While the housing segment will undoubtedly continue to spur growth, the real estate sector is well poised to record its best year with residential sales rising by an unprecedented 51 per cent post pandemic.
In the first half of 2022 alone, the real estate sector garnered investments amounting to a total of USD 1.1 billion, out of which, nearly half was accounted for by the residential sector.
Looking back at the year gone by, through all the geopolitical upheavals and tumultuous uncertainties in the wake of the pandemic, the one constant that has stood steadfast as a bastion of stability has been the Indian real estate sector. Even in the face of challenging supply chain disruptions in 2022, the residential sector has not only exhibited exceptional resilience, but also proved largely immune to market volatilities. As the engine that drives the Indian economy, the real estate sector has been a magnet for attracting foreign investments, especially from NRI and HNI homebuyers living abroad.
In the first half of 2022 alone, the real estate sector garnered investments amounting to a total of USD 1.1 billion, out of which, nearly half was accounted for by the residential sector. Thus, in a year that was expected to be plagued by the aftershocks of the pandemic, this is one of the only sectors that notched an increase in sales growth, with the demand for luxury housing defying all expectations and surpassing all previous records. This can also be attributed to the faith that the Indian real estate sector instils in its patron investors. From a historic standpoint, it has been well documented that in phases of market turmoil, this is the one sector that investors look to invest their capital with the confidence of seeing lucrative returns on their investments.
As we look towards future horizons, the Work-From-Home and Hybrid Work Models seem to have become the new normal for various medium and large enterprises in the upcoming 2023 year. To this end, market experts are confident that the residential sector will continue to show an accelerated growth rate, as prospective homebuyers will look to invest in luxury homes that offer them an integrated community with the best-in-class amenities that leading developers have to offer. Catering to the next generation of millennial homebuyers, the real estate sector has reinvented itself and incorporated digital technologies and innovation in every facet of its modus operandi. More and more developers are now offering virtual walkthroughs and augmented reality tours wherein young working professionals can experience the home buying experience at their convenience. With digital transformation bridging the gap and the Meta-verse emerging in a big way, it is easy to assess that the coming year will augur new opportunities for discerning first-time homebuyers looking to invest in the home of their dreams.
With the World Bank forecasting India’s GDP to grow as much as 7% in FY23, there is much to celebrate about in the upcoming year. The real estate sector will play a major role, as it is responsible for creating massive employment opportunities both directly as well as indirectly through its allied and auxiliary industries. This would in turn have a cascading effect to further increase the demand for residential housing, as more and more people will enter the housing market in 2023 than any year before.
The government on its part is doing to further incentivise the real estate sector to stimulate the Indian economic growth story further. Not only has there been a slew of measures to encourage homebuyers with various states reducing the cost of stamp registration duty, major government initiatives like the Pradhan Mantri Awas Yojna (PMAY) and the “Housing for All” endeavours will further bolster demand for residential real estate in the coming year. Low interest rates and the removal of bureaucratic red tape are all aimed towards streamlining the home buying process, especially in the real estate markets in Tier-II and Tier-III cities that have traditionally been bogged down by excessive redundant approval protocols.
Additionally, the completion of mega social-infrastructure projects and logistical interconnectivity through new highways, airports and metros have galvanised realty developers to launch major real estate projects pan India. Such measures are sure to drive qualitative and quantitative growth across all residential asset classes. This is best exemplified by the growth in demand for affordable and mid-range residential projects, which have come to become the dependable drivers of sales despite the increase in repo rates by the Reserve Bank of India. The positive market sentiment will ensure that the year 2022 ends in a decadal high with sales surpassing the 200,000-unit mark. Even with the central bank raising rates by 35 base points in the first week of December to curb inflationary trends in the economy, these price categories have proved to be the catalysts of demand, and have offset any slowdown in the residential real estate growth trajectories in the coming year.
While the housing segment will undoubtedly continue to spur growth, the real estate sector is well poised to record its best year with residential sales rising by an unprecedented 51 per cent post pandemic. And while there are still supply chain shortages for crucial building materials, government initiatives, public policies and a conducive ecosystem will go a long way to ensure that logistical disruptions remain limited and localised. In the panoramic scheme of things as the Indian economy continues to prosper, the real estate sector has a bright prospect to look forward to in the coming year.
(By Rahul Singla, Director, Mapsko Group)