In recent times, economies around the world have experienced post-pandemic disruptions, heightened geopolitical situations, and high inflation. This period was also seen as a phase of recovery for the Indian economy. Meanwhile, the real estate sector in India has shown resilience and weathered market fluctuations due to factors such as urbanisation, importance of home ownership, rising population and rising incomes. The residential sector has gained momentum and will remain largely untouched as demand remains high.
The residential real estate market in India made phenomenal growth in 2022, setting new sales records of 68 per cent growth, showcasing the industry’s prominence as one of India’s fastest growing sectors. Moreover, India’s dynamic domestic economy and strong macroeconomic fundamentals played a significant role in stabilizing real estate.
The residential sector in particular has witnessed a strong demand revival with the top-seven cities – Mumbai, Delhi-NCR, Bengaluru, Hyderabad, Chennai, Kolkata and Pune registering decade-high sales. The historically high sales figures are significant considering the current rising property prices and global headwinds. Despite all these challenges, consumer sentiment remains positive and the residential market has set new benchmarks. Market consolidation has increased the market share of organized branded players at prime locations in these metropolitan cities.
Given the increasing importance of home ownership after the pandemic, the sentiment to buy a home will not subside anytime soon. Home ownership has unquestionably emerged as a safe bet investment in unprecedented volatile times based on stability and security. The government’s affordable housing schemes have also led to a significant growth in the affordable housing segment.
The industry is taking cognizance of buyer preferences and focusing on projects that are more relevant and in line with the changing needs of customers. Holistic living has become the norm and the real estate sector is changing customer preferences with offers that meet market demands. The liking for an experience that puts sustainability and well-being at the center of things has led to an interest in homes that are multi-functional.
A favorable economic outlook will further contribute to the market recovery, supported by factors including emergence of first-time home buyers, growing economy, higher number of HNIs investing in luxury properties, among others. The industry is seeing a boom in real estate in 2023 and expects the residential side to remain stable in most markets based on sustainable demand. The long-term potential for growth and attractive returns have ensured that investors continue to invest much-needed capital in this sector.
Luxury real estate will be the primary driver behind the performance of the market sector. Investing in luxury homes has become more financially viable and this trend is best exemplified by the increase in demand for luxury properties in the last three years. These observations are also supported by the fact that real estate investment by millennials, non-resident Indians (NRIs) is set to reach an all-time high in 2022.
Buyers have come to fully appreciate the inherent value of the property and the immense potential of such residences. In addition, customer diversification across affordable, mid and luxury property segments in top residential markets has played a significant role in driving demand. The hybrid work model has also made commuting to the periphery or suburbs very attractive. Within these communities, homebuyers enjoy modern and natural living and this is particularly evident in the luxury segment.
With the return of normalcy from the low of the pandemic, the real estate market is expected to witness higher growth due to confidence among home buyers. Moreover, with over 250 ancillary industries, from manufacturing to services, dependent on the realty sector, any incentive offered to home buyers would strengthen the country’s wider economy. As the sector becomes more organized, so will the desire for home ownership. A conscious consumer shift towards quality, developable space, amenities and lifestyle are some of the strongest trends that have been reshaped and will materialize in the future.
The real estate market will continue to be driven by various factors such as supply and demand, regulatory framework and overall economic conditions. While rising inflation and interest rates may impact demand to some extent in the near term, the industry is however poised for steady growth in the years to come and thus home ownership is likely to increase.
The sector will continue on its journey of long-term growth as we witness continued growth in per capita GDP, increasing urbanization and the world’s increased focus on us as the next big economy. The economic fundamentals are expected to remain strong enough to continue the upward trend in the real estate sector and there will be a sustained uptick in demand.
In short, the year 2023 will present exciting short term and long term investment opportunities for both first time and experienced investors, which adds to the promising outlook of the year.
(The writer is chairman and managing director of Sterling Developers)
read all latest business news, tax news And stock market update Here