Indian real estate in 2023: An outlook (2024)

In 2022, real estate emerged as a sector which stood the test of market volatilities as it stabilized and brought returns to investors.

According to Magicbricks Research, by the end of 2022, the residential demand in the top 8 Indian cities is expected to reflect over 15% YoY growth and 2023 promises a similar big picture.Not just in the metros, but India’s tier-2 markets such as Nagpur, Coimbatore, Bhubaneshwar, Indore and Jaipur have also emerged as real estate growth engines.

2023 looks promising as well and residential demand could increase by 10-15% as end-user demand is expected to maintain its momentum. Simultaneously, supply is also expected to increase as many large developers are buying new land parcels and gearing up for big project launches. At the same time, customers are becoming more digital savvy and environmentally conscious, which is changing the way homes are being built, sold and valued.

Keeping in mind the supportive policy, environment and evolving customer, the following trends are likely to be popular in the real estate sector in 2023:

Rise of proptech and its impact on the real estate sector

Year 2023 will accelerate adoption of proptech to continue making customers’ journey of searching and shortlisting to finalizing a home (and even moving in) more smooth and convenient. At a time when ‘10 minute deliveries’ are disrupting the e-commerce market, real-estate will be disrupted by demand for ‘full-stack services.’

While searching and shortlisting properties, proptech tools such as 3D tours and viewings, project and locality review videos, and comparative tools are fast gaining popularity. With multiple launches and inventory to choose from, these tools are assisting the customers in making informed decisions to shortlisting. While finalizing the property, proptech tools, including access to home loans, financing tools, legal and valuation assistance, at the click of a button are in high demand. These AI-powered and smart-phone enabled tools are driving convenience and hassle-free experience in home-buying which can be a tedious task for many. While moving in, the role of services such as 3D-enabled decor tools and packers & movers are becoming essential and driving convenience for customers.

We have already seen success with our full-stack of services in aiding customers’ decision making journey through relevant advice and proptech tools, and access to services at the comfort of their home.

Increasing popularity of co-living and co-working spaces

As millennials take over the Indian economy, real estate is also adapting its offerings to suit their modern lifestyle while addressing challenges of increasing urban density with solutions such as co-working and co-living. By providing housing and working environments which support collaboration, innovation and social interactions, co-working and co-living models in India offer a business opportunity of a whopping INR 1 lakh crore by 2023 for developers and investors (FICCI 2019 report). Co-living is already popular amongst working professionals who prefer furnished and serviced homes with lifestyle amenities and thrive in communities of like-minded people. Similarly, co-working spaces are in high demand amongst corporates, entrepreneurs, startups and even individuals as a space to innovate, network and collaborate with peers.

Growing demand for smart and connected homes

Fuelled by rapid technological advancements and modern lifestyle, the demand for IoT-enabled homes is fast increasing. Frost and Sullivan estimates that by 2025, the Indian IoT market will be valued at US$9.28 billion as tech-savvy customers look to invest in connected home solutions for convenience and hassle-free home experience. The pandemic also accelerated the demand for smart appliances and it is estimated that Indian homes had over 2 billion connected devices in 2021. In 2023, smart home technology will continue to disrupt real estate, presenting a significant market opportunity for designers, builders, entrepreneurs and investors.

Touchless interactions and whole-home automation such as IoT-enabled kitchen chimneys, ceiling fans, water purifiers with AI Monitoring will drive efficiency and save energy, attracting the conscious customer. Developers who offer homes with pre-fitted smart appliances will successfully tap into the premium segment of customers and enjoy high demand.

Rise of sustainable and eco-friendly real estate developments

Over the last few years, the demand for homes is rising significantly and at the same time there is growing consciousness about balancing this real-estate development with impact on the environment. Both developers and customers are keen to invest in eco-friendly and sustainable real estate developments that control carbon emissions and identify it as a business-critical requirement. As green buildings can save up to 30% of energy and 50% of water, India has witnessed a 31% increase in green real-estate assets across the top six cities — Drlhi-NCR, Mumbai, Pune, Hyderabad, Bengaluru, and Chennai in the past decade (Source: CBRE South Asia Report 2022). With 50% of India’s 2030 building stock yet to be built, real estate developers who invest in green building material, energy efficient lighting, onsite renewable energy systems will carve a niche for them and enjoy customer interest. A 2022 report by The International Finance Corporation (IFC) also observes that while currently only 8% of Indian buildings are ‘green buildings,’ by 2030, green buildings will offer a US$24.7 trillion investment opportunity. As the bellwether industry of the economy, real estate has the potential to lead ‘planet over profit’ commitment and meet India’s commitment to reduce its total projected carbon emissions by 1 billion tonnes by 2030 and reach its net-zero target by 2070.

Overall, 2023 brings a promising outlook for real estate as it continues to be a resilient as well as aspirational investment offering both short term and long term gains. With an expanding economy, increasing commercial operations and rising income, 2023 will offer an exciting time for this sector!

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