The real estate market is the bellwether of the Indian economy. It consists of four subcategories which include housing, retail, corporate, and hospitality. The real estate sector provides for the highest employment in the country which starts from very minimal consideration in the employment terms but includes the very chain of a huge number of laborers to engineers. After the agricultural industry, the real estate sector is the second most contributing industry to the GDP of the country. It has a 7% contribution to the country’s GDP. If proper development occurs then it is rightly predicted that the sector might nearly contribute 13% to the GDP by the year 2025.

The boom of this sector is nicely complemented by the boom in the corporate surroundings and the need for office spaces in both urban and semi-urban areas. Thus it can be said that the real estate sector has a huge scope for investments. Today the real estate industry ranks 14 among all other sectors of work and has an indirect or direct impact on several other businesses and thus has a huge impact on the economy of the country. India is also considered as a hub for NRI investments in both the long and short term and the most preferred cities which have a huge scope for these investments include Ahmedabad, Pune, Goa, Delhi, Dehradun, Bangalore, and Chennai. Among these Bangalore being the technological hub of the country holds the highest rank in the investment sector. 

Effects of the viral outbreak:

However in 2021, due to the outbreak of the deadly virus, a lot of small and big sectors were affected, the real estate industry being one of them. The outbreak led the industry to major loss as there were no NRI investments as well as a huge loss in the commercial as well as hospitality sectors were observed due to the viral outbreak.

Forecasting demand in real estate has long been a source of consternation for economists. According to economic theory, consumer goods such as the iPhone, automobiles, and mobile data have a falling demand curve, which means that as prices fall, consumption rises. When the price of an investment product, such as equities, falls, trading volumes typically fall, indicating decreased demand.

However, when it comes to real estate, this process becomes a very complicated exercise; some people buy homes for consumption while others buy for investment, and still others for investment as well as consumption. As a result, demand forecasting has always been a mystery. A broad-based analysis, on the other hand, can shed a lot of light on the expected trend for this year.

For the Indian immobilization sector, in particular, for the housing sector, 2020 was intended as a year of recovery. With diabetes, the implementation of the GST and RERA property legislation, and the NBFC crisis three years of business disruptions, the market began to stabilize.

However, every hope was thwarted by the COVID-19 global pandemic in India which forced the government to lock up the deadly disease for over two months, from the 25th March.

Instead of recovery and growth, 2020 saved 40-50 percent of businesses in the home segment from an already low base and caused more pain and distress in the real estate sector.

Size of the market:

Retail, hospitality, and the values of the commercial properties also increased significantly and supplied India’s growing needs with the much-needed infrastructure. From 2017 to 2028, Indian property rates increased by 19.5% CAGR.

In ITeS/IT, BFSI, advisory, and manufacturing sectors, the offices were mostly driven by growth. The office leased space in eight major cities was 60.6 MSF during 2019 and grew by 27 percent a year. In 2019, demand from the office sector reached 69.4 MSF for commercial leasing. By the end of 2019, co-work areas across the top seven cities were up to 12 square meters.

Lager spaces should reach 247 MSF by 2020 and are expected to reach Rs. 50,000 (US$ 7) crore.

The efforts made by the government:

The Government of India, in collaboration with the governments of the respective states, has launched a number of initiatives to promote development in the real estate sector. With a goal of building 100 smart cities, the Smart City Project has come up with a great opportunity for real estate companies.

The following initiatives were taken by the government of or country in order to take the real estate industry at a rise:

  • A low-cost rental complex portal was launched by the Housing and Urban Affairs Ministry (MoHUA) in October 2020.
  • Income tax relief measures were taken for the real estate buyers as well as the home buyers by the release of Atma Nirbhar package 3.0 released by the Finance Minister recently. 
  • India formally approved 423 SEZs on July 31, 2020, with 248 already in operation. The majority of special economic zones (SEZs) are in the IT/BPM industry.
  • In order to create 1.20 crore job opportunities, 1.12 crore houses in urban areas were included under Pradhan Mantri Awas Yojana(U) (PMAY(U)).
  • The Government announced on 27 October 2020 the application in Union territory of Jammu & Kashmir of the Real-estate Law 2016 on Regulation & Development. In contrast to the eligibility of local residents, this has opened the way for any Indian citizens to buy non-agricultural land or property earlier.

 

Some of the leading builders in 2021:

  • DLF:

DLF is a commercial real estate developer based in Delhi. Raghvendra Singh Chaudhary founded the company in 1946, and it has served a large number of satisfied customers since then.

Aside from establishing a promising reputation in the real estate industry, the DLF has also successfully constructed a 10.5 km road network in Gurgaon.

DLF’s headquarter is in New Delhi, and it has been involved in the development of a wide range of infrastructures, including residential colonies in Delhi such as Shivaji Park, Greater Kailash as well as Kailash Colony, Krishna Nagar, and Hauz Khas.

 

  • Godrej Properties:

Godrej Properties is a leading real estate company with its headquarters in Mumbai. The company has webs in almost every part of the country and has a promising reputation in the industry.

The company was founded in 1990 under the guidance of Adi Godrej. The company is currently expanding projects that are expected to cover more than 89.7 million square feet.

Godrej Bkc and Planet Godrej are the company’s most remarkable projects. As the top-class stakeholder in the business, Godrej properties have distinguished thousands of genuine clients with a lot more experience than any other company.

 

  • Sobha:

Sobha is a Bangalore-based real estate company, and PNC Menon is the company’s founder. It was established in 1995.

Sobha is one of India’s most respected real estate brands and the country’s only backward integrated real estate player. The idea of transforming the way people perceive ‘quality,’ began in 1995. It is present across India in 27 cities and 14 countries, making it a genuine PAN India player

 

  • Raheja developers:

Raheja developers were established in 1990 by Navin Raheja and are based in New Delhi. They have projects in 12 cities across India, including Gurgaon, Bangalore, Mumbai, Delhi, Mewat, and Dharuhera.

Raheja developers have made significant contributions to the beauty of our country by participating in the development of several projects such as Raheja park, Riverdale heights, and abisky ritkriti projects, among others.

Raheja Developers are recognized for their excellent contribution in the field of real estate.

 

Further scope for development:

In recent times the Indian real estate sector has been witnessing strong growth with increasing demand for office and residential areas. Investing in real estate in 2019 was Rs. 43,780 crores (US$ 6,26 billion). In 2019, the retail sector attracted approximately $1 billion in PE (Private Equity) investment. During the quarter ended March 2020, institutional investment in the sector totaled $712 million. Between 2015 and Q32019, real estate attracted approximately US$ 14 billion in foreign PE.

SET exports in FY20 amounted to Rs 7.96 LKH (113.0 billion dollars) and in Fy19 they grew ~ 13.6% from Rs 7.1 LKH (100.3 billion dollars).

Some of the important upcoming developments in the real estate sector are as following :

  • The government approved proposals from TCS and DLF to establish SEZs for the IT sector in Haryana and Uttar Pradesh in March 2020.
  • In India, Blackstone has reached a US$ 12 billion investment milestone.
  • Puravankara Limited has planned to invest Rs. 850 crores in the upcoming years in huge residential projects. These projects will be based in Mumbai, Chennai, and Bangalore.
  • A worldwide investment firm Blackstone and real estate company Embassy Group launched First REIT, which raised Rs. 4750 crores (USD 679.64 million).
  • RMZ Corp has established a partnership with Mitsui Fudosan (Asia) Pte Ltd in January 2020 in order to expand the company’s operational footprint.
  • Taj Group in partnership with the Ambuja Neotia Group planned to establish three new hotels, one in Patna and two in Kolkata in November 2020.
  • The Godrej Group has entered the financial services industry with Godrej Housing Finance (GHF), with the goal of establishing a long-term and sustainable retail financial services business in India, with a balance sheet of Rs. 10,000 crore in the next three years.
  • Brookfield Asset Management, through a US$ 2 billion property deal, made massive investments in India in October 2020. Brookfield will acquire 12.5 million square feet of commercial real estate assets from RMZ Corp, a privately-held developer. The purchase includes rentable office space as well as commercial co-working space.
  • Bhumika Group, a developer of real estate based in Rajasthan, announced its plans to invest Rs 450 crores (US$ 60.81 million) in Udaipur, Alwar, and Jaipur respectively, in two residential and retail projects.
  • Anarock says India will probably have 100 new malls by 2022, according to the property consultant. Of this total, 69 malls will be built in the top seven metropolises, with the remaining 31 malls being built in Tier 2 and Tier 3 cities.

The real estate industry is quite possibly the most well-known on a global scale. The housing sector in India is expected to grow unquestionably, with the government pledging to build over 20 million low-cost houses in metropolitan cities across the country by 2022, as part of the visionary Pradhan Mantri Awas Yojana scheme of the union ministry of housing and urban affairs (PMAY). The anticipated growth in the number of new properties in metropolitan areas will increase interest and demand for wholesale and retail office spaces.

Outlook of the market in 2021:

Because of the challenges that the industry has faced in recent years, exacerbated by the Covid crisis, the number of new projects has decreased significantly, and as a result, inventory for sale has decreased significantly.

“2020 dealt a further setback to the struggling real estate sector. However, the resilient human spirit shone through the lockdown and pandemic. As we get to the end of a year that was unlikely to occur in our lives, the real estate industry is experiencing clear signs of demand. Whether this is a sustained rebound or pent-up demand will be revealed in the coming months, but there are a number of dynamics at work in the current environment.

Increased affordability is the main factor contributing to increasing sales. Accessibility was positively impacted based on falling prices in the past five years and wage increases for home buyers over the same period.

The decrease in mortgage rates complements the increase in inaccessibility. We now have historic mortgage rates lower than before. This interest-rate reduction increases cost-effectiveness.

The last time the figures looked so good was in 2004, when the property industry experienced an unprecedented boom in the coming years, with prices rising significantly.

Maharashtra’s government, as well as some other state governments, have offered lower stamp duty for flat purchases made before December 31st. By offering a bigger discount on stamp duties up to December and a lesser duty between January and March, the Government of Maharashtra has taken an extremely intelligent step. This also encourages home purchasers to enter and buy their homes.

Because of the challenges that the industry has faced in recent years, exacerbated by the Covid crisis, the number of new projects has decreased significantly, and as a result, inventory for sale has decreased significantly. Developers are being cautious, and as a result, homebuyers now have far fewer options than they did previously. This also contributes to people hastening their decision to buy a home.

Although the sector is all positive, the structural issues of high leverage, outgoing debt, and stagnant projects have not yet been resolved. Developer margins have been eroded as a result of the additional interest burden and overheads incurred during the lockdown and Covid period.

Altogether, although this is an excellent moment to purchase a home, the homebuyers have to take care of themselves and ensure that they can purchase from reputable developers where their investment is practically not at risk.

Market favorable for buyers:

As the general perceived situation is challenging, the market is flush with projects, but developers go all-out to attract buyers. Therefore the situation is difficult to understand. This is an excellent time for end-users or long-term buyers to enter the real estate market. When purchasing a new property that has recently been completed or is nearing completion, the end-user is now in control. Some developers even propose to pay the interest rate on the loan until a property is ready to take over there are huge offers on the market.

Prices in the residential sector have been low for a long time, making it even more appealing to buyers. Given the current situation, where raw material prices are rising, realtors will have to raise their prices soon. The current pandemic situation has caused the developers to maintain their pricing, giving the buyer a window that should be used as soon as possible.

Following the Budget announcement, in which the FM emphasized infrastructure development, the possibility of purchasing affordable properties in outlying areas has increased. Many affordable housing projects are moving away from city centers, but with improved connectivity, buyers no longer need to worry about commuting. If we speak about Delhi NCR, Yamuna Expressway, Sohna Road, Dwarka Expressway, Manesar, and many more opportunities are offered. It is not always the case that affordable homes are located far from populated areas, as there are lucrative options in areas such as Greater Noida West, Raj Nagar Extension, and so on.

Likewise, the business segment is extremely helpful to investors because the market analysis places demand buildings and centers at an ever-high level. Some developers have developed innovative investment possibilities associated with the option pre-leased. In the case of pre-leased properties, the risk factor for commercial property investors is zero. One of the last options for investments is a fractional investment in which the possession of part of the property is optional and the profit is divided accordingly.

If you want to make consistent returns on your property investment, it is a good idea to buy even at a slightly higher price in areas with high rental returns. Rent returns in the last year have grown by 15-20% — 5-10% alone in the past six months. If you have a transferable job and are hesitant to buy in a city where you may be transferred, keep in mind that rising rental returns are in your favor.

One should check the long-term benefits of the site when buying a property in a far-flung area. It could look like the wilderness when you start your purchase. However, the values will not be small if you wait for infrastructure. Therefore, evaluate the area’s infrastructure plans. Developers usually can only say these details to you too gladly. For example, the proposed metro lines are a major attraction in the Delhi NCR. The property is always good for attracting end users along the metro lines.

Overall, the real estate market is about to improve, and now is the time for buyers to take advantage of it.

The ultimatum:

The real estate sector functions as a cog in the wheel that drives India’s economy. Infrastructure development and housing are two major players that are known to be critical in reviving a country’s economy after it has entered a slump. The real estate sector employs approximately 15% of all people in India. Add to that all of the ancillary industries that support the construction of homes — cement, steel, aluminum, and so on.

In order to meet the requirements in 2021, the industry will need to find new ways to deal with them. While homes are still sold, creative disruption is now occurring. Technology will play a leading role in meeting the altered norms being considered by home buyers as part of this reinvention.

While the effects of the pandemic cannot be ignored, urbanization must continue, and the real estate market will rebound in the near future. This return of the sales in 2021 shows an increase in demand between middle and high-income groups in 2021, as they prepare themselves to buy their dream homes in a year that began with the market and the overall economy looking for a booster vaccine. Thus the release of the vaccine might turn out to be a boost in the economy of the country as well as a comeback for the real estate sector. 

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