In 2023, the Indian residential market remained unstoppable. Housing sales reached an all-time high in the first nine months of 2023. Despite the surge in both loan rates and home prices, total housing sales in the first nine months were more than 349,000 units across the top seven cities, accounting for 96% of total sales in 2022, according to ANAROCK Research.

According to Anuj Puri, Chairman of ANAROCK Group, the trend has continued in the current quarter, with some developers reporting a strong increase in both new launches and house sales. Housing sales reached a new high in the third quarter of 2023, with nearly 120,300 units sold across the top seven cities.

"This indicates that the appetite for homeownership has not waned, with end-users driving the majority of sales." Meanwhile, fresh supply has been expanded by prominent and publicly traded developers, who have also reported strong housing sales. This trend is expected to continue in the next quarters, as homeownership sentiment has risen dramatically in 2023. "Residential demand remains strong," Puri said.

Several developers had a healthy pipeline of new project launches over the year, particularly during the ongoing Christmas quarter across all seven locations, according to the market observer. According to ANAROCK Research, more than 328,000 units were launched in the first nine months of the year in the top seven cities, whereas in the same period in 2022, approximately 265,000 units were released in the top seven cities, an increase of 24% year on year.

In terms of commercial demand, the first half of fiscal year 2024 has been a somewhat slow period for commercial office space activity throughout the top seven cities, with both net absorption and new completions remaining flat when compared to the same period last year. "The silver lining is that, despite all domestic challenges and global headwinds, including early layoffs, office activity in the first half of FY 2024 remained roughly the same as in the corresponding period in FY 2023." "It was widely expected that commercial demand in India would fall due to layoffs by several large corporations and shrinking businesses," Puri added.

According to data, the Indian office market saw a 5% increase in new office supply across the top 7 cities in the first half of fiscal year 2024, totaling over 25.12 million square feet. The southern cities (Bengaluru, Hyderabad, and Chennai) continued to dominate in the first half of FY24 (H1FY2024), accounting for 72% of total new office supply across the top 7 cities.

In terms of net office absorption, demand for office space in the top 7 cities fell by 1% year on year in H1 FY2024, totaling almost 18.84 million square feet. Bengaluru stayed on top, accounting for a quarter of net office absorption across the top seven cities.

The Path Ahead

If we look at the current situation, Puri predicts an 8-10% increase in average residential prices in 2023 compared to the previous year. 

Despite rising interest rates and global headwinds, home demand in cities remained at an all-time high. "Average residential prices across the top 7 cities increased in the range of 8-18% in Q3 2023 when compared to Q3 2022, mainly due to an increase in the prices of construction raw materials and an overall rise in demand," according to the report. According to ANAROCK Research, the average property price in the top seven cities climbed by 11% year on year, rising from Rs 6,105 per sq. ft. in Q3 2022 to approximately Rs 6,800 per sq. ft. in Q3 2023.