Demand should be considerably higher in the affordable housing category with peripheral housing markets performing even better as per experts. Real estate is one of the most important investments which consume up several years of family savings likewise. The sector which is already struggling in most areas of India, came to a standstill owing to the COVID-19 induced lockdown. Things started improving gradually from the month of July when the process of unlocking the economy started.
Experts feel that this is a good time to buy property since there is steady pent-up demand in the market along with attractive discounts which may spur higher demand. The sector has performed well and recovered over the last couple of quarters and is expected to touch pre-COVID volumes throughout the next two quarters as well, in the opinion of Kanika Gupta Shori, the COO at Square Yards. The affordable housing segment will be the major growth driver as per Shori and cities like Bangalore, Pune, Mumbai, Hyderabad and Delhi-NCR will see a dip in inventory levels with stable property prices and lower rates of interest which will spur higher sales volumes. Peripheral markets will do better since they have units more in sync with user budgets and preferred unit sizes as per Shori.
Rental yields have remained the same while the drop in rates of interest on deposits is enhancing their overall attractiveness at present. Experts feel that there is a narrowing gap between rental yields and rates of interest. With a slight 3-4% appreciation, property will be a more attractive investment at present. Tax benefits on home loan principal and interest may also lower loan costs to lower than 5% for those in the higher income-tax segments. Prices of property are also currently at their lowest levels and buying currently will benefit customers as per several experts.
Those with higher appetite for risks and desire to invest in commercial realty, a selective approach should be followed as per experts. Grade A assets in this space have stayed robust throughout the pandemic with collections touching 90% and even higher. While the vaccine is being finalized for launch and distribution, commercial office spaces are expected to witness higher net absorption growth with rentals stabilizing ultimately in the year 2021. REITs are also suitable options for attaining higher real estate investment benefits with comparatively lower monetary deployment. Both listed Indian REITs have witnessed stronger rental collections surpassing 97% throughout the COVID-19 pandemic
