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Outlook 2023: The country’s budget is about to come and preparations for this start long in advance. Different sectors put forward proposals regarding their demands and expectations in front of the Finance Ministry so that they can get the benefit of allocating the desired amount of money. Yesterday we told you about the demands of MSME sector and today we are going to talk to you about realty or real estate sector.
residential real estate
Talking about housing sales, the year 2022 has proved to be good for it and with this, good expectations are being drawn for the year 2023. With the current sales momentum likely to continue till the first quarter of 2023, home buyers and residential property owners as well as new buyers need to think about the decisions they want on repo rate hike and property prices. Go In the year 2022, a total increase of 2.25 percent has been seen in the repo rate and home loan rates did not hold back from climbing up immediately.
Negative effect of rate hike
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So far, the repo rate hike has seen a slight impact on the prices of houses, but the home buyers who are shopping for affordable houses have pulled their hands back from it. The mid-income group and luxury housing haven’t seen much impact on home sales, though each segment has a capacity to absorb the impact of costlier homes.
Learn big things from Anarock’s latest consumer sentiment survey
The latest Consumer Sentiment Survey by ANAROCK clearly shows that if home loan interest rates go above 9.5 per cent, we can see the impact especially on the decline in home sales.
There is no scope for much growth in new launches in the year 2023.
Even in 2023, we will not see much spurt in new launches and most of the cities will be similar to what we saw in 2022 with limited capacity. Property developers are not keen on infusing more inventory in the market and at the same time they are reluctant to come up with new projects in new locations where there is a fear of low demand. To put it in more detail, take the example of NCR as earlier too many property developers were coming here with their projects, as a result of which there was huge inventory here. The year 2022 saw the effect of the cautious approach of the developers and the same trend is expected to continue in the year 2023 as well.
US Federal Reserve’s decisions will also be monitored
If the process of increasing the interest rates of the US Federal Reserve continues, then its effect can also be seen on the housing demand in India. If there is a heat on the jobs of IT professionals in America, then its effect can be seen in the figures of home purchases. The negative effect that comes on the Indian market due to the effect of the decline of the American markets, that effect can also come on the housing demand.
Impact will be seen on housing demand
The decline in the earnings of stocks can also affect the housing demand as many professionals use their earnings for homes. The increase in home loan rates is already affecting the demand for homes. As we told you that the new supply of houses is also decreasing due to which instead of reducing the difficulties for the housing sector, they are increasing. The demand for ready-to-move-in housing will remain highest in the year 2023 as well.
How is the trend for commercial real estate
The trend of increasing interest rates will not be very good for the commercial real estate sector as well and due to its effect, some concerns are going to dominate in the year 2023 as well. The effect of the global economic recession can definitely come on the commercial real estate office market of India. This is because this sector depends heavily on the amount coming through domestic and international corporates.
Important factors for commercial real estate sector
To know which factors can be dangerous for the commercial real estate sector of India, we need to know which sectors elevate it. If seen, 70 percent of the country’s offices are currently built for foreign companies and it is a big issue for the employees working in them that what will happen to their real estate future if there is an economic recession.
How was the performance in the year 2022
The year 2020 was a slow and sluggish year for the Indian commercial office markets, but the year 2021 saw a boom in demand and supply and showed good growth. In the first half of 2022 also, the good trend for this sector remained. However, due to the global economic slowdown from the second half of the year 2022, clouds of crisis have started looming for the commercial real estate sector. Therefore, before opening their new offices in any country, global corporates want to be sure about its better results.
Decreased demand for leased offices
By the end of this year, the demand for Grade A offices which are taken on lease has decreased by 6-7 per cent in the top 7 cities and this is the figure compared to the year 2021. The decrease in the number of offices to be taken on lease is increasing rapidly.
How is the trend in terms of commercial property in the year 2023?
The economic slowdown in America will further affect due to such signals, which will slow down the pace of office leasing by multinational companies. Although the number of offices for lease is decreasing, but the deals made for 2022 are showing signs that property buyers are confident and the number of offices for rent can be seen in future. Is.
Good sign so far in the year 2022
The level at which property prices have been in the first 9 months of the year 2022, they are looking fine as compared to last year. The deals completed in the first 9 months of the year are showing an increase of 7-10 per cent in comparison to the first 9 months of the year 2021. The signs of the year 2023 for the commercial real estate property sector are both negative and positive and it seems that this segment of the Indian property sector has to be watched very carefully.
Note: The author Anuj Puri is the chairman of real estate consultancy firm Anarock Group. The views expressed in the article are his personal.
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