Which is the place you’ve spent most of your time during the COVID-19 lockdowns? You are correct if the first thought that comes to your mind is — your home. In the last two years, our lives have been more homebound than taking the usual daily commutes to the office. This period gave people enough time to ponder on how necessary was it for them to have a safe home of their own. And year 2022 is precisely about turning this realisation into an actuality through growing demand for homeownership. People’s dream of buying homes and investing in real estate prevailed throughout 2020 and 2021 and has now shown evidence of turning real in the new year — 2022.
With the gradual recovery in the economy and real estate becoming more affordable, we are set to witness a new growth in the sales of real estate. The whirl in the realty sector is not only moving towards residential spaces but investments in the commercial land sector are becoming more relevant than ever. The low cost of doing business, carried over from the previous years, is still prevalent and many new Micro, Small and Medium Enterprises (MSME) are finding this day a most appropriate time to kickstart their businesses. These small enterprises are now keen to buy land and organise their businesses at bigger commercial plots.
While some sections of commercial land like shopping malls, community complexes and lodging facilities may have seen a decline, yet on the other side of this coin are businesses like storage facilities, industrial complexes, hospitals and huge data centres, whose space requirements have gone up. Speaking of workspaces, in 2022, we are to see a new hybrid office, wherein while video conferencing will be preferable, the core human need for physical interaction will also survive. From a psychological and sociological perspective, the hybrid workplace of the future would be a mix of both work-from-home offices as well as the traditional office complex. In addition, it is an interesting question to think that given our need for social distancing, will the Government increase the square foot area per person while releasing the new building codes. If this begins, the year 2022 will be a happy boost wherein more space will be required for industrial constructions as compared to the pre-COVID times.
Contributing to this positive projection are the Government policies, which have been supportive to people impacted by the COVID-19 curbs. As the recent crisis has been treated as force majeure, the new rules under Real Estate Regulatory Authority (RERA) now allow relaxation in completion dates for realty projects. Another important move has been the announcement of a 6-month loan moratorium by the Reserve Bank of India, wherein significant time relaxations were granted to people for repaying their loans. With Government norms already allowing a 100% Foreign Direct Investment (FDI) in real estate, a September 2021 report predicted a strong investment of about $3.5 billion in this sector, which is almost 75% of what was seen in 2020.
In addition, the strategic move of demonetisation freed the real estate space of all its impurities. Demonetization curbed the superficial inflation and surfaced the true market prices of land. The infrastructural development is also not far, wherein the National Highway Authority of India (NHAI) has done wonders. A target of 40 kilometres of highway construction per day was set by NHAI during the 2020-21 fiscal. Indian Railways have also marched very quickly to expand its infrastructure and all set to complete both DFC corridors in near future. These developments make real estate more lucrative than ever.
In retrospection, given the bent of people to own their own homes, the need for bigger spaces, upcoming hybrid workplaces and the Government’s infrastructural boost, 2022 is the ripe year to secure your investments in the real estate market.
By Ved Parkash Dudeja, Vice-Chairman, Railway Land Development Authority (RLDA)