Residential prices expected to post 5% capital value growth in 2022: report

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India’s real estate market is showing strong signs of rebounding as the economy continues to recover from the COVID-19 pandemic, according to a report released today titled “India’s Real Estate Market Outlook”. Leading valuation and advisory firm RBSA Advisors expects India’s real estate sector to grow at a CAGR of 15%, from $60 billion in 2010 to $1 trillion by 2030 and contribute 13% of the country’s GDP by 2025.

India’s residential real estate segment (on average around 3-5% of GDP) contributes 80% of the real estate market. The report says that in the first half of 2021, the impact on residential market traction was seen more as a speed bump than a major impediment.

After a prolonged period of decline and then stabilization, residential prices should pick up again. A growth of 5% in capital value for the residential real estate segment is expected in the country in 2022.

As things return to normal, residential sales volumes posted strong growth of 67% year-over-year to 99,416 units and the level of unsold inventory fell slightly, by 1% year-on-year since the first half of 2020, to 441,742 units in the first half of 2021. on affordable housing should give further impetus to this segment.

The organized commercial real estate sector is expected to grow by 28% to 82 million square feet by 2023. India recorded investments worth USD 2.4 billion in real estate assets, a growth 52% year-on-year in the first half of 2021.

The momentum continued as the Union Budget 2022 announced a spending of Rs 20,000 crore for Gati Shakti in infrastructure projects. Rs 48,000 crore for Pradhan Mantri Awas Yojana (PMAY) for urban and rural households in FY23. The property market is expected to recover from the shock throughout the forecast period as it is a “black swan” event (COVID 19) and not related to persistent or fundamental weaknesses in the market or the global economy.

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