Post COVID, India’s real estate sector has performed exceptionally well. With the increasing project developments and sales response, the Indian Real Estate sector is all set to contribute 13% of the GDP to the economy. Especially the commercial sector has remained immune to the dynamic market of India with the uptick in office leasing and NRI investments. It is estimated that India’s real estate market will grow and reach around Rs. 13,00,000 crores by 2023.
And why not? Throughout 2022, the Real Estate market experienced positive momentum with a structural basis, increased demand, and decreased loan rates. Besides, the housing demand has also increased due to the increasing income levels, expansion of commercial operations, and the improvement of the labour market. The sector is also witnessing a technological revolution. Due to this, tier II and tier III markets are gaining momentum. With such an incredible performance of the sector in 2022, what can we expect from this industry in 2023?
Let’s take a look at the top Real Estate trends that we expected to rule the market in 2023.
Office leasing will continue growing:
Office leasing increased by 66% in India in October this year and will continue increasing in the coming years. IT companies, data centers, and startups are the 3 main segments responsible for an uptick in office leasing. Back-to-office trend has also grown occupancy rates in the commercial sector. Large tech businesses have signed leases with hefty price tags.
E-commerce companies are pouring money into the warehouse and retail sectors. The government is also backing the development of data centers by incentivising their construction. This has made big players establish their presence in India. Due to these factors, office leasing will see incremental growth.
Digital real estate investments will surge:
Digital platforms existed before the epidemic, but during and after the outbreak, the need for these platforms increased across all industries. Some individuals even booked their properties online. In addition to the home tour, other portions of the home-buying process are becoming digital.
Furthermore, it is now possible to arrange a home loan online. Property purchases and sales will be based on this component. Online real estate buying and selling will increase multiple folds with time and technological advancements.
The emergence of REITs and real estate funds has further inclined people towards online investments. Additionally, online real estate investments ensures transparency and saves time and energy throughout the investment process; hence, most of the transactions will be done online.
Increase in property prices:
As there is an influx in demand and a cut in the home loan rates, property prices will increase. Major metropolitan cities in India are undergoing infrastructural advancements, which will ultimately improve connectivity. For example, due to the construction of Noida International Airport and the Metro line near Yamuna Expressway, there is an upsurge of investments in that region. This is because people expect huge capital appreciation in the future.
The luxury market will continue to boom:
The luxury segment has been the growth driver for real estate in 2022, and the trend will continue in 2023. There will be an increased demand for more extensive, high-end properties priced at Rs 2.5 crore and above. The growing trend of work from home and hybrid working models is further fueling the demand in this segment.
The desire to own:
Post-pandemic, people have learned the importance of owning an asset to deal with unpredictable financial crises. Also, due to the RBI repo rate hike, people expect an ever-increase in interest rates. As a result, they are planning to buy properties at existing loan rates before loan rates hike any further. Looking at the current economic scenario where the rupee is depreciating against the dollar, there might be a surge in the NRI investments for the first half of 2023.
Finally, real estate remains a viable alternative due to the fragility of other financial assets. In FY23, real estate will be an intriguing investment opportunity for investors with a long-term horizon.
