The industry data of faster recovery and record home sales conceal more than it intends to reveal. The rosy outlook fails to address the fact that this is a K-shaped recovery where a handful of large developers with sound financials have grown at the cost of the large universe of the developers. More importantly, the sales registration data doesn’t differentiate between primary market sale and distress sale in the secondary market.
Apart from data centers, there is likely to be more focus on greenfield assets in the industrial sector in 2022 led by strong demand from E-commerce companies. The Industrial and warehousing segment saw investments at a five-year high at USD1.1 billion. Green financing through green bonds will also see greater acceptance this year in India as developers, asset owners and investors turn their focus to sustainable development. This trend has further been accelerated by the pandemic across geographies.
2022 won’t be an easy year for the average Indian home buyer in terms of making a conscious decision of buying a house. The fundamentals of the market and macroeconomic outlook indicates 2022 could be even more challenging than 2021 for more than one reason. The rising input cost of construction has put a serious question mark over the feasibility of the business in a price sensitive market. Many of the developers with thin profit margins are facing a catch-22 where the input cost hike is compelling for escalation but the demand side is not ready to absorb the hike.
Across the world the commercial real estate, most notably the retail and office spaces, have been hit the most due to Covid-induced new normal. It is hence being debated as to whether commercial real estate would be able to reinvent itself to remain relevant in the post-Covid world where the Work From Home and online shopping threatens to eat up the market share of till-recently lucrative business models of retail and office space. Track2Realty explores the need for innovation.
The real estate industry stakeholders are debating over the design changes and other functional changes in the housing projects after Coronavirus. An impression is gaining ground that the developers have the realization that the world has changed due to pandemic and they need to alter to fit into the buyers’ needs. An online poll by Track2Realty nevertheless finds that the industry is off the mark when it comes to read the pulse of the buyers. The buyers are not looking for knee jerk design changes but housing to have long term functional changes.
What is icing on the cake for the developers in these smaller towns now is the fact that they are getting the labour force at a much lower cost. Explaining this trend, Sandeep Agrawal, a property broker in Patna says that the labours were getting their daily wages in the Delhi NCR region in the range of INR 350-500, depending upon the project. But now they are more than willing to work at INR 250 in places like Patna, Kanpur, Kochi etc where they are stationed in proximity to their home towns and the cost of living is much lesser, compared to the metro cities.
Located in Dodamarg, Axis Lake City is barely 35 KMs away from Panjim city centre. It is also just 18KMS away from the prestigious MOPA airport, which is expected to be operational by 2022. Spread across 12 acres, the project offers commercial plots in the size of 150 square meters, with state-of-the-art infrastructure and facilities. The size of the project is INR 40 crore and it is expected to be completed by 2023.
There are multiple factors why the home sales in monsoons are subdued. One obvious reason is that the Indians traditionally don’t make any high value purchases after Akshay Tirtiya and before Ganesh Chaturthi. Since a home is the most emotional & aspirational product; is life’s biggest purchase; and is in most of the case for the lifetime; the Indians prefer to wait till the beginning of the festive season. Inauspicious period of Shraddh and Pitripaksh also falls during the monsoon season, where the traditional belief is that any new purchase will invite the curse of the ancestors.
Devesh Ratan: A lawyer who is exclusively representing you will only look at your interest. A broker has to charge his brokerage from both the parties; he will never say this property has this deficiency, or the papers that you are signing is fixing your liability. For example, many developers put it in their Agreement Form that if they delay the project they will only pay INR 5 but if the buyer delays the payment he has to pay at the rate of 10-15. Only a lawyer can tell you this kind of liability is wrong and it should be negotiated upon.
Until the lion learns how to write, every story will glorify the hunter, says an African Proverb. Research report by various industry stakeholders try best to paint a rosy picture; force feed the collective consciousness that the real estate market is on its way to historic high in the year 2021. But the mood of the nation is juxtaposed to the orchestrated euphoria and Track2Realty Investment survey finds that the real estate has slipped as the 3rd choice for a vast majority of the Indians, with C-SAT Score (Consumer Satisfaction Score) all time low.