2022 witnessed a rise in real estate market forces, with demand even treading back to the pre-pandemic levels

2022 witnessed a rise in real estate market forces, with demand even treading back to the pre-pandemic levels

One is the rise in real estate market forces, with demand even treading back to the pre-pandemic levels

Vimal NadarUpdated: Saturday, January 21, 2023, 12:13 PM IST
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The year 2022 has been one of not just recovery but also sustained growth. There were no new surprises on the COVID-19 front, except in December 2022 when cases started rising globally. A stable health environment brought in some stability and confidence among real estate stakeholders. However, when looked at from a greater perspective, the year 2022 saw a duality in the economy and market.

One is the rise in real estate market forces, with demand even treading back to the pre-pandemic levels. The other facet is the economic concerns such as rising inflation, global recessionary pressures, volatile input material costs and geo-political challenges. Overall, even with the ongoing concerns, the real estate sector performed well and witnessed higher traction.

While the real estate sector is expected to see a mild downturn led by soaring inflation and tightening of monetary policy, it is likely to bounce back soon. In 2023 it will continue to be flexible and adaptive towards changing market conditions. Companies will resort to a long-term approach and re-position themselves beyond the recession and inflation irregularities.

After facing a downturn for a while, the housing sector saw an upswing in 2022. The year 2021 saw high growth in residential demand, after slow demand for some years. The momentum continued in 2022. Demand was led by a high inclination to own homes, relatively low-interest rates and rebates are given by developers.

Led by robust demand and a rise in the cost of construction, housing prices have been on the rise since the beginning of 2022. Despite rising interest rates, the rates continue to be lower than what was prevailing in the market a decade back, indicating sustained affordability. In the next few quarters, housing sales are likely to be impacted especially in the affordable and mid-range segment from the highs seen in 2022. This is led by a rise in the cost of construction and hike in home loan interest rates.

With sentiments turning weak due to recent lay-offs in the technology sector there could be some hold-offs on homebuying in the short term. With changing needs, homebuyers’ focus will change towards owning eco-friendly homes, which are energy efficient and have ample green and open spaces.

Following a pandemic-driven course correction, the sector is now expected to see positive momentum. However, hinging on the recession situation, the real estate sector might see some moderation in 2023.

Five takeaways for 2023

Economy and recovery will move in a zig-zag pattern until uncertainty looms over

Sustainability will be at the forefront

Adopting new technologies will be more immediate

There will be structural shifts in how and where we work

Flight to quality, flexibility and agility, health and wellness will be the buzzwords

(The writer is Senior Director and Head of Research, Colliers India)

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