Derailed Real Estate sector shifts gear for high growth trajectory

It is darkest before dawn; this adage has proved to be true for the Indian economy and real estate stood no exception. The industry has been facing challenged scenarios following the tsunamis of industry, taxation and economic reforms over the past few years. Last mile funding has seemed to be a daunting task, with stressed and delayed projects exacerbating the scenario where unsold inventories impacted the company’s balance sheets in terms of profitability. The Covid19 pandemic was the economic shocker which led to the initial shutdown if the economy. However, the gradual mission unlock of economic activities marked the process of economic reboot. The sectoral momentum was on uptick with much progression while transiting into 2021. Many instrumental fiscal yardsticks led to a rippling effect in the real estate sector churning the sentiment of the home buyers and other concerned stakeholders like developers and banking and financial institutions. The cumulative effect of booster dose injected in the economic reel turned into record sales and property registration hitting records in February 2021.Truly, a new day has dawned; as dreadful phase sees an optimistic day of light.

As the economic situation improved through the second half of 2020, most of the efforts were directed towards the home buyers. The need of the hour is support for real estate in the form of project finance. Let it not be forgotten that the sector is among the leading job creators and uplifts 270-plus ancillary industries as a multiplier effect which augments economic growth.  The high gear vaccination drive turned negative indicators into positive numbers of scale of growth. The improvised Moody’s rating is in tandem to the outlook forecast of Indian GDP numbers. The festive tailwinds, high public spending, bolstering infrastructure network, enhanced consumption and demand drive, and growing sense of owning a real estate asset has triggered an uptick in property sales. The innovative policy measures and fiscal stimulus has pumped in enough fuel and oil to resume the derailed sector back on track. Many micro markets have potential to grow and has been shifting gears to peddle up the sales momentum. All this optimistic signals into an anticipated projection of 10% CAGR growth rate of Indian real estate turning into a win- win scenario for all that meets the primitive objective of ‘Housing for All’.

Amid an upbeat economic outlook, real estate is poised to participate in scripting the Indian growth story. Outcome of desired measures by the government, Industry and apex regulatory bodies have percolated downstream in the economy that has enhanced the confidence index in the backdrop of Self Reliant India drive. Owning a house is no more just a dream, but has emerged as a basic necessity on the grounds of safety and security bringing the sense of urgency to ownership. The trend of young millennials turning into the first time home buyers, and simultaneously the current home owners upgrading to the larger configuration in need to encompass luxury of space to accommodate new normal activities like work, fitness or study at home in the long run. The sentiment index turns positive in lieu of many add on incentives offered to sustain the demand indices. Measures like interest subvention under CLSS scheme, deal sweeteners by developers, reduced stamp duty, low interest rates, ready reckoner or circle rates and a wide choice of apartments available continues to allure fence sitters for converting into actual home-buyers. The record numbers of property registrations for the month of February 2021 is a snowballing outcome of efforts by all stakeholders in Indian real estate.

The onset of vaccination drive has accelerated the economic cogwheel in the direction to become Aatmanirbhar Bharat and achieve the magic figure of $5 Trillion economy with employment and GDP growth inclusive. The fact that Indian market predominantly spells consumption centricity attracts investor’s bandwagon across the globe. Development of the real estate sector is an important denominator to gauge the health of any economy as it drives higher employment and GDP index. Progression of the real estate sector is imperative if the economy has to grow, as it comprises four sub segments like Retail, Commercial, Housing and Hospitality. The construction industry ranks third among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of the economy. The Annual construction by the real estate stands at 12.53 lakh crore which is 6 .1 percent of GDP of which developers housing contributes 42 per cent, self-construction constitute 53  per cent and rest of course is 5 percent.