This maxim by Georgi Plekhanov, a noted Marxist theorist, and philosopher, captures beautifully the cyclical nature of progress for a space like real estate in the Indian context. Growth’s main adversary is regression, and both of these tendencies are governed by a unique set of external and internal factors that, when aligned with the right resonance, give way to the naturally obvious outcome, whether positive or negative.
Keeping this in mind, a look at the current state of the sector reveals a buoyant optimism that goes against the widespread conservatism blowing through the entire global ecosystem.

While talking about the real estate sector with respect to India, one has to also note the lack of a common universal regulatory framework, with a plethora of national, state, and city-specific laws operating in tandem, leading to a compliance burden, which is quite gargantuan.

Taking all of this into account, one can conclude that the sector has performed admirably over the last few fiscal years. Global studies examining the impact of the pandemic on key factors such as real estate supply, demand, sale, and rental value revealed a general decline, but most of it has been successfully recovered following the post-pandemic rebound. In fact, for FY 22, the commercial realty space recorded transactions worth 40 million square feet, a record high.

With a similarly aggressive pace of growth expected for the upcoming fiscals, one can safely assume the real estate sector will reach a market cap of US$ 1 trillion by 2030. This will be fueled by increased investment growth, which will be channeled through channels such as REITs, among others. To be more specific, REITs have grown consistently and sustainably over the last two fiscal years, with a year-on-year growth rate of 6.85%. This is likely to continue in the coming fiscal year.

In fact, FY 23 will complete the post-Covid-rebound for the space in India. According to industry reports, the top 7 prime residential markets in India recorded the highest sales during the first half of the fiscal year 2022-23 as compared to the previous ten years, despite the RBI’s increased monetary stickiness in response to inflationary pressures caused by global macro volatility. This domestic-led boom, clearly distinct from global recessionary moods, can be safely expected to continue in the coming fiscal year. Similar momentum is expected in the commercial segment as well, with co-working spaces leading the charge, with a 15% or higher Y-o-Y expected growth as India transitions to a digital-first, gig-led economy.

To ensure that the overall state of optimism prevalent in the sector is sustained, the government should go for proactive structural reforms, including rationalization of norms, sops for REITs, further FDI liberalization in the retail and health infra segments, and extension and expansion of tax related sops for special focus areas like SEZs, smart cities, etc. Also, symbiotic convergence with upcoming big-ticket infra additions like DFCs, expressways, and new airports, can also be realized through targeted packages.

In short, 2023, would be a year of tremendous progress for Indian realty, with growth pivoted on a focused consensus resulting in a situation that would be clearly different from global realities.

As some wiseacre once said, “Some tête-à-tête are best left unfinished.”