Real Estate In India: Navigating Thе Invеstmеnt Maze For 2024

Analysts assert that the sector's upward trajectory can be attributed to sustained urbanization, expansion in the rental market, and a consistent increase in property prices.

The Indian real estate market has experienced significant growth this year. According to a recent ANAROCK Research report, housing sales reached unprecedented levels in the first nine months of 2023, surpassing the total sales value for the entire year of 2022 within this short timeframe. The surge is expected to continue, with the final data for 2023 likely to show further gains. Major cities like Mumbai MR, Delhi NCR, Pune, Bengaluru, Chennai, Hyderabad, and Kolkata witnessed an unprecedented rate of residential real estate property transactions. The real estate boom has also extended to smaller cities and towns across India. Considered a long-term and secure investment by many experts, real estate is gaining popularity. A report by Concorde on the future and trends of real estate in India predicts an impressive Compound Annual Growth Rate (CAGR) of 9.2 percent from 2023 to 2028. The outlook for the future appears promising, and 2024 is anticipated to mark the next phase in the evolution of the Indian real estate sector.

Analysts posit that the sector's upward trajectory is primarily driven by sustained urbanization, growth in the rental market, and a consistent appreciation in property prices. As per the JLL Home Purchase Affordability Index report, residential real estate is projected to remain within affordable limits and reach a three-year high in 2024. The anticipated repo rate cut is expected to fall within the 60-80 basis points range, ensuring that home rates remain within an affordable range for potential buyers. Major metropolitan cities such as Mumbai NR, Delhi NCR, Chennai, and others are poised to lead this upswing in the real estate market.

However, many experts believe that the prevailing global economic uncertainty may lead investors towards safer, long-term options such as real estate. "Economic uncertainty casts a significant shadow as we navigate the investing landscape in 2024. Successful real estate investors, on the other hand, recognize the value of resilience and adaptation. Diversifying portfolios, actively monitoring global events, and making data-driven decisions are critical in managing concerns about market volatility. The idea is to seek possibilities amid uncertainty rather than just weathering the storms."

On the flip side, LC Mittal, Director of Motia Group, believes that the real estate sector is currently undergoing a significant technological transformation in 2024, and technology will play a pivotal role in assisting real estate investors this year. Mittal stated, "Proptech advancements are no longer a luxury for investors seeking to remain competitive. Virtual property tours, blockchain transactions, and other technological advances are transforming the way we purchase, sell, and manage real estate. Investors that embrace these changes will not only streamline their operations, but they will also gain a significant competitive advantage."

Meanwhile, Aman Gupta, Director of RPS Group, advocates for the green development of real estate and believes it should be the way forward. Gupta expressed, “Sustainability is no longer an option; it is an essential component of real estate investment in 2024. The green revolution has taken center stage, with environmentally-friendly developments increasingly appealing to investors. Aside from ethical concerns, using green technologies and ecologically sensitive activities is a wise financial option. Properties that adhere to sustainability standards not only contribute to a better environment but also exhibit a dedication to long-term wealth generation.”

Piyush Gupta, Managing Director of Capital Markets & Investment Services at Colliers India, is optimistic about Real Estate Investment Trusts (REITs). He stated, “Real Assets businesses across various sectors have shown impressive performance in 2023, with Residential, Office, Logistics, Hospitality, and Retail continuing to thrive. The residential sector is experiencing a structural upturn, with strong consumer confidence driving record sales across different segments and markets. Despite global headwinds, office absorption has performed well, and the expansion of the economy, coupled with increased consumer spending, has fueled growth in the Hospitality, Logistics, and Retail sectors. The investment climate remains positive, with global investors increasing their exposure to newer investment avenues such as REITs (including Retail). The regulations for MSME REITs are now in place, and platforms for alternate assets, including Data Centers and Shared living & working, are gaining strength. India's positioning in emerging markets has strengthened, and with the goal of reaching a size of US$ 5 trillion on the horizon, a consistently investor-friendly policy framework is attracting global capital.”

The prevailing sentiment strongly suggests that real estate investment is poised for significant growth in 2024. With stable interest rates anticipated, the sector is expected to receive additional momentum as India aims for a growth rate exceeding seven percent in the current financial year. To make well-informed investment decisions in real estate, it is crucial to conduct thorough market analysis and stay abreast of emerging trends.

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