What Drove Real Estate in 2023: Our Top Five Picks

In our last report of yet another momentous year, our objective is to go beyond the macro factors and dissect some of the most defining demand trends in a bid to answer a simple question - what really drove different real estate segments in India in 2023?

-        Demand driver diversification acts as an insulation shield for the Office sector: The demand diversification involving the technology, BFSI, flexible spaces, and engineering & manufacturing sectors is expected to continue being responsible for insulating the office sector from global headwinds. This is also likely to help the office sector breach the 50 million sq. ft. gross leasing-mark by the end of 2023.

-        Demand from 3PL and manufacturing players continue to fuel resilient growth in the I&L sector: The third-party logistics (3PL) players dominated the overall industrial & logistics (I&L) leasing in 9M 2023 with a share of 45%, followed by the engineering & manufacturing (E&M) players (at 15%). The demand for 3PL services stemmed from interlinked stakeholders across the supply chain, including wholesalers, retailers, and e-commerce players.

-        Diversified demand drivers in the Retail sector with domestic retailers taking the lead: While fashion & apparel continues to remain one of the top demand categories for the retail sector, other segments such as departmental & homeware stores, entertainment zones, and the luxury retail categories have also gained greater traction in 2023 compared to 2019.

-        Luxury and premium housing steal the show for the Residential sector: While mid-end housing continued to pillar the overall residential demand, the traction in the premium / luxury category housing segment (comprising of units priced at INR 2 crore and above) in 2023 has been noticeable. These segments not just registered a 70% Y-o-Y increase in sales in 9M 2023, the trend was especially pronounced in Delhi-NCR and Mumbai.

-        Land activity remains strong, domestic developers lead Investments activity: In 9M 2023, out of the cumulative USD 5.1 billion inflows into the Indian real estate sector, 40% of the overall investment was committed for land acquisitions. While activity from North American investment funds slowed down, domestic developers remained particularly active with a share of 42% in the overall investments in 2023 YTD, followed by funds headquartered in Singapore and Japan.

To delve deeper into our report on the top demand drivers for the real estate sector in 2023, please click on the download button.

We would also like to take this opportunity to wish you all a very Happy New Year!