Research

India Residential
Market Update:
H1 2019

Despite modest new launches during the first half of 2019, sales are expected to remain strong.

July 02, 2019

The last five years saw the implementation of key structural reforms such as RERA and GST which are expected to strengthen the economy in the coming years with the NDA government coming back to power. During the first quarter of this year, the government lowered Goods and Services Tax (GST) rates on affordable and other housing segments. Apart from these regulatory reforms, RBI has also cut interest rates thrice since the beginning of 2019 in a bid to improve liquidity and fuel economic growth.

Given the prevailing situation, it is important at this juncture to take stock of how residential markets have reacted to these changes in the first half of 2019. This report summarizes the larger picture for residential markets observed in H1 2019. It examines the positive outcome of continuous reforms and also highlights the developer fraternity’s ability to align supply with changing demand patterns.

The report observes that in H1 2019 sales of residential units increased by 22 per cent compared to the corresponding period in 2018. Developers focused on delivery and construction of already launched projects and hence, new launches of residential units decreased by 11 per cent on a y-o-y basis across the top seven cities (Delhi NCR, Bengaluru, Mumbai, Kolkata, Chennai, Hyderabad and Pune).

Keeping in mind the large unfulfilled demand from mid and affordable segments, maximum launches were witnessed in this category across these cities. Prices remained stable across key locations as developers kept a check on supply and focused on delivery of existing projects.

Going ahead, stringent implementation and continuity of reforms under the second term of the current government will keep up homebuyers’ sentiment thereby translating into higher sales.

Bengaluru

  • Sales and new launches maintain a balanced growth.
  •  The Silicon hub of India displayed steady and mature growth in residential markets as sales grew at a stable rate of 12 per cent over H1, 2018.
  • Immense job opportunities created by the technology sector and consequent migration of professionals continued to provide a boost to housing sales.
  • In line with past trends, the core IT hubs remained attractive for buyers and developers alike. Supply was concentrated in three core IT hubs and they accounted for 89 per cent of the launches in first half of 2019. The combined share of sales stood at 74 per cent for these regions.
  • Hosur road emerged as developers’ favorite grabbing 44 per cent share of new launches; Hosur road and Whitefield the core IT hubs together contributed to more than half of the units sold.

Chennai

  • Launches remain restrained, sales yet to gain significant traction.
  • New launches were rationalized, developers remained focused on affordable and mid segments.
  • Southern and western suburban submarkets witnessed heightened activity both in terms of launches and in terms of sales. Developers continued to bet high on these markets owing to strong end user demand emanating from IT companies housed in the neighboring business district.
  • Prices remained range-bound and developers continued to push existing inventory.

Delhi NCR

  • Boost in sales backed by sustained positive sentiment.
  • Enhanced consumer confidence led by active implementation of key infrastructure projects and clarity on rationalisation of GST rates and implementation of RERA have brought back large and established developers into the Delhi NCR market.
  • Revival in sales set in 2018, gained further momentum during the first half of 2019.
  • Developers focused on the upper-mid and premium segments, mainly in Gurugram and Noida.

Hyderabad

  • Increasing sales along with a sharp rise in prices.
  • Resurgence of residential real estate continued with sales increasing by 65 per cent in H1 2019 on a y-o-y basis.
  • New launches decreased by more than 50 per cent in H1 2019 with developers adopting a cautious approach because of the state and general elections.
  • West Suburbs drove the residential market in the city, contributing more than 80 per cent to the new launches and sales in the first half of this year.
  • The average price of residential units witnessed a sharp jump with an increase of more than 6 per cent as compared to the previous year.

Kolkata

  • Recovery in sales with prices remaining unchanged.
  • The recovery of residential real estate which started in 2018 continued in H1 2019 with sales increasing by 33 per cent on a y-o-y basis.
  • New home launches in Kolkata saw a substantial decline of 66 per cent over 2018 primarily because of rising inventories and uncertainty regarding the regulatory environment.
  • The established residential submarkets of the South witnessed maximum activity during the first half of 2019, contributing more than 50 per cent to new launches and accounting for a third of the overall sales.
  • The average price of residential units continued to hover around the INR 3,670 per sq ft mark.

Mumbai

  • Sharp rise in new launches in response to pick up in home buying momentum.
  • JLL research indicates that offtake of houses moved northwards, registering a growth of 25 per cent in H1 2019 over the same period of last year.
  • Supply scenario was more optimistic with new launches rising by a whopping 58 per cent during the period.
  • Thane and Navi Mumbai submarkets accounted for one out of every two units launched in Mumbai region, as developers were able to offer right-sized homes for buyers.
  • Housing sales breached the 3-year mark with 17,000 units being lapped up by homebuyers in H1 2019. The primary drivers for homebuyers in Mumbai were stable prices, improved confidence due to RERA and launches by credible developers.

Pune

  • Limited launches and steady sales augur well for the market.
  • Launches dipped by 35 per cent on a y-o-y basis.
  • Sales continued their healthy trend led by sturdy end-user demand and stable prices.
  • Maximum launches were in affordable and mid segments.

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