Rebuild, Reinvent, Reimagine
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In a world drastically changed by Covid-19, Indian real estate moved on to rebuild, reinvent and reimagine its future. Surprisingly, the residential sector stood much resilient than other sectors and emerged stronger. A host of factors were responsible for this. All-time best affordability, lowest-best home loan rates, developer deals and discounts, controlled launches, organised players holding the fort, and the government and RBI’s incessant support in 2020 helped the residential sector to sail through. In fact, during the lockdown period itself several developers changed their business strategy and adapted to new market realities. This significantly helped them to bolster sales despite the pandemic.
In terms of policy and finance measures, easily, RBI’s massive repo rate cut of 140 bps in 2020 coupled with six months moratorium of EMIs on all outstanding loans was the biggest fight India ever saw against Covid-19 pandemic. Repo rate cuts led to home loan interest rates reaching all-time low – almost 6.7 per cent now. This is a major factor driving housing demand presently.
Further, the government’s Swamih Fund already sanctioned Rs 12,079 crore for over 81,000 units across 123 projects in the country. Due to this, despite Covid-19, we saw several previously-stuck projects complete in 2020. As per ANAROCK Research, as many as 190 stuck/ delayed housing projects accounting for over 73,560 units were completed in 2020. As of 2020-end, altogether 1,132 projects accounting for approximately 5.02 lakh units (launched in 2013 or before) are now stuck in various stages of (non) completion in the top seven cities. Back in 2019-end, there were as many as 1,322 stuck projects comprising approximately 5.76 lakh units.
The post-Covid-19 world
Covid-19 has in many ways altered the way real estate now conducts business. Moreover, buyer preferences have also changed significantly. Some of the notable learnings of Covid-19 pandemic include:
• Millennials are the new home buyers: Indian millennials are now in favour of buying over renting. This is a significant change than pre-Covid-19 period. Suddenly, tech-savvy millennials have become the new target audience for real estate marketing. This is a tremendous change, especially since it came about in less than three months. In ANAROCK’s pre-Covid-19 survey, millennials accounted for over 40 per cent of aspiring homebuyers. This increased to 55 per cent in post-pandemic survey.
• Embrace digital: Digital is the new normal in the world that underwent a sea change due to the pandemic. The lockdown period made way for technology-led homebuying in India possible to some extent as homebuyers inspected properties online and negotiated and finalised deals. Digital tools such as virtual site visits helped majority of property selection and purchase process online.
• Data-led research is no longer just an option: It has become a necessity. The lockdown period itself saw a scramble for informed insights into how the real estate would behave in the months — and perhaps years — ahead. More than raw data, there is requirement for research-based conclusions, predictions and advice.
That said, the sector also needs some measures that will further bolster demand in 2021. Ideally the government should have given further tax sops to homebuyers in the recent Budget. We anticipated personal tax relief or hike in the Rs 2 lakh tax rebate on housing loan interest rates under Section 24 of the Income Tax Act up to at least Rs 5 lakh. GST waiver for under-construction homes would further boost demand.
