Real estate demand remained intact in 2022: Knight Frank

January 13, 2023

The rise in mortgage rates and record high retail inflation did not deter home buyers in 2022, which ended with residential sales at a nine-year high sending prices up across markets.

Property consultant Knight Frank India released data detailing about 3.13 lakh residential units were sold across the top eight cities in 2022, up 34 per cent year-on-year. Mumbai topped the charts in sales, followed by the National Capital Region and Bengaluru. Kolkata saw a dip in sales, bucking the general trend.

New project launches rose 41 per cent in the year under review to 3.28 lakh units.

Office leasing at 516 lakh sq ft was up 36 per cent on year, with 494 lakh sq ft being added during the year. Bengaluru led the field in leasing transactions followed by the National Capital Region, the data showed.

Knight Frank India’s Chairman and Managing Director Shishir Baijal said that the pace of growth seen last year was expected to remain in 2023 as well, “owing to continued domestic growth.”

The cities and regions that were part of the survey included Mumbai, National Capital Region, Bengaluru, Pune, Chennai, Hyderabad, Kolkata and Ahmedabad.

Resilient Residential Demand

Though the second-half saw a rise in mortgage rates as Reserve Bank of India increased key policy rates to clamp down on inflation, the demand momentum did continue, at least in urban centres.

This was due to easier payment schemes offered by developers, incentives such as free home accesories and absorbing part of the hike in mortgages. Banks and home financiers also chipped in by extending loan tenures while keeping monthly instalment intact.

The resilience in demand saw prices rising an average 4 to 7 per cent across markets in 2022, though in some pockets it was higher. In the second half of the year (July-September) residential prices rose 1 to 3% across markets compared to the first half.

Office Demand

Compared to the domestic companies, which have been seeing near full attendance for most of the year under review, multinational companies’ physical office attendance is still to pick up. The fear of a resurgence in Covid-19 cases, especially in places like the United States and in China towards the end of the year has delayed return-to-office plans for many companies.

In the second half of the year, leasing transactions rose a mere 4 per cent from the first half while on an annual basis it was up just 2 per cent. But the addition to new space is an encouraging sign and an indicator of hiring and occupancy plans of companies.

Lease rentals also saw an uptick in many key markets such as Pune, Hyderabad, Chennai and the National Capital Region. It was stable in Ahmedabad and Kolkata.

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