Greater demand for luxury houses, a generational shift toward home ownership, capital appreciation, and rent inflation dominated India’s real estate sector in 2022
- Pent-up demand for residential units due to return to work-from-office and stalled construction due to covid caused a demand-supply mismatch, leading to drastic rent inflation across cities
- Purchase activity across the country increased as Indians underwent a mindset shift, prioritising home ownership over renting
- Bangalore residents witnessed the maximum brokerage savings with INR 1,182 crore, the platform saved over INR 4,000 crore in brokerage across six key cities
- A growing demand for plotted developments and luxury homes
- NRI interest in India-based properties increased significantly
New Delhi, January 20, 2023: Mapping a stellar year for the country’s real estate sector, NoBroker India’s first proptech unicorn, has recently released its annual Real Estate Report for the year 2022. For the sixth year running, the report broke down the key trends that defined the real estate sector by combining platform data of 30 million users with survey responses from over 26,000 customers across Bangalore, Mumbai, Pune, Chennai, Hyderabad, and Delhi-NCR.
Speaking on the report, Saurabh Garg, Co-founder & CBO – NoBroker.com, said, “Indian real estate, in 2022, has been an exciting space to watch. Buoyed by favourable tailwinds, the sector overcame the inertia of past several years inertia to achieve record growth. 2022 saw record high capital appreciation and rent inflation. The momentum is expected to continue well into 2023 as ready-to-move-in residential units, rental properties in gated societies and plotted developments are very much in demand.”
Pent-up demand drives up home prices, buying activity, and rent inflation
Perhaps the most defining trend of 2022 was the post-pandemic pent-up demand. 67% of potential buyers said that pandemic induced insecurity positively impacted their home purchase decisions.
Migrant professionals also returning to working from office in key cities resulted in high demand for rental properties. But due to Covid-19, the construction activity came to a halt resulting in less supply of housing units. This resulted in major cities registering a rent inflation between 12%- 40%. Rents will stabilize in a couple of months as construction activity and new project launches catch up with the current demand. The homebuying outlook for 2023 also remains positive, with 77% of respondents indicating they are looking to buy a house next year.
The consumer demand in 2022 also demonstrated robustness despite changes in market conditions. While initially driven by factors such as historically low home loan interest rates and developer discounts, it remained strong even when home loan interest rates and house prices increased in the latter part of the year. In fact, the demand for ready-to-move-in properties far outstripped the supply, driving major buyer interest toward new project launches.
Over one-thirds (36%) of homebuyers on NoBroker.com were millennials between the ages of 25 and 40 years, indicating a mindset shift in a generation earlier characterized by preferring utility/rental over ownership.
Residential real estate becomes a lucrative investment opportunity for NRI and domestic buyers
Real estate also emerged as a lucrative investment opportunityin 2022. While 82% of respondents wanted to buy a property for end-use, 18% indicated that they wanted to buy property as an investment. This trend was driven by several factors, including robust long-term capital appreciation and improved rental yields. Rental yields increased by 3-5% across top metro cities, while the average price of 2BHK units also saw healthy appreciation, with Chennai (7.9%) and Hyderabad (7.35%) registering the maximum price appreciation.
In the survey, 71% of respondents indicated that they would prefer to invest in real estate over other investment instruments such as gold, SIP/stocks, or Bitcoin. In fact, 89% landlords mentioned that they were looking to invest in another property. 73% also felt that they find it much easier to rent out their property now. 56% of them have even admitted that they increased the rent post covid.
The demand for plotted land saw an increase with about 12% people showing interest. This growth in demand for plotted land drove a massive increase in land launches across metro cities; with even the largest of developers launching plot projects, the number of new land launches increased by over 100% in 2022.
With the declining value of the Indian Rupee giving them a significant advantage, NRI interest in the Indian real estate space also surged this year. The NRI segment on NoBroker.com grew by 33%, with a majority of demand coming from nations such as the US, the UK, the UAE, Australia, and Singapore. Developers catered to this growing overseas demand with high-quality luxury housing projects, the demand for which outpaced the demand for mid-segment homes.
Even in the domestic market, more spacious living spaces continued to be a priority, with nearly half (42%) of buyers preferring 3 and 4BHK properties, a further increase from 2021. According to the report, 16% of the respondents had set aside a budget of INR 1 crore or more, highlighting the strong sentiment for a more luxurious and comfortable living experience.
Regardless of whether they resided in India or abroad, however, buyers in the Indian property space demonstrated a preference for residential real estate (84%) over commercial real estate (16%). That said, investment appetite in commercial real estate doubled over the previous year, when only 8% of the respondents had indicated their willingness to invest in commercial projects. The growth outlook for commercial real estate, however, remains positive beyond 2022, as the space normalises and returns to pre-pandemic levels.
Easy to shift houses
68% of tenants felt that relocation has become easier due to the real estate websites and apps as they offer the benefit of brokerage-free properties and some of these websites are a one-stop-shop for all real estate needs (including packers & movers, home services such as cleaning and painting, home interiors, etc.). These websites also democratise the home search process in true sense by eliminating biases and pressures brought in by brokers.
Corporate Comm India (CCI Newswire)