After posting a strong performance in 2022, the luxury residential segment witnessed continued momentum in sales and launch activity in the first few months of this year.
A report brought out by CBRE South Asia Pvt. Ltd said that post-pandemic uptick in ownership of luxury housing results from homebuyers’ mindset looking for larger spaces and a higher preference for home ownership with better amenities.
The report ‘India Market Monitor Q1 2023’, says that cities including Delhi-NCR, Mumbai, Hyderabad, Pune and Kolkata are leading cities where maximum traction for high-end units was recorded. Sales in Delhi-NCR surged by over 216%, Mumbai by 44%, Hyderabad by over 800%, Kolkata by 100% and Pune by nearly 13 times on a Year-on-Year (Y-o-Y) basis for quarter ending Jan-March 2023.
The report further highlights 12% Q-o-Q as well as Y-o-Y growth in overall sales of residential units (across all segments) during Jan-Mar’23 period.
According to the report, a total of over 78,000 housing units were sold in Jan-Mar 2023 and about over 81,000 units were launched during this period. Out of this, 49% share was recorded in the mid-end category in units sold, followed by affordable/ budget projects. The Live, Work, Shop survey had earlier highlighted that more than half of Gen Z respondents planned to move to a new home in the next two years, compared to only 29% of baby boomers.
The past two years have seen a realignment in homebuyers’ priorities and the need for owning a house has been further accentuated due to the uncertainty that the pandemic ushered. Mumbai, Pune and Delhi-NCR had 62% cumulative share in sales of housing units in Jan-Mar’23.
The report points out that Mumbai led in the number of total housing units sold at 19,000 units, followed by Pune (18,000 units), Delhi-NCR (11,600 units) and Bangalore (11,500 units). On the new launches front, the gateway cities – Mumbai (25,300 units), Pune (16,000 units) and Delhi-NCR (11,200 units) cumulatively accounted for about 64% share during Q1 2023.
Anshuman Magazine, Chairman and CEO – India, South-East Asia, Middle East & Africa, CBRE, said, ” We foresee demand for luxury housing this year will primarily be driven by the aspiration of continued home ownership. The momentum is expected to continue in the coming quarters as well. Projects with better amenities, focus on health and safety and clean surroundings to further gain an edge amidst evolving consumer preferences”.
The outlook for the year says that strong sales and launch momentum expected in the first half of 2023; a minor tapering in activity likely in the middle of the year but its impact could be cushioned by the festive season.
Capital value appreciation trends would vary basis the segment, city, micro-market, unsold inventory levels and even project attributes; at the same time, developers likely to be cautious about raising prices lest it impacts homebuyers’ purchasing power.
Projects in the higher ticket range (Rs 1.5 crore and above) would continue to see traction in sales as the market has witnessed a spate of new launches in this bracket of late; moreover, the impact of rising home mortgage rates would be limited on this segment.
As large developers foray into tier-II cities, we expect to see a higher number of joint ventures and joint development initiatives as they strike partnerships with local players with an aim to manage regulatory hurdles and understand consumer preferences, the report says.