2019 was a lukewarm year for Indian Real Estate as sentiments moderated due to slowdown in the economy. Despite appetite shown by end-users, investor activities have softened. Although upcoming corridors in Hyderabad, Bangalore, Chennai & Pune continued to show growth, other major markets such as Mumbai & Delhi-NCR continued to suffer from unsold inventory overhang. It is estimated that currently, the value of stressed assets in Indian Real Estate is to the tune of around INR 174,000 Crores. A majority of such assets are concentrated in Delhi-NCR & Mumbai.
However, 2019 also saw some notable changes in the industry. The government has taken some praiseworthy steps such as recapitalization of NBFCs, stress fund for stuck Real Estate projects & repo rate cut to boost liquidity in the market. Likewise, NRIs are becoming a dominant force in Indian Realty & contributing a sizable part of the demand dynamics. The growing strength of the diaspora is a welcome change in the industry. The year that passed by has also witnessed growing consolidation in the industry as bigger developers are acquiring smaller ones.
The outlook for 2020 looks promising drawing strength from strong fundamentals, growing consolidation, & government initiatives to bring in more liquidity. Here are the top 4 trends that are going to influence the industry in 2020.
Marginal rise in sales volume: We are expecting a marginal rise in sales volume. Although prices nearly remained stable in most of the major markets in India. A viable price option will further add momentum to the homebuyers' demand. There will be a growing propensity for ready-to-move-in properties from major developers. Newer growth corridors will see higher transactions.
Young Demographics: India’s young demographics will play an instrumental role in driving home demand in the near future. India is home to around 600 million individuals who are below the age of 25. The young demographics of India with its changing consumption pattern define a huge amount of aggregate demand. Apart from fashion products, consumer durables & automobiles, the young Indian demographics will also be a key player in driving housing demand in India. Many youngsters these days prefer to own a home at the early stage of their career & this is going to be a growth multiplier.
Technology: Innovation & technology will further deepen its role across the entire value chain of realty transactions with a key focus on lowering the transaction costs & raising customer convenience. During 2016-2019, over USD 300 million has been poured into the emerging proptech space in India. In 2020, more investments will follow in the proptech, which will also include newer technologies such as machine learning, Blockchain, drones and virtual reality, among others.
Commercial: Increased demand for Grade-A office spaces in the CBDs of India will continue to gain momentum. Demand for commercial office spaces will continue to get a shot in the arm due to the IT/ ITeS, BFSI & manufacturing industry. There will also be a growing demand for shared or flexible office spaces as both startups & bigger companies are getting lured towards such office spaces. Going forward, around one-sixth of the total office transactions will comprise of such shared office spaces.
