Over the past decade, India’s real estate sector is undergoing radical transformations in terms of policy reforms, technological advancements, buyer-centric structural changes, and market consolidation — which have all been instrumental in reshaping the sector, increasing transparency and customer confidence.
Additionally, the government’s Pradhan Mantri Awas Yojana — the world’s largest housing program — aiming to provide housing to all in the country’s urban areas by 2022, has brought affordable housing to the fore, giving the real estate sector a significant boost.
Today, India’s property market is witnessing a dramatic shift from yesterday’s brick and mortar business to a more professional, service-based industry. Nowadays, it is becoming increasingly crucial to customize the supply in line with the evolving dynamics of the market. In the days ahead, the market will see a range of innovative developments, which will play a vital role in driving the sector’s growth momentum.
The Ministry of Commerce and Industry’s ‘India Brand Equity Foundation’ reports that the country’s real estate sector will be a 1 trillion dollar market by 2030, and its contribution to the nation’s GDP will be over 13 percent by 2025. The year 2020 is all set to be exciting and positive for both investors and end-users. Here are a few key trends to watch out for in 2020.
Both Commercial and Residential Real Estate Will Grow
The year, 2020 holds high potential both for commercial and residential real estate. During the last few years, especially in 2019, the demand for office spaces has picked up in many Indian cities, which house the top domestic and global ITeS/IT players. Increased migration of white-collar professionals in these cities and speedy urbanization in several other parts of the country are keeping the demand for residential units strong. The warehousing sector is also gaining considerable traction because of the expeditious growth of e-commerce businesses throughout India.
The changing preference by the new-age customers has resulted in real estate developers innovating to suit their offerings to match the changed demand scenario. Making credibility and affordability their business mantras, small and big developers are trying their best to match supplies with varying consumer demands. Focusing on joint ventures, joint developments, acquisitions, consolidations, and mergers, builders are adopting a holistic approach to meet the expectations of the new generation of home buyers.
Banks Will Offer Cheaper Home Loans
In 2019, the RBI has amazed home buyers with a drastic cut in rates, slashing the lending rate by 135 basis points. This trend is going to continue, and in 2020, the good news for consumers is that they will have access to more affordable home loans. Though some banks were slow in passing on the benefit of RBI’s rate cut to the customers, industry experts believe that financial institutions will soon narrow down the difference in lending rates and play their part in recovering the economy and nation-building. The entry of new banks and non-banking finance companies will also make the market more competitive, enabling buyers to choose from a variety of home loan offerings.
Demand for Co-Working and Co-Living Spaces Will Rise
According to property market analysts, lately, generation Y is driving significant changes in consumer behavioral patterns. These days, the generation Y, or the millennials, are showing a great interest in co-working and co-living spaces, which are more dynamic than traditional real estate. The demand for co-working and co-living spaces is on the rise, especially in the IT sector dominated markets like Pune, Hyderabad, Gurugram, and Bangalore. According to multiple sources, the concept of shared living and working is being widely accepted by the millennials, and in 2020, the market will see an escalation in demand for such spaces.
Cities With Upcoming Metro Rail Projects Will Attract Real Estate Investments
India presently has functional rapid transit systems in 13 cities, namely Lucknow, Kochi, Mumbai, Gurgaon, Jaipur, Hyderabad, Bengaluru, Chennai, Delhi, Nagpur, Ahmedabad, Noida, and Kolkata. Besides these big cities, which had positive real estate growth in 2019, the government announced that 11 more cities will soon have metro rail connectivity. The cities with upcoming metro rail networks are Varanasi, Indore, Thiruvananthapuram, Coimbatore, Kanpur, Patna, Guwahati, Visakhapatnam, Surat, Navi Mumbai, and Pune. Real estate investments in these 11 cities are likely to go up.
Digital and Engineering Technology
Advancements in construction technology are playing a crucial role in modern-day constructions. Technology is not only enhancing quality standards, but it is also accelerating the pace of new projects. At the same time, customers are also benefiting from digital technologies, such as web and mobile-based applications, which are facilitating access to information and simplifying the process of buying properties.
Sustainability and Green Real Estate Will Have Widespread Acceptance
All stakeholders, including consumers and developers, are embracing sustainability and green real estate. Leading developers are increasingly adopting sustainable designs, and they are procuring eco-friendly raw materials, to build smart homes that support green living. This trend will continue in 2020, and beyond.
Increased Implementation of Policies and Regulations Will Further Improve Market Sentiments
Property-oriented government programs, such as Pradhan Mantri Awas Yojana and Credit Linked Subsidy Scheme, as well as greater enforcement of transparent policies and regulations like RERA & HIRA, are progressively transforming the real estate sector into a pro-customer market from a developer-centric one. This is improving market sentiments significantly. Improved sentiments will strengthen the sector and augment sales numbers.
According to market analysts, despite the continuing economic downturn 2019 has been a fairly healthy year for India’s property sector. Sustained commitments by global and domestic investors have boosted commercial real estate transactions, which saw a historic rise in 2019. The residential segment also recorded an increase in sales volumes and new launches in 2019. New launches saw a year-over-year rise of more than 20%, while home sales across India’s metro cities went up by 1%. As the nation’s GDP continues to grow, the real estate sector of the county will also keep pace and retain its momentum.
Another trend worth noting in 2020 is student housing. The sector offers excellent opportunities, as the demand for student housing is high, but only about 20% of its current needs are met. The sector looks promising because students from Indian villages and small towns, as well as from other countries, are more frequently coming to Indian cities for higher education. According to industry sources, the sector could add about 6 lakh beds over the next 3-4 years. With students and job seekers flooding the metro cities, the residential rental market is also likely to remain strong in 2020.
In a nutshell, India’s real estate industry looks towards a positive 2020 with new opportunities and growth prospects, and it is the right time to take advantage of it. As such, those entering the property market this year will reap the rewards of cheaper interest rates, high-quality units, and a crystal clear ecosystem.
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