The Indian real estate market saw remarkable new highs in the first half of this year as office space sales reached record highs. This growth was mainly driven by global firms eyeing India's viable economic growth and talent pool, according to Knight Frank
Between January and June this year, the surge in foreign interest propelled office demand to a record high of 3.2 million square meters across eight major cities, accounting for 48% of the total office sales during the period.
Residential real estate also saw significant gains, with house sales reaching an 11-year high of 1.73 lakh units. The report also found that homebuyer preferences are shifting towards luxury spaces as residential units priced over Rs 10 million constituted 41% of the total sales.
Mumbai led the residential real estate sales and Bengaluru led the way with the highest office 'transaction' or sales volume.
This strong growth momentum, amid an improving global outlook, underscores the positive economic sentiment prevailing in the country and is reflected in the robust performance of the Indian real estate markets.Shishir Baijal, Chairman and Managing Director, Knight Frank India
Office Space Transactions Hit All-Time High
Rising confidence in the country's strengthened economy has encouraged office occupiers to expand their Indian operations.
Office space transactions have scaled to all-time highs and the first half of this year saw the highest-ever transaction volume in a half-yearly period at 3.2 million square metres. Bengaluru aced the chart with the highest transaction volume and 24% of the overall demand during this period.
Western firms are increasing their operations in India, constructing Global Capability Centres owing to the country's high-quality talent pool and cost arbitrage, resulting in 48% more space taken up in the first half of 2024.
Major City-Wise Breakdown
Transaction volume in Mumbai, Pune and NCR also scaled all-time highs in H1 2024.
Bengaluru led with 0.78 million square metres in terms of total volume transacted among all markets.
Mumbai, Pune and Hyderabad saw the most growth in YoY terms among the larger markets as occupier confidence in the business environment continued to grow.
Chennai was an exception, showing a 33% drop in transaction volume compared to the previous year.
Vacancy levels in office spaces now stand at single digits in Pune and Chennai at 7.8% and 9.3%, respectively.
Hyderabad and Mumbai are the only markets which have seen vacancy levels increase compared to the year-ago levels as supply has caught up with the demand.
Reasons Behind The Surge In Sales
Positive economic sentiment.
Country's strong GDP growth attracting more foreign firms increasing operations in India. GCCs alone contributed to 48% more office space taken up in the first half of the year.
Post-pandemic, remote working in India has not fully developed, with only a few exceptions in IT markets.
A pro-business leadership.
Residential Real Estate Boom
Since the pandemic, the real estate business has recovered broadly across all segments, with the residential market witnessing the fastest and steepest return among all real estate segments.
The residential market has reached an 11-year high in sales during the first half of the year, according the the report. The 0.17 million units sold during this period represent a healthy 11% growth in YoY terms.
A noteworthy aspect highlighted by the report is the shift toward premiumisation that has taken root in the residential market, with higher priced homes driving market volume.
Premium housing products priced over Rs 10 million have emerged as the largest segment, accounting for 41% of sales and experiencing the most growth during this period. Indian developers have also been ahead of the curve and have judged the shifting preferences of the market by launching lifestyle-oriented premium products, the report said.
Major City-Wise Breakdown
Sales have grown across all markets in YoY terms, with the exception of NCR which shows a drop by 4% YoY.
Hyderabad scaled a new all-time high in the first half of 2024, with 18,573 units sold during the period.
Mumbai home sales also stand at a 13-year high, with 47,259 units
sold in the first half of 2024 constituting a healthy 16% YoY growth.
Home prices have grown across all markets, with Bengaluru growing at 9% YoY; and Mumbai, NCR and Pune growing at 4% each.
Home prices in Chennai and Hyderabad also grew by a healthy 5% YoY each. This is the fifth consecutive half-yearly period of price growth across all markets.
Reasons Behind The Surge In Sales
Increased savings during lockdowns.
Minimal income disruptions in mid and high income brackets.
Robust economic growth forecast.
Development activity scaling to tap into the rich vein of demand that the residential market is currently seeing.
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