Real Estate Business
Housing Markets to See Novel Launches in 2023
As housing sales soared in 2022, their positive trend is projected to continue for the first half of 2023. That said, later quarter projections indicate that a downturn may be on the horizon.
“The year 2023 will continue to witness controlled new launches in most of the top cities. The launch trend in 2022 was calculated caution, with developers refraining from putting more inventory on the market than it could reasonably absorb – especially in already abundantly supplied markets,” Anarock Group said.
Anarock’s recent Consumer Sentiment Survey has revealed that a rise in home loan interest rates to over 9.5% could have serious consequences, causing a “considerable contraction in housing demand.”
“Much will depend on forces other than the desire for homeownership, such as additional repo rate hikes and property price increases,” Anuj Puri, chairman of Anarock Group, said.
“2022 saw the repo rate go up by almost 225 basis points (bps), and home loan interest rates lost no time in going up concurrently.”
The Pradhan Mantri Awas Yojna is helping to fuel growth in the housing sector by making a whopping Rs 48,000 crore available for finishing construction on 80 lakh residences before 2023.
After the pandemic, state governments have outlined ambitious plans to revive economic activity and restore consumer confidence. Many of these initiatives are designed to build a stronger foundation for long-term growth in their respective communities.
The SWAMIH initiative provides financial backing for stalled affordable housing projects and is expected to inspire further expansion of the affordable housing segment in years to come.
“Affordable housing finance will grow the fastest, with mortgage penetration expected to double to 8-10 per cent over the next few years,” Pradeep Aggarwal, founder and chairman Signature Global (India) Ltd., stated.
Meanwhile, Delhi NCR’s real estate market has seen a remarkable turnaround from its previously oversupplied state. By restricting new supply and reducing unsold inventory, the area is now witnessing substantial growth in housing demand.
With 2022 being an example of the benefits that come with a cautious approach, 2023 looks to reap similar rewards.
If current trends continue, the US is projected to experience an economic downturn by 2023. This could have rippling effects in India, resulting in a decline in housing demand.
India’s IT/ITeS industry is facing a challenging time, causing reduced outsourcing and increased layoffs, which will undeniably impact residential absorption.
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Technology professionals are having a significant impact on the real estate market here, and with higher interest rates from the federal government, Indian stock markets feel their presence.
With fewer stock earnings coming to the fore, people are now more judicious when making discretionary purchases and taking on long-term financial responsibilities.
This is particularly visible in the housing sector, which requires substantial financing; mortgages play a crucial role in keeping these industries afloat.
With potential uncertainty looming, developers are exercising caution in releasing new supplies. Instead, they’re taking a hands-on approach to ensure clarity is at the forefront as they move forward.
2023 is likely to remain a buyer’s market, with ready-to-move housing drawing the strongest demand. Homebuyers can expect more of their favorite projects from top developers and listed players in new launches this year.
Vikas Chaturvedi, leader of Xanadu Group – a realty tech business accelerator firm – is passionate about creating more innovative solutions that capture the attention and fascinate property seekers.
He believes it’s essential for the industry to stay ahead in these changing times.
“We believe that the current upward trend will continue in FY 2023, too,” he said.
Indian Housing Market
Private equity investment in real estate took a significant dip this year, with investors becoming wary of the current geopolitical and inflationary climate.
According to Knight Frank India, such investments fell by 17%, amounting to USD 5.13 billion – marking a drop from previous year’s figures.
Private equity investment saw a decrease in residential, office and retail real estate during 2022. However, an upward trend was seen for warehousing properties, indicating that this could be a promising area to look into for future investments.
Investment in warehousing saw a massive 45% surge this year, with PE funds pouring over $1.9 billion – an increase of almost $600 million from last year.
“The investment climate in India moderated in 2022 as investors grew more cautious in response to escalating international tensions and concerns about rising inflation and interest rates,” Knight Frank India Chairman and Managing Director Shishir Baijal stated.
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Despite some challenges, the Indian real estate market is a tempting prospect for investors both at home and abroad. With great potential to capitalize on new growth opportunities, it’s no wonder many are eager to invest in this robust sector.
This year, office space investments topped the charts as the most popular investment category with a record-breaking inflow of USD 2.33 billion, according to Baijal.
“The warehousing segment continued to observe a rise in interest amongst PE investors supported by the strong demand from manufacturing, e-commerce, and third-party logistics occupiers,” he stated.
With the upcoming year just around the corner, experts believe that inflation will likely slow down, and central banks will take a more gradual approach regarding rate hikes.
“With investors paying attention to the economy, governmental and regulatory framework, business results, and valuations, investments in India are expected to improve,” Baijal added.
From 2011 to 2022, the Indian real estate sector has been awash with Private Equity investment – 659 deals worth a massive $54.8 billion have been made.