo rates.

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The desire for home ownership increased steadily over the April–June 2022 quarter, as seen by double-digit QoQ increases in site visits and inquiries. Pune took the lead with a roughly 150 percent rise in inquiries, and Bangalore closely followed with a QoQ increase of almost 140 percent. Nevertheless, Mumbai & Delhi NCR, which together accounted for more than half of all house transactions during the study quarter, continued to have the highest conversion rates.

Report On Indian Real Estate

Due to significant Capex deployment and infrastructure improvements, housing supply in metro areas increased by over 60% QoQ in April–June 2022. Nearly 800 housing societies were registered under various Real Estate Regulatory Authorities (RERA), with Mumbai alone accounting for more than 50% of the market. Pune came in second place with about 194 project launches. Chennai took home almost 15% of the entire share, with the southern markets grabbing close to 24 percent. However, there were only a few new registrations in Delhi NCR for the quarter ending in June 2022.

Despite an increase in supply, the remaining inventory as of June 2022 fell by roughly 3-5 percent QoQ to reach almost 6.25 lakh units. As a result, although barely, average home values rose across the majority of metro areas.

In the investigated period, the home rental trend that had been revived in the previous quarter kept gaining strength. The demand for rentals increased as more businesses started using work-from-home policies again and as colleges resumed regular operations. This was encouraging for the landlord community. Which either took no action or raised monthly rental rates by close to 5-8 percent year over year.

Market Movers

Repo rate increased by 90 basis points

The base rate increased by 90 basis points (bps) to 4.9 percent as a result of the repo rate’s two consecutive increases in May and June 2022. Although the change was anticipated in reaction to the economy’s spiralling inflation. It is likely to slightly raise the costs of home development and buying.

In metro cities, the percentage of halted projects is decreasing.

The percentage of unfinished projects across the metro cities decreased from 5.17 lakh units in December 2021 to 4.8 lakh units in May 2022. Despite the SWAMIH Fund and State-owned NBCC overseeing the delayed housing projects. The majority of units were completed in the city of Delhi NCR, which, together with Mumbai Metropolitan Region (MMR), also accounts for over 80% of the projects that have reached a standstill.

1.2 million Dwellings have been approved under PMAY-U.

More than 1.22 crore dwellings have been approved by the central government as part of the Pradhan Mantri Awas Yojana-Urban (PMAY U). Around 60 lakh homes have been finished and delivered, while over one crore dwellings have been grounded. In comparison to the 17 lakh approved homes. Uttar Pradesh has completed nearly 10 lakh residences, placing it in first place among all States. With more homes getting authorised, there are proposals to extend the programme in metropolitan areas by two years.

Infrastructure improvement to spur real estate growth

The Center has launched a number of infrastructure projects throughout States in an effort to build a $5 trillion economy by 2025. For instance, 11 projects in Tamil Nadu that are financed by the Union Government have been announced. The 262 km long Bangalore-Chennai Expressway is also included in this. Along with numerous road expansion projects, Bangalore will also unveil 150 technological clusters. The April 2022 start of the water conservation project Amrit Sarovar will aid in the revitalization of 50,000 water bodies in various States. And the soil and silt will be used for the construction of multiple rail and road projects. These initiatives working together will open up tremendous real estate prospects.

Outlook for Commercial Real Estate

When compared to the same month last year. Office space leasing increased nearly twofold across the top seven cities in May 2022. Pre-commitment & term renewals were included in the overall leasing activity, with Mumbai and Bangalore accounting for the majority of the transactions.

In terms of office space vacancies across metro areas, Delhi NCR continued to lead with over 28 percent. As of June 2022, Pune, Chennai, and Bangalore have the lowest vacancy rates, ranging from 8.5 to 11.25 percent. The cities with the lowest levels of vacancy account for almost 108 million sq ft of total Grade A office space stock that is planned or under development. Whereas Delhi NCR has 26 million sq ft of vacant office space.

Coworking businesses have accelerated their leasing of Grade B facilities vacated by the epidemic. In order to meet the enormous demand from corporations and unicorns. The operators renovated these rooms in accordance with post-pandemic norms. Operators were able to take advantage of discounts, and developers received guarantees of rentals. By 2022–2024, unicorns—startups valued at $1 billion—will lease about 8.1 million square feet of office space spread across six major cities. The office space used by unicorns, which is currently seven million square feet, is anticipated to double by 2024.

Important Points: Pan India

The trend of home ownership shown durability in Apr–Jun 2022, despite an increase in virus cases and inflationary pressure. In total, the top eight metro areas sold almost 80,000 units. While overall sales slightly decreased QoQ, Chennai & Kolkata experienced a QoQ loss of almost 15%.

Resale houses, which are exempt from the Goods & Services Tax (GST), or communities that were almost finished were favoured by homebuyers in order to avoid possession delays. With the exception of Bangalore, residential styles for 3 BHKs experienced a little decline. While homes structured as 2 BHKs continued to gain popularity. Although the desire to acquire a property was not significantly affected by the increase in the repo rate, consumer tastes clearly changed.

The mid-income segment housing societies selling units in the range of Rs 40 lakh to Rs 1 crore were second in terms of market share. Due to builders and purchasers’ increased attention on homes under Rs 45 lakh. While apartments in residential societies with state-of-the-art facilities & amenities by Grade-A developers had the most inquiries, independent houses and residential plots were still preferred.

In Jan.–Mar. 2022 Report

In Jan.–Mar. 2022, there were 500 projects, including phases; in Apr.–Jun. 2022, there were about 800 project launches. During the study period, MahaRERA received registrations for more than 600 of these residential projects. Pune, Delhi NCR, and Bangalore estimated a fall of 1-3 percent YoY; however the percentage of new supply in Mumbai increased from 35 percent a year earlier to roughly 50 percent in Q2 2022. Ahmedabad experienced the most annual decline of 16 percent.

Searches for rentals have dramatically increased year over year. As a result, average rental prices increased in places like Pune, Mumbai, and Ahmedabad. Hyderabad saw a decline in rental rates, but otherwise Bangalore, Delhi NCR, Kolkata, and Chennai saw stable average housing rents. Similar to the buying market, housing societies with two bedrooms saw the most demand. In the midst of the ongoing hybrid work culture. Tenants mainly choose to rent premises at reasonable prices in remote places.

Conclusion

The housing market in Tier-1 cities is slowly recovering after hitting an unparalleled low in the past two years. While the circle rate increases and the revised repo rates have been roadblocks in areas like Pune, Mumbai, and certain portions of Delhi. They are thought to be temporary given the inflationary pressure. According to industry veterans, the housing sector is showing a K-shaped recovery after falling into chaos last year. As a result of a labour shortage and a disturbed supply chain that slowed development. Even while the increase in construction costs is unquestionably a major obstacle, things are improving.

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