REAL ESTATE YEAR ENDER HEADING FOR A REBOUND

BY Realty Plus

Year 2021 can be called a year of extreme polarities for real estate, as on one end was the havoc created by the second wave of covid at the onset of the year, causing challenges for the businesses as well as the customers and on the other the year ended with surge in property buying across cities, witnessing price rise in property prices pan India. Despite disruptions and market upheavals during the pandemic, the real estate sector has achieved a remarkable recovery. Affordable property prices, discounts and offerings from developers, payment flexibility plans, etc., encouraged fence-sitters to make their purchase decisions during the pandemic. This transformed the sector into an enduser market with an evolved sense of preferences and market sentiments. Also, the reopening of workspaces have provided a fillip to the commercial real estate sector. Due to lucrative and stable income potential, we expect commercial real estate to continue to be on investors’ radar.

According to Manju Yagnik, Vice-Chairperson, Nahar Group, infrastructure and connectivity are key when it comes to purchasing real estate. “Any location with ready infrastructure and good connectivity scores over other parameters when it comes to home purchases. With newer launches lined up by almost all developers, buyers can have a collective sigh of relief as the added inventory will bring down the demand to supply gap further.” As Prashant Solomon, MD, Chintels India & Hon. Treasurer, CREDAI NCR also shares, the mood is upbeat across both the residential and commercial markets.

“Despite the volatility, 2021 has been a pivotal year for the growth of Indian real estate as it paved the way for an evolved and resilient sector driven by increased adoption of disruptive models & new-age technologies. With covid induced disruptions slowly settling accompanied by increased technology adoption and the government's positive stance towards the sector, the real estate market is expected to gain back its rhythm." Navin Makhija – Managing Director, The Wadhwa Group expressed that the reduced stamp duty by the State Government at the end of the year 2020 set the momentum for the real estate sector at the beginning of the year 2021. “The new project launches were back in the market as the sector witnessed increasing demand for larger homes with the prevalent work- from-home culture.

Thereafter the second wave of COVID-19, which further hit India in March-April 2021, the economic activity in many states was hit hard and also put the brakes on the recovery of the real estate sector. We saw a lot of engagements happen on the digital platforms as clients were quite comfortable having initial information and project walkthrough online through virtual tours. The relaxation in lockdown curbs saw the buyers visiting the sites again for enquiries. We immediately saw sales volumes coming back to normal due to a boost in the consumer sentiments on the back of favorable Government policies. Initial phase of opening up saw a pent up demand for OC ready projects to avoid any risk of construction uncertainty, but as the inventory start depleting, home buyers skewed towards leading developers who assured them

timely project delivery and quality construction.”

“We have been seeing green shoots of recovery with projects like condominiums or integrated townships being in huge demand. Organised and seasoned developers will get opportunities to take over languished projects through the joint venture/ joint development route. The sector will also witness acquisitions of a portfolio of projects of smaller companies by larger developers,” said Harshavardhan Neotia, Chairman, Ambuja Neotia Group

Amit Modi, Director, ABA  Corp., President (elect), CREDAI Western UP concurred that the year 2021 started on a rather grim note for real estate sector with COVID induced construction ban and labour migration and muted new launches in the sector. “While most industry experts thought the demand for real estate will witness a downfall, entirely contradictory scenario prevailed by the end of the year, bringing positivity for the overall sector. The silver lining by the end of the year was the importance of having a home during such situations getting reinstated for buyers at large. Homebuyer’s are now open to the idea of spending more to add that one additional rooms in their living spaces. Even in affordable housing projects, the layout changes from 2BHK to 2.5BHK, 3BHK to 3.5 BHK have been the most preferred demand by buyers.”

Giving a sense of the year’s performance KT Jithendran, CEO, Birla Estates said, “Historically low mortgage rates, preference for owned homes, rising affordability and select stamp duty cuts led to the surge in demand, which helped the sector  sustain through the second wave of Covid-19 and recover even more quickly in the post-Covid environment. The signs of recovery have also been captured in in the online property search volume in September 2021 that surpassed the past historical peak of September 2020.”

A TRANSFORMATIVE YEAR

The year 2021 was favorable in terms of performance .However it was a highly uncertain year for the industry as such. The changing dynamics of customer preferences has made the sector reinvent its business models. Integrated multi-blend projects, operations in non-metro cities and designing of smart residential or commercial spaces have become the hallmark of 2021.

Sanjay Sharma, Director, SKA, Group believes, the year was very challenging for real estate sector and other economic activities. “Because we have faced the pandemic of the century and all the activities were totally stopped. There was a sense of fear in the mind of public at large. But after lockdown fortunately in real estate, we saw a surge in demand  and sale. We feel customers have understood the importance of home. There is 20 to 30 % increase in sales and we have seen more sales in bigger flats.”

Dhaval Ajmera, Director of Ajmera Realty and Infra Ltd sharing his perspective stated, “The high demand for quality and spacious homes developed by renowned names is witnessing huge traction. Players with a strong balance, positive track record have a strong footing. With the growing demand for self-owned homes, the demand is rising in peripheral areas in cities like Pune and Bangalore. Residential projects that offer the best-in-class services tailored experiences, and provide top-notch amenities have seen see an uptick rise this year.”

Giving an overview of the commercial real estate Subrata KC Sharma, COO - Commercial, Brigade Enterprises Ltd stated, “Most companies recognize the need for increased office space, and we have seen a surge in momentum of enquiries and physical inspection of properties. The robust hiring trend of top IT companies has created an incremental demand for office space. Companies are looking to acquire high-quality properties in prime locations to expand their corporate footprint and to meet employee expectations. Workplace culture is being reimagined and employee wellness, safety, and amenities have been the determining factors whilst shortlisting properties. Companies are willing to pay premium for marquee spaces that enable them to connect and support their employees.”

The year started slowly, but the demand for fully managed office spaces gradually increased, opines Neetish Sarda, Founder Smartworks. He added, “With hybrid offices and work arrangements taking center stage, managed office spaces have gained significant popularity and have become an integrated part of portfolio strategy for enterprises. Office experience has become more critical in the ‘new normal’ than ever, so a lot of focus will be on implementing the right tech solutions in workspaces for real-time insights on space optimization and utilization, leading to overall efficiency."

Sharing his views on sector’s trends in 2021 Dr. Nitesh Kumar, MD & CEO of Emami Realty stated, “Pandemic trends combined with low interest rates, affordability, and other favorable factors expanded real estate growth in metros like Bangalore, Mumbai and Hyderabad along with Kolkata and other cities. As 65% population has fully vaccinated with the second dose and trend of NRI interest in investing in native country is also boosting the demand for real estate. The trend of standalone homes in fully developed integrated township emerging as the preferred choice while high-street and multipurpose commercial properties found favor with investors and shoppers. Now FDI in Real Estate is also bouncing back with a bang and surpassed pre-Covid levels."

According to Rohit Gera, MD, Gera Developments, the market was in an ongoing state of consolidation in 2021. “With the number of new project launches declining, the unsold inventory has plunged to a seven-year low. The surge in residential real estate prices will be due to decline in adequate inventory to meet the growing demand. The growth in premium and luxury segment during such unprecedented and challenging times highlights the willingness of people to upgrade and buy a more premium product. With new project launches at unprecedented lows, the robust demand will face supply-side bottlenecks. This has already propelled a 3.73% surge in property prices on an average, over the past 12 months. In addition to the supply crunch, there is a tremendous increase in the cost structures for developers. The last 15 months have seen slower construction and project launches and as a result, the overhead costs for developers has increased. More significantly, the cost of several raw materials including the most critical items such as cement and steel have risen by 25-40%.”

Ramani Sastri - Chairman & MD, Sterling Developers Pvt. Ltd is of the view that although 2021 had its share of challenges, it also paved the way for the real estate sector to adopt disruptive models to ensure business resilience and agility. “Reviewing the overall performance of the Indian residential real estate market, 2021 shows a definite upswing. Despite a slow start owing to the pandemic, the market did recover as the year went along due to a boost in the consumer sentiments on the back of favorable government policies, necessity for owning a home during times of unprecedented uncertainty, overall improvement in the job market all-time low home loan interest rates along with various schemes from developers which have been instrumental in supporting the residential market recovery. There certainly is positivity coming in from the customer’s perspective.”

END TO A NEW BEGINNING

In 2021, realty stocks had been on a dream run. The NSE Nifty Realty index hit an all-time high and this Bull Run could be just the beginning of many. Investments in real estate have remained resilient despite the headwinds triggered by the pandemic. For the nine months ended September 2021, investments were recorded to the tune of $3.5 billion, almost 75% of the quantum seen in 2020.

There is still a degree of uncertainty with new Omicron strain emerging and businesses are cautious in their approach. However, mid-to-long-term prospects remain highly positive as some experts believe, that there could be a continuation of the 2021 trends boosting the realty sector next year as well.

K-SHAPED RECOVERY IS CERTAINLY WHAT WAS SEEN ON GROUND IN 2021, POLICY INTERVENTIONS AND INITIATIVES BY THE GOVERNMENT LIKE THE LOWERING OF REPO RATE, TAX HOLIDAYS FOR AFFORDABLE HOUSING PROJECTS, AND STAMP DUTY CONCESSIONS AMONG OTHERS HELPED THE INDUSTRY STAY RESILIENT.

YEAR 2021 SAW CHANGE IN DEMAND AND SUPPLY DYNAMICS WITH DEMAND SHIFTING TO CITY SUBURBS FROM CITY CENTERS AND METROS TO TIER-II CITIES.

THE PREVIOUSLY INVESTOR-DRIVEN REALTY SECTOR IS STRONGLY EVOLVING TOWARDS AN END-USER MARKET. YEAR 2021 ALSO PUSHED THE SECTOR TO EXPLORE UNIQUE MARKETING TOOLS TO VIRTUALLY APPEAL TO THE CUSTOMERS

Tags : Amit Modi Director ABA  Corp. President (elect) CREDAI Western UP Manju Yagnik Vice-Chairperson Nahar Group Navin Makhija – Managing Director The Wadhwa Group Harshavardhan Neotia Chairman Ambuja Neotia Group KT Jithendran CEO Birla Estates Sanjay Sharma Director SKA Group Dhaval Ajmera Director of Ajmera Realty and Infra Ltd Neetish Sarda Founder Smartworks Dr. Nitesh Kumar MD & CEO of Emami Realty Rohit Gera MD Gera Developments Ramani Sastri - Chairman & MD Sterling Developers Pvt. Ltd