Envisage a scenario where innumerable housing complexes and townships are mushrooming all over, leaving buyers, tripping over heaps of cash, spoiled for choice. In an ideal world, India’s property market ought to have been a hub for commerce and a major contributor to value creation and wealth.
But the last two years presented unprecedented challenges. Covid-induced lockdowns, labourers migrating to hometowns, and buyers’ reluctance to visit project sites brought a brief lull in the real estate market. Yet, 2021 not only braved the obstacles, but it also promised a period of healthy transformation in the realty sector.
How did the housing sector adapt?
Digital channels like online bookings, Internet of Things (IoT), chatbots, Artificial Intelligence (AI) and the adoption of drones ensured there weren't any communication barriers between developers and buyers. Even during a period of inertia, developers offered the best-in-class amenities that became buyers’ most sought-after choice.
This customer-centric approach kept the market in fine health. The year 2021 also rebounded with fresh optimism for 2022.
Market analysts have pointed to the way NRI’s are benefitting from the rupee-dollar exchange rate, making real-estate an attractive investment proposition.
On average, luxury property prices have remained stable in the last four years, wherein stamp duty reduction had given an extra push to the housing demand. Other SOPs in the form of low-interest rates, and good rentals continue to be the key drivers.
Taking a closer look at the Mumbai market, factors such as better connectivity to the parent city and the proliferation of metros enthused buyers to invest in properties here.
The pandemic accelerated the development of savvy building designs and healthcare facilities in luxury housing apartments. While there is also an emphasis on space and amenities, new-age home buyers have become conscious of green architecture and sustainable construction.
4.5 bhk luxury residences at ‘Parthenon’, by Raiaskaran, promote this green endeavour. Designed to achieve Leadership in Energy and Environmental Design (LEED) – a green building rating system – homes at Parthenon implement sustainable design strategies to achieve maximum natural ventilation.
With the outbreak of Covid-19, people realised the importance of owning more spacious and comfortable homes, as work from home became the norm. Young homebuyers today, seek flexible spaces, large living areas and open layouts, all hallmarks of modern luxury apartments. People want to focus on fitness combined with a holistic lifestyle and break free from the shackles that new variants of the virus continue to impose. This new outlook has elevated the expectations for 2022.
Stating pointers from a report by Anarock, between January and September 2021, the residential sector witnessed a hike of 27% in new supply than the full-year supply in 2020, and sales also went up by 5%.
What does 2022 hold for this sector?
Property consultant Knight Frank has signified that India’s economic indicator projects a GPP growth of 9.5% for the financial year 2022. In a report, it predicts approximately 5% capital value growth for the residential property segment in India this year. It adds that many of the demand and supply-side factors, evaluated over the last decade, have contributed to upward pressure on house prices. “Residential sales momentum is expected to continue in 2022 as prospective homebuyers’ preferences for bigger homes, better amenities and attractive pricing will keep them interested to seal the deals,” a certain section of the report reads.
Structural reforms in the form of RERA, which brings in accountability and transparency in property transactions, should encourage further investment infusions from NRIs.
That said, an upswing in steel prices and rising input costs could be the concerns for developers. While we expect the housing demand to continue, the rising cost of commodities may get transferred to the end buyers leading to a 5-7% hike in the prices.
Finally, even though the New Year has started with the Omicron trepidation, chances of a prolonged lockdown seem unlikely. Economic fundamentals are unlikely to be affected severely. The uptrend for the real estate sector, especially the luxury housing segment, is expected to continue in 2022.
The author of this article is Mr. Yuvraj S. Rajan, Director at Raiaskaran
The views and opinions expressed are not of IIFL Securities, indiainfoline.com