We have crossed 2021 and started living in 2022. There were a lot of positive expectations when we did so. All of us hoped that the gradual improvements in our lives, the economy, and everything we value will continue to gather momentum.
Seldom life recreates our dreams into reality in exactly the same way we envisage. Often, the greater power in the universe has a different plan and throws up a challenge to test our grit and determination.
We must always remain faithful to ourselves and remember that a temporary setback is actually designed to make us stronger.
We must remember that this phase of Omicron infection spread will also pass. The virus is already becoming powerless to inflict major damage to our health and becoming, arguably, like flu, although highly infectious.
ResidentialÂ Real Estate SectorÂ will Remain Upbeat
The property market has been witnessing heightened interest because of a variety of factors recently. The lowest interest rates in the decade and other incentives such as stamp duty reduction have propelled the homebuyers to book their chosen homes and not delay the decision any further. Residential sales momentum is expected to continue in 2022 as prospective homebuyersâ€™ preferences for bigger homes, better amenities, and attractive pricing will keep them interested to buy their dream homes.
A notable factor of 2021 is the launch of more value-added real estate projects with better amenities, elements of sustainability, and superior environment-friendly features. It is expected that this trend will continue even in 2022. We expect to see more such projects in the extended areas of the cities as well as non-metro cities.
It is not expected to witness a massive interest rate hike this year by the RBI although rising inflation may force it to slowly raise interest rates.
Office Sector is Experiencing Massive Tailwind
The office sector is experiencing a massive tailwind because of huge hiring in the IT and start-up sector. IT sector is experiencing huge manpower requirements and hiring has increased manifold. Almost all IT companies have indicated that they wish to reduce work from home and return to campus and this indicates massive office space demand growth. Although temporary blips like Omicron infection may postpone the plans for a while the demand growth is going to gather further momentum eventually.
Apart from the IT sector, which obviously has higher space requirements as more hirings are the way to grow, start-up companies are also finding the business environment conducive to growth. We have recently witnessed quite a few start-ups getting listed on the stock exchanges. Growth inevitably demands higher office space requirements by the company and its associates.
In the uncertain times created by the COVID-19 pandemic, businesses want to remain flexible on most cost components. In this situation, the co-working sector will benefit as the pandemic reinforces the need for agility like never before. As the situation improves further, demand for co-working spaces will be elevated further.
E-commerce Boom will Propel Warehousing Sector
The E-commerce sector is witnessing amazingly fast growth in the recent past.
E-commerce has transformed the way business is done in India. The Indian E-commerce market is expected to grow to US$ 111.40 billion by 2025 from US$ 46.2 billion as of 2020. By 2030, it is expected to reach US$ 350 billion.
This skyrocketing growth in e-commerce is catapulting the demand for logistics, especially the warehousing sector. Pro-industry government interventions like 100 per cent FDI in warehousing have placed the industry on a high-growth trajectory.
Homebuyersâ€™ Expectations in 2022
Homebuyers are already experiencing more choices with more and more new project launches. New projects are often thematically unique and aggressive in meeting homebuyersâ€™ current expectations.
Residential complexes are gearing up to meet the complete need for all-around high-quality living, not only an apartment with some amenities thrown in.
It is expected that the trend will gather momentum in 2022. Apart from a higher number of sales of property units, a higher number of deliveries is also expected going forward.
However, we expect that property prices may inch up later this year because of the price rise of most raw materials. As demand for property is extremely upbeat, prices will slowly move upward.
Inflation is an ugly monster in many economies. In India, it is slowly raising its head and if inflation increases, RBI will have little option except to raise interest rates. If that happens, home loan rates will inch up and the cost of property acquisition will go up.
Let us remember that the economy is cyclical. A low-interest regime is followed by a high-interest regime. Homebuyers should take advantage of the low-interest regime as long as it lasts and should not delay home purchases.