The year 2020 has been an unforgettable one for the economy in general and the real estate market in particular. Several stakeholders even maintain that this has been an even worse year than 2008, which witnessed a global economic slowdown after the Lehman Brothers’ crisis. However, the second half of 2020 had some silver lining for the real estate business.
Positive trends in real estate in 2020
Real estate recovery in H2 2020: The pent-up demand, following the lockdown, made fence-sitters realise that in times of uncertainty, a house of one’s own could not only be an asset but could also provide safety.
Shift to digital platforms: Digital platforms and tools like augmented reality and virtual tours were introduced into the Indian property market almost a decade ago. However, following the lockdown and the impact of Coronavirus on real estate, buyers and builders started relying completely on these platforms, in a market where physical site visits had been the norm.
REITs become attractive investment options: More players are firming up their plans to launch real estate investment trusts (REITs) in India, after the successful launch of the first such instrument.
Realty stocks recover: When the stock market tanked in the last week of March, 2020, the Nifty Realty Index went as low as 170.65 on March 24. Stocks have recovered since then, with the Index at 292.50 at the market’s closure on December 11.
Foreign funds bullish on office spaces: In spite of the growing challenges for the office space segment, with many companies adopting remote working policies, foreign funds remain bullish over the long-term growth of this segment.
More consolidation is likely: With practically no new launches by the not-so-reputed developers and many joint ventures (JVs) and joint developments (JDs) on the cards, 2020 has contributed significantly towards consolidation in the real estate industry.
Focus on delivery, instead of new launches: New launches have been at a historic low in 2020 and the focus has shifted to project delivery, with buyers preferring ready-to-move-in or near-completion properties.
Serious buyers only: Along with non-serious builders, non-serious buyers have also exited the market. The serious buyers left in the market prefer to offer more down payment and borrow less.
Measures that could revive realty amid COVID-19
“The biggest learning this year has been that even the most adverse circumstances can yield a positive result, if one perseveres, re-strategises in time and makes optimum use of the resources at hand,” says Deepak Goradia, vice-chairman and managing director, Dosti Realty. “While the first quarter of FY 2020-21 was a bit slow, Q2 and Q3 witnessed a significant upward surge in the demand for residential housing. The subdued pace of construction activity due to labour availability issues is slowly being resolved,” he says. Demand during the festive season of 2020, the government’s support through lower interest rates, reduced stamp duty, the extension of the PMAY scheme, etc., have been instrumental in the sector’s revival, he maintains.
See also: Sales and new launches improve in Q3 2020: PropTiger report
Aditya Kushwaha, CEO and director of Axis Ecorp, believes the real estate sector was already in a bad shape, before the COVID-19 pandemic but recent trends indicate a recovery. “With policy support from the government, the real estate sector is displaying signs of growth and sales numbers are increasing across cities. To boost housing demand, the finance minister had announced measures like an additional outlay of around Rs 18,000 crores, for the Pradhan Mantri Awas Yojana (PMAY). This relief is expected to lift the demand, particularly in the affordable and mid housing segments,” he says. With most of the corporate professionals working from home, the demand for second homes is also on the rise, he adds.
According to Hiral Sheth, HOD, marketing, Sheth Creators, the pandemic has turned people towards technology, thereby enabling ease of doing business. “During the times of lockdown between March and May 2020, realty transactions continued to happen virtually, which was a new trend for all. One of the biggest realisations of 2020, is that real estate as an asset class has stood strong during the time of crisis,” he concludes.
From the home buyers’ perspective, the record low home loan rates, relaxation on stamp duty in a few states, better bargaining power with the builders, convenient and often customised payment plans and more ready-to-move-in options, have been the silver linings of 2020.
FAQ
Is real estate still a good investment in 2020-21?
For serious buyers, this may be an ideal opportunity to invest in real estate, owing to the low home loan interest rates, concessions on stamp duty and attractive offers from developers.
What happens to house prices in a recession?
Typically, an economic recession has a mirror effect on the property market, with demand being hit.
Which was the first REIT in India?
India’s first REIT is Embassy Office Parks REIT.
(The writer is CEO, Track2Realty)
Ravi Sinha is a journalist with nearly two decades of cross-discipline media exposure. He is the CEO of real estate think-tank group Track2Realty. He has been writing extensively on the real estate sector for nearly a decade. Evaluation of real estate brand performance is his expertise and he has immense insight into consumers’ psychograph in the property market.
Twitter: https://twitter.com/ravitrack2media
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