Introduction
Real estate markets will be the bellwether for the Indian economy and industry as a whole in 2023. The country is the fastest-growing major economy in the world. Apart from that, all real estate indices hit record highs at the end of the year.
Table of Contents
- India Real Estate Sets Record in 2023
- Hyderabad, Mumbai, and Pune Also Recorded
- Indians Shopped More in 2023
- Stable Performance in 2023
- India Is Growing Real Estate
India’s Real Estate: In retrospect, 2023 began with global inflation headwinds turning into a full-blown recession. As such, Indian real estate has delivered a strong performance this year. Here’s a recap of how the year ended.
India Real Estate Sets Record in 2023
India’s office markets set record in 2023 Leasing activity increased to 63 million square feet in one year. The second half of the year was particularly strong, breaking all previous records.
Demand from global capability centers (GCCs) came in a muted year for third-party tech outsourcing, particularly in the manufacturing or engineering, financial services, and technology sectors.
Flex space also performed well, registering a record 10.3 million square feet leased. Combined, flex space along with GCCs accounted for 55% of 2023 office leasing numbers.
Hyderabad, Mumbai, and Pune Also Recorded
Markets like Bangalore and Delhi NCR saw a strong finish across all cities. Chennai had a record year. However, cities like Hyderabad, Mumbai, and Pune also recorded strong leasing activity levels in 2023.
Net absorption levels in the Indian office markets were recorded at 42 million square feet. This was second only to the previous high of 2019. These numbers were unimaginable just six months ago and represent strong expansion-driven, headcount growth.
A few other things also stood out. Green footprint crosses 50% of India’s Grade A office market. It is about creating a sustainable built environment. And stakeholder support from the sector driving the decarbonization agenda.
Indians Shopped More in 2023
Indians also shopped more in 2023. Retail leasing in malls and high streets is over 7 million square feet. Over a decade on, brands are embracing new formats and experiential stores. Actively attracting aspirational and affluent customers with international merchandise offerings. Brands have become a beeline for tier 2 and 3 cities as well with merchandise sales showing a big spike.
Stable Performance in 2023
The logistics and industrial sectors showed steady performance in 2023. Demand for Grade A-compliant warehouses recorded a vacancy rate of 6% compared to an overall sector vacancy of 10.6%. 3PL players led the space take-up, while the auto & engineering sectors’ leasing share increased to c.30% in 2023.
23% by 2022 on the back of supportive manufacturing policies. Additionally, highly dispersed consumption trends have increased the demand for logistics in Tier 2 & 3 cities. But the need for quick deliveries has increased the need for warehouses in the city.
India Is Growing Real Estate
India also sold more apartments this year than in previous years. Apartment sales in the top seven cities touched 272,000 units, with Bengaluru, Mumbai, and Pune being the top three active markets.
This was in a year when affordability was slightly down, as prices averaged north of 7-11% y-o-y, and interest rates remained at moderately high levels. Apartments priced above INR 15 million were the fastest-selling category for the first time.
Conclusion
The tailwind for India’s real estate sector stems from India’s economic resilience. These pillars supporting growth in the real estate sector have the highest GDP growth forecast among major economies. Its technology ecosystem skills, talent pool, and cost advantages to become an ‘office for the world’, as well as agile. and a supportive business environment. For more information, visit our Openplot.
Also read: Mumbai Real Estate Market: Why 2 BHK Rentals Are in High Demand