The Indian real estate industry has shown tremendous growth and resilience over the past few years. Homebuyers, sellers and industry experts are keenly observing potential changes in the housing market and are hopeful about a future where home prices could become more affordable. The number of new project launches in 2023 was the highest in a decade, with the first three quarters surpassing almost all of the previous year’s records. This paves the way for a positive development trajectory into 2024, ensuring the industry is well-positioned for continued growth and momentum in 2024 and the years ahead.
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What will drive the market in 2024?
economic factors- The real estate industry plays a key role in strengthening the country’s economic landscape. The industry’s bull run will continue and it will contribute 11-13% to India’s GDP by 2025 and is expected to be worth $1 trillion by 2030. There are several factors responsible for this shift.
After the pandemic, people realized the importance of owning tangible assets. Return-to-office orders have also led professionals to return to the workplace. In contrast to the earlier preference for suburbs, people are now looking for properties within city limits.
Also read: Rent surges 17% year-on-year across Indian cities, Gurgaon city rents soar 31%, report shows
Cities are undergoing transformation due to ongoing urbanization. In the face of ongoing global economic uncertainty, the stability and durability of real estate is proving to be a source of confidence and comfort for investors.
NRI Interest- Non-resident Indians (NRIs) are actively seeking to establish a tangible connection with their home country and want to buy property in India. In the financial year 2019-2020, NRIs accounted for approximately 10% of the total investment in the Indian real estate market. Subsequently, this figure currently stands at around 15% and is expected to rise to 20% by the end of 2025.
Government policies are encouraging this trend and Indian builders are meeting global standards of excellence.
The rise has been driven by several factors, including rising rental yields, continued depreciation of the Indian rupee, favorable economic policies, emotional connect with the motherland and the Indian real estate industry’s resilience amidst challenges.
Market dynamics and buyer trends
Upscale Lifestyle Trends- As India’s economy expands, people with higher disposable income want a more upscale lifestyle. There is a growing demand for homes with lifestyle amenities such as fitness centers, swimming pools and lush green landscaping.
Not only high-net-worth individuals (HNI) and ultra-high-net-worth individuals (UHNI), but also middle- and upper-class individuals are expanding their budgets to acquire larger living spaces.
The demand for 3BHKs has increased significantly over the past year, especially considering that people with mixed working patterns want more spacious homes. Owing to the growing demand for more spacious homes, the average price in the IT corridor is currently around Rs 11,000 per sq ft.
Environmental Considerations- The Indian real estate industry has witnessed a clear inclination among buyers towards sustainable properties over the past two years. From energy-efficient design and eco-friendly building materials to water-saving initiatives, the real estate industry is redefining the living experience.
Homebuyers are looking for living spaces that resonate with their core values and beliefs. New-age homebuyers, especially millennials, are concerned about their environmental responsibility and prioritize homes with renewable energy, rainwater harvesting and energy-efficient appliances.
The sustainable home optimizes large amounts of natural light and ventilation, giving it a feeling of spaciousness and openness. Especially for those working from home, this can reduce stress levels and lift their mood, thereby increasing productivity.
Although the upfront outlay of green real estate is relatively higher than that of a traditional home, one can significantly reduce utility bills later on, making it a prudent and cost-effective choice in the long run.
Housing Preference- A shortage of ready-to-move-in (RTMI) inventory and rising prices in gated communities are driving buyers toward under-construction projects, resale properties, and individual residences, respectively.
Resale properties are popular because they offer decent living space without having to wait a long time or spend too much on interior decoration. Meanwhile, houses under construction are preferred as house prices are expected to rise significantly after the project is completed.
Investment transfer- Commercial properties have traditionally been the investment of choice due to their superior returns and minimal maintenance requirements. But the significant rise in rental yields on residential properties over the past two years, coupled with their cost-effectiveness, has tipped the scales in their favour. Given the rapid rise in prices, it is widely expected that residential properties will outperform commercial properties in terms of capital appreciation.
Changing tenant behavior – The sudden spike in rental costs has also led to a shift in tenant behavior. With the option to convert high rents into monthly EMIs, home ownership is becoming a financially prudent option for many people. According to NoBroker’s 2023 Annual Real Estate Report, the share of first-time buyers has risen from 62% in 2022 to 68% in 2023, with soaring rents being a significant driver of this shift.
Seller Strategy- A large number of sellers are also choosing to reinvest in new properties. Favorable market conditions, coupled with capital appreciation and attractive rental yields, make it an attractive financial strategy.
Government initiatives and policy rates
India’s commitment to affordable housing is unwavering, including initiatives such as the Pradhan Mantri Awas Yojana (PMAY). With more than 50% of India’s household savings invested in real estate, these initiatives have also contributed significantly to the growth of the sector.
The Reserve Bank of India (RBI) kept policy rates unchanged. This has become a catalyst for the rapid growth of the real estate industry. The continuation of this stability is expected to further boost housing demand.
The role of technology in the transformation from offline to online
Technology has changed the way we perceive, access and invest in real estate. Market trends are at your fingertips. From virtual property tours to instant transactions, advances in real estate technology are redefining the traditional way of finding a home, transcending the constraints of time and distance.
With the convenience of metro-based search filters on the proptech platform, individuals can now explore homes beyond their office proximity, unlocking more affordable housing opportunities while saving time on their daily commute. The online platform aims to be a one-stop service related to property packing and moving, rental agreements, maintenance fee payments and other housing related services.
Positive outlook for 2024
The rental market has reached its peak and shows no signs of declining in the future. This situation provides favorable prospects for investors as these real estate units are expected to continue generating good returns.
In addition, the significant recovery in construction activity after the epidemic has brought new impetus to the real estate market. As projects resume and new launches near completion, the market is poised to readjust to ensure the stability of property prices. A combination of market dynamics, government initiatives and changing homebuyer preferences are setting the stage for a real estate boom in 2024, making it a promising year for homeownership.
-The author is the co-founder, chief product and technology officer of NoBroker.com. The views expressed are personal only.
Disclaimer: The opinions and investment advice expressed by experts in News18.com reports are solely their own and not those of the website or its management. Readers are advised to consult a certified expert before making any investment decisions.
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