Globally, the real estate sector is the most important sector. In India, it stands as the second largest employment generating sector after agriculture. It is estimated that it will grow up-to 30% over the next decade. The four segments - Housing, commercial, retail and hospitality, come under the real estate sector. For Indian economy, it contributes close to 6% of the country's GDP (Gross Domestic Product).
With the implementation of various economic and structural reforms in recent times like - RERA Act, and GST, it is observed that the new trends in the real estate market are shaping and reshaping the industry on a continuous basis.
Here, we will get an insight on the new trends in the Indian real estate market, which is majorly contributing to its restructuring.
1.Global cash flow in India
The world is endorsing India with large investments after its improvement in some it’s ranking like 4th in developing Asia for FDI Inflows. The stable and strengthening modern economy is also perceived as a major reason for attracting more investors from all over the world. The foreign direct investment regime is more liberal as compared to earlier times, which has led to a better ranking of many Indian Tier-I cities in the global market, as per JLL's Global Real Estate Transparency Index. The Real Estate Regulatory Investment Trust (REITs) is also making initiatives in increasing the transparency in the sector by increasing the regulatory framework. This is helping in making realty sectors as favorite investor destination in Indian economy.
2.Business Models Revamped
With new policies and reforms like - RERA act, GST and Benami Property Act, have forced the small and big, realtors and land developers to revamp their business models according to the new guidelines or otherwise face the penalty. This has infused a new confidence and trusts in the consumers, especially the mid-sized residential property seekers. It is observed that the increased transparency in the sector will give a boost to the affordable housing segment. The major builders of the country have already gauged this and have launched many projects in this segment.
3.The Era of Hybrid Spaces
The boom of start-ups culture and search for affordable and flexible commercial rent spaces has moved the traditional commercial spaces to hybrid commercial spaces. The Co-working spaces or Hybrid spaces is fast catching up in across all Indian Tier-I and Tier-II cities. This segment is surely booming because of its cost-efficiency, better services and low maintenance of the commercial space. Market researchers have already predicted that this is surely going to stay in the real estate market and will reshape the commercial property market segment in India in next few years. This will continue to happen for over the next five years.
4.Consolidation of the realty sector
With many schemes launched by the government of India providing affordable housing in rural and urban areas, providing finance to boost this sector, structural reforms, demonetization effect and still lack of financial prudence among many realty developers, is leading to a fair consolidation of the market. The consolidation will happen through more joint ventures between the small and big land owners or builders. The smaller or struggling developer may get sell its ventures to bigger players of the market which have a strong balance sheet and better growth prospects.
5.The Road Ahead
As it is expected that the real estate market to touch $180 billion by 2020, along with its ongoing reforms and challenges, the investors and developers of Indian real estate market are responding in-concurrence to the demands of the market. They are slowly shifting their gear to a professionally well-managed, accounting and management systems, to meet the diligent standards of the government and work along with it, to move forward and offer better living at affordable costs.