India’s real estate market is growing faster. Will 2024 be bigger and better?
2023 was a bumper year for Indian real estate with record sale of houses and properties. By 2030, India’s real estate market will be worth $1 trillion.
India’s real estate market is among the fastest growing in the world. Though there were property price escalations this year, sales remained robust, indicating a strong affinity for homeownership among prospective homebuyers.
What’s driving this surge? A lot of factors, but the biggest one is India’s economy. Growth has been stable, fundamentals are strong, India’s Central Bank has not hiked interest rates, all of this has driven up demand and with the economy, India’s middle class is also rising. They are earning more; they have more disposable income and they are investing in real estate. The government is also offering incentives. There are tax reductions, subsides for buyers and schemes for affordable housing.
But it not just affordable housing that Indian buyers are seeking. A lot of them also want luxury premium properties. What defines luxury real estate? In India its anything priced over Rs. 5 Crores. If you are in Mumbai, its anything above 2.5 Crores, that’s luxury. These properties have a few defining factors. They are prime neighbourhoods, they have amenities, there’s top notch infrastructure, state-of-the-art fitness centres, infinity pools, rooftop lounges, concierge services, shopping centres. In the first six months of 2023, the sale of luxury homes jumped by 130%. Then there is Ultra Luxury Homes, real estate priced over Rs. 40 Crores.
Currently real estate contribution is 7% of India’s GDP. It employs over 50 million people – Cement, steel, glass, all these industries depend on real estate.
Which type of properties to be in demand in 2024?
With the prevailing enthusiasm for homeownership, the demand for affordable properties is expected to soar further. More individuals seeking to move away from rental accommodations will drive the quest for spacious 2BHK and 2BHK+ homes.
Simultaneously, the luxury housing segment will also witness exceptional demand as High-Net-Worth Individuals (HNIs) and Non-Resident Indians (NRIs) are eyeing larger and more sophisticated assets within India. Their preferences lean towards technology-integrated 3BHK, 3BHK+, and 4BHK homes featuring bespoke elements and extravagant amenities.
As trends indicate, the security associated with owning a physical asset during a coronavirus-like crisis coupled with a rising aversion to high-risk investments has given rise to increased demand for residential real estate buy over rent. Additionally, many tenants now see rent as an expense and are thus considering EMIs as SIPs to build non-volatile assets such as real estate.
Looking ahead to 2024, optimism prevails as the sector is poised to rebound from the challenges encountered in 2023. Analysts anticipate a more favourable market environment, citing the presence of pent-up equity seeking housing opportunities. Whether you’re a first-time buyer or an investor eyeing property expansion, staying abreast of real estate trends is crucial for making well-informed decisions in this dynamic market.
Demand for commercial real estate to rise
The demand for commercial real estate is expected to match or even surpass the leasing records set in 2022.
Even in the face of global geopolitical tensions and elevated inflation levels, the first three quarters of 2023 witnessed healthy leasing activity across the 6 major office markets of the country. 2023 closed on a stronger note; the momentum is likely to continue, and gross absorption is anticipated to be around 50mn sqft, at par or better than the historic performance of 2022.