Real Estate 2019: Trends and Challenges
July 19, 2019
Author by Bijay Agarwal – Managing Director – Salarpuria Sattva Group
The real estate segment in India has experienced a radical change in 2018 where the teething problems posed by various regulatory reforms started settling in. With the sanctioning of key policy reforms like, RERA, GST and demonetization in the year 2017, the year flown by has turned out to be an inflection point and has begun to clear out inefficiencies from the sector prompting an era of transparency and accountability.
In fact, the first half of 2019 has evidently met expectations and as the industry is coming to terms with the exceptional reforms, it will be fascinating to see how the government will reflect on driving the growth of the industry. The improved market slant has created a significant impact on the developers and buyers across the industry. However, this impact has been in depth in a few segments like affordable housing, home-buying, co-working and commercial, warehousing etc.
The government’s emphasis on affordable housing has been extremely well received and procured rich incomes. On the other hand, with Indian customers rapidly becoming familiar with international standards of living, the possibility of affordable luxury housing has also evolved significantly. Not only is luxury housing no longer defined by only the size and location of the property, customers are today much better informed about the prevalent offerings in the market. Therefore, customers are progressively looking for luxury homes at affordable prices with adequate infrastructure and ground-breaking amenities for ease and convenience.
Millennials today are emerging as the most important market for the real estate sector. They will continue to make up the largest segment of buyers and by 2022, the average age of a potential home-buyer in India will be only 29, making it the most youthful nation on the planet. Reason being, unlike the older generations, millennials prefer to invest in a home at a very young age as they have high incomes with rise of varied jobs. More importance is given to experiences than products. Moreover, what sets millennials apart from the older generations is that they are well-informed, engage better with marketers and are shrewd and savvy decision makers.
Co-working & Commercial:
Co-working currently is the fastest growing segment in the commercial real estate sector. An unfaltering and steady development in real estate markets will naturally supplement the ascent of co-working spaces as well. However, the increasing demand for co-working spaces, not only from start-ups but also from large corporates will add to growth in existing commercial leasing. Co-working spaces have become the preferred choice for many enterprises as they are more convenient and cost effective.
Warehousing is likewise, another sector that is witnessing a huge growth. There has already been a decent measure of increment in the interest for organized storage due to advancements in e-commerce. Now with the liberalization of FDI policy, the demand for warehousing industry is expected to grow further.
Technology has transformed nearly every industry, including real estate. Technological innovation is here to stay and is galvanizing the real estate industry and is even preparing for disruption. iBuying, blockchain, artificial intelligence and machine learning are changing the way buyers, sellers and investors collaborate with one another and the properties they are keen on. Therefore, to stay relevant in the real estate sector, all stakeholders will have to embrace the latest technologies, using them to drive efficiencies in the lifecycle of a real estate project.
All in all, the Indian real estate market is growing at a predictable, however moderate pace. However, in most of the major cities, the year-on-year cost increments have stayed low. We can anticipate a comparative pattern for the coming years.
Another challenge is the intermittent growth we see in the homegrown real estate markets. While Bengaluru, Hyderabad, Delhi and Mumbai go through a surge in demand, markets are in debility in cities like Pune and Kolkata.