Supportive policies, customer-friendly low tax regimes, lower interest rates for loans and solid investments, as well as the recognition of real estate assets by purchasers as a guarantee for the future all, contributed to a rise in consumer confidence and market emotions. Residential real estate has evolved into a buyer-centric market in recent years, and the industry has a bright future ahead of it. It was a great year for the real estate market, despite the epidemic, in 2021. Demand for housing soared as people became more conscious of the importance of health, sustainability, future security, and solid investments. When the pandemics struck, the residential sector was able to quickly adapt to new technologies and better withstand the effects of the pandemics.
Many new residential patterns emerged as a result of the epidemic, spurring developers to meet the changing needs of purchasers. As a result of such trends as work-from-home, e-schooling, reverse migration, and the desire for a house with wide areas among lush vegetation, cities in Tier II and III emerged as the clear victors and drew potential purchasers. Flexibility in their working hours has also pushed them toward looking at local housing options. Housing demand in growing places was encouraged by reasons such as affordability, world-class infrastructure, superior connectivity, fewer traffic jams, low pollution levels, affordability, and a higher quality of life.
Investing in the housing market has shown to be the most lucrative option for investors, based on its overall performance. Between January and September 2021, 1.63 lakh units of new residential supply were added in the top seven Indian cities – 27% more than in 2020, according to research by Anarock. 5 per cent more units were sold than in the entire year of 2020. A dramatic V-shaped rebound was seen in residential real estate following the second wave.
The residential real estate market might experience a 5% increase in value next year, according to industry projections. Investments in Indian real estate are likely to rise to $5 billion in 2022, according to JLL’s forecast. This is due to the low-interest-rate environment and continuing monetary stimulus as well as better revenue visibility across asset classes and an inclusive growth policy. An Indian economy of 5 trillion dollars will soon be a reality, and the real estate sector will play a major role in helping make this happen.
As a result, homebuyers’ tastes have shifted dramatically, and they’re now looking for larger apartments with bespoke features like expansive open areas with plenty of natural light and additional rooms as well as more contemporary conveniences like a study room, separate office, exercise room, and a balcony. They are looking for contemporary homes from trusted developers in areas that have well-developed social infrastructures including shopping malls, schools and hospitals; banks; movie halls; restaurants; and other facilities, such as schools and hospitals.
After the first shutdown, the Covid-hit real estate industry rebounded from a 90 per cent drop in quarterly sales (Q1FY22) due to low lending rates and incentives given by state governments and property developers. If you can afford it, the recession provided an excellent chance to expand your living space or diversify your financial portfolio by purchasing real estate at significantly reduced costs. Industry experts say that now is a good moment to invest in residential buildings because of rising demand, rising raw material prices, and an expected rise in interest rates.
For those looking to buy a home for their own use, Anarock Group Chairman Anuj Puri believes that now is a great time to buy because interest rates are at historic lows, housing is more affordable than it has ever been, and developers are continuing to offer various offers and discounts on many residential projects.
Customers wishing to buy their first house or to move to a larger property can take advantage of this opportunity to invest in real estate. Trehan Group’s Managing Director Saransh Trehan noted that “property prices are favourable, house loan interest rates are at decades-low levels, and there are lots of alternatives in both ready-to-move-in and under-construction properties.
There’s a 99% chance that prices will rise. According to Puri, developers are now considering raising prices due to the steadily growing cost of essential raw materials like cement and steel. Prices have already climbed up to 10% in certain residential projects, he says. Q2:2021-all-India 22’s house price index (HPI), which is based on transaction-level data obtained from property registration authorities in the ten most populous cities, showed that the HPI grew by 2.6 per cent compared to the previous quarter’s 2 per cent rise (y/y).
Developers’ margins are already extremely tight, and Trehan claims that growing input costs are cutting into those margins. “Input prices have climbed by over 20 per cent in the previous few of years, and developers must pass the increase on to homeowners reluctantly. He went on to say that “property values will rise by 10 to 15 per cent.”
Cement and steel prices, in particular, have risen by 40-50 per cent, according to industry members, and this trend isn’t expected to abate any time soon. It’s been a year since the epidemic hit, and many developers saw their stock clear out, allowing them to raise prices, says Puri.
Property prices are only projected to rise as a result of strong demand from buyers, according to experts in the real estate sector. In the third quarter of 2021, house sales in India increased by about 46% quarter-over-quarter to 50,000 units, according to the latest report from property consultancy CBRE. Year-to-date (YTD) sales are up by around 86%, according to the report. Investing in blue-chip companies, on the other hand, offers a substantially higher rate of return. During this year’s bull run, the Nifty and Sensex indexes have returned a total of 29 per cent!
Growth in the secondary market for residential real estate
There will be a surge in secondary and tertiary markets in the future of the real estate. The recent rise in the value of real estate assets has led many people to begin seeking more inexpensive housing choices even before the epidemic occurred. The epidemic heightened this interest in smaller markets, but it was already a trend. To guarantee that we as investors are still making good investments, conducting a housing market study of these smaller areas is more vital than ever. It’s not just the favourable inbound migration that makes the secondary and tertiary housing markets attractive, but the supply of purpose-built rental accommodation is often lower, and asset prices are lower, as well. For those renters who work from home, smaller markets are especially attractive because they tend to be less expensive than larger cities.
