2022 was an optimistic and positive year for the real estate industry in India, in spite of the COVID-19 pandemic and other hurdles. 2023 should maintain the optimism in the market according to experts. The market will be more towards buyers in 2023, and hence there will be a need for statistics and strategic market research with regard to demand throughout diverse real estate asset classes. This will help in assessments, pricing, and demand and supply maintenance according to experts.
The National Sales Head, Square Yards, Rahul Purohit, feels that 2023 may be a landmark or defining year for the real estate sector, since the residential real estate market is already witnessing a revival due to high demand. This has come about due to several factors like Government support, better economic conditions, and a major desire for financial security and wellness amongst buyers according to him. He also highlights all-time high sentiments of consumers with more young professionals and millennials choosing home ownership over rentals. He also feels that this trend should be welcomed by developers despite home prices increasing by approximately 5-8% throughout India’s leading 8 cities in the period between January and September.
Other experts feel that the present traction in sales should continue well into Q1 2023 and beyond. Yet, things will also depend on the movements of interest rates throughout 2023. The repo rates have been increased by close to 225 basis points by the RBI in 2022. The impact has not been felt yet although it may affect sales if there are further hikes according to them. New launches should be controlled throughout leading cities in 2023 with developers adopting a cautious approach. Some experts also feel that the office segment should witness steady growth in 2023 with growth in flexi spaces as well. BFSI and other categories should do well, leading to steady growth. Another new REIT is anticipated in 2023 which should draw more investors, while PE investments could also witness growth in the New Year, with several new sectors like IT, life sciences, and data centres doing well.
Experts also anticipate stronger demand from NRIs throughout several categories, including the premium, mid-range, and luxury home segments. There will also be growth in residential leasing in the future along with higher rental prices in prime zones with absorption of several empty units according to them. Grade A spaces should have steady demand with lower vacancy rates, though Grade B spaces may have a few hurdles along the way. Experts anticipate strong rental growth in Pune, Delhi-NCR, and Mumbai, while Hyderabad has huge incoming supply over the next few years and pricing could be a challenge. Co-working spaces will also keep doing better while more companies will depend on flexi options in the New Year, particularly across Tier-2 and Tier-3 cities. E-commerce players are expected to keep increasing storage and enabling growth in the warehouse sector as well.
