About 58 per cent of the developers surveyed in India expect housing prices to increase further in 2023. The rise in prices is likely to be led by robust demand for homes in the Indian market and at the same time, volatile key input costs, according to a joint survey report by Colliers-CREDAI-Liases Foras.
“Raw material costs have surged significantly in the last two years due to global supply chain disruption, which has led to inflationary pressures. About 43 per cent of the developers saw a 10-20 per cent rise in project costs in 2022 compared to 2021 amidst rising input costs. This is in line with Colliers’ construction cost Update: November 2022, which states that the cost of key construction materials has jumped about 32 per cent in a span of three years. This has led to increased costs of construction for the developers,” according to the Real Estate Developers’ Sentiment Survey 2023.
About 62 per cent of the developers feel that buyer enquiries and engagement have increased in 2022 compared to 2021. Around 43 per cent of the developers feel that residential demand would remain stable in 2023, followed by 31 per cent who feel that the demand would increase up to 25 per cent.
Around 43 per cent of the developers saw a 10-20 per cent rise in project costs in 2022 amidst rising input costs. 31 per cent of the developers are willing to explore plotted developments as an alternative business model, followed by branded residences preferred by 19 per cent of developers.
About 39 per cent of the developers also hope for better ease of doing business from the government in 2023 and another 31 per cent expect rationalisation/ income tax credit GST. Almost half of the developers believe that a probable recession will have a moderate impact on their business.
Harsh Vardhan Patodia, president of CREDAI National, said, “The previous year provided the much-needed impetus and led to record-breaking sales in the last decade. Hence, more than 70 per cent of developers believe the demand for home ownership will either increase by 25 per cent or remain stable in 2023. With such sentiment, most of the developers in the community (87 per cent) are looking to expand their offerings and the year is likely to see a surge in new launches equal to the current supply under construction.”
He added that rising population, wealth growth, and rapid urbanisation are the key influencing factors driving the sector’s growth. Hence, to help maintain the momentum, almost 40 per cent of developers anticipate improved ease of doing business from the government in 2023, while another 31 per cent anticipate rationalisation/income tax credit GST.
Ramesh Nair, chief executive officer (India & managing director) for market development, Asia, Colliers, said, “During 2022, developers across the spectrum saw increased enquiries led by a continued inclination towards home ownership since the pandemic. The survey reveals that developers remain optimistic about the market. About 43 per cent of the developers feel that residential demand would remain stable in 2023. Homebuyers remain enthused about purchasing homes, despite rising interest rates.”
He added that developers are also focusing on launching projects that are aligned as per the needs of the homebuyers and are also formulating strategies to complete their pending projects and bring in demand-led supply.”
Pankaj Kapoor, managing director of Liases Foras, said, “2022 witnessed the highest-ever sales and new launches across major cities in India. We have also seen a marginal increase in property prices. The market is likely to maintain the momentum that the sentiment survey re-affirms.”
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