Real estate in India is an integral part of the emerging markets’ growth phenomenon and has significantly driven economic growth. Even as economic growth moderates in many emerging markets, the construction activity remains fast-paced, increasing investment opportunities. The rise of emerging economies is also increasing competition among real estate managers and the investment community.
Over the past decade, we have seen substantial growth in technology, especially in areas like big data and artificial intelligence. These advancements have been adapted in the real estate sector and have led to new concepts like “Smart Homes”. These innovations are benefitting both the buyers and sellers alike. Technology is fueling most of the trends expected to affect the real estate industry in the not-so-distant future.
PwC has made the following predictions pertaining to the changes in the real estate landscape by 2020: In the next five years, all buildings in advanced economies will likely need to have sustainability ratings. The concept of sustainability will get broadened to mean creating ‘places’ where people enjoy living and working. So, new developments will be designed with green spaces, good air quality, spaces for social gathering and so on.
The builders are integrating sustainability elements in office buildings and individual homes. New eco-cities such as Tianjin in China and Masdar City in Abu Dhabi aim to have zero-waste and zero carbon emissions, while existing cities such as Tokyo in Japan and Malmö in Sweden simply aim for urban revitalization. Green office buildings incorporate renewable energy technologies, waste reduction and greater use of natural light to improve economic, social and environmental performance. Similar projects are expected in India as well.
Other anticipated trends are as follows:
Virtual Tours for Prospective Customers
Smart phones have taken over the world today – you do not need to be physically present to facilitate a sale. Over the past few years’ mobile technology has grown by leaps and bounds and the e-commerce industry has grown big.
Builders have come up with virtual tour of properties, approaching potential buyers online. These websites act as platforms for any and every kind of property across the country and great efforts are being put to provide as much detail as possible to ensure transparency. Add to it, eAuctions which are also being initiated and offer a lot of promise even when buying new properties.
Thanks to technology, builders can today reach out to potential buyers without them being physically present. By taking a virtual tour of the house, the potential buyer can take an informed decision with the help of a click of a button and will not have to roam around looking for properties. A person sitting in India can take a virtual tour of a property in the United States, and vice versa. All that is required is that the virtual tour video content must be uploaded on the website of the realtor, and anybody can access the same.
The Rise of IoT enabled Smart Homes
Smart homes are houses that incorporate hi-tech automation systems that provide advanced monitoring and control over the functions of a building or a house. For example, a smart homeowner can control lighting, security, temperature and door and window operations without him being physically present there. He can be several kilometers away and still operate all of these through a remote control or his mobile phone.
Thanks to constant technological advancements, smart homes are also becoming ‘smarter’ with every passing year. Just a few years ago, smart Indian homes were primarily marketed as homes with advanced security features like cameras, smart door locking systems and similar surveillance. Today, the implications have expanded to include electronically enabled lighting systems, fire detection systems, gas leakage detection, energy efficiency monitoring, entertainment systems, etc.
There are, however, a few factors that hinder mass acceptance: Cost and lack of awareness. Most Indian customers expect that smart technologies will add to the security of living in some way or the other; if it does not, the offering is more or less unacceptable. Things like AC control or smart gadgets are considered desirable, but not an absolute necessity. The demand for technologies like video conferencing, communication across floors or even curtain control is largely limited to commercial spaces and are not yet a big factor in smart residential units in India.
High Housing Prices
Growing cities will continue to grow and attract more people and increase in prices. This will directly impact affordability and in turn lead to greater urban density and smaller living spaces. As per a report by tax-guru published in December 2017, the middle-income group in India is projected to climb up to 475 million by the year 2030.
In the long run, real estate prices are expected to be sky-high with the surge in the middle-class population and the parallel rise in demand for residential flats, office buildings, villas, and retail establishments.
Impact of RERA
Lately, online portals have come into existence with a vision to provide all the relevant details to the consumer that would help them make informed decisions and make the process of purchasing property hassle-free for them.
The Real Estate Regulatory Authority bill has come as a great respite for online real estate portals as they now not only have a source of accurate information from RERA websites but also an abundance of information to create tools, which will help customers in making right decisions when it comes to home buying from developers.
Affordable housing has received a tremendous boost after it was accorded the infrastructure status during this year’s union budget. Affordable housing is expected to drive the real estate scene in India in 2021. Affordable housing refers to housing units that are affordable to that section of society whose income is below the median household income.
According to Knight Frank India, a global real estate consultancy, there has already been a significant surge in affordable housing projects across eight major cities. Homes priced below 50 lakh rupees, accounted for about 71% of the total launches between January and June 2017, a significant 52% increase from the corresponding period in 2016.
Disposable income of the people remains the primary factor in determining affordability. As a result, the government assumes greater responsibility to cater to the rising demand for affordable housing. The Government of India has taken various measures to meet the increased demand for affordable housing along with some developers and stressing on public-private partnerships (PPP) for development of these units.
The established developers are expected to expand the scope of their business categories. For instance, some branded developers, catering to the ultra-luxury segment, expanded their focus on compact, efficient, boutique homes for high and mid-level income category of buyers, a trend that is expected to gain further momentum.
Millennials on the Way
As time passes, more millennials are on the way to joining the investor community in the housing sector. According to a report by the Union health ministry’s technical team, the average age of population in India would be 34.7 by 2036, from 24.9 in 2011, and this speaks a lot about the changing demography of the sector. That is why builders are trying to learn more about the buying preferences of millennials with regards to properties. Millennials, certainly, are going to be here to change the housing market.
Demand for Luxury Housing
Demonetization and market uncertainties did take a toll on the health of the luxury housing market. But as the fact remains, it is a niche segment with a potential for continuous growth. As more millennials with higher income and stronger aspirations join the buyers’ club, the luxury market is on its way to witness good days again.
So, it is evident that there is going to be a significant upward shift in the buyers’ space. Technology and government initiatives will further enable them to collectively boost the overall housing market. The current trends point to this, and we look forward to what the future holds as we move forward.
Effect of pandemic and government’s response
Demand for a new home has gone up especially for end users including both the first-time buyers and those looking for lifestyle upgrade. Product design has taken precedence over mere square footage and the demand for an extra room to work or for recreational activities has also inched in. With prices already on the increasing trend in the last few quarters, people are preferring to move to a larger home and villas to the outskirts from compact homes in central district projects, a phenomenon mostly prevalent in metros and other tier-1 cities. Higher savings of the salaried class, lower home loan rates, and unchanged repo rate are catalyst to the increasing demand during the current times.