What are the latest Real Estate Trends in 2024? And what investors need to know before investing? The question is, what will happen in 2024? Whether you're an end user or a first-time property buyer or a seasoned real estate investor, it's essential for everyone to know real estate trends so they can identify a correct opportunity. I'll share what we'll see in 2024. Some trends are old and continued, while some emerging trends are new.
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For those who thought that the real estate market would crash in 2024, it's bad news. Looking at the demand for houses, sales volume, and fresh inventory supply, it doesn't seem like the market will crash in 2024. Year 2024 is also an election year in India, and usually, the real estate market doesn't crash in election years.
The reason is that the real estate age in directly and indirectly contributes to 7.3 % of the GDP, and therefore, the government will make every effort to keep the market bubble and hence, there doesn't seem to be any possibility of a market crash. In fact, given the demand, prices will rise in 2024 as well.
Still prices won't rise rapidly, but it will definitely increase. So Real Estate Trends in 2024 is still going to be a good year for investment. But if you're an end user, market timing doesn't matter. If you like a product and it fits your budget, you should definitely go for it.
However, if you're an property investor, here's some good news: a report suggest Indian Real Estate Market is expected to grow by a compounded annual growth rate of 9.2% between 2023 to 2028, based on historical data of the Indian real estate.
After such aggressive price growth last year and expectations of prices rising for another year or two, a period of stagnation is expected, which has historically occurred. Some industry experts won't agree, but historically, there has been a big real estate boom in every decade where people believed that real estate would never slow down, but after that, a period of stagnation always comes.
We have written on the history of Indian real estate, which will help you understand historical trends and predict the future based on history. So looking at this real estate trends in 2024, if you're investing in property without taking a loan, you can still expect good returns.
But if you're investing with a loan, you'll need a long holding period to make your investment profitable. But in a nutshell, in 2024, prices will continue to rise.
Another trend that will continue from 2023 is the increase in demand for luxury housing. In 2019, the share of luxury housing in total residential sales was only 7%, which increased to 18% in 2023, and it is expected that from 2024 to 2029, luxury housing sales will grow comfortably to 22%.
Now, this is a big opportunity for investors. While stagnation may occur in the affordable budget or premium segment properties in the future, growth can still be expected within luxury housing. We have written earlier what factors drive this growth and why it's a significant opportunity.
Next, in 2024, it will be a seller's market, meaning if you're thinking of booking profits by selling your property, it's a good time. The inventory of ready-to-move properties in the market is very limited, and therefore, resale property prices are quite high.
After 2020, many projects were launched, and investors have invested a lot of money, and people have bought properties on easy payment options. Now, when these projects are nearing completion, these investors will need to exit, meaning the supply of ready-to-move properties will increase in the market.
The majority of projects are scheduled for completion between 2025 and 2028, meaning inventory supply will increase during this duration. This will lead to market competition and possibly stabilizing prices. It may also take time to sell properties in resale.
So, if you're thinking of booking profits by selling your property in 2024, it could be a good time. But if you're comfortable with your existing asset, which fits your budget and needs, because if you're selling at a high price, you're also buying at a high price.
Next, after the downfall in the COVID era, rentals have increased rapidly over the last two years, and now tenants are not in the mood to pay higher rents. Therefore, the general rental market will slow down slightly in 2024. However, exceptions will be found in some locations.
From a rental yield perspective, considering the increasing property prices, rental yields may also decrease from around 4% to 5%. But those who bought properties earlier will still get decent rental yields.
Next is the demand in the suburbs of metro cities, which will increase rapidly. It means demand will increase significantly in developing and underdeveloped locations around metro cities, presenting an opportunity for end-users and investors. In 2023, demand in the suburbs of metro cities increased by 20%, and there are two main reasons for this. Firstly, prices are already very high in central locations, becoming unaffordable.
Secondly, people nowadays not only want a home but also amenities. They want larger homes, and a middle-class family can afford all these things only in a developing or underdeveloped location. Indian real estate is already experiencing a price growth rally, but in the next four to five years, another growth wave can be expected in such developing locations when the social infrastructure there is ready.
But here comes the million-dollar question for everyone. Developers and brokers always market their product, but the infrastructure development of a location is in the hands of the government, and government projects are always delayed.
So, end-users will have to evaluate whether this particular location will be liveable for how long, and investors will have to evaluate how much holding power they have, meaning how long they can hold their investment. Before exiting. Like in 2023, in 2024, demand will also increase in tier two and tier three cities. In fact, demand will increase more than in 2023. There are three major reasons for this.
- Firstly, the government is promoting smart cities, creating better connectivity in tier two and tier three cities, and investors don't want to miss this opportunity.
- Secondly, prices have already increased significantly in metro cities, becoming unaffordable. But people still need to secure their future, so they're considering buying homes in tier two and tier three cities. In worst-case scenarios, they might use them for retirement.
- Finally, developers are pushing heavily to create demand in tier two and tier three cities. They're launching their projects in these locations, some being major pan-India developers with big brand names, launching mega projects in these cities.
Now, land has become very expensive in metro cities, but developers still need to run their business, so they're moving towards tier two and tier three cities. They're aggressively branding these projects and marketing them, creating additional demand.
If you're thinking of investing here, be slightly careful and do your due diligence properly. First, you'll have to evaluate whether you can really live in these tier two and tier three cities. Some cities will give you very good growth, but in some cities, it might take a long time to get an exit from your property. So, be careful and do your homework correctly.
2023 was a great year for office leasing. By 2022, many companies had adopted hybrid or work-from-home models. But in 2023, the majority of companies started calling their staff to the office regularly again, leading to a sudden increase in demand for office leasing.
However, currently, due to the global economic and political situation, office leasing space will grow slowly. Factors such as the global economic and political situation will influence the growth of office leasing space.
Multiple wars are ongoing - India-China relations, India-Canada relations, and there are elections in the USA this year. Due to these factors, office leasing space will experience slow growth. So, those considering investing in commercial office space will need to closely monitor the market. On the contrary, retail space could perform quite well.
Several major infrastructure projects that have been ongoing for the past 8-10 years are now in their advanced or near-completion stages. This will create new retail markets, boosting both retail leasing and sales.
For example, the Trans-Harbor Link in Mumbai is under construction, the Panvel Airport is being built, the Jewar Airport in the Delhi NCR region is progressing, and the Dwarka Expressway is almost at completion stage.
Aggressive work is also underway on Sona Road. Many cities have major infrastructure projects at advanced or completion stages, leading to the creation of new markets. This will increase demand for retail space. Additionally, demand for co-working space will increase in India.
Many companies are still operating on a hybrid or work-from-home model, but people aren't finding productivity while working from home enjoyable. Therefore, they prefer working from co-working spaces, increasing the demand for such working environments.
The demand for luxury working spaces is still increasing, and this can be a very good investment opportunity. But one word of caution: luxury is in higher demand than budget working spaces, so evaluating before investing in it is advisable.
Next are emerging trends that may not matter much today but will definitely make a difference in the future. Increasing demand for smart homes is a luxury feature in India, available in very limited projects. Gradually, its demand is growing significantly. Smart homes mean fully connected homes where curtains, AC, TV, and everything can be controlled from your phone.
Additional security features are in high demand, attracting good tenants and buyers. These features may become very common in the future, but initial investors will have a significant advantage. Next is the increasing demand for green buildings, which are energy-efficient and environmentally sensitive. There are very limited projects in this segment, mainly in the luxury segment.
The demand for such projects is gradually increasing as people are sensitive to the environment and are willing to pay extra for both purchase and lease. Moreover, over the long term, energy-efficient projects save a lot of money in maintenance.
In conclusion, besides trends, you should also monitor interest rates, inflation rates, and the global political and economic situation because all these things affect buyer sentiment and the cost of raw materials, which ultimately impacts the price of a property. The Indian real estate market is sentiment-driven, so if a major economic event occurs somewhere, it could significantly impact the market.
When a developer gets involved in a scam, the entire market turns negative. Conversely, if a major infrastructure project is proposed in a location, the entire market becomes positive. That's why you need to monitor trends so that you don't miss out on any opportunities and can make informed decisions.
If you're interested in real estate trends analysis and the property buying process, you can check out listing on Upcoming Projects website. We list all new launch projects of Indian real estate industry, so that everyone is aware of what's happening in real estate. I hope you found today's article interesting. Thank you.
