Why India’s Youth Are Investing in Real Estate: A 2023 Perspective
Did you know that India is home to the world’s youngest population, with an average age of 29 years old? In fact, the country is home to one-fifth of the world’s population, creating a particularly beneficial demographic. As is expected, this has had a significant impact on the country’s economics and growth, with the country being the fifth largest economy in the world as per the International Monetary Fund (IMF).
Millennials, who account for 36 percent of the country’s population, in particular, have had a particularly defining impact on the various sectors in the country. With a spending power of over US $330 billion, this new generation has recently entered the real estate market and will account for 54 percent of homebuyers in 2023.
A recent survey by the global real estate investment firm highlights the positive home-owning sentiments of the younger Indians, with 44 percent keen on buying their first home in the next two years, far higher than the global average. This has undoubtedly led to the preferences of this generation shaping the Indian real estate market, especially in Tier 1 and Tier 2 cities.
In this blog, we endeavor to uncover the reasons why the younger Indian generation is going against the grain by investing in real estate early in life and moving on from other investment avenues.
- The Indian economy has emerged as one of the fastest-growing economies in the world. While the rest of the world is undergoing one of the worst economic toils since the Great Depression, with the remnants of the pandemic and the ongoing Russian-Ukraine war tipping the international economies on a downward spiral, the Indian economy has stood strong. In fact, the country recorded a growth rate of 7.8 percent year-over-Y in the second quarter as opposed to 6.1 percent in the first quarter, putting the country on the path to becoming one of the fastest-growing major economies in the world.
The real estate sector, projected to grow to US$ 9.30 billion by 2040, has contributed significantly to this growth trajectory. The sector is the second-largest employer and is projected to account for 13 percent of the country’s GDP by 2025. In light of these facts, in addition to the growing disposable income of the middle class, it is only natural that investment in the real estate sector is at an all-time high in the country, with it being one of the top 10 appreciating residential markets in the world.
- The Indian government has proactively introduced policies and programmes to encourage investment in real estate. The introduction of the Real Estate Regulatory Authority (RER) has significantly transformed the real estate sector in India. With the introduction of this framework, a veil of transparency and accountability has been imposed on the sale and purchase of all properties, protecting the interests of homebuyers.
Furthermore, the government has launched various affordable housing schemes, such as the Pradhan Mantri Awas Yojana (PMAY), which provides incentives and subsidies to both developers and homebuyers in the affordable housing segment.
Interestingly, a recent industry survey showcased a 60 percent inclination to invest in real estate as opposed to 3 percent in gold. Furthermore, out of those surveyed, a whopping 52 percent of Millennials and 35 percent of Gen X were planning to use their earnings from different avenues to invest in a home. This is a change from the previous generation, who usually invested in investment instruments like chits or stocks at this stage of their lives. The reason behind this shift is multifaceted and can be traced back to the pandemic.
The uncertainty of having a safe and secure living space during the two-year reign of pandemic terror is a feeling that the younger generation is all too familiar with. While the world was dealing with a catastrophe unprecedented in modern times, many people were displaced from their rented houses or simply could not afford to pay it during this time of economic uncertainty. This has instilled a deep desire in the youngsters to become house owners to ensure their safety. As per recent research, housing sales in the top 7 cities in India reached an all-time high with a 36 percent year-over-Y increase in Q2 2023 as compared to 2022.
Another interesting trend that has become increasingly evident in recent times is the popularity of aspirational and luxury properties among the younger generation. As many around the globe were shifted to remote work during the pandemic, the need for larger living spaces with designated work spaces and luxe amenities has become a new desire. Indeed, a recent study states that 48% of homebuyers prefer 3 BHK or larger residential spaces.
According to a survey by the Confederation of Indian Industry, 66% of Millennials invest in home ownership as a source of stable long-term income. As opposed to other investment classes such as stocks, bitcoins, etc. that are vulnerable to market fluctuations, the real estate sector in India has stood the test of time. In this contemporary period of financial uncertainty, real estate properties are a tangible and resilient asset class.
Not only can real estate spaces help build equity over time, but they can also facilitate wealth accumulation as they can be leveraged to invest in other areas. Further, investing in real estate can also lead to a steady source of passive income and consistent cash flow due to rental yields. To put this into perspective, rent in Gurgaon has increased by 28 percent year over year in 2023, encouraging many to invest in the Millennium City.
In another study, Delhi-NCR, particularly, was amongst the top 5 realty investment hotbeds in 2023, with a survey reporting a 9.6 percent Q-o-Q growth as opposed to 4.6 percent across 13 cities surveyed. With high per capita and disposable income, seamless connectivity enabled by a progressive transit network, and a presence of over 250 of Fortune 500 companies, the city is understandably an attractive investment magnet. Let’s explore two of the hottest ultra-luxurious properties in Gurgaon.
DLF Privana : Located in Sector 76, Gurgaon, the 28-acre township of DLF Privana is brought to you by the real estate developer DLF, who has effectively transformed the face of the city in less than two decades. The community comprising 4BHK ultra-luxury properties is located right at the intersection of NH-48 and Dwarka Motorway, granting its residents seamless access to major commercial and business hubs in Delhi, NCR. From beautiful landscaped gardens to amenities like a plush clubhouse to benchmark security provisions and elegant fixtures, the residence is definitely an investment avenue you should look forward to.
Godrej Sector 49 Gurgaon: Newly launched in Gurgaon, Sector 49, Godrej 49 is the epitome of Godrej Properties’ dedication to deliver residential properties unparalleled in quality and innovation. Located in the hotspot investment destination Golf Course Extension Road, the 3 and 4 BHK ultra-luxury residences are built for those who want to live in an exclusive development that spoils its residents with only the best of everything.
In conclusion, the landscape of real estate investment in India is undergoing a profound transformation, driven by the energy and aspirations of its youthful population. As India stands resilient in the face of global economic challenges, the country’s booming real estate sector not only reflects the dreams and priorities of its millennial generation but also serves as a beacon of stability and growth in uncertain times.
