Consumer behavior and real estate during recessions 2023
A recession causes a severe drop in the global economy and impacts several industries, including manufacturing, information technology, and banking, among others. It influences the GDP, trade ties, transactions, and consumer purchasing power.
Despite this, there are governments and industries that have established their exit strategies.
Nevertheless, despite the impending economic downturn in 2023, the Indian real estate market is on the upswing. 35% of respondents to the Housing.com study of the year 2020 ranked residential real estate assets as their favourite asset type.
Market impact of the Covid slump on a global scale.
The “covid recession” has perturbed the running market and its participants. It precipitated corporate upheaval, resulting in unemployment, inflation, a budget deficit, and sluggish GDP growth.
The global IT industry’s poor cash flow is one of the numerous repercussions of the recession. Another factor is that construction costs have risen. The higher prices result in growing home expenses, which discourages purchasers from purchasing.
Due to the state of the economy, few individuals can afford to buy a home or property. When supply exceeds demand, a substantial proportion of homes stay unsold. Generally, property prices decline, and the market stagnates.
Yet, the Indian real estate industry rebounded in the face of the epidemic. According to a survey by the property brokerage business PropTiger.com, the number of units sold in India’s eight top residential marketplaces increased by 68% between October and December of 2020, totaling 58,914.
A discernible shift in consumer conduct
A recession discourages customers from investing substantial quantities in the market. As a result of uncertainty over “what will happen,” customers lower their purchasing power. Increasing layoffs and firms’ cost-cutting practices result in less money in the purses of ordinary people. In addition, consumer behavior has shifted towards sanitation, a sustainable environment, and risk aversion.
Real estate is the preferred asset class for Indian consumers.
In India, real estate professionals work as investors. Real estate assets are the most stable investment for an Indian buyer.
Consumers view residential and commercial real estate properties as investment-worthy. Small-scale investors have been drawn to the prospect of receiving a steady income flow from a secure property investment.
Residential real estate assets are illiquid, immovable, have a high appreciation value, and provide a reasonable rental yield. After two years of uncertainty and lockdown, physical offices and retail storefronts have reemerged, making commercial properties more attractive to bidders.
A government-backed Real Estate Company
The Indian government has launched several mega-infrastructure projects, including the Bhrahmtala Project, the development of multi-lane Expressways, major rail and airline projects, and the “Pradhan Mantri Awas Yojana” housing plan. They will propel the expansion of the real estate industry.
In addition, the government has cut tax-related programs and other purchasing incentives. These initiatives and projects will assist purchasers from tiers two and three.
A tremendous opportunity for Indian Tier-2 and Tier-3 cities real estate
The growth of industrial corridors has transformed Tier-2 and Tier-3 cities into real estate’s golden goose. These lanes are intended for trade, commerce, expedited commodities transit, manufacturing, and economic integration. These corridors might alter the economic landscape of cities in tiers two and three. These cities will provide business-friendly environments, high-quality warehouse and logistics space, and seamless connection to tier-1 cities. In these cities, the real estate market is predicted to flourish.
Enormous employment potential in the Real Estate sector
Even after the recovery from the epidemic and lockdown, IT businesses are reducing headcount to avoid financial difficulties.
Notwithstanding the poor economic climate, the real estate industry continues to expand at a rapid rate.
According to research by India Brand Equity Foundation (IBEF), the Indian real estate industry would contribute 13% to the country’s GDP in 2025. The research describes how the Indian real estate industry became a major employment creator.
Numerous Indian real estate enterprises are on a recruiting binge while IT corporations are in the process of laying off employees. These real estate companies are seeking blue-collar and white-collar personnel to meet the increased customer demand.
Conclusion
The year 2023 will be a turning point for the Indian real estate market, which is aiming for the big picture. The Indian consumers’ attitude toward real estate assets would not be affected by the recession as a result of innovative economic advancements and government programmes and efforts that empower prospective purchasers.