Even though the real estate sector is likely to have a tough year, new trends are expected to emerge
New Delhi: For potential homebuyers, the year 2019 is not expected to be any different from the last few years. Prices are likely to remain stagnant and developers will continue to focus on clearing existing inventory rather than launching new projects as they continue to grapple with regulatory changes like Real estate (regulation and development) Act, 2016 (RERA), goods and services tax (GST) and overall subdued demand.
In fact, 2019 is expected to be another tough year for real estate developers, given the ongoing liquidity problem, owing to the NBFC crisis.
However, even as the scenario remains bleak, some new trends are expected to emerge during the year. Here are a few things you can expect.
In the last couple of years, affordable housing is the only segment where transactions seem to be happening. The trend is expected to continue in 2019 as well.
“We see an uptick in affordable housing sector—both from supply and demand side—which leads us to believe that it would be a key driver for the residential sector in coming times," said Shishir Baijal, chairman and managing director, Knight Frank India, a real estate consultant.
Government incentives to both developers and homebuyers are pushing supply as well as demand within the segment. In a recent announcement, the government extended the benefit of Credit Link Subsidy Scheme (CLSS) on home loans for the Middle Income Group (MIG) under the Pradhan Mantri Awas Yojana (Urban) till the end of March 2020. A homebuyer can avail a subsidy of up to ₹ 2.67 lakh on home loans under this scheme.
“It will prove to be another major push towards the progression of the affordable housing segment. We are confident that this move will set the tone for a prosperous 2019 for the Indian real estate sector," said Jaxay Shah, president, The Confederation of Real Estate Developers’ Association of India (national), a lobby of private real estate developers.
Co-living is not a new concept, but just got a new name recently. Many people, especially students and young professionals, prefer to share a house or apartment, usually with other students or professionals. Various privately-operated hostels or lodges work on the basic concept of co-living.
While such co-living trends have been around for several years now, they are getting more organised now. “Co-living is more than a mere bed-and-breakfast deal. There are private bedrooms with access to common shared areas like the kitchen and living room. Such spaces offer convenience and an entirely new lifestyle for young professionals," said Anuj Puri, chairman, Anarock Property Consultants.
However, such co-living options are largely available only in metro cities. “While it is largely major cities like Bengaluru, Mumbai, Gurgaon and Pune that began promoting this concept, the demand for co-living spaces is also gradually percolating to tier II cities like Jaipur and Lucknow where both working millennials and students are increasingly opting for these spaces," said Puri.
According to a study by Magicbricks, a real estate portal, “Co-living is a fragmented industry with most players being startups having formed in the last 3-4 years. Nestaway, Oyo Living, ZiffyHomes, StayAbobe, SimplyGuest, Placio, YourOwnROOM, RentMyStay, CoHo, CoLive, Stanza Living, Quickr, and Zolo are the key players operating in this space."
It remains to be seen how this new concept emerges and performs in 2019 and later.
As far as commercial real estate is concerned, co-working spaces are expected to strengthen their position in 2019. It was a new concept in India a decade ago, but not anymore. In the last few years, co-working spaces have witnessed a lot of traction and acceptability. While earlier only small businesses and individual professionals opted for it, now even larger companies are occupying co-working spaces.
“A significant change in occupier trends has been witnessed with a marked increase in the collective take up of co-working spaces," said Ramesh Nair, CEO and country head, JLL India, a real estate consultancy firm.
The share of co-working spaces in total office leasing increased to 10% in 2018 from 5% in 2017. With more supply likely to come in the near future, leasing is expected to intensify in 2019. In addition to strong demand from startups and small and medium enterprises (SMEs), large mainstream corporates are also actively looking at these new-age office spaces, added Nair.
According to CRE Matrix, a real estate research and analytic firm, during the year 2018, Smart Work Business Centre, a co-working space provider rented 18,000 sq. ft to Tata Communication. Similarly, Awfis Space Solutions, rented out 21,000 sq. ft space to Hinduja Global Solutions.
Will REITs be launched?
Many experts also believe that the first Real Estate Investment Trust (REIT) will be launched in the country in 2019. REITs was introduced in the year 2008 in India, and first draft guidelines on the subject were issued in 2013. But lack of clarity on tax implication was holding back the REITs to become a reality. But in the last few years, government has removed many hurdles.
“One of the major drivers for the growing interest of investors in the commercial office space has been the government’s move to bring in progressive modifications in India’s REIT policy in last three years, making it more market friendly. As a result, global investors have invested significant capital in acquiring large office assets for building their REIT portfolios in India," said Samantak Das, chief economist and head (research and reis), JLL India.
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