Forced lockdown led to an increasing demand for plotted developments

By Arjun Kumar
The Indian real estate sector contributes around 6 percent to the GDP and this figure is expected to rise to 13 percent by 2025. The housing sector has a great future ahead as mortgage penetration is very low in India and the family size is large.
Emphasizing on the significance of the housing sector and the changes it has went through over the course of the pandemic, #IMPRI Center for Habitat, Urban and Regional Studies (CHURS), IMPRI Impact and Policy Research Institute, New Delhi presented a special lecture with Prashant Thakur on The Housing Market amidst the COVID-19 Pandemic as part of the series The State of Cities – #CityConversations.
Dr. Rumi Aijaz, Senior Fellow, Observer Research Foundation (ORF), New Delhi, welcomed the speaker and discussants before delivering his enlightening comments. He said, “The housing sector does not need an introduction. Its significance is very well understood.” It is also important as it offers opportunities to various stakeholders like architects and housing has become a dire need in today’s world according to Dr Aijaz.
He further mentioned that there is a shortage of housing in India regardless of the socio-economic conditions despite numerous housing programmes established by the Government. Also, there are unfortunate incidents in large cities where air quality is deteriorating and disruption in livelihoods is observed. He said the pandemic and its persistence is a topic of concern as it has had many adverse consequences on the housing sector.

Introduction to the Housing Sector

Prashant Thakur, Senior Director and Head of Research, ANAROCK, Mumbai, began his talk by presenting the evolution of industry and its impact. The Indian real estate sector contributes around 6 percent to the GDP and this figure is expected to rise to 13 percent by 2025.
“This sector is crucial for India’s ambition to become a 5 trillion economy by 2025”, said Prashant Thakur.
Speaking of various countries, he mentioned that China and Brazil are the closest comparisons with respect to evolution in the housing sector. In India, the urban housing shortage is 11.2 million and home ownership as a percent of urban population is only 32 percent.

Demographic Factors

The housing sector has a great future ahead as mortgage penetration is very low in India and the family size is larger when compared to China and Germany. At the same time, Mr. Prashant emphasized that India has a young population and that around 54 percent of the population comprises the working class.
However, the sector was in bad light for many years, owing to several factors like high fragmentation, low entry barriers, illegal construction and other unscrupulous activities. Moreover, the market was driven by speculators which is not optimistic for the long-term.

Changes in the Real Estate Sector

The transformation journey of the real estate sector can be mapped into: fearless, regulated, controlled plus outlier and cautious revival according to Mr. Prashant. In 2013-2014, there was a supply of more than 10 lakh units and it was mainly driven by investors and in 2018-2020, the supply dropped to 5.6 lakh units as the sector was more regulated during this period.
The supply-absorption dynamics of pre-COVID and post-COVID shows that the industry was slowing down and this slowly reversed with the advent of COVID as the process of consolidation occurred. A sharp recovery is seen and Mr. Prasant attributes this to affordability and a market driven by end users.
After the government announced various incentives for housing projects, the share of affordable housing as a percentage of total new launches, went up to 44 percent as of June 2019. The peripheral areas are gaining prominence after COVID, with the hybrid working models, improved connectivity and cheaper land parcels. Sensing this trend, developers are launching many projects in the periphery.

Emerging Trends Due to COVID Outbreak

The forced lockdown has led to an increasing demand for plotted developments for sustaining better social distancing standards and weekend homes along with farmhouses are also in demand according to Mr. Prashant.
The market has changed from being driven by speculators to being end-user driven and millennials, who preferred renting to buying, as evident in average age of homebuyers which has fallen from 54 years to 29 years in the past two decades.

Real Estate Consumer Survey (H1 2021)

The findings of the Real Estate Consumer Survey state that 47 percent of property seekers are looking for nearing completion units and 71 percent of them are looking to buy for self-use. Mr. Prashant emphasized that 77 percent of them were concerned about developer credibility, 56 percent about location, 81 percent about pricing, 68 percent about design and 55 percent about reliable post sales services which indicates that most of them are end-users.
Digital adoption in the real estate sector was very low but the pandemic has accelerated this method. This is substantiated by the fact that 60 percent of the entire buying process is conducted online as opposed to the 39 percent in the pre-COVID era.
Dr Rumi Aijaz mentioned that the market seems to be in a better place now due to increased demand and this appears to be a good sign for both buyers and sellers. He agreed that peri-urban areas are growth centres where many upcoming construction projects are coming up.
Pavan Dixit, Co-founder, property360degree, Hubli, Karnataka, commented that prices were mostly remaining at the same level with the exception of minor drops. “As part of the rental market, the sizes of the properties are increasing” said Mr. Pavan, agreeing with Mr. Prashant. Mr. Pavan posed a question with respect to increasing rental yield.
Dr Akshaya K. Sen, Joint General Manager (Economics) & Fellow, Human Settlement Management Institute (HSMI), Housing & Urban Development Corporation Ltd (HUDCO), New Delhi, acknowledged that the housing sector has strong multiplier effects – an investment of 1 lakh rupees will create four jobs. NCAR study further mentions that this sector has an output multiplier of 5 – one unit of investments will give an output of 5 units. Thus, it is crucial to accelerate investment in the housing sector. Dr Akshaya spoke about governance-related issues such as many approvals are required, and delays and corruption are rampant.
He continued to speak about access to affordable housing finance – the funds available to economically backward groups is less than 4 percent. The other 96 percent of the funds are available to those sections where the housing shortage is less.
Mr. Prashant said that the housing sector has oversold properties as an investment while the demographic profile indicates that the housing rental would remain in check due to rising supply. The question was posed on the way forward of the sector. Mr. Prashant responded by saying that the construction sector is a very important one and the current investments in the real estate sector would contribute around 13 to 15 percent in the next 5 years.
—
Acknowledgement: Ritheka Sundar is a Research Intern at IMPRI

Comments

Urgent need to study cause of large number of natural deaths in Gulf countries

By Venkatesh Nayak* According to data tabled in Parliament in April 2018, there are 87.76 lakh (8.77 million) Indians in six Gulf countries, namely Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE). While replying to an Unstarred Question (#6091) raised in the Lok Sabha, the Union Minister of State for External Affairs said, during the first half of this financial year alone (between April-September 2018), blue-collared Indian workers in these countries had remitted USD 33.47 Billion back home. Not much is known about the human cost of such earnings which swell up the country’s forex reserves quietly. My recent RTI intervention and research of proceedings in Parliament has revealed that between 2012 and mid-2018 more than 24,570 Indian Workers died in these Gulf countries. This works out to an average of more than 10 deaths per day. For every US$ 1 Billion they remitted to India during the same period there were at least 117 deaths of Indian Workers in Gulf ...

A comrade in culture and controversy: Yao Wenyuan’s revolutionary legacy

By Harsh Thakor* This year marks two important anniversaries in Chinese revolutionary history—the 20th death anniversary of Yao Wenyuan, and the 50th anniversary of his seminal essay "On the Social Basis of the Lin Biao Anti-Party Clique". These milestones invite reflection on the man whose pen ignited the first sparks of the Great Proletarian Cultural Revolution and whose sharp ideological interventions left an indelible imprint on the political and cultural landscape of socialist China.

India's health workers have no legal right for their protection, regrets NGO network

Counterview Desk In a letter to Union labour and employment minister Santosh Gangwar, the civil rights group Occupational and Environmental Health Network of India (OEHNI), writing against the backdrop of strike by Bhabha hospital heath care workers, has insisted that they should be given “clear legal right for their protection”.

Uttarakhand tunnel disaster: 'Question mark' on rescue plan, appraisal, construction

By Bhim Singh Rawat* As many as 40 workers were trapped inside Barkot-Silkyara tunnel in Uttarkashi after a portion of the 4.5 km long, supposedly completed portion of the tunnel, collapsed early morning on Sunday, Nov 12, 2023. The incident has once again raised several questions over negligence in planning, appraisal and construction, absence of emergency rescue plan, violations of labour laws and environmental norms resulting in this avoidable accident.

History, culture and literature of Fatehpur, UP, from where Maulana Hasrat Mohani hailed

By Vidya Bhushan Rawat* Maulana Hasrat Mohani was a member of the Constituent Assembly and an extremely important leader of our freedom movement. Born in Unnao district of Uttar Pradesh, Hasrat Mohani's relationship with nearby district of Fatehpur is interesting and not explored much by biographers and historians. Dr Mohammad Ismail Azad Fatehpuri has written a book on Maulana Hasrat Mohani and Fatehpur. The book is in Urdu. He has just come out with another important book, 'Hindi kee Pratham Rachna: Chandayan' authored by Mulla Daud Dalmai.' During my recent visit to Fatehpur town, I had an opportunity to meet Dr Mohammad Ismail Azad Fatehpuri and recorded a conversation with him on issues of history, culture and literature of Fatehpur. Sharing this conversation here with you. Kindly click this link. --- *Human rights defender. Facebook https://www.facebook.com/vbrawat , X @freetohumanity, Skype @vbrawat

Job opportunities decreasing, wages remain low: Delhi construction workers' plight

By Bharat Dogra* It was about 32 years back that a hut colony in posh Prashant Vihar area of Delhi was demolished. It was after a great struggle that the people evicted from here could get alternative plots that were not too far away from their earlier colony. Nirmana, an organization of construction workers, played an important role in helping the evicted people to get this alternative land. At that time it was a big relief to get this alternative land, even though the plots given to them were very small ones of 10X8 feet size. The people worked hard to construct new houses, often constructing two floors so that the family could be accommodated in the small plots. However a recent visit revealed that people are rather disheartened now by a number of adverse factors. They have not been given the proper allotment papers yet. There is still no sewer system here. They have to use public toilets constructed some distance away which can sometimes be quite messy. There is still no...

Women's rights leaders told to negotiate with Muslimness, as India's donor agencies shun the word Muslim

By A Representative Former vice-president Hamid Ansari has sharply criticized donor agencies engaged in nongovernmental development work, saying that they seek to "help out" marginalizes communities with their funds, but shy away from naming Muslims as the target group, something, he insisted, needs to change. Speaking at a book release function in Delhi, he said, since large sections of Muslims are poor, they need political as also social outreach.

Gujarat Bitcoin scam worth Rs 5,000 crore "linked" with BJP leaders: Need for Supreme Court monitored probe

By Shaktisinh Gohil* BJP hit a jackpot in the form of demonetisation, which it used as an alibi to convert black money into white in Gujarat. Even as party scrambles for answers of how the Ahmedabad District Cooperative Bank (ADCB), whose director is BJP president Amit Shah, received old currency worth Rs 745.58 crore in just five days, and how Rs 3118.51 crore was deposited in 11 district cooperative banks linked with Gujarat BJP leaders, a new mega Bitcoin scam, worth more than Rs 5,000 crore has been unraveled.

Warning bells for India: Tribal exploitation by powerful corporate interests may turn into international issue

By Ashok Shrimali* Warning bells are ringing for India. Even as news drops in from Odisha that Adivasi villages, one after another, are rejecting the top UK-based MNC Vedanta's plea for mining, a recent move by two senior scholars Felix Padel and Samarendra Das suggests the way tribals are being exploited in India by powerful international and national business interests may become an international issue. In fact, one has only to count days when things may be taken up at the United Nations level, with India being pushed to the corner. Padel, it may be recalled, is a major British authority on indigenous peoples across the world, with several scholarly books to his credit.

Counterview

Search This Blog