Emerging trends likely to reshape Real Estate in 2020
With the sluggish growth in 2019, the year became quite challenging for the retail industry in 2019. This made the Indian developers aware of their position in the world and what steps should be taken to overcome the backlog of the previous year. To work on the same, changes in demographics, technology, and preference with an aim to boost the sale of property in 2020.
Even with the slow down of the industry, quarter 3 and quarter 4 showed some improvements due to the developments based on consumer’s requirements.
Prominent trends in 2020
1. Real estate to be end-user driven
While the market does not have an increased number of investors, the segment still seems to dwindle. The probability is, the investors in 2020 will be end-users, with the targeted sale towards them. The market is increasingly becoming end-user driven.
2. The rise in demand for co-working and commercial spaces, compact areas
The main principle to be offered is ‘right size, right price’. The mentality of the buyer has shifted from luxury houses to affordable houses. Developers are looking forward to addressing this challenge because the houses which are low priced will get more response from the investors than the high priced houses.
The commercial sector has been rapidly increasing with the increase in foreign investment which is helping the economy to grow. There was a huge demand for commercial spaces in 2019 which is expected to be more immense than the previous year.
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3. Increasing use of technology
With the high dependence of users on technology, it has become necessary for the developers to indulge themselves in the technology and provide the best information and positive perception about the sector to the user.
Challenges to be faced by real estate in 2020
A rise in trends is to be expected in the year. But the industry might face some challenges as well in order to revive from the previous year’s slowdown. The developers have requested the government to take some measures to help the industry in growing back.
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The status of the industry and single-window clearance system
The real estate sector and the GDP are directly proportional. Even with policies like “Pradhan Mantri Avas Yojna” and “smart city projects” introduced by the government, the sector still faced a downfall. Now, by awarding the industry status to real estate developers will be able to pick up loans at low rates and reduce the cost of capital.
A complaint from the developers also stated that the projects get delayed due to the absence of single-window clearance.
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Funding from banks
The funding provided by the financial institutions in 2018 was less and it further dropped down to a dreadful 37%. We just hope that there is an increase in funding by banks.
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Financial bailout
A financial bailout of Rs. 25 crores was announced by the government. But keeping in view the stagnant market, the bailout ain’t enough to recover the difficulties investors are facing. A further financial bailout will be required to address the issue.
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Tax reforms
To boost the real estate, it is suggested to ease the goods and service tax and a speedy approval to the projects. One of the complaints from the developers was that the withdrawal of Input Tax Credit affects the housing segment as it involves high costs.
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High stamp duty charges
The stamp duty charges on registration of property are conveniently high compared to the other economies. Id the charges are reduced that will help the buyers to invest in property.
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Home loan interest rates
The interest on home loans in other economies is 3%-4% but in India, it is 8%-9%. This discourages the buyer to invest in property.
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