The Aftermath of the Pandemic in the Real Estate Sector

14 Jan 2022 , 08:36 AM

The COVID-induced lockdowns in 2020 had a stifling effect on the real estate industry, bringing property transactions to a halt. Despite the steep downturn, the market made several strides toward recovery in 2021 by registering impressive sales and new project launches.

From myriad unique deals, enticing property prices to a paradigm shift in consumer behavior, various factors have assisted the nation’s realty industry reach a new zenith of growth. The RBI also decided to leave policy rates steady throughout the year, supporting the recovery of housing demand with low-interest rates. In addition, individuals started to acknowledge the value of owning a home and saw it as the safest investment option. Let’s know more about how the pandemic completely transformed the landscape of the real estate sector!

Huge Demand For Budget-Friendly/Mid-Sized Homes

There has been a significant increase in the demand for budget-friendly/mid-sized homes during 2021. Although the government announced benefits and schemes (lowest home loan interest rates etc.) had enticed many homebuyers, the real estate segment as a whole has witnessed an increase in buyer interest. In addition, several projects between the price ranges of INR 50 and 80 lakhs were launched in 2021, providing evidence of remarkable recovery in the sector.

Shift In Preferences For Buying A Home

There was a substantial shift in consumer predilections in the year 2021. Individuals who prefer to buy homes have developed an obsession with residential projects that offer best-in-class amenities, integrated living, large open space areas, and a high level of safety and security. Individuals who opted for 1 or 2 BHK homes have also started asking for additional space to fulfill their multi-functional needs during the COVID outbreak.

Moreover, gated communities are chosen over individual homes and standalone apartments due to the many health hazards associated with the COVID-19 pandemic. This has paved the way for the homebuyers to choose a safe and secure abode for their loved ones. Consequently, more themed projects were launched, such as wellness houses, children and senior citizen-friendly homes, and so on. As work-from-home and e-learning concepts are the talks of the town nowadays, additional rooms will be in greater demand in the future.

Real Estate Consolidation

The market began to consolidate due to the abrupt strain on cash flows imposed on the real estate industry with protracted lockdowns in place. Homebuyers become more careful about investing their hard-earned money, preferring to put their money into established/credible players to prevent any risk.
On top of that, an excellent track record, credibility, increased transparency, and client confidence in renowned players during the turbulence are some of the characteristics that helped established companies achieve a robust foothold in the market.

Millennials Are Making Real Estate Investments

After studying the current market condition, millennials now understand that real estate is one of the greatest and most secure investment options. The work-from-home concept, which drastically reduced major expenditures, has caused millennials to reconsider their investment choices (particularly those paying high rents). On top of that, the residential segment has begun to see a spike in interest from millennials, who are leveraging historically low house loan interest rates, accessible tax exemptions, and various other benefits.

The author of this article is Vimesh P, Vice-President, CASAGRAND

The views and opinions expressed are not of IIFL Capital Services, indiainfoline.com