Revealing Trends and Projections: A Comprehensive Overview of Residential Real Estate for 2023-2024 By: WireDus, January 31, 2024
The Indian real estate sector stands out as a highly esteemed sector worldwide, encompassing residential, retail, hospitality, industrial, and commercial properties. Residential real estate comprises properties designed for people and their families to live in, ranging from single-family homes, townhouses, and apartments.
Residential real estate in India
Indian residential real estate saw higher highs in 2022. Significant progress was observed in new property launches and home sales, which set the stage for a promising continuation of this momentum in 2023. The residential segment has expanded quickly, and the reason behind its growth is the demand for homes, including those in urban and semi-urban areas. An upward surge in growth momentum and a positive outlook showcase the ability of the market to thrive in 2023 and beyond.
As conditions approached near-normalcy following the post-COVID-19 period, peripheral regions attracted increased attention from prospective homebuyers. Housing prices in 2022 increased at an average rate of 4–7%. Notably, even the escalation in home loan rates did not affect the sales of residential properties, showcasing the resilience of the sector.
The luxury residential market’s sales increased by 151% Y-O-Y in Q1 2023. A striking surge in this segment was witnessed as a total of 4000 units were sold in Mumbai, Bengaluru, Hyderabad, Delhi NCR, Chennai, Pune, and Kolkata.
The market presents many investment opportunities that align with the preferences and objectives of many investors.
Trends in Residential Real Estate
Integration of technology: The significance of digital platforms for house hunting increased, particularly during and after the pandemic period. The trend of house hunting and securing home bookings through digital platforms has gained traction. Beyond that, home tours, positive transactions, and other elements integral to the home-buying process have gone digital. Additionally, obtaining home loans through online channels has become common.
Shared Living: With the expansion of urbanisation in India, there is an increasing demand for affordable housing units. The popularity of shared living is on the rise, particularly among young professionals and students looking for affordable yet comfortable living spaces.
Rise of Affordable Housing: Affordable homes are a big thing right now in the real estate sector. The developers are coming up with affordable housing projects because a lot of individuals are searching for housing that fits their budget. According to a report, there is a shortage of housing, as three houses are built per thousand people, less than the required rate of five houses per thousand people. The affordable housing shortage in urban areas is estimated to be around 10 million units. Given the fast growth of the urban population, an additional 25 million units of affordable housing might be required by 2030.
Sustainability in Development: Environmental consciousness and green building practices are making a mark in the Indian real estate market. Homebuyers and investors are inclined towards sustainable homes featuring eco-friendly features and energy-efficient designs. Many builders, including ATS Greens, are integrating these features into their projects.
Revolution of REITs: Real Estate Investment Trusts (REITs), within the real estate market, have garnered popularity as an investment avenue. Their benefits are not limited to liquidity, diversification, and a consistent income stream.
Projection of India’s residential property market
The value of the Indian real estate market is projected to reach USD 39.16 trillion in the year 2023. This sector is poised to dominate the market, with an estimated market volume of USD 34.31 trillion in the same year. Witnessing significant growth and development in recent years, the factors driving this growth include customer preferences for affordable housing as well as underlying macroeconomic factors such as the rise in the Indian urbanisation rate. Additionally, government policy reforms, which attracted foreign direct investment (FDI) and facilitated the entry of foreign investors through Real Estate Investment Trusts (REITs), have been playing a pivotal role in the sector’s expansion.
Projections also suggest that the real estate sector is set to achieve a valuation of US$1 trillion by the year 2030, with a significant contribution from the affordable housing segment. The growing public awareness of the perks of homeownership, along with the government’s affordable housing initiatives, has led to substantial growth in the affordable residential sector.
The real estate sector has demonstrated its resilience amid the challenges brought about by the pandemic over nearly two years. Following the COVID-19 period, the real estate industry maintained a consistent upward trajectory. The sector experienced robust growth in 2022, particularly in response to the demand for housing in urban and semi-urban areas. Despite challenges, the sector demonstrated resilience, with rising housing prices and a remarkable surge in luxury unit sales. Key trends include the integration of technology in house hunting, a growing preference for shared living spaces, and a heightened focus on affordable housing. Government policies, urbanisation, and customer preferences for affordable housing are driving this growth, with the sector expected to reach its highest valuation by 2030.