Realty industry at inflection point, could potentially see explosive growth- Vineet- Kohinoor Grp
--By- Vineet Goyal Jt. Managing Director, Kohinoor Group
The real estate industry has been through several boom and gloom in the past two decades. With the new challenge of the ongoing pandemic, the real estate cycle is turning for the better. This year there is fundamental support in terms of demand looking good, supply-side being weak and the possibility of price increase, along with interest rates at historically low levels, rising affordability along with flexible payment plans offered by developers are helping revive buyer interest has helped the realty market stay afloat.
Though there is a substantial pent-up demand in the market, the offtake has not been consequential due to various reasons such as infrastructure development delays of some major projects, litigations, delays in policy interventions and deliveries among others that have dried up the interest of the investors and taken the sheen off the sector.
The future of real estate can be pinned on 3R’s, those are Relief, Restructure and Resilience, with the new reforms now in place, the developers and the governing agencies can work hand in hand for the betterment and upliftment of the economy. Though the real estate industry has observed slight high growth in recent times with a surge in demand for residential as well as commercial spaces. Even new demands are emerging from sub-sectors like data centers, warehousing, and logistics. Globally, there is a radical shift in the question of the ideal investment option: from 'Why India’ to ‘Why Not India' given the growth rate and opportunities in the Indian real estate market.
Given the current scenario, it would not be wrong to say that the industry is at an inflection point and could potentially see explosive growth in the coming years. Among all the segments, housing is showing tremendous demand, both affordable and luxury markets, owing to the gradual rise in property prices as well. Due to the Covid-19 crises, the emergence of heightened demand for homes in tier-II and tier-III cities saw a sudden rise, including rentals because of the remote working culture which many companies have adopted.
The Indian commercial market is largely driven by IT/ITES sectors, owing to the rise in demand for commercial space across major cities. As per the JLL report, India’s net office absorption stood at 4.39 million sq. ft. in Q2, showing 32% YoY growth. The rise in numbers is largely due to the increase of data centers, IT/ITES, BFSI, startups and boutique companies expanding their office spaces. Furthermore, MNCs are recalibrating their plans of bringing back their workforce to offices with the Covid curve showing a downfall. This will further boost the demand for grade-A offices, flexible/hybrid office spaces. An increase in economic activities will gradually set the pace of retail growth and a demand surge will be witnessed for retailed destinations including shops, malls etc.
Last Mile Funding Mechanism
Whereas the support by the government for the last-mile funding mechanism for the delayed housing projects, property registration fee in a few states, and stamp duty reduction, along with other lucrative payment schemes and attractive incentives offered by developers, have drawn the interest of consumers in the residential market. Developers are now seeing a rise in enquiries across key real estate markets, leading to improved marketing and sales outlook with many encouraging factors converting enquire into thefinal purchase decision.
While the world moved to digitalization in every aspect of life, the Indian real estate business has now finally accepted the much-awaited technological change in the business. For developers too, a data-driven digital approach that offers granular insights can result in improved reliability of the market value of a property and better risk management. Due to the unforeseen emergency,it has undoubtedly quickened the pace of digitization within the industry, redefining parameters and forming a path for fundamental home buying and marketing strategies to ensure the sector stays afloat and in demand.
Developers are now able to take help from their enhanced networking and can generate leads through social media, given personalized property buying experience along with conversational AI, market listings with remote viewing and virtual walk-throughs experience and finally closing deals through video conference to follow the social distancing norms. Customers are more active on digital platforms than ever, and the developers now are coming up with new strategies to sell their properties online. Though the crisis has undoubtedly given the sector a major push towards the integration of widespread technology and equipped them to face crisis with ease. The increased use of digital platforms which is aiding the real estate industry today will form a strong foundation for tomorrow’s businesses, and the implementation of these new upcoming technologies will only create a seamless buying experience for property buyers.