Indian Real Estate: A Rear-view Mirror Look At 2022 And Projections For 2023

Indian Real Estate A Rear-view Mirror Look At 2022 And Projections For 2023

The real estate sector in India has been expanding faster than ever before in recent years, and home prices in India will continue to rise at the similar rate in the coming years.

The real estate market in the National Capital Region (NCR), especially in Gurugram, has seen incredible growth despite the pandemic, attracting investors from the world over. Real estate investors have looked towards Gurugram as their preferred destination because of its modern infrastructure and high standard of living. Gurugram offers a plethora of information technology (IT) and information technology-enabled services (ITES) enterprises that have created a hub for employment generation in north India.

As a direct result of this rising demand, home prices in Gurgaon have significantly risen over the past year. Outside Delhi NCR, real estate prices have rebounded in a ‘K’ shape, and consumer confidence has remained high despite the uncertainties of the pandemic. Another trend observed in 2022 was a significant uptick in the demand for independent floors. Independent floors have been a magnet for buyers and investors because of their higher return on investment.

Trends That Will Drive Indian Real Estate in 2023

The year 2022 witnessed the Indian the real estate market grow despite all previous apprehensions. If forecasts by industry pundits are anything to go by, this growth will continue in the year to come. As industries pick up after the pandemic, a prosperous festive season in 2022 has encouraged sales across the country. Residential and commercial real estate developers have unanimously reported a significant decrease in the inventory pending from before the pandemic. This has inspired confidence in market experts to predict a rise in housing prices in the perceivable future.

More Millennials Will Buy Homes

Contributing 34 per cent of the country’s entire population, there are 440 million millennials in India. This is a big consumer segment, even in a relatively young country such as India. In response to the pressures from India Inc., IT professionals across the country’s largest software corporations are looking to return to the workplace. As this demographic looks for more flexible work hours, there has been an exponential rise in the demand for bigger homes (2, 2.5, or 3 bedrooms), with clear demarcation between work and living areas. In the wake of the pandemic, work-from-home became a norm during the pandemic. This trend is likely to continue as millennials explore possibilities to work remotely, either part or full-time.

Demand for Premium to Luxury Homes Will Soar

In terms of most desirable asset classes across the Indian real estate market, luxury residences have remained relatively resistant to the market downturn and have subsequently made a remarkable return. Not being reliant on mortgages fluctuations, the luxury home market is driven by affluent homebuyers, and has traditionally been an attractive investment option. Additionally, because they offer a better and more personalised lifestyle, developers have been able to successfully market luxury projects better than other asset classes.

The advent of new technologies coupled with a shift in the conventional working norms in the wake of the pandemic, has fuelled a rise in the quality of life in India. Investing in luxury homes – a symbol of affluence and status – has become more financially feasible. This trend is best exemplified by the increase in demand for luxury properties over the past three years. These observations are also supported by the fact that real-estate investment by non-resident Indians (NRIs) reached an all-time high in 2022.

The Market for Gated Condominiums Likely to Expand

Redseer, a prominent management-consulting firm, has predicted that the sale of gated condominiums will increase 2.6 times in India by 2026, reaching a market size of $500 billion. This means that at least 24 million Indian households are expected to move into gated communities in the next five years.

Micro-Markets in NCR Will Lead the Housing Segment

Trade pundits have reported an increase in micro-markets across NCR, with Golf Course Extension Road, Dwarka Expressway and New Gurugram emerging as the most promising growth stories in the entire country. These micro-markets provide a plethora of possibilities across a wide spectrum of asset classes, spanning from the very affordable to the very luxurious. The resale and rental markets in New Gurugram have shown exceedingly encouraging signs of expansion leading to unbridled optimism in homebuyers and developers alike. Even if the purchase price and rental rate differential is quite high in comparison to other micro-markets in India, the growth rate and rental yield make it a lucrative investment option. This variation is also reflected in the absorption proportion, with the New Gurugram, Golf Course Extension and Dwarka Expressway micro-markets together accounting for almost 70 per cent of the total absorption in all of Gurgaon.

The real estate sector in India has been expanding faster than ever before in recent years, and home prices in India will continue to rise at the similar rate in the coming years. Continuing its remarkable growth trajectory across major Indian cities including Bangalore, Hyderabad, Mumbai, Delhi-NCR, Chennai and Pune, this expansion of the real estate market may be directly attributed to a host of diverse factors. Leveraging modern technological advancements, developers are clearly committed towards making the most of these opportunities. Additionally, the NRI demographic has taken note of the paradigm shift in Indian real estate operations since the enactment of RERA (Real Estate Regulatory Authority). After the disruptions and uncertainties caused by the pandemic, this has created a constructive environment that is well-suited for the creation of new secure investment opportunities.

Source : FE

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