The rise of purchasing power parity of India
India has risen as the third largest economy in terms of purchasing power parity (PPP). Digital transformation, demographic dividend and foreign direct investment are some of the factors that contribute towards India’s economic growth. India’s GDP growth rate rose to a pace of 7.8% year-on-year in the April-June quarter of 2023, according to data released by India’s National Statistical Office.
Amid this economic progress, India’s real estate sector emerged as one of the fastest-growing markets in the world. India house prices grew 2.7% year-on-year in June 2023, following an increase of 1.8% year-on-year in the previous quarter (Source: CEIC Data).
The increase in purchasing power influences the real estate sector positively. Here’s how it’s contributing to the surge in residential and commercial properties:
Home ownership
As income levels rise and buyer preferences evolve!
The aspirations of the middle-income group, particularly their dreams of owning a home, is impacting residential property growth. This group views home ownership not just as a tangible asset but as a symbol of respect and progress. Further, government initiatives & incentives such as tax reductions and subsidies for homeowners facilitate their journey towards achieving this dream.
Lifestyle
The COVID-19 pandemic has reshaped homebuyers’ priorities and expectations. They’re prioritising wellness and choosing homes that are well-ventilated, equipped with modern technology, and surrounded by greenery. Additionally, easy access to essential facilities like hospitals, schools, and supermarkets has become crucial. With rising incomes, they are actively seeking lifestyle-enhancing amenities. This evolving demand is compelling the real estate sector to move beyond just constructing buildings and focus on developing holistic gated communities.
Commercial spaces
The surge in purchasing power, especially in Tier 1 and Tier 2 cities along with the start-up boom is creating a demand for commercial spaces. As companies embrace the ‘return to office’ trend following the post-COVID-19 lockdowns, there’s a growing inclination towards state-of-the-art workspaces that prioritise both flexibility and safety. This isn’t merely a phase but a reflection of India’s evolving work culture and aspirations. It’s exciting to witness commercial buildings evolving into hubs of innovation and collaboration.
Investment opportunity
Rising incomes play a pivotal role in shaping investment patterns.
Institutional investments in the sector reached $4.6 billion from January to September, marking a 27% year-on-year increase (Source: Colliers India Report)
The festive seasons further catalyse the market, with a notable enthusiasm for residential investments. This boom is attributed to urbanisation, an expanding middle class, infrastructure development, foreign investments, and supportive government initiatives.
Real estate is no longer static; it’s an evolving canvas of creative possibilities.
The boost in purchasing power real estate is propelling the real estate industry into a transformative era. Homebuyers’ changing preferences and priorities have pushed the industry to emphasise sustainability, creativity, inclusion, and wellness. Developers are now integrating eco-friendly features, innovative designs, flexible spaces, and enhanced safety measures to meet these demands. The market’s getting bigger & better with a promise of a brighter future for all.
By Mr. Hira Ludhani, Director at Evershine Group
