Residential Sales Grow By A Record 51% YoY In 2021; Knight Frank India

In an extraordinary year marred by the pandemic and lockdowns, the real estate sector showed great resilience in 2021. In their latest report, Knight Frank India note that the Residential Sector had an unprecedented year of growth with sales rising by 51% year on year (YoY) to be recorded at 232,903 units across the top eight cities of the country. New home launches also saw a significant rise of 58% YoY with the addition of 232,382 units in 2021. For the Commercial office segment, the year was a mixed bag. Leasing volumes, recorded at 38.1 million square feet (MSF) though remaining at similar levels as 2020, clearly indicated towards the potential the market has in terms of leasing. Noteworthy is that an overwhelming 68% of the total leasing in 2021 took place in the second half of the year. Bengaluru led the pack with 12 MSF of total leasing during the year. New completions in 2021 for office space was recorded at 39 mn sq ft, higher by 9% over the preceding year.

"The year 2021 was a remarkable one for the branded real estate players. People realized the importance of owning a home, this led to sales in the top 8 cities rising 51% YoY. Quality and timely delivery were the key criteria for sales. The initiatives by the government such as a cut in stamp duty, property tax waivers, RBI keeping rates near a two-decade low coupled with lucrative offers and reduced home prices helped maintain the momentum. New launches as per new requirements were another reason for high traction in 2021," says Rohit Poddar, Managing Director, Poddar Housing and Development Ltd on Knight Frank's India Real Estate: H2 2021 report.

According to Dhaval Ajmera, Director, Ajmera Realty & Infra (I) Ltd low interest rate regime makes the market conducive for the home-buyers to purchase a residential property. "Soft interest rates, effective government interventions and sales velocity makes Indian residential market a prime investment asset class for the global institutional investors. Mumbai leads the residential asset recovery in India and has reached a new high with over 232,903 house sales in the year. Despite the input cost pressures on the supply side, the demand is expected to be robust and keep the residential economics in upward momentum in the medium term," Ajmera says.

Largely the high momentum is expected to continue for residential as well as commercial & office space. The hybrid work culture with the workforce called to the office for a few days and WFH for rest will keep the demand for office space up. Completion of new infra projects in key cities will likely result in the creation of new micro-markets and residential hotspots."

Knight Frank India, in its latest report, India Real Estate: H2 2021 cited that 133,487 housing units were sold in second half of the year 2021 cumulatively for the top eight cities. This also showcased a substantial 41% increase Year-on-Year (YoY). Around 69,477 housing sales were reported in Q4 2021. Residential prices stayed steady or recorded marginal growth in seven of eight cities during the year. Homes priced over Rs 50 lakhs constituted around 58% of the overall sales in H2 2021.

On the office market performance, Knight Frank India cited that the top eight cities recorded transactions of 25.9 mn sq ft in July - December 2021, whereas the office completions were recorded at 23.7 mn sq ft in the same period. Six of the eight markets saw transaction volumes grow in YoY terms during H2 2021. With the increasing need for flexibility and a hybrid working environment, co-working/ managed office sector's transactions share increased to 18% in H2 2021 from 10% in H2 2020. With 8.7 mn sq ft transactions in H2 2021, Bengaluru recorded its highest ever office leasing activity in a half yearly period.