NEW DELHI: Indian real estate witnessed steady demand during January-March with housing sales rising by 1 per cent and gross office space leasing growing by 5 per cent year-on-year across eight major cities, Knight Frank India said on Monday.
Housing prices rose in the range of 1-7 per cent annually in the first quarter of this calendar year, while office rentals grew 2-9 per cent, according to real estate consultant Knight Frank India Real Estate report released on Monday.
As per the data, housing sales stood at 79,126 units across eight major cities during January-March 2023, up by a marginal 1 per cent from the year-ago period.
The gross office leasing rose 5 per cent to 11.3 million square feet in January-March, from 10.8 million square feet in the corresponding period of the previous year.
"The residential market remained resilient in the face of rising interest rates and prices as sales level sustained in the first quarter of the year," Knight Frank India Chairman & Managing Director Shishir Baijal said in a statement.
The need for home ownership continues to drive demand even as the homebuyer's ability to purchase has come under pressure over the past few months, he said.
"The mid and premium (housing) segments have emerged as outperformers in this market and can also be expected to drive volumes for the remainder of 2023," Baijal said.
According to Knight Frank, all eight cities posted a YoY (year-on-year) growth in per square feet (sq ft) prices of residential properties during January-March this year.
Prices grew the most in Bengaluru at 7 per cent followed by Mumbai at 6 per cent, whereas Hyderabad and Chennai prices rose 5 per cent each YoY during Q1 2023.
Housing prices appreciated by 4 per cent in Pune, 3 per cent each in Ahmedabad and Delhi-NCR.
Kolkata saw a growth of just one per cent in housing prices.
In the office market, rentals in Kolkata rose 9 per cent year-on-year in the January-March period.
Rentals grew by 5 per cent each in Hyderabad, Bengaluru and Chennai, while Pune and Mumbai saw a 4 per cent rise in rent each.
Ahmedabad and Delhi-NCR witnessed 3 per cent and 2 per cent increase, respectively, in office rent.
On the office market, Baijal said, "The relatively stronger economic environment in India has helped the office market to step into 2023 on a positive note. The proposition of high-quality talent and the cost arbitrage with the appreciation in the USD has served to anchor the Indian businesses of multinational corporations."
As per the data, housing sales in Mumbai during January-March fell 6 per cent to 20,300 units, but office leasing more than doubled to 2.2 million square feet.
In Delhi-NCR, housing sales rose 2 per cent to 15,392 units, while office leasing were up 12 per cent to 2.6 million square feet.
Housing sales in Bengaluru dropped 2 per cent to 13,390 units, but the office market remained stable with a leasing of 3.5 million square feet.
Pune saw a marginal growth of 1 per cent in housing sales at 10,368 units, while office demand fell 8 per cent to 0.8 million square feet.
Housing sales in Hyderabad rose 19 per cent to 8,300 units but office absorption declined 46 per cent to 0.8 million square feet.
Ahmedabad witnessed a 3 per cent growth in housing sales at 4,225 units.
However, the office demand fell 20 per cent to 0.4 million square feet.
Housing sales in Chennai went up 8 per cent to 3,650 units, but office demand fell 18 per cent to 0.8 million square feet.
In Kolkata, the sales of residential properties dipped 3 per cent to 3,501 units during January-March period this year.
The city, however, saw 48 per cent increase in office leasing to 0.2 million square feet.
Gurugram-based realty firm Advance India Projects Ltd (AIPL) Head Corporate leasing Mukul Sharma said the demand for Grade-A offices continues to strengthen with each passing quarter.
"In fact, in cities like Gurugram, demand has outpaced supply by a significant margin. Sectors such as IT and business process management are expanding rapidly and are on a hiring spree.
"Additionally, many multinationals are establishing their headquarters and global capability centres (GCCs), driving demand for high-quality office space leasing," Sharma added.