India Real Estate: Brick by brick, Indian real estate market is climbing out of the Covid hole

India Real Estate: Brick by brick, Indian real estate market is climbing out of the Covid hole

The Indian real estate market is showing signs of steady recovery with both residential and commercial property segments recording robust performance in the July-September quarter.

Real estate activity gained momentum during the quarter as the country began to cautiously return to normal economic tempo supported by aggressive vaccination drives.

Record-low home loan interest rates and sops offered by realty developers helped top Indian property markets move upward after a lull in the April-June quarter marked by the pandemic‘s resurgence and restrictions imposed by various state governments.

Top seven Indian property markets recorded over 124% on-year jump in housing sales at 32,358 apartments, data from JLL India showed, while the Knight Frank data recorded 92% rise in housing sales across 8 cities at over 64,010 units.

“The market seems to have factored in the very low likelihood of a complete lockdown as was seen last year due to the ample availability of the Covid vaccine. Comparatively lower residential prices, attractive interest rates and higher household savings rate over the past year should support housing demand going forward. With the upcoming festive season, the market is gearing up for new project launches and consumers are likely to reciprocate,” said Shishir Baijal, CMD, Knight Frank India.


The growing need for home ownership and stable employment scenarios led by sectors like information technology and healthcare drove housing demand during the quarter.

“Developers have already started launching optimal sized apartments to capture changing consumer preference across most of the cities. The Indian residential sector is expected to witness sustained growth in the coming quarters. Renewed buyer confidence has been instrumental in the recovery of the housing market in Q3 2021, which recorded good volume of sales and launches compared to the same period last year and almost inching towards the pre-covid era,” said Siva Krishnan, head – residential, India, JLL.

Mumbai has consistently been the largest contributor to sales over the past five quarters. In the September quarter, Mumbai and Delhi each accounted for one-fifth of total sales followed by Pune and Bengaluru. Recovery is well underway as sales surpassed pre-covid levels.

India’s office transactions also recorded a strong quarterly growth at 12.5 million sq ft, up 168% on-year despite a more severe second wave of covid infections and the looming threat of a third wave, showed the Knight Frank data.

According to analysts, the total office transactions of the eight India markets during the quarter have improved and reached 83% of the 2019 quarterly average level.

Among the larger markets, Chennai, Bengaluru, and National Capital Region (NCR) recorded the highest recovery in the September quarter with transactions reaching the level of 123%, 112% and 93% respectively of the quarterly average of the year 2019.

The Information Technology sector was the largest consumer of space during the quarter and took up 34% of the space transacted. The heightened transaction activity from this sector is an encouraging driver for office demand as it is the most prolific occupier category in the office market. Occupiers also took up nearly 23,500 co-working seats across the eight markets during the quarter, the highest this year.

New completions of office projects also picked up significantly with 11.9 million sq ft delivered during the quarter, a 67% on-year growth. Bengaluru, Pune and Hyderabad accounted for 73% of the new completions with Bengaluru witnessing the most space delivered at 4 million sq ft.

The fourth quarter of 2021 is expected to see heightened traction as seen in 2020, if infection levels continue to remain low and vaccination targets are achieved.

In terms of pricing and rentals, the market is heading towards stability in both residential and commercial segments.

In the office market, NCR was the only market that experienced rental growth during the quarter. However, that was also restricted to 1%. Landlords’ strategy of offering relaxed lease terms is reflected in the fall in rentals on a year-on-year basis across most markets. However, the fall in rentals has reduced in the last few months.

In the residential segment, to push sales, developers had earlier pursued an aggressive pricing strategy over the year with spot discounts, finance deals, stamp duty waivers and other freebies to entice buyers. This has been observed to have reduced in the September quarter as the price decline in most markets has been arrested. Residential markets such as Chennai, Hyderabad and Kolkata have seen prices increase marginally during the quarter.

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