January 5, 2021
Nishit Jalan in Voices, Economy, India, TOI
In the past few years, the real estate sector in India has been undergoing a rapid evolution. Major government initiatives have enabled greater transparency and ease of doing business. The year 2020 started off on a positive note, but the subsequent outbreak of Covid-19 and resultant global lockdowns coupled with heavily disrupted supply chains, dashed all hopes temporarily.
With a vaccine on the scene to abate coronavirus, anticipations are high for the new year that it shall usher in new beginnings. As a consequence of the global pandemic, several sectors witnessed the emergence of new trends, thus transforming many businesses. Real estate too hasn’t remained unaffected. With offices shutting down and people working from home, the demand for commercial and residential properties underwent significant changes. This year, in the office segment, the absorption rate has been nearly 29 million sq. ft. in top 5 metro cities, which is almost 30% less than the annual absorption rate of 2019. However, the projections for 2021 show that the office absorption rate is expected to touch 40 million sq. ft.
Major Trends Expected in 2021
Although India is still amidst a wave of Covid-19 cases, the plummeting positivity rate has inspired confidence among people. As people missed the cultural and social life of the city, they have now started trickling back to public places such as markets, shopping malls, restaurants etc. Also, to advance careers, especially in big companies, one will need to be visible and back in office. Keeping this in view, majority Indian corporates have returned to their workplaces.
In the upcoming year, the ‘co-working’ players are highly likely to take up more spaces, being a popular alternative to working from home, in locations that would be closer to residential pockets as many will prefer to avoid longer commutes to office districts. Several IT companies will continue to either work from home completely or will work in a combination of WFH and office for their teams, at least till the first half of the next year.
Following the SEBI’s amendment to the rules of Real Estate Investment Trust (REITs), an inflow of investment is expected in commercial real estate which is sure to guarantee stable and lucrative returns, in comparison to other real estate segments. India is counted amongst the fastest-growing economies and is emerging as an important real estate investment opportunity amongst NRIs who want to buy homes here as the pandemic has led to a feeling of insecurity. All in all, global affluent consumers will continue to realign their priorities to spend more on real estate that gives them and their families a sense of security, health safety, and privacy in a cocoon of their own.
Real estate sector has conventionally been reckoned a safe investment option and continues to be the top preference of investors. And this trend of investing in real estate is likely to be accelerated by a politically stable environment, expectation of economic stability and urbanization in 2021. The residential sector registered a robust recovery after the lockdown was lifted during Covid-19.
The bounce back was a pleasant surprise for real estate developers, investors and other stakeholders of the sector. Majority mainstream markets did really well. The Q3 sales grew by nearly 85% compared to Q2. As per digital platforms, online search activity for the residential properties spiked sharply and even surpassed the pre-Covid levels by 30-40% in most markets. Home prices will continue to witness an upward trajectory in both cities and suburbs even when the pandemic has subsided – driven by record-low mortgage rates and millennials entering their ‘peak’ house-buying years.
Developers are optimistic about and unanimously agree that real estate will bounce back in 2021. Prospects of economic growth, conducive policies and technology-driven innovations are all likely to play a crucial role. To top it all, work-from-home is here to stay and developers will adopt a tech-empowered approach to incorporate it in their future projects.