NCR records 3% YoY growth in residential sales in H1 2023: Report

July 07, 2023: According to a Knight Frank India report, 30,114 units were sold in National Capital Region (NCR) in the primary residential market during H1 2023, recording 3% YoY growth. This was the highest sales levels for the city since H1 2013. This also led to a decline in the Quarters to sell (QTS) levels from 9.6 in H2 2022 to 7.2 in H1 2023. Gurgaon witnessed the highest market share of 52% of the total sales during H1 2023, the report said.

Residential market summary: Top eight Indian cities

Source: Knight Frank India

The report stated that 2023 started on positive note for the NCR residential market with sales reaching new high while new launches moderated in the primary market in comparison to H2 2022. However, on a YoY basis, H1 2023 launch volume exceeded that of H1 2022 by 4%. It further said that though developers continued to launch new projects, many intensified their efforts for new land acquisition in preparation for a future pipeline of projects. The traction has also helped the average residential pricing, which rose by 5% in the last 12 months indicating a steady growth in the price appreciation.

Residential market health

Source: Knight Frank Research

Residential Price Movement

Source: Knight Frank India

In terms of ticket-size split comparison of sales, the share of units above Rs 10 mn in the total sales volume has consistently grown in NCR since H2 2021, the report mentioned. From 37% in H2 2021, the share of this category grew to 41% in H1 2022. In H2 2022, this ticket size category comprised half of the region’s total sales volume before rising to 65% in H1 2023.

Gurgaon residential property trends

Since H2 2019, Gurgaon’s share in NCR’s total sales volume has only grown with each half-yearly period. From a 12% share in H2 2019, the city’s share has grown to 52% in H1 2023, according to the report. A high housing demand has revived the new launches activity in the city. In H1 2023, new launches in Gurgaon comprised 82% of NCR’s total launches. From 19% share in H1 2021, the city’s share has risen to 82% in the current review period as many new projects have been launched in the developing peripherals.  In H1 2023, the areas that witnessed new residential launches included Sector 53, 63, 76, 77, 79, Badshahpur, 37D, 93, 103 and 111.

Noida and Greater Noida residential property trends

The report highlighted that since H2 2019, Noida and Greater Noida’s share in NCR’s total sales volume had been declining sequentially. From 71% in H2 2019, the share declined to 42% in H1 2022 before further reducing to 32% in the current half-yearly period. The non-availability of ready-to-move-in inventory in key micro-markets of Noida situated closer to Delhi and a shortage of new launches by credible developers in both these cities contributed to the rationalizing of its share in NCR’s total sales.

The report stated that during H1 2023, Noida and Greater Noida’s cumulative share in NCR’s new launches remained limited at 13%, although in H1 2022, it had accounted for a 26% share in NCR’s new launches. During H1 2023, new launches took place in Techzone IV, Sector 12 and Sector 16 B in Greater Noida. In Noida, Sector 94 and Sector 150 witnessed a few new projects being introduced in the market.

Mudassir Zaidi, executive director – North, Knight Frank India said, “Despite the changing situation regarding higher house loan interest rates, NCR recorded the second largest growth in residential sales during the first half of 2023. The NCR market is still being driven by high consumer demand despite a number of challenges.”

Office market trends in H1 2023

In the office market segment, NCR emerged as the second-best performing office market across the top eight cities in terms of office space leasing during H1 2022, the Knight Frank report said. NCR’s transactions volume saw a growth from 4.1 mn sq ft in H1 2022 to 5.1 mn sq ft in H1 2023, which resulted in a 24% YoY growth. New office completions were recorded at 3.9 mn sqft during the same period, registering a decline of 58% YoY.

Of the total volume of office spaces leased during this half yearly period, Gurgaon accounted for 57% share of the total numbers, followed by Noida at 33%. Delhi accounted for 10% of total office spaces transacted, with Secondary Business District (SBD) comprising 9% of Delhi’s total, the report said.

In terms of office leasing, Gurgaon had a 57% share while Noida accounted for 33% of the total numbers. Delhi accounted for 10% of total office spaces transacted, with Secondary Business District (SBD) comprising 9% of Delhi’s total. In H1 2022, the emergence of office space requirements from other sectors and expansion by the flexible spaces sector led to the upward growth trajectory of the office market.

Market Summary: Top eight Indian cities

Source: Knight Frank India

The report mentioned that in terms of sectoral split, office spaces catering to India facing operations comprised 49% of the total whereas flexible spaces accounted for 25% of the total. Global capability centres (GCCs) accounted for 22% of the end usage while the remaining 4% was used by third party IT services. It said that proliferation of GCCs across the BFSI, consulting and IT sectors had accelerated during the pandemic across key cities in NCR.

In terms of new office completion, NCR recorded 3.9 mn sqft of new completions In H1 2023, witnessing a 58% YoY growth. Noida and Gurugram together comprised 87% of the total share, with 64% and with 23% respectively. This was followed by the Secondary Business District (SBD) of Delhi which accounted for 11% of the share.

Business district-wise rental movement

Source: Knight Frank Research

Gurgaon office market trends

According to the report, during H1 2023, Gurgaon accounted for 2.9 mn sqft of office space leasing, accounting for 57% of NCR’s total transaction volume. Of the 160 deals closed in NCR in H1 2023, Gurgaon accounted for 58% share, the highest across all cities in the region.

While Gurgaon’s share in NCR’s overall leasing decreased from 71% in H1 2022 to 57% in H1 2023, it remained at par in terms of absolute volume with H1 2022, the report said.

The report stated that Gurugram Zone A remained a preferred choice among occupiers in H1 2023 which also comprises 35% of NCR’s total leasing. Occupier interest in Golf Course Extension Road and MG Road are two hotspots in Gurugram Zone A were on a continual rise due to availability of available Grade A spaces at relatively cheaper rents compared to main locations of the city.

Noida office market trends

In H1 2023, Noida accounted for 1.6 mn sqft office space leasing, which is 33% of NCR’s total office spaces leased, the report mentioned. In the past one year, Noida’s share in the region’s total leasing has increased from 25% in H1 2022 to 33% in H1 2023. This accounts for a 60% YoY growth during this period in this city. Sectors 16B, 62, 129 and 135 gained a lot of occupier traction in this period.

Noida accounted for 64% of NCR’s new office space completions in H1 2023. Sectors 129, 132, 143A and 144 witnessed infusions of new Grade A. Growing occupier demand in Noida led to a 4% YoY increase in average rents for office spaces in H1 2023.

Mudassir Zaidi, executive director – North, Knight Frank India, “In the first half of 2023, rents in the NCRi office market remained at par with H1 2023. Despite transaction volumes for office leasing reaching a new high, rents remained stable due to weak global economic environment and inflationary pressures that occupiers are facing. India facing businesses accounted for the highest share in H1 2023, amounting to 49% of total transactions.”