The interplay between residential and commercial segments, coupled with the rise of Tier 2 cities, has set the stage for a promising outlook in 2024, marked by continued growth and innovation in the industry.
In 2023, the real estate sector witnessed dynamic shifts with distinct performances in the residential and commercial segments. Residential markets across cities experienced robust growth, driven by the increased demand and new supply additions.
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The growth trend was backed by flourishing economic conditions, high-disposable incomes, and a surge in NRI investment strengthening market sentiments. Industry data indicates a notable uptick in home sales, with a steady rise in property values across various metro cities.
Santosh Agarwal, CFO and Executive Director, Alphacorp, says “Government policy reforms and shifts in customer preferences, particularly the growing demand for housing, instilled confidence among investors in the real estate sector in 2023. With positive market sentiments, 2024 appears even more promising. The diverse options in residential and commercial properties, coupled with new housing projects in NCR, are poised to attract young and first-time homebuyers.”
Interestingly, tier II cities have emerged as new shining realty hotspots and gathered significant momentum. Fueled by rapid urbanization, infrastructure upgradation, and rise in aspirational living class, tier 2 markets have significantly contributed to the growth story of the real estate sector in 2023.
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Parvinder Singh, CEO, Trident Realty, says, “The focus has shifted towards luxury housing, independent floors, plotted development, and the growth of tier 2 cities, which have redefined the optics of the sector, leading to a robust year ahead. Homebuyers now prefer investing in well-planned tier 2 cities, leading to a healthy demand for premium and luxury housing in new markets. Amongst tier 2 cities, Tri-city (Panchkula) is immensely promising in the forthcoming years due to its strategic location, connectivity, quality of life, and economic opportunities. The shift towards tier 2 cities is not only spurred by aspirational living but also infra upgradation, seamless connectivity, and supply of luxury projects catering to the demand of homebuyers. The ascent of tier 2 cities and luxury housing are not just trends but fundamental swings that will navigate the sector towards new horizons.”
Agarwal added, “Premium projects with top-notch construction and modern lifestyle amenities are anticipated to drive demand in tier II cities such as Karnal, Meerut, and Amritsar.”
The outlook for the real estate sector remains optimistic in 2024. Anticipated economic growth and continued government initiatives and infrastructure development are expected to help the real estate sector maintain positive growth momentum.
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Adil Altaf, Director, Sales & CRM, Whiteland Corporation, says, “The year 2023 has witnessed a significant surge in demand for luxury residences. The completion of the long-awaited Dwarka Expressway has played a pivotal role in reshaping the real estate landscape. The impact of the Dwarka Expressway completion goes beyond mere connectivity; it has become a catalyst for the proliferation of luxury housing demand. Properties in and around the Dwarka Expressway corridor have experienced substantial appreciation in demand as well as value, reinforcing the notion that location remains a critical factor in real estate dynamics.”
In the commercial segment, the sector witnessed an upswing in investor activity across office space and retail space segments.
Abhishek Trehan, Executive Director, Trehan Iris, says, “Investors and buyers showed a lot of confidence, and this has resulted in a sustained growth momentum throughout the year. Industry reports indicate that the top six cities have recorded an all-time high office demand, with a total of 38 million square feet of office space absorbed in the first three quarters of 2023. In addition, the office space rental rate has grown by 17 percent annually in Q3 2023. Delhi-NCR is ranked as the sixth most expensive office space rental market in the Asia Pacific region, indicating the confidence of occupiers in India’s economic stability despite global uncertainties.”
The retail space segment has also witnessed significant growth in 2023, with a 46 percent increase in retail leasing across the top 8 cities compared to the previous year. The retail segment growth is attributed to the sector’s resilience, investors’ confidence, brand expansion, new brand entry, and increased appetite of shoppers.
Abhishek adds, “Retail space is expected to experience even more growth in the coming years, as developers are focusing on expanding their business portfolio due to strong demand.”
Aman Sharma, Founder and Managing Director, Aarize Group, echoes similar views, “This year’s increased investor and developer sentiment has made the commercial and retail real estate categories more vibrant. A greater emphasis on real estate investment trusts (REITs), which give developers and funders better visibility into cash flow, is a reflection of the growth.”
Furthermore, a joint report by the National Real Estate Development Council (NAREDCO) and Knight Frank suggests that India’s real estate industry could reach a substantial value of USD 5.8 trillion by 2047. This significant expansion is expected to be a key driver of the Indian economy, accommodating the growing needs of various asset classes, including residential, commercial, and industrial land developments. The interplay between residential and commercial segments, coupled with the rise of Tier 2 cities, has set the stage for a promising outlook in 2024, marked by continued growth and innovation in the industry.
