Rising Trends That Will Shape Real Estate In 2021

The residential segment was the only silver lining in an otherwise bland 2020 for the real estate sector. After staying on the back foot at the beginning of the pandemic, the sector was successful in deflecting the covid curveball, demonstrating remarkable resilience and registering huge sales in Q3 and Q4 2020, which has set the tone for a promising recovery in 2021.

The housing market is clearly burgeoning; as per industry sources, almost 80% of prospective buyers are looking to acquire a house within the next one year, while 65% of the buyers prefer ready-to-move-in houses in 2021. The home ownership sentiment is still strong, induced by decision drivers such as flexible payment plans, low interest rates, discounts and the ease of home buying with the increased use of technology.

As homebuyer confidence nears record highs, the extension of tax benefits for affordable housing and affordable rental housing projects along with interest deduction for a year in the recent budget and stay on repo rates by RBI will keep the buyer traffic strong, given favourable demographics, shifting geography of housing demand to lower-density markets, stamp duty cuts in Mumbai, Karnataka, Delhi NCR and low home loan rates.

Proptech companies will evolve and innovate: Proptech has played a strategic role in helping real estate companies enable business continuity remotely during the pandemic. Property owners and developers are increasingly relying on emerging digital technologies typically associated with proptech to deliver smarter and more efficient selling, leasing and property management experiences. This trend will see significant traction in the coming months as homebuyers have moved to online real estate portals. Developers have realized that their future looks bleak without the proptech component, whereas proptech firms will look to evolve and reinvent to accommodate all changes coming their way.

Housing demand momentum to sustain: The splendid performance of the residential sector in Q3 followed by an even better execution in Q4 where sales zoomed by 51% q-o-q in seven key markets are tell-tale signs that this positive momentum will continue in 2021. Affordable housing will play a key role in upping the ante and pave the roadmap for a vibrant housing ecosystem. Affordable rental housing projects will flourish with the tax exemption. Mid-segment and luxury properties will attract good activity as buyers are more inclined towards upgrading to larger multi-purpose usable spaces.

Real estate consolidation to accelerate: Consolidation of demand towards financially stable developers with a good track record, execution capabilities and high-quality projects will expedite in 2021, and they will continue to gain substantial market share, as limited funding availability, squeezing margins and shifting preferences towards bigger brands will push smaller players out of business. The consolidation will make the sector more organized and bring the premium segment into more focus.

Property prices to witness marginal rise: Despite an economic recovery and vaccine roll-out, chances are slim that property prices will rise this year. As per industry reports, the total unsold inventory in the top eight cities stands at 9.5 lakh units and it will take more than a couple of years to reduce it to a sustainable level, even though sales have surpassed new launches. However, we may see a marginal rise in prices in some pockets.

Suburbs and tier-2 property markets to boom: The desire for a better lifestyle, remote working culture and reverse migration have led to an increased demand for homes in suburbs and tier-2 cities. Homebuyers are scouting for homes that are priced 30-40% lesser than those in the metros. Besides, the five-year rental outgo for tenants living in cities is equal to 30-50% of the property cost in smaller cities. This rationale for homeownership will lead to a boom in housing demand in these satellite cities.

In all, 2021 will be a harbinger of positivity, growth, innovation and investment for the residential real estate sector.

(Source: Livemint)