As we move into 2022, the residential real estate industry will continue to pave a new path of growth, innovation, technology, and investments. The pandemic turned out to be a silver lining for residential real estate. The last two years have seen phenomenal growth within the sector and a transformation in the product, demand, as well as supply. It has certainly resulted in consolidation and ensured that only credible players remain in the mix largely.
2021 – The golden year for residential realty
Luxury housing to grow further – In 2021, we witnessed that the luxury homes have been a preference for most buyers. More than half of the housing demand in leading markets is driven by premium projects. The coming year will offer developers a chance to focus on optimizing cost, despite the increasing input prices; by deploying technology and bringing innovation to their offerings.
Adapting to the digitization wave – The sector has also experienced a digitization wave on a big scale. Developers resorted to digital technology with a goal to improve productivity and profitability. New-age digital transformation tools and advanced enterprise technologies such as internet of things (IoT), ERP, Robotics process automation (RPA), Analytics for decision making & mobility solutions and data science are helping developers with negotiations, prompt asset valuation, and increasing visibility and productivity. Virtual walkthroughs have also been a prominent tool used by developers during the pandemic.
Redevelopment: Driven by the heightened need for home ownership, residential sales have gained momentum. In prime cities and locations, there is a rise in redevelopment projects as there is surging demand for lifestyle up-gradation. Redeveloped buildings ensure that the entire layout is redesigned and residents get better facilities and a larger carpet area. Also, it helps in keeping up with supply flow in desirable neighbourhoods. The importance of location has taken precedence like never before in the past year after the population’s experience during the lockdown.
Pre-Launch projects gaining popularity – In the previous year, there was a rise in demand for pre-Launch projects across India. An increasing number of credible developers with good track records have announced projects; which gave homebuyers the confidence to bag the opportunity to make a pre-launch investment. Couple with other incentives, this gave a massive appreciation prospect to many.
Support to the industry by the Government – The government has introduced and streamlined policies to boost the industry and encourage developers. Residential sales velocity has been observed across the key markets of Mumbai, Pune, Hyderabad and Kolkata. Mumbai has already crossed 1 lakh home registrations in the year. The stamp duty rebate in some states, soft interest rates, better than expected economy recovery has been the prime influencers in ushering positive sentiment amongst the home buyers.
Outcome on Sales – In addition to the need for a tangible asset and a necessity in times of crisis, buying a home became a priority due to great incentives like low interest rates and stamp duty rebates. There was an increase in residential sales in seven cities across the country. Mumbai recorded a record-breaking home registrations in the year 2021, leading to a celebratory close for all stake holders and a promising year ahead.
Time ahead in 2022
The real estate sector contributes to the country’s GDP; set to go up by 10% till 2030; efficiently contributing around $1 trillion to the economy, as per a report by Knight Frank. Residential sales momentum is expected to continue in 2022 as prospective homebuyers’ preferences for bigger homes, better amenities and attractive pricing will keep them interested to seal the deals.
The current industry trends indicate that the future of Indian real estate not only looks bright but is set to do better in the coming years. Several dynamics will continue to impact the multiple touch points of the real estate industry; such as prices, buyer behavior, demographic shift, cost of raw materials in general. The need for a desirable lifestyle, remote working culture, and reverse migration has led to an increase in demand for homes in the prime areas. This has also created a chance for real estate developers to dig new opportunities and offer great home experiences to satiate the modern consumer’s demand and look for new avenues. Hence, properties with a consumer experience centric approach will lead the way for the industry in the coming years.
(Ram Raheja, the author of this article, is the director of S Raheja Realty)