2024: A Promising Year for the Real Estate Market
The confluence of evolving consumer preferences, governmental policies, and dynamic market forces is poised to create a vibrant real estate landscape throughout 2024. The Indian real estate sector has experienced remarkable growth in recent years.
Notably, the first quarter of 2024 eclipsed almost all records set in the previous year. The year 2023 witnessed the announcement of the highest number of new projects in a decade. A recent report indicates that the residential real estate market is anticipating a considerable influx of new launches in 2024, projecting an estimated range of 280,000 to 290,000 units. This surge paves the way for a prosperous year, signaling that the industry is not only expanding but also demonstrating robust potential for sustained growth in the coming years.
Key Drivers Shaping the Market in 2024
India’s real estate industry has long served as a primary engine of economic expansion, significantly contributing to the nation’s GDP. The sector has displayed resilience and adaptability in the face of recent challenges, including the COVID-19 pandemic, regulatory shifts, and liquidity constraints. A gradual market recovery was observed in 2023, propelled by supportive government policies, pent-up demand, and the increasing adoption of digital technologies within the industry. According to Hardeep Singh Puri, former Housing and Urban Affairs Minister, the Indian real estate market is projected to burgeon into a $1 trillion sector by 2030 and contribute roughly 15% of the country’s GDP by 2025.
Beyond meeting domestic requirements, the Indian real estate market is increasingly regarded as a global investment opportunity. Non-Resident Indians (NRIs) are actively participating in the market, driven by a desire to maintain ties with their homeland as well as to invest. Approximately 10% of all market investments during the 2019-2020 fiscal year were attributed to NRIs. This proportion is anticipated to rise from its current level of 15% to 20% by the end of 2025, underscoring the market’s widespread appeal and the confidence vested in it by the NRI community.
The upward trajectory of the Indian real estate industry reflects its inherent resilience rather than mere chance. This sector has maintained a consistent increase in rental yields despite the ongoing devaluation of the Indian rupee and the challenges posed by the global economic landscape. This stability has bolstered the sector’s growth, instilling confidence in its stability and potential for further expansion, which is supported by conducive economic policies and a strong emotional connection to the nation of origin.
Consumer Behavior and Market Dynamics
The Luxurious Living Trend
India’s expanding economy has fueled a desire for more affluent lifestyles among those with greater disposable income. The population is increasingly seeking homes with enhanced amenities such as swimming pools, fitness centers, and landscaped gardens. Affluent individuals are also pursuing larger living spaces, along with HNIs and UHNIs.
Focus on Environmental Considerations
The construction of sustainable structures has witnessed a significant surge in the Indian real estate market over the past two years. The industry is elevating living standards by integrating environmentally friendly building materials, water conservation and management techniques, and energy-efficient building designs. Customers are actively seeking homes that reflect their values and beliefs. Properties incorporating rainwater harvesting systems, renewable energy sources, and energy-efficient appliances are highly sought after by today’s buyers, particularly those belonging to Generation Y.
Sustainable homes often feature naturally occurring light and air, fostering a sense of spaciousness and fresh air. This can enhance moods and reduce stress levels, ultimately boosting productivity, especially for individuals working from home. While green real estate construction may entail slightly higher upfront costs compared to traditional homes, individuals can realize substantial long-term savings on utility bills, making it an attractive investment.
Evolving Housing Preferences
Due to a limited supply of Ready-to-Move-In (RTMI) properties and rising prices in gated communities, buyers are increasingly gravitating toward individual homes, resale properties, and under-construction projects. Resale properties are in high demand as they offer desirable living spaces without the wait or the high costs associated with interior design. Prices are expected to increase significantly for completed or under-construction homes.
Shifts in Investment
Commercial real estate has traditionally been favored for investment due to its higher returns and lower maintenance requirements. However, a notable increase in residential property rental yields over the past two years, coupled with their affordability, has altered the investment landscape. There is a prevailing expectation that residential properties will yield returns more rapidly than their commercial counterparts due to the swift appreciation in prices.
Harnessing Technology
Technology is rapidly transforming the real estate market, making property access and investment easier and more efficient. Access to market data, virtual property tours, and the ability to buy or sell a home with a single click are revolutionizing the home-hunting experience. Individuals can now identify reasonably priced homes near their workplaces and minimize commute times by utilizing metro-based filters on Proptech platforms. The convenience and effectiveness of the real estate process are being enhanced by the gradual development of Internet channels into comprehensive service hubs for all market-related needs.
Modern buyers desire homes that seamlessly integrate technology to improve their quality of life. The demand for smart homes is reshaping the real estate market. Examples include automated lighting and climate control, voice-activated assistants, smart security systems, and elevators featuring predictive maintenance services. The adoption of smart home technology has significantly influenced buyer preferences and purchase decisions by distinguishing properties on the market.
In conclusion, the real estate market has experienced a notable surge in building activity since the onset of COVID-19, providing fresh momentum. Home prices in India are poised to continue rising, ensuring a stable future for the middle-class population aspiring to a luxurious lifestyle. The market is primed for recalibration and stability in real estate prices as construction activity increases and new projects approach completion. The year 2024 presents a wealth of opportunities due to the convergence of market dynamics, government initiatives, and evolving homebuyer preferences.