Make a wise decision to invest in Indian Real Estate Market in 2020 – 21
Considering housing loans are cheaper and property prices are stable, it makes perfect monetary sense to buy end-user property in 2020. The same is true for you to plan and earn rental income by investing in property.
The real estate sector is one of the most globally recognized sectors. Real estate sector comprises four sub sectors – housing, retail, hospitality, and commercial. The growth of this sector is well complemented by the growth of the corporate environment and the demand for office space as well as urban and semi-urban accommodations. The construction industry ranks third among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of the economy.
It is also expected that this sector will incur more non-resident Indian (NRI) investments in both the short term and the long term.
By 2040, real estate market to grow to Rs 65,000 crore (US$ 9.30 billion) from Rs 12,000 crore (US$ 1.72 billion) in 2019. Real estate sector in India is expected to reach a market size of US$ 1 trillion by 2030 from US$ 120 billion in 2017 and contribute 13 per cent of the country’s GDP by 2025. Retail, hospitality and commercial real estate are also growing significantly, providing the much-needed infrastructure for India’s growing needs. Indian real estate increased by 19.5 per cent CAGR from 2017 to 2028.
Sectors such as IT and ITeS, retail, consulting and e-commerce have registered high demand for office space in recent times.
6 key Factors that will shape real estate in India in 2020
1. Both residential and commercial sector to grow
2020 has a great potential for both residential and commercial real estate business. In the last few years, the office space gained traction in most cities with IT/ITeS players contributing to majority of the leases. Also, the warehousing sector will gain traction. Rapid urbanization and white-collar migration will ensure strong growth for the commercial sector, which in turn will translate into higher residential demand. With concepts like ‘Housing for All’, affordable housing will continue to be the key growth driver.
2. Sub-urban cities to get more traction
Markets such as Bhiwadi , Dharuhera , Delhi NCR etc have seen a steady rise in demand for homes and we are optimistic that this trend is set to continue in financial year 2020-21 as well.
3. Co-living and co-working spaces will continue to rise
Over the past few years, there has been a significant change in the buying behaviours of customers, especially the millennials. They are more inclined towards co-living spaces that is more dynamic as compared to the usual rented space.
4. Technology reshaping the sector
Smart tech and innovation in the sector is no longer a distant future. In terms of construction, the key players will adapt to the latest technology – data gathering, artificial intelligence and machine learning which will play a key role in redefining the realty sector in India. With improving the quality of construction, the technology will also help boost timely completion of the projects.
5. Sustainable and green living will be widely accepted
Both developers and home buyers have been supporting green technology. This will continue to grow with developers focusing on technological advancements in procuring raw materials that are eco-friendly and sustainable designs that are environment sensitive. The customers as well are opting for smart homes which make way for sustainable living.
6. Luxury housing is redefined
The traditional concept of luxury housing will witness a major shift effected by the demands of the new age home buyers.
The Government of India along with the governments of the respective states has taken several initiatives to encourage the development in the sector. The Smart City Project, where there is a plan to build 100 smart cities, is a prime opportunity for the real estate companies. Below are some of the other major Government Initiatives:
- In order to revive around 1,600 stalled housing projects across the top cities in the country, the Union Cabinet has approved the setting up of an Rs 25,000 crore (US$ 3.58 billion) alternative investment fund (AIF).
- Blackstone crosses US$ 12 billion investment milestone in India.
- Puravankara Ltd, a realty firm plans to invest around Rs 850 crore (US$ 121.6 million) over the next four years to develop three ultra-luxury residential projects in Bengaluru, Chennai and Mumbai.
- Under Pradhan Mantri Awas Yojana (Urban) [PMAY (U)], 1.12 crore houses have been sanctioned in urban areas creating 1.20 crore jobs.
- Government has created an Affordable Housing Fund (AHF) in the National Housing Bank (NHB) with an initial corpus of Rs 10,000 crore (US$ 1.43 billion) using priority sector lending short fall of banks/financial institutions for micro financing of the HFCs.
- As of September 16, 2019, India had formally approved 419 SEZs, of which 234 were in operation.
- In February 2018, creation of National Urban Housing Fund was approved with an outlay of Rs 60,000 crore (US$ 9.27 billion).
The Securities and Exchange Board of India (SEBI) has given its approval for the Real Estate Investment Trust (REIT) platform which will help in allowing all kinds of investors to invest in the Indian real estate market. It would create an opportunity worth Rs 1.25 trillion (US$ 19.65 billion) in the Indian market over the years. Responding to an increasingly well-informed consumer base and, bearing in mind the aspect of globalisation, Indian real estate developers have shifted gears and accepted fresh challenges. The most marked change has been the shift from family owned businesses to that of professionally managed ones. Real estate developers, in meeting the growing need for managing multiple projects across cities, are also investing in centralised processes to source material and organise manpower and hiring qualified professionals in areas like project management, architecture and engineering.
The growing flow of FDI into Indian real estate is encouraging increased transparency. Developers, in order to attract funding, have revamped their accounting and management systems to meet due diligence standards.
As already known, land is a scarce resource and according to fundamental supply and demand principle, demand will increase with lesser supply, property prices are sure to rise. Gurgaon has good connectivity to all the major cities in NCR and offers the same amenities you may get in Gurgaon except for the huge traffic jams. It has a lot of affordable home options along with some luxury ones. The outsourcing industry in Gurgaon hires more than 5 lakh people and nearly 2 lac workers are employed by Maruti and Honda factories leading to increase in the demand for homes in Gurgaon and nearby areas. You will have a steady handsome rental income if you rent out your property in Gurgaon.
With it, Bhiwadi is also a good location to invest in property. Upcoming RRTS project makes Bhiwadi a promising real estate investment hub. The regional rapid transport system (RRTS) is planned to cover Delhi-Gurgaon-Rewari-Alwar region, ensuring good connectivity via world class commuter transit services. This is the right time to invest in Bhiwadi, as the prices of property may increase later on.
- Media Reports, Press releases, Knight Frank India, VCCEdge, JLL Research, CREDAI-JL