Bengaluru, Hyderabad and Chennai emerge as India’s best performing residential real estate markets,
10 cities of the 12 surveyed show positive market dynamics
– Search trends suggest India is looking for houses under Rs.4000/sqft
Magicbricks’s PropIndex Report Q4 2019 reveals that a silver lining in the residential sector appears to be traceable with 10 cities out of 12 key residential markets of India showing positive market dynamics in the last quarter of the year and South India market emerging as the best performing market in 2019.
According to PropIndex Report Q4 2019, while some areas of the country faced downward pressure on prices and reduction in supply, searches remained robust in the affordable segment. The search trend suggests that India is looking for houses under Rs.4000/sqft – 5000/sqft.
Credit Linked Subsidy Scheme (CLSS) under PMAY has led to increased buyer interest in the affordable and lower-mid segment. Emerging localities in the price bracket of Rs.4000/sqft to Rs.5000/sqft observed the highest consumer interest. In most of the cities, supply-managed to keep pace with the demand maintaining stagnant prices across cities. The premium segment witnessed price declines in most TIER I cities, as above Rs.10,000/ sqft, buyers looked for negotiated deals. The segments of Rs. 20-30 Lacs, Rs. 30-40 Lacs, and Rs. 40-50 lacs each accounted for 10% of the searches at the India level.
Commenting on the report, Mr. Sudhir Pai, CEO, Magicbricks said: “The findings of PropIndex Q4 2019 indicate that consumer searches have remained robust in the affordable segment. While some areas of the country faced downward pressure on prices and reduction in supply, the search trend suggests that India is looking for houses under Rs.5000/ sqft, making up a significant 40% of the searches on Magicbricks. Credit Linked Subsidy Scheme (CLSS) under PMAY has led to increased buyer interest in the affordable and lower-mid segment. In most of the cities, supply-managed to keep pace with the demand. The highlight, however, is the south India market that continued to resist recessionary pressures, with prices appreciating in all three cities of Hyderabad, Chennai and Bangalore.”
PropIndex also suggests that besides the south India cities of Hyderabad, Chennai and Bangalore, other cities which are also doing commercially well are Pune and Navi Mumbai. Also, affordable satellite cities such as Noida and Thane are also gathering pace due to the infrastructure and connectivity with the main employment hubs.
Cities with rapidly improving infrastructure (like Navi Mumbai and Hyderabad) witnessed steady price increases, due to real estate development and buyer interest along major growth corridors. In the west, prices in Pune fell marginally due to oversupply in peripheral areas, while remaining stagnant in Mumbai. North India on the other hand is yet to recover from the oversupply situation and project delays.
Key insights of Magicbricks PropIndex:
· Bengaluru showed steady growth in the residential market, with an increase of a strong 25% in the last 5 years, beating the sectoral woes
· Hyderabad observed a consistent upward trend in prices, which rose by 3.8% from INR 5400 per sqft. in Q3 2019 to INR 5600 per sqft. in Q4 2019
· Demand started to pick up in Chennai in the last one year, with prices moving in tandem, rising a moderate 5% YoY.
· In Delhi, the demand has started to pick-up, but the options are limited. While the city prices remained low in the last 5 years, an increase of 1.8% in the last one year indicates a positive development for the residential segment of the city
· Although the residential demand in Gurugram has been dull, the city’s improving infrastructure could boost demand. Average city level prices hovering between INR 7000-8000 per sqft., significantly higher than the other satellite cities of Delhi.
· Despite demand matching supply, affordability, and lower interest rates, Noida and Greater Noida markets are struggling to pick-up. While Noida’s average prices fell by 10%, G.Noida witnessed an increase of just 3.6% in the last 5 years.
· In Mumbai, the city level weighted average prices have remained stagnant for the past 5 years, while the premium segment remained under pressure
· Big-ticket infrastructure projects are driving the real estate activity in Navi Mumbai markets, which unlike the rest of the country, has given an impressive 21% return in the last 5 years
· In Thane, the city prices grew by a moderate 6.8% in the last 5 years, with a 1.1% QoQ growth
· While investors remained at bay, end users dominated the market, preferring established localities in Pune. The slow but steady rise in the city’s prices came to a halt this quarter though, witnessing a marginal decline of 0.6% QoQ
· In Kolkata, despite the decrease in active listings and consumer searches, the city price index rose with 2.1% during the quarter, indicating a revival of the residential market
· In Ahmedabad, the demand has started moving towards the peripheral areas. Benefiting from a lower base, the city’s prices grew by a decent 6.9% YoY
The PropIndex report also suggests that the industry could recover from the liquidity crisis, as more trusted developers are dominating new supply and big-ticket projects like metros and roads are encouraging the sales volumes in the peripheral areas.