by Akhilesh K Prasad
Residential real estate transcended a relatively dull phase in 2018. Some of the slowdowns were attributed to prevailing economic conditions, while implementation of reforms such as RERA 2016, GST and demonetisation also caused obstructions. However, residential real estate trends in 2019 are expected to as follows:
Increase in demand:
The demand for housing has always been prevalent, even in periods that have been marked by lower transactions. This is obviously due to the ever-increasing population. At present, the shortage of houses is estimated to be approximately 40 million. Additionally, improvement in demographics, the concept of nuclear families and the increase in rural-urban migration could lead to an estimated annual demand of 10 million houses.
The shift in focus to affordable housing:
In the past, the focus of developers has been in the luxury and middle housing segments. Given the increasing cost of land and inputs, developers have been compelled due to economics. Though there has been greater demand for affordable housing, it has not been perceived by developers as a viable business venture. However, in its annual budget 2017-18, the government has granted infrastructure status to affordable housing. Developers now have access to diverse and cheaper sources of funding, including External Commercial Borrowings or ECBs. This will lower the cost of projects and developers will be in a position to transfer the benefits to the home buyer. Therefore, the sector is now poised to grow in leaps and bounds and prove a driver for the real estate market. Experts opine that an expected growth rate in affordable housing to the tune of 30% mid-term is likely.
The shift in the sentiment of home buyers:
It is also anticipated that there will be a shift in the general sentiment of home buyers from the luxury and mid-segment to affordable housing segment. The shift will take place in order to avail of the aforesaid benefits. Properties that have the amenities and facilities of the luxury segment, but are affordable to a large group of home buyers may, therefore, see an increase in demand.
The shift in demography:
Residential real estate in 2019 is also presumed to observe a demographic shift prompted by an increase in millennials. It has been estimated that India will have 410 million millennials who will spend $330 billion annually by 2020. Therefore, it is likely that there will be traction towards projects that cater to the millennial demand. Such residential projects should have basic amenities, urban connectivity and public infrastructure in a liberal neighbourhood.
In summation, our residential real estate market analysis visualises 2019 to an eventful and transitory year for the sector.
An MBA by qualification, Akhilesh has dabbled into various businesses. He is a keen debater, data miner and analytically inclined. His blogs tend to present a fresh perspective on any given matter