The recent surge in demand for commercial and residential properties has resulted in a significant growth trend in the real estate industry in India after a long time. So many new investment opportunities like logistic warehouses and data centres are emerging every day from the lower echelons of the trade.
India is just one name in a long list of countries like the United States of America (USA) and the United Arab Emirates (UAE) that have witnessed a similar increase in the demand for real estate options worldwide. However, there has been a radical change in the perception of real estate as an investment option in our country. The ones who used to ask, “Why to invest in India?” are now asking, “Why not invest in India?”
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Evaluating The Current Market Trend
Looking at the recent market trends, we can easily say that the realty industry has touched an inflexion point and can be predicted to achieve explosive growth soon. The tremendous rise in demand among all the subsectors of this industry can be observed in the residential real estate sector. However, a gradual increase in property prices can be seen all across the board.
The COVID-19 outbreak forced a large scale reverse migration of people working in almost every sector of our economy. Loss of income source, work unavailability, lockdown restrictions, and work from home culture helped further the cause. So many people returning to their hometowns led to heightened demand for living options like owned homes and leased rentals in most tier II and II cities in India.
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Government Initiatives and Their Effect
To cope with the sudden rise in demand for real estate across the country, the Government of India went into swift action. They provided strong policy support to drive widespread consumer interest with last-stage funding mechanisms for near-completion housing projects, property registration fee and stamp duty cutbacks, and attractive incentives, schemes, and payment plans offered by real estate developers.
The drop in loan interest rates also helped sweeten the deal, resulting in a significant surge in consumer engagement across all essential real estate sectors. Additionally, so many favourable factors encouraged potential leads into homebuyers and significantly improved the sales outlook.
Gross sales and property registration in the residential real-estate sector across all states have exceeded their pre-COVID levels in the last two quarters of the 2021 financial year (October 2020 to March 2021). Throughout 2020, new residential unit launches progressively rose to over 6,00,000 units in the last quarter of FY21. The sudden boom has encouraged even the real estate investment giants like Radhakishan Damani, the proprietor of DMart, on an extensive realty buying spree.
Irrespective of the developmental boom in the real estate sector, many other industry sectors in India witnessed some pretty high attrition rates in the April to June months of 2021. We’ve mentioned the various attrition rates in the respective sectors as follows:
- Information Technology Industry – 8.03%
- Education & Training Industry – 7.45%
- Knowledge Process Outsourcing – 7.38%
Therefore, most companies have resorted to doling out an average pay hike of 10-15% throughout their corporate hierarchy to increase employee retention rates. With so many handsome salary raises going out this year, the growth of the real estate market is bound to rise as we move forward not only because of the pent up demands but also due to some fundamental changes in the way young Indians perceive their life in the future.
Additionally, another factor that has helped boost the demand for residential real estate beyond imagination is the vast number of people trying to move up the realty ladder. Those living in rental homes aspire to become first-time homebuyers while existing homeowners shift to larger living spaces or acquire a second home in a different location. It has resulted in a significant demand boost for better housing options in urban centres like Delhi NCR, Mumbai Metropolitan Region, Bengaluru, Chennai, Pune, Ahmedabad, Hyderabad.
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Investment and Developmental Opportunities
The Government of India (GoI) has undertaken various strategic measures in the Financial Budgets presented in the last seven years to drive sales in the realty industry. With the recent approval of the Real Estate Investment Trust (REIT) platform by the Securities and Exchange Board of India (SEBI), the Indian real estate market is expected to create investment opportunities worth Rs. 1.25 lakh crores ($19.65 Billion) shortly.
The Smart City Project launched by GoI, aimed at developing more than a hundred smart cities in India, is also a prime opportunity to grow real estate entities. Under the ambitious Pradhan Mantri Awas Yojana (PMAY) formulated by the Union Ministry of Housing and Urban Affairs, the residential real estate sector will get a further boost from the central government’s objective to provide twenty million affordable housing options in all major urban cities all over the country by 2022.
Furthermore, the projected growth in housing units near major urban centres will also boost the demand for commercial and corporate real estate. Hence, the real estate industry in India, which was standing stale at around $120 billion in 2017, is anticipated to achieve a market size of $1 trillion by 2030, with almost 13% contribution to our country’s GDP by 2025.
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Paving The Road Ahead
A significant increase in the flow of Foreign Direct Investment (FDI) in the Indian real estate market and the Real Estate Regulatory Act (RERA) will also help increase transparency throughout the industry. In conclusion, the projected recovery of the real estate market in India has brought about some remarkable changes in how the housing finance sector functioned in the pre-COVID era, thus presenting incredible opportunities for both buyers and investors at the same time.
At RNC, we understand how vital asset valuation and other related valuation services are for successful financial future planning. Contact the best valuation service provider in India to learn more.