Indian Real Estate Investment Market In 2022

Indian Real Estate Investment Market In 2022


The real estate investment sector is one of the most globally recognized sectors. It comprises of four sub sectors – housing, retail, hospitality, and commercial. The growth of this sector is well complemented by the growth in the corporate environment and the demand for office space as well as urban and semi-urban accommodation. The construction industry ranks third among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of the economy. In India, the real estate sector is the second highest employment generator, after the agriculture sector. It is also expected that this sector will incur more Non Resident Indians (NRIs) investment, both in the short term and the long term. In the recent days, Bengaluru have emerged to be the most favoured property investment destination for NRIs, followed by Ahmedabad, Pune, Chennai, Goa, Delhi and Dehradun.

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Well, one great news coming from this sector is that the several of the reports are suggesting that the Indian real estate market is expected to exhibit a CAGR of 9.60% during the period of 2022-2027. Ever since the beginning of the year 2022, the Indian real estate sector has constantly registered indomitable resilience and has been on investors’ radar contributing significantly to India’s economic recovery and growth after the setbacks of COVID-19. Real estate values are witnessing an upward trend across India. The rise in demand for the realty sector has been fuelled by the improved sentiments of the buyers and initiatives by the Government and the developers’ community!

Record Growth In The Year 2022

Real estate remains to be the preferred investment class given the local and international challenges in today’s unsettling environment. The housing market in India is expected to close the year 2022 on a high. Sales of housing units hit a record high aided by resilient economic activity and strong consumer sentiment for home ownership further fuelled by the pandemic experience, according to Knight Frank Research. The sales for the top eight Indian real estate markets were over 2.32 Lakh Units in the first 9 months of the Current Year of 2022. With this, the industry has surpassed the sales witnessed in the pre-pandemic months. In fact, the sales witnessed in the first 9 months have been higher than full year sales in 2017. The traction witnessed in the first three quarters of this year suggests 2022 will undoubtedly set multiyear high for the industry. A large percentage of home sales are bank financed, and consumer sentiment is slightly affected due to rise in interest rates, but the silver lining is that rate increase has been front loaded and most of the rate hike or inflation concerns should start to settle soon.

Interestingly, the corona virus pandemic too played a great role in stimulating the growth in the Indian real estate market. The very notion of a home, as one of life’s most fundamental requirements, was altered. People felt the need for a large home that can fit work and education requirements. Due to this, demand for large homes increased. There has been an increase in housing demand and consumer confidence since the pandemic remains buoyant. The Knight Frank – NAREDCO future sentiment score, which measures stakeholder perceptions about the real estate sector over the next six months, declined from 62 in the second quarter of 2022 to 57 in the third quarter. Despite this, the Sentiment Score has largely remained above 50, indicating the prevalence of a positive sentiment in the market.

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As per ICRA estimates, Indian firms are expected to raise around Rs. 3.5 trillion (US$ 48 billion) through infrastructure and real estate investment trusts in 2022, as compared with raised funds worth US$ 29 billion to date. Well, it should also be noted that Construction is the third-largest sector in terms of FDI inflow. FDI in the sector (including construction development & activities) stood at US$ 54.17 billion from April 2000 to March 2022. Moreover, the technological intervention has also helped the real estate sector to gain ground, and developers are showing clear intent to utilise the tools at hand to the maximum. The NRIs as well as the Foreign Investors have noticed the change in real estate functioning post RERA (Real Estate Regulatory Authority) and pandemic, leading to the creation of safe investment scenarios for them!

For NRIs & USA Investors

India’s real estate market has shown some promising & rapid growth of late, which has been noticed by the investors around the world too. Ironically, the weakening of the Indian Rupees is also helping the Indian real estate sector in its own way. Currently, the value of 1 US dollar is as high as Rupees 82 and over here, the Indian industry observers see it as an opportunity for the NRIs & American Investors to invest in India’s ever growing and lucrative real estate sector. Well, there is no doubt that the slide of the Indian rupee to a record low has unlocked a golden and unique opportunity for expatriates to turn their foreign-earned money into a profitable investment, and what’s better than investing in a property!

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Non Resident Indians (NRIs) as well as the American investors (Big Firms like Meta, Google, and Trump Tower etc.) are motivated to invest in India due to the weakening of the Indian Rupees and the promise of the new Indian economy. Further, new launches of quality housing products in major Indian cities have also attracted such buyers. The well connected global environment and local market infrastructure growth have substantially aided NRI buyer interest. The amount of investment from the NRIs & American investors in the real estate market has risen, which has broadened the pool of potential customers for developers in recent times.

Written By NEEL PREET – Author of the Books, Voice From The East (2016); Journey With Time Place And Circumstances (2018) & Indian Defence Files (2021).

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