Real Estate Market Trends As We Enter 2018
The year 2017 has been the most eventful year for the real estate sector, at least in this decade. The demonetisation drive launched in November 2016 had a cascading impact on the following months, while the enactment of the real estate law and the implementation of Goods & Services Tax (GST) has created a wave of change for the sector. Amid this scenario, our research studies have shown some striking trends that indicate towards the direction the real estate sector in India is moving.
Here are some of the major trends that are likely to sustain in 2018 as well:
Affordable housing at the centre stage
Home sales across nine major cities of India witnessed a decline of 18 per cent during the second quarter of the current financnail year as compared to the same quarter the previous year, data available with PropTiger.com show. The nine cities included in the analysis are Ahmedabad, Bengaluru, Chennai, Gurgaon, Hyderabad, Kolkata, Mumbai, Noida and Pune.
At the same time, Gurgaon witnessed a decisive change in the demand completely skewed towards affordable housing units priced in the range below Rs 25 lakh. During Q2FY18, these units contributed as much as 61 per cent residential real estate sales in the city.
This is why, Gurugram was one of the two cities, the other one being Mumbai, that recorded improvement in sales during the said period, whereas all the other seven cities suffered a fall.
Source: PropTiger - Realty Decoded – Q2FY18
Mumbai, on the other hand, recorded sales across the price ranges, with units above Rs 1 crore contributing 35 per cent to the total sales in the Q2FY18 period.
Source: PropTiger - Realty Decoded – Q2FY18
Configuration rejig
In order to get the price levels well within the range of homebuyers, real estate developers may shrink the sizes of the housing units in a way that it caters to the needs of most buyers without making them compromise on the configuration. In recent years, the apartment sizes in cities such as Mumbai and Bengaluru have shrunk by 12 and 30 per cent, respectively, industry studies show.
However, this decrease in the size has not affected the configuration. Thus, a 2BHK remains a 2BHK, but its size would be somewhat lower than the 2BHKs built in the past years. This is one of the ways, real estate developers in India are striving to keep the property prices stable and maintain buyers' interest.
Livability and quality of life are the deciding factors
Irrespective of the price range a project offers, homebuyers do not want to compromise on the factors affecting the livability and quality of life. Gone are the days when there were projects that did not even provide sufficient parking for cars, forget about the other facilities.
Today, homebuyers look for sufficient car parking slots, well-lit campus, convenience stores and parks as a basic necessity. These factors need to be there in projects having units priced below Rs 25 lakh. When the price range goes above this range, projects that offer the aforementioned facilities plus club house with gym, swimming pool and other facilities definitely get an edge and stand a better chance among buyers.
Although these trends have evolved during the recent years, it is expected that the same would continue further in 2018 with more force.