Real estate trends that are likely to dominate in 2021

The year 2020 has been quite challenging for economies across the globe. The outburst of the pandemic has hit global markets hard, and the majority of countries are still grappling with a COVID-19 toll amid case escalations. Real estate, amid all other important sectors of the Indian economy, has faced a major setback. However, amid all the chaos, there are certain realty trends that are likely to dominate in 2021.

While the adverse effects of the global pandemic are still being felt across the world, varying options are emerging with respect to its impact on the real estate sector. The novel Coronavirus strain, which led to a shortage of labourers at construction sites and a temporary halt in construction activities, delayed the recovery of real estate, which was already struggling with multiple issues, including ongoing liquidity constraints. The ongoing COVID-19 mayhem led to a decline in the new residential supply and piling up of existing unsold inventory. Further, stalled construction activities worsened the situation for developers across all major markets in India.

While buyers were earlier reluctant to park their money and deferred their home buying decision for several months, they have now realised the importance and value of owning a home. Therefore, we are now observing a surge in buyer enquiries and an increased interest in home-ownership. Work-from-home compulsions, online education, an increase in e-commerce and business-related webinars, are all reasons why the demand for residential homes in major cities is picking up the pace.

Here is what we expect in the year 2021:

Rise in affordable homes: Over the past few years, the affordable housing sector has been provided with a consistent push via government initiatives. A considerable portion of India’s workforce in the organised sectors is from Tier II and Tier III towns. The majority of these people have been forced to leave their temporary rented settlements in Tier I cities and go back to their hometowns. This will increase the demand for affordable housing, especially in Tier II and Tier III areas. Also, schemes such as the Pradhan Mantri Awas Yojana Urban (PMAY-U) have been implemented to push affordable housing and make it lucrative even for the builders. The incentives provided to developers in this segment include subsidies, tax benefits, and institutional funding. These, along with the standardisation of the definition of affordable housing, have paved the way for healthy investment in this sector.

Digitisation: The real estate industry, similar to others, has also been quick to adopt digital solutions. The crisis has unwittingly shown us that there are various cost-effective ways to interact and conduct activities. The world has now stepped into a zone of digital-irreversibility. The real estate market will adjust accordingly and will feel the impact of digitisation. Whether it is transactions, capital deployment, property management, virtual tours, or even the consumption patterns - digitisation will dominate most processes.

Rise in demand for homes located in peripheries: The trend of remote working is here to stay. Even after the pandemic loosens its grip, most companies will explore some version of work-from-home (WFH) for its employees. While commuting will no longer be an issue for those working from home, it will further reduce the need to buy a house close to the workplace. As a result, people will be more open to shifting to peripheral locations in search of affordability. Resultantly, the demand for spacious homes will also go up in the outskirts.

This is the right time to invest in Indian realty, as developers are offering properties at lower rates to drive sales and clear unsold inventories. Further, interest rates on home loans are extremely attractive at the moment, making it a good time for residents and Non-Resident Indians (NRIs) to take the plunge.

Though the real estate market has suffered a lot during the pandemic, there are green shoots of recovery, which are visible since the past few months. The recent news of successful vaccine trials will only help in improving overall sentiments. Also, there are high hopes from the upcoming budget of 2021-2022, which shall focus on reviving the stalled economic sector.