Charting a Distinct Path: India’s Real Estate Market Outlook for 2023
The residential real estate market in India made remarkable progress in 2022, achieving record-breaking sales growth of 68% year-on-year (YoY). This highlights the industry’s significance as one of India’s fastest-growing sectors. After grappling with two years of challenges due to COVID, Tier 2 and Tier 3 cities emerged as fresh and notable trends in the Indian real estate landscape for 2022. The real estate market continued its upward trajectory, setting unprecedented benchmarks and sustaining the momentum it gained in 2021, even amidst a global economic slowdown.
Real Estate Market Trends in 2022
Hari Movva, Senior Vice President at SILA, emphasized that despite the ongoing economic uncertainties, the real estate sector thrived in 2022. According to industry reports, the top 7 prime residential markets in India witnessed the highest sales in the first half of the financial year 2022-23, surpassing figures from the past decade. This growth can be attributed to increased awareness of homeownership and the government’s favorable affordable housing schemes, which spurred significant development in the affordable housing segment.
As more individuals recognized the long-term benefits of owning a home over renting, sustainable growth occurred in this sector. Factors like improved earning potential, a desire for a higher standard of living, and a growing population of aspirational consumers with evolving lifestyles further contributed to the sector’s substantial growth. The premium housing segment is also expected to experience increased demand in the coming years.
Government reforms related to stamp duty, the introduction of affordable rental housing complexes, and various government-aided schemes are anticipated to boost this asset class, providing relief to those who previously lacked access to such opportunities.
Outlook for the Indian Real Estate Market in 2023
Robin Chhabra, Founder and CEO of Dextrus Workspace, shared his insights on the real estate market in India for 2023. He believes that 2023 holds promise despite potential downward trends in the global economy. Chhabra sees this as an opportunity for the Indian economy to assert itself as a world leader. The real estate sector is expected to continue its path of long-term growth, driven by rising GDP per capita, increased disposable incomes, urbanization trends, and growing global attention on India as the next major economy.
Chhabra predicts that there will be high demand for office and commercial space in Tier 1 and Tier 2 cities in India. This demand is already evident in the rapid growth of the commercial sector in cities like Pune and Hyderabad. The coworking industry, considered a rising star, has adapted effectively to evolving work requirements and is poised to cater to the needs of India’s young and growing workforce. In fact, the co-working sector in India is projected to exceed 50 million square feet by the end of 2023, representing a year-on-year increase of 15%. Additionally, managed office spaces are expected to grow by 10% in 2023.
According to a recent report from JLL, the net absorption of office space in 2022 across the top seven cities in India (Mumbai, Delhi-NCR, Bengaluru, Hyderabad, Chennai, Kolkata, and Pune) totaled 38.25 million square feet, underscoring the continued vitality of the commercial real estate market.