Residential realty momentum in 2023 strongest in decade as demand picked up

As 2023 comes to a close, the real estate sector seems to be settling down. The housing market in India saw highest sales in more than a decade this year as demand for spacious and luxurious living picked up post Covid.

Global real estate service firm Cushman & Wakefield, in its report ‘Outlook 2024’, said that new launches in 2023 are likely to touch close to 300,000 units, up 11 per cent, surpassing the previous high seen in 2022. Factors such as increased preference for quality developers & lifestyle amenities, and rising incomes have sustained the momentum despite the high interest rates.

Latest Anarock Research data indicates that housing sales in the top seven cities have created a new peak in 2023, an all-time high.

Around 476,530 units were sold in 2023 against 364,870 units in 2022 across the top seven cities – Delhi-NCR, Mumbai Metro Region (MMR), Bengaluru, Pune, Hyderabad, Chennai and Kolkata. This is a 31 per cent rise year-on-year (Y-o-Y).

The last peak in the decade was seen in 2022, after 2014, when around 343,000 units were sold in the top seven cities.

“Amid unprecedented global uncertainties beginning early 2023, the Indian real estate sector emerged as a beacon of resilience and adaptability during the year. On an annual basis, housing prices rose between 10 and 24 per cent across the top seven cities, primarily due to increased input costs and strong demand. Interestingly, despite the price rise, we saw a significant jump in housing sales and new launches,” said Anuj Puri, chairman, Anarock Group.

Real estate analytics platform PropEquity report shows that the residential real estate sector has performed exceptionally well this year, especially in terms of absorption, which has been the highest in the last decade.

Tier-1 cities have witnessed 2.4x times new launches and absorption of Tier-2 cities.

“The year 2023 is set to be a record year with the highest sales in residential markets recorded ever with Tier-1 cities growing by 15 per cent. Luxury markets also did exceptionally well this year with launches of A Grade Developers. Despite the global indicators showing a downward trend, Indian residential markets have been resilient and we expect the momentum to continue for the next quarter,” said Samir Jasuja, Founder & Managing Director, PropEquity.

Developers’ gain

In light of the positive trajectory of the Indian residential real estate market, developers also witnessed effective purchaser traction. Developers from across the country saw their portfolio glimmer through rise in sales, inventories, property launches, and more. 

Delhi-based DLF Homes Developers said metropolitan cities like NCR and Gurugram have seen a consistent demand growth in luxury residences throughout 2023. 

“The demand for luxury residences, particularly in major Indian metropolitan areas like NCR and Gurugram, has shown consistent growth in 2023. Doubling of growth in luxury segments is expected in 2024. Additionally, a noteworthy trend is the increasing interest from non-resident Indians (NRIs) seeking investments in India. This emphasises on the importance of well-located developments by reputed developers with a focus on community living,” said Aakash Ohri, joint managing director (joint MD) and chief business officer, DLF Home Developers.

Brigade Group has seen residential growth across all its portfolios, ranging from affordable to mid-segment and premium products in its key markets — Bengaluru, Chennai, Hyderabad, and Mysuru. “For the first two quarters of the financial year, we have achieved 3.1 million square feet of residential pre-sales with equivalent revenue of Rs 2,224.4 crore. Inventory of ready or under-construction projects has come down to an all-time low due to strong demand,” said Viswa Prathap Desu, chief operating officer (COO), residential, Brigade Group.

Brigade Group said the mid-income segment, with ticket sizes ranging from Rs 80 lakh to Rs 1.5 crore, continues to see a good demand. There was also a growing demand for luxury apartments and villas priced at Rs 1.7 - 2.5 crore and above.

The group has tied up properties in Bengaluru and Chennai where it plans to introduce apartments priced above Rs 2.5 crore. “India may grow rapidly over the next five years, with gross domestic product (GDP) growth expected to outpace the previous year. With the real estate sector playing a critical role in the growth of the economy, this special combination will pave the way for the growth of the sector in Tier II cities,” said M Murali, chairman and managing director, Shriram Properties.

BCD Group, which is Bengauru-based, said it experienced unprecedented success in the sales arena, with over Rs 300 crore worth of residential stock sold in the vibrant Bengaluru micro-market alone.

The company’s venture in Tier 2 cities such as Raipur, Chennai, Bengaluru, and Lucknow, has also seen substantial demand, resulting in a remarkable 60 per cent revenue growth.

“BCD Group has demonstrated an impressive surge in its residential portfolio surpassing the 500,000 square feet mark from an initial 300,000 square feet. Looking ahead, BCD Group is poised for further expansion,” Angad Bedi, MD, BCD Group.

“The premium and luxury segment saw a significant boost, making up 24 per cent of the 349,000 units sold in the first nine months of 2023, a 115 per cent increase from the previous year. Sales of luxury apartments or villas have reached new heights this year. This can be attributed to the country's growing economy, a rising aspirational class, and a preference for top-notch amenities, such as golf course and club house,” said Kamal Singh MD and chief executive officer (CEO), Arvind Mindspaces. 

“Since India has a housing deficit, the demand for sustainable housing will remain buoyant. A strong pipeline of supplies is being developed. For 2024, the surge in demand will result in a 10-12 per cent increase in property prices,” said Niranjan Hiranandani, chairman, NAREDCO National.