Driven by policy reforms, positive consumer sentiment, rising disposable income and growing demand for bigger homes, the real estate sector in India has experienced remarkable growth in 2023, surpassing the growth rates of all previous years and breaking all records.
According to an Anarock report, for instance, housing sales in India’s top 7 cities – including MMR, Pune, Hyderabad and NCR — have created a new peak in 2023 as close to 4,76,530 housing units were sold in 2023 as against 3,64,870 units in the previous year – recording an yearly growth of 31%. Similarly, new launches across the top 7 cities witnessed a 25% annual rise – from close to 3,57,640 units in 2022 to about 4,45,770 units in 2023.
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Amrita Gupta, Director of Manglam Group and Founder President of CREDAI Rajasthan Women’s Wing, says, “The year will be remembered for the positive consumer sentiment and government support with stable interest rates that further pushed growth in the Indian real estate industry. Consumers are opting for luxurious and modern spaces beyond the metros which pushed developers to respond with offerings that meet these expectations. The strategic expansion into non-metro markets in 2023 showcased the adaptability of the real estate sector, and the coming year promises even more exciting developments. Cities like Jaipur, Udaipur, Chandigarh, Goa, Surat, Vadodara etc are now emerging with their own unique economic identities, presenting a promising prospect for growth and development.”
“During the year 2023, sales across all price brackets, including luxury properties, have surpassed the 2022 numbers overcoming all apprehensions related to the likely adverse impact on demand from the hike in interest rates on home loans and a surge in property prices. Gurugram has been one of the brightest markets in terms of both sales and capital appreciation perspective. Rapid infrastructure development like Central Peripheral Road, Dwarka Expressway have played a huge part in it,” says Mohit Jain, Managing Director, Krisumi Corporation.
The year 2023 also marked a significant milestone for fractional ownership, particularly within the second or holiday home segment.
Shravan Gupta, Founder and CEO of YOURS, a platform for fractional ownership of luxury second homes, says, “Several factors contributed to the heightened demand for fractional ownership of luxury second homes, including the growing acceptance of this concept, rising property prices, and the willingness of affluent families to invest in holiday properties. The recent guidelines issued by SEBI pertaining to fractional ownership and small REITs have further solidified the foundation for growth in this sector in 2024. The market exhibits substantial potential, and the coming years are anticipated to witness exponential growth in the fractional ownership segment. The evolving regulatory landscape and increasing recognition of the advantages associated with fractional ownership are expected to propel this market to new heights, making it a promising avenue for investors as well as end users.”
Luxury Housing Demand In Top Gear
Among the budget categories, luxury housing demand increased exponentially in 2023 as homebuyers continue to look for bigger livable spaces post the pandemic. According to Anarock, the new luxury supply addition across the top 7 cities in 2023 has jumped up five times when compared to 2018.
As per a recent report by CBRE, the premium and luxury housing segment comprising units priced at Rs 2 crore and above maintained strong sales momentum, registering a 70% Y-o-Y increase in the January to September 2023 period and the trend is even more pronounced in certain cities such as Delhi-NCR and Mumbai, where the combined share of these categories in overall sales is around 20%.
Commenting on this trend, Aditya Khushwaha, CEO & Director, Axis Ecorp, says, “In 2023, the Indian real estate sector experienced significant prosperity, particularly in the luxury real estate segment, witnessing a remarkable 97% surge in luxury home sales. This underscores the resilience and allure of the high-end real estate market. As we look forward to 2024, the demand for luxury real estate and holiday homes is expected to sustain its upward trajectory. Homebuyers are increasingly seeking opulence coupled with global design and décor exposure for an exquisite living experience. The discerning tastes of the NRI market further contribute to the positive outlook for the industry.”
The industry, in fact, has witnessed an exceptional year in housing sales during 2023, with the demand for luxury and ultra-luxury segments taking center stage.
“The market has experienced a surge with prospective buyers eagerly seeking high-end flats ranging from Rs 2 crore to Rs 100 crore. This unexpected demand has resulted in builders swiftly selling entire projects, with developers employing innovative strategies to manage the overwhelming expressions of interest compared to the available number of flats. While the luxury market has shone brightly, it is important to acknowledge the continued robust activity in the low-cost and mid-income segments, contributing significantly to the overall housing sales growth. As we look forward to the coming year, we anticipate sustained demand, potential price stabilization, and a promising outlook for the entire spectrum of housing segments,” says Aman Sarin, Director & Chief Executive Officer, Anant Raj Limited.
Outlook for 2024
Industry experts anticipate the homebuying sentiment witnessed in 2023 to persist in 2024 also. According to CBRE, demand for projects in the mid-end and budget/affordable category (Rs 45 lakh to Rs 1 crore) is projected to remain strong, aligning with the trends of the past couple of years. Projects in the premium and luxury segments (Rs 2 – Rs 4 crore and above) are also likely to continue experiencing healthy growth.
Amrita Gupta observes, “As we step into 2024, the sector is set to evolve further with a notable shift towards sustainability. The trend of people choosing sustainable homes speaks volumes about our commitment to a greener and more responsible future. Homebuyers are increasingly embracing ownership, encouraged by a favorable buying environment. While Tier I cities will always have their allure, 2024 is poised to witness a sharper growth curve in Tier II and III cities, as they take the lead in spearheading development and complementing the success of established regions.”
Some developers say expectations for the real estate market in 2024 are cautiously optimistic.
“Continued economic recovery, coupled with government initiatives supporting affordable housing, is anticipated to fuel demand. Developers are likely to focus on sustainable and technologically advanced projects to meet evolving consumer preferences. The commercial real estate sector may witness a resurgence as businesses adapt to hybrid work models, emphasizing the importance of flexible office spaces. Infrastructure developments, including connectivity improvements, are expected to open up new investment avenues. Overall, 2024 holds promise for a more stable and innovation-driven real estate landscape, with a renewed emphasis on resilience and adaptability in the face of ongoing global changes,” informs Wasson of Royal Green Realty.
The holiday home segment is also expected to do well going ahead.
Khushwaha says, “The holiday home segment, in particular, presents exciting opportunities for growth in the coming year and we foresee Goa maintaining its spotlight, driven by its unique blend of scenic beauty, cultural richness, and the growing trend of individuals seeking a second home for leisure and relaxation. With a commitment to cutting-edge amenities, the industry is poised to meet the evolving preferences of clientele. The anticipation of government schemes and announcements providing support adds an optimistic note to the sector. As the industry embraces sustainability, it aligns with the collective vision for a robust and progressive real estate landscape.”
Moreover, amid transforming preferences, affordability will no longer be the sole decisive factor for homebuyers as health & safety, community living, sustainability, and integration of smart home technologies have also started to emerge as key factors in home purchase decisions.