Anuj Puri, Chairman - ANAROCK Group
2022 was a phenomenal year for the real estate sector, particularly the residential segment. There was robust housing demand, mainly from end-users, across the top cities and tier 2 and tier 3 cities. In the year's first half, job security had improved vis-a-vis the uncertain pandemic period. There was robust hiring in the IT/ITeS sector, though the second half brought more sobering news on this front. Financial services showed a good hiring graph throughout.
Low home loan rates and steadily growing homeownership sentiment also helped residential real estate gain and maintain momentum. Going by housing sales currently and in the first three quarters this year, 2022 will have breached the previous peak of 2014 with all-time high sales across the top 7 cities. Latest ANAROCK data projects total sales in the top 7 cities to exceed 3.6 lakh units in 2022 (in 2014, the previous peak year, 3.43 lakh units were sold.)
We expect the final data for the last quarter of 2022 to bear this out once it is collated. The Jan-Sept period already saw housing sales and new launches surpass the full-year readings of 2019 with approx. 2.73 lakh units sold in 9M 2022 and new launches at 2.65 lakh units. Approx. 2.61 lakh units were sold in 2019, with new supply in that year at 2.34 lakh units.
As the clock ticks briskly towards the end of a fantastic year for Indian housing, here are some of the trends that shaped it in 2022:
Affordable housing declines, mid-range & premium housing dominate launches
The mid-range (INR 40 - 80 lakh), premium (INR 80 lakh - INR 1.5 Cr), and luxury segments (>INR 1.5 Cr) were the showstoppers of 2022. In contrast, affordable housing had a lean time, with more buyers in this segment going into wait-and-watch mode; unsurprisingly, new supply in this category reduced markedly.
As per ANAROCK data, in the pre-Covid year of 2019, affordable housing had the highest supply share with 40% of 2,36,560 units launched in the top 7 cities. In the first nine months of 2022, affordable housing supply reduced to 21% of approx. 2.65 lakh units launched in the top 7 cities during this period.
Grade A developers corner the market
Demand, driven primarily by end-users, was mainly focused on projects by Grade A developers, who gained even more market share in 2022. Approx. 60% of the 2.65 lakh units launched in the first three quarters of the year was by branded developers - who also sold more than 55% of the 2.73 lakh units purchased in this period.
The rise of the suburbs
Peripheral locations led homebuyer demand in 2022, despite the near-normal situation post-Covid-19. The walk-to-work concept, which involves compact homes around workplace hubs in expensive city centres, lost more traction. The suburbs shone despite work-from-office and physical school attendance having resumed.
42% of respondents in the latest ANAROCK consumer sentiment survey continued to prefer peripheral/suburban areas where they can buy bigger homes with better lifestyle amenities at lower prices. Only 10% of respondents still chose walk-to-work city centre locations, and only 23% were within the city limits.
Property prices head north
Housing prices increased by an average of 5-7% in 2022, but this - coupled with increased home loan rates - did not impact residential sales in 2022. These price hikes were inevitable after relative stagnation for 2-3 years.
Rental demand surges
With more companies calling their employees back to the office, at the very least in the hybrid model, rental demand rose again after softening considerably during the worst of the pandemic. Rental market demand not only breached pre-pandemic levels but surpassed them, and many housing societies have few or no vacancies. Rentals rose 20-25% against pre-pandemic levels on average, with some of the more popular societies seeing more than 30% increase.
Land - the plot thickens
Plotted developments were popular in 2022, especially in South Indian cities. Though the worst of the pandemic, which saw increased demand for independent living, is over, plots ruled the residential roost in Bengaluru, Chennai, and Hyderabad.
Plot buyers have taken a futuristic investment perspective and are betting on the superior and safer long-term ROI of land over built-up properties. Many large developers catered to this demand in 2022.
NCR's unsold inventory down to a historic low
As per ANAROCK Research, unsold inventory in NCR reduced to 1.33 lakh units by Q3 2022-end - the lowest since 2013, when it was 1.51 lakh units. Robust sales and restricted new supply in 2022 helped NCR write this remarkable turnaround chapter. Moreover, new launches in 2022 were dominated by top developers like DLF, Godrej, M3M, Puri Constructions, and Mahagun -which also helped boost consumer confidence and increase sales.
Tier 2 and 3 cities share the limelight
The residential market in Tier 2 and 3 cities like Lucknow and Ahmedabad staged a strong show in 2022, with very decent sales and new launches. Many Tiers 2 & 3 cities are the new growth engines where a lot of the country's real estate action will take place in the coming years. ANAROCK's consumer sentiment survey found that Tier 2 & 3 cities are the first preference for 25% of property seekers looking to invest in 2023.
Their top favourites include Ahmedabad, Jaipur, Chandigarh, Nashik, Kochi, and Lucknow, where low property prices and improved infrastructure facilities are powerful investment magnets.
Hottest residential markets of 2022
Various micro-markets across the top 7 cities saw significant activity in terms of new launches and housing sales. The top micro-markets with maximum new launches in the Jan-Sept period of 2022 include:
Bengaluru - The top 3 micro-markets with highest supply were Sarjapur Road, Whitefield, and Bommasandra. As per ANAROCK data, these three markets saw a combined new supply of approx. 14,415 unts in the first nine months of 2022
MMR - The top 3 micro-markets with highest supply were Thane West, Dombivli, and Kalyan. Approx. 23,620 units were launched in these three areas in the Jan-Sept period
NCR - The top 3 markets were New Gurugram, Dwarka Expressway and Greater Noida West with collective new supply of approx. 13,550 units in this period of 2022.
Pune - The top 3 micro-markets with highest supply include Moshi, Kharadi, and Hinjawadi. ANAROCK data indicates that these three markets saw combined new supply of approx. 9,955 new units in the first nine months of 2022
Hyderabad - The top 3 micro-markets with highest supply were Puppalaguda, Tellapur, and Ameenpur - which saw new supply of approx. 13,690 units in this period
Chennai - The top 3 micro-markets in terms of new supply were Madhavaram, Medavakkam, and Guduvancheri, with approx. 1,540 units added in the first nine months of 2022
Kolkata - The top 3 micro-markets with highest supply were Rajarhat, Narendrapur, and New Town, which together saw approx. 5,450 units launched from Jan-Sept 2022 |
