Real Estate Investment Trends: Residential and Commercial Opportunities

The real estate industry is widely recognized worldwide. It has four subsectors: housing, retail, hospitality, and commercial. The expansion of this sector is primarily supported by the expansion of the business environment and the demand for office space and urban and semi-urban residential. 

The building construction sector ranks third among the 14 main sectors in terms of direct, indirect, and induced effects on the economy.

Current Indian Real Estate Market

The Indian real estate investment trends have grown steadily. According to Statista, the real estate business in India was valued at approximately $120 billion in 2017 and is expected to reach $1 trillion by 2030. This suggests that investors might expect tremendous growth in the following years.

According to Knight Frank's research, the Indian residential market will experience a 68% year-on-year sales boom in 2022.

Commercial Real Estate Opportunities

Many opportunities have cropped up recently that are changing the commercial real estate landscape in India. Opportunities to invest in the sector, such as expanding urban areas, retail markets, e-commerce, and technology, have emerged.

Green Spaces Demand in the Real Estate Market

Indians who shift to city living are increasingly interested in bringing green spaces into their homes. This trend, which started with growing awareness of the health benefits of natural surroundings, has taken root within the Indian real estate investment market.

Tier 2 and Tier 3 Cities

After introducing programs like AMRUT and Smart City, tier II and III cities have grown significantly. People are slowly relocating to these towns. Consequently, such cities offer additional opportunities for investment in real estate.

Real Estate Structured Debt

Real estate-backed structured debt is an attractive alternative investment offering mutual benefits to borrowers and investors. It is a financial product whose value is underpinned by underlying real estate assets.

These structured debts pool funds from multiple investors and use them to finance or lend to property projects or borrowers. Typically, loans are backed by buildings, land, and homes that are being bought for real estate investment trends.

Potential Opportunities with PropTech

Many new opportunities have been presented to developers and investors who deal with real estate investment trends. This is due to the advent of PropTech, which uses technology to innovate in property markets.

Such potential abounds for upcoming PropTech initiatives such as lease automation platforms or AI-driven tenant screening to intelligent building automation.

Co-Working Spaces

This has led to an increase in co-working spaces, where people rent desks instead of entire office blocks. Many prefer working from home to going to offices, so everyone who can work remotely should benefit from co-working spaces.

Over the past four years, India's co-working space segment has seen demand rise twofold among local firms.

Notably, absorption increased by 8.2 million sq ft across the top seven cities, registering a Q-o-Q growth of 14% in Q1 2019—rising further by another 13% points to 27% during Q1 2023 for co-working spaces.

Residential Real Estate Opportunities

Increase in Low-Density Housing (LDH)

The concept of a low-density lifestyle has attracted home buyers' attention. People are embracing low-density living as a solution away from congested urban areas; they value compatibility with nature, privacy, and space.

In response to this trend, developers are suggesting precisely planned low-density developments that emphasize wide open spaces, greenery, and an elite atmosphere.

Technical Integration

Security, comfort, and convenience have all been improved by the inclusion of technology into the home environment.

Smart houses fitted with IoT devices, home automation systems, as well as AI-powered virtual assistants have now become quite common in most homes thereby allowing occupants to live without any break-down while setting new standards for future living.

The Smart Home market in India is estimated to hit US$6.5 billion by 2024. 

Increased Preference for Homeownership

The outbreak of Covid-19 pandemic has had a significant change on social views about owning a home. Today, many people prioritize homeownership over renting.

People have learned how they can benefit from being in their place, complete with space for work, study, or leisure activities.

Luxury residence

The real estate industry has turned its attention to premium and luxury residences. Such luxury residential towers become a magnet for discerning buyers seeking exceptional living experiences and top-notch amenities.

India Sotheby's International Realty's recent research shows a significant surge in wealthy people who intend to buy luxury homes in the coming years.

Tier 2 emerges as a force to reckon with

After COVID-19, many individuals reconsidered where they lived and opted for secure houses in their hometowns to bring more stability.
As a result, Tier 2 cities have emerged as real estate hotspots. There has been a marked increase in investment activities within these cities, which has significantly changed the real estate scenario there.

Wrapping It Up

Commercial properties may be worthwhile for investors who desire long-term income streams that require minimal daily management. Meanwhile, residential properties may appeal to investors seeking a broad market mix, capital appreciation potential, and rental flexibility.

On the other hand, adding both commercial and residential properties into your portfolio can give you balanced strategy thereby maximizing returns while keeping risks low.