New Delhi [India] December 27 (ANI): Indian real estate sector has come out of the troubled waters facing strong headwinds caused by the COVID-19 pandemic and has done relatively well in 2022 with the growth outlook for the next year projected to be robust.
Housing sales in the country remained upbeat throughout 2022 and the momentum is expected to sustain at least into the initial part of 2023, said industry participants.
Besides the once-in-a-century pandemic, the realty sector also smartly maneuvered the rising input costs and the cost of borrowing, and a likely recession in some advanced economies.
Going ahead, much will depend on repo rate hikes and property price increases.
"While there are concerns regarding the mounting interest rate, the demand for larger, luxurious homes will expand. The increasing popularity of WFH and hybrid working models has bolstered demand for holiday homes. We expect these trends to reign in 2023," said Aditya Kushwaha, CEO and Director of Axis Ecorp, adding that millennials and first-time buyers will dominate the housing market.
On the rate hike by the RBI, Rohit Gera, Managing Director of Gera Developments, said the rise in interest rates has so far not dampened sentiment and with inflation expected to come under control in the near future, the current interest levels will not "adversely affect" momentum.
According to real estate consultancy firm Anarock, the monetary policy tightening had only a "marginal impact" on the residential real estate segment. It said ready-to-move-in housing will continue to draw most of the demand in 2023.
The RBI, in its fight against rising inflation, hiked the key policy rate by 225 basis points since May to 6.25 per cent to cool off domestic retail inflation that had stayed above the RBI's upper tolerance limit for over three quarters. Raising interest rates typically cools the demand in the economy, thereby putting a brake on inflation.
"While more affordable housing buyers stepped back from purchase decisions, mid-income and luxury homes sales were not markedly affected," said Anuj Puri, Chairman, Anarock Group, with a rider that there is a tolerance limit even for the upbeat sentiment.
"Reduced flows of IT/ITeS work outsourced to India and further layoffs will leave their mark on residential absorption here," Puri added.On the commercial real estate segment, the firm noted the sector hangs in a fine balance in 2023.
A global recession may have direct and considerable repercussions on the Indian commercial office market as it depends heavily on expansion by global corporates.
Shiv Parekh, Founder of hBits, which is into the fractional ownership segment, said premium office spaces have attracted investors in 2022 due to a sharp uptick in demand by IT companies, software, and Banking, Financial Services and Insurance (BFSI) firms.
"Moreover, the growth of co-working spaces, reverse migration back to cities, and MNCs making India their new APAC (Asia-Pacific) bases have contributed significantly to the numbers in 2022. The year witnessed commercial real estate spread its wings as sectors like retail, hospitality, warehousing, and data centres were spurred on by soaring demand and investments," Parekh said.
After over two years of working from home, the trend of working from offices too is expected to pick up further in 2023.
Further, according to Anand Naiknavare, Head Business Process at Naiknavare developers, post-pandemic pent-up demand across India has ensured that the sector experienced consistent growth.
"The year 2022 has been a smooth sail for the real estate sector and the revamped customer response helped the sector to recover faster. Sales have been good -- in all residential and commercial as well," Naiknavare said.
Importantly, the warehousing sector is another area where there would be much traction, led by the central government's Production-Linked Incentive and 'China plus one' strategy by global manufacturers.
"The government's PLI scheme and the China plus one strategy is also going to see a big thrust in manufacturing of smartphones, API (active pharmaceutical ingredient) related products and other specific industries. These will enhance the demand of upgraded warehouses in locations around these facilities," said Gagan Randev, Executive Director and India Sotheby's International Realty.
As part of its Atmanirbhar plan, the Government launched Production Linked Incentive (PLI) schemes in varied sectors to make Indian manufacturers globally competitive, attract investments, enhance exports, integrate India into the global supply chain and reduce dependency on imports.
The coworking realty segment is also in demand as the future of work culture is changing rapidly.
"Flexible spaces are becoming mainstream now and hence coworking companies have seen a massive spike in the number of enquiries this year from across the clientele spectrum - large enterprises, MNCs, corporates, unicorns, start-ups and individuals amongst others," said Manas Mehrotra, Founder, 315Work Avenue -- a leading new-age co-working space provider.Mehrotra added that co-working culture will drive the future of the corporate realm and is an idea that is here to stay.
Pradeep Aggarwal, Founder and Chairman of Signature Global, said, the government should announce some incentives for home buyers in the coming budget.
"To sustain the demand, which is also essential to support the economy, the government should announce home buyers friendly tax sops in the upcoming budget. Respective state governments should also think of waivers in stamp duty and registration fees, as announced earlier by few states, to keep the demand going," he said. (ANI)
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