The real estate sector, which took a major hit during the Covid pandemic lockdown phase in 2020, is in consolidation mode and is expected to get into growth path in 2021.
“After the unlock, the festival season boosted the sentiment and this continues as we have entered the year 2021. We expect to see good growth momentum going forward,” Niranjan Hiranandani, President of real estate body Naredco, said.
During a detailed interaction with BusinessLine, Hiranandani said, “In my 45 years of engagement with the real estate sector, I have not seen interest regime as low as the current level. This low interest rates, pent up demand, and some tax rebates announced by the Centre and lowering of stamp duty for registration by some States like Maharashtra has added to huge volumes during November and December.”
“Significantly, this momentum is likely to continue to the fourth quarter of the current financial year and possibly during the year 2021,” he said.
“The sentiment is positive for the real estate sector. If we consider the FDI and REITs, the investors are keen on investing in good projects. Even we get regular requests for investments. The Government, the Reserve Bank of India and various States have also boosted the sentiment by extending funds, sops and reducing the interest rates,” he said.
“The Prime Minister Awas Yojana will see the construction of 1.1 crore houses by 2022, covering the entire country barring Mumbai, and Delhi. The GST has been brought down to 1 per cent of PMAY along with 3 per cent interest subvention for 15 years. This only shows that banks are actually subsidising housing sector,” he explained.
States like Maharashtra have brought down the stamp duty to 2 per cent per cent from 5 per cent.
“With people working from home during the Covid pandemic period, many of them started looking at either acquiring a property or considering upgrading to bigger homes. Coupled with the interest rates dropping to 6.75 per cent, it has become an attractive proposition to buy new homes. The sales volumes witnessed recently show this trend,” he said.
“Home loans are safest business for the banking sector. Data shows that there are less than 2 per cent defaults. Significantly, it is unique to India where about 50 per cent of home buyers prepay their home loans,” he said.
In the past, there was the problem of mismatch of available housing offerings versus what the people wanted. This is slowly changing with builders reworking their plans.
“The residential segment and the construction sector will do well in the fourth quarter of the current financial year as there is a huge appetite which is backed by pent up demand and low interest rate regime. Developers have shifted their approach to increased digital platforms and enhanced automation at construction site,” he said.