April 1, 2024: Indian residential real estate market witnessed a robust momentum in the first quarter of 2024 (Q1 2024), fuelled by sustained high demand, according to Cushman & Wakefield’s residential marketbeat report for Q1 2024. The high-end and luxury segment continued to drive growth of the sector, while the mid-segment sector continued to be the front-runner in terms of absolute number of launches or share.
According to the report, the total unit launches across the top eight cities stood at 69,000, with Mumbai and Pune accounting for the highest contributions with 28% and 16% respectively. This was followed by Hyderabad and Bangalore with 16% and 13%. While the total launches represent a modest 7% decline from a strong Q4 2023 (74,344 units) and a 15% decrease compared to Q1 2023 (81,167 units), it remains above the average quarterly launches observed in 2022 (67,960 units), another positive year for the sector.
The high-end and luxury segment continued its reign in the quarter, capturing approximately 34% of launches in Q1 2024, a trend that began in recent years and reflects evolving homebuyer aspirations for enhanced lifestyles. This segment’s share has steadily increased from a mere 13-14% in 2019 to more than 30% post 2022. Mid-segment housing continues to be the volume leader, accounting for over 50% of launches, consistent with the past 3-4 years. The affordable housing segment, meanwhile, saw a decline, holding just 13% of launches this quarter. Developers may be hesitant to invest in this 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.
The report further goes on to reveal a significant trend – established developers – listed and large and regionally reputed, are driving residential launches across cities. According to the data, over 38% of Q1 2024 launches originated from listed and reputed developers. This trend has been growing steadily, with listed developers showing consistent year-on-year increase in launches for the past two years (registering an increase of approximately 7-8% from 2022). This shift reflects changing homebuyer priorities. Quality and trust are now taking precedence over solely price driven decisions. This trend highlights a potential gap in the market and the need for more established players to fulfil the growing demand for reliable developers.
The report further delves deeper into important insights that each city witnessed in Q1 2024:
- In NCR, high-end and luxury captured 61% of the total launches, with Gurgaon leading the way and Noida contributing the highest of the mid-segment launches (26%). During Q1 2024, capital values in NCR witnessed an increase of 1%–2% on a QoQ basis and 12%-15% on a YoY basis.
- In Q1 2024, Mumbai’s residential sector witnessed launch of 19,461 units, a 21% growth over previous quarter but in-line with activity witnessed in the same quarter last year. Mid-segments dominated Mumbai launches with 61% share. Rising number of redevelopment 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% growth in rental values from the previous quarter. The capital value witnessed about 3-6% across all sub-markets from the previous quarters, on the back of strong progress in infrastructure projects.
- Bangalore witnessed launch of nearly 8,850 units in Q1 2024, a 14% growth on an annual basis. Branded and listed developers contributed around 53% 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 4,750 residential unit launches in Q1 2024. Currently, several projects are in the pipeline and will likely get registered with RERA soon, with this number expected to shoot up in subsequent quarters. The state government’s extension of 2% stamp duty cut and 10% reduction in circle rate up to June 30, 2024, is likely to help maintain demand for residential units.
- During Q1 2024, Chennai’s residential sector saw healthy launches of over 5,490 units, recording a significant growth of 86% on a QoQ basis. The mid segment contributed over 64% of the total launches, with high-end and luxury segments seeing notable growth accounting for 28% of quarterly unit launches, marking a threefold increase in the segment’s launches on a YoY basis.
- In Q1 2024, Pune witnessed residential launches of 11,358 units, a rise of 19% from the previous quarter, although an 18% drop on a YoY basis. Collectively, high-end and luxury units constitute 47% 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% YoY. Rentals have been stable since the last quarter, although on a YoY basis rentals have surged by 12-15% across submarkets.
- In Ahmedabad, mid-segment continued to dominate quarterly launches with a 40% share, closely followed by high-end and luxury segment with a 37% share. Owing to a steady demand for premium housing units, the high-end and luxury segment has risen by approximately 35% over the average quarterly launches seen for the segment. Capital values recorded a growth of 3-5% on a YoY basis primarily in the Northern and Western submarkets driven by uptick in demand. Going ahead, rentals and capital values are expected to increase in these submarkets owing to the proposed development in the near term.
- Hyderabad witnessed residential launches of 11,090 units during the first quarter, a fall of 44% on a QoQ basis and 23% drop on a YoY basis. In Hyderabad, high-end and luxury segment housing units lead supply with 52% share, followed closely by mid segment housing units with 47% share. On a YoY basis, the capital as well as rental values across the city saw an average increase in the range of 8–15%. The western region of Hyderabad witnessed an average increase of 12% to 15%, followed by the northern markets such as Miyapur and Kompally, which increased by 8% to 10%. However, on a QoQ basis, average property prices and rental values in the city remained broadly stable.
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, customised 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 YoY contribution to the residential market. We expect this momentum to continue throughout the coming fiscal year (FY 2024/25) as well.”
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