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Real estate in 2021: Industry pins recovery hopes on COVID-19 vaccine, government measures

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As we step into 2021, the real estate sector is hoping for a revival of the economy and income levels, as well as demand from home buyers and successful distribution of the COVID-19 vaccine year 2020, was eventful for many reasons. The world faced its first pandemic in a hundred years, the global economy came to a standstill and millions of people lost their homes and livelihood in a matter of days. Amidst all this, there was one sector, apart from technology and healthcare that continued to amaze analysts and this was the housing market. The Indian housing market, in 2020, saw an enormous increase in interest from retail investors, including people buying their first homes, as well as those upgrading to a bigger home in search of extra space to be used as home offices. However, for co-working and commercial space owners, the year brought immense difficulty, as people switched to remote working and online shopping for the most part of the year. Will anything change in 2021? Some industry insiders maintain that things are definitely looking up.

Real estate industry’s expectations in 2021

Industry stalwarts are pinning their hopes on economic recovery and the successful distribution of COVID-19 vaccines, as a turning point for 2021. Experts point to the RBI’s decision to reduce the repo rate and some states’ temporary reduction in stamp duty charges, as some of the reasons behind this unimaginable recovery.

“Post-April 2021 there will be a period of slowdown, after this phase of panic buying until March 2021. We sense the government at the centre is wanting to bring lending rates closer to levels at which the western countries lend. We expect the GDP growth to turn positive in Q4 of FY2021. With steady decline in the number of COVID-19 infections across the country and the vaccine around the corner, we expect far better days for the economy going forward,” says Kaushal Agarwal, chairman, The Guardians Real Estate Advisory.

However, the mutation of the Coronavirus seen in the UK and lockdowns in some European countries may dampen the sentiments of the investors early next year.

Future of commercial real estate in 2021

For the co-working and commercial office space segments, there is a ray of hope, as corporations plan to bring their employees back to work and practice hybrid remote working. The stakeholders are confident that the best is yet to come for the segment and that investors will get their due return, in time.

“Co-working spaces across the country witnessed a drastic decline in revenue, due to the pandemic. Now that companies are resuming businesses, co-working spaces are expected to see gradual penetration in the coming months. Bigger enterprises will look for smaller spaces to accommodate their employees on a shift basis. Besides this, the start-ups that are emerging in tier-2 and tier-3 cities, will also boost occupancy in local co-working spaces,” explains Abhay Chawla, co-founder of India Accelerator, a mentorship-driven incubator in India for technology companies.

The commercial segment, including co-living and co-working, could bounce back, because of the innovative offerings and demand for efficiently designed office spaces. Once this picks up, REITs would also become an attractive proposition again.

“Commercial properties could witness major interest in 2021, as the pandemic has allowed working professionals to collaborate creatively and effectively, via various innovative tools. With offices reopening, we could see greater adoption of tech-enabled properties that offer lots of flexibility, as well as improve efficiency. Additionally, with SEBI revising some rules around REITs, the commercial real estate space could see greater investment opportunities in 2021,” maintains Anuj Goel, CMD, Goel Ganga Developments.

According to some experts, the influx of migrant population to metro cities, as and when companies reopen, will bring back the demand for quality accommodations.

“Co-living spaces and shared accommodations will gradually become a necessity for modern migrants, as they adjust and familiarise themselves with the new normal. As long as there is a rising demand for affordable accommodation in cities, co-living will continue to be a lucrative business,” insists Kahraman Yigit, co-founder and CEO, Olive by Embassy.

Major trends to look out for in 2021

Demand for spacious homes

The biggest trend to watch out for will be the ongoing demand for bigger homes with additional rooms or spaces to be used as offices. As people adjust to the new normal, an extra room will be a welcome change for millennial buyers, who are keen to work from home rather than traveling long distances to the office or paying higher rents to stay close to the office. Moreover, as vaccine distribution in India is still going to take time, the reopening of the office may not happen at full volume. Till then, work-from-home will remain the norm for the millennial workforce.

“Considering access to vaccines will take time and the current work-from-home situation, the concept of OBHK (Office-Bed-H-K) will get more traction from home buyers,” says Chintan Sheth, director, Ashwin Sheth Group.

New launches to pick up

As India went under a complete lockdown in March 2020, the migration of the labor force created a shortage of manpower at construction sites, impacting project launches and delivery timelines. While the scarcity of construction laborers is still an issue in big cities, new launches may now resume. However, people would still prefer ready-to-move-in homes over under-construction properties, owing to the risk associated with the latter.

“We expect the aspirational market to continue to lean towards ready-to-move-in apartments and the luxury segment to contribute to high revenue and cash flow to organizations. The center stage, however, will be taken by the new launches which have been sluggish this year,” adds Ajay Singh, assistant VP– sales, Century Real Estate.

Evolving marketing and technological innovation

Real estate brands went the extra mile to lure buyers. From video walkthroughs and virtual reality videos to virtual site-visits and inventory selection, the real estate segment saw new levels of technological innovation, even by those buyers who were not comfortable with technology.

“The role of technology expanded in real estate, with developers leveraging 3D walkthroughs and virtual reality, to improve customer experience and sustain the momentum of sales, while additionally focusing on improving construction methodologies. Digital channels such as AR/VR helped in creating the visual depiction of projects for new inquiries, along with 24/7 chatbot services and video calls, to facilitate the buying process and enhance the sales journey,” elaborates Reeza Sebastian, president, residential business, Embassy Group.

Thanks to technology-enabled solutions, the active participation from NRI investors is the new-found wealth for real estate sellers. The early adoption of technology by the real estate segment is a welcome change for the overseas buyers, who used to depend on their domestic resources for property scouting, site visits and even property documentation.

“Real estate is almost always driven by what people want and the current pandemic has made that evident. What’s more, in terms of investment, we can look forward to active participation from NRI customers, who wish to explore lucrative investment opportunities in India,” adds Goel.

Regulatory boost to real estate in 2021

The government has managed to keep the sector afloat, by introducing a number of measures to boost home-buying. While most of the experts opine that all state governments should bring down the property registration charges, there is also some muted demand for introducing new measures, to boost investment from second-home buyers and investors.

“The support of the government will play a transformational role in making home-buying more affordable and hassle-free. The nationwide reduction in interest rates and the slashing of stamp duty for the affordable segment in Karnataka are very welcome steps in this direction. We hope the government will take steps towards boosting the real estate sector, such as improving infrastructure, connectivity, etc. This will ensure the development and affordable options for first-time buyers,” says Singh.

Moreover, the repo rates, which have been kept low this year, may rise in the next financial year to control inflation. Consequently, experts are wary and suggest that funds should be made available to buyers and businesses, to keep the momentum going even after March 2021.

“We do not think the government should increase the rate of interest, as the market has just started to get better and stabilize. In the coming days, the government should make more funds available for businesses, as well as end-users,” says Goel.

Tax benefits to incentivize home buying is a long-pending demand of the industry. To keep the real estate sales number encouraging, this could be the way ahead for the government in Union Budget 2021.

“Individual tax benefits along with an increase in income tax deduction limits will benefit lakhs of taxpayers. This will induce and incentivize home buyers to buy a property. Also, further concession in stamp duties, reduction in ready reckoner rates, and slashing GST to zero, will prompt home buyers to make purchases and increase consumption,” says Sheth.

Source –  https://housing.com/news/real-estate-industry-pins-recovery-hopes-on-covid-19-vaccine-government-measures/

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