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Several big financial reforms and efforts by the government and the industry, shaped the real estate sector over the past decade. The decade ahead, is likely to witness the emergence of a more organised sector that focuses on efficient use of resources. The residential realty sector, in particular, has been through several phases over the last decade: (i) The high in 2010-2013 during the recovery from the sub-prime crisis; (ii) The stagnation phase from 2013-2016; (iii) The correction phase of 2016-2017 and; (iv) A period of stabilisation, after 2018. The last two years have been characterised by moderation in inventory levels and some degree of reactivation in the primary market, with new launches across India.
Projects that are likely to witness demand in the new decade
The trend witnessed over the past few years, is likely to persist during the first half of the next decade, as the existing inventory with the current level of absorption, would take time to clear, says Ashutosh Kashyap, associate director, valuation and advisory services, at Colliers International India. “During the first half of the next decade, growth can be expected to be at moderate levels from the perspective of absorption, as well as capital values. Differentiated products, ready-to-move-in products and marquee products by profiled developers, are likely to entice the buyers and command a premium,” explains Kashyap.
The success of new launches will hinge on the ability of developers to address the needs of buyers within the right ticket size. With inventory overhang likely to moderate over the next 3-5 years, the real estate market could witness better momentum during the second half of the next decade.
Project delays and delivery timelines
The process of construction is also evolving, with Indian developers adopting global best practices. “Increased mechanisation and construction schedules planned and monitored by AI (artificial intelligence) and IoT (internet of things) will result in a reduction in the time taken for construction. New norms, such as Mivan construction technology, save time as compared to traditional brick wall technology. The biggest saving in time also happens, because there is no need for a separate ‘finishing’ of the wall’s surface. While the delivery time will differ across locations, micro-markets, and projects, it will be less than what it has been till recently,” maintains Niranjan Hiranandani, national president, NAREDCO.
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Measures to streamline the process of obtaining approvals from the authorities, will also be vital in minimising the delivery timelines. There are hopes that the long-standing demand of developers for single-window clearances, will be met over the next decade.
The role of technology in the home buying process
Leveraging of technology will take the home viewing process to a whole new level, says Hiranandani. “Today’s mandatory ‘human interface’ will no longer be the norm. The future will be fully automated and powered by AI and IoT – from site visits and property documents/plans being available in physical form, to virtual walkthroughs,” he explains.
Buying a home involves a total cost, payment schedules and home loans. The actual transaction gets recorded through documentation that is registered and stamped. In the next decade, we may see Blockchain technology replacing manual documentation/ registration/ stamping. The payment schedules may incorporate rental payments in initial years, which may then morph into a sale transaction, once a specified number of rental payments are completed.
Demand and supply in the new decade
“The residential real estate market is expected to normalise in the next 2-3 years and then exhibit sustained and steady growth. In terms of demand, the next 2-3 years will mostly be end-user driven and increase by at least 10%-15% annually. Affordable and mid-segment properties at the right locations, should witness demand in the coming years. Supply will be dependent on the existing demand and the quantum of existing unsold stock. Markets with high unsold and under-construction stock, are unlikely to witness new launches in the next 2-3 years. At a pan-India level, both, demand and supply, may be more stable and consistent, as it will be more driven by end-users only,” concludes Kashyap.
5 key expectations from the property market in the coming decade
(Niranjan Hiranandani, national president, NAREDCO)