Renting Generation Now Buyers’ Market

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Renting Generation Now Buyers’ Market

NRIs, Millennials Set Realty Market Afire

As the real estate industry looks forward to continuous growth, we present opinions from Tata Realty, Godrej Properties, Kolte-Patil Developers and Planet Smart City.

SANJAY DUTT, MD & CEO, Tata Realty & Infrastructure Ltd: The Global Economic sentiments and market volatility haven’t affected the Indian real estate market all that much yet. The pandemic stoked the aspiration among NRIs to own a home back in India. It acted as a pecuniary security and made them feel connected to the country. Another reason that encouraged lakhs of Indians based in other nations to own a home in India was the depreciating value of the Indian rupee. Since 2018 the rupee has been on a falling trend. The pandemic and geopolitical tension in a way had a positive impact on the Indian residential sector.

The Indian real estate industry has met investor expectations and has persevered through recent market ups and downs. Had it not been for the recession, the residential sector could have fared much better. Yet, India remains to be among the few countries with the highest GDP growth. The residential sector, despite the price increase, is likely to cross over 3,00,000 units FY22-23. Even tier-2 & tier-3 cities have shown substantial growth. In the office market space, despite less than 50% of the workforce having returned to offices, it has witnessed 40 million sq. ft. net absorption. The serviced office is well over 10% of the office absorption, the highest ever. High Street & Shopping Centres have cross pre-Covid levels in terms of traffic and sales. Warehousing and logistics are touching 30 million sq. ft. annually. Several new entrants have taken up the Data Centre business and their underwritings have converted to commitments.

With the increase in job growth and a rebound from the current stock market decline, the Indian economy is likely to expand by 6.9% in 2023.  Many analysts believe that the self-sustaining nature of the sector coupled with the growth potential of the Indian economy, optimistic expectations, and upward momentum will persist in the future year. The value of the real estate sector is expected to reach $1 trillion by 2030, up from $200 billion in 2021, and at that point, it would have contributed 13% of India's GDP. In one year, the Indian real estate market saw transactions involving 1,700 acres of land in the top seven cities. In this sector, foreign investments totalled $10.3 billion from 2017 to 21. All of these signs are positive and should be taken as such. Also, with the Energy Conservation (Amendment) Bill passed recently, which places a core focus on sustainable development, the overall quality of residential and commercial projects will be keeping climate change in mind. This, however, could cause an upward migration of the prices of real estate. The housing segment, which drives economic growth and underpins the whole real estate industry, is predicted to have one of its most exceptional and probably best years ever. According to Reuters, prices would increase by 7.5% countrywide (4-5% in Mumbai and Delhi, 5.5-6.5% in Chennai and Bengaluru), and a number of other economic indicators are encouraging.”

GAURAV PANDEY, MD & CEO Designate, Godrej Properties Ltd: The current real estate cycle has been consumer-driven. We are still in a sweet spot as far as affordability is concerned in spite of rational price hikes by developers. Post Covid, there has been a value shift in this mind-set of homebuyers and is the key investment driver in residential real estate. Now homebuyers are more specific in their requirements and expect more than just a living space from their homes. Maintaining good health and leading a healthy lifestyle is becoming the utmost priority for most homebuyers; thus, the increasing demand for multifunctional spaces at home. Homebuyers are also looking for a lot of greenery and leading a sustainable lifestyle in their residential units.

The vast majority of our focus will continue to be on Mumbai, Bangalore, NCR and Pune as we look to strengthen our presence in key micro markets and enter newer micro-markets within these focus cities. We have deepened our presence in Kandivali, Mumbai through a recent land acquisition. We have also acquired a land parcel in Mundhwa-East, Pune, along with land for residential projects at Carmichael Road, Mumbai and Bengaluru’s Indiranagar extension. Additionally, GPL will also develop residential group housing on the land parcels located in Noida Expressway, allotted in an e-auction by New Okhla Industrial Development Authority.

We recently entered Nagpur and Sonipat and also acquired a land parcel for a residential project in Manor-Palghar, Maharashtra for plotted development.

In FY 23, we have added 8 projects which takes the cumulative expected booking value from projects added in FY 23 to approximately INR 16,500 crore as against the full year guidance of adding projects with a booking value potential of INR 15,000 crore.”

RAHUL TALELE, Group CEO, Kolte-Patil Developers Limited: Residential and commercial real estate experienced robust growth in 2022, reaching new highs. Housing unit sales reached a record high, aided by resilient economic activity and strong consumer sentiment toward home ownership, which was fuelled further by the pandemic experience. Furthermore, the January-November 2022 period has emerged as the best-performing year in the last ten years since 2013. For example, Mumbai and its outskirts reported 8,756 property registrations in November, up from 8,276 in October.  In the first nine months of CY22, the top eight Indian real estate markets sold over 2.32 lakh units. As a result, the industry's sales have surpassed those seen prior to the pandemic. In fact, sales in the first nine months were higher than full-year sales in 2017. For instance, at Kolte-Patil, we have managed to sell 1.95 million sq. ft. Area sold in the last 9 months. The outlook for the coming quarters is strong and we are confident of delivering in line with the shared guidance of 25-30% y-o-y growth in pre-sales. The weakening rupee and the promise of the new Indian economy is actively motivating non-resident Indians (NRIs) to invest in their home country considering the geo-political situation and global inflation uncertainties. While smart townships and gated communities took the centre stage when it comes to preferred home segments, larges space, open areas, diligently designed compact homes and senior living spaces were among the top choices for homebuyers who are looking to invest in residential assets. One of the distinguishing features of today's demand is that even millennials are considering purchasing a home. The millennial generation is also known as the renting generation, as they previously chose to use their money for the functional premise of an asset rather than ownership. When it comes to starting families and buying homes, millennials are currently in their most financially active years. According to leading analysts, millennials now account for approximately 43% of all home buyers, more than any other demographic group, hinting towards a change in new age home-buyers’ group. Given the momentum achieved thus far, 2023 is expected to continue the momentum at a rapid pace, reshaping real estate returns for investors and homebuyers, pushing developers to launch new and innovative products to address the rising demands.

DANIELE RUSSOLILLO, Deputy CEO and COO, Planet Smart City: Proptech is actively enriching India's real estate sector with state-of-the-art offerings beyond conventional app-based bookings and interactions. For instance, Indian Proptech startups received more $3 billion in funding across more than 200 transactions in the last decade. Innovation is the new mantra for real estate and Proptech industries. While real estate is trying to address ever-increasing housing demands with bespoke residences, Proptech, on the other hand, is trying to better manage the consumption of critical resources like water and electricity and improve residents’ user experience. For instance, our own IOT-based digital solution, Planet SIM, empowers more than 5,000 families to counter water anxiety in low-supply regions by actively mapping its usage, delivering insights, and applying technology to vital water management operations within residential buildings.

While large homes and integrated living are gaining ground in popularity, we should witness more significant demand for smart living solutions driven by IoT to enhance buyers' overall living experience. With the pace of growth achieved in 2022 – despite the interest rate growth – 2023 is expected to be an excellent year for the real estate sector in the subcontinent.

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