New Delhi: The sales of residential property in tier-1 cities in the country stood at more than 250% of the levels seen among tier 2 cities in the calendar year 2022. The total absorption witnessed in tier 01 cities was a whopping 4.53 lakh units as against 1.83 lakh units in tier 2 cities, according to a report by leading real estate consultancy, PropEquity.
Even in terms of new launches of residential property, the tier 1 cities outperformed the tier 2 cities by more than 240% in 2022. The new launches seen in metros stood at 3.71 lakh unit mark while it was 1.52 lakh units in the latter.
Pareto-distribution or pareto principle is used in various fields, to identify and analyse various social, scientific, geophysical and business phenomena in society. Pareto distribution is also observed in real-estate market trends in the new launches share of the top 44 cities (tier-1 & tier-2), tracked by PropEquity.
In CY’22 the market share of top 9 cities (20% of 44 cities) have witnessed about 80% of new supply. Similar trends can also be identified and used in various business applications & analytics in real estate.
“This disproportion in metros and tier 2 cities this due to employment opportunities, better infrastructure with better standard of living in tier-01 cities. Regardless of size of the real estate industry in the two categories of cities, there are very positive developments and all round growth of property market across the country where more and more people are finding a home of their choice and within their budgets. These are healthy signs of a mature real estate in any country,” said Samir Jasuja, founder and managing director at PropEquity.
“Rapidly rising property sales in tier 1 cities have shown us that despite challenges, perseverance and innovation always win. With an impressive 2.5 times sales figure compared to tier 2 cities, it is a testament to the strength of the market and the tenacity of those involved in the real estate industry. This growth is not only a sign of economic prosperity but also a reflection of the trust and confidence people have in the future. It is a reminder that there are always opportunities for success and growth, even in the most challenging of times.” said Ankush Kaul, chief business officer, Ambience Group.
Interestingly, calender year 2022 has witnessed the highest launches and absorption in the last eight years, with absorption crossing 4.5 lakhs of residential units with only 3.7 lakhs new supply in the same period. Inventory overhang is at all-time low with only 12 months of inventory left in top tier1 cities in India. This gap in inventory will encourage developers to launch new projects in the coming quarters to cater to the existing demand.
In all, 2022 has witnessed maximum residential property sales in the last eight years, with total absorption increasing by 28% year-on-year. These higher sales were a result of multiple factors such as increased confidence of consumers on hard assets compared to volatile assets post-COVID and lower repo rates of 4% in the first half of 2022, increasing the borrowing and lending capacity of commercial lenders because of lowered cost of credit and the increase of liquidity in the financial system.