The luxury housing segment in India maintained strong sales momentum, registering a 130% Y-o-Y increase in Jan-Jun’23 period. Total sales of luxury units during Jan-Jun’23 period stood at 6900 compared to 3000 units during the same period last year, according to a CBRE report.
Among the leading cities in absolute terms, Delhi-NCR, Mumbai, and Hyderabad emerged as prominent markets, combined together accounting for nearly 90% of the total luxury housing sales across the top seven cities. Hyderabad recorded the highest percentage increase in sales on a Y-o-Y basis with nearly 14-fold growth with total sales of 1400 units. This was followed by a nearly six-fold increase in sales in Pune and over three-fold jump in Delhi-NCR on a Y-o-Y basis.
In terms of the quantum of sales of luxury residential units, Delhi-NCR topped with sales of 2,900 units, marking a 205%Y-o-Y increase, followed by Mumbai, which recorded sales of 1,900 units, an 18% Y-o-Y growth, while sales in Kolkata stood at 200 units, a 100%Y-oY increase, and Pune recorded sales of 300 units, registering a 500% Y-o-Y increase during this period.
A similar trend prevailed during the Apr-June’23 quarter in the luxury housing segment across the top cities, registering a 121% Y-o-Y increase in sales. The quarter saw total sales of 3100 luxury housing units compared to 1400 units during the same quarter last year. Among the cities, Delhi-NCR, Mumbai, and Hyderabad emerged as prominent markets during the quarter, while luxury sales in Hyderabad increased by 20 times, it jumped three-fold in Delhi-NCR.
The surge in demand for luxury housing was primarily driven by a growing preference for enhanced amenities and more spacious living areas. Moreover, it is the aspirational class that has been on an upward trend and driving luxury sales. Besides, the rise in NRI investments in the Indian real estate market has significantly contributed to the heightened demand for luxury properties.
Overall, in the residential sector, during the Jan-Jun’23 period, a total of 154,000 units were sold, and over 151,000 new units were launched across all categories. During the Jan-Jun’23 period, sales increased by about 3% compared to the same period a year ago, whereas new launches recorded a growth of 9% Y-o-Y basis, highlighting a substantial rise in the newly-launched residential properties compared to the corresponding period in the previous year.
Pune, Mumbai, and Bangalore emerged as the leading cities in terms of sales, accounting for an impressive 61% share in total sales in India during Jan-Jun’23.
In terms of the total unit launches in India, Mumbai, Pune, and Hyderabad dominated the activity, capturing a significant cumulative share of 65% in Jan-Jun’23. This indicates a strong market dominance by these cities when it comes to introducing new residential projects.
During the Apr-Jun’23 quarter, sales of over 75,000 units and over 70,000 new unit launches were recorded. Mumbai, Pune, and Hyderabad jointly dominated the market for apartment launches, having a cumulative share of 66%. Pune, Mumbai, Bangalore, and Delhi-NCR accounted for maximum sales in Apr-June ‘23. Pune led the sales, accounting for a 22% share, followed by Mumbai at 20%, Bangalore at 19%, while Delhi-NCR accounted for 15% of the share.
Commenting on the same, Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE, said, “We are witnessing an impressive growth and resilience of the luxury housing segment, as evident from the data showing a remarkable 130% increase in sales. This surge signifies the strong demand and positive momentum in the luxury housing market. Looking ahead, we anticipate a stronger second half of 2023 in the residential market, supported by factors such as a healthy supply pipeline, the approaching festive season, and stabilizing mortgage rates. Despite global macroeconomic challenges, we expect the residential sector to maintain robust sales momentum. Additionally, the premium and luxury segments are expected to perform well with new launches, and the volatility in mortgage rates on demand in this segment is anticipated to be limited.”
Residential Outlook:
* Despite global macroeconomic headwinds, the residential sector is likely to witness healthy sales momentum due to stabilizing interest rates and the upcoming festive season.
* Capital value appreciation trends to remain divergent across cities and micro-markets; stabilizing inflationary trends and healthy wage growth could allow for some appreciation in capital value amid healthy sales momentum.
* Projects in the premium / luxury segment would continue to witness healthy traction amidst a spate of new launches; mortgage rates to have a relatively muted impact on demand from this segment.
* Another year of strong top-line and bottom-line performance by developers is expected, leading to a healthy surplus cash generation and strengthening of balance sheets.
* Ongoing / new infrastructure initiatives to boost activity in established micro-markets and also result in the creation of new micro-markets; would result in greater traction across tier-II cities as well.
Commenting on the CBRE report, Aakash Ohri, Group Executive Director & Chief Business Officer, DLF Ltd, said, “The luxury housing sector is expected to sustain strong sales momentum on the back of rapid urbanisation, improved affordability and aspirational needs. There was a resurgence in demand in the luxury housing segment that has almost doubled in the last five years, primarily on account of the improvement in the financial position of reputable and larger real estate players. Case in point, success of The Arbour almost set a trend for the real estate sector in Delhi-NCR and there has been a slew of luxury real estate launches ever since. Today Indian developers are delivering projects of international standards, attracting buyers not just from India, but overseas too. Among other Indian cities that have recorded a rise in demand for luxury properties, NCR stands out observing not just an increase in sale, but even rising rentals for luxury homes.”
“Within NCR, Gurugram particularly has emerged as a preferred choice for luxury homebuyers, with large presence of HNIs and UNHIs base and a significant rise in the number of affluent millennials in the region, who prefer to stay close to work, and are willing to go the extra mile for their convenience and indulgent lifestyle. There has also been a newly stirred up insistence on luxurious integrated townships that offer affluent homes, safety, and security to the homebuyers,” Ohri added.
“In Delhi NCR, Gurgaon’s real estate market demonstrates substantial growth potential. The area’s strategic positioning, exceptional connectivity, and flourishing corporate landscape have significantly bolstered its allure for real estate investments. In Gurgaon, the Dwarka Expressway area has witnessed a substantial price appreciation of around 5-8% in the past two years. We foresee further appreciation in property value due to the ongoing enhancement of infrastructure, notably the opening of the Dwarka Expressway, Metro Extension & the Delhi Mumbai Expressway. The limited supply of luxury homes and the rising demand is another significant reason that has led to a surge in demand,” said Ravish Kapoor, Managing Director, Elan Group.
Source : FE