The Indian real estate market in 2023 exhibited commendable resilience and substantial growth across diverse sectors, thereby establishing a sturdy foundation for future developments. Each sector displayed unique trends and characteristics, making distinct contributions to the overall positive trajectory of the industry, as highlighted in the CBRE report.
Office Sector: Diverse Expansion
The Indian office sector demonstrated resilience in 2023, recording a leasing activity of 42.2 million sq. ft. The market diversified, with technology, BFSI, flexible spaces, and E&M driving growth. Geographically, cities like Chennai, Pune, and Hyderabad experienced substantial office space take-up, showcasing a broader regional interest. The sector is poised to exceed 50 million sq. ft. by year-end.
Retail Sector: Changing Dynamics
The retail sector witnessed a shift in demand categories, with leasing reaching 4.7 million sq. ft. Domestic retailers dominated, constituting 75 percent of leasing in January-Sep ’23, a significant change from pre-pandemic times. The retail market is projected to touch 5.5–6 million sq. ft. in 2023, driven by robust supply and evolving consumer preferences.
Industrial and Logistics: Sustained Growth
The industrial and logistics sector experienced steady growth, with 3PL players leading leasing activities at 45 percent. The Engineering & Manufacturing (E&M) segment witnessed increased activity, driven by government initiatives like the Production-Linked Incentive (PLI) scheme. Anticipated absorption for 2023 is in the range of 36–38 million sq. ft., fueled by the continued adoption of ‘multipolar’ supply chain strategies in response to heightened consumer demand.
Residential Sector: Premium Segment Thrives
Despite concerns surrounding a high-interest regime, the residential sector reported robust sales, surpassing 230,000 units in January-Sep’23. The premium and luxury segments experienced a remarkable 70 percent year-on-year increase, with sales for homes priced above INR 4 crore witnessing a growth of over 75 percent. Beyond affordability, consumer preferences now encompass factors such as health and safety, community living, sustainability, and smart home integration. Sales and new launches are expected to exceed 300,000 units in 2023.
Real Estate Investments
In the realm of real estate investments, land acquisitions took a prominent position, constituting 40 percent of the overall USD 5.1 billion inflows in 2023, with domestic developers leading the charge. Notably, the residential sector received 83 percent of the USD 2 billion committed for land investments in January-Sep’23, underscoring sustained interest in residential developments.
Outlook for 2024
The 2024 outlook foresees hybrid working models becoming the norm in the office sector, with positive sentiments and GCC expansions. Retail leasing is expected to gain momentum, while the industrial sector is set to strengthen due to rising transportation costs. The residential sector anticipates continued demand, with mid-end and budget housing driving growth. Steady investment flows are projected, with a focus on development sites and the office sector.
(Source: CBRE Research)
Number of leases as per Industry Sectors – Jan-Sep 2023
Retail
I&L
Residential
