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- Both the half-yearly and annual volumes of residential units launched have hit their highest levels in a decade.
- Mumbai led in residential launches with 93,051 units introduced during the year.
- While unsold inventory is on a high, the sales velocity is keeping pace.
Despite interest rates rising 250 basis points between May 2022 to February 2023, courtesy RBI policy action, the real estate demand has only seen acceleration with a steady upward trend in residential prices across major markets. In fact, the demand for residential properties in India continued to surge, hitting a ten-year high in annual sales by reaching 329,097 units sold in 2023, according to a report by Knight Frank.
It is no surprise that India’s financial capital, Mumbai led with the highest sales of 86,871 units, showing a 2% year-on-year growth((Y-o-Y) growth, according to the India Real Estate: Residential and Office (July – December 2023) report. Kolkata, meanwhile, experienced the most growth in home sales at 16% year-on-year, followed by Ahmedabad at 15% and Pune at 13%.
New units launched reach record levels
Both the half-yearly and annual volumes of units launched have hit their highest levels in a decade, surpassing sales figures for the same periods, a rare occurrence seen only three times in the past ten years. The total launch of 350,746 units across the eight markets marked a 7% Y-o-Y increase.
Mumbai led in residential launches with 93,051 units introduced during the year. Kolkata demonstrated the highest percentage growth in launches at 28%, followed by Bengaluru at 18%. Interestingly, the National Capital Region (NCR) was the only market to experience a slight slowdown in launches.
Market Summary: Top Eight Indian Cities
| Sales | Launches | |||
| City | 2023 | YoY % Change (2023) | 2023 | YoY % Change (2023) |
| Mumbai | 86,871 | 2% | 93,051 | 3% |
| NCR | 60,002 | 3% | 62,649 | -1% |
| Bengaluru | 54,046 | 1% | 51,126 | 18% |
| Pune | 49,266 | 13% | 42,437 | 10% |
| Chennai | 14,920 | 5% | 16,272 | 6% |
| Hyderabad | 32,880 | 6% | 46,985 | 7% |
| Kolkata | 14,999 | 16% | 15,730 | 28% |
| Ahmedabad | 16,113 | 15% | 22,497 | 8% |
| All India | 329,097 | 5% | 350,746 | 7% |
Source: Knight Frank Research
Mid and premium segments show uptick but…
According to the Knight Frank report, properties priced below ₹50 lakhs faced a decline in sales, dropping from 37% (117,131 units) in 2022 to 30% (97,983 units) in 2023. Escalating property prices, higher home loan rates, and the pandemic’s adverse impact played roles in dampening demand within this category. Notably, Mumbai, known for its high prices, experienced a 6% Y-o-Y decrease in affordable housing sales, totaling 39,093 units in 2023.
Conversely, the ₹50 lakh to ₹1 crore segment accounted for 37% of residential sales, growing by 7% annually to 120,280 units in 2023. Bengaluru, Mumbai, and Pune dominated this segment, contributing to over 60% of the sales within this price range.
The premium category, valued at ₹1 crore and above, expanded significantly, comprising 34% of sales in 2023, up from 27% the previous year. This segment witnessed a remarkable 33% Y-o-Y growth, with NCR leading the pack, selling 38,816 units and constituting 65% of the premium segment sales.
Inventory surplus not a matter of concern
Despite the strong growth in sales, there’s been a surplus in the number of property launches compared to actual sales, resulting in a 5% Y-o-Y increase in unsold inventory levels.
Concurrently, the market trend favouring the mid and premium segments has also affected the unsold inventory, with both segments showing levels higher than the market average. The mid segment saw a 7% Y-o-Y increase in unsold inventory, while the premium segment experienced a substantial 33% Y-o-Y rise in unsold properties.
While rising inventory levels might seem concerning on their own, it’s crucial to analyse them alongside sales velocity to accurately evaluate the market’s overall health.
“You also need to look at the sales velocity. The velocity of sales is also shooting up and hence the time to sell is shrinking. Only if velocity of sales does not pick up, there can be a inventory pileup but that yet not happening and so we are not seeing any major pileup of inventory,” says Says Shishir Baijal, Chairman and Managing Director, Knight Frank India,
Prices rise steadily across cities
In 2023, Hyderabad experienced the most significant residential price surge among major Indian cities, with a notable 11% Y-o-Y increase. Mumbai, Bengaluru, and Kolkata closely followed with increments of 7% each.
Meanwhile, NCR and Pune observed a 6% and 5% increase, respectively. Chennai and Ahmedabad also saw modest rises in residential prices, each with a 4% increment over the 12-month period.
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