5 Key Factors That Affect The Real Estate Scenario

“The real estate sector is a roller coaster ride”- Del Carnegie.

This sentence sums up the reality of the real estate sector throughout the world. The real estate sector is one of the most dynamic and volatile investment markets in the world. It has seen changes in customer preference, client behavior, and customer choices throughout various decades in India. Home buyers in cities like Pune, Mumbai, and Bangalore, etc. today prefer bigger homes and a better lifestyle at more affordable prices. The walk-to-work concept shed much of its popularity and ‘Work from Home has become the next fulcrum for home-buying decisions. This new demand is also dictating a fresh supply of real estate construction. Developers with land banks in the peripheries and even otherwise saw it as an opportune time to launch new projects there. As much as 58% of the total 1.49 lakh homes launched in FY21 are in the peripheries of the leading cities. Our data confirm that average apartment sizes in the top seven cities have Increased from 1,050 sq ft In 2019 to 1.120 sq ft in 2020 and further to approx. 1.200 sq ft as of 03 2021. For understanding sake, let’s understand the key factors that affect the real estate scenarios in a rapidly growing city like Pune.

MILLENNIALS – Rise of the assertive new client segment

Millennials have emerged as the key demand drivers today. their preferences are now dictated by the prevailing uncertainties, stock market volatility, and recent-past financial sector incidents. Many of them now prefer buying over renting homes. A sense of security associated with physical assets has also motivated many to consider buying a home post-Covid-19. Thus, homeownership is a compelling priority for millennials facing uncertain times. While real estate continued to be the best asset class for Investment for over 57% of respondents in the survey, a whopping 48% of these were in the age bracket of 25-35 years. Previously, in the 2019 survey, this percentage was lower at just 20% This implies that millennials are now the new-age, homebuyers, and the trend is likely to continue in the future as well.

Dynamic rise in real estate pricing

Frankly, a price rise of maybe around 5-10% is quite inevitable in the backdrop of rising Inflation vary trends in major construction raw materials including cement, steel, and even labor cost. Already, a few developers have begun to increase prices and it will be only any time before others begin to follow suit. To be fair, the overall operating costs for developers have also gone up in the last several months since many are offering safety protocols to their workers on-site, taking care of their vaccinations and other medical needs. Additionally, in the last year (amid offers and discounts), many developers saw their stock getting cleared post housing demand surge during the pandemic, thus giving them the leverage to increase prices.

Need for co-working spaces

Amidst several changing dynamics within Indian real estate, many developers are also mulling the viability of Incorporating co-working spaces in their residential projects to align with the new WFH realities. There are at least two possibilities for co-working spaces in existing clubhouses & incorporating such a feature at the design stage for new projects.

Revival of rental housing

A critical factor that is likely to fuel the demand for rental housing is the passage of the Model Tenancy Act. The Act is expected to streamline/formalize the sector, attract Investments, and in turn help monetize the vacant rental stock. Moreover, the Act will address the trust deficit of Homeowners and tenants. This may have a real estate multiplier effect with steady growth in real estate construction projects.

Environment-conscious home-buyers

Consumers are conscious of their lifestyle choices and aim for sustainable living. Initiatives like wastewater recycling, rainwater harvesting, implementation of the solar energy-efficient design that optimizes natural ventilation for air and light, and adequate blue and green Infrastructure are key to them. The evolving sustainable lifestyle has also led to an increase in demand for electric vehicles (EVS) and subsequently for EV charging infrastructure in developments. Industry research shows that one in five prospective consumers are now asking for EV charging provisions as an amenity. In the market for large offices in 2022, the demand for large office spaces will return to pre-Covid-19 levels and overall absorption will inch toward the average momentum seen during 2018-2019. The transition to quality buildings embedded with wellness and green quotient will be the driving factor for both developers and occupiers in the Safe investment asset. Being less volatile than other asset classes and synonymous with stability, real estate has emerged as a safe means for asset creation. Even after the lifting of stamp duty cuts, the demand for housing significantly persists, and with the prevalent low home loan rates, the sentiment is going to boost further, and people will continue considering real estate as their best bet.

Considering all these aspects, both the parties i.e a real estate developer and real estate buyer both need the support of an expert entity that can serve as a bridge between them to ensure a ‘win-win situation’ for both of them. Pyramids is one such entity that ensures project-focused velocity sole selling marketing campaigns to ensure time-based selling outputs for the real estate developer. At the same time, it also streamlines targeted real estate buyers in such a way that they will have informed decisions in terms of real estate investment.

With Pyramids at its side, real estate developers and real estate investor both get a strong foothold in the real estate market.