Uncertain times bring up questions that are meant to appease the parties involved. One such question is about the housing or realty trends in India in the year 2021. Corporate and real estate guru Hirav Shah has certain insights and suggestions for both investors and builders.
India was a fast-developing economy. Then the unexpected happened and the pandemic struck. But it has to be remembered that it is not just India that is facing the consequences of Corona. It is indeed a global phenomenon. As per astro-strategist and real estate investment advisor Hirav Shah, the situation may not be as gloomy as it appeared in the first quarter of 2020.
Yes, real estate suddenly experienced a slump and housing and construction sectors were severely hit. During the initial days of the pandemic, there were stories about economies not recovering and write-ups about how sluggish realty would impact the general economy of the country.
However, being a corporate strategy consultant, Hirav Shah has his thoughts about the realty industry. He feels certain things depend on the individual fortunes and overall prospects of a project and this is likely to help his clients gain a better perspective on the market dynamics.
Sops from the government
For starters, right at the beginning of the year, Finance Minister Nirmala Sitaraman had come up with certain proposals as part of the union budget:
- Deductions on affordable housing were allowed on housing loans sanctioned on or before March 31, 2020. To ensure affordable housing, the date of loan sanction has been proposed to be extended by 1 year and a tax holiday is being provided on profits earned by developers of affordable housing projects.
- In real estate transactions, while taxing income from capital gains, business profits and other sources if the difference is less than circle rate by more than 5 per cent, then it is counted as profit for both the buyer and the builder. This has been increased from 5% to 10%.
- The most important point was the proposed Rs 100 lac crore to be invested in infrastructure over the next five years in various sectors like housing, basic amenities, healthcare, educational institutions, transportation, logistics, warehousing and irrigation projects.
Successful launch of Real Estate Investment Trust (REIT) opened new avenues for investments coupled with government initiatives for the sector. Housing sales saw a modest 4-5% annual growth and new housing launches saw 18-20% growth with developers hoping that deduction on loan interest, GST rate cut and alternative investment fund for stalled projects and changes to credit guarantee scheme would strengthen the sector.
Despite the pandemic, the real estate sector looked at more traction with financially strong players staying ahead in the game. This buoyant atmosphere would boost and revive housing units in NCR and Mumbai-MMR, predicts Hirav Shah.
So, what exactly is investing in realty?
Hirav Shah says it is like any other investment strategy. Any purchase done is meant to rake in profits and the idea is to resell it at a higher cost or rent it out at best possible rates. Just like equities and bonds, it is pertinent to understand the ins and outs of the industry and it is here that experts like Hirav Shah come into play.
The renowned astro-consultant will help you chalk out an investment strategy that is likely to bring forth maximum benefits.
Issues concerning realty in 2020
The year 2020 has been marred by pandemic and realty saw several new developments that will impact the industry in 2021:
- Firstly, Greater concentration of demand. This has led to development of high-end projects that have all amenities suited for a happy and hi-end lifestyle.
- Secondly, it is estimated that by the year 2025, India is likely to have 1.1 crore average house completions. So real estate is set to develop at a global scale, which is good news for both realtors and property investors.
- Thirdly, says Hirav Shah, a new trend of co-owning or splitting of spaces into rental units will see a rise. This spells good news to investors in rental property, according to the real estate guru.
- Fourthly, market research has shown that fast growing cities will drive high risk high rewards in emerging economies.
- Fifth, there is clear progress and growth in micro markets such as Bhiwadi in NCR, Halol in Gujarat, Jamshedpur, Jaipur, Jodhpur, Sohna in Gurgaon, Airoli in Navi Mumbai, Pirangut in Pune and Madhapur, financial district of Hyderabad. It is predicted that in 2020, there will be high demand for quality residential homes, thanks to the development of industry and economic opportunities.
- Sixth, more than the luxury and hi-end segment, it was the mid-segment that saw growth in this year. Lower EMI rates, flexible payment plans, income tax rebates on home loans, discounts and freebies offered by builders were a major attraction for many.
- Seventh, the market has become more organised with professional builders taking on the market. And these builders are trying to demarcate the sector by coming up with comfort homes, senior citizen homes, kid-centric homes and even co-living spaces. Amenities like 24×7 CCTV surveillance, power back-up, club houses, swimming pools, outdoor parks have become a mainstay in such projects these days.
- Eighth, growth of integrated townships in Tier II cities. With realty becoming unreachable in major metros, Tier II cities are emerging as good investment options with builders providing all amenities as seen in major metros.
So, the big question, is it profitable to invest in real estate in 2021?
Well, the answer is a huge yes, says corporate strategy consultant Hirav Shah. If the government remains true to its promise and brings about reforms in the realty sector, the demand is going to rise exponentially, feels Hirav Shah.
Some suggestions to invest
Bhiwadi: Apart from being a real estate investment hub, Bhiwadi will soon have a RRTS project. The regional rapid transport system (RRTS) will cover Delhi-Gurgaon-Rewari-Alwar region, thus ensuring good connectivity. The right time to invest is now, so you can reap higher returns in future.
Jaipur: A famous tourist spot in India, it has recently been declared a world heritage site. Thanks to the many higher educational institutions, top class infrastructure and good connectivity, Jaipur has all features of a full-fledged realty hub. There is a proposed plan of RRTS which will enable connectivity to Delhi/NCR and will also have a double decker train very soon.
South Gurgaon: The Maruti and Honda factories and the outsourcing industry in south Gurgaon hire more than 5 lakh people. This will mean investing here will mean a steady handsome rental income. The property prices have gone up by 10-15% in the past few years and will only increase in years to come.