Housing High Hopes
What a year it has been for India’s housing sector! Projections are suggesting a remarkable ten-year high in terms of both sales and new launches, and potentially surpassing the 300,000-unit milestone. What’s even more thrilling for the sector is that this trend is expected to persist in 2024.
Anshuman Magazine, Chairman & CEO - India, South-East Asia, Middle East & Africa - CBRE, attributes this shift to evolving homebuyer preferences. "Amid transforming preferences, affordability will no longer be the sole decisive factor for homebuyers as health and safety, community living, sustainability, and integration of smart home technologies have also started to emerge as key factors in home purchase decisions," says Magazine.
According to Magazine, the demand for projects in the mid and budget/affordable category (Rs 45 lakh to Rs 1 crore) is projected to remain strong, aligning with the trends of the past couple of years. "We also expect projects in the premium and luxury segments (Rs 2-4 crore and above) to continue experiencing healthy growth," he adds.
As per ANAROCK Property Consultants, the residential sector surpassed all previous highs in 2023 with housing sales creating a new peak quarter-on-quarter. Even before Q4 2023 sales numbers are collated, the strong sales momentum indicates that the total value of homes to have found buyers in 2023 will cross the Rs 4.5 lakh crore-mark, which will be 38 per cent higher compared to the total sales value of Rs 3.27 lakh crore clocked in 2022, it says.
Sample this: In the first nine months of 2023, the total residential property sales value is already 7 per cent higher compared to last year, with the top seven cities seeing sale of inventory worth Rs 3,48,776 crore, whereas the corresponding figure for the entire 2022 stood at Rs 3,26,877 crore. Between January and September 2023, around 3.49 lakh units were sold in the top seven cities, against around 3.65 lakh units in whole of 2022.
Anuj Puri, Chairman - ANAROCK Group, says, “The fact that the housing sales value in 9M 2023 exceeded that of the whole of entire 2022 reflects the increased demand for premium luxury homes this year. If we look at the quarter-on-quarter sales values in 2023, each quarter saw consistent growth and overall sales value has already breached the Rs 1 lakh crore mark."
However, the housing sector, particularly the 'affordable housing' segment did not see any growth. On the contrary, there was a shrinkage. Shishir Baijal, Chairman and MD, Knight Frank India explains, "The shrinkage in sales of affordable housing may be influenced by various factors, including economic considerations, relatively greater shrinkage in affordability, changing demographic profiles, or shifts in the
overall housing demand." Developers, keen on maximising their market responsiveness, have adjusted their product offerings to align with the prevailing demand for premium residences, he adds.
Expectations in 2024
Experts says the metros and Tier 1 cities are expected to continue being the major recipients of equity inflows. Tier 2 cities are also expected to witness a rise in investments due to a spurt in real estate development activity backed by healthy demand, particularly in the retail and logistics sectors. "We could also see the listing of the fourth office REIT and a couple of infrastructure investment trusts (InvITs) in 2024, along with expansion of existing REIT portfolios and diversification of institutional investor base across the listed REITs," says Magazine.
The Global Capability Centres (GCC) are also expected to scale up their operations in India, which would boost demand for both conventional as well as flexible office spaces. At the same time, mature GCC occupiers, with a large existing footprint and long-term vision, could explore large-sized campus developments in top cities, say experts.
Looking at 2024, Pradeep Aggarwal, Founder & Chairman, Signature Global, a Gurugram-based leading developer says, “The anticipated growth in demand for mid-range housing, luxury housing mirrors the evolving preferences of homebuyers and signifies the resilience and adaptability inherent in the real estate market particularly locations like 37D, Sector 71, Dwarka Expressway and South of Gurugram. The anticipated growth in demand aligns with the broader landscape, as the Indian real estate sector is poised to jump multi-fold in the coming years.”
Experts add that sustainability and environmentally conscious features are anticipated to gain further prominence in luxury real estate and other housing segments as both developers and buyers are likely to prioritise properties that align with green living and offer energy-efficient solutions.
Leaders in the real estate sector underscore the critical role of government incentives in lightening the financial load on prospective homebuyers. Citing past triumphs, such as the effectiveness of reduced stamp duties and premiums, industry stalwarts say these incentives as indispensable tools for sustaining the current surge in residential sales. Beyond merely stimulating market activity, these measures are necessary for democratising homeownership, rendering it more accessible across a diverse demographic spectrum.
