The Indian real estate market has exhibited remarkable resilience over the past two years, even amidst the pandemic. Despite the challenges posed by COVID-19, the real estate sector has continued to perform well and is expected to further expand in 2023. This article highlights why 2023 will be an exceptional year for real estate investments in India.
Assessing India’s economic landscape, projections from ICRA indicate that infrastructure and real estate investment trusts are likely to raise around Rs. 3.5 trillion (US$ 48 billion) in 2022, surpassing the cumulative sum of US$ 29 billion raised thus far.
The market trends and demand analysis indicate various opportunities in the Indian real estate market. Residential, office, retail, hotel, and industrial properties are available, each with varying market values depending on their location. Cities such as Delhi-NCR, Bengaluru, Mumbai, Pune, Chennai, and Hyderabad have thriving real estate markets, while towns like Jaipur, Ahmedabad, and Chandigarh are emerging as promising real estate destinations.
Understanding the legal and policy framework, it is predicted that the residential real estate market in India will experience a positive capital value increase of over 6% in 2023. Reduced premium charges and stamp duty will contribute significantly to this growth, particularly in the mid-income housing market. Favorable policies expected in the coming year will further stimulate real estate projects and investments.
To prepare for real estate investment, it is essential to conduct a risk assessment and implement mitigation techniques. Evaluating affordability is crucial, considering factors such as mortgage payments, downpayment requirements, rental income estimates, price-to-income and price-to-rent ratios, and capitalization rate. The mid-income housing sector is experiencing consistent growth across cities.
Setting property selection criteria is also important, defining investment objectives and desired features for the chosen project. Construction quality, reputable contractors, location, and market price evolution are common factors to consider. Additionally, deciding on land investment, commercial or residential real estate is necessary, as new supply and launches are meeting demands rapidly.
Evaluating expected ROI involves calculating the return on investment by comparing the total investment in the property, including purchase price and additional costs, with its current value. Various methods such as the cost method or out-of-pocket method can be utilized to determine ROI.
Performing a background check and due diligence is crucial before making any investment decisions. Thoroughly investigate the builder’s credibility, ensure compliance with local authority approvals, familiarize yourself with local tax rules and regulations, and verify the project’s registration with the Real Estate Regulatory Authority (RERA). Additionally, confirm the builder’s possession of the necessary Commencement Certificate (CC) and Occupation Certificate (OC) for completed projects.
In conclusion, considering the positive market trends, opportunities for capital gains, favorable policies, and the potential for value appreciation, 2023 presents an excellent time for real estate investments in India. However, thorough research, due diligence, and risk assessment are vital steps to undertake before making any investment decisions.
While it is challenging to provide a definitive prediction, considering the positive market trends, demand, and growth projections, it is unlikely that real estate prices in India will experience a decline in 2023.