In the year 2022, the Indian real estate sector is set to pivot towards different models of development and business, resetting to the new way of living. The learnings and experiences gathered from the year of 2021 presents an overall positive outlook for the upcoming year.
While attaining an industry status will continue to be the most awaited amendment for the real estate sector, some other revisions that the government should instigate during the budget 2022 to propel India's realty sector are - the introduction of a single-window clearance system for real estate project approvals & other administrative functions, authorizing REITs to invest in residential projects, relaxing provisions around investing in REITs, tax rebate on housing loans and GST waiver for under-construction properties.
Increase in FDI inflow, expanding government-backed stress funds like SWAMIH and introducing new mechanisms to ensure ease of acquiring funds for real estate projects along with incentivising both rental as well as affordable housing sectors & incentivisation of private investment in the affordable housing sector will bring cheer to the sector.
2022 OUTLOOK FOR EAST INDIAN REAL ESTATE
The Eastern India realty markets like Kolkata and Bhubaneswar are seeing a revival and steady growth with the adaptation of innovative digital marketing, construction technology and timely government reforms put in place.
The two percent stamp duty rebate has worked wonders for Kolkata The registration of mid and luxury residential property along with plotted developments has been growing rapidly. Bhubaneswar, considered a conservative market too is witnessing an increasing consumption trend with government focus on developing transportation infrastructure that is fuelling growth in this region.
According to Basant Parekh, Managing Director, Orbit Group, the Year 2021 was a crucial year turning into a boom for the real estate sector. “We have seen the demand for residential as well as commercial spaces increase at a phenomenal pace & the rate of interest becoming very affordable. The demand for warehousing & other related sectors has also witnessed positive growth despite Covid haunting upon us on and off. The Government has also given certain incentives and relaxations to the real estate sector by reducing stamp Duty as well as Circle rates which have given an additional thrust to the real estate sector.”
Siddarth Pansari, Director of Primarc Group agreed, “2021 was a year that provided positivity & a promise of a better future for the real estate. The demand for better quality & bigger spaces both in residential and commercial segments carried forward the recovery process for the industry. 2021 was marked by a robust housing sector demand. Prices, which had been a constant till 2020, started seeing an upward trajectory.”
Kolkata has undergone a facelift post the various social and civic Infrastructure development projects taken by KMC. Basant Parekh sharing his positive sentiments stated, “From 2021 we have seen the overall real estate market taking a revival path and I believe that it will continue to
grow further for a few years to reach its peak. Quality real estate by good brands would lead this growth story followed by other players. The neighbourhood of Kolkata is also witnessing unprecedented growth and I feel this will continue in the time to come. Orbit Group’s strength has been predominantly in the luxury segment which we shall continue to focus on & at the same time we have ventured into an affordable segment for residential flats within the ‘one crore’ category and endeavour to upgrade the sector by adding a luxury flavor to it. We are in process of launching luxury as well as affordable Row- Houses, Bungalow projects in and around Kolkata along with certain mixed use developments in Newtown, Rajarhat & Joka.
Our thrust and focus would continue to provide quality and luxurious homes branded with our philosophy of maintaining healthy and personal relationships synonymous with our tagline ’Rishton Ki Mithaas’.”
Siddarth Pansari added, “There is an overall demand of bigger & quality spaces because a hybrid world is here to stay. With work from home, online classes/tutorials – the need for space has increased and is here to stay. We at Primarc, strongly believe in working together with all our stakeholders, bringing progress to each one of them. Our core focus going forward will be the Residential Segment – and we to intend to create a balanced portfolio of MIG, Upper MIG and luxury. We also want to work on different segments including Industrial/Logistics Park, Row Housing and Second Homes. Because of this and allied reasons, the overall outlook of the sector seems buoyant for the year 2022 with steady and consistent growth. There is now an equilibrium of demand and supply. Prices mostly will be going north because of the impending rise in cost of raw materials. We hope for a Government mechanism to control the prices of raw materials, especially steel and metals. Credai has taken up this issue with the different statutory authorities. Alternatively, there must be a mechanism, wherein we are permitted to share and or pass the burden to customers. Also we hope for continuation of the PMAY interest subsidy of Rs 2 lakh and increasing the upper limit for affordable housing definition from 45 to 75 lakhs.”
2022 OUTLOOK FOR WEST INDIAN REAL ESTATE
The major real-estate markets of cities of Western part of the country have showed a great amount of enthusiasm with respective state governments taking proactive measures in terms of waivers and concessions to the industry.
The key real estate markets in Mumbai, Pune and Gujarat have already touched the pre-Covid levels and the year 2021 has been one of the breakthrough for the real estate industry which bounced back after showing resilience, innovation and performance and the same sales momentum will continue in the year 2022. Renewed buyer confidence, reduced home loan rates and incentives offered by the developers will be instrumental in 2022 in supporting the realty market recovery.
Dr. Niranjan Hiranandani, Vice Chairman National- NAREDCO, and MD Hiranandani Group sharing his thoughts said, “In the transition from the year 2021 to 2022, there has been a quick turnaround - from ‘revival’ in 2020 to ‘record-break recovery’ in 2021. Indian real estate has shown surprising resiliency post pandemic shock waves, boost in sectoral growth is anticipated with innate demand for housing, uptick in Warehousing and Data centers demand pan India and rising GDP growth will infuse fresh lease in beleaguered commercial real estate segment for the year 2022."
Summarizing the year 2021 for the sector Deepak Goradia - Vice Chairman and Managing Director, Dosti Realty expressed, “In the year 2021, the real estate sector with policy support, low home loan interest rates and attractive opportunities, witnessed an upward trajectory owing to the pent-up demand. We also saw how homebuyers’ requirements evolved due to the impact of the pandemic. As work from home and online education became the norm, the need for well-planned/designed homes, amenities, and open activity areas increased significantly. All in all, the past year saw an increasing number of fence-sitters turning into home buyers. There was a mix of first-time home owners, those upgrading to larger spaces and people investing in a second home. The government had been extremely supportive in understanding the issues faced by the developers and backing the industry through a policy framework, stamp duty rate cuts, etc.”
While the pandemic initially impacted realty, we saw a significant recovery in 2021, Vishal Jumani, Managing Director, Supreme Universal concurred that while the pandemic initially impacted realty, it saw a significant recovery in 2021, with home sales reportedly rising 71% YoY, and MMR at the top with 76,400 units sold. “People recognised the value of not just homeownership, but also larger spaces that promoted privacy and wellbeing. Pent-up demand, low home loan rates, and stamp duty concessions encouraged buying. Ready inventory was in demand, but under-construction property from Grade A developers also drove the market. The office market saw dramatic changes too, with employers seeking safe, hygienic workspaces and exploring hybrid models of working, and hub-and-spoke formats. IT continues to propel the office market; one report I read said it accounted for 49.2% share of leasing in 2021. Greater transparency and sophisticated digital marketing have also led to customer confidence and ease of buying. While we will continue to focus on premium properties across both Mumbai and Pune, which are seeing greater demand, we will also explore new micro-markets and formats like plotted developments and villa properties,” he said.
Mumbai developers are optimistic that real estate industry in MMR is going to improve further in 2022 considering the velocity witnessed in 2021. As per Dr. Niranjan Hiranandani, outlook for Hiranandani Group continues to follow its growth trajectory with healthy traction and effective demand momentum across segments and geographies. “The company has surpassed previous high records in registering sales performance and future pipeline exhibits robust performance with plans, finances, and execution capabilities already in place. The company growth strategies for 2022 are largely about expanding the portfolio in residential, commercial, high street retail and logistics with grade A assets in hub and spoke locations like Thane and Panvel, among others.”
Deepak Goradia expressing optimism said, “We envisage that new launches in the city will rebound sharply owing to demand for residential homes as well as the recent government order on the flamingo issue. With over 6 million sq. ft. of projects under construction, Dosti Realty’s strategy for the next year is to foray into different development avenues as well as cities eg Pune. The vision is to have a diversified portfolio that caters to the affordable, mid income and luxury segments as well as provide supporting social infra to our large scale projects in the form of shopping, schools, commercial/IT premises etc. The upcoming Union Budget is an opportunity in the hands of the Government to boost the savings and for the benefits of the Home buyer, we would request the Government to increase the exemption limit under Section 24 from current Rs 2 lakhs to 5 lakhs, Removing Home loan principal repayment from 80 C into new section for additional deduction, Reduction for long term capital gains on sale of house property to 10%, Introduction of 80 IA related to increased investment in IT Parks and Infrastructure etc. These moves will create more income in the hands of the home buyer and enable to purchase his own dream home.”
Mumbai and Pune have been top-performing real estate markets, contributing to almost 50% of home sales in India and Vishal Jumani is confident of the growth of these cities. “Both are hubs of economic activity, with diverse business interests and IT strengths. Maharashtra is also the first to have successfully implemented Real Estate Regulatory Authority (RERA), boosting buyer confidence. Launches by reputed developers and improved infrastructure and connectivity are also growth drivers here. I believe that as travel restrictions ease, more NRIs will seek property in these cities. While the government has recognised that real estate is a key economic driver and has offered support through incentives such as reduced premiums on development in Maharashtra, a great deal needs to be done. Industry status for the sector, for instance, is vital. Apart from making low-cost credit available, this will lead to jobs and business opportunities. The government should also consider a reduction in GST for commercial spaces from the current 12% and a GST waiver for residential real estate. Currently, homebuyers can avail of a deduction from their total income up to a maximum of Rs 2 lakh under Section 24. This should be revised and increased to build healthy demand.”
2022 OUTLOOK FOR NORTH INDIAN REAL ESTATE
The Delhi NCR real estate market is getting back on track, and buyers and investors are regaining faith in the market's ability to grow. During the fourth quarter of 2021, 2,708 residential units were launched in Delhi NCR. The forthcoming quarter is expected to see several long-awaited housing projects by prominent developers in Delhi, Noida, Gurugram and even Chandigarh, Mohali and Jaipur. In terms of office space, Delhi NCR is the most dominant region and it has recently witnessed enormous commercial realty expansion. It is also one of India's major cities with a high demand for data centre real estate space, and tier 2 towns like Jaipur may soon follow suit.
“Despite the volatility, 2021, was 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,” elaborated Prashant Solomon, Managing Director, Chintels India & the Hon. Treasurer, CREDAI NCR. He added, “Policy Interventions and initiatives by the government such as lowering of repo rate, tax holidays for affordable housing projects, and stamp duty concessions among others helped the industry stay resilient.”
Deepak Kapoor, Director, Gulshan Group added, “The year 2021 was dedicated to a rapid recovery, with only positive news for the sector coming in. We've seen more sales of larger homes as everyone understood the need for more space. Larger homes in projects that could cater to the residents' well-being were in high demand, just as they were following the first wave. The year 2022 will give the sector the much-needed boost it has waited and worked so diligently. We too are diversifying our portfolio by entering the commercial and retail sectors. By 2023, we hope to complete five million square feet of construction, including 9.5 lakh square feet of luxury homes and 4.75 lakh square feet of commercial space.”
Vipin Modi, Director Sales, SAYA Homes believes that the year 2021 had been challenging for every individual and organization and it has rewind the growth by almost a decade. “The Indian real estate industry is one of the most impacted pillars of the economy, which runs on a high cost machinery and with passage of time, losses keep mounting. But as the pandemic curb got controlled, we decided to bounce back with jet speed and hence opted new horizons of business like, non-metropolitan cities and neighbourhood commercial spaces to attract aspiring entrepreneurs. We decided to align our business approach with the national agenda of promoting start-ups or self-sustainability and our projects are getting overwhelming responses. Recently, our landmark project Saya Gold Avenue got clearance on allegations from the High Court,” he shared.
Expressing his outlook for the year 2022, Prashant Solomon said, “The regions ability to provide a well-developed ecosystem consisting of all necessities from renowned educational institutes to best in class hotels & restaurants have also helped to further strengthen the region's presence as one of the most fertile realty hotspots across the country. For the year 2022, our focus will be on commercial projects & we expect to maintain a steady policy of growth.” Deepak Kapoor expressed that the numerous subsidies offered under government policies have greatly helped in the recovery of the real estate market, but other variables, such as the real estate sector's industry status, require attention to produce a substantial impact in the market. He said, “We expect the Finance Minister to include stamp duty in the real estate sector as part of the GST and rationalize it. It would also be ideal if the GST for construction goods such as cement was changed to make them more affordable. Industry expects an increase in the limit of tax deduction given to home loan borrowers to Rs 5 lakhs and also increase in the limits of affordable housing.”
2022 OUTLOOK FOR SOUTH INDIAN REAL ESTATE
Chennai, Bengaluru, and Hyderabad are important property markets in South India. Between 2019 and Q3 2021, these three cities accounted for 30% of all real estate sales in India. These locations will continue to be the most popular real estate destinations in 2022.
In 2022, Chennai, Hyderabad and Bengaluru are also predicted to be larger marketplaces for commercial segments including warehousing and industrial parks. Owing to increased demand for space from IT occupiers and higher pre-commitment levels in some future developments, office space rental growth is expected in the commercial sector by H2 2022.
Bijay Agarwal, Managing Director, Sattva Group shared that there were several lifestyle changes amongst buyers that occurred as a consequence of the pandemic and acted as catalysts for peak in demand for affordable housing and ready to move-in apartments and residential properties, in Tier 2 and 3 cities. “The pandemic accelerated the demand on the industrial front, particularly for warehouses, data centers, and distribution centers. This trend opened new pathways for the sector to grow, in the coming years. Sattva Group has diversified, sensing opportunities in new asset classes by venturing into co-living (student housing, young professional housing, etc), co-working and data centres.
Expressing similar views, Ashish R. Puravankara, Managing Director, Puravankara Limited stated, “In 2021, the overall performance of the Indian residential real estate market displayed a clear upward trend. The luxury and ultra-luxury category especially saw tremendous demand. The homebuyers in this segment were quick to take advantage of the current favourable market conditions, viz., reduced stamp duties and decadal low-interest number of customers. In the last three years, we diversified sensing opportunities in new asset classes by venturing into co-living, co-working, warehousing, and also data centres. In our data center portfolio, we have completed over 140 MW worth of projects comprising of 2 data centres, one in Mumbai and the other in Bengaluru, and have plans to enter Chennai and Pune markets. Furthermore, this year we have also entered into the affordable housing segment and have 3 new launches planned in this category in Bangalore. Our growth strategy for the year remains to put up a well-balanced offering for our consumers and deliver differentiated projects in the residential and commercial space.”
Ashish R. Puravankara added that the South Indian real estate market has been a growth engine for the Indian real estate sector and will continue to lead the real estate recovery in 2022. “We are confident that the robust momentum in the residential markets will continue in the coming years. Moreover, Bengaluru and Hyderabad have been the fastest-growing metropolises to have witnessed a boom in demand for office space and quality homes in the cities. Large MNC offices and the booming start up ecosystem have led to talent migration from across the country (to these cities). This has, in turn, spiked demand for quality residential projects with value-adding amenities. We plan to develop over 14 million square feet this year. The development will be spread across three of our brands, i.e. 5 million square feet, will be launched under Puravankara Limited, which caters to premium and luxury projects. Another 5 million square feet will be launched under Provident Housing Limited, our brand catering to the affordable housing segment. We will also develop 4 million square feet under our brand Purva Land, our plotted development arm. The launches will be across 9 cities, these being Mumbai, Pune, Chennai, Bangalore, Kochi, Hyderabad, Mangalore, Coimbatore and Goa.”
As per Bijay Agarwal, 2022 will be the year of growth and resurgence for the real estate industry that will be led by the high office demand across leading markets in South India. In addition to this, momentum for e-commerce, logistics, data centres, and warehousing, will add balance to this growth. Co-working and co-living will also see increasing demand and soon become a first choice for a lot of tenants and migratory population. The expanding IT parks and growing manufacturing, biotech, pharmaceutical, and automobile industries, are some of the key factors that will drive the growth of re The government must acknowledge the important role played by the sector and make deep policy reforms to accelerate growth, in realty demand. It is expected that the Union Budget 2022, will play a supportive and enabling role. Overall, we are very positive about the budget and that the government and regulators will continue to provide fiscal and monetary support to the industry. We hope for positive-looking policies, there-by enabling better recovery and further growth of the industry.al estate investments in the South.”
For the upcoming 2022-23 Union Budget, Ashish R. Puravankara is hopeful to see an increase in the limit of home loan interest deduction for a tax rebate from the current ceiling of Rs. 2 lakh to at least Rs.5 lakh. “Our expectations include - a revised definition of affordable housing, new rental housing provisions, and a reduction in long-term capital gains tax for real estate. A tax exemption for Real Estate Investment Trusts (REITs) investments starting at Rs 50,000 will be a welcome change. This should be carried out while allowing tax-neutral consolidation of businesses through mergers or amalgamation to help homebuyers (especially in the affordable segment). We expect the upcoming budget to give the much-needed impetus to infrastructure development, which will be especially beneficial for the housing market. We are also optimistic about the RE sector receiving an industry status. This will help organise the sector and enable developers to access loans at lower rates.”
Sharing his hopes from the upcoming budget, Bijay Agarwal stated. “Few key relaxations in taxes to boost the real estate sector and rise in FDI inflow are among some of the expectations from the Budget this year. A multi-dimensional approach focused on availability of improved & low-cost credit, through priority sector lending. Holistically, the current industry scenario has made real estate development costlier, and it is challenging to manage the cost and the funding thereof, from time to time. Hence, few changes in GST become imperative for creating a positive impact on all real estate asset classes. The mandatory changes expected from Budget 2022 is: waiving of GST on Transfer Development Rights (TDRs) (both government allotted and privately purchased) and Joint Development Agreements (JDAs), new provisions for encouraging rental housing, ease of taxation and cost definitions in affordable housing, single-window clearances, input tax GST credit for Commercial real estate and additional interest rate deduction on home loans. We are also hoping to see some relaxations in provisions for REITs in commercial real-estate and reduction of income tax burden on long-term capital gains. Furthermore, granting infrastructure status to the real estate sector – as this will help build liquidity in the industry and decide supply-side costs.”
WHAT LIES IN STORE
The year 2022 has once again started with uncertainties over the impact of new variant of Covid on economy. However, the real estate segment has seen rekindled demand. For it to sustain its gradual recovery, it will need the government’s consistent support through policy initiatives and ease of doing business.
As the developers’ from across the country have expressed, with the learnings of the last two years the sector is well-prepared for the future and hope to jump-start 2022 on a high note with steady revival and positive future growth.
The forecasts for the year predict it to be an exciting year with the recent volatility in the stock market, as well as the currency benefit of the rupee-dollar exchange rate, making real estate attractive for both domestic and NRIs buyers as well as investors. Real estate experts see 2022 as a period of transformation with even more investments in technology and digital channels and attracting of foreign moolah.
“The Union Budget 2020-21 would be a real estate friendly budget where we expect certain benefits to be extended and/or announced for the mainly affordable sector. No additional burden on Real Estate is foreseen which itself will leave a further surge in the demands,”- BASANT PAREKH
“For the first time the industry has seen an exuberant rise in prices of raw materials ranging from 10% to the north of 40%. As inventory has already been sold and as per RERA – the price hike can be passed on to the customers. This puts us developers in a very vulnerable position.”- SIDDARTH PANSARI
“Industry and Homebuyers are optimistic with a budget wish list that will augur demand creation, favourable investment climate, enhance liquidity funnel and rationalization of taxes. It also pegs hopes on measures that will optimize affordable and rental housing spectrum to meet the goal of Housing for All.”- NIRANJAN HIRANANDANI
“India has been ranked as the fifth-largest recipient of Foreign Direct Investment, and Indian REITs have proved resilient during the pandemic, gaining in popularity. With money returning to financial institutions and turning to the real estate industry, I am confident that this will fuel growth.”- VISHAL JUMANI
“The trend of homebuyers seeking homes in localities with access to better healthcare services, security, and open spaces is going to continue and will be the driving force behind rapid sales. Also overall in 2022 the demand for commercial spaces may increase as offices are expected to resume.” -DEEPAK GORADIA
“Delhi NCR has always been one of India's most influential real estate markets & it will continue to dominate the charts in 2022 as well. The region strengthened its presence by providing exceptional ROI & future security.”- PRASHANT SOLOMON
“The market sentiment in real estate is much more positive this year when compared to the two pandemic years gone by. Owning a home is the best possible asset in present times due to the long term capital appreciation. Amid the third wave, is the perfect time to provide industry status to the real estate sector.” DEEPAK KAPOOR
“There is a forecast of robust revival in housing demand this year and we also anticipate a favourable and enabling Union Budget this year focussing on a few key tax benefits, ease of liquidity, GST exemptions, and raw material price reductions. It is the right time to provide industrial status to the real estate sector so that it may access lower-cost credit facilities from banks.”- VIPIN MODI
“The pandemic ignited a new era of development for the real estate sector, with an increased focus on digitization, to meet the growing market demand. The industry transitioned by implementing new methods and adapting, innovation, and digital transformation to change the way we live and work.”-BIJAY AGARWAL
“Overall, 2022 will see a significant shift in customer buying patterns and homeowner aspirations. As the home buying process becomes increasingly digitised, customers will strongly prefer branded and reliable developers who can anticipate their needs and offer tailor-made solutions.”- ASHISH R. PURAVANKARA
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