After almost facing three years of business interruptions, 2020 was finally set to be the year when the Real Estate sector saw light at the end of the tunnel, however all hopes were quashed as the Covid-19 pandemic hit India. With demonetisation, GST implementation and the enforcement of RERA law and the NBFC crisis posed some serious challenges to the Real Estate industry, particularly the housing segment in the past three years.

The COVID-19 pandemic was a hard blow to not just the real estate sector but the entire economy, with the country coming to a standstill after the government imposed lockdown to stop the spread of the virus. The real estate sector saw a massive downfall in business, with over 40-50% business in the residential sector being cut off as projects came to a halt because of the lockdown.

Even as the lockdown started to unravel after June, the condition of the real estate industry saw no improvement as construction activities were stalled because of unavailability of labour. Along with that the massive job losses across the segment dampened consumer confidence significantly resulting in falling sales.

Consumer sentiment also remained skeptical especially in the homebuying sphere due to no possibility of site visits. However, real estate developers used this opportunity to adopt digital technologies to launch and market their new projects online.

COVID 19 has brought about winds of change in the real estate market, in this article let us take a look at the real estate trends that are going to rule in 2021.

Shift from rented home to buying a home

Millennials have always favoured living in rented apartments, due to the flexibility it provides when one changes cities. The millennial generation refuses to stay in one city for a long time, more so when a better work opportunity comes in, the millennial generation does not think twice before committing itself. However, the pandemic is slowly and steadily changing this mindset. Work from home culture is especially bringing back the desire to buy a home. With living close to work out of the picture at least in the near future, millennials are looking for properties located away from the hustle and bustle of the city. As per experts, 2021 will see more and more millennials choosing to move away from populated and polluted city areas to more affordable suburban locations. The more affordable cities in India will see a preference towards plotted developments or builder floors over apartments.

Tapping into the Work from Home Culture, developers have also come up with amenities like business bay, pre-installed WiFi connection that will further ease potential residents to work from the convenience and comfort of their home.

The Work-from-home model has been increasingly being incorporated in the long-term strategy for many companies more so for the IT companies. Businesses are looking to minimise their operational costs and therefore the WFH model might become a permanent thing for a lot of businesses. This change has driven the need for larger homes as several buyers are deciding to upgrade their homes solely based on size.

The work-from-home model is increasingly becoming an integral part of their long-term strategy. Business CEOs across the globe are already looking to minimize costs and real estate does become the first target. "The trend of consolidation at one place which was being considered by companies may now get realigned to the hub and spoke model. We may thus see smaller properties being taken up vis-à-vis single large offices. Nonetheless, health and hygiene and social distancing norms would take precedence over space efficiencies and workplaces would be realigned for the post-Covid world

Low Interest rate

The first budget of the new year saw the RBI stay put on interest rates, after reducing it by 115 basis points this financial year. The last policy change was made during the May MPC meet. SInce then the benefits of the rate cut has been passed onto the customers by all major banks in the form of reduced home loan rates. Interest rates at present are at a 15-year low which means homes loans are the cheapest now compared to the last 15 years. Therefore this has definitely helped in bringing back confidence of buyers into the market.

Most banks have kept their home loan rate below 7%. Amid the ensuing pandemic, its believed that the low levels of interest rates are here to stay, which for sure will further aid demand and confidence.

Government Push

The government's continued support to help the real estate sector to come out of the crisis is commendable. The center had announced various measures such as invoking the 'Force Majeure' clause under the RERA to extend project completion deadlines by 6-9 months, the extension of interest subsidy for the middle-income group, and relaxing tax rules to allow sales of homes valued up to Rs 2 crore at a 20% discount to circle rate. Further in this year's budget the center has also provided relief by providing Tax holiday for affordable housing projects, continued deduction of interest for home buyers and funding to infrastructure.

Preference for big builders and developers

The pandemic has once again made everyone realise how sure and confident one needs to be while investing their hard earned money. The slowdown of the economy has certainly shaken the confidence of homebuyers, therefore 2021 will see investors banking on projects by developers with a strong financial foothold.

More festive offers

Demand for housing has slowly recovered its upward trajectory on the back of festive offers, as developers are utilising the pent up demand in the market by offering attractive offers and discounts during festive seasons. The reduction of stamp duty on property prices in Maharashtra has significantly helped in boosting demand in the state. The state government had cut the stamp duty on property registrations from 5% to 2%till Dec 31, 2020 to boost consumer sentiment in the backdrop of the pandemic that had significantly hit new property registrations. From Jan 2021, buyers will have to pay 3% stamp duty on property registrations till March 31, 2021.

Technology innovations

The lockdown had put a stop on site visits and as we know site scouting which is a very important step in the home buying process. To prevent the lockdown from being a hindrance to homebuyers from visiting property sites, developers have taken the help of virtual reality technology to service the need. Typically, a client would visit multiple properties before deciding on the one they want. This requires a lot of time and things get complicated when leaving the house is not an option. VR technology helps solve these problems, allowing millions of people to virtually visit properties without leaving their homes. Simply put on a VR headset and you can experience immersive, three-dimensional walkthroughs of properties. In a matter of minutes, potential buyers are now able to virtually visit dozens of locations. However, even as site visits are no longer a difficulty at the moment, with the pandemic still going on, this serves as an easy and effective alternative for homebuyers to visit properties from the comfort of their home.

With the economy slowly regaining its footing, it looks like 2021 will augur well for the real estate sector albeit with the support of the government. Housing sales will likely continue to see a surge in demand in the coming months given the green shoots of recovery in the economy.