The real estate industry is in the cusp of transformation and the past decade has played a crucial role in shaping the sector. The realty sector and its ancillary industries witnessed a series of structural reforms with advent of RERA, policy change, industry consolidation, fast proptech growth, and so on, which has helped increase transparency and trust between builders and buyers. Furthermore, the clarion of 'Housing for All' has brought the mid-income housing and affordable housing sector to the foreground.
The real estate industry has certainly evolved from brick and mortar to a service-driven product offering and the growth of the sector will be largely driven by ever-evolving customer requirements, technological transformations, and a favorable policy environment allowing it to flourish in the coming years. As reported by the Indian Brand Equity Foundation, the real estate sector in India is expected to reach a market size of US$1 trillion by 2030 and contribute 13 per cent of the country's GDP by 2025.
2020 will certainly be a positive year for the real estate market. Here are a few major trends that will lead to the growth of the sector.
1. Both residential and commercial sector to grow
2020 has a great potential for both residential and commercial real estate business. In the last few years, the office space gained traction in most cities with IT/ITeS players contributing to majority of the leases. Also, the warehousing sector will gain traction. Rapid urbanization and white-collar migration will ensure strong growth for the commercial sector, which in turn will translate into higher residential demand. With concepts like 'Housing for All', affordable housing will continue to be the key growth driver.
2. Sub-urban cities to get more traction
Markets such as Pune, Chennai, Hyderabad and Bangalore have seen a steady rise in demand for homes and we are optimistic that this trend is set to continue in FY21 as well. The affordable housing segment will create demand in secondary markets like Goa, Coimbatore and the likes.
3. Co-living and co-working spaces will continue to rise
Over the past few years, there has been a significant change in the buying behaviours of customers, especially the millennials. They are more inclined towards co-living spaces that is more dynamic as compared to the usual rented space. On the other hand, the rise in gig economy led to high demand in co-working spaces in major cities like Bangalore, Hyderabad and Pune markets. This trend is set to grow in 2020. As per Knight Frank, 'In India, the co-living concept is gaining widespread acceptance and though the concept is novel, it's here to stay. This trend is giving impetus to an organised rental market in cities such as Bengaluru, NCR and Pune in the same way as co-working spaces did for shared office space.'
4. Technology reshaping the sector
Smart tech and innovation in the sector is no longer a distant future. In terms of construction, the key players will adapt to the latest technology-data gathering, artificial intelligence and machine learning which will play a key role in redefining the realty sector in India. With improving the quality of construction, the technology will also help boost timely completion of the projects. Smart homes will continue to be the choice of customers. The real estate market will tap this space with ambitious projects and according to industry estimates, the Indian smart home market is currently valued at about $893 million and is expected to grow by leaps and bounds in the next five years.
5. Sustainable and green living will be widely accepted
Both developers and home buyers have been supporting green technology. This will continue to grow with developers focusing on technological advancements in procuring raw materials that are eco-friendly and sustainable designs that are environment sensitive. The customers as well are opting for smart homes which make way for sustainable living.
6. Luxury housing will be redefined
The traditional concept of luxury housing will witness a major shift effected by the demands of the new age home buyers. The luxury housing will evolve to accommodate a holistic and elevated living experience that the developers will have to incorporate.
2019 has been a year of reforms in the industry with an increased focus on transparency and customer centricity by both, policy makers and developers. The regulatory framework has helped regain the trust in the industry. Also, the systematic implementation of the government reforms will definitely help in rekindling consumer sentiment, which will eventually push the growth of residential segment in the coming quarters. We expect the New Year to be more than promising for developers and home buyers where the growth is led by the positive change in the business ecosystem.
(By Ashish R Puravankara, MD, Puravankara Ltd)