Knight Frank India claims that the office market was driven by demand from global capacity centers.
Knight Frank India’s quarterly update on the sector, home sales saw a 9% increase to 86,345 units across the top eight cities in India in the first quarter of 2024, while office leasing saw a 43% rise to 16.2 million square feet.
India remains a country where many people buy homes, with sales growth slightly outpacing supply growth. The first quarter saw the launch of 93,254 units in total, an increase of 7% from the previous year.
Demand from global capacity centers (GCCs), which had experienced a sharp upturn in the previous few months following a sluggish start, propelled the office market.
Residential sales
Mumbai witnesses the highest growth during the quarter. Knight Frank data shows that 23,743 units were sold during the quarter, representing an increase of 17% over the prior year. Hyderabad and Pune were the next two top-performing markets.
During the quarter, there was a 1 percent increase in the National Capital Region, the city with the second-greatest volume after Mumbai, and a 2 percent decline in Bengaluru.
Sales were almost flat with a downward bias overall, and Pune, Bengaluru, Mumbai, and NCR all reported lower sales.
Except for Kolkata and Mumbai, every other city experienced a rise in the supply of homes. Ahmedabad saw growth of just 1%, while Chennai experienced the largest expansion at 89 percent.
The inventory shortage occurred at 5.9 quarters to sell, down from 6.7 quarters a year ago due to the increased demand for homes. However, due to new launches, the amount of unsold has increased. At the end of March, it was 480,420 units.
More residences in the price range of more than Rs 1 crore have been sold. A price increase could be the cause of this. The bulk of home sales in the quarter prior fell between Rs 50 lakh and Rs 1 crore.
In a year, prices have risen by 2-13 percent, with Hyderabad seeing the biggest increase and Ahmedabad seeing the lowest. There has been a consistent rise, ranging from 1 to 14 percent, and Mumbai and Ahmedabad have not seen any change.
Office Demand
According to Shishir Baijal, the chairman and managing director of Knight Frank India, the country may end 2024 with record leasing volumes.
Every city except Bengaluru and Kolkata reported strong increases in office lease transactions. The leasing volume increased by 261 percent in Hyderabad and 146 percent in Pune. Bengaluru saw no change, while Kolkata saw a nine percent decline.
The figures show that there needs to be a sufficient amount of newly constructed office space. The amount of completed office space was only 1.2 million square feet in the quarter under review, and this has essentially stayed the same over the previous quarters.
Office rental rates are buoyant as a result of the supply and demand imbalance. Bengaluru, Mumbai, and NCR have seen 4-5 percent growth in rents. There also has been a marginal reduction in vacancy level though it is still above 15 percent.
The report predicts that a reduction in interest rates towards the second half of the year will improve sentiment in the residential and office markets.