The real estate market in North India has seen significant growth and development over the past decade, driven by factors such as increasing urbanization, rising incomes, and favorable government policies. Some of the key cities in North India with a strong real estate market are Delhi, Gurgaon, Noida, and Ghaziabad.

"NCR is in the middle of a significant leap. The opening of new avenues, massive improvement in all-around connectivity, and most significantly, the construction of the upcoming international airport at Jewar, have brought the region into the limelight and have acted as a catalyst in real estate development in the NCR. The area exhibits a vast growth potential and has received a significant quantum of private equity funding. PE funds, especially in the commercial segment have led to higher returns on the investment and we expect this trend to continue growing in 2023 as well." — Sanchit Bhutani, Managing Director, Bhutani Grandthum

Private equity funding in NCR real estate has zoomed in 2022, Anarock Capital’s Flux 9M FY23 report showed. The report revealed that PE players invested USD 1,215 Mn into NCR in the first nine months of FY23, against USD 771 Mn in the corresponding period in the previous financial year. This was a 58 percent yearly jump in total PE inflows in the region. 

North Indian Real Estate in a Nutshell

North India has always been the investors’ favorite when it comes to Real Estate, with Delhi-NCR bagging the most prestigious establishments. However, in recents times, its development is outpaced by southern giants such as Bangalore, Hyderabad and Chennai. But it has bounced back strongly with NCR expanding and Tier 2, 3 & 4 cities catching the eyes.

North India is home to many fast-growing cities such as Delhi, Gurgaon, Noida, and Chandigarh, which have seen significant development in recent years. These cities are attractive to real estate investors because of their increasing population, rising income levels, and strong economic growth.

Moreover, the Indian government has been implementing various policies and initiatives to boost the real estate sector, such as the Real Estate (Regulation and Development) Act, 2016, which aims to protect home buyers' interests and promote transparency in the sector. The government has also launched schemes such as the Pradhan Mantri Awas Yojana (PMAY), which provides affordable housing to people from the economically weaker sections of society.

Additionally, the North Indian real estate market is characterized by high rental yields, which make it an attractive destination for investors looking for rental income. However, it is important to note that the real estate market can be volatile and subject to market conditions, so investors should conduct thorough research and analysis before making any investment decisions.

Residential Real Estate

Over 70 percent of respondents indicated that they are looking at buying a home in the next couple of years in Delhi-NCR, reported R&R by Rise recent survey. The survey also recorded the demand for residential realty precedes commercial, with 45 per cent respondents looking at picking up residential, and 35 per cent looking at tapping into commercial spaces respectively. 

There are several reasons why one might consider investing in residential property in North India:

Growing population: Growing Demand of Homes

North India is one of the most densely populated regions of India. As the population continues to grow, the demand for housing is likely to increase, creating opportunities for property investors.

Additionally, the government's initiatives such as Pradhan Mantri Awas Yojana (PMAY) and Smart City Mission are also boosting the demand for residential real estate in North India. These initiatives aim to provide affordable housing and improve the quality of life in urban areas, which is driving the growth of the residential real estate market.

Economic growth: The Urban Dream

North India is home to some of the fastest-growing cities in India, including Delhi, Noida, Gurgaon, and Chandigarh. These cities are hubs for IT, manufacturing, and other industries, which are attracting a large number of people to the region. As the economy continues to grow, the demand for housing is likely to increase, driving up property prices.

Furthermore, the increasing urbanization and rising income levels are driving the demand for better quality and larger homes with modern amenities. Homebuyers are looking for homes with features such as gated communities, 24/7 security, fitness centers, swimming pools, and more.

Infrastructure development: Miles Getting Shorter

The Indian government has been investing heavily in infrastructure development in North India, including new highways, airports, and metro rail systems. These developments are likely to increase connectivity and drive economic growth in the region, making it a more attractive destination for property investors.

The development of social infrastructure such as hospitals, schools, universities, and shopping malls is improving the overall quality of life in North Indian cities. This is making these cities more livable and attracting more people to move in, which is increasing the demand for residential properties.

Cultural and historical significance: The Sweet Spot North India is home to some of the most culturally and historically significant cities in India, including Agra, Jaipur, and Varanasi. These cities attract a large number of tourists every year, creating opportunities for property investors in the hospitality sector.

Commercial Real Estate

The Indian government's programmes such as Make in India, Digital India, and Smart Cities are accelerating the expansion of commercial real estate in North India. These programmes have attracted both domestic and foreign investors, resulting in increasing investment in commercial real estate projects. As a result, the organized retail real estate stock is expected to increase by 28% to 82 million square feet by 2023, indicating strong growth possibilities for the industry.

Retail Landscape: Reflection of Growing Lifestyle

The organized retail industry in India is predicted to grow at a CAGR of 25-30% in the next few years, thanks to increased consumerism, the expansion of the middle class, and the proliferation of organized retail formats. North India, which includes the national capital Delhi, is a major retail destination in the country and is well-positioned to capitalize on this growth opportunity.

Logistics & Warehousing: ‘To Be Continued’ Story

The growth of e-commerce has had a big impact on North India's retail real estate market. Demand for logistics and warehousing spaces has increased as a result of prominent e-commerce businesses like Amazon and Flipkart setting up their distribution centers and warehouses in the area. Additionally, as e-commerce has grown, new retail formats including hypermarkets, supermarkets, and convenience stores have emerged. These establishments require substantial retail locations.

Tourism: The Revenue-Generator For Real Estate

Agra, Jaipur, and Shimla are among the well-known tourist sites in North India, which also includes other important regions that are vital to the development of the country's hospitality sector.

The demand for hotel real estate in North India has increased as a result of the spike in international visitor visits.

Delhi-NCR: Capital Cities For A Reason

Gurgaon's retail sale price surpassed Delhi's in 2023 and is anticipated to reach 2,40,000 square feet. However, Delhi, the ancient commercial capital of the North, has been improving as well and is predicted to have growth of up to 12 percent in 2023. But the underdogs—the Tier 2 cities in North India—are challenging these two mainstream favorites.

Uttar Pradesh: Investments-Bagging State

Additionally, the State of Uttar Pradesh recently held a sizable investor summit that resulted in 18,643 Memorandums of Understanding, of which 4.32% contained real estate projects. Many cities in North India want to increase their office leasing options and attract renowned IT and retail companies to set up shop there. Commercial real estate is already seeing financial gains from warehousing for e-commerce businesses.

Tier III & Tier IV: The Next Chapter Of North India Real Estate

Long-time managers of North India's identity, Delhi-NCR and Gurugram, have faced competition from newcomers. Tier II cities are already catching up to Tier I cities, but Tier III and Tier IV cities have an incredible, mainly unrealized potential.  

Conclusion

With such development prospects, the north Indian real estate markets are expected to grow by leaps and bounds in the next quarters. With economic activity picking up, investments are likely to flood in, and the real estate sector will accelerate, benefiting all stakeholders, particularly investors.

But as they say, “Too much light can blind you”. As a retail real estate investor it gets hard to decide where to invest when you are spoilt for choice. In such times, you need a trusted real estate advisor by your side to navigate through the legal complexity and suggest you the best properties as per your portfolio and investment goals.

Read Also: Investing in Real Estate in India: A Guide for NRIs