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Indian market growth: Indian residential market should maintain its growth momentum in 2023, according to experts

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According to experts, the Indian residential market is expected to maintain its growth momentum in 2023 while facing global headwinds and rising interest rates.

Sales momentum is expected to accelerate this year in the mid-priced and affordable sectors, with growth also expected in the high-end segment due to new developments by established developers in prime locations.

“The current real estate cycle has been consumer driven. We are still in a sweet spot when it comes to affordability, despite rational price hikes by developers. The vast majority of our efforts will continue to be focused on Mumbai. , Bangalore, NCR, and Pune as we seek to build our presence in key micro-markets and enter new micro-markets in these target cities,” said Gaurav Pandey, MD and CEO Designate, Godrej Properties.

Despite the gradual increase in house prices and mortgage interest rates in 2022, the residential segment has seen the fastest and most significant recovery.

According to Anarock Research, home sales in the top 7 cities peaked in 2022, surpassing the previous high of 2014. About 3,64,900 units were sold in 2022, compared to 2,36,500 units in 2021, representing a year over- year increase of 54%. In 2014, a total of 3.43 lakh units were sold in the top 7 cities.

“Without the recession, the residential sector could have fared much better. Yet India remains one of the few countries with the strongest GDP growth. The residential sector, despite rising prices, is expected to break through over 3,000,000 units in FY22-23,” said Sanjay Dutt, MD and CEO of Tata Realty & Infrastructure.

According to JLL, in 2023, the residential segment should see well-controlled new launches in most major cities. In 2022, 247,000 new residential units were started, the highest number in over a decade and second only to the previous peak of 281,000 units in 2010. This represents year-over-year growth of 81% compared to the previous year. Ready-to-move residential properties should continue to be in high demand, but there will also be growing demand for new launches. This is largely due to the dominance of large listed developers in the new supply entering the market.

“We expect home buying synergies to remain largely intact for the time being and that the upscale and luxury segments that have seen strong growth since last year will continue to remain largely isolated as demand for spacious homes with more green and open spaces is likely to increase,” said Bhavesh Kothari, founder of Property First, a luxury real estate brokerage firm.

Developers should also focus on plotted developments and freestanding floors due to the faster turnaround and rapid inventory clearance these products allow.

According to Anuj Puri, Chairman of Anarock Group, the current sales momentum in the housing sector is expected to continue in the first quarter of 2023, with peak sales driven by end users.

According to experts, 2023 will also see consolidation at a faster pace in the residential space, with more joint ventures and development management contracts likely to be seen. Large residential real estate agents are expected to see double-digit growth over the next fiscal year, driven by strong sales momentum and buyer preference for larger homes as the hybrid work model continues.

“The trend of market consolidation continues to bode well for the big players with a substantial gain in market share. Developers have maintained a healthy balance sheet by deleveraging and reinventing new business financing models to diversify profitably,” said Niranjan Hiranandani. , MD of Hiranandani Group.

The affordability game that prevailed six months ago has faced some challenges as there has been an increase in residential prices in India’s seven major cities in a range of 4-11% year-on-year .

“Besides being a safe haven in these uncertain times, Indian real estate also offers capital appreciation and rental income. middle-income to high-end and luxury housing,” said Angad Bedi, Managing Director of BCD Group.

Additionally, likely stakeholder actions, such as longer loan terms and attractive pricing offers, will keep buyers’ affordability levels within their comfort zones.

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