Moneycontrol Pro Panorama | Real estate in 2023: Sky is the limit

Bullishness in real estate is not restricted to the housing sector, even the commercial segment is showing traction. (Representational image)

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Everything that was considered bad for the real estate sector happened in 2022. Real estate prices moved higher, interest rates continued to rise, input costs were high for builders and the economy was affected by multiple headwinds during the year. Despite these factors, the real estate sector posted one of the best years in recent times.

House sales rose to 364,900 units in 2022 from 236,500 units in 2021 across the top seven Indian cities, a 54 percent jump YoY. Housing sales in the top seven cities broke the previous record of 2014 when 3.43 lakh units were sold.

Mumbai Metropolitan Region (MMR) numbers continued to remain strong posting the highest sales at 109,700 units sold in 2022, followed by the National Capital Region (NCR) with 63,700 units.

New launches in the top seven cities also kept pace with sales and saw a 51 percent rise from 236,700 units in 2021 to nearly 357,600 new units in 2022.

The question on everyone’s mind is will the music stop anytime soon?

Not in the near future if experts are to be believed.

Anuj Puri of Anarock expects the current sales momentum to continue in the first quarter of 2023. Keki Mistry, CEO of HDFC in a recent television interview said that structural demand for housing in India remains strong and envisages a 15-20 percent growth for individual home loans.

Edelweiss hosted a group of real estate companies earlier in the month and the general consensus was that sales were driven by pent-up demand, rising household savings, increased preference for owning a house and a shift towards branded players. Despite the price hikes, all players reported continued traction and expect demand momentum to continue in the near term.

Bullishness in real estate is not restricted to the housing sector, even the commercial segment is showing traction. According to the Edelweiss report, after reaching the peak gross absorption of 60 million sqft in CY19, the commercial real estate market absorption declined to 33.7 million sqft in CY20 and 38.2 million sqft in CY21. However, in the first nine months of CY22, it has touched 39.5 million sqft with an expectation of the year closing at 51.8 million sqft.

The appetite for home ownership has remained unsatiated, with most of the sales being driven by end-users and not investors. If interest rates start reversing, the fence sitters will also join the party giving another boost to the sector.

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Technical Picks: L&T, Guar Seed, L&T and Nifty50 (These are published every trading day before markets open and can be read on the app).

Shishir AsthanaMoneycontrol Pro​