5 trends shaping the future of residential real estate in India
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The Indian real estate sector is experiencing a significant evolution, largely driven by the rapid growth of the nation’s middle class. This transformative change, marked by a substantial increase in both the population size and the economy’s growth, has not only drawn the focus of industry experts but has also sparked considerable interest among investors, developers, and potential end users. This remarkable growth is powered by a combination of factors, including urbanisation, rising incomes, and improved access to education.
With new opportunities and trends, the residential market in India stands as a barometer of societal aspirations, economic vigor, and regulatory shifts. India’s residential property market in FY23an all-time high of Rs. 3.47 lakh crores, accounting for a robust 48% year-on-year increase. With a 36% rise of 379,095 units sold; the volume of sales also exhibited an updwardsa growth trajectory.
Every facet of the sector echoes the pulse of a rapidly evolving nation. Here are the key trends that are shaping the residential real estate market in India:
- Rise of Low-Density Housing: There has been a notable surge in demand for low-density housing options such as villas, townhouses, and plotted developments. Low-density housing, like small neighbourhoods or houses with fewer people, uses up fewer resources such as water, air, and electricity. This type of housing encourages sustainable living for the people who live there for a long time. Shaping neighbourhoods with fewer houses and keeping the land largely unchanged helps save resources by reducing the need for additional infrastructure. The virtues of low-density housing have caught the homebuyers’ attention. Prioritising harmony with nature, privacy, and space, people are now gravitating towards low-density housing as a respite from crowded urban centres. Responding to this trend, developers are introducing meticulously planned, low-density projects that emphasize the importance of open spaces, lush greenery, and a sense of exclusivity. This shift underscores a growing appreciation for balanced living environments that seamlessly blend modern amenities with the tranquility of suburban landscapes. As per the annual Luxury Outlook Survey 2023 by India Sotheby’s International Realty, about 33% of HNIs and UHNIs are ready to spend more than Rs 10 crores to buy a property. For instance, Landmark Group sold their plots in _their new low density housing project, Landmark Avana situated in new Gurugram, in record time, especially to a new age group that is seeking more space, and a higher quality of life.
- Technological Integration: The integration of technology is revolutionizing the residential landscape, enhancing convenience, security, and comfort. Smart homes equipped with IoT devices, home automation systems, and AI-powered assistants are becoming the new standard, offering residents a seamless living experience while setting new benchmarks for a futuristic living. The projected revenue in the Smart Home market in India is expected to reach US$6.5bn in 2024.
According to Researchandmarkets, India ranked third in terms of smart homes worldwide in 2020. In addition to this, Statista’s Digital Market Outlook for 2021 forecasts that the number of smart homes in India is expected to surge to 442 million by 2025 - Increased Preference for Homeownership: The onset of the Covid-19 pandemic has instigated a notable transformation in societal perspectives regarding homeownership. Many are now placing a greater emphasis on owning a home rather than opting for rental arrangements. Individuals have come to appreciate the advantages of residing in their own space with dedicated areas for work, study, and recreation. Consequently, there’s a heightened awareness regarding the intrinsic value of possessing a home, which offers a heightened sense of security and stability amidst periods of uncertainty. In FY22, banks in India advanced to an estimated 2 trillion Indian rupees in housing loans which is similar to the pre-Covid housing loan levels. This showed renewed homebuyer sentiment, as an increasing number of Indians were investing in purchasing residential property.
- Luxury housing: Premium and luxury housing have become the focal points of the real estate market. Such exclusive residential projects, boasting top-tier amenities, allure discerning buyers seeking unparalleled living experiences. According to a recent study conducted by India Sotheby’s International Realty, there’s been a notable uptick in affluent individuals intending to invest in luxury properties over the next couple of years. The landscape of luxury real estate has undergone remarkable changes, driven by shifting consumer preferences influenced by changing demographics, increased technological integration, and rising income levels. Millennials are gravitating towards luxury homes due to their rising income, changing urban lifestyle, and growing affluence. Additionally, the potential for a high return on investment and significant rental income further fuels the demand for luxury properties. The sale of luxury homes in India increased by 130% in the first half of 2023 compared to the corresponding period of the previous year. Landmark Group’s new residential project upcoming in Dwarka Expressway promises an ideal residential complex with untold luxury services and modern amenities best suited for the evolving way of living.
- Tier 2 emerges as a strong player: The aftermath of the pandemic prompted many individuals to reevaluate their living spaces and look for secure homes in their hometowns for an increased sense of stability. Consequently, Tier 2 cities have garnered attention as growing real estate hubs. These cities are witnessing a notable surge in investment activity, driving significant changes in their property landscapes. Bolstered by a thriving housing market, Tier 2 cities are experiencing rapid infrastructure expansion, presenting an array of residential and commercial prospects. In addition to this, the government’s push for smart cities is also helping the real-estate market growth. The Government has allowed FDI of up to 100% for townships and settlements development projects.
The real estate growth in tier 2 cities is catching up with that of tier 1 cities. For instance, Ahmedabad’s residential real estate market size of INR 83,390 crores has outshone some of the Tier 1 cities like Kolkata and Chennai with market sizes of INR 38,440 and INR 52,554 crore respectively at the end of fiscal year 2021-22 and this growth has resonated in the Tier II cities as well such as Nashik, Jaipur, Vadodra, Gndhingar etc
Keeping the recent demand for housing, the government has renewed its focus on affordable housing and developers have recalibrated their strategies to tap into this underserved segment. Affordable housing refers to housing that is priced at a level which is affordable to low and middle-income households. The Landmark Group is expected to deliver its affordable housing project, Landmark the Homes in sector 81 by December 2024. To buy affordable housing in India, one can explore government-funded programs designed specifically for low-income groups or home loan options from private lenders/NBFCs. In the Union Budget 2023-24, a commitment of Rs. 79,000 crore (US$ 9.64 billion) for PM Awas Yojana has been announced, which represents a 66% increase compared to the last year.
Government schemes like the Pradhan Mantri Awas Yojana and Rajiv Awas Yojana have incentivised developers to venture into affordable housing projects, fostering inclusivity and accessibility in the real estate market. With a population growing at a rate of 2.1% per year on average and the low purchasing power of a significant portion of our population, meeting the 40 million urban housing demands needs to be addressed.
India’s increasing urban population continues to fuel demand for residential spaces, transforming skylines and cityscapes.
Also read: Opening Achievement: Commercial Projects in Thane Driving the Way
Source - timesofindia.indiatimes.com
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