Real estate demand in southern cities like Bengaluru, Chennai, and Hyderabad showed resilience in early 2023, contrasting with challenges in Mumbai influenced by macroeconomic pressures such as rising interest rates. A Knight Frank report for January-March 2023 highlighted stable national residential sales at 79,126 units, up 1% year-over-year, driven by mid-to-premium segments.​

Southern Cities Lead Sales Growth

Hyderabad recorded the strongest growth at 19% YoY in residential sales, reaching 8,300 units, while Chennai saw 8% growth to 3,650 units. Bengaluru experienced a slight 2% dip to 13,390 units but led price appreciation at 7% YoY, followed by Mumbai at 6%. These trends reflect affordability advantages in southern markets amid RBI repo rate hikes totaling 250 basis points since May 2022, pushing home loan rates toward pre-pandemic levels.​

Mumbai Faces Headwinds

Mumbai’s sales slipped 6% YoY to 20,300 units despite high supply launches, signaling sensitivity to economic slowdowns and inflation concerns. National unsold inventory rose 6% YoY, but quarters-to-sell improved to 7.2 from 9.1, indicating robust demand overall. Southern cities benefited from steady occupier activity in IT and flex spaces, with Bengaluru transacting 31% of office space at 0.33 mn sq m.​

Market Outlook

Prices grew across markets for the fifth straight quarter, with new launches up 12% YoY to 87,299 units, as developers met demand for ready and near-ready inventory. Flex spaces captured 29% of office transactions, particularly in Bengaluru. Experts noted that while inflation persists at 6.4%, moderating global commodity prices could sustain momentum into 2023.

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