The year 2023 proved to be a landmark year for the real estate sector, witnessing remarkable growth in demand, supply, and land acquisitions across various asset classes. The strong performance indicators underscored the sector’s continued journey on a steep growth curve.
Incremental Growth in Land Acquisition
Real estate developers invested heavily in land acquisition, further bolstering their robust supply pipeline. In 2023, a staggering 1,947 acres of land were acquired through 111 separate deals, with the transaction value reaching INR 32,203 crore. This marked a substantial increase compared to the previous year, which recorded 1,603 acres of land valued at INR 18,112 crore, signifying a 21% year-on-year growth.
Soaring Land Values
The average transacted value of land stood at a remarkable INR 16.5 crore per acre in 2023, indicating a remarkable 46% increase from the previous year. This significant surge is primarily attributed to higher land transactions in Tier 1 cities and established prime micro markets across the country.
Mumbai Metropolitan Region’s Rising Impact
The Mumbai Metropolitan Region (MMR), known as the most expensive real estate market in India, saw a doubling of its share in total transacted land area in 2023. MMR soared from 7% in 2022 to 15% in 2023, contributing significantly to the per acre transacted value growth.
Leveraging Tier 1 Cities
Tier 1 cities remained the dominant players in total land transactions, accounting for 65% of the national share. Developers strategically acquired land in prime locations within metro cities while also venturing into new markets and detecting emerging pockets of growth. In 2023, Delhi National Capital Region (NCR) topped both in terms of the number and area of land deals. Across 36 separate transactions, 415 acres of land valued approximately at INR 9,120 crore were acquired. Gurgaon, a major part of Delhi NCR, saw an acquisition of around 264 acres, accounting for 64% of the total land area and valued at over INR 5,300 crore. Noida followed with the acquisition of over 59 acres of land, valued at approximately INR 1,775 crore. Delhi itself, along with Faridabad and Sonipat, contributed to the remaining land acquisitions in the region. Bengaluru secured the second spot after Delhi NCR, acquiring close to 305 acres of land during 14 separate transactions, valued at INR 3,412 crore. As the highest in the country, MMR witnessed 24 land deals spread over 289 acres, valued at INR 11,222 crore. This translated into an average transaction value of INR 39 crore per acre, significantly higher than the national average. Chennai stood out by acquiring a total of 209 acres of land across 8 separate deals valued at INR 1,220 crore. Several other cities, including Nagpur, Ludhiana, Ahmedabad, and Ayodhya, observed prominent developers acquiring land. In Tier 2 and 3 cities, Ludhiana took the lead with the acquisition of approximately 320 acres of land.
Residential Segment Dominates Land Transactions
The overwhelming majority of land transactions in 2023 focused on the residential segment. Developers proactively acquired 70% (approximately 1,365 acres) of the acquired land (1,947 acres) for proposed residential projects, emphasizing a development potential of around 130 million sq. ft. These residential developments are projected to have an estimated sales potential of INR 138,750 crore. Dr. Samantak Das, Chief Economist and Head of Research and REIS, India at JLL, acknowledged this trend, stating, “With a surge in demand for housing, developers are actively acquiring land parcels to build future supply pipelines. The launches of new residential projects are expected to strengthen further through strategic land acquisitions in prime locations and growth corridors.” Furthermore, residential markets experienced a 26% year-on-year increase in sales in 2023. The year marked the highest-ever annual sales, with a record-breaking 271,800 units sold. Residential launches in 2023 also recorded a significant growth of 19% year-on-year.
Anticipating Steady Land Transactions in 2024
Looking ahead to 2024, it is anticipated that land transactions will sustain their steady pace. Developers will continue to expand their land banks due to expected moderation in interest rates, growing demand for housing, and support from institutional funding agencies. Commensurate infrastructure improvements, including enhanced metro connectivity between different micro-markets, will also give rise to new pockets of growth within each city. The real estate sector’s consistent growth reflects the resilience of the market and the confidence of developers as they navigate the evolving landscape to meet the housing demands of a burgeoning population.
