Outlook 2024: Residential and commercial segments on the rise

The real estate sector’s resilience and adaptability are a big draw, propelled by factors such as urban trends, government initiatives, technological integration, and consistent demand

March 15, 2024 01:45 pm | Updated 01:45 pm IST

The increasing drive of urbanisation, combined with consistent growth across various sectors in India, is fuelling a formidable demand for both housing and office spaces. Cities such as Bengaluru, Pune, Chennai, and Hyderabad serve as beacons of this paradigm shift, reflecting evolving residential and commercial preferences. Despite global headwinds, both homebuyers and businesses in India remain resilient, continuing to ride on India’s growth story.

Changing dynamics

One of the primary catalysts for the anticipated growth lies in the ever-evolving urban dynamics of our nation. Cities are becoming magnets, attracting individuals in pursuit of better opportunities, education, and improved lifestyles. This urban migration, coupled with a burgeoning population, forms the cornerstone for a surge in demand for residential spaces, especially in the thriving metropolises. A recent report by JLL highlights substantial growth of 26% in housing sales across the top seven residential markets in India, indicating a robust market in 2023. Notably, the premium segment priced above ₹3 crore has seen an impressive rise of 83% in the first nine months of 2023. Fuelled by the discerning choices of High Net Worth Individuals (HNIs) and Non-Resident Indians (NRIs), this resilient segment remains unaffected by market fluctuations. This trend suggests an expanding horizon that is set to redefine luxurious residential living in the Indian real estate landscape. Geographically, Delhi-NCR and Mumbai stand out as leaders in housing sales, particularly in the premium segment, where luxury segment sales have shown a noteworthy increase.

Product diversification

In an era defined by rapid technological advancements, the real estate industry is not left untouched. The integration of technology is transforming the way individuals interact in the homebuying process. Virtual property tours, online transactions, and digital documentation are becoming integral, enhancing transparency, efficiency, and convenience. This tech-driven evolution is poised to create a more seamless and user-friendly experience, appealing to a wider audience. Additionally, the strategic procurement of land in key areas and along burgeoning growth corridors underscores the industry’s proactive approach. Developers, attuned to the pulse of the market, are diversifying their product portfolios. As per reports, new launches are expected to rise with developers having secured 725 acres of land in the January to November period last year for proposed residential development.

Amid this residential growth, the rise of commercial real estate emerges as a complementary force. India’s commercial real estate is set for strong growth driven by robust macroeconomic fundamentals, domestic consumption resilience, and cost-effective business operations attracting corporate offices. Coworking spaces, smart city initiatives, and strategic infrastructure development are adding to the commercial sector’s momentum. Expectations of steady investment activity, supported by a strong acquisition pipeline, further underline the positive outlook for India’s commercial real estate.

E-commerce boom

Various cities in India are experiencing a surge in demand for shared office spaces, driven by businesses adapting to flexible work models. The e-commerce boom is intensifying the need for strategically located warehouses and distribution centres, influencing the demand for commercial spaces. Concurrently, government initiatives focused on smart city development are contributing to the overall growth of the commercial real estate sector. According to JLL’s report, the office sector is poised for a strong year-on-year growth of 20–22% in 2024, highlighting the sector’s resilience and enduring demand fundamentals. The report further states a substantial increase in net absorption, reaching between 45-47 million sq.ft., aligning with the overall positive sentiment. The sustained demand for flexible workspaces remains integral to occupier strategies, encompassing both conventional and on-demand flex spaces for portfolio optimisation and enhanced employee experiences.

Steady growth across sectors

The cost-effectiveness and abundant skilled talent make India a top choice for corporate offices, ensuring a continued high position on the corporate radar. In logistics and industrial sectors, sustained demand is anticipated, driven by supply chain diversification and ongoing government support. The retail sector is expected to thrive with retailers leveraging diversified locations and omnichannel sales strategies to navigate the evolving business landscape.

Economic implications
According to the Naredco-Knight Frank report, India’s real estate sector could evolve into a significant $5.8 trillion industry by 2047, emerging as a key catalyst for the nation’s economic growth. This not only represents a substantial growth path but also establishes the real estate sector as a fundamental pillar of long-term economic development. Furthermore, the sector also has the potential to create a large number of jobs, both directly and indirectly.

The writer is Founder and CEO, MAIA Estates.

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