Indian real estate sector poised to grow
In 2024, India’s real estate industry is expected to continue growing, but at a slower rate than the previous year. While in the year 2024, the real estate sector has demonstrated consistent growth, significant patterns lead to further increases in property prices, which are expected to climb by 10-15% owing to high demand and rising construction costs, according to market estimates. Affordable housing remains a critical driver, aided by government efforts like as the Pradhan Mantri Awas Yojana, which seeks to provide homes for everyone by 2024. Not only major cities such as Mumbai, Delhi, Bengaluru, and Hyderabad are witnessing high demand, but smaller towns like Ahmedabad, Chandigarh, and Lucknow are also gaining popularity due to improved infrastructure and less congestion.
While the residential real estate market is seeing substantial growth, notably in the affordable and premium segments. The need for affordable housing is being driven by a growing desire for homeownership among first-time purchasers, whilst the luxury category is prospering, thanks to high-net-worth people and non-resident Indians. According to Knight Frank's India Luxury Residential Report 2023, the luxury market is predicted to expand by 8-10% in 2024. On the other hand, commercial real estate is seeing new trends, such as the emergence of flexible workplaces, which are expected to account for over 20% of office space demand. Despite global tensions and economic uncertainty, leasing activity continues robust, with cities such as Chennai experiencing a 58% year-on-year rise in office space absorption, placing it among India's top five office real estate markets.
Although real estate developers face a variety of challenges, including growing building prices, regulatory complications, and the need for sustainable practices, interest rate fluctuations and economic uncertainty are additional risk factors. The Reserve Bank of India’s expected interest rate increases in 2024 may result in higher house loan interest rates, making fixed-rate loans more appealing. Real estate opportunities abound, notably in the areas of affordable housing and sustainable development. Government incentives and infrastructure initiatives in smaller communities can drive major growth. The commercial real estate sector's trend towards flexible, sustainable spaces and the continued demand for luxury homes provide profitable opportunities for developers. Overall, India's real estate industry is expected to increase, owing to high homebuying enthusiasm, government backing, and shifting consumer preferences.
Ram Naik,
