The residential realty category was a ray of hope in 2020 for the industry at large. The sector successfully avoided the curveball thrown by the COVID-19 pandemic, showing excellent resilience and posting massive sales figures for Q3 and Q4 alike. This has set the foundation for better recovery in 2021 as well. The COO and Co-Founder at Square Yards, Kanika Gupta Shori, has opined that the housing market is witnessing positive growth with 80% of potential buyers seeking to acquire their homes within a year while 65% of them prefer ready to move in homes for 2021. Ownership sentiments continue remaining strong according to Shori and this has been influenced by flexible plans for payment, discounts, lower rates of interest and the overall ease of buying a home with enhanced technological convenience.
Shori has stated that confidence of homebuyers is steadily touching new highs with tax benefits being extended for affordable housing along with affordable rental housing ventures in tandem with interest deduction in the recent budget for a year and the stay on repo rates by the RBI. This will keep buyer volumes stronger in the sector owing to more favorable parameters. Housing demand is also shifting steadily towards lower-density markets as per Shori while other demand drivers include cuts in stamp duty across Mumbai, Delhi-NCR and Karnataka while low rates on home loans continue to be a key factor.
In this context, she has highlighted some major trends that will influence the sector greatly throughout 2021-
- Evolution and innovation of proptech entities- Proptech has played a leading role in helping the whole sector and enabling continuity of business throughout the coronavirus pandemic. Developers and buyers are now relying more on emerging technologies for efficient and smarter transactions along with property leasing and management experiences. Shori predicts this trend to gain momentum in the coming months of 2021 with most buyers having shifted towards online real estate platforms. Developers have woken up to the indispensable proptech aspect while firms in this sector will keep evolving and innovating further.
- Sustenance of housing demand- The excellent performance of residential real estate for Q3 and then even better figures in Q4 (sales figures went up by 51% on a quarter on quarter basis) across the 7 big markets are indicators of momentum staying strong throughout 2021. Affordable housing will continue being a major demand driver while affordable rental housing ventures will also flourish as per Shori. She feels that luxury and mid-range properties will also draw decent volumes with more people inclined towards upgrading their homes for more usable and multi-functional spaces.
- Swifter industry consolidation- Demand consolidation of buyers will take place more towards developers with good track records, financial stability, capabilities of large-scale execution and those offering high-quality residential projects. They will keep gaining considerable market share in 2021 since smaller players will be constrained owing to limited availability of funding, narrowing margins and shifting preferences of buyers towards leading brands. This consolidation will lead to a more organized industry while highlighting the premium property category too.
- Slight increase in real estate prices- In spite of vaccine roll-out and economic recovery, property prices have a slim chance of increasing in 2021. Based upon latest reports, unsold inventory in India’s top 8 cities currently stands at a whopping 9.5 lakh units. It will take more than 2 years to bring this down to a sustainable threshold even though sales figures have outstripped new launches. Yet, some pockets may witness a slight property price rise.
- Boom in tier-2 markets and suburbs- A remote working culture, reverse migration and aspirations for a better life will lead to higher housing demand in Tier-1 and Tier-2 cities in India. Buyers are seeking homes which are priced at least 30-40% lower than those in metro cities. Alongside, the 5-year rental outgo for tenants staying in cities is equivalent to at least 30-50% of costs of property in smaller cities. This logic will drive a housing demand boom in satellite cities and towns.
Shori feels that 2021 will usher in better growth, positivity, investments and innovation as far as the residential real estate segment is concerned.
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Published Date: May 17, 2021
