Indian residential real estate has witnessed a robust momentum in the first quarter of 2024 fueled by sustained high demand, said a report by Cushman & Wakefield. In the sector, the report added, the high-end and luxury segment continued its reign in the quarter, capturing approximately 34 per cent of launches in Q1 2024, while the mid-segment continued to be the front-runner in terms of absolute number of launches or share.
The high-end and luxury segment’s share has steadily increased from 13-14 per cent in 2019 to more than 30 per cent post 2022. Mid-segment housing continues to be the volume leader, accounting for over 50 per cent of launches, consistent with the past 3-4 years. The affordable housing segment, meanwhile, saw a decline, holding 13 per cent of launches this quarter. The report said that developers may be hesitant to invest in the affordable housing segment due to potentially lower margins and stricter regulations for claiming incentives, particularly when high-end and luxury, and mid-segments are experiencing high demand.
Per the findings of the report, the total unit launches across top 8 cities stood at 69,000, with Mumbai and Pune accounting for the highest contributions with 28 per cent and 16 per cent respectively. This was followed by Hyderabad and Bengaluru at 16 per cent and 13 per cent. While the total launches represent a modest 7 per cent decline from a strong Q4 2023 (74,344 units) and a 15 per cent decrease compared to Q1 2023 (81,167 units), it remains above the average quarterly launches observed in 2022 (67,960 units).
Another trend revealed in the Cushman & Wakefield report stated that established developers – listed and large and regionally reputed, are driving residential launches across cities. According to the data, over 38 per cent of Q1 2024 launches originated from listed and reputed developers.
Furthermore, here are trends that emerged in top cities in Q1 2024:
In NCR, high-end and luxury captured 61 per cent of the total launches, with Gurugram leading the way and Noida contributing the highest of the mid-segment launches (26 per cent). During Q1 2024, capital values in NCR witnessed an increase of 1- 2 per cent on a QoQ basis and 12- 15 per cent on YoY basis.
Mumbai’s residential sector witnessed launch of 19,461 units in the first quarter of 2024, posting a 21 per cent growth over previous quarter but in-line with activity witnessed in the same quarter last year. Mid-segments dominated Mumbai launches with 61 per cent share. Rising number of re-development projects, particularly across the Western Suburbs Prime and Western Suburbs markets have added to the rental housing demand and continued to result in 5-6 per cent growth in rental values from the previous quarter.
Bengaluru witnessed launch of nearly 8,850 units in Q1 2024, up 14 per cent growth on an annual basis. Branded and listed developers contributed around 53 per cent of residential launches in the quarter. While it may be lower than the 70% share recorded in the previous quarter, the pipeline of unit launches by reputed developers does look strong.
Kolkata recorded 4750 residential unit launches in Q1 2024. The state government’s extension of 2 per cent stamp duty cut and 10 per cent reduction in circle rate up to June 30th, 2024, is likely to help maintain demand for residential units.
Chennai’s residential sector saw launches of over 5,490 units during the first quarter, recording a growth of 86 per cent on a QoQ basis. Mid segment contributed over 64 per cent of the total launches, with high-end and luxury segments seeing growth accounting for 28 per cent of quarterly unit launches, marking a threefold increase in the segment’s launches on a YoY basis.
Pune witnessed residential launches of 11,358 units in Q1, up 19 per cent from the previous quarter, although it posted a drop of 18 per cent on-year. Collectively, high-end and luxury units constitute 47 per cent of the total launches, marking the highest proportion witnessed in the city over the past five years. The city’s average capital values have surged by approximately 21 per cent YoY.
In Ahmedabad, mid-segment continued to dominate quarterly launches with a 40 per cent share, closely followed by high-end and luxury segment with a 37 per cent share. Owing to a steady demand for premium housing units, the high-end & luxury segment has risen by ~35 per cent over the average quarterly launches seen for the segment.
Hyderabad witnessed residential launches of 11,090 units during the first quarter, down 44 per cent on a QoQ basis and 23 per cent on a YoY basis. In Hyderabad, high-end and luxury segment housing units lead supply with 52 per cent share, followed closely by mid segment housing units with 47 per cent share. On YoY basis, the capital as well as rental values across the city saw an average increase in the range of 8- 15 per cent. The western region of Hyderabad witnessed an average increase of 12- 15 per cent, followed by the northern markets such as Miyapur and Kompally, which increased by 8- 10 per cent.
Shalin Raina, Managing Director, Residential Services, Cushman & Wakefield, said, “Over the past year, a significant rise in demand for high-end and luxury properties has emerged at both national and local levels. This shift reflects a change in homebuyers’ growing desire to invest in a place not only to live, but as a high-quality asset that reflects their lifestyle aspirations. Furthermore, the demand for larger, more luxurious homes has attracted established developers with the capital and expertise to deliver premium, customized living spaces that cater to the aspirations of modern India. This trend has led to a surge in launches by established developers, significantly increasing their y-o-y contribution to the residential market. We expect this momentum to continue throughout the coming fiscal year (FY 2024/25) as well.”
