Indian Residential Real Estate: A Strong and Appreciating Market
Everyone knows the value of a planned and diversified portfolio. While investing can greatly facilitate ensuring financial security, it is critical to possess a portfolio that is created to secure oneself against volatile market forces. When making investment choices, therefore, it is critical to recognise that while investment instruments like stocks, bonds, crypto currencies, etc. might promise high and quick returns, they are vulnerable to macroeconomic factors. Conversely, real estate offers investors a dependable and resilient asset category.
It is no wonder then that real estate accounts for a lion’s share of many Indian investors’ portfolios. A recent study corroborates this in its finding that in a typical Indian household, over 77 percent of total assets are in real estate. In the real estate market, residential real estate has always held sway for the Indian populace. Investing in residential real estate is not just a savvy investment undertaking for Indian households but also a dream come true for many, possessing deep cultural and emotional significance.
Indeed, in recent years, the Indian residential real estate market has surpassed many records, with the residential real estate market in India being one of the top 10 appreciating housing markets in the world. While many factors have contributed to this development, we cannot deny the role India’s triumphant economy, the government’s introduction of a liberal and transparent investment policy, rising per capita income, and urbanisation have played. Some recent trends that have been observed in the residential real estate sector in India are:
Rise in the Number of Residential Units Sold
Bangalore in particular has been showcasing a particularly strong demand for and sale of residential units. This is due to a number of factors. For one, the city is home to the IT revolution in India, housing some of the biggest names in the IT industry. Not only this, but the state government has made incredible strides in improving the social and transit infrastructure in the city. From expanding metro connectivity to improve intercity commutes to the development of many Special Economic Zones, the economic landscape of the city has never been stronger. It is not surprising then that in the report mentioned above, the city came in at the penultimate spot, accounting for 22.9 percent of total units sold.
Bengaluru Tops the Chart in Residential Unit Sales
Bangalore in particular has been showcasing a particularly strong demand and sale of residential units. This is due to a number of factors. For one, the city is home to the IT revolution in India, housing some of the biggest names in the IT industry. Not only this, the state government has made some incredible strides in improving the social and transit infrastructure in the city. From expanding metro connectivity to improve intercity commute to development of many Special Economic Zones, the economic landscape of the city has never been stronger. It is not surprising then that in the report mentioned above the city came in at the penultimate spot, accounting for 22.9 percent of total units sold.
The Premium Sector Takes the Lead
Another trend that has been noticed this year, particularly in Q3, was the emergence of the premium residential sector as the leading residential property sold. During this period, properties priced above ₹ 1.5 crore contributed 24.3 percent to the quarterly sales, the highest throughout the year. Homeowners today, especially in leading metropolitan cities like Gurgaon, Bangalore, Lucknow, and Pune, are becoming increasingly inclined towards larger residential properties.
This emerging disposition can be credited to many factors. The relegation of the population to their homes during the pandemic and shift to work-from-home mode, for instance, has often been considered the catalyst of this shift. The yearnings of the thriving working population, particularly millennials, who make up the largest share of homeowners today, to own homes reflective of their rising status in the social hierarchy is another major contributor to the popularity of premium and luxury homes. These homes are often designed with the highest quality furnishings, set in prime locations, and embellished with lavish amenities.
Increasing Prices in the Housing Market
Due to the burgeoning demand in the residential sector, prices will also appreciate significantly in 2023. While Bangalore witnessed 14.8 percent Y-o-Y appreciation, the highest in the country, Delhi NCR also saw an appreciation of 8.5 percent Y-o-Y prices.
To sum it up..
In light of these trends, it is expected that the increase in demand and sale of residential properties is likely to drive developers across the country to launch new projects. This momentum of new launches would be noticeable preeminently in peripheral micromarkets, which are fast emerging as the growth corridors of the nation. The residential real estate market is therefore expected to remain lucrative next year, with special interest from mid- and premium-tier buyers.
