Indian residential real estate market expected to maintain strong growth in 2024 despite election disrupti – The Economic Times

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The Indian residential market is poised to sustain its strong growth momentum in 2024 undeterred by temporary disruptions caused by the upcoming general elections, said industry executives and market analysts.
Sales are predicted to surge by 10-15% to more than 300,000 units this year, buoyed by a robust supply pipeline as several branded developers continue to acquire land parcels for new launches and enter new markets to capitalize on a boom in housing demand.

“The year 2023 was the all-time high surpassing the 2010 peak by 24-25%. Going ahead, we do not see much impact of the general elections since the majority of real estate activities are state subjects. We expect sales will continue to maintain the 2023 momentum and would register a growth of 10-15% Y-o-Y. Sales are expected to cross 300,000 units and would be around 310,000 to 315,000,” said Samantak Das, chief economist and head of research and REIS, India at JLL.

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According to experts, the 2024 polls may cause a short-term labour shortage as many workers will be returning to their villages to cast their votes. This may lead to temporary delays in construction, they said, but reiterated the bullish outlook for the sector this year. The realty sector employs nearly 10 million people, most of whom are contractual workers.

“With 2024 being an election year, we expect the labour movement to be only a short-term phenomenon and do not expect any significant disruption in construction activities during the course of the year. Overall, we expect to clock over 30% growth in 2023-2024 and expect the same strong momentum of sales to continue in the year 2024 – 2025,” said Praveer Shrivastava, senior vice president, residential at Prestige Group.
Currently, tens of thousands of rural people, especially from Uttar Pradesh, Bihar, Madhya Pradesh, Chhattisgarh and more recently from West Bengal, migrate to work in India’s major cities where homes are being constructed for the middle class and rich. But they tend to return to their villages during elections, either to vote or to avail largesse distributed by political parties.

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Elections to choose a new government at the Centre are slated between April and May. Experts believe any disruption caused by the elections will likely be limited to a couple of months, given that many builders have factored in delays within the Real Estate (Regulation and Development) Act (RERA) timeline.

“The impact would only be for a month or two as most builders have factored the delay in RERA timeline with projects expected to be completed over a 5-year period as compared to 3 years earlier. The overall sentiment in the domestic housing market remains positive both from investment and new development perspective. Also, the sales guidance shared by various established developers reflect robust sales which are expected to get a healthy response from the buyers,” said Amit Bhagat, CEO of ASK Property Fund.

Developers have also realigned their marketing strategies based on the current market dynamics, reflected in the increasing number of luxury housing project launches. JLL estimates a substantial number of under-construction residential units, pegged at around 280,000 units to be launched in 2024. Over the next two years, around 632,000 residential units are expected to be completed across the top seven cities.

“The project pipeline is quite impressive and the sector already recorded healthy pre-bookings and sales throughout the year. As far as the delivery is concerned, I think there will be a temporary deceleration before elections. However, as soon as the elections are over, the sector will regain its acceleration owing to the prevailing bullish sentiment in the market,” said Srinivasan Gopalan, co-founder and chairman of ArisUnitern RE Solutions, a real estate development management company.

Going ahead, economic growth projections, inflation containment, and potential rate cuts by the Reserve Bank of India suggest a favourable environment for housing sales, with an anticipated 40-50 basis points reduction in home loan rates. The top seven cities currently have an inventory of 522,112 units, which will take 2.1 years to sell, according to JLL.

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