Property price growth in India’s key markets drops amid slowdown
Property values in a majority of India’s prime residential markets have seen dismal growth in the past five years, indicating that a prolonged demand slowdown has kept value appreciation under check, data available with PropTiger.com show.
At 7% CAGR (compound annual growth rate), Hyderabad saw the highest increase in value of property among key markets between March 2015 and March 2020. Besides Hyderabad, only Mumbai and Bengaluru saw any noteworthy rise — of 2.8% and 2.1% CAGR, respectively. The Gurugram and Noida markets, on the other hand, saw a decline in property values during the same five-year period.
“An ongoing demand slowdown in India’s real estate market has kept price growth in check, as a result of which housing rates in most markets have shown only negligible growth. If Hyderabad stands as an exception here, it has more to do with the fact that the base price in what is referred to as India’s pharmaceutical capital was quite low during 2015. The state bifurcation also pushed prices upwards. On the other hand, moderate correction is seen in key NCR markets, primarily because of major delays in project completion by key developers,” says Dhruv Agarwala, Group CEO, Housing.com, Makaan.com & PropTiger.com
In terms of absolute change in the period from March 2015 to March 2020, Hyderabad saw the average value of apartments increasing 40% to reach Rs 5,318 per square foot (psf). In Mumbai, the average value rose 15% to Rs 9,446 psf. At the third spot on the list was India’s technology capital Bengaluru, where the average apartment value rose 11% to Rs 5,194 psf in the past half a decade.
While price increases in Ahmedabad, Chennai, Kolkata and Pune were only marginal, the two NCR markets of Gurugram and Noida saw rates declining during the same period. The average property value in March 2020 over March 2015 increased by 4% in both Kolkata and Chennai; the rise in Pune was only 2% while Ahmedabad saw a rise of 3%.
Housing prices in Gurugram fell by 7% during the same period, while the decline in Noida was 4%. These two NCR markets have been at the receiving end of negative publicity because of large-scale project delays and instances of some mega players entering into insolvency resolution.