India’s residential sector witnessed a robust demand revival in 2022

V Nagarajan

India’s residential sector witnessed a robust demand revival in 2022 with the year registering a decadal high in-home sale with 215,000 units across the top seven cities (Mumbai, Delhi NCR, Bengaluru, Hyderabad, Chennai, Kolkata, and Pune) according to JLL’s Residential Market Update – Q4 2022.

It is almost like the 2010 sales of 216,762 units. Comparing the yearly numbers, the sales in 2022 increased by 68 per cent Year-over-year (YoY) with more than 50,000 units sold in each of the four quarters of 2022.

The historic high sales numbers are significant keeping in mind the rise in mortgage rates, property prices, and global headwinds during the year.

Bengaluru and Mumbai jointly led the annual sales in 2022 as they clocked more than 46,000 units (22 per cent share each) followed by Delhi NCR at 38,000 units (18 per cent share). It is interesting to note that Kolkata, along with the two bigger markets of Mumbai, and Bengaluru witnessed the highest yearly growth in sales.

The high sales volumes in H2 2022 show that sales were still robust despite the recent challenges underlining the strength of the residential market in India and the increasing importance of home ownership post-pandemic.

The Indian residential market is expected to sustain its growth momentum in 2023 while dealing with the challenges of global headwinds and higher interest rates. Moreover, the momentum inhibitor looks to be a temporary one as India has a resilient domestic economy and robust macroeconomic fundamentals,” said Siva Krishnan, Managing Director and Head, Residential Services, India, JLL.  

There is rising demand for bigger homes with good amenities and support infrastructure. It is interesting to note that the share of the affordable segment in annual sales in 2022 has declined as compared to the previous year.  The share of apartments priced below INR 5 million in total annual sales has declined from 28 per cent in 2021 to 22 per cent in the current year.

On the other hand, the share of the premium segment (priced above INR 15million) has seen an increase from 10 per cent to 19 per cent.

“While affordability is likely to be dented, job stability and economic growth will continue to provide the necessary impetus to homebuying activity. Also, it is expected that measures will be taken by various stakeholders to combat inflationary pressures.”

“As the developers are taking cognisance of the buyers’ preferences and focusing on developing or launching projects that are more relevant and aligned with the evolving customer requirements, the residential market is expected to carry forward the growth momentum witnessed in the past year” said Dr Samantak Das, Chief Economist, and Head Research & REIS, India, JLL.

Another 27,000 residential units in the plots and villa categories were sold in 2022 across the top seven cities. Most of the traction was seen in the southern cities of Bengaluru, Chennai, and Hyderabad.

As of Q4 of 2022, unsold inventory across the seven cities increased by 1.8 per cent on a Q-o-Q basis as new launches outpaced sales. Mumbai, Bengaluru, and Hyderabad together account for 63 per cent of the unsold stock. An assessment of years to sell (YTS) shows that the expected time to liquidate the stock has declined from 3.1 years in Q3 of 2022 to 2.9 years in Q4 of 2022, an indication of robust sales growth.

India’s residential market has been on an unprecedented upcycle in 2022 with affordable synergies and the growing importance of home ownership.

Price pressures and moderate-income growth are further likely to create a temporary glitch for affordability, though it should remain attractive and second only to the highest affordability levels seen in 2021. Sales momentum is likely to sustain in 2023 on the expectations of moderating inflation supporting a reversal in repo rate hikes.

I bought residential and commercial properties using local funds while in India. A portion of them have been gifted to my relative who is living in Gulf.  Can he sell and repatriate the sale proceeds as it was bought out of rupee income?  Please clarify.   Avinash Dutta, Dubai.

The Reserve Bank has allowed authorised dealers of foreign exchange to permit repatriation even in respect of properties which were not acquired with foreign funds but held by NRIs in India either by inheritance or gift.  Repatriation of sale proceeds of such properties is permitted out of NRO account of an amount upto US$1 million per financial year subject to the payment of applicable taxes in India.

Following the demise of my parents, I am trying to obtain a legal certificate. Can one of the legal heirs obtain it?  Mukul Goel, Sharjah.

Yes.  It can be applied by any one of the legal heirs. You should mention details such as name of the deceased, date of death and attach a copy of the death certificate obtained from the government authorities.   You could also include details of the persons who were legal heirs along with their contact addresses. The tahsildar will issue a legal certificate specifying the names of all the legal heirs to the property.