Real estate trends to watch out for in 2023

There’s something for everyone — young homeowners, professionals who choose to live holistically, and seniors who need their community space

December 30, 2022 03:57 pm | Updated 05:14 pm IST

2022 was when economies across the globe were dealing with post-pandemic disruptions, escalating geopolitical situations, and the risk of oncoming inflation. The year was also classified as a phase of recovery for the Indian economy. The real estate sector in particular showed resilience and withstood market volatility thanks to urbanisation, a growing population, and rising incomes.

According to recent industry reports, India’s real estate market is expected to reach ₹13,00,000 crore by 2023. A favourable economic outlook will further contribute to the market’s improvement, supported by other factors including the emergence of first-time homebuyers, a growing economy, greater numbers of HNIs investing in luxury properties, a lower interest rate, and more. Contributing as well will be the increase in investor interest thanks to the tax advantage and the potential for building wealth that real estate offers.

“The rising demand for residential and commercial properties is a healthy sign for both investors and developers. The fear of anticipated recession in the world economy has prompted investors to choose the real estate sector as it seems to be the only industry immune to the current economic slump. Investing in warehousing and office spaces is going to be one of the most attractive categories in commercial real estate in 2023.”Kishore ReddyCMD- MANA, Bengaluru

Some trends will dominate the real estate sector in 2023.

More expansive homes: The luxury real estate market has been a primary driver behind the sector’s revival, and this trend will continue well into 2023. Uber-luxury villas, villaments, large condominiums, holiday homes, fully-serviced residences, and plots in self-sustained communities will feature as the most attractive investments.

“2023 will be yet another year where the Indian real estate sector will establish itself as one of the most robust industries across the world. The impact of rising interest rates and recession fears will not deter the industry. It will continue to be an attractive proposition for investors.”Kishan GovindarajuDirector, Vaishnavi Group, Bengaluru

Consumers will continue to demonstrate a preference for properties priced at ₹5 crore and above. For a luxury villa, the average budget will be between ₹10 and ₹25 crore, while in some cases this could also go as high as ₹90 to ₹150 crore. A trend that will remain at the forefront is the demand for fully-serviced residences. Buyers have come to fully appreciate the inherent value of the services and the immense possibilities that such residences present.

“We expect home purchase synergies to remain largely intact for the time being with banks likely to delay passing on further significant hikes to consumers in the immediate term. The residential sector that seems to have gained momentum is likely to continue if not hit by global financial crisis. High-end and luxury segments that saw strong growth since last year, will remain largely insulated as demand for spacious houses with more green and open spaces is likely to increase.”Bhavesh KothariFounder & CEO, Property First, Bengaluru

Holistic living experiences: This year has seen developers and the real estate sector succeed at translating emerging trends and changing client preferences into offerings that meet market demands. The onset of new trends, thanks to the evolving consumer shift post-pandemic, has seen high-end developments with spaces for live-work-play gaining prominence. An affinity for a holistic living experience that keeps both sustainability and wellbeing at the centre has been a major catalyst for the surge in interest in homes that are multi-functional, have dedicated workspaces, silent zones, or relaxation areas.

“There will be a shift in demand for sea-facing homes with large open spaces like balconies, terraces, courtyards, gardens, and parks. Work-from-home and the hybrid work culture have changed the pattern for most home buyers and this trend will play out.”Shraddha Kedia-AgarwalDirector, Transcon Developers, Mumbai

Interest in gated communities: The last few years have reshaped the sentiments, tastes, and preferences of homebuyers. The long hours spent indoors have inspired a greater appreciation for integrated ‘live-work-play’ communities. Ready-to-move-in properties, branded plots, and independent villas have witnessed significant interest, along with the ‘15-minute city’ — homes in urban, self-sustaining environments.

Residential plan
The 15-minute city, a term coined in 2016 by Carlos Moreno, is an urban concept that implies having all necessary amenities within a short walk or bike ride from one’s home.

We anticipate this trend to continue, with reports showing that 82% of employees prefer to work from home. With professionals from diverse sectors spending more time in their houses, the attraction of luxury residences in gated communities with a host of amenities, including community spaces such as parks and gardens, clubhouses, spas, and sports and wellness facilities, has been reaffirmed.

“The rental demand resurgence will continue. Cities infamous for high traffic congestion are going to see a steep rise in rentals in areas where offices are located. But cities that have made investments in building a reliable public transport infrastructure will fare better on evenly spreading out the rental demand across multiple areas.”Rajat RastogiExecutive Director, Runwal Group, Mumbai

The hybrid work model has also boosted the appeal of the periphery or suburbs. Within these communities, homebuyers can benefit from an amalgamation of modern and natural living. This has been particularly evident in the luxury segment, where HNIs and UHNIs have seen the appeal of investing in weekend or second homes.

“2023 will prove to be a game-changer for the commercial real estate sector. The key trends that are expected to drive the sector’s growth include evolving business models, increasing investor activity and deeper geographical expansion with increased efficiency across existing markets. Tailor-made solutions will be at the heart of coworking spaces.”Shesh Rao PaplikarCEO & Co-Founder, BHIVE Group, Bengaluru

The senior living segment: The demand for fully serviced senior living homes has increased substantially. This segment is expected to become an important residential asset class, thanks to the expanded focus on health and our fast-ageing population. While still at a nascent stage, real estate developers have begun to cater to the needs of our senior population. In the coming years, senior living properties will not only provide well-designed homes but also fully-serviced ones with amenities such as 24-hour medical assistance, food, security, and activities that foster a sense of community.

“The use of technology will play a major role in the real estate sector. Focus on sustainability and green building practices will also play a big part with buyers promoting properties that are energy-efficient and have a smaller environmental impact. India’s real estate will see its biggest change ever as people buy and sell property online.”Avneesh SoodDirector, Eros Group, New Delhi

With the return of normalcy from the lows of the pandemic, the real estate market is expected to usher in greater growth in 2023, thanks to the booming sense of confidence amongst those purchasing real estate. As the sector gets further organised and the share of the larger developers increases, we will see a greater desire for homeownership and a marked shift away from renting, driven by the luxury housing segment’s momentum. India’s rapidly growing economy, its attraction for foreign and domestic investors, the increasing population, improved infrastructure, and government subsidies will all generate developer and consumer optimism.

“Residential sales momentum is expected to continue in 2023 as prospective homebuyers’ preferences for bigger homes, better amenities and attractive pricing will keep them interested in sealing the deals. Reputed and trusted developers will witness better sales in the mid-income and affordable housing segments. ”Pritam ChivukulaCo-Founder & Director, Tridhaatu Realty and Treasurer, CREDAI MCHI, Mumbai

2023 will present exciting short- and long-term investment opportunities for both first-time and seasoned investors, adding to the year’s promising outlook.

Emerging markets
With tier II and tier III cities experiencing immense economic growth, it is anticipated that there will be an entire macroshift in consumer preference towards owning a home in a non-metro city. Due to the government’s focus on building 100 smart cities, a healthy housing market is thriving to support this infrastructure boom. Offering an alternative to overcrowded and overburdened metro cities, these tier cities will offer diverse real estate investment opportunities in 2023.
It is largely expected that commercial real estate will pick up pace in 2023, maintaining its upward trajectory in tandem with the growth of the Indian economy. With organisations returning to offices, Grade A and flexible office spaces will see a healthier uptick. According to JLL, the Grade A office market will expand to 1.2 million sq. ft. by 2030. Several MNCs are moving their manufacturing units to India, with more companies expected to follow suit, which will open new growth avenues for the sector.

The writer is Executive president, Residential Business, Embassy Group.

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