Are Indian Real Estate Investors Back in Business in 2022?

It is anticipated that robust and positive momentum would continue to prevail in the real estate market of India in 2022-2023, supported by the stable structural basis, the increase in demand, and the decreased interest rates on house loans. Without a doubt, the year 2022 and 2023 would be the ones that the market has been anticipating for a considerable amount of time.

A brighter picture of the economy will contribute, in its own right, to the market's improvement. The majority of rating agencies have placed India's growth within the acceptable range of 8-9 percent in their predictions for the country. The spike in commercial activity, together with an improvement in the state of the employment market and an increase in income levels, would inevitably result in an increase in the demand for housing.

An heightened feeling of urgency among purchasers as a consequence of the pandemic caused housing demand to surge for more than two years. However, late-stage real estate businesses have been failing, developers are raising prices, and mortgage interest rates have begun to climb. Is the honeymoon phase finished in real estate? Let's peel back the veneer and examine the underlying concepts at work here.

Recent research issued by a well-known real estate firm found that Q1 2022 home sales were the highest for any quarter since Q1 2015, when the trend began. More than 99,500 properties were sold in the seven most populated cities in India, according to the survey. The consultant failed to account for sales in secondary and tertiary cities. When comparing sales from the same time last year to those at the same time this year, just the seven largest cities account for the majority, or 71%.

This sales milestone was reached despite the fact that many people's daily lives were still being severely interrupted. Now that the worst consequences of the Covid-19 outbreak are easing, IT workers are enjoying significant salary increases and increased job security. The result is a vacancy in the job market.

The IT sector drives the economy and the need for housing in places like Bengaluru, Pune, Hyderabad, and Chennai, as well as in many tier 2 and tier 3 cities. After dipping to a low point during the first and second waves of the economic slump in India, demand for office real estate has been on the rise recently. This is because many companies have started calling employees back to work. So that they can house both present employees and new ones, they require extra space.

A lot of Indians are making their way back to their villages and towns after having fled them during the epidemic's deadliest days. Because they heard the rallying cry to "go back to work," they are making this effort. The result is a dramatic increase in the demand for dwellings in major urban centres. While we expect end-user demand to remain dominant, we have seen an exciting new trend: a comeback of real estate investors.

Market factors that will lead to higher house sales

The Real Estate Regulatory and Development Act (RERA) in India has helped rebuild credibility in the real estate sector, leading to higher levels of trust and confidence among investors.

Rapid urbanisation: By 2020, 35% of Indians lived in cities, up from 31% in 2010, and this number is expected to rise to 40% by 2030. To put it simply, this is a massive growth.

As of 2011, 61% of Indians were employed, and this number is projected to climb to 65% by 2036.

Big, existing market demand — Over 28 million homes are still needed to accommodate the growing population in India's metropolitan areas.

Affordability: The percentage of gross income needed to cover monthly mortgage payments fell from 58% in FY2008 to 28% in FY22.

One of the most significant reasons fueling real estate development and housing demand is the anticipated USD 1.4 trillion investment in the nation's infrastructure by 2027.

A ravenous appetite for real estate investment — Real estate comprises over 40% of investment portfolios owned by the great majority of middle-class and higher income Indian families.

The return on investment

For a long time, the lack of appreciation in property prices was discouraging to real estate investors. Therefore, they ignored the residential real estate sector in favour of the commercial real estate sector. Now that the housing market has been cleaned up because to RERA, they are refocusing their attention on the industry.

One of the most important elements driving investors to acquire real estate is that property prices have recently began to climb after being stable for more than four years. With the pandemic's grip loosening on the rental property market, investors may look forward to rising prices and a rapid recovery in tenant demand.

Investors are racing to lock in today's low rates before they rise any higher. The fact that high-quality residential real estate retained its value even throughout the epidemic is one among the many reasons why investors are once again paying attention to the housing sector. The stock market, on the other hand, has maintained its volatility and uncertainty.

As an asset type, real estate is increasingly seen as a safe bet in today's economy. They stick out like a sore thumb due to their pointed inquiries and polished haggling techniques. 20-25% of serious queries made to real estate brokerages and developer sales teams during the last few months have come from investors, according to those entities.

They are looking for reliable guarantees from the developers that the project will be finished on schedule, built to high standards, and include only the best in facilities and services. If such a developer is working on the site, potential buyers are more likely to consider pre-construction homes.

The question of whether or not a homeowner with an existing residence should invest in a second or third property simply for the sake of collecting rent and seeing the value of those holdings rise is an important one right now. While this may seem like a great deal at first glance, it's vital to bear in mind that rising construction costs will eventually drive prices further higher. There is still an opportunity to benefit from the present more cheap home loan interest rates and property prices.

Follow the lead of savvy financiers who choose to invest in properties that are still in the process of being created by dependable developers. They provide you a lower barrier to entry and more future earnings possibilities. In addition, as the project nears completion, housing values increase organically and in tandem with the progress being made. Take great care to only buy homes from reputed builders who are in the midst of constructing them.

The housing market is on the cusp of a major expansion that will have far-reaching effects. Consumer demand seems immune to the slowly but gradually growing expenses of acquiring a home. Many Indians want to secure their financial future by investing in their local market during the next 12-18 months.

The return of property investors in Indian real estate has marked a crucial turning point in the real estate market, as these buyers are anticipated to snap up all of the most attractive options.

It is important for all serious home investors, commercial real estate investors to take advantage of the opportunities that this real estate investment window in 2022-2023 offers.