The ongoing COVID pandemic had left the real estate sector in heavy losses last year. However, in 2021 things are starting to look up.
The year 2020 was going to be the year when the Indian real estate sector would recover from the previous disruptions. For three consecutive years business had suffered because of the demonetisation, the implementation of GST and RERA, and the crisis caused by NBFC. In 2020, the market had begun looking up, especially the housing segment had begun stabilising. Then, COVID pandemic brought everything to a grinding halt.
Once the unlocking process started in July, recovery of business began in certain parts of the country. The last quarter of 2020 saw improved performance in the sector. Discounts and pent-up demands had a significant contribution in this road to recovery. However, experts believe that it will take several quarters before the sector returns to its pre-COVID level of revenue generation.
Is This the Right Time to Buy Property?
2021 has begun on a promising note and the momentum has continued in the first two quarters. Although business hasn’t been smooth-going and even across the country, the affordable housing segment has seen a surge in sales in cities such as Pune, Mumbai, Delhi-NCR, Hyderabad, and Bengaluru due to factors like stable prices and low interest rates. Buyers in peripheral markets are yet to catch on to the momentum.
According to a report by Savills India, PE investment in the Indian real estate sector would recover and garner inwards flow of up to $6 billion in 2021.
As one of the fastest-growing economies, India’s mass vaccination drive is ensuring that the economy is back on the growth track in 2021. This along with the lowering of interest rates for the short to medium term loans, will add to the growth in real estate investment.
In January 2021, the Maharashtra government cleared a proposal to cut levies on real estate by 50% until December 2021. This has led to reduction in construction cost, and subsequently, reduction in the prices of houses in Maharashtra. This is a direct result of the reduction of several premiums that developers have to pay as part of development of a project. The decision is consistent with the government’s aim to make properties more affordable.
The Current Real Estate Scenario in Pune and Mumbai
The second wave of COVID has hit the Pune and Mumbai markets badly. However, the partial shutdown in Maharashtra has not affected any construction activity in the state. The smooth flow of raw material supplies and labour availability has ensured that the construction activity remains undisrupted.
Factors such as stable prices, low interest rates and government SOPs have helped push sales and launches in the Mumbai-Pune housing market in the first three month of of 2021.
According to a report, Pune housing market grew faster than Mumbai in January to March 2021, registering a 19% growth over October to December 2020 period. Anarock reported that the recent rise in sales in Pune and Mumbai markets had tilted the housing market heavily towards the region.
In summary, the slew of economic and policy reforms by central and state governments, and the stimulus packages that are introduced by the authorities, the real estate sector has seen a positive turn of events in 2021. Despite the second wave of the pandemic crisis threatening to disrupt the market, the improved buyer sentiment has led to increased investment in the sector. The year 2021 might just be the year for Indian real estate.