Things to Look out for the Indian Real Estate Sector in 2021

Things to Look out for the Indian Real Estate Sector in 2021

The real estate sector was already in bad shape before the COVID-19 pandemic, which has only added to the troubles of the distressed industry. April and May were probably the worst months when the economy was broken badly, however recently there has been a good spike in the recovery of the real estate sector and demand for home loans has gone up evidently.

 Even the tax collections on account of GST has been on a surge. These are surely good signs of growth in the sector during the unlock process in the country, and while it is a positive development, it is not reflective of a recovery in the sense of the economy moving from a trot to a gallop.

 With policy support from the Central Government, the real estate sector is displaying signs of growth, and sales numbers are increasing across cities. To boost housing demand, the Finance Minister had announced measures like an additional outlay of around INR 18,000 crores for PM Awas Yojana. This relief is expected to lift the demand, particularly in the affordable and mid housing segments. Likewise, a record low rate of Home loans, relaxation on Stam Duty in a few states & RERA Regulation have been instrumental to motivate investors to invest in Real Estate.

Home away from Home

Due to the COVID-19 pandemic, the concept of a holiday home or a second home has gained widespread acceptance. With most of the corporate professionals working from home, geography is no longer a constraint. The need for a perfect balance between work and personal life has fuelled the concept of a weekend retreat in a holiday home. 

 From the investment perspective, second homes in non-metro cities are a relatively safe investment option with higher capital appreciation compared to homes in metros, especially during COVID-19, when alternative options such as mutual funds, shares have seen diminishing returns. These properties can be rented out to home-stays and tourism businesses, a booming market promising an assured and stable source of income to investors.

However, home loans for holiday homes are rarely available. Most of the time banks ignore funding under construction holiday homes especially to those customers who are desperately looking for it. We think, govt. can extend support in creating such policies that will benefit the players as well as people who are willing to spend on holiday homes.

To further speed fast the government vision of ’Housing for All’ and to give an impetus to struggling Real Estate Sector, Industry is hoping that the Government will re-visit the present limit of INR 2 Lakhs for Interest on Housing Loan U/s 24(b) of IT Act, and Cap of this INR 2 Lakhs in Interest would be waived off. It will be instrumental in allowing some tax relief to buyers and providing a much-needed push to the Industry.

 Keeping a positive outlook for the upcoming budget, we are hopeful to see relaxation in income tax norms, offer single-window clearance and GST reforms. Additionally, helpful measures like easing out of the liquidity issues that are being currently faced by the sector will boost investment in real estate.

 We also hope that the government gives ‘Industry Status’ to the Real Estate sector as a whole including Secondary Housing and Holiday Homes. Currently the same has been conferred only to affordable housing. This is a long-pending demand that is expected to help developers raise funds at lower costs.

 More so, the government needs to push the active NBFCs to extend liquidity to the Realty Sector and should declare that the rental income received from any Holiday Home-based / Tourism centric zones would be free from GST, to give further impetus to the holiday homes segment.

Real estate industry in 2021: Demand will go beyond the top 10 cities

The Covid-19 pandemic has altered how we live, work, learn, and play. The overall health, hygiene, and wellness concerns during COVID-19 have significantly shifted the focus towards spacious holiday homes set amid luxuriant greenery, away from densely packed Tier 1 cities. Further, riding on the wave of sustainability and prospective investment, the holiday homes/secondary housing has emerged as a sought-after option for the segment of buyers whose jobs and lifestyle quotient have remained unaffected in the wake of pay cuts.

 The trend has changed, and now the real estate scenario has moved from top metro cities to tourist Destinations. Investors have a strong belief that they could find better entry prices, flexibility, and sizable returns. There’re good avenues for youngsters beyond top metro cities. It is essentially because of the work-from-home concept, the demand for holiday homes is gaining traction, and there are more takers of holiday homes and secondary housing in Tier 2 cities.

Even, for the tourist states like Goa, the Goa government has been working in partnership with Software Technology Parks of India (STPI) to create the infrastructure to facilitate software exports and promote tech entrepreneurship in the region. As tech companies become location agnostic, options like Goa will beckon more strongly and not just remain a utopian dream of the Next Generation.

The above article has been contributed by Aditya Kushwaha, CEO & Director, Axis Ecorp. The views expressed in this article are that of Aditya and Mumbai Live may not endorse the same views. 

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