Property purchase which was a sign of wealth quotient before the pandemic has become a necessity now, writes NAVIN MAKHIJA*
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, wherein the units with extra space/study room/ decks emerged as the best-performing category.
Thereafter, the second wave of COVID-19, which further hit India in March-April 2021, caused a wide surge of infections. Several parts of India were already under strict restrictions in a bid to defeat the second wave of the virus. The economic activity in many states was hit hard due to the second wave of pandemic in India and some important sectors were impacted due to the prevailing situation. It 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.
But soon India's largest vaccination campaign picked up pace and the Indian real estate market again saw a sharp turnaround on the back of a healthy demand. 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 favourable Government policies, necessity for owning a home, all time low home loan interest rates along with various schemes from developers. Property purchase which was a sign of wealth quotient before the pandemic has become a necessity now across age groups. Millennials, who favoured rental as an option started looking for an escape from a lifelong rental web and realized the importance of owning a home due to higher affordability on account of reduced gap between loan to rent. These factors helped drive demand and boosted sales in the festive season and were the key in ridding the sector of the ills caused by the virus.
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 too started preferring organized players having a good track record of execution as they were more skewed towards leading developers who assured them timely project delivery and quality construction.
Outlook for 2022: Real estate industry has played a dominant role towards the country's economic prosperity. In the coming months, the expectation of the buyers and developers ought to rise as the sector has witnessed lots of new government policies. These policies will help the industry to be more organized and will provide a boost to both the residential as well as commercial real estate segments.
The Government has shown adequate support by bringing in reforms in policies and creating online windows for submission but we need local authorities and departments like CFO/HRC/MCGM to create a Single Window System for approvals. These initiatives will help to bring down the cost of projects, ensure timely delivery which in turn would be beneficial for the buyers and meet the actual objective of RERA.
We have witnessed a very robust demand in the past few quarters on the back of improved consumer sentiments. We anticipate the Government to announce incentives that will propel the growth of the sector such as introducing tax breaks which will increase public spending, less transaction cost, etc.
Developers should focus to complete the existing projects, sales will happen as the buyer gets to see development and the project reaches a close to completion stage and therefore the demand for good developers and ready-to-move-in inventory will continue. Trusted and reputed developers have witnessed relatively better sales in mid-income and affordable housing segments and will continue to dominate in 2022 as well. (*The author is Managing Director, The Wadhwa Group).