As they say, every dusk sets the stage for a new dawn. The past couple of years has been very challenging for the economy at large. However the real estate industry saw a huge demand for housing and despite the inflation in construction costs, the market has been performing well. Let us decipher the factors which have lead to a strong rebound of the real estate demand in India.
Encouraging sales numbers and new launches
Real estate markets across India have shown resilience and succeeded in maintaining their position in exceptional years hurt by pandemics and blockades. While the housing sector showed a strong recovery throughout, the commercial real estate showed more stability in late 2021.
The residential segment achieved unprecedented growth, with sales up 51 percent year-on-year, reaching 232,903 units among the top eight cities in the country.
Knight Frank India reported that new homes launched in 2021 also increased 58 percent to 232,382 units. It was mixed for the commercial office segment. Although the rent volume was recorded at 38.1 million m², it remains at the same level as in 2020, clearly showing the market potential in terms of leasing.
Affordable Prices
Owing to the pent up ready inventory, the real estate prices are expected to rise gradually. The potential homebuyers who were waiting for the pandemic to get over are keen on investing in the real estate sector and considering the prices are still reasonable with developers are offering great discounts to serious buyers. Moreover, the continued push of the Indian government on the affordable real estate sector is driving the demand further. Naturally, this demand will aid in solid sales for both the real estate sector across India in 2022-23.
Buoyant Commercial and office spaces sector
The coronavirus pandemic had confined India Inc to the homes and the office’s space sector suffered a severe blow. However, as the Coronavirus has receded and the companies have started resuming operations from offices, the recovery of commercial real estate is actually encouraging and aiding in a full-scale recovery.
If the latest data compiled by the real estate consulting firm Cushman and Weikfield is referred to, the net office absorption is expected to rebound strongly, at 30-35 percent, and will reach up to 29-31 million sq ft (MSF) by the end of 2022. Owing to the resumption of office activities, the fresh supply could reach 45-46 MSF in 2022 alone. These are very positive signs of a recovering and resurgent real estate sector across India.
Government Push
Looking at the challenges faced during the pandemic, the Indian government is refocusing its commitment towards the ‘Housing for All’ mission. The recent extension of the Pradhan mantra Awas Yojana (Gramin) up to 2024 displays continued support of the government. In addition to this, the focus of the exchequer towards the Tier II and Tier III cities has increased the confidence of the real estate developers in launching new projects in such cities. This will boost the housing demand manifold.
With the Credit Linked Subsidy Scheme, the homebuyers of the economically weaker sections are finding it easier to acquire a home and this sentiment will aid in a robust recovery of the real estate sector in 2022-23.
Conclusively, the recovering housing demand, reopening of offices and government support towards the affordable housing segment are collectively helping in a solid recovery of the real estate sector across India. The year 2022-23 will be the year of recovery for the property market of India.
By – Subhash Goel, MD, Goel Ganga Developments
