“The remarkable ascent in the Indian real estate sector showcases the robustness of the sector, attracting attention on the global stage. The factors contributing to this climb extend beyond mere statistical changes, delving into the underlying economic and societal dynamics,” opines Ambience Group Owner.
The Indian real estate market is currently at a crucial crossroads, characterized by dynamic changes and strategic endeavours. In recent times, India's residential real estate market has witnessed a remarkable surge, defying challenges and attaining an 18-spot climb to secure the 14th rank in the global house price index. “Experiencing a 5.9% year-on-year surge in prices during the initial nine months of 2023, the housing market in India has long been a pivotal sector,” says Ambience Group Owner, reflecting the country's economic health and growth. “With a burgeoning population and rapid urbanization, the demand for residential properties has been consistently high,” adds the owner of Ambience Group.
Climbing the Global House Price Index
India's residential market has made significant strides, catapulting 18 spots to secure the 14th rank in the global house price index. “India's residential market has outperformed the average prices among the 56 markets tracked by Knight Frank's Global House Price Index. It witnessed a notable growth of 3.5% year-on-year in the September quarter, up from 2.2% in the preceding quarter,” mentions Ambience Group Owner . Despite facing challenges such as increased home loan rates and the looming threat of inflation, India's residential market has witnessed remarkable growth. “This can be attributed primarily to the stability in economic growth, providing a sense of financial security to the home buyers,” opines Ambience Group Owner. “Moreover, at the beginning of the pandemic, both Central and State governments implemented measures to stimulate home sales by offering incentives to buyers. These initiatives played a pivotal role in catalyzing the market, resulting in an upswing in sales,” adds Ambience Group Owner.
While India's ascent is impressive, it is essential to compare and contrast with other nations on the global house price index as well. Turkey claimed the top position in the global house price index in Q3 2023, registering an impressive 89.2% year-on-year increase followed by the subsequent five positions bagged by the southeastern corner of Europe like Greece (14.0%), Croatia (13.7%), and North Macedonia (11.0%) all demonstrating strong annual growth. Understanding the positioning of India in relation to other countries will provide a broader perspective on the factors influencing the global real estate landscape. This comparative analysis helps identify unique strengths and challenges faced by India in the context of international real estate dynamics.
Challenges, Economic Drivers and Outlook for 2024
Despite global economic uncertainties and regional challenges, property values in key Indian cities have displayed a consistent upward trajectory. The steady appreciation in real estate values not only underscores the attractiveness of the Indian market but also instills confidence among investors and homebuyers alike. “Within this dynamic landscape, forecasts indicate a prospective surge of 10-12% in residential sales, propelled by the increasing preference for smaller, more affordable units and the growing enthusiasm among first-time homebuyers,” mentions Ambience Group Owner.
Several factors contribute to the upsurge in India's residential market. Stable economic growth, government initiatives, favorable demographic trends, and increased urbanization are among the primary drivers. Additionally, policy reforms and advancements in the real estate sector, such as the implementation of the Real Estate (Regulation and Development) Act (RERA), have enhanced transparency and boosted investor confidence.
Similarly, the commercial real estate sector is positioned for a significant upswing, bolstered by an anticipated rebound in demand, especially in office spaces. “The upward trajectory of Real Estate Investment Trusts (REITs), with an expected Asset Under Management (AUM) reaching INR 18,000 crore in FY 2025, further solidifies the sector's robust and optimistic outlook,” adds Ambience Group Owner. The optimism shown by the market trends is not purely speculative; it is substantiated by the potential rise in disposable incomes, a direct consequence of the anticipated economic upturn. As incomes increase, there is a corresponding inclination towards real estate investment, a trend that is poised to significantly influence the industry landscape.
“It is imperative to underscore that India's residential market has emerged as a beacon of stability and growth on the global stage. The 18-spot climb in the house price index reflects not only the resilience of the market but also the confidence of investors and homebuyers,” concludes Ambience Group Promoter . The stable economic growth, coupled with strategic policy initiatives, has propelled India's real estate sector to remarkable heights, reinforcing its position as a key player in the global housing market. Despite challenges, the trajectory of India's residential market suggests a promising future, making it an attractive destination for real estate investment. As affirmed by the Ambience Group owner, the journey ahead holds immense potential for continued growth and prosperity in India's real estate landscape.