With lessons from 2020, Real Estate moving confidently for 2021

The ongoing social and economic situations highly influence the real estate sector’s demand and supply. The beginning few months of the Unlock witnessed interest in property investment rising in Tier II-III cities. Buyers in Punjab region were getting inclined towards well-planned projects and better infrastructure. After initial hiccups, 2020 panned out well for the real estate sector as it set the tone for 2021.

Talking of 2020, Nagaraju Routhu, CEO, Hero Realty, says, “The year has been a great learning period when it comes to reforming our business strategies and revisiting our contingency plans to prepare ourselves better for tackling setbacks caused due to the lockdown. Real estate witnessed the new dawn with digital integration in terms of virtual tours, online sales etc. Gradual unlocking of states and industries helped the sector go back to normalcy. The festive months were bright in terms of project deliveries and possessions. Tier-II and Tier III cities as compared to metros have seen robust demand in the residential segment due to reduced home loan rates and buyers' inclination towards integrated living.”

2020 has been a year of unique trends in the real estate sector, the reverse migration among the working professionals from metros and NRIs lead to increase in demand of property for Tier II and tier III cities. “When it comes to analysing the northern region, Tricity and its peripheries witnessed an upsurge laying the foundation for a market that is going to grow exponentially from here. The year 2021 promises favourable returns, as the lifestyle of people is going to be changing drastically after overcoming the effects of the pandemic. Residential spaces that promise holistic living, unique amenities, the ideal location would become the epitome of an ideal home,” says Raman Gupta, Director- Branding & Construction, GBP Group.

Delivery of projects and catering to the changed preferences of the buyers will be the focus of developers in the coming year. Prateek Mittal, Executive Director, Sushma Group, says, “Since April 1, 2020, SUSHMA Group has already given possession of 302 units in four of its projects, and plan on giving possession of another 812 units by the end of FY 20-21. The demand for Integrated townships is on the rise due to their amenities provided within the premises and controlled living conditions. The upcoming year will witness the development of more integrated township projects in this particular market with an expansive green cover and close attention paid to hygiene and cleanliness. Experienced developers in the industry, have revised their upcoming projects as per changing homebuyer’s lifestyle choices.”

Mohit Goel, CEO, Omaxe Ltd., says, “The positives that have emerged from the COVID-19 crisis will form the cornerstone of the coming decades of growth in the real estate sector and overall Indian economy. The increased investment in infrastructure development by governments and businesses in developing tier 2/3 cities as centres of economic activity along with increased consumer spending and activity will write the story of growth, employment and opportunities in the coming decades in India.”

More millennial are likely to go real estate assets in 2021 as they understand the importance of real estate investment. Vimal Monga, VP- sales and leasing (commercial), TDI Infratech Ltd., says, “The coming year will see an increasing demand owing to the people’s likeness for gated communities post-COVID-19 due to the ability of these projects to provide a complete healthy lifestyle. We will also see interest in well-planned commercial developments as the requirement of malls and office spaces will go up. The real estate sector will also witness more young investors coming in as the millennial are now getting attracted to investment in commercial properties. The demand for commercial among youngsters has picked up pace as Post-COVID-19 people are looking for a source of extra income and rental income from the commercial is a smart way to get it; young professionals see commercial properties as their pension plan.”

Talking about the commercial segment in 2021, Goel adds, “As far as the office segment is concerned, it will remain affected as the rationalisation of the workspace by the corporate sector has led to a pile-up of inventory that is expected to take 2-3 years to clear. Additional supply that is being created despite subdued demand will aggravate the situation further. As far as the retail segment is concerned, those with 2-3 years delivery timeline will continue to be highly sought-after but more importantly, the trend of developing more organised retail space, mainly commercial redevelopment projects in metros, will become more prevalent in the times to come.”

The most preferred property segments in 2020 were mid-income, affordable housing and plotted land development, and we see a considerable growth potential for these segments in 2021 as well.  Covid 19 has made the prospects brighter for mid-income and affordable housing segments. The end-users' current mindset is to own a house /flat with all safety measures and flexible design options to meet pandemic limitations and constraints. 

Additionally, real estate is considered the best asset class to invest in the present economic scenario, with the falling interest rate of fixed deposits and stock market uncertainties.  Therefore, there will be a further increase in housing demand and well-developed residential plots from the reputed builders in 2021. Commercial and office space will also witness a moderate rise in demand from the second quarter of 2021.

In order to achieve the mission of Housing For All, there needs to be a more significant thrust for this industry from the Government, including ease of doing this business, affordable capital availability and relevant tax cuts, enabling India to reach the $5 Trillion economy goal soon. We feel that this already rising demand in the housing sector will only further emphasise that the year 2021 belongs to the Real Estate sector. - Murali Malayappan, Chairman and Managing Director, Shriram Properties Ltd.

Today’s workforce is on a continuous move and does not prefer compromising on their living standards. The pandemic has compelled people to prefer places that offer greater safety along with fully furnished facilities. The lockdown induced a strong need to find new ways for building and sustaining human connections than ever before. In consideration to the extensive offerings that co-living spaces and shared accommodations offer, along with ensuring enhanced safety protocols, this alternative will gradually become a necessity for modern migrants as they adjust and familiarize themselves with the new normal. As long as there is rising demand for affordable accommodation in cities, co-living will continue to be a lucrative business. - Mr. Kahraman Yigit, Co-Founder and CEO, Olive by Embassy.

The most important factor contributing to the increase in sales is the increase in affordability.  Affordability has been impacted positively based on prices coming down over the last 5 years and home buyers getting salary increments over the same period.   
Compounding the increase in affordability is the reduction in mortgage rates.  We are now at historical lows for mortgage rates.  This reduction in interest rates multiplies the increase in affordability.
The last time the numbers looked this good was in 2004 after which the real estate sector saw an unprecedented boom for the next few years and prices rose substantially.
 
The government of Maharashtra as well as some other state governments have offered lower stamp duty for flat purchases made before 31st December.  The Maharashtra government has infact taken an extremely smart step by offering a greater stamp duty discount up to December and then a lesser slab between January and March. This too is acting as an incentive for home buyers to come in and purchase their homes.
 
Because of the challenges faced by the industry over the last few years exacerbated by the Covid crisis, the number of new projects has gone down substantially and as a result inventory for sale has come down substantially.  Developers are exercising caution and the result for the customer is that from a situation of abundant choices, home buyers today have far less to choose from. This also contributes to people accelerating their decision to purchase their homes.
 
While these are all positives as far as the sector is concerned, the structural problems of high leverage, outstanding debt and stagnant projects has still not been addressed.  Developer margins have been eroded on account of additional interest burden and overheads payable through the lockdown and Covid period.
 
All in all while this is a great time to buy a home, it is important that homebuyers do their due diligence and make sure that they buy from reputed developers where there is virtually no risk to their investment.'' - Mr. Rohit Gera Managing Director, Gera Developments