Real Estate Scenario in 2023

Hi Friends!

Happy New Year 2023!

This is Sanjeev Kathuria from Torbit Consulting updating you with new facts geared to control or influence the Real Estate Industry in 2023.

2022 turned out to be one of the best years for the Real Estate Industry. The year saw residential, commercial, and warehousing properties sold and leased like hotcakes; especially in tier-2 cities.

All stakeholders, such as financial institutions or developers worked and earned well. Customers got an opportunity to realize their dreams!

This year too has started aggressively, and every stakeholder in the industry is in a good situation, whether stakeholders, government, financial institutions or developers. All are optimistic and forward-looking at the very start of 2023.

Here I will be sharing specifics about various sections and will try to explain them piece by piece.

In 3 steps I will share a complete drift of the year 2023 vis-à-vis Real Estate.

To start with I will discuss the Housing Sector in 2023, and the expectations particularly from the Residential Sector.

In 2022, Boutique Housing, or what we call Affordable Housing broke all records of the past many years. Government policies were excellent and the Rate of Interest was low.  People bought personal space for thousands.

This year it is envisaged that the Residential Housing in the metro will work at a medium pace. Sales are currently on but nothing to match last year’s sales.

The enhancement will happen definitely, but prices will be stable in medium to long-term investments.

In major cities in India, we will see a little slower growth. There are some specific reasons:

(i) Home loan rate has crossed 8%
(ii) Because of the 2022 appreciation, the rate of properties has increased in such a manner that it has gone out of customers’ range of affordability. Home Loan rates have also increased simultaneously. Therefore, I think that the prices will either be stable this year or will not increase or decrease further. The volume of sales in the metro will be stable or go down a bit.

We’re bullish on tier-2 cities when last year we saw huge sales in tier-2 cities. Reputed developers like Godrej, Tata, and many more also invested and sold their properties overnight. Tier-2 in 2023 is expected to do well as absorption and sales will be high. For investors, there will be benefits in appreciation.

(iii) Luxury Housing: Last year we saw great numbers in sales in this sector after a decade. 2022 was the first year when sales of Luxury Properties were higher across India. The demand for Luxury Housing this year will be good because of fewer inventories available across the country. Thus, absorption will be good.

After COVID-19 Luxury Homes have gained in currency in comparison to Affordable Houses. People at present are opting for Luxury Homes.

This is the main reason that in the metros the demand for Luxury Housing is higher than for Boutique Housing. In metro cities, Luxury Housing will rule the scenario and will do much better than Boutique Housing.

So, capturing this housing segment in totality should do the trick.

We have a simple outlay of research here, which I am going to mention in pointers:

(i) Due to high home rates and high appreciation in 2022, affordable housing will be stable or will witness a little slowdown in sales volume in 2023.

(ii) Housing in Tier-2 cities will do wonderfully well; especially the plotted development.
(iii) Luxury Housing is the core of the metro; we don’t see luxury housing in tier-2 and tier-3 cities. So, Luxury Housing will witness a lot of absorption with new launches and will also see price appreciation.

This is our research for the housing segment in 2023. Now let’s talk about another sector which is commercial and retail, which means Office Space, Shopping Malls, and Hi-street Retail, and how we see all these in the year 2023.

Due to COVID-19, many countries across the globe print a lot of currency and incur huge inflation to steer the growth of the country. The result is a situation with inflation increased in such a manner, that countries have to increase the rate of interest and that leads to hampering growth.

We’re anticipating a lot of layoffs across the globe in giant companies like Microsoft, Google, Twitter, and more. Companies are laying off thousands of people across the globe. Thus, seeking office space absorption would be stable or slow in 2023.  We envisaged that only grade A office space would have a low inventory, especially in major cities like- Bangalore, Hyderabad, Pune, and Gurgaon in 2023. Absorption will be there. Otherwise, B-category office space would grow slowly as per our research.

There will be increased footfall in Shopping Malls, however, sales volume will be low again due to high inflation.

We also foretell that hi-street retail will do much better. So, office space absorption will be slow and leasing will be stable. Low footfall will be witnessed in multiplexes. This is our overview of how commercial office space will look in 2023.

Then, where is the bright spot? For us, Data Centre will be the biggest inventory builder across the country. We will get huge investments across the globe in Data Centres.

For the last 5 years, money has been coming from logistics and will continue to do so now. And Ware Housing will work very well and Lease Rental will be stable.

The Hospitality Industry like hotels will do well as foreseen; people will keep wanting to travel for holidays and vacations. Therefore, the hospitality sector is bound to do well.

Now I am concluding with the last sector where huge investments will be done across India as well as worldwide.

I envision that Land parcels in the year 2023 will be hot property.
Huge investment in industrial land parcels is projected. The Indian govt. took an initiative of “Make in India” across the country. 18 States can be mapped where big industrial parts are manufactured and logistics hubs are required.

Govt facilitating and offering incentives for this sector will act as a big boost. Due to this the manufacturing sector is going to grow a lot and we will see rapid growth in industrial land parcels.

Agriculture is the largest producer of employment. In this, we are speculating a rapid growth of agricultural land. Especially because our dear Prime Minister promising double the income to agriculturists is bound to create wonders. Institutionalization or industrialization will happen in agriculture!

The reputed industrialists will acquire 500 – 1000 acres of land where industrial farming will be done. We’re seeking the two best sweet spots in 2023 as Agriculture Land Parcels and Industrial Land Parcels. These will do extremely well. 2023 is the conscious year for the industry and mostly we think that in residential (housing) and commercial we will have to be somewhat careful.
In Tier -2 cities, agricultural land parcels are the prime area where investors can think about investment.

A Quick Recapping:
1.  The Housing Sector in tier-2 cities will emerge winner in overall housing space. Metro will slow down in volume absorption and prices will remain stable and Luxury Housing will keep doing well.

2. Office Space will remain moderate or slow. Lease Rental will remain stable. They will not appreciate and we’ll not see volume absorption in office space in 2023.

This year will see mutant growth in retail space and we’ll largely see hi-street retail will do much better than the multiplex.
3. Since the Govt. push the industrial parcel will see rapid growth and will attract many investors.

This is our prediction for this year (2023) as per our research and understanding. Your views are welcome. Keep posting!