Indian Real Estate Market- A 2022 Outlook!

India's real estate industry, which was heavily damaged by Covid-19 owing to a lack of labor and poor budget investment, is now picking up speed and heading towards a robust recovery. Despite concerns about the Omicron crisis, the real estate market in 2022 appears to be positive, with demand growth across all categories.

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Indian Real Estate Industry 2022: Will Omicron Stop The Growth?

The real estate business emerged as the most desired investment choice in 2021. Because of the two waves of the COVID-19 outbreak and the subsequent lockdowns, the phrase “Owning a Home” became the slogan in every conversation – in familial, social, and professional circles. Despite the fact that it was a challenging year in which lives and livelihoods were at stake, economic development stalled, and job losses were widespread across industries, the real estate industry had a substantial recovery, preparing the stage for a bright year ahead. The sector’s resilience during the past two pandemic waves offers cause to hope that it will withstand the current Omicron strain threatening the globe.

The real estate industry, for its part, has adapted to the changing environment. It changed its strategy and linked its objectives and operations with changing trends and client preferences, supported by technology. The pandemic losses did not dampen the sector’s enthusiasm for long, and the optimistic rebound was seen in better market and consumer sentiments.

Also Read: Ultimate Guide for Bangalore Real Estate Investment

Position of Real estate in 2022

According to an international property specialist, 2022 may prove to be a more stable year for the pandemic-affected business and residential sectors. According to the consultant’s ‘2022 Outlook Report,’ the residential category might witness a 5% increase in value in 2022.

Portfolio optimization and hybrid working are projected to be the dominating trends moving ahead, driven by increased demand from IT/ITes organizations and the rebond of flexible office operators, with physical offices here to stay. Further demand resurgence is forecast in the residential sector, with strong end-user desire assisted by government stimulus and developer incentives assuring buoyancy. Demand from e-commerce and 3PL firms will keep the warehousing market, which was risk apprehensive during the epidemic, growing at a steady pace.

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Despite the pandemic’s challenges, the real estate industry rebounded strongly in 2021, with residential sectors surpassing others. The effects of the pandemic are beginning to fade, and the real estate market is expected to resume its normal rhythm in the following two to three quarters, assuming that the new variant’s risks are appropriately managed with minimum disruption in the early part of the New Year. If we can maintain this pace, the real estate industry will recover sufficiently to meet or perhaps exceed pre-pandemic levels.

The report’s major conclusions highlight 2022 trends and dynamics in India’s different real estate categories.

  • In 2022, the residential category is expected to see a 5% increase in capital value. Many supply and demand-side issues that have been evaluated during the previous decade have begun to exert increasing pressure on property prices. In 2022, the trend in residential sales is projected to continue, as potential homebuyers’ demand for larger houses, greater facilities, and competitive pricing will keep them interested in closing transactions.
  • The incremental demand for office space among the Top 5 IT businesses, based on strong hiring in the previous eighteen months, is anticipated to be 11.67 million square feet over the next one to two years.
  • As the epidemic underscores the need for adaptability like never before, the coworking industry will profit. Despite the return to normalcy, agility, a buzzword associated with the co-working sector, will increase the demand for flexible office spaces.
  • Rents are likely to remain constant to increase in 2022 as the office sector recovers and the flight-to-quality trend continues. 
  • The warehouse industry is expected to rise at a CAGR of 20% from 31.7 million square feet in FY 2021 to 45.9 million square feet in FY 2023, owing to the e-commerce boom. During this time, e-percentage commerce’s of total transactions is expected to rise to 36% from 31%.
  • The Indian Data Centre market now houses an estimated 445 MW of essential IT capacity, with a major 290 MW expansion expected in 2022, bringing the overall count to 735 MW by the end of next year.
  • Mumbai is home to around 193 MW of India’s total data center capacity of 445 MW. The overall capacity of Mumbai is anticipated to be 1,006 MW, with 258 MW now under construction and 555 MW in different phases of development.
  • The ability of Indian REITs to weather the epidemic and their rising appeal among retail investors would pave the way for other commercial real estate REITs.

Also Read: 5 Reasons Why Entrepreneurs Should Consider Real Estate Investing

Bengaluru, Mumbai, and Hyderabad-key in residential real estate recovery

Bengaluru and Hyderabad are projected to lead India’s residential real estate recovery in 2022, according to a top real estate platform, at a time when home sales are picking up steam thanks to record low home loan interest rates and record low affordability powered by steady real estate prices.

These three cities had a surge in homebuyer activity during the second wave of the coronavirus outbreak, whereas Tier-II cities like Surat, Jaipur, and Patna saw the highest spike in online property search volume in 2021. According to the index, Surat, Jaipur, Patna, Mohali, Lucknow, and Coimbatore are among the ‘cities to monitor for building-up residential demand.’

The online property search volume of high-intent homebuyers is tracked by the IRIS index of a renowned real estate website. The index is a leading indicator of residential demand in India’s 42 most populous cities.

Also Read: Why you should invest in commercial property

The year 2021 will undoubtedly be remembered as a year of good transformation in the residential real estate market. We are certain that the robust momentum in the residential markets will continue beyond 2022, assuming India can successfully address the threat of the Omicron variant spread. Larger residences will be the preferred option among homebuyers in 2022, according to the index, as firms continue to provide remote working arrangements in the face of Omicron variant concerns. 

According to data, in 2021, search queries for apartments with 3+BHK configuration increased by 15% year over year. In 2022, the metro cities of Mumbai, Bengaluru, and Hyderabad will drive a surge in residential demand. On the back of continued remote working policies, we’re seeing growing traction in tier-II cities like Surat, Jaipur, Patna, Mohali, Lucknow, and Coimbatore. Homebuyers are increasingly gravitating toward larger homes and areas with better healthcare, security, and open space. In 2022, the market will be shaped by shifting consumer preferences in residential real estate, as well as digital penetration across the supply and demand value chain.

Since the price of a property is directly proportionate to its size and amenities, internet searches for homes costing more than Rs 2 crore have surged as well – the index for luxury properties showed 1.1x more questions in 2021. Despite the NCR’s poor exposure due to project delays and developer insolvencies, the index projects strong homebuyer demand in Noida Extension in the future year.

According to the index, this year’s national online property search traffic was dominated by Noida Extension. This is owing to the area’s relative affordability, as well as the fact that the federal government and Uttar Pradesh’s state government have announced a series of big infrastructure projects for the region. According to the IRIS index, the rental market in the megacities of Mumbai, Bengaluru, and Delhi may revive in 2022 as firms hire more people. These three cities were responsible for the majority of online rental search volume in 2021.

Dwarka Eway to lead real estate sales in Delhi and Gurgaon

On the Dwarka Expressway, there are a variety of inexpensive properties for sale. They are available for purchase through the Haryana government’s affordable housing scheme, Pradhan Mantri Awas Yojana (PMAY) Lifestyle homes that are affordable while still providing the best amenities such as a community center, daycare facility, landscaped garden, 24-hour power and water supply, and convenient shopping within the community.

Dwarka Expressway is a popular property buy and investment destination due to its strategic position, strong connectivity, and outstanding physical and social infrastructure. It is near to the Railway Station as well as the planned Interstate Bus Station. The closeness of major expressways like the NH8, KMP, and NPR adds to its accessibility.

The long-awaited Dwarka Eway project is set to be completed on July 4, 2022. The longest elevated road in the world is a 29-kilometer stretch between Shiv Murti in Delhi and Kherki Daula Toll in Gurgaon (23 km). It would have an 18.9 km length in Gurgaon and will be an 8-lane grade-separated road.

Dwarka Expressway has lately emerged as Gurgaon’s most well-known and prosperous neighborhood. This high-potential area is being developed by renowned developers like Tata, Godrej, Sobha, Shapoorji Pallonji, Signature Global, Hero Group, ATS, and Puri Constructions. Individuals wishing to buy a house can find a good selection of 2,3,4 BHK homes in a variety of price levels. The Dwarka Expressway will have extensive link enhancements as part of the General Metropolitan Development Authority’s (GMDA) Comprehensive Mobility Management Plan. Highways will be built connecting Sectors 125 and 114, as well as Sectors 108 and 106, NPR, and Sector 114.

The GMDA has called for bids to repair the Sector 99-115 link road. In the Sector 10 and Dwarka Eway neighborhoods, two urban woodlands are being developed. Green covers will be 30 times denser and 10 times taller than in conventional plantations. The MRTS line will connect with the Metro Extension at Subhash Chowk.

This expanding list of initiatives, together with its expected operationalization in the coming months, would make Dwarka Expressway a very attractive investment for both end-users and investors.

Pune Metro to guide Pune Realty

The debut of the Pune Metro train services is expected to stimulate the city’s real estate sector. The start of metro operations is expected to spur real estate development along the city’s metro routes. With a larger floor space index (FSI) allowed in these regions, real estate developments are taking off to exploit this new mass transportation infrastructure and fuel the next phase of expansion in Pune’s real estate.

The Pune Metro started a 12-kilometer length on Sunday, and the metro train network is anticipated to grow further to reach all parts of the city.

Along the metro corridor, the city is poised for vertical expansion. The transit-oriented development (TOD) strategy allows for increased FFSI and population density within a 500-meter radius of metro stations. While the Maharashtra government announced an FSI of 4 along TOD zones within a 500-meter radius, analysts believe that for real estate developments to take off in the TOD zone, the government would need to change some of the restrictions to make it more feasible and cheap for purchasers. Some of Pune’s top real estate developers stated they were excited about the Metro’s debut and have scheduled launches in the next quarters with a total saleable area of 4.85 million sq. ft.

Position of real estate in the next three years

India’s real estate industry, which was heavily damaged by Covid-19 owing to a lack of labor and poor budget investment, is now picking up speed and heading towards a robust recovery. According to research, there has been an infusion of investment in the commercial area, which is a more formal section (with significant businesses participating).

Bengaluru, Chennai, and the National Capital Region (NCR) saw the most improvement among prominent markets in the September 2021 quarter. Information Technology (IT) continues to be the largest space user in the quarter, accounting for 34% of all space traded.

According to the survey, interest rates on house loans (October 2021) are anticipated to operate as an incentive for prospective purchasers in residential areas. In addition, unfavorable income effects, ‘thriftiness’ induced by unanticipated situations, ‘access to huge green spaces,’ and ‘access to decent healthcare’ are increasing factors in purchasing decisions.

The research emphasizes the government’s multiple steps to assist and support the sector, such as tax holidays for affordable housing developments and interest deductions on housing loans in the Union Budget 2021-22, which bode well for the business. In addition, rising interest rates on house loans (October 2021) and festival deals are expected to entice potential purchasers.

To make the market more accessible to small and retail investors, the Securities and Exchange Board of India (SEBI) reduced the minimum application value for Real Estate Investment Trusts from Rs 50,000 (US$ 685.28) to Rs 10,000-15,000 (US$ 137.06 – US$ 205.59) on July 30.

Under the “National Infrastructure Pipeline (NIP) throughout the period 2020-25,” the Centre and states would collaborate to provide Rs 5,43,559 crore in capital expenditure (Capex) for affordable housing. The impact of policy initiatives and changes in real estate, including financial deregulation, privatization, the functions and workings of banks and financial institutions, balanced regional development, living standards, and the promotion of disruptive and incremental innovation, is needed.

According to the study, the delay in buying and selling projects caused by Covid-19 has been an issue for the builders. As individuals switched back, the gap increased even further due to a labor shortage. However, once the epidemic fades, the industry will undoubtedly gain traction. The home price index revealed that despite the spread of the Covid epidemic, the ‘price index’ has been rising, peaking at over 110 during the first wave. During the same period, however, the ‘quantity index’ fell below 30.

The paper emphasizes that if the current scenario persists, even lowering house loan interest rates will be ineffective. Due to the uncertainty in the property market, investors stayed away during the Covid-19 pandemic uncertainty. Unsold luxury housing stock was over Rs 1.59 lakh crore in 2019. (which was around 34 percent of the total unsold homes across top residential markets).

The prospect of a third wave of Covid-19 and the appearance of a delta variation, according to the research, is a source of anxiety for the industry.

According to the survey, the real estate business has changed dramatically in the two years after the outbreak. While the Covid-induced “work from home” paradigm lowered business space demand, it raised residential space demand.

However, given the extent of company activity in India, commercial investments bode well, as seen by the ongoing advances in the Indian business arena, where more firms are being founded as they reach greater heights of expansion, necessitating additional working space.

Furthermore, by 2051, India is predicted to have 88 crore people living in urban areas, up from 46 crores now. As a result, together with government initiatives and new plans rolling out in urban home spacing, this trend-setting behavior is expected to be beneficial to the real estate business.

Low financing rates, favorable government regulations, lowered circle prices in Delhi, and more ready-to-live projects are among the factors fueling the real estate industry’s expansion in India.

The research also points out that more than 58% of individuals perceive property to be a secure investment, with the expectation that real estate prospects would improve once the epidemic has passed.

One of the surprising good stories of the ongoing Covid pandemic has been the recovery of the real estate business. In the pandemic year, low lending rates reduced stamp duties, and the prevalence of work-from-home culture resulted in a K-shaped rebound in the residential segment. The appeal of real estate as an investment asset class expanded noticeably after Covid. According to the CII-Anarock Covid-19 Sentiment Survey, approximately 62 percent of respondents said it was a good idea to buy a home immediately soon. Buyers sought larger houses, even if it meant relocating to the outskirts, as a result of the work-from-home and online education culture. Millennials aged 25-35 years account for 48 percent of respondents who favor real estate as an asset class, compared to 17 percent before Covid-19. 

If you are looking for a real estate partner to start your investments with then Assetmonk may be your best option. Assetmonk has been facilitating its clients with some of the safest and best options in India. Contact our team to start your investments today.

Indian Real Estate Industry 2022 FAQ'S:

From Rs. 12,000 crores (US$ 1.72 billion) in 2019, the real estate industry would rise to Rs. 65,000 crore (US$ 9.30 billion) by 2040. India’s real estate market is predicted to grow to US$ 1 trillion by 2030, up from US$ 200 billion in 2021, and contribute 13% of the country’s GDP by 2025.

Roof access, shared areas, and even specific workstations will become more important aspects in the future of the real estate. Investors in multifamily buildings may see these changes as early as this year, but they will only become more pronounced as time goes on.

Between 2019 and 2029, the Bureau of Labor Statistics predicts a 2.3 percent increase in employment for real estate brokers. During that time, an estimated 8,700 positions should become available. Clients use real estate agents to purchase, sell, or rent properties.

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