Indian real estate has undergone drastic transformation in the recent past. The post-taxation period witnessed high economic shifts, globally altered uncertainties, and far-reaching impacts owing to the COVID-19 pandemic. Industry tipped on the edge to enter into a whole new growth-promising evolution of consumer preference, novel technology, imperatives for sustainability, and migration towards Tier 2 and Tier 3 cities for it as it enters 2024 from the pandemic. Forces that not only transform the industry but also our worldview we carry in our minds concerning real estate as an asset class for long term.
Having previewed the trends for now, let’s jump straight into the major trends that will define the Indian realty landscape in 2024 and henceforth.
- The Flexibility Boom: Hybrid Work and Agile Offices
The post-pandemic work culture forever changes the face of how offices will be approached in the business world. Flexibility boom from the remoteness of working starts blurring but entwines with elements that blend flexibility through remote location while retaining all the goodness of an office setting. Companies would be seen doubling down on more flexible workspaces capable of adapting different styles of working for greater employee health and accessibility to the office.
Hybrid work models will change. It would be the route that companies adopt as organizations begin to adapt Return-to-Office policies to take into consideration how workers would like to travel to work and choose a location based on easy access. Suburbs office locations will be most favored because firms will seek to establish offices closer to workers’ residential areas to minimize potential commutes and enhance work-life balance. Investments from companies will be more oriented toward dynamic office designs targeting health, well-being, and employee engagement. Majority of the tech-enabled workspaces would allow seamless connectivity for hybrid meetings with functionally designed workspaces encouraging collaboration and innovation.
- Sustainability is now an absolute necessity
It’s now urgent in development-from just being an add-on benefit to an absolute necessity in real estate developments. As buildings account for about 40% of the emissions of greenhouse gases, a large number of developers and investors are now planning their strategies according to green building practices and eco-friendly technologies. Regarding this, sustainable real estate will evolve further in the year 2024; definitely at a mass level, Grade A developments will be in demand, especially in the residential as well as the commercial sector.
The new feature, or the new trend, in India’s real estate space-green certified buildings are driven both by environmental responsibility as much as investor demand for sustainable assets. Major developers are now including energy-efficient HVAC systems, rainwater harvesting, solar power, and waste management systems in their projects. All these factors, coupled with occupiers-in particular, multinational corporations-upping ESG goals-will lead to increased demands for sustainable office and commercial spaces. Industry outlooks were established in the context of visions for viewing the progress of the I&L sector to achieve Grade A status to achieve 35-50% of the total stock by 2030, reflecting an exponential leap towards high-quality and sustainable infrastructure. - Technology as a Pillar of Innovation and Efficiency
It is only in 2024 that the real estate sector will get to truly reinvent itself, with technological enablement, be it in building, maintaining, or experiencing things. So much more would be called for from digital only to become the driver towards bettering operational efficiency and a real estate experience of tomorrow in AI-driven project management, smart building technologies, and much more.
Proptech, where technology meets real estate, will be part of the way toward being almost indispensable in the industry. For residential and commercial projects, it means IoT will give total control over energy consumption, security systems, lighting, AI with the optimization of schedules regarding the maintenance of many assets on the property and reduce operational costs really. I&L believes the advancement of technology would accelerate supply chain resilience and planning for demand head on to make a warehouse smart and responsive to market needs.
The retail sector will see a different kind of wave, this time more amped up by the technology stack. Omnichannel retailing will weave together seamlessness between the online and offline shopping experience. Advanced data analytics will help retailers construct customized journeys for customers. Brick-and-mortar stores will add ARs and virtual fitting rooms to raise engagement levels and walk-ins.
- Tier 2 and Tier 3 cities as growth drivers.
It is going to migrate to Tier 2 and Tier 3 cities in the future years. Now, in the current scenario, Lucknow and Indore, Surat and Coimbatore and so on offer great possibilities for developers, businesses and investors as there is the triple synergy of increasing the income level, developing infrastructure, and a huge demand for affordable housing.
These small cities thus hold huge potential for the retail, office, and industrial sectors, within which corporates have been consolidating their presence in the suburbs through hub-and-spoke office models. With more and more enterprises embracing hybrid work, these Tier 2 and Tier 3 cities will be satellite office hubs that allow enterprises to tap into broader talent pools and accommodate increased headcounts beyond the metros.
I and L will witness healthy growth in these cities in the future with both the uptake of e-commerce and diversified supply chains. Better infrastructures of transport, government-sponsored infra development projects and rising demands for warehousing facilities and logistics parks will further make Tier 2 and Tier 3 cities more important for India’s supply chain transformation.
- Positive policies of the Government and increase of investment globally
Probably, government initiatives will be the most viable factors for growth in Indian real estate. The regulatory reforms such as RERA or the Real Estate (Regulation and Development) Act along with tax benefits to the first-time homebuyers have already streamlined market transparency and buyer confidence mainly in the residential segment. With these key regions now to be focused by the government on Affordable Housing and Smart City projects, the real estate investment activity should witness a significant spurt in the next phase.
While global investors will remain the front runners in the Indian real estate market, a record inflow of $7.8 billion in 2022 does indeed prove to be an exciting piece of news. This makes an area of clear focus for international funds in scouting quality assets with sustainability in a country that has continuously seen an increase in demand both for commercial and residential spaces and has solid growth of the economy. What remains to be seen, however, is that institutional investors, which are the real driving force behind the Indian investment market, will continue to be keen on investment-grade developments located in core geographies, partly focusing on high-quality office space with good ESG credentials and on industrial and logistics assets that can grow over the long term.
Conclusion: The Year of Transformation and Opportunity
Indian Real Estate Looking at the trajectory that Indian real estate has been undergoing all along in 2024, it is literally teetering on the edge of all change. Growth will come from two cornerstones: sustainability and technology; supportive governments’ policies, more investment coming from worldwide destinations, and the recently given importance and focus to regions will form a solid platform for growth in years to come. Such all-inclusive investor, developer, and homebuyer landscape promises full opportunity, innovation, and high growth potential for 2024.
