The Real Estate sector in India is one of the highest employment-generating sectors of the country apart from agriculture. It contributes about 7% of the country’s GDP and is expected to grow more and contribute 13% by 2025. One of the pillars uplifting the Indian economy, the Real Estate Industry has a range of investment opportunities as well.
The COVID-19 Havoc
With the fading after-effects of demonetisation, the NBFC catastrophe, and the implementation of RERA laws, the Real Estate looked at 2020 as their gleam of hope. But things went south due to COVID-19 and its repercussions. The pandemic forced the government to impose a lockdown which loosened its grip only towards the end of the year.
The lockdown led to a shortage of labour and any possibility of site-visits. Builders and developers nationwide got stuck with unsold inventory, frozen capitals, and seized construction developments. 2020 was expected to bring wealth for the industry, instead, it led to a 40% deficit in the residential segment of industry.
The market started suffering from March till July. Situations started easing post-August but a definite solution only emerged after September. Developers and Real Estate apps started putting their properties up on the internet. This led the industry towards an easier and smarter solution – the internet. Real Estate improved its online presence immensely during the lockdown with technological enhancements like drone-videography and an increased number of photos.
October marked the arrival of festivals in India which further amplified sales in Real Estate. Consumers broke-out of the monotonous and lethargic behaviour towards higher purchases. Stifled interests on home loans loosened to 7%, further helping the builders in asset liquidation. The rising development of the Work From Home culture is expected to show a shifting pattern of consumer interests in residential properties.
Mumbai and Pune reduced stamp duty levied on booking properties. Karnataka followed up with this ruling only until 2021. The government further speeded the sales cycle of inventories by relaxing tax rules on expensive properties. Properties valued a 2 Cr received a 20% discount on the circle rate. Karnataka further promoted affordable housing by reducing stamp duty to 3% on properties listed between 35L to 45L.
Industry Recovery Post-Pandemic
A report by Savills India stated that private equity investment in the industry is walking towards a colossal recovery. Producing an influx of $6 billion in 2021 and 30% yearly growth. With the economy’s stabilisation and development measures in place, the industry is expected to boom in metropolitan areas with increasing demand.
According to research by Global Construction, India will have 1.1 Cr annual average house completions by 2025. This is a huge green flag for the industry to buckle up for the course with developed prices to increase investments from prospective buyers and investors.
The industry jumped back on its feet with the approaching festivities of October till December. Not only were buyers keener on buying and investing, but builders and developers were equally enthusiastic about asset liquidation. Builders started putting their assets up for sale at lucrative discounts and offers.
The successive five years are expected to bring growth and developments. By 2025, India will become one of the nations that account for 72% of construction activity worldwide. This implies improved infrastructure and better connectivity- reducing the gap between rural and urban living. This would also contribute to a higher standard of living.
The government in its 2021 budget session announced inducing ₹100 lakh Cr on infrastructure across varied sectors like educational institutions, amenities, connectivity, housing, and healthcare. This only solidifies that the coming 5 years will prove to be the best time to invest in the industry.
The lockdown and its consequences fairly changed consumer-preferences. Consumers no longer limit their necessities to a home and a garage. The future of Real Estate vastly depends upon the integration of high-end amenities and services like ease of delivery, housekeeping, postal services, easy transportation, milk & newspaper delivery, to name a few.
While these are external services and convenience points, demands for a bigger home in green and hygienic housing societies, healthcare and rejuvenation centres have also considerably risen. These services have elevated themselves from luxury to necessities as demands. Living is more than basic attributes, to a self-sufficient experience.
Rise of Non-Metropolitan Cities
Consumer-preferences have changed largely and accommodating it all in one space needs larger spaces. This has automatically increased the demand for properties in tier 2 and tier 3 cities like Pune, Indore, Surat and so on. This demand has also increased infrastructural developments and the entry of MNCs.
Whether you buy a house to move-in or a property to invest in, Real Estate is the industry of strategies. Like a game of chess, it requires considerable thought processes before making a move. Despite the lows and the downs of the industry, 2021 shows a promising future for buyers as well as investors.