Realtors see 2023 as the year when property price growth peaked

Bengaluru: The bull-run residential properties saw in the country in 2023 may not be matched next year, say some realty players, who think the surge peaked in this calendar. They attribute this largely to the narrowing gap between demand and supply and are of the belief that going forward it will be purely the market forces at play rather than various
extraneous factors that impacted raw material prices and interest rates.

“We will see price appreciation continuing in CY24, but the heat will probably mellow down,” said Darshan Govindaraju, director of Bengaluru-headquartered real estate major Vaishnavi Group. In the absence of any adverse global event he does not see prices of raw material going through a more-than-average increase in 2024.

The sixth edition of the annual real estate report launched by proptech unicorn NoBroker on Monday highlighted a decadal record launch of new projects in 2023. The startup expects that new housing units will cross the 4 lakh-mark to register a 20%-plus growth this year, over last year’s launch of 3.28 lakh units.

In its estimation, the residential segment registered an 11-15% increase in prices in the top-6 markets of the country in 2023. “With these new launches, the gap between demand and supply will reduce which will eventually result in controlled price appreciation and rental surge,” Saurabh Garg, co-founder and chief business officer of NoBroker said.

While refraining from making a categorical forecast, Vimal Nadar, senior director (research) at property consultancy Colliers said: “The market is going in the right direction wherein there is significant price discovery that is happening purely because of market forces - demand and supply”.

Others were more cautious.

“The demand in the residential sector is phenomenally high, which makes it easier for developers to increase prices,” Angad Bedi, Managing Director, BCD Group, said.

Established branded developers are however, yet to tweak their launch pipelines in favour of the affordable or middle housing segments, which would benefit more number of home-buyers.

“Our focus would be on operating in mature markets where prices are already high so that across the project lifecycle of 36-42 months, even if there are upward price revisions, it can be captured within a delta of the selling price,” Govindaraju said.

While the above is true for the residential segment, the commercial arm of the industry is likely to follow a different trajectory. “People post Covid-19 have adopted hybrid work which has reduced their office space needs. So commercial (segment) has a slightly oversupply dynamic right now,” co-founder and chief executive of co-living platform Zolostays, Dr Nikhil Sikri said, adding that this segment is likely to see a steady or minor growth in 2024.