How is the real estate market shaping up in India?

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The real estate market in
India has evolved significantly over the years. From being increasingly
residential-focused to witnessing explosive growth in commercial and retail
sectors, the industry is expanding at a rapid pace. Unsurprisingly, the Indian
real estate market is one of the fastest-growing sectors of the economy.
With the advent of
technology and shifting customer sentiments, the sector has undergone dynamic
changes. While the residential sector has grown from simple housing projects
with basic facilities to homes with ultra-luxurious amenities, the commercial
sector has expanded to include new models such as co-working spaces. These
shifts could be attributed to a multitude of factors. The increasing
transparency in the sector and consolidated efforts of the government have
contributed to the growth trajectory of the industry.
Let’s understand in
detail the key trends shaping the real estate sector below:
- The Increasing Desire For Opulence
The sale of luxury homes
in India increased
by 130% in the first half of 2023 compared
to the corresponding period of the previous year. There's a mounting appetite
for luxury as consumers seek elevated experiences. Homes are no longer just
places to live in but a means to redefine living standards. The statistics for
luxury homes reflect the Indian homebuyers’ inclination towards upgrading their
lifestyle and enhancing their social status. Going by the current trends, the
luxury segment is expected to witness robust growth.
- The Millennial Mindset
Millennials are more
inclined towards creating wealth-generating assets. Some view real estate as a
stable long-term investment whereas some are drawn towards the social status
and a sense of accomplishment that comes with having real estate investments. A
survey by the Confederation of Indian Industry (CII) and real estate firm
Anarock indicates that 52% of millennials
choose real estate as the best asset class. Millennials, thus, have a major
role to play in driving the growth of the real estate sector.
- Booming Commercial market
The value of commercial
real estate is expected to show an annual growth rate (CAGR 2023-2028) of 11.50%,
resulting in a market volume of US$8.36 Trillion by 2028. The recent
developments in the commercial sector have resulted in burgeoning demand.
Developers are integrating offices with residential and recreational facilities to create independent ecosystems
that promote work-life balance for individuals. The incorporation of the latest
technology has led to the development of efficient spaces, attracting demand
from across classes.
- Rise Of Gated Communities
Gated communities and
townships are picking the pace in Indian real estate. According to a Redseer
report, the demand for gated communities will increase by 2.5 X reaching $500 Billion by 2026.
Ease of living is cited as one of the top reasons for the increasing popularity
of townships and gated communities. Health, amenities, private living, security
and lifestyle are the key factors driving individuals towards townships and
gated communities.
- Digital Homebuying and Investments
The ingress of AI and
virtual tools has enabled digital homebuying. Developers have leveraged virtual
walkthroughs, e-launches, and a host of other platforms to increase the reach
of their properties. Individuals from across geographies are now investing in
real estate properties whereas data analytics are enabling access to crucial
insights on buyer sentiments for developers.
Besides the rising
aspirations and disposable incomes of homebuyers, government initiatives have
played a major role in driving the real estate boom. Affordable housing
projects, FDI and interest subsidies for first-time home buyers among others
are a few government policies that have had a positive impact on the real
estate sector. The government has permitted FDI of up to 100% for townships and
settlements development projects. FDI in the sector (including construction
development & activities) was US$ 56.03
Billion from April 2000 to March 2023.
Moving forward, the real estate sector in India is expected to experience a
growth rate (CAGR) of 9.2% during the five years from 2023 to 2028. With an
increasing percentage of individuals viewing real estate as an asset of a
lifetime, the sector is poised to set new benchmarks in the near future.
Article authored by: Team Propfynd
Date: 12th January, 2024