Residential real estate investment avenue: An analysis – People
The resurgence of the real estate sector is one of the positive stories of the ongoing Covid pandemic. In the pandemic year, low lending rates, reduced stamp taxes, and the spread of the home working culture led to a K-shaped recovery in the residential segment. Not only the domestic sector, but also the FPIs continue to rely on the real estate sector. Affordable home prices, stricter regulatory measures, as well as increased transparency and greater consolidation in the sector have combined created a profitable opportunity for NRIs to invest in the Indian market.
For centuries, real estate has always been characterized by an increase in the value of the property. As more international companies invest in India, property values have risen faster than ever. All the more attractive for real estate investors in India in the post-Covid-19 scenario, since international investors want to relocate their business from China to India. As people move to new cities, there will be more jobs, more immigrants and more people looking to buy real estate. This will increase the demand for real estate.
Opinions differ as to whether the dynamic is permanent or just a temporary phase. When demand drops in cities where the Covid surge is strong, uncertainty grows. Hence, the real question arises: what is residential property in India’s long-term perspective? Three fundamental changes will take place in the next decade:
The first is a demographic shift. In India, almost 60% of all home purchases are made between the ages of 35 and 55. That is where income stability and growth take place. This age group is also known as the main consumer class. The 25- to 35-year-old age group has been the dominant cohort over the past ten years. The sheer size of the market and the existence of more stable income groups therefore suggest that housing will be in high demand for a long time to come.
The increase in per capita income is the second key factor. Expecting the world to return to pre-Covid levels by 2023, India’s GDP will grow 6-8 percent per year, bringing it to around $ 8 trillion by 2030. With that GDP figure, per capita income will rise 2.5 times from its current level of $ 2000. People will have more money in their hands as a result.
The social structure is the third shift. The degree of care will drop from 6.5 in 2011 to 5.3 by 2031, according to the study published in July 2020 by the “Population prognosis” group. The number of young people in the care group will also be reduced. This means that more and more households are getting smaller and have fewer dependents, which means more savings and disposable income.
The demand for houses in the country is great. Favorable socio-economic conditions, a young population, an unprecedented rate of urbanization and infrastructure improvements, as well as increasing household incomes overall, will support the growth of the industry. However, significant work would be required at all levels – government, organization and individual – to enter the market.