This year an Indian realty major made an announcement its latest luxury residential project was ready it was located in Gurugram in India’s national capital region, The project opened for pre-sale and within 72 hours it was sold out . We are talking about 1,113 Luxury flats that were valued at ₹72,000 crore sold out in 3 days in india buying a house is a big deal a social right of passage an emotional experience and a guarantee of a financial security , there’s also a lot of sentimental value attached. But this sentimental alone driving India’s real estate or are there other forces at play ?
2023 was a bumper year for Indian real estate will 2024 will be bigger and better? That’s what we will discuss here .
Our story begins with India’s independence, here was nation that had been looted and plundered for centuries now free of occupiers try to rebuild itself so the focus was on the accessibility not luxury AKA public housing projects, the government launched many of them all over the country, then came the land reform of the 50s and 60s land was redistributed . The next big shift came in the 1980s that’s when private housing entered the market and with liberalisation in the 1990s it grew further, large scale projects came up IT parks, shopping malls , big budget housing ,Cut to 2024 India’s real estate market is among the fastest growing in the world and its evident . If you live in the Indian metro city go out and look around ,the cultures may be different, the language may be different ,food habit may be different but there’s one thing which you will find everywhere skyscrapers and cranes. The droning noise of the construction is deafening but its also defining every major Indian city . In 2023 India’s real estate market was worth around $265 billion by 2030 it will be worth $1 trillion and by 2047 $5.8 trillion that is the projection , imagine that a 12 fold rise between 2023 and 2047 which means a lot will change .
Currently real estate contributes to 7% India’s GDP , employees over 50 million people . Cement ,steel ,glass industries depend on real estate by 2047 it could make upto more than 15% of the country’s GDP , it will be a mammoth sector and the trends are clear. In 2022 the homes were worth ₹3.22lakh crore were sold and the next year (2023) it went up to ₹4.5 lakh crore that’s a 38 % rise in just one year so the demand is strong . But where are these people investing? India has 7 top residential markets – Mumbai , Delhi NCR , Bengaluru , Hyderabad , Chennai , Kolkata and Pune essentially country’s biggest cities and last year these cities sold a lot of houses more than 4,76,000 units in one year a 31% increase since 2022 . So what’s driving the surge ? a lot of factors but the biggest one is India’s economy it is shining otherwise gloomy global picture ,growth has been stable, the fundamentals are strong , India’s central bank has not hied interest rates all of this has driven up demand plus with the economy , India’s middle class is rising , they are earning more they have more disposable income they are investing in real estate and government supports this , it wants real estate to boom so it is offering incentives there are tax reductions , subsidies for buyers and schemes for affordable housing but it’s not affordable Indian buyers seeking a lot of them also want luxury premium properties.
Now the first things first so what defines luxury real estate? typically anything over ₹1.5 CR and if in Mumbai is anything over ₹2.5 CR that’s luxury these properties have few defining factors -they are in prime neighbourhood , they have amenities , there’s top notch infrastructure state of the art ,fitness centres , infinity pools , roof top lounges , Coner service shopping centres its this attention to detail that makes them appealing and the rich want them . In the first 6 months of 2023 the sale of luxury homes jumped by 130 % . It was 3000 units in 2022 ,6900 units in 2023 which is a 130% rise . then there’s ultra luxury homes that real estate priced at ₹40 CR , last year sale for that rose by 200% almost 600 such houses were sold in India’s top 7 cities the numbers may sound too good to be true but its not happening out of the blue there have been signs and one of them is India’s rising affluent demographics . By 2027 the number of millionaires in the country is set to increase by 69 % then there are the ultrahigh net worth individuals , people with a net worth of $30 million and more in the next three years will have atleast 9,18,000 ultrahigh net worth individuals they want affluent lifestyles and first thing they want is luxury real estate, and its is not just houses that is picking up demand there’s demand for other segments as well ,talking about office spaces, co working spaces ,malls all of them have seen an uptick also industrial spaces , warehouses , dark stores demand for them is also rising .
Growing ecommerce businesses are fueling it and investors are tracking the surge in , including foreign investors they want to invest in India’s real estate in the first half of 2023 more than $ 4 billion flowed into India this was in the form of private credit and half of it went to real estate so foreign investors want to invest here and they are dumping China for it . China’s property market is going through a slump debt is pilling ,companies are shutting shop middle class are battered foreign investors or any invertor for that matter do not likes Such volatility so they are turning to India as here they get growing economy , favourable demographics , stable government its almost an easy choice and it working for in India’s favour so to sum it up more people are buying houses more houses are being built foreign money is pouring it and it looks very good but no success story is without challenges so India’s real estate has its own share of challenges first one is the cost of land , it is rising across the country India is now the 14th most priciest real estate market globally which means affordable solutions are few and far between its not like everyone can afford ₹1.5 CR houses and then there is bureaucratic processes you find an affordable plot of land you want to buy it but you have to jump through hoops the red tape can be daunting , plus there are legal challenges 16% of all properties are embroiled in some or the other legal case . then there is issue of loans most buyers cannot pay for their full price of the house so they take loans so it’s a tedious process especially when you don’t know when you will get possession of your property take can take years it can go bust , buildings can be left under construction and all the high paying of property taxes and high interest rates , so there’s a lot to discourage people a lot that needs to be fixed . Having said that the sentiment still remains positive real estate is booming in India and its expected to continue to grow in the years to come, its also a reflection of India’s journey a country where dreams are built and realised one brick at a time .
