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Updated January 2nd, 2024 at 16:14 IST

Residential buzz in 2023: Did high-interest fears fizzle out or forge challenges?

In 2023, residential sales reached 230,000 units with a 5% year-over-year growth, and Anarock reported a peak of 3.49 lakh units sold in the first 9 months.

Leechhvee Roy
Residential real estate
Residential real estate | Image:Republic
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2023 residential real estate overview: Contrary to the anticipated slowdown attributed to high-interest rates, the residential sector has demonstrated a robust performance in the first three quarters of 2023, according to CBRE and Anarock. Residential sales surpassed expectations, exceeding 230,000 units, marking a 5 per cent YoY growth. Anarock highlights an all-time high, with over 3.49 lakh units sold in the first 9 months, constituting 96 per cent of the total sales recorded in the entire year of 2022.

 

Are high-end homes the new norm?

The trend extends to the premium and luxury housing segment, with a 70 per cent YoY increase in sales of units priced at Rs 2 crore and above according to CBRE. Anuj Puri, Chairperson, Anarock, emphasised that the undeterred demand for housing has led to a significant uptick in both new launches and housing sales in the ongoing last quarter of 2023.

Notably, cities like Delhi-NCR and Mumbai have emerged as hotspots for premium and luxury housing, constituting around 20 per cent of overall sales. The allure of these high-end properties as investment avenues, especially for High Net Worth Individuals (HNIs) and Non-Resident Indians (NRIs), has been a driving force.

The performance report highlights a paradigm shift in homebuyer preferences, where factors such as health and safety, community living, sustainability, and smart home technologies are now pivotal in purchase decisions. Looking ahead to 2024, both CBRE and Anarock predict that the robust homebuying sentiment for 2023 will persist, with demand likely to reach a 10-year high.

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Land grab in 2023: Was it the golden ticket?

CBRE's analysis of real estate investments unveils a strong focus on land acquisition, with 40 per cent of the $5.1 billion inflows in 2023 committed to this sector. The residential sector dominates this trend, securing an 83 per cent share of the total $2 billion committed for land investments in Jan-Sep'23. Anarock further adds that despite rising interest rates and global uncertainties, the residential demand has remained at an all-time high, resulting in an 8 per cent to 10 per cent average jump in residential prices in 2023.

Domestic developers have played a pivotal role in driving this momentum, accounting for 42 per cent of overall investments in 2023. Despite an anticipated tapering of overall capital inflows in 2023, the reports suggest that opportunistic bets on residential and Industrial & Logistics (I&L) sectors will continue, sustaining the land acquisition activity.

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2024: Will housing outdo the 2023 surge?

Looking ahead to 2024, industry experts anticipate sustained growth in the residential sector. Demand for mid-end and budget/affordable housing is projected to remain strong, aligning with the trends of recent years. The premium and luxury segments are expected to continue experiencing healthy growth.

In terms of investments, steady flows are predicted, with development sites and the office sector likely leading the way. Metropolitan and tier I cities are expected to remain major recipients of equity inflows, but there may be a rise in investments in tier II cities, driven by robust demand.

The real estate sector, propelled by domestic developers, shifting buyer preferences, and sustained demand, appears to be on a trajectory of growth, defying global economic challenges. As the industry looks toward 2024, the outlook remains optimistic, with opportunities emerging across various segments of the real estate landscape.

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Published December 30th, 2023 at 14:49 IST

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