HomeReal Estate News2021 real estate sector outlook: Healthy economic indicators to push revival

2021 real estate sector outlook: Healthy economic indicators to push revival

After facing tough COVID-19 challenges, like many other industries, the real estate sector too is now betting on a better 2021. With sky-high expectations based on the slew of measures, the government took in 2020, the real estate sector expects the new year to unfold with people continuing to consider it as the safest investment option.

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By Timsy Jaipuria  December 14, 2020, 5:20:36 PM IST (Published)

2021 real estate sector outlook: Healthy economic indicators to push revival
After facing tough COVID-19 challenges, like many other industries, the real estate sector too is now betting on a better 2021. With sky-high expectations based on the slew of measures, the government took in 2020, the real estate sector expects the new year to unfold with people continuing to consider it as the safest investment option.


After a gloomy time of lockdown, the sector picked itself up and developers did cash in on the pent up demand, but several economic indicators and virtual platforms are now giving an additional edge to the sector.

The optimistic expectations are attributed to the economic growth predictions of the Reserve Bank of India (RBI). In the first quarter of the next fiscal year, the RBI suggested growth could be 21.9 percent (largely because of the base effect as the economy contracted by 23.9 percent in Q1 2020-21) and overall 6.5 percent for the first half of 2021-22.

Nagaraju Routhu, CEO, Hero Realty adds, "Real estate witnessed the new dawn with digital integration in terms of virtual tours, online sales etc. as an alternative to no physical interaction between homebuyers. Gradual unlocking of states and industries helped the sector go back to normalcy. The festive months were bright in terms of project deliveries and possessions. Tier II and Tier III cities as compared to metros have seen robust demand in the residential segment due to reduced home loan rates and buyers' inclination towards integrated living."

Based on the overall economy, the sector feels comfort is here to stay. Sector watchers foresee the momentum sustaining in 2021 due to revival in customer sentiment.

"We expect that 2021 will see a consolidation of the industry in favour of organized developers, leveraging of technology to enhance customer experiences and customer-centricity as the key objective of developers. In the commercial segment, the high-street concept has gained momentum as compared to malls and this will continue in the coming year. The residential segment is already on the path to recovery owing to the pent-up demand and the need to invest in well planned, spacious homes amidst extended work from home. The mid- segment in the range of Rs85 lakhs to Rs1.5 crores will witness the highest demand in residential real estate. We recorded sales worth Rs 2,500 crores from Apr-Nov 2020. We are eyeing to close this year with a 10 percent increase in revenue in 2020, up from Rs 4200 crores last year." says Pankaj Bansal, Director, M3M Group

The retail segment looks promising, especially after the pandemic time, as people are likely to prefer visiting places that can provide them with a safe environment.

Amarjit Bakshi, Chairman & Managing Director, Central Park says, "The pandemic has played a part in shaping sentiments, tastes and preferences. There is an emerging trend of settling into townships due to the availability of a plethora of amenities available to the residents within the vicinity. Integrated urban areas with spaces that are multi-purpose for use will gain more momentum. There will continue to be increased focus on sanitization, hygiene, cleanliness & wellness in apartments and on creating work-from-home office spaces to work out of."

The reduced home loan interest rates, which are around sub-7 percent, is giving additional comfort to the residential real estate sector.

“The extended support from authorities in terms of slashing the repo rate, RERA extension for project completion were some major initiatives that helped us maintain positive stance among buyers. Plotted developments and affordable housing witnessed increased enquiries and stable demand respectively. The mid-segment housing may take 6-8 months of 2021 to bounce back to pre-COVID levels due to the reeling market, but festive times did register a certain momentum due to the lucrative offers," added Achal Raina, COO Raheja Developers.

“Since the time home-loan rates were reduced, we have been witnessing an increased number of inquiries; the same trend is going to continue in 2021. The demand for gated communities has increased as people are concerned about the healthy lifestyle; the pandemic has also made people realize the importance of having their own abodes,” says Harvinder Singh Sikka, MD, Sikka Group.

In the announcement after the latest Monetary Policy Committee review, the RBI mentioned that it would continue to employ instruments to ensure ample liquidity. Some of the announcements during the year include Rs 18,000 crore additional funding for PMAY for Urban area, income tax relief for developers and homebuyers for houses that cost up to Rs 2 crore, approval of the Union Cabinet to set up a Rs 25,000 crore (US$ 3.58 billion) alternative investment fund (AIF) to revive around 1,600 stalled housing projects in top cities, 1.12 crore houses sanctioned under PMAY in urban areas, creation of Affordable Housing Fund (AHF) in the National Housing Bank (NHB) with an initial corpus of Rs 10,000 crore, etc.

“The sector has always been saying that liquidity is an issue for the real estate sector. The government of India announced several packages that are likely to have a positive impact in 2021. Looking at the response in 2020 after the Unlock, the coming year looks promising,” says Ashok Gupta, CMD, Ajnara India.

Similarly,  Mohit Goel, CEO, Omaxe Ltd. adds, “The positives that have emerged from the COVID-19 crisis will form the cornerstone of the coming decades of growth in the real estate sector and overall Indian economy. The reverse migration led to the emergence of heightened demand for homes in tier 2/3 cities including rentals. Demand for bigger homes inside an open, hygienic and green complex with facilities like healthcare, daily necessities and everyday rejuvenation within walking distance formed the crux of increased demand for branded and reputed developers who would not just provide value for money products and services but also had the ability to deliver those projects. The increased investment in infrastructure development by governments and businesses in developing tier 2/3 cities as centres of economic activity along with increased consumer spending and activity will write the story of growth, employment and opportunities in the coming decades in India.”

When it comes to residential space, in particular, affordable housing segment is what is expected to continue to excite buyers next year.

Pradeep Aggarwal, Co-Founder & Chairman, Signature Global and Chairman, National Council on Affordable Housing, ASSOCHAM says, “The market for affordable housing is robust, and in the coming months, there will be more movement. People have realized the importance of owning a home, and this feeling is going to persist. We are coming up with multiple projects, and the response that we are getting is an indication that the affordable housing segment will not face any problem.”

Talking on the sector, from the market perspective, Sharad Mittal, CEO & Head, Motilal Oswal Real Estate says, “In 2021, we believe that most of these office assets will continue to remain stable. However, as companies explore the WFH strategy, developers may review the launch of new supply, especially where it is speculative and not build-to-suit. Most companies will review new space requirements to align it with their WFH strategy. Developers will build new supply but will albeit with a cautious approach."

"In the case of residential real estate, pent-up demand, developer discounts and stamp duty waivers may have created a temporary spurt in demand this year, however, we believe that some of the following factors augur well for a more long-term growth in residential real estate over the next 2 to 3 years. Lastly, COVID-19 has led to a clear preference for staying in an owned home. We believe that this will spur home demand over a period of time and give rise to a new phase of growth in residential real estate, one that will be led more by volume and less by price,” he added.

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