Tag Archives: Boom in Indian real estate

Anarock reports a 57% decrease in unsold homes amid the NCR real estate revolution

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Homebuyers in the Delhi NCR area are benefiting from the current market upswing, as the region has seen a  57% drop in unsold homes over the last five years, the largest decrease of any city in the country. 

According to a recent Anarock report, the number of unsold homes in NCR has steadily decreased from around 200,000 units at the end of the first quarter of 2018 to approximately 86,420 units by the end of the first quarter of 2024. During the same period, the main southern cities of Bengaluru, Hyderabad, and Chennai saw their unsold housing inventory fall from over 196,000 units in Q1 2018 to more than 176,000 in Q1 2024.  

Gurgaon now leads the list with a total unsold stock of 33,326 units, down 37% over the last five years, followed by Greater Noida, which had up to 18,668 units at the end of the first quarter. 

According to Pradeep Aggarwal, founder, and chairman of Signature Global (India), Delhi-NCR’s unsold inventory has decreased by 57%, from approximately 200,000 units at the end of Q1 2018 to approximately 86,420 units by the end of Q1 2024, with Gurugram playing a significant role in this positive trend. This will boost the NCR real estate market by instilling buyer confidence and improving market stability. Key contributors to this decrease include extensive economic growth, which increases purchasing power, and significant infrastructure development, particularly the expansion of metro lines and expressways such as the Dwarka Expressways, Southern Peripheral Road Sohna Elevated Road, Delhi-Mumbai Industrial Corridor, and upcoming metro lines. Proactive government policies and regulatory reforms, such as RERA, improve transparency in the real estate sector. Improved connectivity via expanded transportation networks makes distant areas more appealing, lowering unsold inventory stocks. This positive outlook is expected to encourage the creation of new premium and mid-range residential projects for discerning buyers and inventors.” 

However, Greater Noida’s supplies have decreased by a much higher percentage of 70% since Q1 2018. 

Overall unsold housing inventory in Ghaziabad fell to 11,011 units in Q1 2024, down from 37,005 in Q1 2018, representing a 70% reduction in five-year inventory. 

Noida had  7,451 unsold units at the end of the first quarter of 2024, down 71% from the same quarter in 2018 when there were 25,669 units. 

S.K. Narvar, chairman of Trident Realty, says, “The Delhi-NCR real estate market has undergone a tremendous transformation, with a 57% decrease in unsold homes over the last five years. This decline reflects a positive change in the local real estate landscape, indicating improved market stability and a more stable supply-demand situation. The city’s strategic approach to new supply additions has played a significant role in this transformation, resulting in restored buyer confidence and a healthier market environment. The determination of developers to manage new supply additions, combined with regulatory actions such as RERA and GST, have contributed to this optimistic trend. The decrease in unsold inventory indicates  strong demand, modern living preferences, and a bright future for the real estate sector in Delhi NCR.”  

Overall, the top three Southern cities of Bengaluru, Hyderabad, and Chennai trailed by 11% in unabsorbed stock. Unsold inventories have decreased by 8% in MMR and Pune in the region to the west. During the period under review, Kolkata, on the East Coast, experienced a significant decline in unsold inventory, which dropped by 41%. 

Ashish Sharma, AVP of Operations at Brahma Group, stated, “The real estate market in Delhi NCR has evolved significantly, resulting in a remarkable decline of approximately 57% of unsold residential properties in the last five years, highlighting the sector’s dynamism. Furthermore, NCR’s unsold stock fell from about 2 lakh units at the end of the first quarter of 2018 to 86,420 units by the end of Q1 2024. Additionally, regulations like RERA and GST have reduced the new supply developers offer in bringing buyers back into the market.  Furthermore, this positive trend will drive residential launches, including luxury projects, as the NCR’s demand for modern, luxurious, and integrated habitation spaces grows. It reflects the industry’s ability to adapt to changing market dynamics while meeting the rising expectations of discerning investors and buyers considering NCRR’s transformation process.” 

One of the reasons South India has been able to report a relatively low decline in unsold inventory is that supply has arrived at a rapid pace, particularly in Hyderabad, where new supply has been exceptionally high over the last two years. 

Finally, the NCR real estate market has undergone a significant shift, with a 57% decrease in collectively accumulated unsold housing inventory over the last five fiscal years. These reasons suggest that the development of the city’s economic growth, infrastructure, and government policies are among the key factors contributing to this significant decrease. As a result, Gurugram has emerged as a key market in India’s real estate market, attracting investors and end users. 

Colliers report that foreign investors invest more than $4 billion in Indian real estate each year

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Foreign inflows rebounded in 2023, rising 20% over the previous year to $ 3.6 billion. These investments went beyond traditional channels, expanding into alternative asset classes and supporting the strong growth in the domestic office, residential, and industrial segments. 

A favorable investment environment and rapid urbanization have established India as an attractive investment hub in the Asia-Pacific area because of its robust economy. 

As a result, numerous new funds are actively considering the market, while established global and sovereign funds such as Mubadala, Mitsubishi Fudson, PAG Credit & Markets, Cadillac Fairview, Korea Investment Corp, and PNB Malaysia are either increasing their investments or forming new collaborations to capitalize on the Indian market’s burgeoning opportunities. 

“2024 is expected to be a more dynamic year for both the Asia Pacific real estate markets and capital in the region, which will remain the dominant investor in global real estate. “The ability to act quickly, dig deeply into markets and sectors to identify value, and form productive partnerships will be critical to capitalizing on the region’s diversity and increased opportunity,” said Chris Pilgrim, Collier’s Managing Director of Global Capital Markets, APAC. 

Strong economic resilience, a favorable investment environment, and rapid urbanization have made India a highly desirable investment destination for international funds. 

With the International Monetary Fund (IMF) forecasting 5.7% GDP growth by 2024, India remains one of the world’s fastest-growing economies and a top choice among emerging Asia-Pacific (APAC) nations. Its appeal stems from attractive pricing, superior valuations, and promising yields for investors looking for profitable opportunities. 

Foreign inflows rebounded in 2023, rising 20% from last year to $3.6 billion. These investments went beyond traditional changes, expanding into alternative asset classes and bolstering the strong growth in the domestic office, residential, and industrial segments. 

New funds are expected to enter the Indian market shortly, maintaining investor interest. The residential, industrial, and alternative sectors expect renewed interest and income-generating office properties. 

“Investments in Indian real estate have been consistent in recent years, and they are likely to grow further as demand for capital changes structurally. Global investors have always been at the forefront, investing an average of $4 billion annually for the last five years, demonstrating their continued commitment and confidence in the sector. With an increase in performance credit, special situations, portfolio acquisitions, asset reconstruction, and related structures, the sector is expected to attract even more investment in the coming years,” said Piyush Gupta, Managing Director, Capital Markets & Investment Services at Colliers India. 

APAC countries show increased interest in Indian real estate. 

While the United States and Canada remain primary sources of capital, prominent APAC countries such as Singapore, Hong Kong, South Korea, and Japan are increasingly focusing on India’s burgeoning real estate sector. In 2023, investment inflows from the APAC region increased by 57% annually to $ 1.8 billion, with office assets accounting for 70%. 

Aside from office properties, APAC countries have shown interest in residential, industrial, and warehousing assets. The volume of investments has nearly doubled since 2019, indicating a significant increase in investor enthusiasm and confidence in India’s real estate sector. 

Looking ahead to 2024, investors are likely to become more involved in India’s real estate sector. This urge is driven by the country’s strong economic growth, favorable business conditions, and rising demand in numerous industries. The expectation of increased activity indicates confidence in the policy landscape, a narrowing gap between buyers and sellers, and investors’ eagerness to allocate more capital across various real estate asset classes. 

“In 2023, foreign investors accounted for 90% of all investment inflows into India’s office sector, demonstrating the strength of the underlying asset class. The industry is currently transforming. Furthermore, as sustainability becomes more important in investment decisions, the real estate sector, including India’s office market, is poised to align seamlessly with global Environmental, Social, and Governance (ESG) standards,” said Vimal Nadar, Senior Director and Head of Research at Colliers India. 

Godrej Properties saw sales bookings of Rs 22,500 crore in FY24, an 84% increase from the previous year

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Due to rising housing demand, Mumbai-based real estate company Godrej Properties reported an 84% year-over-year increase in sales bookings to a record of Rs 22,500 crore. 

Due to rising housing demand, Mumbai-based real estate company Godrej Properties reported an 84% year-over-year increase in sales bookings to a record Rs 22,500 crore on April 9, according to a regulatory filing from the business. 

The booking value increased by 135% to over Rs 9,500 crore in the fourth quarter of FY24, and by 84% to over Rs 22,500 crore in the full year. 

GPL surpassed its booking value guidance by 161% for FY24 thanks to an improved project mix, volume growth of 31% to 20 million square feet, and year-over-year improvements. The company sales volume increased by 56% to 8.17 million square feet in Q4FY24.  

Godrej Properties said in a regulatory filing that the company’s sales for the fourth quarter of the previous fiscal year and the entire year 2023-24 were the highest they have ever been.  

“This marks the greatest annual sales any publicly traded Indian real estate developer  has ever disclosed.” The company claims was achieved by selling 14,310 homes totaling 20 million square feet. 

Superlative customer demand propelled sales in a few significant new project launches. According to the statement, Godrej Reserve in MMR and Godrej Zenith in NCR had booking values of over Rs 3,000 crore and Rs 2,690 crore, respectively. 

Four projects in FY24 achieved over Rs 2,000 crore in booking value, including Godrej Tropical Isle in Q2 and Godrej Aristocrat in Q3. In FY 24, GPL’s booking in the NCR increased by 18% to exceed Rs 10,000 crore, while in the MMR, they increased by 114% to exceed Rs 6,500 crore. 

“The scale-up we have accomplished over the last years fills us with great satisfaction. Our annual bookings in FY22 are not as high as the sales bookings of over Rs 9,500 crore in Q4FY24. In FY24, we saw an 84% increase in bookings, totaling more than Rs 22,500 crore. Godrej Properties MD and CEO, Gaurav Pandey, expressed his satisfaction that the company’s sales growth was driven by a strong 31% increase in volume and an improving project mix.  

Along with its recent entry into the Hyderabad market, the company will have an even stronger launch pipeline for the current year. 

In FY24, land deals will total 3,000 acres as developers purchase real estate

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Aiming to maintain the launch momentum, real estate developers in India expect land deals to reach 3,000 acres in FY24, up 59% from the previous year. 

Anarock, a property consultant, provided data indicating that homes sold for 2,258 acres in the first nine months of FY24. Anecdotal evidence and exchange filings from listed developers that Businessline tracks suggest that the momentum in land acquisition has continued, with the possibility of another 600-700 acres added this quarter. 

For example, Godrej Properties went on a purchasing binge in the March quarter, spending over Rs 400 crore on over 15 acres in Hyderabad and Rs 506 crore on a 6.5-acre plot of land in Noida. In a joint venture, it will develop a 62-acre township in Bengaluru. Mahindra Lifespace recently purchased a 9.4-acre plot of land in Bengaluru.

The managing director and co-head of Motilal Oswal Alternates, Saurabh Rathi, claims that both listed and unlisted players have been very busy. The availability of land parcels from corporations, the government, and other landowners, in addition to developers, has increased transactions, he said, particularly in the Delhi-National Capital Region and the Mumbai Metropolitan Area. In Gurgaon alone, land deals totaling more than Rs 3,000 crore have concluded in the past two years.  

According to Anarock’s data, the two main metropolitan areas saw the most transactions, with Bengaluru and Hyderabad, two of the real estate hotspots, trailing closely behind. 

From light to heavy assets 

Since the middle of 2022, there has been a shift toward land acquisitions, according to Rathi. As they pursued an asset-light model, developers joined joint development projects in 2019-2021 and the first few months of 2022. While smaller developers faced project delays because of inadequate funding, landowners sought to make money from their real estate holdings. 

Developers are turning to carry out full buyouts or purchase their former development partners, according to Rathi. 

While the new supply was at 4.5 lakh units, an all-time high of 5.3 lakh were sold in 2023. Players in real estate are building up their land banks in anticipation of volumes. The difference in supply and demand has fueled an increase in prices. 

Land availability

More land is now available. To generate revenue, corporations are selling non-core land assets. For example, last year Bombay Dyeing, owned by Nusli Wadia, sold a 22-acre plot of land in the heart of Mumbai for Rs 5,200 crores to a division of Sumitomo Realty. Runwal Developers paid Rs 726 crore to Kansai Nerolac in December for a 4.13-acre plot in Lower Parcel. It had previously received Rs655 crore for the dale of a 24-acre Thane plot to the house of Hiranandani. 

Local state authorities, like the CIDCO in Maharashtra and the Haryana State Industrial and Infrastructure Development Corporation, regularly auction plots for residential and commercial use.  

The extraordinary demand for land, says Rathi, has driven up prices. The price per acre has increased by 50-60% in Pune and MMR over the past two years, while land prices in Hyderabad have doubled. 

Compared to two years ago, when the transaction’s value was projected to be between Rs 25,000 and 30,000 crore, he now places it between Rs 35,000 and 40,000 crore. 

Property prices in this category are among the highest in India.

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India moved up eighteen places to take 14th place in the third quarter of 2023 on Knight Frank’s global house price index. The nation’s home prices rose 5.9% annually, creating a notable upward momentum.

In September 2023, the average annual growth rate for home prices in the 56 markets that compose Knight Frank’s Global House Price Index was 3.5%. The previous quarter saw a 2.2% increase in worldwide home prices. 

According to Knight Frank, India’s steady economic growth is the reason behind the country’s rising residential market despite obstacles like increasing home loan rates and inflationary pressures. State and federal governments offered assistance during the pandemic, which sparked the market. 

As per Shishir Baijal, CMD of Knight Frank India, “strong internal economic fundamentals, rising aspirational qualities of residential real estate, and an elevated interest cost environment brought on by elevated levels of inflation are driving heightened demand among homebuyers in prominent residential markets within the country.”

Emerging residential hubs in India’s urban centers are made possible by the increased momentum infrastructure development is receiving from the country’s increasing urbanization, according to Bajijal.  

The Indian housing market has been strong despite price increases. Compared to 3.65 lakh units in 2022, as many as 3.49 lakh units were sold in the top 7 cities by the end of the third quarter of 2023. 

At the same time, the total sales value of the sold housing stock increased marginally to Rs 3.48 lakh crore. The value of all residential property sales in the first nine months of 2023 is already 7% more than the entire year of 2022. 

After a five-to-six-year period of stagnation, real estate value began to decline in 2013. It was a period of tepid demand. But after COVID, we saw a significant resurgence in demand that exceeded the previous peaks, according to Poulomi Estates MD Prashant Rao.

Pent-up demand, the need to upgrade, and a willingness to pay for newer features were key factors driving up property prices. Property prices also rose due to infrastructure development and improvements in the economic environment. Even though real estate prices increased dramatically across the nation, Hyderabad consistently outperformed other top cities year over year. It’s since the city has seen an increase in corporations moving their headquarters there. We anticipate this trend continuing. 

The first quarter of 202 saw Turkey at the top of the rankings. With an annual growth rate of 89.2%, this is another year of record growth. The top five rankings belong to countries in southeast Europe, including Greece (14%), Croatia (13.7%), and North Macedonia (11%). 

With 6.3% annual growth, Japan leads the Asia-Pacific region, followed by India with 5.9%.

Given the rising costs for mortgage borrowers, the resilience of global house prices is surprising; however, market supports include solid savings, pay settlements above inflation, and a shortage of stock available for purchase. The main problem facing the housing markets in 2024 will continue to be low market liquidity, with sales volumes falling by up to 25% from their recent peaks. “Only a move toward lower interest rates will boost sales activity,” stated Liam Bailey, Knight Frank’s global head of research.