Publication: CNBC TV18, 11th March 2021
The real estate industry was one of the thriving sectors until the pandemic hit us in 2020. However, with the unlocking, the sector has hit a reboot button and is walking on the path of recovery. The home buying process has significantly picked up pace as consumers want to invest in properties at the right time which can be their personal investment.
There are major trends in the home buying investment process that are expected to pick up pace in 2021.
Homeownership is a major goal for the millennials now and coupled with easy availability of finance and low interest rate; it is relatively easy to buy a home. They don’t wish to spend their finances on rented accommodation and hence are leaning towards possessing their own.
Hence, home buying investment will boom.
Work from home feasible properties
With the work from home being the new fad, home buyers would look forward to owning a property that is spacious and would be able to accommodate their lifestyle and work from home furnishing at affordable pricing. People will prefer having their work set up in the comfort zones of their homes. Rather than walking to work or near to work home.
Investing in ready-made homes and opting for gated societies
2021 will exhibit an increase in the purchase of gated communities and societies. Meeting the family’s requirements is a pre-requisite and safety is one of their major concerns. Gated societies offer both security and state-of-the-art amenities and hence they are preferred by the consumers.
However, ready-made homes will also be preferred as not all users wish to spend their time and efforts on the building and construction process. Additionally, the delay in possession is another reason that consumers now prefer ready-to-move-in homes for swift-moving and ease of the process.
Practicing social distancing by opting for investing in plots and land
Considering the social distancing norms, there is an increase in the buying of land as a long-term investment. Some of the users are also looking forward to investing in gated societies as they wish to build it as per their requirement and then eventually set up a home. The self-owned homes will offer optimal implementation of social distancing along with green lush spaces and will be constructed as per their choice.
The real estate sector in India is expected to reach US$ 1 trillion by 2030 as reported by IBEF. By 2025, it will contribute 13% to the country’s GDP. Additionally, their study also further states that the residential sector will exhibit significant growth as the government is aiming to build 20 million affordable houses in urban areas by 2022 under the Pradhan Mantri Awas Yojana scheme.
The Atmanirbhar Bharat 3.0 policy announced by Finance Minister in November 2020 offered income tax relief measures from 12th November 2020 to 30th June 2021 for both real estate developers and homebuyers for primary purchase/sale of residential properties of value up to Rs.2 crore This will further provide the required push to the home buying process and home buying an investment in 2021.
Additionally, there will be a steady investment flow as global banks will ensure that the interest rates remain low so that there is easy liquidity and funds will eventually be gained from the investments. This will also benefit the consumers as they will be able to plan their home buying process effectively and own their property within their pockets by taking affordable loans from the banks.
Schemes like Housing for all by 2022 and PMAY have further pushed the growth of the home-buying sector. These initiatives by the government will be a major contributor to the boost of the home buying process in 2021.
The home buying process will witness a spike in both rural and urban areas. The low mortgage rates will further drive the growth of home buying trends along with the millennial mindset to invest in the properties. 2021 can turn into a peak year for home investment with all the favorable factors in place.
2021 seems to be the year of revival. Both customers and real estate developers will benefit and will be able to regain what was lost during the pandemic. While real estate, on the whole, will boom, the trend of home buying investment will also pick up pace and its future seems promising.
The author, Ankur Jalan, is CFO at Grovy India. The views expressed are personal