The year 2020 witnessed the test of resilience of the real estate sector. Amid the COVID-19 pandemic, 2020 was off to a slow start, and a lockdown as early as March temporarily halted the industry expansion plans. Nevertheless, a carefully-planned ‘Unlock’ together with consistent government stimuli and the release of pent-up demand turned tables in favor of the industry. Real estate is among 26 sectors that have been extended the benefit of the Emergency Credit Line Guarantee Scheme (ECLGS) that eased liquidity. Moreover, the increase in financial allocation to the Pradhan Mantri Awas Yojana (PMAY) and the Special Window for Affordable and Mid-Income Housing (SWAMIH) schemes have revived consumer sentiment and boosted sales. According to a Proptiger report (October 2020), residential sales witnessed 85% growth in Q3 2020 vis-a-vis the previous quarter. An Anarock report (September 2020) has highlighted that real estate sales have rebounded by over 60% y-o-y in NCR since Q1 2020.
From an investment perspective, real estate has traditionally been considered a stable and safe asset. The extended work from home and economic uncertainty has prompted NRIs to invest back in their homeland. Furthermore, COVID-19 has compelled consumers to recalibrate their priorities in line with the new normal. A trend of reverse migration is gaining currency, and Tier 2 and Tier 3 cities such as Karnal, Meerut, Amritsar have emerged as new loci of growth. According to ‘India Real Estate: A Different World Post COVID-19’ report by Anarock in May 2020, almost 70 percent of residential demand originated in Tier 1 cities and metros while the tier II and III cities accounted for the remaining demand.
Moreover, contrary to the perception, the residential demand is driven by end-users as highlighted by data from Anarock. Since people are spending a majority of time indoors, they are seeking spacious homes with distinct work zones. The need to break the monotony of being confined indoors has also fueled the demand for holiday homes.
The prospect of political and economic stability will accelerate demand in the housing sector in 2021. A Fitch report in November 2020 has predicted a growth of 11% for FY 2021-22. Proposed infrastructural developments such as the Delhi-Mumbai Industrial Corridor, the Delhi –Meerut Rapid Regional Transit System (RRTS), the Delhi-Meerut Expressway, proposed Meerut Metro and Delhi – Karnal RRTS, will bolster connectivity, accentuate real estate prospects and boost economic development.
The COVID-19 has redefined trends, most of which are foreseen to percolate into 2021 as well. The industry is headed for consolidation in favor of leading developers who are willing to go the extra mile to enhance the customer experience. The heightened concerns towards safety, hygiene and wellness imply that developers offering robust facility management and amenities will be sought-after by customers. One can also expect a significant change in consumer-purchasing pattern and decision making. Amid transmission concerns, digital transactions aided by next-generation technologies such as Internet-of-Things, video interactions rather than an in-person experience will facilitate decision-making.
The demand for smart homes will gain currency owing to their ability to offer a superior experience to customers. Amid restrictions on mobility, the integrated townships with state-of-the-art amenities such as a gym, spa, parks etc. will gain precedence. Contactless technologies such as Keyless entry and voice-operated assistants in a controlled and regularly sanitized apartment complex are likely to be the new face of residential living.
Overall, 2021 will bring positive winds of change in the way consumers demand and developers deliver projects. The coming year will be characterized by renewed growth and continued economic resilience for Indian real estate.
(Source: Financial Express)