Top reasons driving housing demand in real estate By Mr. C J Singh, COO, Wave City.
India’s residential real estate has risen to new heights with domestic and foreign investors making a beeline to buy or invest in their dream home. This boom is expected to spill over in the forthcoming year with experts citing India’s buoyant economy, strong government policies, rental market expansion & increasing disposal income as primary factors besides other reasons.
The figures also tell a happy story. Foreign investors pump around US$ 3.1 billion yearly into Indian real estate, with a 37% YoY increase in the first half of 2024, according to IBEF. “The real estate sector shows promise with a projected 9.2% CAGR from 2023 to 2028 and the year 2024 is expected to drive growth with urbanization, rental market expansion, and property price appreciation,” observes IBEF.
Interestingly, the NRI footfalls have also scaled up in the residential housing segment. Bangalore has emerged as a preferred home investment destination followed by Ahmedabad, Pune, Chennai, Goa, Delhi and Dehradun. India’s massive shift to technology, high infrastructural growth and positive Govt. policies are some of the reasons which has drawn the overseas investors. With shining ROI, India is a fast becoming ‘destination next’ in the housing space.
Besides announcing favorable affordable housing schemes, there has been a significant growth of homes to suit every budget—from affordable homes, plotted living, luxury residence and more.
Here are some reasons that are driving the housing demand in India:
1. Stable repo rate by the bank: This means that the visibility of interest on loans remains stable and at the current level, therefore staving off instability. Consequently, the market remains less volatile. The robust demand for residential real estate will further strengthen due to a stable repo rate. Homebuyers and investors can buy property with a more long-term perspective, keeping future growth and other critical parameters in mind. Therefore. RBI’s repo rate of 6.5 per cent indicates that the interest rates will be stable in the current haul for consumers to buy property.
2. Integrated townships and sustainability: Sustainable, smart homes that are niche, well connected, provide topline amenities and usage environment-friendly materials are main priorities for most customers, these days. Therefore, sustainable materials like recycled plastic are being used and homes are now designed to provide maximum cooling.
3. Smart homes: Residences are also fitted with motion sensor lights that automatically switch on and off upon motion detection and other technologies like water-saving mechanisms, solar panels, LED lighting, smart bins among other facilities. Green spaces and recreational facilities within the community enhance the overall quality of life. Additional facilities like trainers, coaches, health experts and others who aid in creating good physical and mental health are a big plus.
4. Value for money at Tier 2 and Tier 3 Cities: Every homebuyer and investor is looking for home that provides quality of life in terms of living spaces, 24×7 security, health parameters and high connectivity. Infrastructural development is also a mainstay while choosing a home. Tier 2 and Tier 3 cities meet these parameters not only by being less polluted than big cities but also by providing an unparalleled quality of life that strikes a good work-life balance.
One of the most formative and significant changes in the last decade has been the relaxation of policies and norms, a series of reforms by the government that have led to greater accountability, transparency and simplified procedures. Rapid digitization and advent of technology have led to a lot of paperwork and filing compartments becoming history.
Some of these key initiatives include the Real Estate (Regulation and Development) Act (RERA), Goods and Services Tax (GST), Pradhan Mantri Awas Yojana (PMAY), tax benefits, home loan interest rates, etc. These measures have resulted in an increase in the number of domestic and international clients over the years.