Dr. Atul Goel believes that the year 2022 will bring great opportunities for Indian real estate.
Dr. Atul Goel Pune, MD of the Goel Ganga Group and President-Elect of NAREDCO Pune, discusses his outlook for the coming year...
A pandemic is difficult for anyone. But it is only when
things become truly difficult that we learn what we are truly made of. If I had
to sum up what the COVID crisis revealed about the nature of the real estate
industry, I would say it revealed a steel spine and a concrete soul! Real
estate has shown remarkable resilience as an industry, and we anticipate a
strong real estate performance in the coming year. Let us examine the trends,
factors, and key ingredients that will drive the real estate market forward in
the coming year.
The king is the
homebuyer.
The coronavirus pandemic struck society as a surprise. While
this resulted in an unavoidable and unprecedented slowdown in site visits, it
also resulted in the human population as a whole suddenly realising the
importance of home. People realised that their home is their first and best
defence against the vagaries of the outside world when the entire world went
into lockdown mode. People began working from home, and children began studying
from home... Everyone realised they had new expectations and requirements from
their home. They required more space, better planning, and homes that provided
complete lifestyle solutions.
The real estate industry responded spectacularly. And new
projects were designed and launched with the changing needs of buyers in mind, with
the home buyer at the centre of all planning and design. This, along with
appealing schemes such as deferred payments, reduced down payments, EMI
holidays, free house furnishings, stamp duty payment by the developer, and
group discounts, is expected to continue in the new fiscal year. After all, the
pandemic is not over, and the home buyer should take advantage of the
incredible opportunities to secure a home that is tailored to his specific
needs and made affordable due to all of the incentives.
Low mortgage interest
rates
The Coronavirus crisis occurred during a period of
historically low home loan interest rates. The Reserve Bank of India maintained
its accommodative stance, keeping REPO rates as low as 4.25 percent. It had a
direct impact on housing loan disbursements, and interest rates on home loans
remained low.
Most public and private sector banks' home loan rates remain
in the range of 6.50-9.50, making it quite affordable for the middle class,
which accounts for the majority of new home buyers in India.
With restrictions relaxed and site visits resumed, the home
buying trend is expected to pick up, and housing finance rates will remain
affordable in the coming fiscal year. However, a word of caution to home
buyers: people are buying quickly, so your wait and watch policy may backfire;
your dream home will not wait for you for long; there are far too many people
who want it as well.
Excellent Return on Investment (ROI)
One thing is undeniably clear. Housing demand is increasing
and growing rapidly. According to the most recent CBRE report, India Market
Monitor, continued attractive mortgage terms and government incentives are
propelling housing sales tremendously. Housing sales increased 46 percent
quarter on quarter to 50,000 units in the third quarter of 2021 (Q3 2021), and
86 percent year on year. As a result, despite the challenges and upheaval
caused by the pandemic, the residential sector has demonstrated great
resilience and will continue to soar in the coming fiscal year.
As residential prices rise in the near future, this trend of
robust and recovering demand will ensure a noticeable return on investment. For
example, if a person invests Rs 1 crore in the real estate sector of any of
India's top eight cities, an overall ROI of 25-30 percent can be comfortably
expected.
Price increases are
unavoidable.
The coronavirus's impact on the Indian economy was like a
domino effect. In the construction industry, input costs have risen due to
rising prices for fuel, steel, bricks, and cement, among other things. Input
costs have risen by more than 20% in the last few years.
This fact is supported by the RBI's recent Housing Price
Index, which revealed that the all-India HPI increased by 2.6 percent year on
year in Q2 2021, up from 2 percent in the previous quarter.
Furthermore, rising demand has resulted in the clearing and
sale of ready stocks by major developers. This will also give the real estate
industry an opportunity to raise prices. Experts believe that a 10-15% price
increase is unavoidable in India's housing markets.
Read More: 4 reasons why 2022-23 will be the best for first-time homebuyers
Housing for Everyone
The Pradhan Mantri Awas Yojana (PMAY), the Indian
government's flagship mission, will be completed in 2022. As a result, the
remainder of this fiscal year will be devoted to the implementation of
affordable housing schemes and the provision of low-cost housing. Affordable
housing developers will benefit from lower interest rates and other incentives.
Furthermore, because the government is encouraging new housing technologies,
which have significantly reduced the cost of housing units, the lower middle
class to economically weaker section (EWS) of society will have more housing
options.
The ideal time to
invest
According to real estate analysts, now is the best time in a
decade to invest in real estate. With prices at their lowest and a supportive
finance mechanism, there should be no more wiggle room in the decision to buy.
We must also warn that this rosy period may not last long, as once the market
has fully recovered, prices will skyrocket, and homebuyers may have to pay up
to 30% more than current prices. If you've been waiting a long time, now is the
time to invest.
To summarise, the real estate market is booming, and market
conditions are making it even more appealing. Waiting and watching was
justified during the pandemic, but it is no longer prudent. Take advantage of
low interest rates, lucrative schemes, and fantastic new designs to purchase
your property. Make 2022 the year when you turn incredible opportunities into
fantastic decisions!
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