75% YoY Growth For Real Estate Through Next 3 Years

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After a generally bad run since demonetisation and the brake checks that the pandemic pulled off, Indian real estate finally seems to be on a sustained recovery path. 

Zooming In

The sector has been witnessing a sort of paradigm shift over the past two years. 

Very quickly, while the Covid induced 'work from home' model reduced the demand for commercial spaces, it increased the demand for residential spaces and the shared economy to an extent. 

Per Infomerics Valuation and Rating (RBI Accredited), real estate should grow at a rate of 75% YoY through the next three years. 

Housing

The report said that with regard to demand for housing, the interest rates on home loans (October 2021) is likely to act as an incentive for prospective buyers. 

📌 Along with that, the buying decisions now factor in adverse impact on income, 'thriftiness' caused by unforeseen emergencies, 'access to large green areas' and 'access to good healthcare'.

The projected 3-year growth in housing rides on favourable policies by the government, like tax holidays for affordable housing projects, registration fee discounts, and tax deduction on interests on housing loans in the Union Budget 2021-22.

Also, Capital expenditure (Capex) of INR 5,43,559 crore is committed by governments combined, for affordable housing over the period 2020-25.

Commercial (CRE)

The commercial real estate (CRE) segment has witness a mixed bag period. Among dominant markets, Bengaluru, Chennai, and Delhi NCR recorded the highest recovery in the September 2021 quarter. 

📌 Information Technology (IT) remains the largest consumer of space during the quarter, occupying 34% of the space transacted.

In a boost to CRE, SEBI lowered the minimum application value for Real Estate Investment Trusts (REITs) from INR 50,000 to INR 10,000 -15,000, making the market more accessible to small and retail investors.

Zooming Out

About 58% folks consider real estate as a mode of safe investment, with a notion that its prospects are likely to see an upswing once the pandemic recedes.

😷 the report also mentions that the possibility of the third wave of Covid-19 and the emergence of delta variant, is a big cause of concern.