How Flexibility and Technology are Shaping the Indian Real Estate Market in 2023

October 20, 2023

Table of Contents

The Indian real estate market has witnessed a remarkable recovery and growth in the past year, despite the challenges posed by the COVID-19 pandemic and its aftermath. The demand for residential and commercial properties has surged, driven by various factors such as changing consumer preferences, government initiatives, increased affordability, and favorable policies. As we enter the last quarter of 2023, let us look at some of the key trends that are redefining the Indian real estate industry and what they mean for buyers, sellers, investors, and developers.
Flexibility and Hybrid Working in Offices
One of the most prominent trends that emerged during the pandemic was the adoption of flexible and hybrid working models by many organizations and employees. This has led to a shift in the office space requirements and preferences of occupiers, who are now looking for more agile, adaptable, and efficient workspaces that can cater to their diverse needs. According to a CBRE report1, occupiers may adopt return-to-office (RTO) and hybrid working strategies that gauge employee preferences, articulate clear RTO goals, and identify new working styles. Factors like employees’ commute patterns, prioritizing accessibility in site and asset selection, and flexible offices in suburban locations will play a critical role for office occupiers.
The report also suggests that there will be an increased emphasis on workplace quality and experience to drive engagement. Technology enablement, sustainability, health and wellness features, supporting services, brand immersion strategies, and functional space designs will become key aspects in enhancing the workplace experience. Moreover, the demand for Grade A office spaces with high-quality amenities and infrastructure will remain strong, as occupiers seek to attract and retain talent.
Sustainability to Become a Key Driver
Another trend that is gaining momentum in the Indian real estate market is sustainability, which is becoming a key consideration for occupiers, developers, and investors as both a moral obligation and fiduciary responsibility. According to CBRE, buildings account for 40% of greenhouse gas emissions globally. Therefore, there is a need to adopt environment-friendly building materials, practices, and technologies that can reduce the carbon footprint and energy consumption of buildings.
The report also predicts that there will be an increase in the share of Grade A developments across segments, as they offer better sustainability features and performance. For instance, in the industrial and logistics (I&L) sector, the report expects a rise in the share of Grade A developments from 35% to 50% of the stock by 20301. Similarly, in the office sector, there is a strong supply pipeline and continued investor interest in investment-grade buildings by leading developers and institutional owners in core locations. The appetite for investment-grade assets with a perfect blend of technology, wellness, and sustainability features will remain high.
Technology Enablement to Shape Experiences
Technology has been a key enabler for the real estate industry in terms of improving property management, enhancing customer experience, facilitating transactions, and creating new business models. The pandemic has accelerated the adoption of digital tools and platforms across the lifecycle of real estate, right from project management, master planning to property management, portfolio management, and much more.
For example, in the I&L sector, technology is playing a vital role in improving supply chain resilience and planning. Digital platforms such as blockchain, artificial intelligence (AI), internet of things (IoT), cloud computing, etc., are helping to optimize inventory management, warehouse operations, logistics networks, etc. In the retail sector, technology is also helping to bridge the gap between online and offline channels. Digital solutions such as augmented reality (AR), virtual reality (VR), social media marketing, etc., are helping to attract customers back to physical stores by offering immersive and personalized experiences.
The Indian real estate market is undergoing a transformational change due to the impact of various trends such as flexibility, sustainability, and technology. These trends are creating new opportunities and challenges for all stakeholders involved in the industry. As we approach the end of 2023, it will be interesting to see how these trends evolve further and shape the future of Indian real estate.
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