Real Estate Outlook 2024: Property rates projected to increase up to 15% but demand to remain steady

  • Kunvarji Realty
  • 28/12/2023
  • 74 views

Real Estate Outlook 2024: Property rates projected to increase up to 15% but demand to remain steady

Source: Live Mint

India’s real estate market showed remarkable resilience, attaining unprecedented heights despite facing global economic challenges like inflation, rising capital costs, and uncertainties in growth this year.

According to Kanika Gupta Shori, Founder and COO, Square Yards, the property rates are expected to rise at least 10-15% in 2024. “As building material costs continue to escalate and the demand for homes rises steadily, property prices in top cities are projected to increase throughout 2024 in the range of 10-15%," Shori told Livemint.

Shori further added, “Though we witnessed property price escalations this year, sales remained robust, indicating a strong affinity for homeownership among prospective homebuyers. This prevailing momentum is poised to persist into the upcoming year, driven by developers' strong cash flow, increase in new launches and house sales, buoyant homebuying sentiment and consumers' steadfast pursuit of financial security."

However, experts believe that this resilience is expected to continue in the coming year despite rising rates. Average residential prices across the top seven cities increased in the range of 8-18% in Q3 2023 when compared to Q3 2022, mainly due to an increase in the prices of construction raw materials and overall rise in demand.

As per ANAROCK Research, the average property prices in the top seven cities combined increased by 11% in the year – from ₹6,105 per sq. ft. in Q3 2022 to nearly ₹6,800 per sq. ft. in Q3 2023. 

“As trends indicate, the security associated with owning a physical asset during a coronavirus-like crisis coupled with a rising aversion to high-risk investments has given rise to increased demand for residential real estate buy over rent. Additionally, many tenants now see rent as an expense and are thus considering EMIs as SIPs to build non-volatile assets such as real estate. This general homebuying sentiment is also guided by relatively cheaper home loan interest rates, which currently average between 8.75% and 9.5%," Anuj Puri, Chairman at ANAROCK Group told Livemint.


 

Which type of properties to be in demand in 2024?

With the prevailing enthusiasm for homeownership, the demand for affordable properties is expected to soar further. More individuals seeking to move away from rental accommodations will drive the quest for spacious 2BHK and 2BHK+ homes, Shori added.

Despite potential property price corrections, the pursuit of homeownership will stay buoyant as consumers will maintain unwavering confidence in real estate as the optimal asset class.

Simultaneously, the luxury housing segment will also witness exceptional demand as High Net Worth Individuals (HNIs) and Non-Resident Indians (NRIs) are eyeing larger and more sophisticated assets within India, capitalising on the rupee's decline to record lows. 

Their preferences lean towards technology-integrated 3BHK, 3BHK+, and 4BHK homes featuring bespoke elements and extravagant amenities. Additionally, this segment remains resilient to market upheavals and global aftershocks, helping it move towards a new phase of expansion.

Tier-1 cities like Mumbai, Delhi, Noida, Bangalore, Hyderabad, Gurgaon, and Chennai are poised for a surge in residential demand. With most offices in central business districts having reopened and business activities gaining momentum, the return of young professionals to offices will spur residential developments around these bustling corporate hubs. 

Moreover, tier-2 cities like Ahmedabad, Chandigarh, Indore, Sonipat, Varanasi, and Lucknow are forecasted to experience a significant uptick in residential demand. These cities are undergoing substantial infrastructural growth and are increasingly viewed by potential buyers as viable alternatives to the congested and polluted metros.


Demand for commercial real estate to rise

The demand for commercial real estate is expected to match or even surpass the leasing records set in 2022, experts said.

Even in the face of global geopolitical tensions and elevated inflation levels, the first three quarters of 2023 witnessed healthy leasing activity across the 6 major office markets of the country.

According to a Colliers report, gross absorption in office demand touched 38 mn sq ft, equivalent to the corresponding period in 2022. Although the share of the technology sector in overall office leasing saw a decline from 35% in 2022 to 25% in 2023, domestic companies across flex spaces, engineering and manufacturing, and BFSI stepped up the ante in taking incremental space.

“This diversification underscores India office market's adeptness in countering external challenges. 2023 is expected to close on a stronger note; the momentum is likely to continue, and gross absorption is anticipated to be around 50 mn sq ft, at par or better than the historic performance of 2022. Flex spaces will further solidify their presence in occupiers’ portfolio, contributing almost one-fifth of the office space demand in the country," the report said.

Do You Need Help With Anything?

Receive updates, hot deals, new property, projects, sent straignt in your inbox every month

The information, details and specifications about the projects on this site are as provided by the developers and/or sellers to the best of our knowledge and it is advisable that the same be verified by the respective buyers & sellers. Kunvarji Realty Brokers is not a developer. Rates are indicative and subject to change without prior notice.
Okay, Got It