First-time Home Buyers To Dominate Festive Season:CBRE The housing market is primed for further growth as we head into the second half of the year, primarily driven by the anticipated surge during the festive season in H2 2023, says Anshuman Magazine, Chairman & CEO, India, SEA, MEA, CBRE

The robust domestic demand across sectors including office spaces, retail, industrial & logistics (I&L) and residential, have been driving the growth of the Indian real estate sector amid global challenges. The increased emphasis on environmental, social, and governance (ESG) principles has played a pivotal role, leading to significant growth in green-certified office spaces. The collaborative efforts between developers and occupiers to embrace sustainable building features have been commendable, resulting in a substantial increase in green-certified office stock, especially in prominent cities such as Bangalore, Delhi-NCR and Mumbai.

"Looking ahead, 2023 promises to maintain the momentum for modern, technology-enabled, and environmentally compliant spaces. CBRE remains committed to deliver innovative, technology-driven, and sustainable solutions. The real estate sector in India is expected to continue playing a pivotal role in the country's economic growth," said Anshuman Magazine, Chairman & CEO, India, SEA, MEA, CBRE

Buying sentiments & festive season

Buyers today prioritize factors like health, safety, sustainability, and smart home integration. Developers offering projects with easy access to essential facilities, well-designed indoor/outdoor spaces, and smart home features are expected to maintain strong appeal. This aligns with the rising adoption of smart home tech, set to fuel the smart home market. Additionally, buyer decisions hinge on developer reputation, execution capability, and financial stability. Government-backed affordable housing initiatives, capital appreciation potential, rental income demand, remote work trends, infrastructure growth, developer incentives, and NRI investments further boost buyer interest in the residential segment.

The buying sentiments in the festive season this year are expected to be characterized by a mix of optimism and caution. "We expect a significant influx of first-time homebuyers during this period as an increasing number of fence-sitters are likely to finalize their decisions based on the enticing festive season offers and discounts extended by developers. The premium and luxury real estate segments (INR 2 to 4 crore and above) are set to emerge as highly coveted investment choices, particularly among high net-worth individuals (HNIs) and non-resident Indians (NRIs) looking to safeguard their investments amidst the prevailing global macro-economic uncertainties. We estimate a sustained high activity level in these segments supported by the promising outlook of long-term capital appreciation," the chairman explained.

Growth of residential & commercial buildings

Residential sales in Jan-Sep'23 exceeded 230,000 units, surpassing sales reported in Jan-September 2022 by around 5 per cent. "The housing market is expected to be further bolstered through the festive season this year, with sales and new launches estimated to reach a ten-year high and exceed the 300,000-unit mark. However, developers and investors need to be aware of the emerging dynamics of the residential sector in specific cities and micro-markets," he said. Tier-I developers, boosted by their well-established track record of successful deliveries and a solid market reputation are poised to maintain their market dominance consistently.

Commercial real estate has been showing steady growth over the years. In terms of office space, a steady quantum of space is expected to be delivered during Oct-Dec 2023, given the pipeline of quality assets. "CBRE expects the annual supply to be around 51 - 53 million sq. ft., a marginal increase of 1 - 3 per cent. Retail leasing grew by 46 per cent Y-o-Y in Jan-Sep'23 to 4.73 mn. sq. ft. Retailers and prominent developers alike are expected to continue exploring emerging untapped markets including tier-II, III and IV cities," he added.

Fuelled by the release of pent-up supply, the Industrial and Logistics (I&L) sector is poised to surpass 2022 levels, with a projected total of 24 to 26 million square feet in 2023. The share of project completions by prominent global / domestic developers is also expected to rise from 37 per cent in 2021-2022 to over 40 per cent in 2023- 2024.

Metros and tier-I cities are expected to continue being the major recipients of equity inflows during this period. Tier-II cities could see a rise in investments due to increased real estate development activity backed by healthy demand, particularly in the retail and I&L sectors. Opportunistic bets would continue witnessing strong momentum in 2023 amidst considerable interest in greenfield developments, especially in the residential and I&L segments.