Tag Archives: India’s real estate

What factors will dominate India’s real estate market in 2024?

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The interplay of shifting consumer preferences, governmental regulations, and market dynamics will result in an active real estate market in 2024. 

In recent years, there has been notable growth in the Indian real estate sector. Almost all of the records from the previous year were shattered in the first quarter of 2024; the year 2023 saw the most new projects announced in a decade. According to a report, the residential real estate market anticipates a significant influx of new launches in 2024, with an estimated range of 280,000 – 290,000 units. This has paved the way for a successful 2024, demonstrating that the industry is not only expanding but also showing signs of continued expansion in the years to come.

Will 2024 see the market’s drivers?

India’s real estate industry has long been one of the main forces behind economic expansion, contributing significantly to the GDP. The industry has proven resilient and adaptable in the face of challenges in recent years, including COVID-19, regulatory changes, and liquidity crunch. A gradual recovery in the market was observed in 2023, driven by favorable government policies, pent-up demand, and a rise in the industry’s adoption of digital technology. According to former Housing and Urban Affairs Minister Hardeep Singh Puri, the Indian real estate market is projected to grow to a $1 trillion sector by 2030 and contribute roughly 15% of the country’s GDP by 2025.

The Indian real estate market is viewed as a worldwide investment opportunity in addition to meeting local demand. Particularly NRIs are actively involved in the market as a means of maintaining ties to their homeland in addition to acting as investors. About 10% of all market investments as of the 2019-2020 fiscal year were made by non-resident individuals (NRIs). By the end of 2025, this percentage is expected to have increased to 20% from its current level of 15%. This is a blatant sign of the market’s popularity across borders and the confidence the NRI community has placed in it.

The Indian real estate industry’s upward trend is evidence of its resilience rather than the product of chance. This sector has maintained a consistent increase in rental yield despite the ongoing devaluation of the Indian rupee and the difficulties presented by the state of the world economy. This has fueled the sector’s growth, providing confidence in its stability and potential for further expansion, supportive economic policies, and an emotional bond with the nation of origin.

Consumer  Behavior and Market Structure 

The Luxurious Living Trend 

India’s growing economy has made it more desirable for those with more disposable income to live lavish lives. The populace also looks for homes with extra features like swimming pools, fitness centers, and lovely gardens. Upper-middle-class individuals also want larger living spaces with more money, besides HNIs and UHNIs.

Considering the Environment

The building of sustainable structures has seen a significant shift in the Indian real estate market during the past two years. The real estate industry is improving living standards by employing environmentally friendly building materials, water conservation and management techniques, and energy-efficient building designs. Customers are looking for houses that align with their values and views. Homes with rainwater collection systems, renewable energy systems, and energy-efficient appliances are sought after by today’s buyers, especially those belonging to Generation Y.

Naturally occurring light and air are also permitted in sustainable homes, creating an impression of greater room and fresh air. This improves moods and lowers stress levels, which boosts productivity— especially for those who work from home. Although building green real estate costs a little more than building traditional homes, people can save a significant amount of money on their bills over time, making it an excellent investment.

Housing Preferences

Due to a lack of Ready-to-move-In (RTMI) inventory and price increases in gated communities, buyers are gravitating toward individual homes, resale properties, and under-construction projects. Resale properties are in high demand because they offer a good living space without the wait or the high cost of interiors. Price should increase significantly for houses that have been completed or are under construction. 

Investment Shifts 

Commercial real estate has historically been favored for investment because of its higher returns and lower maintenance requirements. On the other hand, a significant increase in residential property rental yield during the past two years, combined with their affordability, has shifted the odds in their favor. There is a general expectation that residential properties will capitalize more quickly than their commercial counterparts due to the quick price rise.

Technology Use 

The real estate market is rapidly changing due to technology, which makes it easier and more efficient for people to access and invest in properties. The ease with which one can now access market data, view properties through virtual tours, and buy or sell a home with a single click is revolutionizing the home-hunting experience. People can find reasonably priced homes outside their offices and reduce their commute time using metro-based filters on Proptech platforms. The convenience and effectiveness of the real estate process are being improved by the gradual transformation of Internet channels into a one-stop shop for all services related to the market.

Modern buyers want a home that easily incorporates technology to improve their quality of life, not just any old house. The demand for smart homes is changing the real estate market. Examples include automated lighting and climate control, voice-activated assistants, smart security systems, and elevators with predictive maintenance services. The use of smart home technology has made a significant impact on buyer preferences and purchase decisions by differentiating properties on the market.

In conclusion, there has been a noticeable uptick in building activity since COVID-19, which has given the real estate market a fresh impetus. Home prices in India will keep rising to provide a stable future for the middle-class population who aspires to a luxurious lifestyle. The market is ready for a recalibration and stability in real estate prices as projects see an uptick and new launches get closer to completion. 2024 is not only a promising year for homeownership, but it also presents a wealth of opportunities due to the convergence of market dynamics, government initiatives, and changing homebuyer preferences. 

Triplexes and duplexes are becoming more common in the ultra-luxury real estate market

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Mumbai’s wealthy citizens, who seek forward-thinking and upward-looking homes, prefer a novel idea of ultra-luxury living. In Mumbai, duplex and triplex apartments redefined the definition of living in luxury.

Duplex and triplex apartments are becoming increasingly popular in Mumbai’s ultra-luxury residential market; they bring back memories of the bygone era when sprawling bungalows typified luxury living in this megacity. Mumbai’s wealthy citizens, who seek forward-thinking and upward-looking homes, prefer a novel idea of ultra-luxury living.

This change in the real estate market is especially noticeable in affluent areas like Worli, Bandra, Borivali, and Malabar Hill, where quiet neighborhoods provide an amazing setting for these lavish residences. These dwellings stand in stark contrast to the conventional horizontal ones. Large families will find plenty of room and privacy in these vertically designed spaces.

To put things in perspective, duplexes normally have two stories connected by an internal staircase or elevator, whereas triplexes have three stories connected by an internal staircase or elevator. The numerous bedrooms and living spaces on each floor add to the feeling of luxury and exclusivity.

Imagine a living area that is two stories high with a ceiling that reaches 24 feet. It gets a boost from wide balconies and terraces. Luxurious modern living is available to inhabitants of these architectural wonders, perched high above the busy city. These belong to the ultra-luxury housing market, which is currently very active. A discriminating group of purchasers is driving the demand for such opulent homes. High-net-worth individuals (HNIs) and NRIs are driving the hunt for luxurious real estate showcases of distinction. For these buyers, duplexes and triplexes provide opulent living quarters and are excellent investment opportunities. These opulent residences are affordable for a limited number of people, with starting prices as low as Rs 12.5 crore and prices that can reach over Rs 100 crore.

Duplexes and triplexes are becoming more and more popular as real estate investments that offer luxurious lifestyles and significant returns on investment. The emphasis has shifted to vertical expansion as redevelopment projects have sprung up throughout Mumbai, many of which are limited to small land parcels. Additionally, even in locations that have little room for horizontal development, developers now have the option to include duplex and triplex units.

These spacious residencies appeal to more people than just the wealthiest NRIs or conventional luxury buyers. A new customer demographic is developing, keen to modernize and reflect sophistication and finesse in their lifestyle choices. This change suggests that luxury in Mumbai is more about the caliber and distinctiveness of the living experience provided by the buyer’s chosen neighborhood rather than being restricted to particular regions.

Luxury duplex and triplex units with a sea view are 10% to 15% more expensive because of their stunning views. Homebuyers seeking an opulent lifestyle have a strong preference for these units. Despite their high prices, the appeal of living in a sky duplex or triplex with large, open areas and abundant amenities keeps affluent buyers interested.

Mumbai’s performance on the international scene is also a reflection of the growing demand for ultra-luxury real estate. Mumbai made a spectacular ascent from 37th place in 2022 to 8th place in 2023 on Knight Frank’s  Prime International Residential Index (PIRI). This places  Mumbai firmly among the top 10 leading luxury residential markets and shows an impressive 10% year-over-year growth in annual luxury residential prices. 

Upmarket is extremely sought-after due to several factors, including the dynamically shifting nature of the market, intense pricing competition, and government initiatives aimed at promoting greater transparency. The demand for ultra-luxurious residential properties has significantly increased due to India’s rapid modernization and urbanization. The emergence of duplex and triplex residences in Mumbai’s ultra-luxury real estate market bears witness to the city’s changing goals, as can be observed upon closer examination.

Attracting the most affluent and discriminating buyers, these vertical living spaces offer an unmatched blend of luxury, space, and height. As long as buyers are drawn to vertical homes, Mumbai’s luxury living standards will be redefined, eventually elevating these multi-level residences to new heights of elegance and sophistication. 

Five things the real estate industry anticipates from the finance minister’s budget in 2024

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Finance Minister Nirmala Sitharaman is scheduled to present Budget 2024 today, and the real estate industry anticipates that the government will prioritize affordable and middle-class housing in the plan. To increase affordability, it has advocated for an enlargement of the definition of affordable housing, tax breaks for homeowners, and financial incentives for builders to build more affordable housing.

More tax breaks are urgently needed for buyers and developers looking to build affordable and middle-class housing projects. Real estate experts believe that the government should increase the annual deduction limit for interest paid on home loans from the current Rs 2 lakh to Rs 5 lakh, as this will boost the demand for housing.  

  1. Raise the interest payment deduction cap 

To stimulate housing demand in the face of rising housing prices and mortgage rates, the National Real Estate Development Council (Naredco), a body that represents builders, has recommended that the tax exemption on interest on loans for self-occupied property be raised to Rs 5 lakhs in the upcoming budget from Rs 2 lakhs currently.

Developers have also sought tax breaks to increase the supply and demand for affordable homes. According to NAREDCO, the maximum deduction for interest on loans for self-occupied property is Rs 2 lakh, as stipulated in Section 24 of the Income Tax Act.

  1. Permit builders to pay GST at a discounted rate instead of an input tax credit.

NAREDCO has also urged the government to allow builders to pay GST at a concessional rate without an input tax credit (ITC) or a higher tax rate claiming an ITC. The GST rate is 1% without ITC for affordable housing units and 5% without ITC for other residential units. Developers would save money on taxes and have improved cash flows if they could select between higher rates ITC and concessional rates without it, resulting in advantages for end users.

In its wish list for Budget 2024, the Confederation of Real Estate Developers Associations of India (CREDAI), a body that represents real estate developers, suggests that the government consider granting unlimited interest deductions for self-occupied property or raising the deduction limit to Rs 5 lacks for homebuyers.

  1. Encouragements for reasonably priced  housing

The present growth trajectory is biased in favor of luxury and mid-range housing. Affordable housing is still in short supply, so higher-priced homes can’t sustain this momentum despite the unique housing needs of India’s lower-class populations. According to experts, the government should concentrate on offering more subsidies for mid-range and affordable housing.

According to ANAROCK Research, following COVID-19, the sales share of affordable housing fell sharply, from over  26% in 2022 and over  38% in 2019 to about 20% in Q1 2024. This segment’s share of the total housing supply in the top 7 cities decreased to 18% in Q1 2024 from nearly 40% in 2019 due to low demand. In FY23-24, total sales hit a record high of roughly 4.93 lakh units, despite the launch of 4.47 lakh units.

Anuj Puri, Chairman of ANAROCK Group, states that many interest stimulates previously provided to affordable housing builders and consumers have expired over the past two years. High-impact measures like tax breaks are needed to revive this significant market sector. This will help buyers by bringing down the cost of homes, and developers by motivating them to focus more on building affordable housing.

PMAY Credit-linked Subsidy Scheme

To encourage first-time purchasers of reasonably priced homes throughout cities, the EWS/LIG program, which was set to expire in 2022, ought to be brought back. This will stimulate demand in this market segment once more. CLSS was previously available for housing loans to EWS/LIG buyers in new building projects and for adding rooms, kitchens, toilets, etc. to existing dwellings, subject to criteria specified under government guidelines. According to Puri, if the qualifying requirements are met, all “kaccha” homes being converted into “pucca” ones may also be eligible for this subsidy under PMAY (Rural).

Provide developers of affordable housing a 100% tax holiday once more. 

To boost supply and incentivize developers to build more affordable housing, the government may bring back the “100% Tax Holiday” benefit previously provided under section 80-IBA of the Finance Act, 2016. The profits from developing and constructing affordable housing projects were subject to significant tax relief under this section. 

Change the definition of affordable to include more homebuyers and expand the benefits of additional deductions. 

The Ministry of Housing and Urban Affairs states that a buyer’s income, cost, and size all play a role in determining affordable housing. In large cities, a house or apartment that fulfills the requirements for affordable housing can be valued up to Rs 45 lakh, and in non-metropolitan areas, it can have a carpet area of up to 90 square meters. Loans from banks are given to individuals to help them build houses or buy apartments based on the central bank’s definition.

The government must carefully consider how to modify home prices within the affordable housing budget, considering the unique characteristics of each city’s real estate market. The size of the units is 60 sq.m. The carpet area is appropriate according to the current definition. However, most cities cannot afford the prices of units, which can reach Rs 45  lakh.

For instance, a budget of Rs 45 lakh doesn’t matter in a metropolis like Mumbai. It would have to be raised to Rs 85 lakh minimum. The budget should be increased to Rs 60-65 lakh in other cities. According to Puri, more homes would be eligible for the affordable price tag with such price revisions, allowing more buyers to take advantage of government subsidies and lower GST rates at 1% without ITC.

It is also necessary to revise the definition of an affordable residential apartment, which presently includes requirements for carpet area and a price cap. Only the carpet area condition should be kept, NAREDCO advises, with no upper price limit. A greater percentage of the lower and middle class could purchase homes thanks to this adjustment, which would account for rising land prices in major cities and expand the benefits of affordable housing to more projects.

The criteria for affordable housing are based on the cost of the property (Rs 45 lakh), carpet area (60 to 90 sq.m), and income of the homebuyer (EWS/LIG), according to Anshuman Magazine, chairman and CEO-India, South-East Asia, Middle East & Africa, CBRE. The government should consider extending the cost, size, and income restrictions to, prove the scheme’s inclusivity. Given that capital values in larger metropolises (Mumbai, Delhi-NCR) can be significantly higher than in other cities, the government should think about raising the size criteria for metro cities to 90 sq.m. and establishing three to four brackets of unit sizes and prices to define the eligibility criteria depending on city/state dynamics.

Boost the amount of money allotted to PMAY  

Along with the recent announcement from the Cabinet to provide financial support for the construction of an additional three crore rural and urban houses under the scheme, the government should consider increasing the budgetary allocation towards the Pradhan Mantri Awas Yojana (PMAY) compared to the previous year. This shows the government’s continued commitment to supporting the affordable housing sector. The prompt implementation of the scheme possesses considerable potential to stimulate the industry even more.

According to Magazine, “We also eagerly await further details concerning the PMAY-Urban scheme, given the announcement made about the government’s plan to launch an initiative to help deserving sections of the middle class living in rented accommodations, slums, chawls, and unauthorized colonies to buy or build their own houses in the Interim Budget 2024-25.”

Additionally, the government offered a 100% tax deduction for profits and gains from the business of creating and constructing affordable housing projects under Section 80IBA. The tax holiday did, however, end in 2022. According to the magazine, developers of affordable housing projects would gain from the resuscitation of the program because these projects usually have narrow profit margins.

  1. Utilize land lots that the government and public sector businesses have available. 

The government or public sector organizations have access to multiple underutilized or inadequately utilized land parcels. These might include Port Trust property, railroads, abandoned military land, etc. When the land and necessary permits are obtained, we advise unlocking these land lots and forming partnerships with reputable private developers to build affordable housing. These land lots might also be for industrial parks and associated infrastructure. This will help the government take advantage of the operational efficiencies of the private sector while also lowering the risk associated with development,” he stated.

Magazine went on, “We also implore the government to provide a comprehensive framework regarding changes in land usage.” to expedite construction and facilitate land acquisition.

CREDAI National Chairman and Gaurs Group CMD Manoj Gaur states, “The real estate industry has set high expectations for the upcoming budget.” First and foremost, the goal of resuming the interest subsidy program is to support the housing industry as a whole. Secondly, we are also seeking a redefinition of affordable housing. The present limit should be increased from 90 sq meters, and Rs 45 lakhs in space and pricing, respectively. These will be a much-needed intervention as a considerable demand exists in the affordable housing segment. Lastly, we look forward to announcements on GST input credit to stimulate growth and foster a more resilient real estate environment.”

Over the past three years, there have been fluctuations in the supply and demand for affordable homes in tier 1 and tier 2 cities, according to Dhruv Agarwala, Group CEO of Housing.com and PropTiger.com.

The forthcoming budget should prioritize reinvigorating the supply and demand for residential properties within the Rs15-75 lakh per unit price range. Potential homebuyers could be effectively encouraged by the introduction of interest subsidy programs” he said. 

Agarwala stated that the government could strategically use its vast land banks in collaboration with private developers to increase supply by providing capital and land at discounted prices.

  1. The condition of the property market

Director of County Group Amit Modi said, “One of the most persistent demands the sector emphasizes is the need to grant industry status to enable easier access to low-cost financing, which benefits consumers directly. “Moreover, timely project completion and cost-effectiveness depend on the implementation of single-window clearance.”

Real estate experts said that the sector should also be classified as infrastructure.

By 2030, the real estate industry will likely account for 13-15% of the Indian GDP. As such, stakeholders have long demanded that the sector be granted “infrastructure” status. This could significantly reduce the cost of borrowing for developers and increase the availability of institutional credit, thereby stimulating growth and investment. According to the report, “Standardizing the definition of affordable housing can also enhance uniformity in financing requirements amongst institutions and possibly make it easier for eager homebuyers to obtain credit.” 

India’s commercial real estate market: Surpassing the global recession

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Due to severe downturns in the global economy in 2023, the commercial real estate market saw a 66% annual decline in investments. Significant markets such as the US and Europe saw a 25% decline in leasing activity. The global commercial market is in crisis mode! 

The Indian commercial real estate market, on the other hand, attracted $5.4 billion in investments, the most since 2020, the year before the pandemic, demonstrating remarkable growth and resilience. The office sector in India has been particularly vibrant, drawing over $3 billion in investments, a 53% increase from the previous year. The growth in demand from Global Capability Centers (GCCs) and the strong leasing activity of Indian corporations, which now make up 46% of all market leasing activities, are the main drivers of this surge. 

India’s office sector is growing primarily due to demand from the GCCs. India’s GCCs are expanding rapidly as international corporations look for cost-effective outsourcing solutions in the face of economic pressure. With a projected 10% compound annual growth rate (CAGR), the GC industry is predicted to rise from its current $465 billion by 2027. With a 30% market share in the GCC overall, India employs up to 2 million professionals.

The GCC model is evolving, with hubs driven by technology and customer experience replacing centers primarily concerned with standardization and cost arbitrage. This pushes these developments to increase the spending per square foot and the space per square foot, which raises the investment in Grade A commercial real estate even more.

There is plenty of room for growth because only 40-45% of Fortune 500 companies currently have GCCs. Our estimates indicate that India will have 3.5.-4 million workers employed in GCC countries over the next three to four years, implying a doubling of the Grade A space needed, given the country’s demographic advantage (we will add 80-90 million people to the working age population by 2027).

The increasing percentage of domestic investors and capital entering this market relative to previous foreign capital inflows is another interesting development. Prequin data reveals a dramatic fall in foreign fund activity in India in light of the geopolitical unrest and state of global interest rates. The Indian real estate market is resilient despite these obstacles, and a growing proportion of ultra-high-net-worth individuals and family offices are among this new class of investors.

Approximately Rs. 3 trillion has already been invested by these investors, who are drawn to the regulated environment of Alternative Investment Funds (AIFs) and the tangible security of asset-backed investments. This has a significant impact on the real estate market. This change highlights a dynamic shift in investment patterns, encouraging the sector’s growth to be driven more domestically.

Tier 2 towns will likely emerge as new centers of development and investment in commercial real estate. The Fortune 500 companies’ headquarters are dispersed across 51 cities in the US, whereas in India, the major corporations are centered in just 5-6 cities. Although the infrastructure for transportation has advanced significantly, these cities urgently require an upgrade to their urban infrastructure to improve their quality of life and draw in more businesses and workers.

As investment flows increase twofold to tier 2 cities, pioneering firms are shifting their focus to undeveloped land parcels in these cities. For local and regional developers, this trend underscores the importance of enhancing their offerings and attracting foreign investors.

Through this realignment, not only will Tier 1 cities be addressed, but diversified and sustainable, urban development will be enabled across the nation. As we move forward, these changes are expected to play a crucial role in shaping the real estate investment landscape over the coming years, heralding a new era of growth beyond the traditional hubs.  

The Indian commercial real estate market, on the other hand, attracted $5.4 billion in investments, the most since 2020, the year before the pandemic, demonstrating remarkable growth and resilience. The office sector in India has been particularly vibrant, drawing over $3 billion in investments, a 53% increase from the previous year. The growth in demand from Global Capability Centers (GCCs) and the strong leasing activity of Indian corporations, which now make up 46% of all market leasing activities, are the main drivers of this surge. 

India’s office sector is growing primarily due to demand from the GCCs. India’s GCCs are expanding rapidly as international corporations look for cost-effective outsourcing solutions in the face of economic pressure. With a projected 10% compound annual growth rate (CAGR), the GC industry is predicted to rise from its current $465 billion by 2027. With a 30% market share in the GCC overall, India employs up to 2 million professionals.

The GCC model is evolving, with hubs driven by technology and customer experience replacing centers primarily concerned with standardization and cost arbitrage. This pushes these developments to increase the spending per square foot and the space per square foot, which raises the investment in Grade A commercial real estate even more.

There is plenty of room for growth because only 40-45% of Fortune 500 companies currently have GCCs. Our estimates indicate that India will have 3.5.-4 million workers employed in GCC countries over the next three to four years, implying a doubling of the Grade A space needed, given the country’s demographic advantage (we will add 80-90 million people to the working age population by 2027).

The increasing percentage of domestic investors and capital entering this market relative to previous foreign capital inflows is another interesting development. Prequin data reveals a dramatic fall in foreign fund activity in India in light of the geopolitical unrest and state of global interest rates. The Indian real estate market is resilient despite these obstacles, and a growing proportion of ultra-high-net-worth individuals and family offices are among this new class of investors.

Approximately Rs. 3 trillion has already been invested by these investors, who are drawn to the regulated environment of Alternative Investment Funds (AIFs) and the tangible security of asset-backed investments. This has a significant impact on the real estate market. This change highlights a dynamic shift in investment patterns, encouraging the sector’s growth to be driven more domestically.

Tier 2 towns will likely emerge as new centers of development and investment in commercial real estate. The Fortune 500 companies’ headquarters are dispersed across 51 cities in the US, whereas in India, the major corporations are centered in just 5-6 cities. Although the infrastructure for transportation has advanced significantly, these cities urgently require an upgrade to their urban infrastructure to improve their quality of life and draw in more businesses and workers.

As investment flows increase twofold to tier 2 cities, pioneering firms are shifting their focus to undeveloped land parcels in these cities. For local and regional developers, this trend underscores the importance of enhancing their offerings and attracting foreign investors.

Through this realignment, not only will Tier 1 cities be addressed, but diversified and sustainable, urban development will be enabled across the nation. As we move forward, these changes are expected to play a crucial role in shaping the real estate investment landscape over the coming years, heralding a new era of growth beyond the traditional hubs.  

By 2030, Bengaluru will possess 330-340 million square feet of office space in India: report

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The primary demand generators for Bengaluru’s office market are anticipated to be the technology, engineering, manufacturing, and BFSI sectors. 

The Confederation of Indian Industry and CBRE report projects that Bengaluru, the country’s IT hub, will maintain its dominant position in its commercial real estate market by 2030, with 330-340 million square feet of office stock.

Bengaluru has seen its office stock more than double to over 223 million square feet as of June 2024, from 100 million square feet in 2013, to comprise the highest share in the segment among all major cities in the country, according to a report titled “Karnataka Horizon: Navigating Real Estate Excellence in the South,” which was released on July 10.

The total stock in India as of June 2024 was 880.7 million square feet, with Bengaluru contributing the most at 25%, according to the report. It also stated that over the previous few years, the city’s annual absorption of roughly 15016 million square feet had occurred on average.

Bengaluru is anticipated to grow significantly in the periphery over the next few years. According to Anshuman Magazine, Chairman and CEO-India, South-East Asia, Middle East and Africa, CBRE India, “the commercial sector is slated to expand significantly in the northern, eastern, and southern parts coupled with the availability of large-sized land parcels and multiple upcoming infrastructure initiatives.”

Which sectors are driving demand?

Technology, engineering and manufacturing, and BFSI are predicted to be the main sectors driving demand for Bengaluru’s office market until 2030. Emerging sectors like life sciences, aviation, and automobile are also anticipated to contribute to the rise in demand.

According to the report, the technology sector currently makes up 30-35% of the city’s annual absorption, mostly in the commercial centers of Outer Ring Road and Whitefield.

According to the report, between 2022 and June 2024, Bengaluru accounted for 41% of demand among India’s global capability centers (GCCs). It attributed this achievement to several of Garden City’s offerings, such as its highly qualified talent pool, first-rate Grade-A assets, and a robust  IT ecosystem.

Karnataka’s thriving IT sector needs to keep developing if it wants to stay competitive. According to Ram Chandani, Managing Director of Advisory and Transactions Services at CBRE India, “developing premium, sustainable tech spaces with cutting-edge facilities will be the key.”

Shailendra Naidu, a senior executive director of advisory and transaction services at CBRE, lists a few of the market’s long-term challenges ease of doing business, the high cost of land, and effective space utilization. “Many development companies in this area use joint ventures to purchase land. In that model, there can be challenges going ahead,” he said.

Home goods, fashion, and entertainment drive demand in the retail sector.

Bengaluru’s retail real estate stock, which held the second-highest share among the top Indian cities at 24%, more than doubled to over 16 million square feet as of June from 7.2 million square feet in 2013, according to the report. According to the research, this measure will rise to 20-30 million square feet by 2030, a 1.4-fold increase.

According to the report, the main drivers of absorption in Bengaluru’s retail market are department stores, fashion and apparel stores, and entertainment. Together, these segments account for roughly 20-30% of the city’s annual demand. According to the statement, the capital city’s average yearly absorption in this sector is between 1.5 and 2 million square feet.

As per the report, Bengaluru is a high-achieving city that houses three of the 17 listed malls in the country.  

What factors will dominate India’s real estate market in 2024?

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An active real estate market in 2024 is due to the interaction of changing consumer preferences, government policies, and market dynamics. 

In recent years, there has been notable growth in the Indian real estate sector. The first quarter of 2024 broke nearly the record set in the previous year, with 2023 announcing the most new projects over the prior ten years. According to a report, the residential real estate market anticipates a significant influx of new launches in 2024, with an estimated range of 280,000-290,000 units. This has paved the way for a successful 2024, demonstrating that the industry is not only expanding but also showing signs of continued expansion in the years to come. 

What market factors will influence 2024? 

India’s real estate industry has long been one of the main forces behind economic expansion, contributing significantly to the GDP. The industry has proven resilient and adaptable in the face of challenges to the GDP. The industry has proven resilient and adaptable in the face of challenges in recent years, including the COVID-19 pandemic, regulatory changes, and liquidity crunch. A gradual recovery in the market was observed in 2023, driven by favorable government policies, pent-up demand, and a rise in the industry’s adoption of digital technology. According to former Housing and Urban Affairs Minister Hardeep Singh Puri, the Indian real estate market is projected to grow to a $1 trillion sector by 2030 and contribute roughly 15% of the country’s GDP by 2025. 

The Indian real estate market is viewed as a worldwide investment opportunity in addition to meeting local demand. NRIs in particular actively participate in the market in addition to being investors as a way of keeping ties to their home country. About 10% of all market investments as of the 2019-2020 fiscal year were made by non-resident individuals (NRIs). Currently, this percentage is at 15%, and by the end of 2025, it is expected to reach 20%. This demonstrates the market’s widespread appeal and the trust that non-resident investors have put in. 

The Indian real estate industry’s upward trend is evidence of its resilience rather than the product of chance. The industry has maintained a consistent rise in rental yield despite the ongoing devaluation of the Indian rupee and the difficulties presented by the state of the world economy. This has fueled the sector’s growth, providing confidence in its stability and potential for further progress, favorable economic policies, and an emotional bond with the home country. 

Buyer Trends and Market Dynamics: The trend of Upscale Living 

India’s growing economy has made it more desirable for those with more disposable income to live lavish lives. The populace also looks for homes with extra features like swimming pools, fitness centers, and lovely gardens. Beyond HNIs and UHNIs, people in the upper middle class also want bigger living areas and higher income levels. 

Considering the Environment 

The building of sustainable structures has seen a significant shift in the Indian real estate market during the past two years. The real estate industry is improving living standards by employing environmentally friendly building materials, water conservation and management techniques, and energy-efficient building designs. Customers are looking for houses that align with their values and views. Homes with rainwater collection systems, renewable energy systems, and energy-efficient appliances are sought after by today’s buyers, especially those belonging to Generation Y. 

Naturally occurring light and air are also permitted in sustainable homes, creating an impression of greater room and fresh air. This improves moods and lowers stress levels, which boosts productivity— especially for those who work from home. Although building green real estate costs a little more than building traditional homes, people can save a significant amount of money on their bills over time, making it an excellent investment. 

Choices for Housing 

Due to a lack of Ready-to-Move-In (RTMI) inventory and price increases in gated communities, buyers are gravitating toward individual homes, resale properties, and under-construction projects. Resale properties are highly sought after because they offer a nice living space without the hassle or expense of interior design. Homes that are still under construction are preferred because it is expected that after the project is finished, their costs will rise significantly.  

Changes in Investment 

Commercial real estate has historically been favored for investment because of its higher returns and lower maintenance requirements. On the other hand, a significant increase in residential properties’ rental yield during the past two years, combined with their affordability, has shifted the odds in their favor. There is a general expectation that residential properties will capitalize more quickly than their commercial counterparts due to the quick price rise. 

Policies and Government Initiatives

India continues to deliver on its promise of affordable housing through successful government initiatives and programs. Since real estate accounts for more than 50% of household savings in India, these actions have a major impact on the industry. The Reserve Bank of India’s (RBI) decision to maintain its policy rate at this level is helping to support the rapid expansion of the housing sector. If this stability continues, there will likely be an even greater demand for housing. 

Technology Use 

The real estate market is rapidly transforming thanks to technology, making it easier for people to access and invest in properties. Property viewing through virtual tours and buying/selling a house at the click of a button will alter the face of house hunting. People can search for affordable homes outside of their proximity through the use of metro-based filters on Proptech platforms, thus reducing their daily commute time while also being able to access affordable homes. Online channels are gradually becoming a one-stop shop for all real estate services, increasing convenience and efficiency. 

Modern buyers want a home that easily incorporates technology to improve their quality of life, not just any old house. The demand for smart homes is changing the real estate market. Examples include automated lighting and climate control, voice-activated assistants, smart security systems, and elevators with predictive maintenance services. The use of smart home technology has made a significant impact on buyer preferences and purchase decisions by differentiating properties on the market. 

In conclusion, there has been a noticeable uptick in building activity since COVID-19, which has given the real estate market a fresh impetus. Home prices in India will keep rising to provide a stable future for the middle-class population who aspires to a luxurious lifestyle. The market is ready for a recalibration and stability in real estate prices as projects see an uptick and new launches get closer to completion. 2024 is not only a promising year for homeownership, but is also presents a wealth of opportunities due to the convergence of market dynamics, government initiatives, and changing homebuyer preferences. 

The Green Revolution is reshaping India’s property market

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A significant shift toward sustainability is reshaping the trajectory of Indian real estate. The rise of green construction is more than a fad; it is a strategic move to foster an environmentally responsible and resilient real estate sector. The paradigm shift encompasses a variety of sustainable practices, including utilizing sustainable-friendly building materials and energy-efficient designs. 

Green construction is gaining momentum. 

The Indian real estate sector is undergoing a major shift, driven by rising demand for sustainable and energy-efficient buildings. The Indian Green Building Council (IGBC) reports a remarkable 20% annual increase in the green building footprint, indicating a significant shift toward environmentally conscious construction practices. This growth is driven not only by market demand but also by regulatory initiatives that promote green spaces. 

Economic incentives for green buildings 

Beyond its environmental benefits, green construction has significant economic benefits. According to the World Green Building Council, implementing green practices can result in a 7% reduction in operating costs, a 20% increase in asset value, and a 6% increase in return on investment. These financial incentives promote sustainable practices as both ethical and profitable, making green construction an appealing option for real estate developers.  

Increasing consumer awareness drives change. 

The growing awareness of environmental issues among Indian consumers is a major factor driving the rise of green construction. According to a Nielsen survey, 73% of Indian consumers are willing to pay a higher price for environmentally friendly products and services. This shift in consumer behavior has spread to the real estate industry, with homebuyers actively seeking eco-friendly features such as energy-efficient appliances, rainwater harvesting, and green spaces integrated into residential complexes. 

Regulatory impetus 

Government initiatives have a significant impact on India’s future of green construction. The introduction of certifications such as Leadership in Energy and Environmental Design (LEED) and the enactment of the Energy Conservation Building Code (ECBC) have contributed to advancing sustainable practices. The ECBC requires energy-efficient design and construction in commercial buildings, compelling developers to incorporate green building principles. 

Corporate commitment to sustainability 

Leading real estate developers in India understand the strategic importance of sustainable practices. Beyond mere compliance, businesses are including environmental responsibility in their strategies to attract environmentally conscious investors and tenants. In a ground-breaking move, some of India’s largest real estate developers have pledged to make all their projects carbon-neutral by 2030, setting an inspiring example for the industry. 

Showcasing success: case studies.

Green Building Principles have been applied to several well-known commercial development projects in India. The Infosys Mysore Campus is an excellent example of this. Infosys is a pioneer in implementing green building principles on its campuses. The Mysore campus is an outstanding example, with energy-efficient infrastructure, water conservation systems, and environmentally friendly landscaping. The campus has received several prestigious green certifications, demonstrating Infosys’ commitment to socially responsible corporate development. The Wipro Tech Park in Bangalore is well-known for its commitment to sustainability, and its Electronic City campus exemplifies this dedication. The campus uses energy-efficient technologies, waste management systems, and environmentally friendly building materials. It has received green certifications, demonstrating Wipro’s commitment to creating green responsible corporate spaces. Another example of sustainable green development is the ITC Green Centre in Gurgaon, a flagship commercial development that exemplifies green building techniques. It uses advanced energy management systems, water-saving techniques, and environmentally friendly materials. The project has received several green certifications, highlighting its contribution to sustainable corporate real estate in India.  

On the resident front, the House of Hiranandani in Chennai is a well-known residential development focusing on sustainability. The project includes green spaces, energy-efficient appliances, and water-saving initiatives. Its use of environmentally friendly materials and practices distinguishes it as an example of eco-conscious resident development. Furthermore, the Magicbricks Western Expressway Towers in Mumbai is another prime example of a residential complex with environmentally friendly amenities. This Mumbai residential complex is well-known for its environmentally friendly features and sustainable design. It includes rainwater harvesting systems, energy-efficient lighting, and solar panels. The project aims to reduce environmental impact while providing residents with a comfortable and sustainable living environment. 

Challenges and Opportunities

While the trend toward green construction is encouraging, challenges remain. Many developers are still concerned about the initial costs of implementing eco-friendly technologies and materials. However, the long-term advantages of operational savings and marketability frequently outweigh the initial costs. Furthermore, addressing the shortage of skilled workers trained in sustainable construction practices provides an opportunity for collaboration among government agencies, educational institutions, and industry stakeholders. 

Future Horizons: Creating a Sustainable Landscape. 

Green construction is becoming increasingly popular in India’s real estate industry, demonstrating the sector’s commitment to sustainable and responsible development. With a favorable regulatory environment, economic incentives, and rising consumer awareness, the transition to eco-friendly construction practices is expected to speed up. As the industry embraces green building principles, India is on track to not only meet its environmental goals, and become a global leader in sustainable real estate development. The green construction movement has grown significantly, with the potential to shape the future of Indian construction. The success stories of eco-friendly projects demonstrate that sustainability is more than just an ethical choice; it is also a path to long-term environmental conservation and economic growth. As the green revolution gains traction, Indian real estate developers have an excellent opportunity to incorporate sustainable practices, meeting the growing demand for environmentally conscious real estate and contributing to a greener, more sustainable future. 

Why is residential real estate considered one of India’s safest investments?

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The Indian real estate market experienced an unprecedented surge in 2023, outperforming all expectations and setting new records. Buyers are increasingly prioritizing homeownership over rental arrangements. 

As we navigate recent times, the Indian residential real estate market has emerged as a beacon of security for investors, allowing the housing market to shine for those seeking stability and growth. In 2023, the Indian real estate market experienced an unprecedented surge, far exceeding expectations and setting new records. Buyers are increasingly prioritizing homeownership over rental arrangements. 

It is expected to have a  promising 2024 as the month progresses, and in India’s ever-changing investment landscape, residential real estate stands out as a pillar of strength and dependability. What is the situation in 2024? As we navigate through recent times, the Indian residential real estate market is emerging as a beacon of security for investors, making the housing market shine for those seeking stability and growth. The Indian real estate market witnessed an unprecedented surge in 2023, surpassing all expectations and setting new records. Buyers are now placing a greater emphasis on owning a home rather than opting for rental arrangements.

It is expected to have a promising 2024 as the months go by, and in the ever-evolving landscape of investment opportunities, residential real estate in India stands tall as a pillar of strength and reliability. What is the situation in 2024? All factors indicate that it is a safe investment compared to other asset classes. 

Residential real estate is resilient 

Despite the challenges posed by the global financial crisis in recent years, India’s residential real estate sector has proven remarkably resilient. Early indications suggest that 2024 will be a promising year for the industry, with increased demand, particularly in urban areas with high development and infrastructure trends. India is positioned at the forefront, and this growth has been attributed to strong economic indicators and consistent demand, creating a positive sentiment among key contributors. 

Affordability and Availability of Luxury Homes 

Indian homebuyers have become more aspirational, seeking to live a luxurious lifestyle. According to a study, residential real estate will remain affordable while increasing threefold by 2024. The real estate sector has grown steadily due to continued urbanization, rental market expansion, and price appreciation. The repo rate cut is expected to be within the normal range, allowing home prices to remain affordable for buyers for an extended period. Metro cities like Bangalore would see affordable luxury, while people could purchase homes regularly. 

Urbanization and increased affordability. 

The Indian real estate sector is undergoing significant transformation, owing largely to the explosive growth of the country’s middle class and rapid urbanization, which is driving demand for affordable luxury housing in tier-1 cities. This segment is the foundation of India’s real estate market and is expected to grow further. The rise in incomes and demand for housing in urban areas has resulted in a massive urbanization process, which is the primary cause of urban India’s growth. 

Breakthrough performance 

The real estate market has been the primary driver of India’s growth story. Not only was the country’s economy the fastest growing, but real estate indicators were also at record highs. In retrospect, 2023 began with global inflation that threatened a full-fledged recession. Despite rising inflation, the real estate market performed well this year. A strong finish was seen across the cities, with Bengaluru leading the pack. The figures were unimaginable in the past, indicating strong expansion-driven growth. 

A thriving outlook. 

As the market prepares for a significant leap this year, there is an increase in demand for residential properties. It has become clear that property markets in India have grown significantly, with an increase in new launches and property sales. Fueled by overwhelmingly high sales and a thriving luxury segment, this instills confidence in developers, driving a supply pipeline and establishing major metropolitan cities as rapid real estate consumers. This promotes economic growth, stable interest rates, and a shift in public perception of property ownership, resulting in property ownership serving as a financial safety net. 

The Indian real estate sector, which is central to the economy and supports a variety of industries, is poised for continued growth. A strong economy, urbanization, rising incomes, government initiatives, and increased demand for various properties indicate a bright future. With a promising outlook, it remains one of the most secure assets for investors to hold in the future. 

India’s ultra-rich are shifting their investment focus to residential real estate

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The ultra-rich in India devote a sizable portion of their wealth to residential properties, which account for 32% of their investment portfolio. 

For some time now, India’s affluent class has been shifting its investment focus to residential real estate, indicating a significant shift in the country’s investment landscape. This transition highlights changing investment preferences and reflects the motivations behind the elite’s decision to invest in residential properties. 

According to a recent Knight Frank report, India’s ultra-rich are allocating a significant portion of their wealth to residential assets, with 32% of their investment portfolio devoted to this sector. A growing number of ultra-high-net-worth individuals (UHNWIs) plan to buy a new home by 2024, indicating an increasing appetite for residential real estate investments in India. 

Parvinder Singh, CEO of Trident Realty, commented, “This growing interest of elites in the residential real estate sector reflects a shift towards quality living spaces that cater to evolving  lifestyle preferences.” 

Elites are drawn to high-quality residential projects that provide sustainable and multifunctional living spaces, which satisfy their desire for exclusivity and modern amenities. The residential sector is expected to grow significantly by 2024, driven by urbanization, rising incomes, and a desire to live in harmony with nature. To appeal to affluent buyers, we designed our projects to offer privacy, space, and connection to nature. Our developments provide a distinct blend of luxury, sustainability, and comfort to meet the discerning tastes of elite homebuyers.” 

Knight Frank’s flagship report, The Wealth Report 2024, predicts a significant increase in the Indian UHNWIs, rising to 19,908 by  2028 from 13,263 in 2023. This equates to a massive 50.1% increase, the fastest growth rate in the number of UHNWIs in any country over the next five years. 

Aman Trehan, Executive Director of Trehan Iris, says, “The surge in residential property investment among India’s elite class represents a remarkable shift in preferences, fueled by a thriving economy and evolving lifestyle choices. According to Knight Frank India’s 2024 Wealth Report, 32% of UHNWIs are considering investing in real estate, with 12% planning to buy new homes in 2024. This report highlights the sector’s unprecedented growth and reveals Delhi’s rise in the real estate sector. With a combination of high demand, favorable mortgage rates, and a strong economy, the allure of luxury properties and alternative assets is likely to persist among high-net-worth individuals and ultra-high-net-worth individuals. This year, 22% of wealthy individuals intend to invest in residential properties and 19% in commercial properties. 

Furthermore, the ongoing expansion of infrastructure and connectivity initiatives, particularly in the National Capital Region, is expected to open up new opportunities for elite investors, promising capital appreciation and improved lifestyles. As we look ahead, the trajectory of India’s real estate market is poised for further evolution, implying a promising outlook for the market in the coming years,” he adds. 

Furthermore, people exhibit a positive economic sentiment, reflecting the Indian economy’s resilience and potential. This shift in sentiment coincides with a broader recognition of real estate’s enduring value and potential for long-term financial growth. Investors are positioning themselves to accumulate wealth and create multigenerational wealth through real estate investment. 

Aman Sharma, Founder & Managing Director of Azrize Group, says, “Seeing India’s super-rich devote 32% of their wealth to housing properties is extremely encouraging. There is a strong belief that real estate is a significant driver of wealth preservation and growth. This data demonstrates our dedication to delivering high-quality projects that appeal to the discerning tastes of affluent buyers. We recognize the importance of providing luxurious yet secure options consistent with this demographic’s investment preferences. Such insights guide our strategic planning, ensuring that we continue to meet the market’s changing demands while maintaining our position as a reliable provider of premium real estate.” 

Aside from economic factors, lifestyle changes are spurring demand for luxury and larger homes among India’s upper classes. The ultra-luxury housing sector’s unprecedented growth in 2023 reflects affluent individuals’ strong desire for premium living experiences. This emphasis on enhancing lifestyle offerings is a major reason the wealthy prefer to invest in residential properties, as they seek to improve their living conditions and indulge in luxurious living experiences. 

“The surge in luxury housing sales among India’s elite is up 130% Y-O-Y, signaling a seismic shift in the industry,” says Ashish Sharma, AVP operations at Brahma Group. According to Knight Frank’s Wealth Report 2024, they allocate 32% of their wealth to residential properties.

A strategic pivot towards tangible assets both luxury and long-term capital appreciation. 

The desire for luxurious urban living, combined with an increasing number of high-net-worth individuals, has prompted wealthy investors to design spaces that embody luxury, comfort, and exclusivity. The decision to invest in luxury real estate has evolved into an important statement of status and intent. Furthermore, in the coming years, the industry can expect to see a rise in participation from India’s elite as it continues to grow. 

According to Ashish Sharma, AVP operations at Brahma Group, “the surge in luxury housing sales among  India’s elite, up 130% year on year, signals a seismic shift in the real estate landscape.” According to Knight Frank’s Wealth Report 2024, they now invest 32% of their wealth in residential properties, up from 20%. This strategic shift toward tangible assets offers both luxury and long-term capital appreciation. Driven by the allure of upscale urban living and a growing population of high-net-worth individuals, affluent investors tend to invest in environments that exude comfort, exclusivity, and status. Luxury real estate has evolved beyond mere acquisition into a profound statement of status and purpose. Furthermore, the sector is expected to experience a surge from India’s elite, with an upward growth curve in the coming years.” 

This trend opens up exciting opportunities for the Indian real estate market. Luxury developers can meet the growing demand for exclusivity, comfort, and long-term value among ultra-high-net-worth individuals seeking prime residential investments. However, stay ahead of the curve by anticipating changing preferences and offering innovative solutions to the elite’s ever-changing needs. 

India’s Real Estate Set to Grow by 2030, Pioneering a Trillion-Dollar Transformation

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Historically, growth rates have been determined by industrial, agricultural, and service sector expansion, but the trading market is also an important source of new capital.

According to Dr. (h.c) Tushar Deochakke, real estate has long been the most popular form of investment for those who can afford it. An interest in real estate has meant purchasing private property primarily for self-residence. Cross-country comparisons, individual country studies, and industry and firm-level analyses all point to a positive relationship between financial system sophistication and economic growth. While some gaps exist, the financial system is said to be inextricably linked to economic performance. In 1952, Nobel laureate Joan Robertson stated, “Where enterprise leads, finance follows.” According to this viewpoint, economic development generates demands for various financial arrangements, which the financial system automatically meets. 

 Traditionally, growth rates have been determined by the growth of the industrial, agricultural, and service sectors; however, the trading market is also a significant source of capital formation and plays an important role in the global economy. As a result, the stock market in developing economies such as India is rapidly expanding, and the Indian real estate market is expected to be worth trillions of dollars by 2030. Liquid markets improve capital allocation and long-term economic growth prospects by allowing for longer-term and more profitable investments. Furthermore, by reducing investment risk through Blockchain technology for governance, stock market liquidity can result in more savings and investments. 

Real estate assets are recorded at cost, even though the market value of many properties could be significantly higher. Listing these assets on the platform broadens their trading opportunities by making them available to a wider variety of investors and liquid with cash flow generation potential, increasing market capitalization and having an economic impact on the local and national economies via transactions and taxes. 

The Indian property market is expected to quadruple over the next 6-8 years. New infrastructure development in India will require approximately USD 4.5 trillion for everyone to maintain the pace of growth and become the second-largest economy by 2036. 

The REIT regulations have recently been tweaked to accommodate smaller asset owners. But, it is crucial to understand and accept that Indians are conservative by nature, and real estate investments are used to hedge against capital market volatility. Thus, while the number of dormant accounts registered has tripled in the last five years, the actual investor base is much smaller. REITs were first introduced in the 1960s. But, they still account for less than 2% of global real estate asset valuations. 

Small investors’ ROI from REITs has been low, while real estate developers, asset owners, and managers continue to investigate various funding options for new development assets and their pipelines.  Further banks have sectoral restrictions for lending. On the other hand, Indians invest up to twenty lakh crores per year in bank fixed deposits, where inflation-adjusted returns are negligible, even though the entire economy had around rupees 188 lakh crore in fixed deposits at the end of last year. 

While the Jan-Dhan Yojna (Banking for the Poorest of the Poor), which was previously ridiculed, accumulated Rs. two lakh crore in a short period, this allows users to visualize the impact a middle-class retail investor can have on the economy if given the right opportunity. While global fund managers are allocating larger absolute amounts to their India desk, it remains a small percentage of their entire global portfolio. This comes after the Ministry of Finance established the National Asset Monetisation Pipeline and the National Bank for Infrastructure Development. 

Global pension funds and private equity funds invest in India, but the fact that repatriation for strategic exits takes years, if not decades, discourages them. RERA has significantly changed the perspective of large global fund managers looking to invest in a project’s early stages. Being classified as a promoter entails a slew of RERA obligations, such as regulatory filings, obtaining completion or occupation certificates, ensuring the project, and so on, with failure to comply resulting in severe penalties. While investment documents are typically drafted  to give investors broad rights to protect their investments, it is now worthwhile to structure investments so that an investor can avoid participating in the entity’s day-to-day affairs and management, as  well as project implementation. 

While the rest of the world has gone digital, real estate markets continue to use ancient and archaic methods of asset management, trading, and settlement. This is especially evident in the property markets, which use highly manual and time-consuming methods for administering and trading assets. As, a result, the real estate market is notoriously illiquid and inaccessible. 

The cost of building real estate in India is predicted to increase by 6% by 2024, with Mumbai being the most expensive city

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JLL’s most recent Construction Cost Guide predicts that in the financial year (2024) across all sectors, the nation’s overall construction costs will rise by an average of 6%. 

With higher prices, Mumbai remains the most expensive city overall, but Chennai is a more cost-effective option. The increased cost of necessary building supplies like cement, structural steel, reinforcement steel, and stones is the cause of Mumbai’s higher prices. 

The handbook offers information on real estate asset construction costs and market trends in important Indian markets. It contains an analysis of market trends for key building materials and a cost matrix representing various styles and quality levels.  

“To maximize expenditure, businesses are currently reevaluating their real estate decisions. The general trend is clear: construction costs are rising, even though the precise impact of the pandemic on these costs is still up for debate, according to Jipu Jose James, Managing Director, Project Development Services  (PDS), JJL, India. 

Customer spending is therefore anticipated to prioritize functions that improve the end-user experience. Cost management is essential to maintaining budget control and completing commercially and qualitatively viable projects. 

An increase in labor costs  

While several factors affect building costs in India, labor is also a key component in the country’s economic expansion. As a result, the supply-demand gap is narrowing as construction shifts to non-metropolitan and rural areas, resulting in a more stable labor market and lower wage inequality, according to the report. 

Labor rates have risen by an average of 6% per year over the last three years, increasing construction costs by about 2%. The industry heavily relies on its workforce, as evidenced by its increase to approximately 71 million employees in FY2023, up from 63.98 million the previous, year, due to urbanization and rising infrastructure demands. 

However, this growth is primarily in unskilled labor, exacerbating the skilled worker shortage. Lack of vocational training institutions impedes skill development, according to the report. 

According to the report, global construction costs will rise in the coming year. 

Obtain Environmental Clearance for Building Projects

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Environmental clearance is one of the most crucial factors to consider when planning a construction project. It is the requirement for appropriate environmental clearance for construction projects in many cities. 

The environment may be significantly impacted by construction projects, both during and after the project concludes. Therefore, construction companies acquire environmental clearance from the relevant authorities before starting a project. 

Getting an EC clearance can be a challenging and drawn-out procedure. But it is crucial to wrap up the project environmentally conscious.  

This blog post will discuss the notification process for environmental impact assessments in India. We will discuss the meaning of EIA draft notification and its implications for building projects. We will also examine how India’s environmental clearance procedure ensures that building projects happen with the least possible negative environmental impact. 

EIA: What is it? 

The process of acquiring data regarding the possible environmental effects of a proposed project is known as an environmental impact assessment, or EIA. The development of mitigation strategies to lessen or completely eradicate those effects comes next. 

There are usually multiple steps in the EIA process. 

Screening: The proposed project undergoes screening to determine whether it will likely have significant environmental impacts before moving forward with an EIA. Further assessment is not necessary if there is no possibility that the project will have an impact before construction can begin. 

Scoping: Should the screening step indicate that there may be significant effects, the study region must decide which particular impacts need to undergo assessment.  

Assessment: Information about the possible environmental effects of the proposed project is gathered following the establishment of the study region. Numerous sources, such as computer models, field research, and lab tests, may provide this data.  

Mitigation: Based on the results of the assessment step, mitigation measures are put in place to lessen or eliminate all of the observed effects. These could be adjustments to the project’s blueprint, alternative construction methods, or requirements for post-construction monitoring. 

Making a decision: Compiling and evaluating all available data will determine whether or not to proceed with the project. If serious environmental problems continue, changes could be made or even scrapped. 

What is an Environmental Impact Assessment Notification?  

Government action to preserve the natural world resulted in the 1986 Environment Protection Act. The government issues an Environmental Impact Assessment Notification under section 3 of this act, which mandates that parties seeking to initiate new projects or alter current ones notify the government in advance and adhere to specific guidelines to protect the environment.  

What is the EIA Draft Notification? 

A formal notice that construction projects will be subject to the EIA process is the draft notification for the EIA. Usually, the notice is posted on the project website and in a local newspaper. The notification contains details about the project, the reason for the EIA, and how to take part in the proceedings. 

A crucial step in the EIA process is the notification of the draft EIA. The alert should include all pertinent project information clearly and succinctly. Included should be the contact information for those who would like to learn more or contribute. 

Among the most important recommendations are those found in the newly published draft of the EIA notification 2020, which includes shortened periods for public comment and hearings. The draft has shortened the public hearing notice period from 20 to 30 days and the hearing completion time from 40 to 45 days. 

The analysis was missing several projects classified as A, B1, or B2. Furthermore, proponents must follow specific guidelines outlined in the EIA report following approval from the relevant authority, known as post-clearance compliance. 

Projects lacking environmental clearance can now apply for a post-facto clearance through the notification, allowing them to resume regular operations.  

Construction projects with a built-up area of up to 1,50,000 sq meters are exempt, which marks a significant increase over the previous exemption of 20,000 q meters. These projects must still undergo evaluation by a state-level expert appraisal committee before obtaining environmental clearance. 

India’s Environmental Clearance Procedure

The Environmental Impact Assessment (EIA) notification 2006 governs the environmental clearance process for construction projects in India. All projects needing an EIA must register with the relevant State Pollution Control Board or Pollution Control Committee, per the Notification. 

The notification also outlines the steps involved in conducting an environmental impact assessment (EIA), including holding public meetings, submitting reports, and getting approval from expert appraisal groups or EACs.  

In India, the goal of the entire environmental clearance process for building projects is to reduce any potential harm to the environment. 

Below is an explanation of the Indian environmental clearance procedure. 

  1. Locating and Choosing the Site 

To start the project, the proponent must find a site that satisfies all applicable siting guidelines. The proponent has to find another location if the project site needs to be better. 

  1. Evaluation of Categories 

The next step is for the proponent to determine whether the project’s proposed environmental clearance is needed. The proponent carries out an independent or assisted EIA study if the notification schedule permits it. 

  1. The SPCB-submitted EIA report and evaluation. 

The investor then gives the EIA report to the relevant State Pollution Control Board and the state-based forest department (if located adjacent to or inside the forestland). 

The SPCB assesses the quantity and quality of pollutants or effluent that the project will likely generate and the efficacy of the proposed control measures to comply with the regulations. If the SPCB finds no irregularities and approves, it will issue a No-objection certificate. 

  1. Public Discussion 

Since it allows citizens to voice concerns about the project, the public hearing is essential for environmental clearance. This procedure also occurs before the no-objection certificate is issued.  

The chair of the hearing committee is the District collector. Before proceeding to the approval stage, the hearing committee reviews all suggestions and objections from the general public. 

  1. Sending a request for consideration to MoEF. 

The project proponent applies to the Ministry of Forest and Environment for the necessary environmental clearance in the case of Project A and the state government in the case of Project B. The supporting documentation for the application includes the EMP, NOC, EIA report, and details about the public hearing. 

  1. Evaluation of the Environment. 

Workers at the Ministry of Environment and Forets have reviewed the documentation, and if more inspections are required, they can stand on location. Moreover, the applications are received by and regularly met with the environmental appraisal committees, which are for each industry sector, including mining, river valley, and industries. 

The committee may also arrange public hearings to foster community involvement in development decisions for specific initiatives that spark public interest. After that, the appraisal committees draft their recommendations for accepting or rejecting specific projects.

Getting around India’s constantly changing real estate laws

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India’s real estate market has a long history of being associated with complexity and opportunity. Stakeholders, from large international investors to individual homebuyers, have seen the regulatory framework change over time to strike a balance between sustainable development and rapid growth. The real estate industry’s legislative environment is currently changing, indicating a move in the right direction toward efficiency, accountability, and transparency. 

By 2024, the real estate sector will have a value of Rs. 65,000 crores, and by 2025, it will contribute 13% of the country’s GDP. As a result, the regulatory framework will evolve to encourage the growth of this actor. We must cope with this changing environment by recognizing and responding to these progressive developments revolutionizing the industry.   

The Start of Reforms in Regulations 

A turning point for the industry was the introduction of the Real Estate (Regulation and Development) Act of 2016 (RERA). An essential first step in revitalizing the real estate sector has been RERA, which attempts to protect buyers and increase developers’ accountability. The Act provides a systematic approach to resolving disputes by guaranteeing the timely completion of projects and establishing a regulatory body to oversee transactions. 

The Benami Transactions (Prohibition) Amendment Act amendment, which has been crucial in reducing illicit transactions and enhancing transparency, is another significant achievement. It fosters an environment of efficiency and trust, along with the government’s push to digitize municipal and panchayat papers and land records through the Digital India Land Records Modernization Programme (DILRMP). Legislative trends indicate that the liberalization of the Indian economy will continue to be prioritized, with a renewed emphasis on transparent real estate development and affordable housing initiatives. 

Inventiveness in Adherence 

We now reside in a more convenient and accessible era thanks to the digitization of compliance procedures. The red tape that formerly limited the industry’s agility has been reduced thanks to online portals for RERA-mandated project registration, complaint filing, and project progress reports. Significant improvements have occurred to the ease of doing business, boosting investor confidence domestically and internationally. Furthermore, buyers can now make better-informed decisions about the projects they invest in thanks to the transparency that RERA has brought about. 

Financial Regulations: A Step in the Right Direction 

The Goods and Services Tax (GST) has simplified the structure of real estate taxes, thus reinforcing financial discipline. Furthermore, the Pradhan Mantri Awas Yojana (PMAY) is bolstering the affordable housing market, drawing in investments and guaranteeing that the populace can realize their dream of owning a home. Affordable housing saw a significant boost with the announcement during the Union Budget 2023-24 of a commitment of Rs 79,000 crore (US $ 9.64 billion) for the PM Awas Yojana. 

By lowering lending standards for home loans and updating the sector’s risk weights, the Reserve Bank of India (RBI) has also contributed positively. It has encouraged banks to lend more money to developers and homebuyers, increasing the sector’s liquidity. 

Furthermore, India’s real estate market has historically been strongly protected and heavily shielded from foreign investment by stringent laws that only allow foreign companies to make local partnerships or joint venture investments, emphasizing particular project types like townships. But under the ‘Make in India’ initiative, 100% foreign direct investment (FDI) is now permitted for large-scale infrastructure and real estate developments, including townships, industrial parks, shopping centers, and more, thanks to reforms begun in 2005 and further enhanced in 2016. This method keeps smaller-scale real estate ventures for Indian businesses safe from being overtaken by foreign corporations by strategically directing foreign investments toward large, capital-intensive projects. 

These regulatory policies do have a positive effect; this is not just theory. It is a reality that is beginning to take shape and is already providing noticeable advantages. 

Promoting Sustainable Development 

The government’s emphasis on energy transition and reaching Net Zero targets is India’s real estate industry toward a sustainable revolution. The introduction of the Green Rating for Integrated Habitat Assessment (GRIHA) is driving the creation of energy and environmental efficiency. This change indicates a clear path toward environmentally, socially, and economically beneficial sustainable practices. An additional ambitious project is the Smart Cities Mission, which seeks to integrate urban development and sustainability into a model that could emulate. 

India’s real estate laws are evolving, which indicates potential for future development and improvement. Cooperation amongst regulators, consumers, developers, and the government highlights a dedication to a sector that sustains sustainability and makes a substantial economic contribution. This adaptable governance structure satisfies both the demands of the general public and market dynamics. Maintaining and strengthening these rules is essential to creating an open, effective, and equitable ecosystem, which is necessary for a robust real estate market and economy. Despite its complexity, this shifting landscape creates opportunities for a more stable and reliable real estate sector, which is critical to India’s continued economic development.  

India’s fast-moving luxury real estate market: Why

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The demand for various types of lavish real estate has continued to rise and does not seem to be decreasing, as evidenced by buyers’ insatiable appetite for luxurious homes. In contrast to affordable housing, luxury housing has experienced tremendous demand from consumers before and after the pandemic.

According to a recent Anarock study, luxury properties in metropolitan areas above Rs 1.5 crore are experiencing what some experts might call a “golden run.” The report estimates that between January and September 2023, 84,400 luxury homes (with prices over Rs 1.5 crore in prime real estate markets, including Delhi-NCR, MMR, Bengaluru, Pune, Hyderabad, Chennai, and Kolkata. This figure surpasses the previous record of approximately 39,300 units sold during the same period in 2022. 

A trend worth observing in the current market, in addition to the overall rise in sales, is the diversification of luxury real estate. Uber-luxurious penthouses, villas, independent floors, or apartments have established themselves as standard luxury offerings for the business and ultra-rich, particularly given the apparent rise in demand for them in major cities. Top developers and real estate magnates have either upgraded themselves into luxury developers or are expanding their footprints in it swimmingly, highlighting exceptional profitable values concomitant with the thrill of getting massive consumer attraction with no budgetary constraints. 

One of the main characteristics of a plethora of opulent homes that nearly seem like irresistible opportunities for wealthy individuals to invest in wealth is that it has transformed into an oasis of innovative and breathtaking recreational spaces. Luxury homes often feature a broad range of physical infrastructure that inhibits a profoundly cosmopolitan environment, such as an open terrace, medical room, business lounge with desktop stations, kids’ laboratory, moon deck, prayer room, floating cabana, infinity pool, and snorkeling pool; other features include outdoor grills with open-air dining, mini theater, tuck shop, children’s gym, yoga room, kids’ mania, spa and salon, virtual golf simulator, gaming zone, and sun-tanning salon. Conversely, community centers, gymnasiums, and sports clubs have lost their shock value. 

Concurrently, numerous homebuyers have stated that they want to invest in communities that have earned green certification; this is a natural consequence of the post-pandemic awakening, which has led to a growing consciousness among individuals regarding their health. Due to their preference for aesthetically pleasing and health-promoting properties for their family, kids, and themselves, people frequently invest in luxury real estate. However, most luxury real estate agents are going green and incorporating eco-friendly building toolkits into their development agendas, taking a cue from Sustainability. Luxury projects now oversee the widespread inclusion of green areas such as herb gardens, butterfly gardens, bird’s zones, meditation zones, jogging tracks, pottery barns, and fragrance gardens to promote environmentally friendly homes. 

“Gurgram is the hottest luxury real estate market in NCR,” claims Vikas Garg, Joint Managing Director of Ganga Realty. The old roads’ aesthetic appeal and the new corridors’ quick construction, particularly those near the Dwarka Expressway, have helped the luxury real estate markets thrive and draw in new homebuyers. Sector 84 has grown to be one of the most significant areas for residential investment because of its proximity to the Dwarka Expressway and the Global City project. Additionally, contemporary luxury developments have a charming, timeless appeal and idyllic charm with a lavish array of internal and external amenities and built-in features that appeal to plenty of first-time homebuyers who desire homes with comprehensive features.” 

Saransh Trehan, Managing Director of Trehan Group, elaborates on the significant growth of independent floors in Gurugram, stating that “Independent floors have reached an optional level of purchases in Gurugram, undergirding a dramatic shift in favor of low-density living which offers privacy, enhanced security, and composure. “Among the most popular locations for independent floor options are Golf Course Extension Road and Southern Peripheral Road. These roads frequently offer many opulent amenities, stunning interiors, and comforts. Millennials and Gen-Z are known for preferring independent floors over shared ones. They prefer large apartments with flexible layouts, guaranteed privacy, and the freedom to come and go when they want to.  

India has a remarkable history and is the birthplace of luxury real estate. Globalization has sparked an endless period of acculturation, with Western concepts such as villas, low-density housing, and penthouses becoming thematically Indianized and appealing to home buyers who also want Indian luxury homemakers to adapt, explore, and reinvent themselves in multiple ways due to travel and cultural exposure. Although “luxury” was once thought to apply exclusively to bungalows, modern luxury real estate has expanded to meet the needs and preferences of various luxury home buyers. 

Sotheby’s International Realty report shows that India’s wealthy are considering real estate investments

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High-net-worth individuals (HNIs) and ultra-high-net-worth individuals (UHNIs) showed substantial economic optimism in the India Sotheby’s International Realty (ISIR) annual Luxury Outlook Survey 2024, with a staggering 79% expressing confidence in the country’s positive trajectory for 2023-24, up from 59% the previous year. 

This positive outlook also applies to the real estate industry. 71% of respondents stated they intended to purchase real estate in the next 12 to 24 months, demonstrating strong confidence in the market despite a nearly 40% increase in property prices over the previous 24 months and an increase in mortgage rates. 

The main reason for real estate investment (44%), capital appreciation, has surpassed lifestyle upgrades. It indicates that investors are returning to the market with an emphasis on long-term appreciation. 

India is more confident than ever in directing its destiny. The International Monetary Fund projects that by 2027, the fifth-largest economy in the world will rise to the third rank. The country’s central bank, the RBI, forecasts 7% GDP growth in 2024. An all-time high in the stock market and record-breaking home sales in Indian real estate in 2023 are indicators of the growing economic momentum. The top end of the real estate market will benefit the most over the next 12 to 24 months. Goldman Sachs Group Inc. projects that the number of people in the affluent class will almost double to 100 million over the next three years. India’s ultrawealthy are growing. The ranks of the ultra-rich have continued to rise due to the strength of strat-up ecosystems and the increasing number of unicorns. Amit Goyal, MD of India Sotheby’s International Realty. “Our Luxury Outlook survey results show a renewed and heightened interest among investors who now view real estate as a compelling avenue for long-term wealth creation.”  

“The resilience and potential of the Indian economy are reflected in the remarkable shift in economic sentiment we are witnessing. The significant rise in fresh luxury project launches in the top seven cities in 2023 is unsurprising. Additionally, attitudes are changing consistent with real estate’s enduring value and potential for long-term financial growth. “We think investors are strategically positioning themselves for wealth accumulation and creating multi-generational wealth through real estate investments,” says India’s Sotheby’s International Realty CEO Ashwin Chaddha. 

Regarding home loan interest rates, the Reserve Bank of India (RBI) plans to begin lowering rates in 2024, according to 56% of HNIs and UHNIs, indicating a promising future for mortgages and financing. 

A startling 83% of wealthy Indians, according to the survey, own several luxury homes, indicating a trend of diversified real estate portfolios among the affluent. 

In addition to their primary residences, 34% of respondents showed off their commercial real estate, 25% their vacation homes, 21% their agricultural land, and 20% their farmhouses. 

Other noteworthy results showed that Goa was the preferred destination for 35% of holiday home buyers, indicating the long-lasting appeal of Goa’s lifestyle to Inia’s affluent. The desire to purchase real estate abroad stayed steady at 12%, with the USA and Dubai, United Arab Emirates, continuing to be the top destinations. 

A desire to consolidate their portfolios and concentrate on higher-quality properties and assets that generate income was indicated by 43% of UHNI and HNI respondents.  To research and view properties, 34% of UHNIs and HNIs have switched to using digital tools, such as walkthroughs and 3-D virtual reality, highlighting the impact of digital transformation even at the top of the luxury housing market. 

Experts predict that in 2024, India’s real estate market will reach new heights

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Due to high demand and plentiful supply, India’s real estate market, which resumed last year following a two-year hiatus caused by the pandemic, broke records in 2023. Sales across all segments and new launches experienced notable growth in the year.  

Strong demand and plentiful supply in the residential market during 2017 point to its revival and sustained growth. Ninety-one percent of all sales in 2022 were residential, with 196,227 units sold in the first nine months of 2023, according to a study released by real estate consultant JLL. 

The market for luxury homes expanded at a rapid rate. Sales between January and September of 2023 by prices in the mid-segment (Rs 50-75 lakh). Nonetheless, the premium segment’s share (above Rs 1.50 crore) grew from 18% in 9M 2022 to 22% in 9M 2023. In the premium segment, the first nine months of 2023 saw the highest sales in Delhi, NCR, and Mumbai.

What Industry Insiders Have to Say 

“As the final curtain descends in 2023, the real estate industry witnesses an impressive surge, with Gurugram’s mid-housing sector taking center stage,” stated Pradeep Aggarwal, founder and chairman of Signature Global (India) Ltd. The year-end reflection reveals an upward trend from year to year and demonstrates a strategic ability to satisfy the growing demand for reasonably priced yet high-quality homes.” 

“In 2023, the Indian real estate sector experienced significant prosperity, particularly in the luxury real estate segment, witnessing a remarkable 97 percent surge in luxury home sales,” stated Aditiya Khushwaha, CEO and director of Axis Ecorp. It emphasizes the luxury real estate market’s tenacity and appeal.”

He believes that through 2024, there will still be a growing demand for luxurious real estate and vacation rentals. 

Rise Infraventures Limited co-founder and MD Shantanu Gambhir, “Gurgaon’s real estate saw a remarkable price appreciation in 2023, outshining Bengaluru and Noida.” Despite a surge in real estate prices, the city saw a startling 28.9 percent increase in demand quarter over quarter, surpassing the national average. We anticipate that this trend will carry over into 2024.”

The real estate market in Tier 1, 2, and 3 cities made significant progress in 2023, and this promising trend ought to continue through 2024, according to Mohit Goel, MD of Omaxe Group. Cities like Lucknow, Chandigarh, and Dwarka, as well as other areas, became important centers for high-end residential and commercial developments, adding to the appeal of these places. The year ahead anticipates an elevation in the real estate landscape, promising substantial returns on investment and robust job creation.” 

He says government policies have played a role in this growth by driving demand, launching new products, and aligning consumer behavior with changing supply dynamics. He also says that demand from cities alongside tier 2 and tier 3 towns shows how aspirational living spaces are becoming increasingly popular, thus changing the real estate market. 

“In 2023, real estate developers strategically expanded into tier-2 and tier-3 cities, acquiring 1,461 acres of land, primarily for residential developments,” stated Radheecka Rakesh Garg, director of Rajdarbar Realty. This pattern emphasizes how important non-metropolitan markets are becoming, particularly for low-rise and plotted formats.” 

According to Garg, 2024 will see even more dynamism in the real estate market, satisfying the hopes of India’s smaller cities as developers look into unexplored growth areas. 

The real estate market in India saw exceptional growth in 2023, particularly in the luxury home market, according to Nayan Raheja of Raheja Developers. Luxury and large living spaces were significant responses to changing urban tastes.

With a startling 216 percent increase in sales of luxury homes, Delhi-NCR became a hotspot. Positive economic indicators drove this spike in NRI investments. Raheja went on to say that in 2024, there will be no letting back in the upscale housing market. 

India’s Top 8 Housing Markets See 22% Increase in Sales and Bumper Growth: Report.

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According to the most recent data from PropTiger.com, the top eight residential markets worldwide have shown strong growth, with a 22% in sales and a 17% increase in new supply during the third quarter of the calendar year (July-September 2023).

According to a report published by PropTiger.com titled “Real Insight Residential– July-September 2023,” residential unit sales rose to 1,01,220 in the third quarter from 83,220 units during the same period in the previous year.

All cities saw rises in sales, with the Mumbai Metropolitan Region (MMR) and Pune contributing nearly half of the total volume, excluding Chennai. 

The quarterly report tracks eight key housing markets: Delhi-NCR, MMR, Chennai, Kolkata, Bengaluru, Hyderabad, Pune, and Ahmedabad.

Sales information on apartments and villas is part of the data on the housing market. The micro-markets in Gurugram, Greater Noida, Faridabad, and Ghaziabad are all part of Delhi-NCR. Mumbai, Thane, and Navi Mumbai are all part of the MMR. 

The business head of PropTiger.com and CFO of REA India, Vikas Wadhwan, stated: “The housing markets in the top eight cities are still expanding. Positive customer sentiment supports the robust demand.” 

Pent-up demand, rising disposable income, steady interest rates, and rekindled investor demand were among the main drivers of the sales growth, according to Wadhawan. 

  • According to data from PropTiger.com, Ahmedabad’s year-over-year growth in housing sales is 31% higher, reaching 10,300 units from 7,880 units.
  • Sales in Bengaluru have registered a maximum growth of 60% to 12,590 units from 7,890 units. 
  • Delhi-NCR saw a 44% increase in sales, from 5,430 to 7,800 units. 
  • Hyderabad saw a 34% increase in sales from 10,570 units to 14,190 units. 
  • Sales in Kolkata have increased by 43% to 36,10 units from 2,530 units. 
  • Due to a higher base, sales in Mumbai have only slightly increased, from 28,800 units to 30.300 units. 
  • Pune’s sales increased by 18% to 18,650 units from 15,700 units. 
  • The only market to see a drop in sales was Chennai, where sales of 3,870 units fell from 4,420 units, a 12% decrease. 

“The market is consolidating, with demand centered around reputable developers, which gives homebuyers renewed confidence, especially for projects still under construction. It was not the case a few years ago.” 

31% of sales in the Q3 period occurred in the price range above Rs 1 crore, and 14% of units sold were ready to move into. 

The chief of research for PropTiger.com, Housing.com, and Makaan.com, Ankita Sood, stated: “Despite global difficulties, Indian real estate markets are strengthening in all major cities. The 22% rise in property sales from July to September and the 17% year-over-year growth in new launches indicate that we are in the midst of a residential real estate upcycle. We predict the holiday season will result in further revenue, perhaps breaking previous year’s records.” 

Regarding new supply, Ahmedabad grew the fastest, reaching 16,670 units, while other cities showed erratic trends. Even so, things remained positive overall, with 123,080 new units arriving– a 17% increase across the eight markets.