Real estate is one of the key drivers of the Indian economy, contributing 6-8% of India’s Gross Domestic Product (GDP) as well as generating employment and is thus a priority sector for the government to rejuvenate the sluggish economy.
In the budget presented by finance minister Nirmala Sitharaman on 1st Feb, 2020 she proposed that
2019 was year of ups and downs for the real estate sector. The NBFC crisis resulted in a cash crunch as well as slow sales. On the up side, the successful launch of India’s first Real Estate Investment Trust (REIT) opened new avenues for investments. Housing sales saw 4-5 % growth whereas new launches saw an encouraging 18-20% annual growth. Setting up of a 25000 crore fund by the government to revive stalled projects along with GST rate cut and changes to credit guarantee scheme is expected to boost the sector, especially the affordable housing sector. In this backdrop, here are some Real Estate Trends & Forecasts for 2020.
There should be a rising demand for quality housing in not just metros such as Mumbai, Bangalore, Delhi-Gurgaon and Chennai but also in Tier 1 and 2 cities such as Pune, Hyderabad, Chandigarh, Ahmedabad etc. The main reason is the employment opportunities through IT companies and other sectors as well. These cities have become hubs for real estate investment as the ROI is attractive. In particular, the luxury and mid segment housing is driving realty growth in these towns. Demand for housing in big markets will continue to grow faster than builders can supply which will eventually push up prices and rentals.
In addition to growing demand for residential property purchases in top tier cities and towns in India, the rental properties are also expected to show a rise in demand. This can be attributed to working professionals migrating and relocating for improved job prospects and better standard of living. Also escalating home prices mean that it may be difficult for many buyers to purchase outright, thus preferring to take a house on rent. Delhi, Mumbai, Bangalore, Pune and Hyderabad will have a steady demand for both buying as well as rental properties. Also, having a second property in these cities, which is not being used by the owner, means an additional source of income for the owner.
Implementation of RERA in 2016 and GST in 2017 was a game changer for the real estate industry. Although the industry struggled initially coping with the new rules and regulations, RERA has made the home buying process transparent for the buyers with timely completion of projects, transparency and accountability.
Granting of infrastructure status to compact, affordable housing projects saw a rise in demand for low cost homes. Granting tax exemption of Rs 1.5 Lakhs to buyers on home loans under affordable housing was a great incentive for pushing housing demand.
Although the real estate sector initially struggled with GST, the impact later has been mostly on the positive side with ease of business bringing in increase in infrastructure developments and other real-estate projects. These 3 factors are further expected to have an encouraging impact on the real estate sector in 2020.
One of the direct outcomes of the slowdown in sales units and cash crunch in the market in the last few years is that the builders are concentrating more on actual customer requirements. The new sales strategies are aimed at offering the customer necessary but attractive home buying options (integrated townships, affordable, budget homes, comfort homes, senior homes, kid-centric homes etc.) and amenities combined with a more professional outlook.
Although a lot of work needs to be done, these trends forecast an optimistic outlook for the real estate industry in 2020-21. Land will always be a scarce commodity and thus with less supply and more demand, we’ll see property prices appreciating in the coming year. All round, 2020 has the potential to deliver good results for not only the residential but also commercial real estate businesses.
A real estate developer in Pune that is closely aligned with their customer requirements is Pharande Spaces. One of leading builders in Pimpri Chinchwad and Pune, Pharande Developers have created landmark projects across prime location in the city, earning the honor of being one of the most dynamic construction companies in PCMC & Pune.