From affordable homes to neighbourhood convenience stores, from owning a house to living in gated communities, and to emerging segments like warehousing and logistics, a spate of new trends are gaining traction which will mark the year 2021, observes Vinod Behl.
The residential real estate that was already facing a slowdown, got a crippling blow with the pandemic in 2020. With job losses and salary cuts, the spotlight increasingly turned on affordable and mid-segment homes. Affordability of homes calculated on the rate of home loan repayment to income is expected to go up in 2021, which in turn will push demand for affordable homes. According to industry statistics, the affordability of homes will improve by 50% in FY 2021 against the affordability seen in FY 2012.
Historically, low interest rates have been a major driver of affordable homes. The year 2020 saw home loan rates dropping to sub 7% and with substantial interest subsidy of up to `2.67 lakh under Pradhan Mantri Awas Yojana (PMAY), affordable housing got a big boost. According to International Property Consultancies (IPCs), majority of the homes sold in 2020 were in the affordable housing category. Even 70% of the new home launches happened in the affordable segment. With banking and financial experts predicting the low interest rate regime to continue in 2021 and credit linked subsidy scheme under PMAY likely to be extended beyond March 2021, affordable housing will be the flavour of the season in 2021. The government’s major policy initiative in terms of Special Window for Affordable & Mid-Income Housing (SWAMIH) Fund to aid housing projects stuck for lack of last mile funding, will give a big boost to affordable housing, as the disbursement under this fund gains traction in 2021.
Neighbourhood Shopping Centres
Shopping malls which remained shut for months, saw abysmally low footfalls after they reopened. It is the neighbourhood shopping centres, particularly convenience stores within group housing complexes and townships, which turned saviours. Residents have been preferring to shop within the safe and secure environs of their gated complexes. This retail trend will gain further momentum in 2021 as people continue to be safety conscious.
Taking note of this trend, real estate developers have been making provisions for dedicated retail hubs in their residential projects. These convenience shopping complexes provide a complete shopping experience with premium to daily need brands, besides F&B outlets, ATMs/banks, and entertainment outlets. With power and water back-up, these modern retail complexes, designed for operational efficiency, hold promise for investors also. Considering the growing demand for these neighbourhood convenience shopping complexes, the Haryana government has amended its Affordable Housing Policy to double the commercial space for retail within their group housing. These retail hubs will show greater promise for developers, home buyers, and investors in the new year.
Preference for Buying over Renting
In the aftermath of the pandemic, accommodation seekers, especially millenniums, will be preferring to own a home rather than renting it, simply because of the health safety and security reasons. In fact, a large number of homeowners were reluctant to give their homes on rent for the very same reason. According to the India Real Estate Survey by real estate consultancy NoBroker.Com, in Delhi-NCR, about 73% of the existing tenants (of which 58% are millennials) are looking to buy a home in 2021.
Emerging Segments of Commercial Realty
The office realty, which showed good growth in 2019, was badly hit by the pandemic. According to Savills India Report, office absorption across India’s six major cities declined to 27.4 msf in 2020, registering a drop of 51%. However, office realty displayed strong resilience and could well be on a strong growth path in 2021 - and achieve pre-Covid levels. This is due to the economy picking up pace and commercial segments like warehousing, logistics and data continuing to witness strong leasing transactions. The Transport and Logistics segment increased its share from 1% to 3% in 2020. As per a Knight Frank India report, about 3.5 msf of warehousing stock was added in tier 1 cities in Q3 of CY ‘20, registering a growth of 88% compared to the previous quarter. Around 3.8 msf of space was absorbed - registering an increase of 93% over the previous quarter. Disruption in supply chain across industries is proving to be a boon for warehousing. Logistics players are also set to benefit from higher freight volumes. There will be an upside in logistics stocks as valuations are attractive. In view of this, foreign PE funds will be increasingly betting on warehousing and logistics.
Data Centres also continue to be a major driver of office realty. According to Colliers India, the share of data centres in the India Real Estate PE Investments was as high as 46% in August 2020. Data centres occupy 7.5 msf space in the top 8 cities. Another 10 msf new space will be added by these centres over the next 2-3 years. In view of the good growth prospects, big developers like Adani and Hiranandani have lined up `10,000 crore of investment in data centres in Uttar Pradesh. The introduction of 5G will further push demand and with the government preparing to give infrastructure status to data centres in its draft policy, this segment of real estate will get a big boost, in turn pushing demand for office realty.
Safe Living in Housing Societies
According to a survey, more than three-fourth of home seekers are preferring society living over independent villas and standalone homes/builder floors, due to increasing concerns about their health and safety. They are opting for flats, villas, and floors in gated complexes, as group housing societies provide community living with health and wellness amenities like a gym, meditation centre, jogging tracks, and common facilities like a club house, shopping centre, maintenance, and home services like plumbing, carpentry, electricity, sewage, garbage disposal etc. Visitors are screened at the entry gate of the housing complex, and entrance lobbies in the residential towers have health screening facilities too. The security, rent and maintenance payment and the neighbourhood retail apps enhance the liveability quotient of a group housing society.
The writer is Editor, PropTOQ Real Estate Magazine.