Residential sales in India poised to breach decadal high this year: CBRE

Led by demand for homes priced between Rs 1 crore and Rs 1.5 crore, the sale of 300,000 units this year is expected to be much higher than the five-year average of 187,000 units

With 150,000 units already sold in the first six months of 2023, home sales in India are expected to touch 300,000 units, the highest number of the last ten years, real estate consultancy CBRE said in a report on Wednesday.

In its "Indian Real Estate: Taking Giant Strides - 2023 Mid-Year Outlook" report, CBRE also said that the launches this year are expected to reach a 10-year high. Notably, both sales and launches of homes in India this year are expected to be considerably higher than the average of the last five years of 187,000 units and 184,000 units, respectively.

 

Home sales between January and June exceeded 150,000 units, surpassing sales reported in the same period last year by 4 per cent. It was 6 per cent higher than the sales in the second half of 2022.

On launches, the report said that sustained momentum in demand led developers to launch over 150,000 new housing units in H1CY23, marking an annual growth of 11 per cent.

CBRE said that the price tag for mid-end homes in India has exceeded the Rs 1 crore mark owing to both higher construction costs and higher demand in the segment. It said that in months to come, strong demand is anticipated in the price range of Rs 1-1.5 crore. It accounted for nearly half of all home sales between January and June.

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Talking to Business Standard, Anshuman Magazine, chairman and chief executive officer (India, South-East Asia, West Asia & Africa), CBRE, said that, unlike Western countries, the home loan rates in India have stayed relatively stable for a while, and this has led to higher demand for homes.

Notably, the Reserve Bank of India (RBI) paused the repo rate hikes after a cumulative 250 basis point rise in April this year.

Besides affordability, Magazine also attributed higher residential sales of costlier homes to the changing preferences of Indian customers.

"There is a change in the mindset of younger people. Everybody wants more space. Earlier, the focus was on ticket size, but now people want bigger space. Also, especially after the Covid-19 pandemic, there is a focus on having a better lifestyle. Aspirations have gone up exponentially," he said.

Another reason he mentioned is that due to the price rise in real estate, more people now tend to bet on it as an investment class. "Because prices have gone up, more people tend to invest in real estate."

"The premium and luxury segments (Rs 2 crore and above) are also expected to emerge as a sought-after investment avenue, particularly among high-net-worth individuals (HNIs) and non-resident Indians (NRIs)," the report added.

It mentioned that customers now look at other factors like health and safety, sustainability and integration of smart technologies before buying a home.

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"Buyer interest will continue to be driven by factors such as reputation, execution capability and financial stability of the developers. Tier-I developers, backed by their proven delivery track record and solid market reputation, consistently dominated the market in terms of new launches and sales from 2018 to H1CY23. We expect this trend to continue gaining momentum," the report added.

However, CBRE said that some level of demand-supply mismatch may set in from 2024 as a large influx of supply is expected across markets in the next two quarters.