Business magnate Elon Musk and American entrepreneur Robert Kiyosaki, author of Rich Dad Poor Dad — a book that gives insight into different spheres of investment, warned that the real estate market will face a big jolt of impending global meltdown. Their cautioning words can have a ripple effect on the housing sector globally, but the moot point is: Should the Indian real estate market get worried?
Real estate experts are of the firm opinion that the fundamentals of the Indian economy as well as the dynamics of its market will insulate the country’s housing sector from the global economic slowdown. They are of the view that the sentiment of Indian homebuyers has been positive because of a suitable market ecosystem. Also, a pause in RBI’s rising repo rate and dazzling domestic economic outlook will help the housing market sentiment buoyant.
According to a recent report prepared jointly by Credai, Colliers, and Liases Foras, home price in India has increased 8 percent during January – March period of 2023 with Delhi-NCR registering a humongous surge of 16 percent, closely followed by Kolkata and Bengaluru with 15 percent and 14 percent year-on-year increase respectively. The tangible reason behind such a steep surge in home prices is said to be robust housing demand and consistent quality launches by high-end developers.
Real estate boom in small cities
If the cascading effect of the West slipping into recession and subsequently IT/ITeS companies tightening their budgets reach India, the commercial segment could have some bearing. However, the residential real estate ecosystem in India has been robust with astounding sales records in 2022. In the backdrop of Covid catastrophe that brought the world economy to its knees, the year 2022 witnessed a major real estate boom in Tier 2 and Tier 3 cities and continued the growth momentum in hurly-burly of the global slowdown.
Rosy real estate in 2023
The Indian economy is on the cusp of becoming a world leader. Soaring urbanization, larger disposable incomes, and a rise in GDP per capita script a rosy picture for the real estate market in 2023. Despite sluggish trends in the global economy, India’s strong growth potential paves the way for the high demand for offices and commercial space in Tier 1 and Tier 2 cities. Catering to the needs of young growing India, the coworking sector — coworking is a situation that allows several workers from different companies to share an office space– as media report suggests, may cross 50 million sq ft by the end of the year 2023 that would be a year-on-year 15 percent surge.
Strong economic conditions
The real estate market, as experts feel, appears bullish on the future of its economy in 2023. The residential and office market will be spurred by several factors like strong economic conditions, financial stability, GDP growth, healthy supply and demand dynamics, and regulatory framework. The RBI monetary policy, which kept repo rate unchanged, could have far-reaching significance for the home finance and real estate market.
For the real estate sector, the Union Budget 2023-24 is conducive in several ways. Finance Minister Nirmala Sitharaman has underlined “Green Growth” as a priority. Several organizations are efficiently working on the concept of sustainable and green living which implies a brighter future of sustainable infrastructure in the face of climate challenges. An increase in the allocation for the Pradhan Mantri Aawas Yojana (PMAY), earmarking around ₹ 79,000 crore for the flagship scheme, will boost the economy related to the housing sector.
In India, real estate has always gravitated investors to grow their wealth. They find alpha opportunities in the investment in the real estate market. Going by careful calibration of market pulse and carrying due diligence, well-informed investors can potentially maximise their returns from the real estate market in the fiscal of 2023-24.
Ramakant Chaudhary is a senior journalist. He writes on: Politics, Government Policy, Infrastructure, Health and Social Issues. The author is associated with PR Professionals as DGM -Content.