Housing Sales to Continue to Grow in 2023: Experts

Housing Sales to Continue to Grow in 2023 Experts

Premium residential values in Mumbai, Bengaluru, Delhi, Gurugram and Noida have witnessed considerable growth throughout 2022, according to international property consultant Savills.

Demand in the rental market has also gained momentum as professionals have returned to their work locations. In the backdrop of hybrid work model, end-users are considering renting larger homes in residential complexes offering superior facilities.

“Activity in the premium to luxury residential segment in NCR, Mumbai and Bengaluru is likely to remain robust in the first two quarters of 2023. The market movement, while being reliant on end users, has also benefited from investors seeking medium to long-term investment opportunities in both under construction and secondary spaces,” said Shveta Jain, Managing Director, Residential Services, Savills India.

Under construction projects in these cities witnessed higher appreciation in capital values as compared to the completed projects. This reflects buyers’ preference for new launches with better amenities and spacious units. Affinity for quality homes is likely to keep the demand steady for premium housing segment in 2023.

“Investor interest was also prominent for leisure locations offering both rental and capital appreciation opportunities. To capitalise on the new growing demand for second homes, developers have been seen making a bee line for land parcels ranging between 2,000 sq metres and 3 acres in locations such as Goa, Alibaug, Kasauli,” Jain added.

The heightened demand is leading to both paucity of supply and increase in values for clear title land parcels.

“The renewed focus on homeownership propelled the significant number of new launches in NCR this year. Gurugram has witnessed phenomenal growth in the realty market where housing sales registered a more than threefold increase between January-September 2022,” said Amarjit Bakshi, CMD, Central Park.

The surge was witnessed owing to the increased housing demand across price points.

After a two-year lull, the real estate market has rebounded with developers reporting a significant increase in property demand and sales. In terms of real estate growth, affordable housing has been a leading force, with the demand for mid and affordable residential realty markets steadily improving, backed by the renewed confidence of buyers and developers.

“Additionally, Millennials, who previously preferred renting, have shown a strong interest in homeownership, primarily in the affordable segment, in the post-COVID era. Also, independent floors are gaining traction among the middle-class because of their greater affordability, privacy, and space. The growth in the segment can also be attributed to the Pradhan Mantri Awas Yojna, under which Rs 48000 crores is being allocated to complete approximately 80 lakh houses by 2023,” said Pradeep Aggarwal, Founder and Chairman, Signature Global (India) Ltd.

Customers are looking at bigger houses with better amenities. Luxury housing saw a sharp hike. Demand for retirement and second homes has also seen rising, and homes need multifaceted spaces for work and relaxation.

“Global headwinds have motivated NRIs to invest in Indian real estate. The weakening of the Indian rupee and strong economic conditions have fuelled this trend further. We are experiencing a far greater demand for our projects Axis Blues, Axis Yog Villas and Axis Lake City Plaza,” said Aditya Kushwaha, CEO & Director, Axis Ecorp.

Since the pandemic, India has seen widespread adoption of digital commerce, IoT, and smart gadgets. The commercial real estate sector mirrors this, with demand for data centres, flexible co-working space, and warehousing and logistics on the rise.

There has been a major shift to investment in ultra-luxury homes this year and we see this momentum continuing in coming years. HNI, and UHNI buyers have aggressively invested to enjoy a luxurious lifestyle. This is the reason the residential segment has grown 40% and is further expected to register a CAGR of more than 5% during the forecast period 2022-2027,” said Pankaj Bansal of M3M India.

Policy reforms introduced by the government, and changes in customer preferences, leading to increased demand for the housing sector, has set the tone of buyers’ confidence in investing in the real estate sector in 2022.

“The gamut of choices in both residential and commercial properties, and new launches of housing projects in NCR will attract young and first-time homebuyers to invest in the region. On the other hand, better connectivity, expansion of the Metro network, operation of Dwarka expressway along with other major infrastructural developments will play a significant role in the growth of NCR,” said Santosh Agarwal, CFO and Executive Director, Alpha Corp.

Indicators show that the Indian real estate market will continue to have strong and positive momentum in the fiscal year 2023 (FY 23). This is despite home loan rates going up the full 2022, and the projection is of another hike of 50 basis points.

“By 2023, it is predicted that India’s real estate market will be worth Rs. 13,00,000 crore. In the past, factors such as inflation, rising mortgage rates, and a shortage of building supplies had an impact on the housing market. However, it is anticipated that this sector would have a significant recovery. In the post-pandemic era, residential sales have already increased by 51%,” said Rajan Bandelkar, President, National Real Estate Development Council (NAREDCO).

In the upcoming year, real estate growth in development hubs like Tier 2 and Tier 3 cities will be encouraging as it will witness enormous socioeconomic progress. Many prospective purchasers are already considering these locations as alternatives to the congested and polluted metropolitan areas.

Cities in Tiers 2 and 3 are quickly establishing themselves as real estate hotspots where a strong housing market supports the overall infrastructure expansion.

In FY 23, these cities will compete with metro areas and offer a variety of residential and commercial opportunities. Further, given the existence of sensitivity in other financial assets, real estate seems to be a wise investment for investors.

Despite recent market fluctuations and disruption, long-term investors still view the market as a safe bet. For 2023, it is projected that the growth will be beneficial in terms of both quantity and quality.

“Strong land acquisition activity over the past couple of quarters would keep the momentum in new launches intact. Affordable and mid-segment would continue to lead the new launches and sales activity,” said Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE.

Healthy momentum could continue in the high-end and premium segment with several projects slated to get launched in the coming quarters. Certain pockets with low levels of unsold inventory would continue to see appreciation in capital values backed by steady demand. Apartment units in the 1,200 – 1,500 sq. ft. range would continue to witness higher traction.

“The Indian real estate sector bounced back strongly in 2022, with the resumption of economic activities in full swing, post the COVID-19 pandemic. All segments of real estate – housing, office, retail, warehousing, data centers, co-working, and co-living, performed well. Housing sales too, are all set to breach the pre-COVID levels and may achieve an all-time high. The pent-up demand of the last two years and the strong need to own residential properties in the wake of the pandemic were the two major demand drivers behind this strong revival,” said Dhruv Agarwala, Group CEO, Proptiger.com.

The real estate market in 2022 began slowly but picked up steam in the second quarter, leading to considerable demand. The pandemic changed the value of home ownership over renting, resulting in a K-shaped comeback in prices and robust consumer confidence.

“We foresee the real estate industry soaring heights in the upcoming year, with premium housing being the preferred choice and gated condominiums gaining traction among buyers. We strongly feel that the best is yet to come for the industry. Consolidation will get further induced due to an increase in interest rates,” said Vivek Singhal, CEO Smartworld Developers.

“Moreover, global equity and disruptive technology entering the real estate industry will further boost consolidation making it a long-term trend. Going forward there will be a clear differentiation and Grade A developers will continue to grow backed by superior capabilities to deliver and meet growing customer aspirations by offering better product enhancers like Smart Homes,” Singhal added.

Source : ET

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