Indian Real Estate Market Sees Positive Turn in Homebuyer Sentiment and Investment Trends, FICCI - ANAROCK Survey Reveals.

Mar 05, 2024

India Office Leasing Set to Surpass 50 Million Sq Ft in 2024, Marking a 'New Normal' in Commercial Real Estate: FICCI Colliers report. 

 

NEW DELHI. 05 MARCH 2024: The Indian real estate market is experiencing a significant positive shift in homebuyer sentiment and investment trends, as unveiled by the latest FICCI - ANAROCK Homebuyer Sentiment Survey for the second half of 2023. The survey indicates a dynamic sector evolution driven by changing consumer preferences and robust investment confidence. 

 

In addition, the latest FICCI – Colliers Report: "India Office – Repurposed to Scale Up", underscored the unprecedented leasing activity witnessed in 2022 and 2023, establishing a 'new normal' with leasing expected to exceed 50 million sq ft again in 2024, signalling a robust demand for office space, driven significantly by domestic enterprises and Global Capability Centres (GCCs), which are expected to account for over 50 and 40 per cent of the total demand, respectively.

 

The surveys were unveiled at the 17th Edition of FICCI Real Estate Summit.

 

A standout trend from the FICCI – ANAROCK survey is the increasing preference for new property launches over ready-to-move-in properties, with the ratio dramatically shifting from 46:18 in the first half of 2020 to 23:24 in the second half of 2023. This pivot reflects a growing confidence among homebuyers in larger and more reputed developers known for timely project deliveries, marking a departure from the delays often associated with smaller developers.

 

"The government's increased spending on the infrastructure sector, stable policy regime, and commitment to providing housing for all are not only helping the real estate sector’s growth but also accelerating the growth momentum," noted Mr Raj Menda, Chairman of the FICCI Committee on Urban Development and Real Estate and Chairman of Supervisory Board, RMZ Corporation. He added, “Interest rates are expected to undergo a downward revision in the next two years, acting as a great impetus for both commercial and residential real estate. This division allows borrowers to purchase larger homes, contributing to the real estate market's expansion."

 

The survey also highlighted a 7 per cent increase in investors considering residential real estate as a viable investment option, with 36 per cent of prospective buyers in the latter half of 2023 viewing properties from an investment lens. This uptick indicates the sector's appeal as a stable and lucrative investment avenue.

 

Mr Anuj Puri, Chairman of ANAROCK Property Consultants, commented on the investment trend, "We surveyed 15,000 home consumers and 57 per cent of these consumers say that real estate is a first preference as an asset class."

 

Luxury homes are seeing a rise in demand, with 20 per cent of respondents favouring such properties in the latter half of 2023, up from 12 per cent in the latter half of 2021. Meanwhile, the demand for affordable housing has decreased significantly, from 40 per cent in the second half of 2020 to just 21 per cent in H2- 2023, prompting developers to adjust the supply accordingly.

 

Further, the survey reveals a notable preference for larger homes, with 50 per cent of respondents favouring 3BHK configurations. This preference underscores a trend towards more spacious living environments despite the normalisation of life post-pandemic and rising residential prices.

 

The FICCI – Colliers Report on India Office – Repurposed to Scale up solidified the anticipated 50 million square feet mark in leasing for the third consecutive year as the 'new normal' for the nation's commercial real estate market, suggesting the potential to scale up to 60 msf, driven by robust demand from domestic enterprises and Global Capability Centres (GCCs).

 

The report underlined that domestic companies are expected to contribute to over half of the office demand in 2024, with GCCs gaining further ground, accounting for over 40 per cent of the total demand. The demand for Grade A office spaces is likely to be propelled by the BFSI and Engineering & Manufacturing sectors, while flex spaces are forecasted to drive about 15-20 per cent of the overall leasing. Large-sized deals, defined as 100,000 sq ft or more, are projected to constitute 50-55 per cent of the leasing activities in 2024. 

 

Mr Gaurav Pandey, Co-Chairman, FICCI Committee on Urban Development and Real Estate and Managing Director and CEO, Godrej Properties highlighted the vibrant potential of India's real estate sector.  He emphasised the explosive growth of Indian wealth, particularly in equities and gold, and its implications for residential real estate. With urbanisation rates climbing and wealth creation in full swing, Mr Pandey projected a transformative impact on land and property values, especially in top cities. He pointed out the critical role of urban migration in this evolution, suggesting a significant shift towards higher-income brackets and its consequent effect on the demand for residential spaces.

 

Mr Sanjay Dutt, MD & CEO of Tata Realty and Infrastructure, averred that India's office space supply is poised to surpass one billion square feet. He highlighted that approximately six to seven companies in the country employ over 65 per cent of their global workforce in India. Additionally, he pointed out that banking and financial services firms, which traditionally limited their Indian workforce to 10 per cent of their global total, have now expanded to encompass 30 per cent and are on a trajectory to reach 50-60 per cent of their worldwide employee base.