Post the pandemic, housing demand witnessed a steep rise with a focus on gradually shifting from rented to owned homes. As per reports, India’s real estate market is expected to surpass INR 13 lakh crore by 2023. An increase in disposable income, a rising population, and quick urbanization are the key drivers for this projected growth. Infrastructural growth in tier II and tier III cities, continued hiring in IT sectors, and focus on integrated development, too, have contributed to the rise in housing demands.
Market size for Financial Year 2023
In 2021, almost 40 million sq. ft. was offered in India, and in the next three years, India will own a 40% market share delivering 46 million sq. ft. As expected, the real estate demand will grow by 18 million sq. ft. by 2025.
According to a Reuter poll, property prices in India will are speculated to rise by 7.5 to 8% in 2024. And the property prices in Chennai and Bengaluru will increase by 5.5 to 6%.
So, what will drive the real estate market growth in 2023?
Rise in demand for spacious living spaces
The recent evolution of homebuyers has extraordinarily redefined how homes are seen. People are looking ahead to upgrading their living areas after COVID changed how people lived and worked. The trend will prevail in 2023, and the demand for bigger living spaces exhibits a strong consumer mindset prioritizing spacious and more extensive living areas.
Rise in ownership demand because of developed consumer sentiment
With millennials taking an interest in Indian real estate, there has been a significant contribution to an upbeat sentiment to homeownership. This year will strengthen the trend further, bringing a rise in affirming real estate as a reliable asset.
Greater interest in HNIs and NRIs
The growth of the dollar against the rupee and other promising investment opportunities has garnered the attention of NRIs in Indian real estate. They are eager to purchase luxurious properties in IT and ITes hubs of the country, such as Bengaluru and Chennai, to witness better growth in their investments.
Going ahead, NRI investments will consistently flow in and add to a sizeable portion of the residential and commercial properties in the top metro cities of the nation.
Rise in demand for leasing space
With the growth in demand for space to lease, majorly from IT and startups, tech companies have already booked potential office leases. Ecommerce and logistic companies continue to focus on warehousing properties, adding to the growth of commercial real estate industries. Moreover, data center investments will contribute to the rising demand, making commercial properties a robust asset class.
Prospective home buyers are looking for mixed-use development. There is a rise in inclination towards quality development housing options such as gated communities with infrastructure offering safety, low work commute, and proximity to essential stores, gyms, healthcare facilities, markets, and schools. Homebuyers are also looking ahead for a sustainable ecosystem. Simply put, prospective buyers need a live-work-play environment with a well-knit social fabric.
Growth in tier 2 and 3 cities
Many companies and startups focus on low-cost areas to set up their operations and offices using local human resources. This has created demand in tier 2 and 3 cities as they are easily accessible. Growth in these cities is accelerated as they are closer to metro cities and can offer similar facilities at a scaled-down position. Hence, these cities have high investment prospects because of their excellent development potential.
With the growth in real estate investment, established developers have worked hard to garner higher sales. They look forward to acquiring or collaborating with smaller developers and growing further. Going ahead, these large developers will see 80% of the demand.
The real estate market will rapidly grow in cities like Mumbai, Bengaluru, Pune, Chennai, and NCR. Spacious homes with innovative digital facilities and ready-to-move inventory are the preferences of homeowners driving the growth of the estate market in 2023.
Real estate is a desirable option in the face of the unrelenting vulnerability of financial assets beyond equities. During the upcoming fiscal year, the real estate sector presents a tempting investment prospect for those with a far-sighted approach. It is predicted that the sector will exhibit growth in magnitude and excellence.