Housing Sales in Bengaluru Decline in Q1 2024
According to real estate consulting firm Knight Frank, Bengaluru’s housing sales fell to 13,133 units in the first quarter of 2024, marking a 2 percent decrease from the previous year. This drop was primarily attributed to a steep decline in the affordable housing market.
Decline in Affordable Housing
Vivek Rathi, Head of Research at Knight Frank India, commented on April 4 that the housing market segment selling units priced below Rs 50 lakh saw a significant drop in sales during Q1, at nearly 68 percent. However, the segment priced between Rs 50 lakh and Rs 1 crore witnessed an 8% growth.
Impact of the Ongoing Water Crisis
Housing sales in Bengaluru have been declining over the last few quarters, with buyers reassessing their plans due to the ongoing water crisis caused by unplanned development in the tech city. Sales of 26,247 units in the first half of 2023 further declined by 2 percent in the city. Earlier reports indicated a 1% overall increase in sales for 2023, reaching 54,046 units.
Investors Holding Back
Moneycontrol reported that investors considering real estate purchases in the city have postponed their buying decisions due to water scarcity issues, particularly in areas near the IT corridors.
Office Leasing Trends
Office leasing in Bengaluru remained stable at 3.5 million square feet (MSF) in the first quarter, similar to the same period in 2016. However, office leasing fell by 19 percent to 5.5 million square feet in the second half of 2023, resulting in a 14% decrease in office space transactions overall in 2023.
National Trends
According to the Knight Frank India report, the percentage of sales in units priced at Rs 50 lakh and below decreased by 10% to 23,026 units across the top 8 cities, compared to the same period last year. The persistent negative effects of the pandemic, alongside rising prices and higher home loan rates, had suppressed demand.
Growth in Luxury Segment
In contrast to the same period in 2017, the Rs 1 crore and above segment saw a notable 40% growth in the first quarter. Sales of homes in the Rs 50 lakh to Rs 1 crore segment fell by 6% as buyers' attention shifted to the more expensive range.
Top 8 Cities Overview
The eight largest cities include Bengaluru, Pune, Ahmedabad, Delhi-NCR, Chennai, Hyderabad, Kolkata, and Hyderabad. Mumbai led with the highest sales and annual growth among the eight cities, with 23,743 units sold in the January-March period, a 17 percent increase over the previous year. A 259 percent increase in sales of units costing more than Rs 1 crore was the primary driver of the upsurge.
Regional Performance
During the quarter, sales increased by 15% in Hyderabad and 14% in Pune. On a national level, 93,254 residential units were introduced during the quarter, an increase of 7% from the previous year. Kolkata saw the most launches with a record 6,021 units, an 89 percent increase over the previous year. Mumbai saw the largest growth in the affordable segment with a 13 percent increase to 10,527 units. Together, Pune (5,399), Mumbai (5,815), and Bengaluru (6,065) accounted for over 60% of sales in the Rs 50 lakh– Rs 1 crore segment.