Real Estate In 2022: Sharp Recovery Witnessed On Pent-Up Demand; 2023 Likely To See Continued Growth

After witnessing a complete standstill during the coronavirus-induced lockdown and a sharp slowdown thereafter, the real estate sector saw a rebound in sales this year. The year 2022 has been a positive year as the sector posted a strong recovery across segments — housing, office leasing, and retail, among others. Experts said the pent-up demand of the past two years and the strong need to own residential properties in the wake of the pandemic were the two major demand drivers behind the strong revival.

According to data shared by real estate portal Magicbricks, the overall real estate demand jumped 6.7 per cent year-on-year in the first quarter of the year 2022 (Q1). The second quarter (Q2) witnessed a surge of Rs 27.7 per cent, while the growth in the third quarter (Q3) was 2.9 per cent.

The supply was also up by 4.7 per cent y-o-y in the first quarter of 2022, 16.2 per cent in the second quarter, and 6.6 per cent in the third quarter ended September, according to the Magicbricks data.

On the prices front, the rates were 6.4 per cent higher in Q1 as compared with the March 2021 quarter due to a rise in input costs and the increased demand. The prices were up by 8 per cent y-o-y in Q2 and 9.1 per cent in Q3.

Siddhart Goel, head (research) at Magicbricks, said, “Putting the pandemic-induced slowdown behind, 2022 began well, with the residential real estate sector showing tangible signs of revival and resilience. Earlier this year, both supply and demand recovered and even reached pre-Covid levels in some cities. Magicbricks Research observed that in Q3 2022, the aggregate demand increased by 7.3 per cent, while the cumulative supply grew 6 per cent against the same quarter last year.”

Dhruv Agarwala, Group CEO of Housing.com, Proptiger.com and Makaan.com, said, “The Indian real estate sector bounced back strongly in 2022, with the resumption of economic activities in full swing, after the COVID-19 pandemic. All segments of real estate — housing, office, retail, warehousing, data centres, co-working and co-living — performed well. Housing sales are also all set to breach the pre-COVID levels and may achieve an all-time high.”

He added that the pent-up demand of the last two years and the strong need to own residential properties in the wake of the pandemic were the two major demand drivers behind this strong revival.

Ramani Sastri, chairman and MD of Sterling Developers, said, “We have already witnessed a healthy demand this year and are quite confident that it will continue in the near future amid healthy economic growth. The market did recover as the year went along due to a boost in consumer sentiments on the back of favourable government policies, the necessity for owning a home during times of unprecedented uncertainty, overall improvement in the job market, and all-time-low home loan interest rates earlier supporting the residential market recovery.”

The aggregated sales of three-quarters of CY22 are 16 per cent higher than the aggregate similar three quarters sales of CY21. Despite increasing interest rates and marginal property prices, there is still a parity between the prices and affordability; sales volumes are likely to stay strong, according to a recent joint report by CREDAI-Colliers-Liases Foras

Manas Mehrotra, founder of new-age co-working space provider 315Work Avenue, said, “The future of work is changing rapidly and will almost be permanently oriented towards greater flexibility. Hence, the coworking sector is growing exponentially. It will continue to be vibrant in 2023 as the pandemic has reinforced the need for agility like never before. With the macroeconomy witnessing a strong rebound, companies aspire to keep pace with the economic engine and look out for workspaces that meet new office requirements of the changing economy and coworking spaces help them fill a unique void.”

Lincoln Bennet Rodrigues, chairman and founder of The Bennet and Bernard Company, which is known for luxury-themed homes in Goa, said, “The overall performance of the luxury real estate market in 2022 has witnessed a sustained rise that has led to a sizable jump in sales. A change in lifestyle is driving demand for premium properties.”

Rodrigues added that given the confidence built in 2022, one can expect an uptick in sales in the coming year and the growth of luxury homes will be positive in terms of quantity and quality. NRs, HNIs and investors are once again recognising the advantages of real estate investment, particularly at a time when cautious investment is still the general consensus.

Saransh Trehan, managing director of Trehan Group, said, “Homebuyers in 2022 made a good buy thanks to stable property prices, low-interest rates, options of choosing from completed inventory and so on. At the same time developers were able to clear their inventory and debt, because of good sales.”

Real Estate: Outlook For 2023

Stating that the real estate market certainly looks positive, Ramani Sastri, chairman and MD of Sterling Developers, said, “Given the confidence built in 2022, we do believe that markets will see sustained growth over the next few years. The real estate industry is now set to move beyond the past and 2023 will be an exciting time to discover. Real Estate will emerge as a silver lining due to its stability, security and safety and is definitely an asset class that one must remain invested in today and in the long term.”

Dhruv Agarwala, Group CEO of Housing.com, Proptiger.com and Makaan.com, said, “2022 was a good year for the entire real estate sector after a long gap, looking past the disruptions in the last 5-6 years caused by demonetisation, the introduction of RERA & GST, the NBFC crisis and, of course, the COVID-19 pandemic. We strongly believe that the real estate sector will continue on a growth trajectory in 2023 as well.”

Magicbricks’ Goel said that the momentum is expected to spill over and sustain even in 2023, as there is still genuine end-user residential demand and demand for properties in the affordable and mid-segment will continue to drive the Indian real estate market.

Gagan Randev, executive director at India Sotheby’s International Realty, said, “The outlook for Office remains strong in 2023. We expect a very strong rebound in Grade A spaces and the vacancy rates in these office parks should continue to reduce while Grade B spaces would find it more challenging. The Bangalore, NCR, Mumbai and Pune markets continue to look strong from a rental growth perspective. Retail again seems to be set for its strong performance and rentals will continue to show their upward trajectory.”

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