- Realty sector predicted to pick up pace in next 3 years
- It is all set to register more than 75 % growth
After being hit hard by Covid due to scarcity of labour and low budget spending, India’s real estate industry is now gathering pace and is on the course to healthy recovery. These are some major findings of a report titled Real Estate Industry: Outlook and Challenges released by Infomerics Valuation and Rating.
The commercial segment which is relatively a more formal segment (with big players involved) has seen an influx of investment. Among dominant markets, Bengaluru, Chennai, and the National Capital Region (NCR) recorded the largest recovery in the September 2021 quarter. IT remains the largest consumer of space during the quarter, occupying 34% of the space transacted.
Talking about residential spaces, the interest rates on home loans (October 2021) are likely to act as an incentive for prospective buyers. Along with that, the buying decisions now factor in adverse impact on income, ‘thriftiness’ caused by unforeseen emergencies, ‘access to large green areas’ and ‘access to good healthcare’.
The government has an active and essential role to play in the socio-economic setting of the nation. The Infomerics report outlines the various initiatives taken by the government to help and bolster the sector like tax holidays for affordable housing projects, tax deduction on interests on housing loans in the Union Budget 2021-22 augur well for the industry. Further, the interest rates on home loans (October 2021), and festival offers are likely to act as an incentive for prospective buyers. The Infomerics report states that the delay in buying & selling of projects due to Covid 19 has been a problem for the constructors. This was further widened due to shortage of laborers & workers as people shifted back. However, with the ebbing of the pandemic, the industry is likely to gain traction.
The housing price index showed that the ‘price index’ has been increasing despite the proliferation of the COVID pandemic and it was above 110 during the first wave. However, the ‘quantity index’ plummeted to less than 30 during the same period. The report stresses in the part that if the situation continues, then even reducing the home loan interest rates would not be quite effective. Amidst Covid-19 pandemic uncertainty, investors stayed away due to the uncertainties in the property market. In 2019, around ₹1.59 trillion worth of luxury housing stock was unsold (which was around 34% of the total unsold homes across top residential markets).
Further, the report also mentions that the possibility of the third wave of Covid 19 and the emergence of delta variants, however, causes concern for the industry. Commercial investments augur well, given the scope of business activity in India & this can be clearly witnessed with the on-going developments in Indian business space as more companies are being formed as they touch greater heights of expansions with need in working spaces. Moreover, about 88 crore people are expected to live in urban areas in India by 2051 as against the current 46 crore people. Therefore, this trend setting pattern is sure to be salubrious for the real estate industry along with government interventions & new schemes rolling in in urban house spacing.
Factors driving the growth of the real estate industry in India include low interest rates, favourable government policies, revised circle rates in Delhi, more ready-to-live projects etc. The report also highlights the fact that more than 58% people consider property as a mode of safe investment, with a notion that the prospects for real estate are likely to get an upswing once the pandemic recedes.
