The real estate sector is an important pillar of the economy, contributing 6-8% of India’s Gross Domestic Product (GDP) and is ranked 3rd in terms of direct, indirect and induced influence on all the sectors of the economy. In addition to commercial and residential real estate, sub-industries that are reliant on the real estates’ trends, such as retail and hospitality, also play key roles in economic growth.
Apart from GDP contribution, the real estate sector is second in terms of employment generation and is one of the top priority segments for the government as it pushes to make India a 5 trillion dollar economy by 2022!
Taking into account the country’s economic growth and the performance of the realty segment in the last year and a half, certain trends are becoming noticeable. So what are the real estate market trends that could shape the sector in 2020? Let’s find out…
Today technology drives all aspects of our lives. And the real estate sector is no different. Marketing, sales, virtual property tours, etc. are all the latest means of engaging the customer. Online presence and harnessing the power of social media has become as vital as delivering a quality project. More access to information, client requirements & feedbacks, reduced delivery timelines, improved construction quality all are the byproducts of technological advancements.
In fact, India could be a hub for blockchain technology (a decentralized, distributed, and public digital ledger that can be used to record transactions across many computers so that the records cannot be altered) in the real estate sector to ensure more transparency & accountability. It would further install confidence vis-à-vis the builder and the project in the customer.
More Focus on Consumer Requirements
The last few years witnessed a slowdown in the number of units sold (and in effect a cash crunch) and although the situation is slightly better, many builders are reconsidering their sales strategies. There is a concerted effort being made to understand exactly what the customer needs are (e.g. whether smaller size flats are more budget-friendly).
Also to ensure the health of their businesses, builders are focusing on timely completion of projects, joint ventures & mergers. This is to reduce/distribute financial risks and also to offer their customers attractive home options.
With India improving on the ‘ease of doing business’ index as well as transparency in dealings, foreign and institutional investments have increased with the real estate sector receiving FDI equity inflows of around USD 25 billion in the period April 2000-March 2019. Private Equity and Venture Capital investments in the sector reached USD 1.47 billion between Jan-Mar 2019.
The commercial real estate sector (grade A offices, retail properties, and the warehousing sector) has garnered more attention from foreign investors due to rising demand and rentals. Foreign investors have formed investment partnerships by backing local developers. The response to Embassy Office Parks Real Estate Investment Trust (REIT) stock market listing was enthusiastic and will provide an opportunity for foreign investors to provide funding to the sector.
Smaller Builders will Struggle, Bigger Ones will Manage to Stay Afloat
Although the real estate sector shows signs of improvement, overall sales continue to be weak. In this scenario, the bigger developers, by selling off assets to reduce their debts, are managing to stay afloat but the smaller builders are definitely having a hard time surviving. The government has announced plans to set up an Rs. 25000 Crore fund to improve liquidity and revive stalled projects. This, however, will benefit only about 10% of projects, others will still struggle to deliver completed projects.
Concentration on New Segments
The real estate scenario has been undergoing a change since the past few years and in 2020 the focus will be on formulating newer policies that will target consumer needs. Also, affordable housing (but with amenities that some luxury projects offer) segment will be the segment to watch out for. Similarly, in commercial real estate co-working space, data centers and warehousing space will continue to be in demand.
The real estate sector is becoming more of a service-driven industry and the upcoming trends will align with these changing dynamics.
A project that will appeal to the new home buyer, luxury living finely balanced with natural surroundings and a host of modern amenities is Park Ivory from the Pride Purple Group. A lavish project offering 3 as well as 2 BHK flats for sale in Wakad, Pune, Park Ivory is a gated community ideal for families looking for quiet, open, lush green spaces but with all the conveniences of modern living such as a clubhouse, swimming pool, children’s play area, amphitheater, multipurpose hall and much more.
Located in the prime area of Wakad, Park Ivory is in close proximity to schools, colleges, restaurants, shopping malls, multiplexes, hospitals, etc. if you are interested in a 2 or a 3 BHK flat in Wakad, Pune then Park Ivory is your best option.