Outlook For Real estate In 2021
After three years of disruptions caused by demonetisation, GST, RERA, and NBFC crisis, real estate looked all set to bounce back in 2020. However, all hopes were derailed as the biggest crisis in humankind's history- COVID-19 hit India, causing widespread turmoil and distress in the already embattled real estate sector.
While most of the year passed by transitioning into the new normal, the last few months, also known as the Indian festive season really changed the tide for the realty business. COVID allowed real estate companies to innovate and reinvent their strategies to ensure continuity in operations and navigate the tough times.
The festive quarter that ended in December saw a healthy business especially in residential segment across major cities on the back of all-time low interest rates and attractive sops in the form of limited period stamp duty reductions etc. These trends are expected to continue in 2021 with real estate market finally stabilising this year.
Higher Demand for Properties:
Thanks to lowest-ever bank loan interest rates, NRIs returning to India, government's sops for the sector, stamp duty reduction, the real estate sector is now finally picking up with home buyers willing to make a move. And, it will be the affordable and mid-income housing that will ensure turnaround of the real estate in 2021. However, a lot will depend on the Union Budget, which is due in the first week of February 2021.
Increase in Investment:
2021 is expected to see a steady flow of investment as easy liquidity by global central banks will ensure interest rates are low and funds will chase investments with stable yields. Following SEBI's amendment of REITs rules, one can expect an inflow of investment in commercial real estate that offers lucrative returns compared to other investment avenues.
Rapid technological transformation will continue to unfold in Indian real estate sector in 2021. Although Indian realty had been steadily embracing technology over the past few years, COVID crisis expedited the entire cycle by many folds. As physical interactions were limited, realtors were forced to adopt digital adoptions such as online viewing & transaction, digital launch, virtual property show etc. The uptrend will continue this year too. Moreover, there will be an increasing emphasis on data & analytics, machine learning, and AI.
Commercial Segment on the Upswing:
Despite the work from home trend and compulsions, commercial real estate segment is expected to experience a constant rise in demand in 2021. According to JLL India, the September quarter registered a massive uptick of 64 percent in absorption over June quarter. The office real estate is expected to traverse the recovery path in 2021, driven by warehousing which has been witnessing good demand due to spurt in e-commerce.
Also, with relaxations provided by the government post COVID, employers and employees are seeking the right balance of in-office and remote working options.
With reverse migration from cities to suburbs and native there will be increased demand in tier 2 and tier 3 cities. Also, health will be of paramount importance while buying homes. So, amenities like meditation spaces and gardens, jogging tracks, ventilation, water abundance, etc. will be the decision drivers while purchasing or renting homes. Offices will employ a hybrid model of working and distance from homes won't be a concern for many in the future. However, the hub-and-spoke model of office working culture will enable smaller offices to spring up with multiple and accessible locations. This will redefine the commercial real estate in a very large way.