After facing a body blow due to pandemic, the real estate sector seems to have come out of the woods lately and the growth momentum in the realty space is expected to continue in 2022. Among various segments, residential space saw a huge uptick in 2021.
"The year 2021 was a watershed moment for India's real estate sector. Even when the going was tough, the sector not only remained resilient but also emerged stronger than expected," said Ramesh Nair, CEO, India and Managing Director, Market Development, Asia at Colliers, a global real estate consultancy.
The consultancy expects 2022 to be even better for the realty sector, even if it is marred by the new Covid-19 variant – Omicron. "We have now learned to live with uncertainty. Gross absorption in 2022 should be about 15-20 per cent higher than this year as occupier confidence is back in the market," Nair said. The residential segment has witnessed green shoots of recovery and is expected to gain further momentum in 2022.
"The residential segment is expected to reach pre-Covid quarterly sales volumes in 2022 and given the strong momentum may also match the pre-demonetization quarterly sales in the latter half of 2022," said Samantak Das, Chief Economist and Head of Research and REIS (India) at real estate consultancy firm JLL.
people are going in for bigger apartments Jason Briscoe / Unsplash
Besides, industrial and warehousing are expected to strengthen in 2022 aided by strong business fundamentals. Further, investment in life sciences and data centres businesses are also gaining traction. "New projects are coming up. One of the trends is that people are going in for bigger apartments than what they earlier had following the work-from-home norm since the Covid-19 pandemic struck India in 2020," said T.Chitty Babu, Chairman and CEO, Akshaya.
"Earlier people had spent most part of their day in the office or college or school. And when home turned into office, college and school they found their existing dwelling small and are now upgrading." On the manpower utilization post Covid-19-led lockdowns, Babu said with migrant workers going back to their native places, the real estate players have learnt to carry on with their project with lesser hands. Furthermore, in 2022, Mumbai, Bengaluru and Hyderabad are expected to lead India's residential real estate recovery, said online real estate seller Housing.com.
Notably, home purchases have picked on the back of record low home loan interest rates and higher affordability driven by stable real estate prices. "… the tier-II cities like Surat, Jaipur and Patna are the ones that have recorded the highest increase in online property search volume in 2021," Housing.com said in a statement.
record low home loan interest rates Tierra Mallorca / Unsplash
In recent times, retail demand has skyrocketed and changed the pattern from investor to end-user driven market. "Some pockets that witnessed infrastructural announcements in 2021, like the area around Noida International Airport, will be on the radar of investors and buyers. The trend of bigger and smart homes, luxury features, and increased demand for plots that started in 2021 will carry forward to 2022," said Manoj Gaur, CMD, Gaurs Group and Vice President – North, CREDAI National.
Segment-wise, the office space sector is expected to perform better in 2022. It is likely to clock a 30-35 per cent growth YoY. Especially, the data centre business is moving northwards. With increasing talks of data protection and safety measures, investments in data centres are going to give a structural push to the real estate industry.
"…rollout of 5G, ever-rising digital usage, increasing footprint of global data centre operators and cloud players would usher in another high growth year for the Indian data centre industry in 2022," JLL said. After two long years of working from home, the trend of working from offices too is expected to pick up in 2022. "…as office resumption picks up, it is expected to translate into healthy traction in new leasing activity, as the underlying demand potential from occupiers, who are mainly IT or ITES and global MNC companies, is estimated to remain strong," rating agency ICRA said.
the office space sector is expected to perform better in 2022Austin Distel / Unsplash
According to Nitin Gupta – President- Sales, Marketing, CRM (Head) at Mantra Properties and Developers: "Lately IT sector in India has been into aggressive hiring, which will play an important role in income." "This has led to increased demand in commercial space, this has led towards increased requirement for boutique offices creating a flexible environment. Hence this will lead to increased demand for commercial spaces."
For residential space, Gupta expects a rise of eight-to-ten per cent in capital value in the year 2022. Furthermore, commercial spaces such as retail malls have witnessed a faster recovery in cash flows after the second wave, compared to the recovery after the first wave of the Covid-19 pandemic, driven by faster relaxation in the restrictions and improved vaccination coverage.
Cyrus Mody, Managing Partner at Viceroy Properties said home sales and new launches are showing improvement which in turn indicates a turnaround in the real estate sector after undergoing dramatic structural changes followed by severe lockdowns during the two Covid-19 outbreaks. "The stamp duty benefit announced by the government of Maharashtra encouraged fence sitters to invest in residential real estate resulting in historic sales numbers," he added.
Maharashtra government reportedly reduced the stamp duty on property registrations Unsplash
In a bid to provide a boost to the realty sector, the Maharashtra government reportedly reduced the stamp duty on property registrations during September to December in 2020 and January to March in 2021. The other thing in which people have now become more aware is about green and sustainable buildings.
"The Covid-19 has created awareness about green buildings. India is the second largest market for us with about 3,800 projects participating and about 2,500 projects getting 'LEED' certified," said P.Gopalakrishnan, Managing Director, Asia Pacific & Middle East Markets, US Green Building Council. According to Gopalakrishnan, the participating projects include new buildings under construction as well as existing buildings that are carrying necessary additions, modifications to get certified. Gopalakrishnan said, educational institutions, hotels, office buildings and others are also now looking at green certification. (IANS/SP)
(Keywords : pandemic, real estate, growth, momentum, residential, uncertainty, recovery, industrial, warehousing, business, investment, traction, apartment, manpower, Mumbai, Bengaluru, Hyderabad, purchase, Surat, Jaipur, Patna, commercial, turnaround, lockdown, boost.)