As we reflect on the Indian residential sector's performance in the past few years, it is undeniable that the Covid-19 pandemic had a significant impact on the industry's growth. However, after facing a slowdown in fiscal years 2020 and 2021, the residential sector experienced a year of recovery and growth in 2022. Demand increased by 19 percent YoY and supply grew by 2.9 percent YoY, and this recovery was observed across tier I, II, and III cities, with some cities even reaching pre-Covid levels of demand and supply.
Real estate remains a preferred investment avenue for investors, providing a safer form of investment and a sense of security. With volatility in equity markets and inflationary pressures in the economy, real estate has emerged as a viable investment solution offering higher returns in the form of rental yields and promising price appreciation.
Bigger configurations ruling the roost
The longing for having one’s own home has become stronger ever since the pandemic and has continued to remain strong. Customers are gravitating towards multi-storey apartments and according to Magicbricks’ Report “How India Searched for Properties in 2022”, 80 percent of prospective home buyers searched for apartments in 2022 as compared to 67 percent in 2021. There is an evident preference towards bigger spaces in self-sustainable societies with value-added services and amenities which enhance the well-being of the homeowners.
Further, quarter on quarter, customers have shown a growing preference for larger configurations of 3 BHK and above, making it the most searched configuration across India. Magicbricks’ PropIndex report (Jan-March 2023) observes that in Bengaluru, 3 BHK and above units commanded 59 percent of the demand and 54 percent of the supply and in Delhi, 3BHK and above units commanded 66 percent of the demand and 70 percent of residential supply.
Emerging growth corridors
While our research observes that Bengaluru, Mumbai and Pune were the most searched cities in 2022, the growing popularity of remote & hybrid working models is encouraging homebuyers to explore new hotspots, including peripheral areas of metros and smaller towns. Our research shows that demand for residences in Gurugram and Noida increased 34.5 percent and 35.8 percent, respectively in 2022 vs 14.8 percent in New Delhi. Similarly, cities like Nagpur (49 percent), Coimbatore (27 percent) and Bhubaneswar (12 percent) observed YoY growth in residential demand and showed promising signs to become growth engines of real estate in India.
Key initiatives by the Government, including AMRUT, Smart Cities Mission and extensive outlay in infrastructure development are improving the amenities and quality of life in these cities. For example, Indore boasts of a robust waste management system and has been voted the cleanest city five times in a row by Swachh Survekshan, while cities like Bhopal, Patna, Raipur are homes to AIIMS, IITs and IIMs. It is also heartening to see that the government is maintaining its focus on furthering urbanisation initiatives, especially with the outlay of INR 10,000 crores per annum for an Urban Infrastructure Development Fund (UIDF) for tier 2 and tier 3 cities.
As these cities become more sustainable and resilient, they are well on their path to becoming industrial and educational hubs, which will certainly have a multiplier effect on real estate as well.
Under construction vs Ready to move-in
Increasingly, home-seekers are showing interest in under-construction projects as ready-to-move-into apartments of the same size and with similar amenities are likely to be 10-30 percent more expensive. With developers showing promising signs of new launches and completing delivery of under-construction properties, investments in such avenues are being preferred by customers. Apart from the appreciation potential, such properties may also offer flexibility for customization according to the owner’s preferences making it more popular amongst home-buyers. Hence, though ready-to-move properties offer several safety nets, under-construction properties are becoming a popular choice for those with relatively long-term investment horizons.
Digital house hunting
Digitization is playing a crucial role in saving time and resources for customers throughout their home-buying journey, from discovering relevant properties to moving in. More than 90% of home buyers[2] are using the internet to search for properties, aided by advanced technologies like AI and machine learning that personalize results based on their preferences. Digital tools like virtual walkthroughs, remote viewing, and 3D modelling have made it possible for customers to overcome the challenges of restricted movement and access relevant services to help them realize their dream homes.
Since Magicbricks metamorphosed into a full-stack service provider for all real estate needs, we have seen growing interest and acceptance by customers to use technology-enabled services such as home loans, interior designing, vastu and others to make their home-buying journey more convenient and seamless. Our YouTube channel, MBTV, which has dedicated advisory videos has grown by 48% between 2021 and 2022, owing to the variety of expert advisory and review videos it features to assist customers in their home-buying journey.
Given that real estate decisions are high-stakes and require a great deal of credibility and authenticity, digitising interventions is the only way to ensure this seamlessly.
In conclusion, the path ahead for the real estate industry shows promising signs. As a bellwether industry that opens opportunities for employment, infrastructure development and overall growth, growth of the real estate industry would certainly pave a path for economic growth as well, and encourage new vistas for innovation, product development and technological interventions.
[1] Magicbricks’ How India Searched for Properties in 2022
[2] chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.nar.realtor/sites/default/files/migration_files/Study-Digital-House-Hunt-2013-01.pdf
These articles are not written by Moneycontrol editorial.