Post-pandemic, there has been a significant increase in demand for housing, with homebuyers showing a renewed interest in real estate. Reports suggest that India's real estate market is expected to exceed Rs.13 lakh crore by 2023, including both residential and commercial properties. This growth is mainly driven by factors like rising population, increased wealth, and rapid urbanization. The commercial sector is also playing a big role in driving the growth of the real estate industry, with factors like the expansion of commercial operations, improvement of the labour market, and rising income levels contributing to the demand for commercial properties.
What will drive the growth of the real estate market in 2023?
Demand for bigger living spaces has increased
The preferences of homebuyers have shifted immensely due to the COVID-19 pandemic, with people now looking for bigger living spaces. In 2023, we can expect this trend to continue. Real estate and residential assets have become very important since the outbreak of the pandemic. The luxury industry is experiencing a surge in demand, reflecting a consumer mindset that values experience over other aspects of life.
Increased interest from NRIs and HNIs
The rise of the dollar against the Indian rupee and attractive investment opportunities have caught the attention of Non-Resident Indians (NRIs) in Indian real estate. Wealthy Indian consumers are interested in investing in luxury properties across the country, especially in their hometowns, to maintain an emotional connection with their home country.
In the future, NRI investments are expected to continue to flow into the market and make up a significant portion of the demand for luxury residential and prime commercial properties, with Bangalore, Hyderabad, and Mumbai being the most popular destinations for investment.
Higher demand for homeownership due to consumer sentiment
The release of pent-up demand, along with the growing interest of millennials in the Indian real estate market, is positively contributing to the sentiment towards homeownership. This trend is expected to strengthen in the coming year, thanks to increasing income levels and the recognition of real estate as a dependable asset class.
High demand for leasing space
The demand for leased spaces is expected to increase, especially from IT and retail companies. Several large tech companies have already made commitments to expensive office leases. The warehousing industry is expected to continue to grow rapidly as e-commerce and third-party logistics companies continue to provide financial support. Also, investments in data centres are expected to increase, contributing to the already surging demand and making commercial properties a strong asset class.
The rise of Prop-tech in real estate
The year 2023 is expected to see an increase in the use of technology in the real estate industry. Proptech will continue to provide customers with a seamless experience when searching for, shortlisting, and finalising their homes. Proptech tools such as 3D tours, project and locality review videos, and comparative tools are becoming popular in the initial stages of the property search process. They are helping customers make informed decisions about shortlisting properties.
Growing demand for smart homes
The demand for IoT-enabled homes is increasing rapidly due to technological advancements and modern lifestyles. Frost and Sullivan predict that by 2025, the value of the Indian IoT market will reach US$9.28 billion as customers invest in connected home solutions for convenience and a hassle-free home experience. Also, the pandemic has accelerated the demand for smart appliances. Thus, smart home technology will continue to disrupt the real estate industry in 2023, which presents an excellent market opportunity for builders, designers, entrepreneurs, and investors.
Smart home technology, such as IoT-enabled kitchen chimneys, ceiling fans, and water purifiers with AI monitoring, will drive efficiency and save energy, attracting conscious customers. Developers who offer houses with pre-fitted smart appliances will successfully cater to the premium segment of customers and enjoy high demand. Touchless interactions and whole-home automation will also play a significant role in providing convenience and comfort to customers, making smart home technology a desirable feature for prospective homebuyers.
Rise of environment-friendly and sustainable real estate developments
In recent years, the demand for green buildings has been rising. Developers and customers are interested in investing in eco-friendly and sustainable real estate developments that reduce carbon emissions, and it is becoming a business-critical requirement. Green buildings can save up to 50% of water and 30% of energy, and in the past decade, the top 6 cities in India have seen a 31% increase in green real estate assets, including Delhi-NCR, Mumbai, Pune, Hyderabad, Bangalore, and Chennai, according to a report by CBRE South Asia in 2022.
Overall, the year 2023 has a promising outlook for real estate, as it remains a resilient as well as aspirational investment that offers both short and long-term gains. 2023 will be an exciting time for this sector, with an expanding economy, increased commercial operations, and rising income!
PropertyAngel is a leading O2O (online-to-offline) second landlord platform. We are a Bangalore-based property management company offering professional property management for individual apartments, houses, and villas. Contact us at (91-80-47095974) or (91-7406484455) if you need guidance on how to invest in the right property in Bangalore.