In 2018, the real estate sector’s focus was on ensuring affordability of homes, balancing the impact of the Goods and Services Tax (GST) and improving sales, while also witnessing the fallout of the liquidity crisis of NBFCs. The buyers’ mood, on the other hand, was that of cautious optimism. In 2019, experts believe that urbanisation and economic growth, as well as increasing incomes, will drive the demand for residential and commercial properties. A lot will also depend on the general election, which is scheduled during the year.
Real estate outlook for major cities in 2019
Rohan Sharma, head research, Cushman & Wakefield India, shares the expected trends in the key metro cities in India, in 2019:
- “Mumbai and its peripheral areas: We can expect a minor uptick in preferred residential corridors such as Malad-Goregaon-Kandivali in the western suburbs, on account of the metro rail connectivity from Andheri to Dahisar. Emerging locations are likely to be Ghodbunder Road, the Kalyan-Dombivali-Shilphata Road in Thane, Kanjurmarg due to its strategic location with the Thane-Wadala metro link through LBS Marg and Andheri-Kanjurmarg link through JVLR.
- Pune: Sales will remain slightly tepid, although affordably-priced units should do well. However, the focus remains towards project offerings by established developers. Wagholi in eastern Pune and Punawale and Gahunje in the western region, are expected to remain the key emerging residential locations.
- Delhi-NCR: Buyer sentiment is recovering but it is inclined towards quality and developers with strong profiles. Projects that are close to delivery in the prominent corridors, such as Sector 150 and Noida Extension in the Noida-Noida Expressway region, sectors of new Gurugram and NH-24 in Ghaziabad, shall continue to get interest from buyers.
- Kolkata: Prices have not seen any positive movement. The north-east to New Town and south-west to Joka regions and its surrounding areas, are likely to remain the main growth corridors in the city.
- Bengaluru: Buyer sentiments are expected to remain positive in the upcoming quarters. New launches are expected to increase, even though sales is likely to pick up pace only gradually. Key markets for the future are Kanakpura Road with the availability of land parcels, proximity and connectivity to commercial hotspots such as Electronic City, Bannerghatta Road and Sarjapur; and North Bengaluru due to its emergence as an office market and proximity to commercial hotspots like ORR, Bellary Road and the airport.
- Hyderabad: Driven by the expansion of office markets, residential development has picked up radially outwards along ORR, near Nanakramguda, Narsingi, Manikonda, Kokapet and Puppalguda. Other corridors in the north such as Kompally and Adibatla and Srisailam Road in the south, are gaining ground vis-à-vis plotted developments.
- Chennai: Capital values are expected to remain stable over the first half of the year, after which prices may witness slight appreciation, owing to a huge influx of commercial developments in the suburban and peripheral locations of Chennai. Key residential corridors are the suburban ones in the south, with OMR, Pallavaram-Thoraipakkam Road and Guindy being the major growth locations.
- Kochi: Most of the focus is on the mid-segment and high-end properties and we expect NRIs, who mainly drive the residential market, to remain active in 2019, as well.
- Jaipur: Sale prices have remained steady, albeit with downward pressure, as buyers are negotiating hard. A similar trend is likely to prevail in 2019. Agra Road, Sikar Road, Tonk Road, Kalwar Road, areas around the airport to Mansarovar and Jagatpura, are the main residential corridors that are witnessing buyer interest.”
See also: Is 2019 the best time to buy a house?
Residential property price trends in the top metro cities
| Location | Price range (In Rs per sq ft, as of Q4 2018) | Percentage change (year-on-year) |
| Mumbai | ||
| South Mumbai | 40,000-83,000 | 0% |
| Mumbai suburbs | 12,000-40,000 | 0% |
| Pune (city level) | 8,500-19,000 | 0% |
| Delhi-NCR | ||
| Gurugram | 10,000-16,200 | 0% |
| Noida | 7,000-9,000 | 0% |
| Kolkata | ||
| South | 7,500-13,000 | 0% |
| South-east | 6,200-14,000 | 8% |
| Central | 12,000-19,500 | 0% |
| East | 5,000-7,750 | 0% |
| Bengaluru | ||
| Central | 18,000-30,000 | 0% |
| South | 7,000-10,500 | 0% |
| East | 6,500-10,000 | 0% |
| North | 7,000-11,000 | 0% |
| Hyderabad | ||
| Banjara Hills | 8,000-11,700 | 4% |
| Madhapur, Gachibowli | 5,500-7,000 | 13% |
| Kukatpally | 4,700-6,300 | 10% |
| Chennai | ||
| Central | 23,000-32,000 | 0% |
| Off Central-I | 18,000-22,000 | 0% |
| Off Central-II | 12,000-17,000 | 0% |
| East Coast Road | 6,000-9,500 | 0% |
Source: Cushman & Wakefield
Note: All data is for the high-end segment. Data as of Q4, 2018
Expected trends in the residential realty market in metro cities in 2019
Analysts predict that developers shall continue to reduce apartment sizes, to keep homes affordable for buyers. The FSI norms may also undergo changes, with higher FSI being granted in central and suburban locations.
Other triggers that may impact the residential market in metro cities in 2019:
- The general elections may affect market sentiments in a big way.
- Resolution of pending cases under the Real Estate (Regulation and Development) Act (RERA) and/or insolvency tribunals, is likely to infuse more confidence in buyers.
- Driven by transit-oriented development and unlocking of government and state PSU lands, more housing stock may be created in city-centric locations. This could impact buying momentum positively, as the government will push developers to keep prices relatively affordable.
- Reduction in the GST rates for real estate, to positively impact under-construction projects’ sales.
Rental trends for 2019
The metropolitan cities are expected to account for approximately 30 per cent of new projects launched every year, points out Amit Wadhwani, co-founder of Sai Estate Consultants Chembur Pvt Ltd. Consequently, “Real estate players are now changing the rules of marketing. Also, there is a transformation in buying patterns. With the chronic inter-bank deficit and the government expenditure programme funded by the Reserve Bank of India, the regulator may increase interest rates in 2019,” opines Wadhwani.
While young professionals and families are driving the demand for affordable rental options, healthy demand for corporate leasing for senior executives is driving rentals in luxury housing. “Rentals are expected to be on the growth curve, with an average increase of two to eight per cent year-on-year, especially in residential corridors that are close to commercial office markets. Co-living and student housing formats are changing how the rental market is shaping up, driven by millennials and the young workforce,” concludes Sharma.