2022 could be the year of booming real estate markets
With the economy gradually recovering and real estate becoming more affordable, we will see further growth in real estate sales.
Where have you spent the most time during the COVID-19 lockdowns? You’re right if the first thought that comes to mind is your house. For the past two years, our lives have been more confined to the home than the usual daily commute to the office. This period gave people enough time to reflect on the need for them to have their own safe home. And the year 2022 is all about making that achievement a reality through growing demand for home ownership. People’s dream of buying houses and investing in real estate prevailed throughout 2020 and 2021 and has now shown evidence of coming true in the new year – 2022.
With the economy gradually recovering and real estate becoming more affordable, we will see further growth in real estate sales. The whirlwind in the real estate sector is not only shifting towards residential spaces, but investments in the commercial land sector are becoming more relevant than ever. The low cost of doing business, inherited from previous years, is still prevalent and many new micro, small and medium enterprises (MSMEs) find today the most suitable time to start their business. These small businesses are now keen to buy land and organize their activities on larger commercial plots.
While some sections of commercial land like malls, community complexes, and lodging establishments may have seen decline, on the other side of the coin are businesses like storage facilities, industrial complexes , hospitals and huge data centers, whose space requirements have increased. . Speaking of workspaces, in 2022 we will see a new hybrid office, in which, while video conferencing will be preferred, the basic human need for physical interaction will also survive. From a psychological and sociological perspective, the hybrid workplace of the future would be a mix of home office and traditional office complexes. Also, it’s an interesting question to think that given our need for social distancing, will the government increase the square footage per person while releasing the new building codes. If this starts, the year 2022 will be a happy boost in which more space will be needed for industrial constructions compared to the pre-COVID era.
Government policies, which supported those affected by the COVID-19 curbs, contributed to this positive projection. The recent crisis having been treated as a case of force majeure, the new rules of the Real Estate Regulatory Authority (RERA) now make it possible to relax the dates for the completion of real estate projects. Another important decision was the announcement of a 6-month loan moratorium by the Reserve Bank of India, under which significant time flexibilities were given to people to repay their loans. With government standards already allowing 100% foreign direct investment (FDI) in real estate, a September 2021 report predicted a strong investment of around $3.5 billion in this sector, almost 75% of what had been observed in 2020.
Moreover, the strategic movement of demonetization has freed the real estate space from all its impurities. Demonetization has curbed superficial inflation and brought out the true market prices of land. Infrastructure development is not far off either, where the National Highway Authority of India (NHAI) has worked wonders. A target of 40 kilometers of highway construction per day has been set by NHAI in fiscal year 2020-21. Indian Railways has also moved very quickly to expand their infrastructure and are all set to complete the two DFC corridors in the near future. These developments make real estate more lucrative than ever.
Looking back, given people’s penchant for owning their own homes, the need for larger spaces, the upcoming hybrid workplaces, and the government’s infrastructural boost, 2022 is the ripe year to secure your investments on the estate market.
By Ved Parkash Dudeja, Vice Chairman, Railway Land Development Authority (RLDA)
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