Real Estate Market Shows Signs of Slowing Down, NCR and Pune Hit Hardest
Residential real estate sales, after a period of relative stability, are now showing clear signs of a decline. The National Capital Region (NCR), which includes Delhi, and Pune are experiencing the highest levels of stress, according to data released by real estate consultants Knight Frank India.
Knight Frank attributes the slowdown to 'fatigue' following a post-pandemic bull run and short-term negative sentiment due to the Iran war. 'The market was already overheated. The Middle Eastern disturbances would be one reason, but even otherwise, we've had a bull run of almost four years, if not more. If we look at the typical cyclical nature of real estate, we had to reach that peak,' explained Gulam Zia, International Partner and Senior Executive Director at Knight Frank India.
In the March quarter, overall sales were lower than in the year-ago period, and launches continued to outpace sales in nearly all markets. Sales in the top eight markets declined by 4 percent to 84,827 units, while launches slipped by 2 percent to 94,855 units. Unsold inventory increased by 3 percent to nearly 5.2 lakh units, with the quarters-to-sell also increasing to around six quarters.
The NCR and Pune are emerging as relatively stressed markets, with sales down by double-digit percentages. The January-March period marks the fourteenth straight quarter where launches outpaced sales. While the Rs 1 crore-plus category has been driving real estate sales, momentum has been slowing in this category. Sales in other categories, such as the Rs 20-50 crore ticket size, have seen significant inventory build-up across regions like NCR and Mumbai.
Experts, however, add a note of caution. The overall sales decline is marginal, and more time may be needed to observe a broader trend. 'We analysed a lot more than just the headline numbers and once we saw that the velocity of sales had come down and the quarter of sales was picking up, at that point of time we decided to at least call the market that it is slowing down,' said Shishir Baijal, Chairman and Managing Director of Knight Frank India.
The Iran war has also impacted the stock market, leading to corrections that may have hurt the sentiment. 'At this point of time, it's too early to call. We feel that it is time to call that it is a slowdown and a slight fall from the peak numbers,' Baijal added.
Despite the overall slowdown, Bengaluru, India's technology hub, saw home sales grow by 7 percent during the reported period. This growth occurred despite concerns over technology sector layoffs, particularly at Oracle and other companies, which have affected homebuyers' sentiments. With gross office leasing in India expected to reach around 100 million square feet by the end of 2026, driven by global capability centres and new jobs in artificial intelligence, Bengaluru remains a significant office leasing market.
