2021 THE YEAR THAT WAS
Pandemic a health disaster which transformed into a golden opportunity for the Real Estate Industry : especially residential space
Pandemic 1 brought the global economy to its knees, and the govts across the globe geared up to save their economies and in turn entire mankind.
Low interest rates , stamp duty cuts, extension of hand over dead lines, and the all important support from the govt kept the consumer sentiment positive and the industry moving.
2021 started with a cautious approach with people buying apartments , plots , floors etc so as to secure their basic need of housing. While commercial space was and is continuing to face head winds.
March – April 2021 was struck by the extreme attack of the pandemic and every body seemed to have lost a near or dear one.
But we won over Pandemic 2 in no time, thanks to the swift response from the govt and the massive vaccination drive.
The business is now back to Pre-pandemic levels, hiring is back and the govt has opened its coffers to investment in infrastructure.
Residential space is seeing massive take off and ready-to-move-in inventory is almost over.
New lunches are back.
Interestingly luxury housing , independent floors are the flavour of the time.
Tier 2 cities are doing exceptionally well and so are cities close to nature, be it sea or mountains.
Grade A office space is finding new traction.
Warehousing is the clear winner, thanks to online shopping.
Innovative ways of marketing, like content marketing and influence marketing are showing good results.
Q3 & Q4 are showing good numbers and hopefully 2022 will be a better year for the industry.
In the final analysis 2021 can be labelled as the Revival Year for the Real Estate Industry .
FORESCAST FOR REAL ESTATE 2022
Pandemic has now become a part of our lives, with new variants emerging one after the other in different parts of the world.
As we enter 2022, we already have an Omicron threat looming large, with the centre and state govts announcing lockdowns, and protocols in place to contain the virus and preventing it from further health damage.
Though India is mostly vaccinated, the noise of the spread of the pandemic makes the businesses and the economy turn cautious and nervous.
Real Estate 2022 is going to be volatile and a mixed bag it appears.
The Residential Space absorption is going to continue at the ongoing pace with the following touch points to note :-
Luxury Housing will be the Star Performer, for it offers large spaces leading to less density and features and facilities which star-rated hotels and resorts require. The affluent will want to move from bungalows to condominiums offering an affluent neighbourhood , openness and greenery , large sized apartments fully loaded , amenities for which one wants to step out to 5-star hotels and concierge services .
Small sized apartment or complexes within 5-7 acres, housing larger size units and less dense dwelling units, will be preferred over large complexes housing thousands of apartments . The size will also be the key with 2 bed room + study being the most favoured . 3-4 bedroom apartments with that extra space for a work station will do extremely well.
The madness pervading residential plot value appreciation, will surely cool off, with people realising the benefits of community living and the hassles of building over it.
Tier 2 cities to me are best positioned both for choice of living and for investing . One could look to park money for 2-3 years in Tier 2 cities, where I see an appreciation of 15-18 % year-on-year.
Independent floors will lose some sheen and prices are bound to cool off in this space as well.
Luxury Housing & Tier 2 to me are the best positioned for absorption in 2022 and large sized 3-4 bedroom apartments will be customers’ choice.
Commercial – Office Space Leasing
Second Half of 2022 should see some investor interest back, with businesses opening up and life coming back to some sort of normal.
Only “A“ Grade office space will see absorption in 2022, as the current lease rates and vacancies will attract big corporations.
Commercial leasing will take some time before reaching the levels of 2019, when it was at an all time high.
One is cautioned to invest in commercial office space by virtue of REIT only.
We saw a lot of madness in land absorption for building warehouses. Large land parcels beginning from 25-Acres to 50 Acres, have all vanished from suburbs of metros where Expressways, Railway Cargo, Waterways and Air Cargo facilities were in earlier in the vicinity.
2022 will be the year of development of these warehouses and their leasing .
I do not see any more price escalation in land for warehouse purposes.
Second Home Market ( close to nature – less dense areas with good physical infrastructure and good Wi-Fi support system)
Developers must explore this space for expansion . Second home market is bound to do well for next many years, and one could look at this space as a separate vertical in development space.
Manufacturing & Industrial Hubs
This is another space which developers should consider for expansion. Large industrial parks with modern infrastructure and planned social infrastructure will be a big hit, with govt delivering full support . Developers could jointly opt for this with govt and funding houses as partners. This is a new paradigm in Indian Real Estate Industry .
To sum it up all
2022 looks a promising year for the Indian Real Estate Industry, with ‘Residential’ geared to emerge as a clear winner, and ‘Second Home Market – Manufacturing and Industrial Parks’ full up with new opportunity.