Notably, the year 2022 was about resiliency, rebounding, and rallying. The Indian housing sector thrived withstanding all the polycrisis headwinds and inflationary perils. Today, the real estate sector is at the confluence of growing real demand for homes, supply side shocks, increased cost of borrowings and subsequently the cost of development due to supply chain glitch. Revival of fatigue economic growth is a piece of work to be done in the ensuing year 2023. The diminishing pandemic tailwinds will enable an economic reset. This conducive environment shall foster the real estate sector to mutate into a $1trillion market by 2030 at a faster pace.
The outlook of India’s real estate sector undoubtedly remains sanguine amidst short-term risk contamination. The housing sector is about the long-term view given the nature of the asset. Currently, the industry is well lubricated with improving private capex index, foraying of branded players into the new micro markets, developers assessing new financial models to diversify into the new asset classes, regaining of investor’s interest in housing as a safe bet asset, strong emergence of millennia’s as the first-time homebuyers and revival of luxury housing
The outperformance of the Indian property market is accredited to nudging factors like conducive interest rate regime, rise in consumer’s purchasing power, improved home affordability index, bolstered sentiment of home ownership, and increased share of bank credit in retail home loan segment. The increase in property prices and rentals validates the upward growth trajectory in the housing segment. It is anticipated that tapering of monetary tightening in FY 23 with corroborated fiscal intervention will lead to a balanced economic outlook.
Today, balance sheets are healthier as companies stormed to deleverage and equate equity-debt ratio in the wake of market consolidation. Developers are evaluating new development models for swift turnaround of the project that enables safe exit. Sustained growth rate can be achieved by being prudent of not being ambushed by overhang of unsold inventory.
Housing demand has accrued in metropolitan regions and tier cities due to job opportunities, mushrooming of business districts, and well-laid infrastructure development. The revival in rural consumption is powering housing demand. The Government’ impetus to housing under the PMAY scheme and affordable rental housing is helping to achieve the target of housing for all. The fast-track of slum rehabilitation and redevelopment projects will grant fresh lease to the grappling real estate growth in urban cosmopolis.
Covid pandemic has deeply altered the customer’s behavior and preferences. The discerning homebuyers are now skewed towards a transformative lifestyle wanting a better integration of space and service management. The new projects are well-curated by factoring in revamped customer demand to experience a holistic living at an affordable price point. The demand for luxury homes will flourish as HNIs dive in to upgrade their lifestyle quotient with enhanced amenities, privacy, and comforts. The NRI home buying will continue to catapult accrued benefit of currency depreciation and conducive market dynamics amidst geo-political uncertainty.
The alarming climate crisis has set conscious consumerism strategy in motion. The change in building code, eco-friendly materials, waste recycling and energy efficiency transition is imperative to accord with the ESG compliance and ratings. The investors and consumers are cognizant of investing in sustainable assets to gauge better yields.
Industry pegs hope on tax harmonization for homebuyers, infrastructure status to real estate sector for cheap long-term funding and boost rental housing in an upcoming union budget FY 23. The course corrective measures like improved governance, streamlining of regulatory compliances, and periodic policy restructuring will ensure cost effective and timely development in the real estate sector. Integration of innovative technology, digitalization and automation are new growth cogwheels for fostering unrivaled customer experience. The constant up skilling of the workforce will equip the real estate industry with the best professional.
India is on the cusp of a revolutionary growth cycle inclusive of advanced employment and investment opportunities. Globally, the performance index of the real estate sector signifies an economic growth denominator. Hence, the compounded growth rate of the real estate sector will script the ‘Rise of Atmanirbhar Bharat’ as an economic superpower.
Disclaimer
Views expressed above are the author’s own.
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