The Indian real estate market is expected to continue its upward trajectory in 2023, with demand for housing remaining strong. Despite the challenges posed by the COVID-19 pandemic, the market has remained resilient, with key housing markets experiencing significant growth in the first nine months of 2022. Cities such as Mumbai, Bangalore, and the National Capital Region have seen rising sales, with the third quarter of 2022 registering the highest unit sales so far. 

This growth is being driven by factors such as government assistance, a desire for health and financial security, and a wealth of housing options. The market is expected to provide greater opportunities for appreciation in the coming year, with double-digit growth figures being anticipated. Real estate investments are surging in India, with investors rushing to buy residential and commercial properties, driven by appealing rental returns and potential for future price appreciation. 

Real Estate Price Trends In Major Metro Cities

The Indian real estate market saw an increase in housing transactions in 2022, resulting in price increases across much of the country. All eight of the largest metropolises in India, including Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata, Mumbai, and Pune, recorded increases in the housing price index (HPI) between September 2021 and September 2022. The composite HPI, which is based on market prices in 50 cities across the country, also increased by 5.1% during the year ending September 2022. 

However, there were variations in the annual HPI market price with an increase of 37.7% in Bhubaneswar and a contraction of 6.5% in Indore in the quarter ending September 2022 compared to the previous quarter. Overall, the Indian real estate market is showing positive signs of growth and resilience, with many cities experiencing a rise in demand for housing and potential for appreciation.

MUMBAI:

Mumbai, the financial capital of India, has seen a significant improvement in its prime residential real estate market, making it one of the top 20 most expensive prime residential markets in the world. According to the 2022 PIRI (Prime International Residential Index) report, Mumbai ranks at the 18th position, a significant jump from its previous position of 92 in 2021.

The report indicates that Mumbai's premier real estate market saw a 6.4% price increase, which has resulted in a rise in the PIRI 100 index to position 37. This growth is significant for the city, given that it has been struggling with a slowdown in its real estate market for the past few years.

In terms of affordability, Mumbai has also made significant progress. The data shows that the city has become 13% more affordable (in dollar terms) in 2018. This means that homebuyers can now acquire up to 113 sq. m. of top residential real estate with one million dollars.

This improvement in Mumbai's prime residential market can be attributed to several factors. The government's initiatives, such as the Real Estate Regulatory Act (RERA) and Goods and Services Tax (GST), have brought transparency and stability to the real estate sector. The reduction in home loan interest rates has also made it easier for buyers to invest in the market.

Additionally, the pandemic has accelerated the demand for larger homes with more open spaces, leading to an increase in demand for luxury residential properties. The city's prime locations, such as South Mumbai, Bandra, and Juhu, have seen significant growth in demand for such properties.

DELHI

Delhi-NCR has witnessed a significant increase in housing costs since September 2020. The National Capital Region has experienced the largest increase in home prices across India, with a rise of 14%. The value of Delhi's premium real estate market has also increased by 1.2%, moving it up one spot to rank 77th in the PIRI 100 index from 93rd in 2021.

The increase in housing costs in Delhi-NCR can be attributed to several factors. The government's initiatives, such as RERA and GST, have brought transparency and stability to the real estate sector, leading to an increase in demand for premium residential properties. The reduction in home loan interest rates has also made it easier for buyers to invest in the market.

In terms of affordability, the price of prime residential real estate in Delhi-NCR has increased by 12.43% since last year. This means that a space of 226 square meters may be purchased in the national capital of India for one million dollars. This rise in prices is a reflection of the growing demand for premium residential properties in the region.

The pandemic has also played a role in the rise of demand for premium residential properties in Delhi-NCR. The need for larger homes with more open spaces has led to an increase in demand for luxury residential properties in the region. Areas like Gurgaon, Noida, and Greater Noida have witnessed significant growth in demand for such properties.

BANGALORE

Bengaluru's real estate market has witnessed steady growth in the past year, with a 3% increase in prices. This rise in prices has moved the city up in the ranking, from 91st place in 2021 to 63rd place in 2022 in the PIRI 100 index.

In terms of affordability, Bengaluru has also made significant progress. For one million dollars, one may purchase 385 square meters of prime residential real estate in the city. This represents a rise of 71.87% in the city's premier real estate market during 2018.

The growth in Bengaluru's real estate market can be attributed to several factors. The city's thriving IT sector has led to an increase in demand for residential properties. The government's initiatives, such as RERA and GST, have brought transparency and stability to the real estate sector, leading to an increase in demand for premium residential properties. The reduction in home loan interest rates has also made it easier for buyers to invest in the market.

The pandemic has also played a role in the growth of Bengaluru's real estate market. The need for larger homes with more open spaces has led to an increase in demand for luxury residential properties in the city. Areas like Whitefield, Sarjapur Road, and Electronic City have witnessed significant growth in demand for such properties.

KOLKATA

According to various analysts, Kolkata's real estate market has some distinctive features that set it apart from other Indian cities. One of these features is that it is price-sensitive and promptly responds to demand and supply imbalances whenever they occur in the market.

Currently, less than 50,000 units of unsold inventory are believed to exist in Kolkata, which is fewer than in Pune and Bangalore. However, Kolkata has lower housing sales, and it is predicted that it will take nearly 14 quarters to clear this inventory.

In the next three months, Kolkata apartment prices might increase by at least 10-15%. This price increase is due to several factors. Construction costs have climbed by 12% over the previous year, while labor costs for builders have increased by over 20%, severely reducing their profit margins. In addition, the growing cost of fuel has only made the developers' situation worse.

Despite the price increase, Kolkata's real estate market remains an attractive investment option. The city has a rich cultural heritage, excellent transportation infrastructure, and a growing IT sector, which has led to an increase in demand for residential properties. Areas like Rajarhat, New Town, and EM Bypass have witnessed significant growth in demand for such properties. Contribution of the Indian real estate sector to the developing economy

• Private equity investment inflows into India’s real estate market from January to September 2021 totalled US$3.3 billion. The residential real estate sector is thriving despite the pandemic. The COVID-19 pandemic has increased the demand for real estate in India’s Tier 1 cities because the pandemic has intensified people’s desire to own a home.

• In the top seven cities, 1,700 acres of land were transacted in the Indian real estate market in one year. $10.3 billion foreign investments were made in this industry between 2017 and 2021.

• The Indian real estate sector is expected to register a CAGR of 9% during the forecast period of 2023 to 2028. 

• Looking ahead to 2023, the general Indian economy shows what can only be interpreted as encouraging indicators, including a predicted increase in job creation of 8–9% and a rebound from the current stock market fall. All of these factors would eventually enhance housing demand as more individuals entered the housing market, which is crucial for the health of the real estate industry.

Overall, the real estate sector in India is set to play a significant role in the country's growth and development, fueled by increased demand for co-working spaces, separation of commercial and residential real estate, and the growing need for data centers.

Read Also: 10 Top Cities in India for Real Estate Investment: Where to Invest for Profitable Returns?