2023 Expectations for Real Estate Developers

Market segment trends to strongly influence VT industry future

Real estate and vertical transportation (VT) are interlinked, forming a concrete bond that has been in existence ever since high rises made their appearance. Ironically, today, a new demand segment for VT also comes from the low-rise segment, which was hitherto considered a non-existent market. In the post pandemic scenario, real estate has been undergoing several upheavals and transformations. As we begin 2023, let’s glean some insights from leading real estate developers on their expectations from different categories and the implications these could have for VT going forward. 

Affordable Housing

Pradeep Aggarwal, founder and chairman, Signature Global (India) Ltd., explained that after a two-year lull, the realty market has rebounded with developers reporting a surge in real estate demand. Affordable housing has been a leading force, with the demand for mid and affordable segments steadily improving backed by the renewed confidence of buyers/developers. Also, independent floors are gaining traction among the middle class because of their greater affordability and space. 

He felt that the segment’s growth can also be attributed to the Pradhan Mantri Awas Yojna, which aims to complete approximately 80 lakh houses by 2023. Also, affordable housing finance will grow the fastest, with mortgage penetration expected to double to 8-10% over the next few years, driving further growth.

Rising Awareness

According to Vinay Wadhwa, general manager – Sales, Vatika Ltd., both residential and retail realty segments grew substantially in 2022, strengthening developers’, consumers’ and investors’ confidence in the property market. The growing homeownership awareness contributed to a 40% increase in home sales in India’s eight major housing markets in the first nine months of 2022 despite increasing interest rates, indicating a positive trend. 

He said: 

“The year also witnessed a strong demand for luxury housing, owing to homebuyers’ growing desire for spacious homes with luxurious amenities. Additionally, NRIs (non-resident Indians) too have re-established their faith in real estate this year due to the depreciation of the Indian rupee, which has enabled them to invest more in Indian real estate. If current growth trends continue, the country’s real estate sector may experience explosive growth next year.”

Policy Pangs

Siddharth Katyal, group director and business strategist, Omaxe Ltd., was of the view that the retail sector is gradually returning to growth mode with consumers visiting malls to shop and spend quality time with their families to restore their social life. We believe that, in the next five years, demand for real estate infrastructure will outweigh supply, and the more infrastructure we build, the more demand we will have. However, development should be infrastructure and need-based. He emphasized:

“There is a need for the government to ease the policies for promoters and developers. In addition, developers should be given an extended arm by the government so they can market compliant properties, have a streamlined approval process and develop quickly.”

Numbers Game

As per Kamal Khetan, chairman and managing director, Sunteck Realty Ltd., the Indian real estate market is expected to experience significant and favorable growth in financial year 2023 (FY 23), fueled by a solid structural foundation and rising demand. Due to improving standards of living and population expansion, the demand for housing infrastructure has grown more than ever, further bolstering India’s real estate market. The real estate sector has experienced rapid growth in recent years, and it is expected that this trend will continue in the years to come. The Indian real estate market is predicted to reach Rs. 13,00,000 crore by 2023 and touch $1 trillion in value by 2030, generating a large number of employment opportunities. The housing market, which propels and supports the real estate industry as a whole, is poised to experience a boom. Khetan said:

“Real estate’s fundamental concept has changed, expanding beyond the four walls to provide the end user with a complete 360-degree experience. The recent changes in the demographics of homebuyers have undoubtedly had a significant impact on the real estate market. Technology has enabled the real estate industry to reach its full potential by encouraging the use of digitalization and technological tools like AI, augmented reality (AR), virtual reality (VR), big data and analytics. On the horizon of the sector are automated homes employing the Internet of Things (IoT), AI and other technological advances. The real estate market is being disrupted by the digital technology revolution, which also offers tremendous opportunity to the sector to reach new heights. Technology has transformed real estate in every way and will continue to play a significant part in its digital transition.” 

Real estate’s fundamental concept has changed, expanding beyond the four walls to provide the end user with a complete 360-degree experience.”

 — Kamal Khetan, chairman and managing director, Sunteck Realty Ltd.  

So going by the market predictions, it seems more than evident that 2023 will see the real estate sector do well across the spectrum, and the resultant demand for VT should be quite good, as well. All in all, it’s a year where one could be looking forward to bigger and better growth prospects!