Leading global real estate and investment management firm JLL, have delivered a report analysing India’s residential property market as well as the ‘supply and demand’ dynamics within each of the key seven cities.
Titled ‘India’s Resurgent Residential Sector – A study of top seven markets’, the report focuses on Mumbai, Delhi, Bengaluru, Pune, Chennai, Hyderabad and Kolkata to present an accurate picture of the Indian property market.
During 2016 & 2017, reforms such as the Real Estate (Regulation and Development) Act and the Goods & Services Tax (GST) had an unprecedented effect on the market causing significant turbulence as they aimed to shake up a sluggish Indian property market drastically.
What is RERA & GST?
RERA is an act passed by the Indian Parliament that seeks to protect the interests of home buyers throughout the country, as well as boosting investments within the real estate sector.
GST is a value-added tax levied on goods and services sold for domestic consumption; consumers pay GST, and in the realms of real estate, GST helps the government generate revenue from property transactions.
With these policy changes behind them, developers throughout the country are now shifting focus to the delivery of existing projects; in 2018 launches grew by 53% on a year on year (Y-o-Y) basis across each of the top seven cities.
Along with more launches, prices and incomes have also increased meaning that during 2014 – 2018, annual income is now growing at a faster rate than residential prices.
For easier reading, we have broken down the comprehensive report on a city-by-city basis. Click each city’s name below to view the regional data.
Mumbai’s residential growth was fairly modest and steady during 2018 with 22% Y-o-Y growth; going forward, Navi Mumbai is gradually regaining momentum with large-scale projects expected to launch during this year.
Household income in Mumbai grew 8.3% between 2014-2018, while the residential price growth was only 1.4%, a figure that is far lower than some of the more higher performing cities below.
As mentioned by JLL in their report, Delhi witnessed a ‘strong surge’ in new launches within the first half of 2018 with nearly 12,000 of the total 17,600 units launching in the first half of the year alone.
Delhi enjoyed a significant 114% Y-o-Y growth and new launches have more than doubled in the city during 2018.
Household income in Delhi grew to an impressive 10.4% between 2014-2018, while residential price saw a minuscule growth of 0.2%.
Bengaluru recovered tremendously from a three-year lull showing an 81% Y-o-Y growth in new launches last year,
Much of the growth in the city is due to the increased Metro Rail connectivity which is acting as one of the main driving forces for the market.
Areas such as the promising residential hub of Kanapura Road have been directly affected by the rail expansion which makes it easier for residents to connect to the main city.
Household income in the city of Bengaluru also grew to a staggering 11.3% between 2014 and 2018, while residential price saw a minuscule growth of 1.2%.
Pune’s revived residential market enjoyed a fruitful 2018 with sales outpacing launches; this high is expected to continue as the growth in both commercial and residential space continues.
In 2018, there was a 15% Y-o-Y growth with the latter half of the year witnessing a 29% increase in growth.
During the monitored period of 2014-18, household income rose to 9.6% in the city of Pune while the residential price rose to the highest amongst the seven cities at 3.5%
Chennai’s ‘North Suburbs’ saw a 258% growth in launches in 2018, bringing the city’s total Y-o-Y growth to 53% – The total number of new launches in 2018 reached 13,924, with the first half of year bringing in an impressive 8,596 units alone.
Household income in Chennai rose to 9.3%, while residential price saw a minuscule growth of 1.2% over the same period.
The Hyderabad market had a modest overall Y-o-Y growth of 48%; however, the city’s North Suburbs far outperformed previous years, recording a spectacular 809% growth within this period.
Residential price growth in Hyderabad during 2014-2018 was tracked at 2.2% while income in the city rose to 9.0% during the same period.
JLL predicts that investments in the city’s commercial office space will reach $846m (USD) to provide a ‘stimulus’ to the growth of new residential projects throughout the city, and furthering demand.
In Kolkata, house prices rose 1.8%, while income in the city during the same period was tracked at 9.6%
The submarket that witnessed the highest growth was East Peripheral at an astounding 1,039%; translating as 14,273 new launches in 2018 (4,898 in 2017) and Y-o-Y growth of 191%.
However, despite the high figures, JLL’s data showed that the second half of 2018 recorded slower growth in launches as developers remained tentative post launch of the West Bengal Housing Industry Regulation Act (HIRA).
Enacted on August 16 2017, the much-delayed HIRA sought to increase the efficiency and transparency of the real estate sector.
However, months later developers remain cautious about the increased scrutiny of developments in a more transparent market.