Real estate will survive and thrive as an asset class in the post covid era. After agriculture, once may witness a surge of growth in this sector. The residential sector contributes to 5% of India’s total GDP creating opportunities for both skilled as well as unskilled workers which attract large masses of migratory populations from tier 2 and tier 3 cities to metropolitan cities for work. The construction sector employs approximately 90% of the workforce employed in real estate in construction.
Due to an all-time low home loan interest rate, it is become that much easier to invest in a residential property and in addition to the reduction in the RERO rate announced by RBI, the conditions are very favourable also for the end users to buy their dream home. Another factor is the depreciation of the India Rupee against other currencies, which makes it more lucrative for NRIs to invest. Experts do believe that there is no further room for correction in the property prices and with developers are working with low margins. However, despite all this, they are still providing a 5-10% price cut to enhance cash flows. This will make way for an overall robust scenario and give a boot to the Real Estate segment which will result in prices to rise eventually.
Another factor is that with trusted AAA rated developers who are nearing completion of their projects, their stocks are being sold almost at will and they are often dealing with multiple offers on the same unit. However, this is in a few projects, as the economy improves, this competition will further escalate and will make finding of their home more unmanageable and out of reach. We have started noticing a shift in this market where the buyer is ready to pay a premium for a good project which is nearly completion with a known and branded developer. At this stage the buyer is more concerned about the quality of the project, reputation of the developer rather than the market price.
Recent Comments