Over the last 2-3 years, the housing market has seen an uptick in demand across the Tier I and II cities of the country and developers are optimistic that the momentum is likely to continue in 2024. As per the Developer Sentiment Survey conducted by CREDAI and Colliers, during April-May 2024, about half of the surveyed developers are confident of buoyant residential demand in 2024.
Amidst strong demand, about 52 per cent of the developers pan India expects housing prices to rise in 2024. During 2023, average housing prices across the eight major cities of the country saw a 9 per cent y-o-y rise. The trend persisted in Q1 2024 with a 10 per cent y-o-y rise and is likely to continue for the rest of the year, albeit at a steady softer pace. Nearly two-thirds of developers are willing to explore alternate segments like plotted developments, branded residences etc. within housing.
“India’s ambition to become a $7 trillion economy by 2030 is driven by the transformative power and multiplier effect of infrastructure and real estate,” remarks Boman Irani, president, CREDAI. “This has also been validated in the past few quarters with real estate’s robust growth and volume of transactions being reflected in the strong q-o-q GDP growth numbers clocked by the Indian economy”.
“As we approach the 2024-25 financial budget, the Real estate developers’ sentiment survey 2024 comprehensively leverages the strong network of developer members of CREDAI and encapsulates their insightful perspectives to potentially enhance the conduciveness of the current real estate ecosystem in India and cohesively build towards the collective vision of ‘Viksit Bharat’,” adds Irani. “The survey suggests that the current developer sentiment remains largely positive with more than half of the respondents feeling bullish about the sustenance of the current market dynamics in 2024. However, tackling rising construction costs and rationaliasation of taxes remain key expectations from the new government, with more than 50 per cent of the developers seeking constructive solutions for the same”.
The survey presents developers’ assessment regarding the performance of residential segment in 2023 and the likely trajectory of the housing market in 2024. Responses from over 550 respondents from 18 states across India were compiled and analysed using stratified sampling method. About half of the developers feel that residential demand would remain stable in 2024, followed by 27 per cent who feel that the demand would increase by up to 25 per cent.
On an upswing
“With over 50 per cent of surveyed developers witnessing a rise in home-buyer enquiries, residential real estate has been on an upswing throughout 2023,” informs Badal Yagnik, CEO, Colliers India. “This strong streak is expected to continue in 2024 largely led by stable interest rates, continued inclination for home ownership and positive market sentiment. Going ahead, developers anticipate a rise in housing prices, which reflects their confidence in the residential market. With significant new launches over the last two years, unsold inventory levels have expanded; thus launches are expected to moderate in the near-midterm. Developers are likely to carefully monitor the market trends and be more strategic while launching new projects”.
With evolving demand trends and lifestyle patterns, about 66 per cent developers are keen to explore alternate business segments like plotted developments, branded residences, senior living, etc. Factors such as privacy, green spaces and spacious dwellings have accelerated demand for plotted developments in urban areas, especially in Tier II cities. Furthermore, branded residences are picking up pace across the Tier I cities of the country led by increased affinity for unique living experiences, aesthetics, and luxurious amenities. Interestingly, about 30 per cent of the developers are willing to explore and diversify into other asset classes including developments like warehousing/ logistics parks and data centres.
Over 80 per cent of the surveyed developers are confident of an increase in housing demand from NRIs during 2024, led by the country’s attractive investment landscape, a favourable regulatory environment and potential for investment gains. To cater to this growing demand, developers are likely to launch upscale residential projects in relevant micro-markets across cities.
According to the survey, majority of the developers expect tax rationalisation, sops for affordable housing and single window clearance from Budget 2024. Furthermore, GST related input tax concession and interest rate reduction could provide financial elbowroom to developers and improve financial viability of projects. Moreover, about 30 per cent of developers expect improvements in ‘Ease of doing business’, facilitated by an improved regulatory framework, supportive government policies and streamlined approvals. Such all-encompassing measures can further improve the investment landscape of the country and the housing demand.