As we approach 2024, India’s real estate market is poised for significant developments across both residential and commercial sectors. Here’s an overview of the anticipated trends:
Residential Real Estate
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Price Growth: Home prices in India are expected to rise steadily, driven by increased demand, particularly in the luxury segment. Prices, which rose by 4.3% last year, are projected to increase by approximately 7.75% this year and around 6.0%-6.25% over the next two years.
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Demand Shift: There’s a notable shift towards premium properties, with the luxury housing segment expanding significantly. This trend is overshadowing the affordable housing sector, leading to a shortage in supply for first-time buyers.
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Rental Market: Urban rental markets are expected to experience annual increases between 6.5% and 10%, outpacing consumer inflation. This surge is attributed to competitive demand, especially in major cities like Bengaluru, Mumbai, Pune, and Gurgaon, where job seekers are migrating from smaller towns.
Commercial Real Estate
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Office Leasing: Office leasing activity in India’s top cities is projected to exceed 45 million square feet in 2024, indicating robust demand in the commercial sector.
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Market Value: The overall real estate market in India is expected to reach a projected value of US$45.32 trillion by 2024, with the residential segment holding the largest share at US$39.18 trillion.
Key Influencing Factors
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Interest Rates: The current geopolitical scenario and rising inflation are exerting pressure on lending rates, which are expected to climb in 2024. This increase may impact affordability, particularly for first-time homebuyers.
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Urbanization: Government initiatives like the Smart Cities Mission are transforming Tier-II and Tier-III cities into attractive residential hubs. Improved infrastructure and job opportunities in these areas are expected to drive residential demand beyond the major metropolitan cities.
Challenges
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Affordable Housing Shortage: Despite government efforts, the supply of affordable housing is expected to lag behind demand in the coming years, making homeownership challenging for average earners.
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Economic Disparities: While India’s economic growth benefits the upper classes, many first-time buyers continue to face affordability issues, leading to a preference for renting over purchasing homes.
Conclusion
India’s real estate market in 2024 is set for steady growth, with significant activity in both residential and commercial sectors. However, challenges such as rising interest rates and a shortage of affordable housing may impact market dynamics. Stakeholders should closely monitor these trends to make informed decisions in the evolving landscape.
