India’s housing market defied logic this year to register all-time high sales as home buyers snapped up deals despite a jump in asking prices and the highest interest rates in six years.
Market experts strongly believe the demand will not only sustain in 2024 but rise further, albeit at a slower pace, on high economic growth and expectations of a fall in home loan interest rate.
The real estate industry saw record sales of residential properties in terms of both volumes and value, real estate market data showed as consumers are increasingly buying into the idea of home ownership post pandemic.
RERA boost
The ouster of dubious developers from the real estate market thanks to greater regulatory oversight via RERA helped boost confidence among home buyers. The insolvency law, too, has played a role in elimination of defaulting builders.
According to real estate consultant Anarock, housing sales are estimated to rise by 30% this year to a record 4.74 lakh units in primary (fresh sales) markets of the top seven cities — Delhi-NCR (National Capital Region), Mumbai Metropolitan Region (MMR), Chennai, Kolkata, Bengaluru, Hyderabad and Pune.
In value terms, the sales of residential properties are seen at a whopping ₹4.5 lakh crore, supported by higher ticket prices.
Housing prices, which started rising from last year after remaining stagnant for almost a decade, continued an upward trend and appreciated by an average 14% this year, encouraging investors to return to the primary residential market.
“The changing sentiments of homebuyers — wherein not only are home-renters converting into buyers but also buying bigger homes — has played a huge contributing hand to sectoral and economic growth. The consumer has realised the importance of owning a home and we expect this sentiment to continue in the foreseeable future,” realtors’ apex body CREDAI President Boman Irani told PTI.
Property developers and consultants are of the opinion that the industry is witnessing the ‘best time’ and it is possibly in the first or second year of long-term upcycle.
Sales were strong across price brackets, be it affordable, mid-income, premium and ultra-luxury homes, but what surprised everyone was the huge demand for properties starting from ₹3-4 crore range to as high as ₹100 crore.
“The Indian residential real estate sector experienced remarkable growth in 2023, reaching a pinnacle not seen in the past 15 years. On the back of a strong Indian economy, real estate sector is seeing this robust end user-led growth in the residential demand and supply,” Anarock’s Chairman Anuj Puri said.
He expressed confidence that the market will grow further next year.
“Given the ongoing developments and sustained momentum in the economy and residential real estate sector, the upcoming year is poised for continued growth, although the rate of increase may be more moderate due to high base effect,” he said.
Sales are expected to surpass supply or maintain equilibrium, he said, adding that prices might rise 8-10% in 2024 across major markets. Big branded developers, having a good track record of executing projects, reported sales of entire inventories in their project within a few days, as potential homebuyers and investors queued up to book flats in large numbers, outstripping supply.
DLF, the country’s largest real estate firm, announced in March sales of 1,137 luxury apartments, priced ₹7 crore and above in its housing project in Gurugram for over ₹8,000 crore within 3 days.
DLF, Prestige Estates, Macrotech Developers and Godrej Properties all reported sales bookings between ₹12,000 crore and ₹15,000 crore during the last fiscal year.
Consolidation gains
The consolidation in the housing market, in terms of both supply and demand, gained further momentum towards branded and trusted developers, prompting them to aggressively expand land bank for future development.
Among other segments, the demand for office space is estimated to remain flat this year at 37-39 million square feet across seven major cities. There were apprehensions that the leasing or absorption of office space would decline this year because of geopolitical concerns and global economic slowdown.
The flexible space segment expanded portfolio in a big way to meet demand from corporates who have started adopting managed workspace in lieu of conventional office to save cost and also get rid of facility management.
Leasing of retail space in shopping malls and major high-street locations also increased as retail consumption surged.
The year also saw India’s first retail assets-backed REIT — Nexus Select Trust — sponsored by global investment firm Blackstone, which also made a complete exit from the country’s first REIT — Embassy Office Parks — by selling 23.5% stake for ₹7,100 crore this month in open market transactions.
Builders also diversified portfolio to develop warehousing and data centre projects.
If the growth continues, the size of the Indian realty market may touch $5.8 trillion by 2047 from $477 billion last year, as per NAREDCO-Knight Frank.