In 2023, the residential real estate market sees its best performance in almost a decade.

Positive momentum in the housing industry is predicted to last until 2024

Christmas is rapidly approaching. However, with residential real estate seeing such robust growth through 2023, the festivities got underway early.  Following COVID-19, more people decided to move into larger homes or into housing complexes, which increased demand for housing. Demand remained unaffected even by rising interest rates in 2022?2023. According to a number of forecasts, 2023 will probably be the strongest year for launches and home sales in over ten years. 

196,227 residential units were sold in the top seven Indian cities between January and September 2023, according to real estate consultants JLL India. This represents 91% of all homes sold in 2022. 223,905 units were launched within the same time period, an increase of about 22% from the previous year. Plotted developments, row houses, and villas are not included in the data.

JLL currently projects that sales will exceed 260,000 units for the entire year and launch to reach 280,000, the highest level since 2008. 

"The overall sentiment in the domestic housing market remains positive, with homebuyers maintaining an upbeat attitude towards purchasing homes," stated Samantak Das, chief economist and head of research, India, JLL, "despite the increase in home loan interest rates and rising prices."

According to property expert Anarock, between January and September 2023, properties valued at Rs 3.49 lakh crore were sold among the top seven cities. This represents a 7% increase in sales value over the entire 2022 calendar year.

According to Anarock, if current trends continue, another Rs 1 lakh crore worth of homes would be sold in the October?December quarter, bringing the total sales value of homes to above Rs 4.5 lakh crore.

"Demand began with COVID-19. People began to recognise how important it was to have more space and the benefits of living in huge gated communities. Many made the decision to upgrade as well. Additionally, it presented a fantastic opportunity for luxury developers in all locations, according to Ashish Dhami, executive vice president of sales and marketing at K. Raheja Corp Homes in Mumbai.

The Mumbai metropolitan area had the greatest overall sales value at 1.64 lakh crore, followed by the National Capital region at roughly Rs 50,188 crore. With Rs 9,025 crore in sales, Kolkata had the lowest value.

According to Dhami of K. Raheja, during the previous 12 to 18 months, rentals in certain Mumbai micromarkets have increased by 30 to 40%.

"Therefore, many people are choosing to buying homes over renting," he stated. 

According to Prashant Rao, managing director of Poulomi Estates, government measures such as infrastructure projects were crucial in stimulating demand even in places like Hyderabad. Notably, apartments with noticeably greater sizes became more popular.

According to Dhami of K. Raheja Corp, 2023 will be a good year for luxury real estate. This year, a number of luxury properties were sold in big marketplaces such as Mumbai and MMR. According to CBRE, sales of luxury properties costing more than Rs 4 crore increased by 75% year on year in the first nine months of 2023.  

It is not only about luxury homes. With the advancement of technology, consumers are now wanting smart homes, and developers have been fast to adopt.

"Consumers are increasingly seeking residences that integrate intelligent systems for seamless living, as they are no longer satisfied with mere extravagance." "The rise of smart homes, outfitted with cutting-edge automation and connectivity features, has become a defining trend in the real estate market," said Pritam Chivukula, vice-president of Pritam Chivukula Realty.

Since boosting the repo rate from 4% to 6.50% in the fiscal year 2022-23, the Reserve Bank has left the benchmark rate at which it loans to commercial banks steady for five straight periods. Rate stability aided in boosting sentiment. With inflation forecast to fall in 2024, central banks around the world, including the RBI, are expected to lower interest rates. This could add to the momentum in the housing market. 

Not only are apartments in high demand. According to Badal Yagnik, CEO of Colliers India, demand for second homes, vacation houses, and plotted developments is expected to remain strong in 2024.

Given the anticipated momentum in the high-end category, companies with competence in hotels and luxury are projected to expand their presence in the premium residential market of tier I cities. 

Most major Indian cities are undertaking extensive infrastructure upgrades, including new airports, metro rail lines, and arterial roadways. He noted that the infrastructure upgrade will operate as a spur for residential activity in the influence zones.

According to ICRA, the area sold in India's top seven cities will increase by 13-15 percent in the current fiscal year ending March 2024 and by 10-11 percent in 2024-25.

"The collections of ICRA's sample set companies are expected to increase by 19-21% in both FY2024 and FY2025, supported by an expected increase in unit sales, hike in average selling prices, and a ramp-up in project execution, resulting in an improvement in cash flow from operations," said Anupama Reddy, co-group head and vice-president - corporate ratings, ICRA.

According to Dhaval Ajmera, director of Ajmera Realty and Infra India, the rising interest in the Indian real estate market by non-resident Indian (NRI) consumers and investors has also contributed to increased demand in the housing sector.