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Speaking to CNBC-TV18, Gulam Zia, Senior Executive Director at Knight Frank said there are no signs of demand being impacted by higher interest rates as of now. He believes that 2023 is likely to be as good as 2022 for the real estate sector.
With the opening up of the economy post the COVID pandemic, Knight Frank on Tuesday said housing sales rose 34 percent to a 9-year high and gross office leasing grew 36 percent during 2022 across eight major cities.
While housing sales rose 34 percent to 3,12,666 units in 2022 across eight major cities, the gross leasing of office space increased 36 percent to 51.6 million square feet.
Knight Frank India CMD Shishir Baijal said housing sales have registered a growth in 2022, despite rise in prices and also an increase in interest rates on home loans.
Speaking to CNBC-TV18, Gulam Zia, Senior Executive Director at Knight Frank, said there are no signs of demand being impacted by higher interest rates as of now. He believes that 2023 is likely to be as good as 2022 for the real estate sector.
“Our house view is that the transactions will not be affected as much due to higher interest rates. In the last 6 months despite the 3-4 consecutive rate hikes in the home loan interest rates, the market is not yet showing any fatigue or not really going down. So that gives us some comfort to state that going forward in 2023, the buyers have taken the home loan interest rate hikes in their stride. So, 2023 is not going to be very different than 2022,” Zia said.
As per the data, Mumbai led residential sales in 2022 with 85,169 units, up 35 percent from the previous year.
Delhi-NCR saw a 67 percent growth in sales to 58,460 units, while Bengaluru witnessed a 40 percent rise to 53,363 units.
Housing sales in Pune increased 17 percent to 43,410 units. Sales of residential properties in Hyderabad went up 28 percent to 31,046 units last year.
Chennai saw a 19 percent growth in sales to 14,248 units, while Ahmedabad witnessed an increase of 58 percent to 14,062 units. Kolkata was the only city that saw a decline of 10 percent to 12,909 units.
Knight Frank India said the office sector in India saw a strong recovery in demand despite geopolitical challenges.
In terms of the office space demand, Bengaluru led with 14.5 million square feet followed by NCR with 8.9 million square feet leased during the year 2022.
"For the first time in over a decade we have seen simultaneous growth in all major real estate segments," Baijal said.
Office, residential, warehousing and retail, all registered significant increase in activities in 2022, he added.
"Factors like change in attitude towards home ownership, return to work and increased hiring and proliferation of e-commerce etc. backed by economic stability, allowed India's real estate sector to benefit last year," Baijal said.
He expressed confidence that this pace of growth is expected to largely remain in the new year owing to continued domestic economic growth.
"Having said that, India will have to remain cautious of the global geopolitical and economic challenges as that can cast a shadow on the pace of growth for India," Baijal said.
Speaking about expectations from budget 2023, Zia said there needs to be some tweaking in the income tax regime for salaried people to incentivise loan off-take. He also hoped that budget 2023 will provide an industry status to the realty sector.
“Since the last 15 years there is demand that real estate should be given a industry status but that hasn’t happened so far. The other couple of things that are important are some respite in the income tax regime for the salaried people. When you are taking home loans etc, your income tax has to be released a bit to buy more houses and take home loans. So that is something which we are expecting from budget 2023. However lot of things have happened in the policy framework over the last 7-8 years and that is perhaps the reason why last year was a bumper year. So personally I am not expecting a lot from the government because they have done much more than what they should have done earlier,” Zia said.
(With text inputs from PTI)