Hyderabad saw maximum sales in the INR 1 cr to INR 1.5 cr category

Hyderabad, 13th July 2022: Hyderabad recorded robust residential sales as it saw the highest quarterly sales since Q2 2008. It also witnessed the highest quarterly launches since 2008. New launches increased by 24% Q-o-Q in Q2 2022 as many prominent developers expanded their footprint in the western suburbs. Sales were up by 38% on a Q-o-Q basis. In H1 2022, Hyderabad saw sales growth of 39% as compared to H1 2021.

“Maximum sales in Hyderabad were generated in the Western suburbs submarket at Tellapur, Nallagandla, and Kondapur. One of the pertinent trends to note is that majority of the sales were recorded in residential apartment units priced between INR 1 crore-INR 1.5 crores. In H1 2022, Hyderabad saw sales growth of 39% as compared to H1 2021 as 9549 residential apartment units were sold during this period. Moreover, Hyderabad saw the highest quarterly sales since Q2 2008” said Sandip Patnaik, Managing Director, Telangana, and Andhra Pradesh, JLL.

Healthy offtake of residential apartments in Q2 2022

The residential market recorded sales of over 53,000 units in Q2 2022 which is an increase of 171% Y-o-Y as compared to Q2 2021 across the top 7 cities. This demonstrates the rising demand due to containment of the pandemic and buyer confidence coming back to the market. On a sequential basis, sales increased by 3% during the quarter. Appreciation in residential prices due to rising input costs and interest rates led to almost flat sequential growth in Q2 2022. Mumbai is the largest contributor to sales (23%) followed by Bengaluru with 21% and Delhi NCR with 19% of the overall sales. In terms of Q-o-Q sales growth in Q2 2022, Hyderabad witnessed the highest growth (38%) amongst all cities under consideration. Moreover, it witnessed sales growth of 75% Y-o-Y in Q2 2022 as the units sold increased from 3,157 units in Q2 2021 to 5,537 in Q2 2022. 

Note: Mumbai includes Mumbai city, Mumbai suburbs, Thane city, and Navi Mumbai
Data includes only apartments. Rowhouses, villas, and plotted developments are excluded from our analysis.

Source: Real Estate Intelligence Service (REIS), JLL Research

Another 6,013 residential units in the plots and villa category were sold during Q2 2022 across the top seven cities. The majority of the traction was seen in the southern cities of Bengaluru, Chennai, and Hyderabad. 28% of the quarterly sales in the plots and villas segment were contributed by Hyderabad where 1700 residential units were sold in this category.

Strong recovery in sales in H1 2022 over H1 2021

Bengaluru’s share in H1 2022 sales was 22% with 23,452 units sold which is next only to Mumbai.

Note: Mumbai includes Mumbai city, Mumbai suburbs, Thane city, and Navi Mumbai
Data includes only apartments. Rowhouses, villas, and plotted developments are excluded from our analysis.

Source: Real Estate Intelligence Service (REIS), JLL Research

Prices moving northwards

The increase in input costs and the strong demand have caused an appreciation in residential prices with capital values showing a 3-7% Y-o-Y increase in all cities except Hyderabad which showed resilience by clocking double digit price growth over the same period. “Developers have partially passed on the input cost increases which are now reflected in the current residential prices. New launches also entered the market at higher prices. With interest rates in an upcycle, costs for owning a house are likely to increase further. This may cause some short-term deflation in demand but with changing dynamics around home ownership and with interest rates still on the lower side, residential demand is likely to remain on its growth trajectory. Employment opportunities that were created in IT sector and start-ups are driving residential market in Hyderabad. In addition, investment in city’s infrastructure through SRDP programme has opened new residential clusters in north and east part of the city which is contributing in increased residential sales” said Dr. Samantak Das, Chief Economist, and Head Research & REIS, India, JLL.

New launches scale-up

New launches of more than 63,000 units were recorded in Q2 2022, an increase of 6% Q-o-Q and 135% Y-O-Y. Mumbai dominated with a 27% share in the new launches followed by Hyderabad and Pune which contributed 25% and 21% respectively. Quarterly launches were higher on a Q-o-Q basis in Delhi NCR, Hyderabad, Mumbai, and Pune. It saw a declining quarterly trend in Bengaluru, Chennai, and Kolkata. In Hyderabad new launches in the quarter increased by 24% which is next only to Pune in terms of quarterly growth rate.

New project launches expand in Q2 2022

Around 8,056 units were also launched across the top seven cities of India in the plots and villa segments in Q2 2022. These projects also recorded good responses from the buyers. 20% of the launches in plots and villa segment were contributed by Hyderabad where around 1630 residential units were launched in this category.

Unsold inventory increases by 2.1%;

In Q2 2022, unsold inventory across the seven cities increased by 2.1% on a Q-o-Q basis as new launches outpaced sales. Mumbai, Delhi NCR, and Bengaluru together account for 60% of the unsold stock. An assessment of years to sell (YTS) shows that the expected time to liquidate the stock has declined from 4.2 years in Q1 2022 to 3.6 years in Q2 2022, an indication of robust sales growth.

In Q2 2022, unsold inventory increased in Hyderabad as the new launches outpaced sales in the city and YTS remained the same as compared to the previous quarter.

Analyzing the sales performance as a proportion of total available inventory

Sales penetration -defined as % of apartments sold versus total available inventory is a marker of how markets actually performed on a normalized basis, accounting for varying levels of unsold inventory across all cities. Compared to this metric, the sales penetration for H1 2022 was at an average of 18% at a pan-India level. When looking at individual cities, sales penetration was highest in Pune (28%) with Bengaluru and Kolkata (21%) joint second. Both Pune and Kolkata are smaller markets in absolute sales terms of apartments, but they perform much better on a normalized comparison when sales penetration is considered. Rising inventory levels amid improving sales need to be looked at as well, when analyzing sales performance across cities.

Outlook:

Developers have partially passed on the rising input cost to the buyers and also there has been an increase in interest rates. As a result, there may be some cooling down of sales in the short term. However, successful containment of the pandemic, improved buyer sentiments, and strong fundamentals of the residential market will lead to an upward trajectory in both launches and sales in the medium to long term. Only credible developers, who are customer-centric and possess proven execution capability, as well as quality products, will survive and emerge stronger.