Will Current Boom in Real Estate Continue in India 2022?
Table of Contents
Will the Current Boom in Real Estate Continue in 2022?
- The real estate sector revive and restructured post-COVID-19 pandemic. There are certain changes among people and a trend started to buy a piece of residence, in the urban area.
- Market is known to follow so many trends at a time but what we saw during the first stage of the pandemic is financial assets erosion like mutual funds, equities, metals, LIC, and many more, but only the real estate sector was handled it. All people who used to live in rented residences faced a lot of difficulties in paying rent during the pandemic, these situations make them promising for their future to buy their own residences.
- The problems regarding these factors have seen growth in residential real estate, while the movements of people towards urban areas are noticeable. The second quarter of 2020 was a complete failure for the real estate sector because the customers and architects don’t know how to deal with this situation, so the real estate sector made different ways to finish this problem and initiate the growth trajectory again.
Exemplary Revival
- The establishment of 2.90 lakh units in around the 7 major cities all over India, from the second quarter of 2020 was very encouraging and almost 2.83 lakh real estate deals calculated over all the branches. But there is a continuous demand for residence, instead of the two most dangerous waves of COVID-19 which spread throughout the nation.
- There is the overall development of the real estate was seen after the first wave but, there was a short pause in the 2nd quarter of 2021, the revival in the 3rd quarter was upstanding, and the volumes in sales almost doubled as compared to the previous quarter.
- In spite of increasing sales and development in this sector, there is only slight growth of 3% seen every year as per the 6.55 lakh projects up to the 3rd quarter of 2021. After going through good and bad times currently, the levels of the real estate list coincide with the 3rd quarter of 2019.
- However, We talk about housing real estate is most steady and slow in terms of price. This is possible due to the architect’s proper seriousness in controlling and keeping the expenditures in control even in the case the market has obtained momentum. Architects are giving more attention to building progress and liquidating the available inventory.
- The increasing rates of cement, steel & raw materials have given continuous bullying to the developers. As per the current situation, the price increment by Four percent yearly in the 3rd quarter of 2021, the architects are aware about the sudden jump in rates will interrupt the demand cycle.
- In many small regions, real estate potential has been realized, thanks to big real estate initiatives in different cities all over the country. Industrial Parks, Bharatmala Pariyojna, DMIC, corridors, and various expressways being directed, as well as new ports, and flyovers, played a major role in the creation of new real estate markets in all investment classes.
- As a result logistics, warehousing, and industries will improve in witness with these projects, catalyzing the demand for more residential real estate.
Urban Demand
- There is a noticeable increase in housing demand in smaller areas within big urban cities, as their connectivity to city centers and financial hubs has been greatly improved. The metro rail network is expanding across large cities, allowing for improved connectivity to smaller markets.
- As a result, there is a growing demand for housing in these newly developed landscapes, as seen by the increasing number of residential developments.
- The smaller locations accounted for over 68 percent of total takeoffs in the third quarter of 2021, and this number is likely to climb further.
- Meanwhile, in terms of takeoffs and income, urban markets like the Mumbai Metropolitan Region (MMR) and Pune have seen the highest increased share of real estate demand in the last three years.
- Customers are confident because of the broad economic foundation and the existence of various extensive and detailed developers in these municipalities, as well as Maharashtra’s status as the first state to successfully implement the Real Estate Regulatory Authority (RERA).
- The government’s initiative to lower stamp duty last year also aided in improving lodging demand. Even after the advantages were removed months ago, the impact of these policy changes may still be observed in the resurgence of housing sales.
- During the years 2019 to 2021, the western zone accounted for 46 percent of takeoffs and 48 percent of deals in India’s top-tier cities. To keep the demand & supply in balance, the architects are spending specifically on supply.
- The west zone’s share of new startups has dropped from 52 percent in 2019 to 41percent in 2021. As a result of the government’s motive and low national mortgage rates, the sales share has climbed from 47 percent to 50 percent over the same time period.
- The most dynamic market is in the south, which includes Bengaluru, Chennai, and Hyderabad. Between 2019 and the third quarter of 2021, these cities accounted for 36% of all takeoffs and 30% of all agreements. While the percentage of sales has remained consistent at 30% over the years, the percentage of startups has increased dramatically, from 29% in 2019 to 42% in the third quarter of 2021.
- This increase in the percentage of new launches is largely attributable to increasing supply in Hyderabad, particularly in the last two quarters, as many projects were approved.
Real-Estate Sales in Focus
- During this time, the percentage of real estate transactions and project launches in the north may have decreased. NCR is responsible for about 14% of launches and 17% of total revenue. In 2019, NCR recorded 15% of all startups, but that number has dropped to 12% in 2021. During the same time span, real estate sales dropped from 18 percent to 15%. The situation is set to change in the future as a number of large and listed architects make a dash for the NCR
- The demand for residential real estate is expected to grow in the coming years. Following the conditions created in 2015-16, the residential segment has seen a steady rise in 2019. Nonetheless, in 2020, the COVID-19 pandemic put a temporary halt to real estate development. The V-shaped recovery that followed confirms that the current growth trajectory will continue through 2022 and beyond. If interest rates rise, the rates where grow at a manageable percentage.
- With shifting demographics and the recognition of the need to possess a demanding asset, the development of residential real estate across the country is now proven as a dynamic market. If a result, as the market grows and the financial condition improves, prices might develop dynamically.
IFCCL is a well-known and well-respected name in the fields of valuation consulting and allied services, insurance survey and loss assessment, insurance advisory services, and corporate finance and deal advisory.
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