The strong momentum seen in 2022 in sales and new launches of residential property is expected to continue in H1 2023, as per a recent report. Both sales and new residential property launches are expected to reach a 10-year high in 2023 and may also exceed the 300,000-unit mark in India, according to U.S.-based CBRE's India Mid-Year Market Outlook 2023.

The report says despite anticipation around a lagged impact of monetary tightening, outstanding housing credit rose substantially by about 37% on an annual basis in July 2023, indicating a resilient housing demand across major cities in the country.

Residential sales in H1 2023 exceeded 150,000 units; surpassing sales reported in H1 2022 and H2 2022 by around 4% and 6%, respectively. Sustained momentum in demand led developers to launch over 1,50,000 new housing units in H1 2023, marking an annual growth of 11%.

On the back of strong demand, and momentum witnessed in 2022 and H1 2023, CBRE estimates the housing market will further bolster in the upcoming festive season in H2 2023.

"With the interest raise cycle expected to near an end, incentives and schemes offered by developers in the festive season are likely to further boost sales. We estimate that both sales and new launches could reach a ten-year high in 2023 and may exceed the 300,000-unit mark," the report adds.

Despite positive sentiments around India's residential market, developers and investors must be aware of the emerging dynamics of the sector in specific cities and micro-markets while planning their launches and strategies for the sector, suggests the report.

There have been instances where specific micro markets and segments have significant supply overhang leading to subdued calls from developers on future launches, the findings show.

"For instance, in Maharashtra, there have been instances of projects in Mumbai and Pune getting deregistered on account of the perceived viability gap. In addition, we anticipate some level of demand-supply mismatch to set in from 2024, as a large influx of supply is expected across markets in the next two quarters."

On capital value growth, the residential sector may see divergent trends, with asset prices expected to vary as per the city, micro-market, or even project attributes. Any appreciation could also be governed by unsold inventory levels or inventory overhangs.

Notably, during H1 2023, segments such as high-end, premium, and luxury (₹2-4 crore and above) saw a modest increase of about 0-3% H-o-H in capital values, while the mid-end segment (₹1–1.5 crore) experienced growth of around 2-6% H-o-H.

In its outlook for the rest of the year, demand for projects in the mid-end and budget or affordable category (₹45 lakh – 1 crore) is expected to remain strong in 2023, in line with the last two years’ trends. Similarly, projects in premium and luxury segments (₹2-4 crore and above) are also expected to exhibit sharp growth.

Besides, capital value appreciation over the past two years is likely to attract increased activity from HNIs and NRIs, forecasts CBRE.

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