What lies in store for Indian real estate in 2022?

Despite fears related to the Omicron crisis, the real estate market in 2022 looks bullish and demand is accelerating fast across categories.

Real estate is also capitalizing on a healthy economic outlook. Indian economy is slated to grow in the range of 8-9%, which is driving growth in demand for larger and bigger homes in the major Indian market. As demand will increase, prices will naturally go up.

The year that passed by has been a roller coaster ride for Indian real estate. The market crashed during the lockdown 2.0 but made a quick recovery soon with demand gaining momentum. Despite fears related to the Omicron crisis, the market in 2022 looks bullish and demand is accelerating fast across categories.

Outlined below are some of the key factors that will define Indian real estate in 2022.

The Downside Risk of the Omicron will be managed by the tailwind of a better learning curve

The downside risk of a possible Omicron outburst can’t be denied. Cases are rising in numerous cities and if unchecked, it will weigh on the economy and eventually real estate demand. Meanwhile, the positive sign is that the past two iterations of the crisis have helped us learn a lot about how to cope, mitigate, and quickly recover from an impending crisis. The recent crisis has made the governing agencies as well as the business fraternity resilient. As a result, despite the possible hiccup, the industry is confident and well prepared. Likewise, even if lockdown is imposed business will continue as usual and there would not be huge demand destruction.

Prices might move northwards finally in the second half, H2 2022

Real estate prices have mostly remained stable in the previous two years. However, finally, in the second half of the next calendar year, real estate prices might move upwards. The buoyancy in the market will be backed by a surge in demand. Following a prolonged period of muted demand, the housing market in India is seemingly bullish. There has been a huge amount of pent-up demand generated over the past 2 years, which is now unlocking, giving a positive flip to the market. Lower home loan rates will also help the industry.

Real estate is also capitalizing on a healthy economic outlook. Indian economy is slated to grow in the range of 8-9%, which is driving growth in demand for larger and bigger homes in the major Indian market. As demand will increase, prices will naturally go up.

The positive push in the prices will also be rooted in the surge in prices of raw materials such as cement, steel, bricks, energy, etc. Meanwhile, it should be noted that in case of any monumental shift in cases, this will be reversed.

The focus will be more on sustainable community-driven lifestyle

The recent crisis has taught us the importance of two contrasting ideas. Maintaining hygiene and safety yet living a fulfilling community-driven lifestyle. People are now realizing how important, and enriching is to live a socially fulfilling, community-driven living in India. The feeling of being part of a community, based on meaningful social interaction can give a sense of commitment and belongingness. It also gives a sense of tranquillity and safety.

Traditionally human beings are social animals and it has been the essence of civilizational growth and evolution. The pandemic has once again reaffirmed this idea of living a socially engaging lifestyle.

Developers are also understanding the same and now coming up with numerous new projects that can nurture meaningful social interaction and render a sense of social community lifestyle.

RSH will be the market segment to watch out for

During the pandemic, the RSH market in India has gained a tremendous shift in demand. In major RSH markets like Shimla, Goa, Ooty, Alibaug, the demand is soaring high. Presently the market is sized at USD 1.394 billion and is expected to reach USD 4 billion in the next 5 years.

As the Work from Home or Work from Anywhere culture is gaining popularity, the demand for a second home will continue to go over the roof in the foreseeable future. Increasingly corporate, lawyers, tech entrepreneurs, creative professionals, consultants, etc. will move to second homes and continue operating from there. The rising demand for flexible working hours amongst Indians will be a major growth multiplier for the RSH segment in India.

Experiential Retail

The lockdown has taught us the significance of e-commerce. Meanwhile, the lockdown has also taught us that digital commerce is never going to completely outmaneuver its physical counterparts. However, 2022 will see an increased focus on experiential retail. Highstreets, malls, hypermarkets will come up with new concepts and ideas to help visitors unwind, relax, and entertain themselves. Retail would not just be about shopping. It will also focus on rendering an engaging experience to the visitors.

(By Ankit Kansal, Founder & MD, 360 Realtors)

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