If 2020 was the year that changed everything, 2021 could even be the year where change becomes the ‘new normal’ and adapting to this ‘new normal’ would require imagination, innovation and digital transformation. The arrival of 2021 won’t shake off all the challenges of a pandemic-riddled economy but the groundwork for a sector-wide recovery has been laid by Land promoters in Chennai. The year is poised to work out itself because the year where India enters a replacement phase of property growth, innovation and investment.
With business activities gaining pace and thus the Indian economy expected to rebound considerably in 2021, several important questions come to the fore – Will this year be the start of a new growth cycle for the Indian realty industry? What permanent changes are we likely to witness? Will any of the asset classes return to pre-COVID conditions?
The lifting of lockdown and travel restrictions is predicted to revive land assets, improve income visibility and attract cross-border investments in 2021. Investors are expected to remain moderately cautious and may reposition strategies with improved asset pricing discovery during the year. The big dry powder, low interest rates, and continued monetary stimulus are expected to bring broad-based investment growth. The success of REITs is predicted to drive investment momentum with a preference for office assets by Land promoters in Chennai
Finance Minister, Mrs. Nirmala Sitharaman presented the Union Budget 2020-21 on 1st February. Here are the highlights of the real estate sector:
- The deductions on affordable housing were allowed on housing loans sanctioned on or before 31st March 2020. to ensure that more people avail this benefit and to further incentivise affordable housing, the date of loan sanction has been proposed to be extended by 1 year and a tax holiday is being provided on the profits earned by developers of affordable housing development approved by 31st March 2020 to spice up the supply of affordable houses within the country by Land promoters in Chennai.
- Currently in land transactions, while taxing income from capital gains, business profits and other sources if the consideration value is a smaller amount than the circle rate by more than 5%, the difference is counted as income both for the purchaser and seller. to attenuate hardship in a property transaction and supply relief to the sector, it has been proposed that the limit be increased from 5% to 10%.
- Rs 100 lac crore would be invested on infrastructure over subsequent 5 years across various sectors like housing, basic amenities, energy, healthcare, educational institutes, transportation, logistics and warehousing, irrigation projects, etc.
Housing prices that were already under downward pressure within a previous couple of years, fell further during the Covid crisis. In the last 2-3 years, residential prices have fallen up to 15-16 per cent in the top eight cities. While prices are likely to stay muted in 2021, an extra significant fall in prices from the current levels is unlikely.
After a record level of 60 million sq. ft in 2019, office transactions fell sharply in 2020 due to the pandemic-induced uncertainties and WFH from the land for sale on GST road. Going forward, whilst things return to normalcy, we feel corporates will experiment with hybrid work models. So, even while they provide more flexibility to the employees to work from anywhere, which will not necessarily end in lower office demand.
Some corporates may choose dispersed office locations to facilitate less travelling by the workers. Space per desk that had reduced from a mean of 120 sq. ft to 80 sq. ft in the last five years, could see a reversal in trend with occupiers choosing more dispersed seating to require social distancing under consideration for DTCP Approved plots in Chennai.
Co-working, which emerged as a robust trend in the previous few years, got severely hit by the Covid crisis. This segment received a huge jolt as start-ups and tiny entrepreneurs gave up their office seats during the pandemic. Going forward, as the business uncertainties linger, the co-working segment will emerge strong given the flexibility offered by them. Even among the co-working operators, those having an outsized share of enterprise clients (bigger corporates) will do better than those enthusiastic to start-ups and little entrepreneurs.
Like many other sectors, the property has adjusted to the pandemic and therefore the new normal. While the battered sector has started recovering from the crisis, uncertainties still linger. Going forward, the recovery of the sector is getting to be directly linked to the Covid situation and thus the economic recovery. 2021 is going to be a year of cautious optimism for many sectors, including property.