India’s resilient and burgeoning true estate segment has generally remained an investor’s favourite, and one of the most sought-soon after realty markets globally. The development potentials are such that the segment is poised to account for 13% of India’s economy by 2025. A key wealth creator and one of the biggest employment creating sectors, it has undoubtedly feared undesirable consequences at the onset of the pandemic last year, but predicting the challenges early and injecting swift reforms – which incorporated economic help like loan moratoriums, stamp duty cuts and tax reliefs by way of conducive government policies and complete and properly-calibrated techniques — helped the sector continue its development even soon after a short-term pause in 2020.
The onset of pandemic followed by a stringent nationwide lockdown imbued enormous challenges just before the sector, bringing it to a short-term standstill. Same sentiments have been reflected in a report that informed only 19,038 units have been sold across India’s eight essential house markets through Q2 2020. Similarly, only 12,564 units have been launched through this period across the very same markets. The sale of residential properties declined by 79% annually and new supplies dipped by 81% in 2020. Furthermore, a dip in sales and provide of industrial spaces was witnessed through the shutdown.
Foreseeing the perils of the pandemic early, the governments made swift and critical choices and announced relief measures. The Prime Minister boosted the morale of the stakeholders by launching the Aatmanirbhar Bharat campaign, which was strengthened by RBI’s announcement of loan moratoriums. Stamp duty cuts, reduction in loan prices largely aided the developers through the volatile occasions. Strategies have been re-envisioned speedily by adapting digitization and reaping advantages from emerging ideas like work-from-home model, remote offices, second residences, huge spaces, and so on. Ease in investment possibilities by way of flexibility in REITs and tax reliefs boosted industry sentiments and today, the sector is on its road to recovery with homebuyers and investors returning to the industry.
A mix of variables like elevated demand, low-interest prices, greater household savings and government assistance catapulted development. The prime 7 cities of the nation staged an impressive comeback post lockdown last year. A current report also confirms the reality that housing sales in 7 cities elevated by 29% and new launches by 51% through this quarter against the corresponding period in 2020. Delhi NCR, Mumbai, Bengaluru and Pune collectively accounted for 83% of the sales in the quarter. The functionality of micro-markets in the Delhi-NCR area, like Noida and Gurgaon, witnessed a double-digit expansion in house appreciation rates with 11% and 13% development respectively.
Real estate has generally remained resilient, and purchasers look at the segment also as a extended-term investment. Developers through this perfect time took benefit of the pent-up demand to clear most of the unsold inventories. With sensible pricing, purchasers as well stepped out to invest in residences. The demand picked up with them coming forward to reap advantages of the lowered demand and elevated negotiation possible, and powerful interest from sectors such as technologies, banking, economic services, and other people. Tech-enabled systems, elevated momentum of operations, demand for larger flat sizes and independent floors and new trends are generating the industry look promising for the next coming quarters.
Today, undoubtedly the second wave of coronavirus has imbued uncertainty in the sector resulting in a short-term pause, but developers are now greater ready and properly-versed with the know-hows of a pandemic. The Indian true estate sector is now a buyer’s industry, and the ongoing inoculation plan is boosting the self-confidence of homebuyers. It is most most likely that the sector will resume its development from Q2 of FY 2021-22. We will see a steady flow of investments that will guarantee development possibilities with greater returns. The halt will be brief-term and cheers and self-confidence in the industry will return as quickly as we effectively bend the Covid curve.
(By Ashish Sarin, CEO, AlphaCorp)