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Ravikant has a good grasp of real estate market

However, post-2016 since the supply started becoming higher than demand and events like demonetization and introduction of the GST regime, the market slowly started tilting towards the buyers’ market.

Advertorial | New Delhi |

The business sector, while considering real estate has majorly been a sellers’ market for several years.

However, post-2016 since the supply started becoming higher than demand and events like demonetization and introduction of the GST regime, the market slowly started tilting towards the buyers’ market. Moreover, the (NBFC) funding crisis restricted the growth of the industry, several measures including a reduction in the repurchase agreement (REPO) rate and Corporate Tax Rate were implemented for improving the conditions.

Government aids like Alternate Investment Fund (AIF) for completing the unfinished residential projects, relaxation of GST and implementation of the Real Estate Regulatory Authority (RERA) were increasing the supply of projects steadily in the sector.

With all the necessary measures taken and the aid provided by the government, demand showed a steady growth while favouring investors. By 2019, real estate project launches displayed growth by 23% (year-over-year) as compared to that in the previous years of the decade with so much new supply and demand being on a steady growth, Real Estate became a buyers’ market.

With all the necessary measures being taken, 2020 has been a subdued year with few or no launches due to the impact of COVID-19. However, the demand did not fall the past year, and with the constant negative news around the industry, the potential buyers who had deferred their buying decisions moved towards taking advantage of the subdued demand and price benefits offered by developers to offload their stocks and there was a growth rate which significantly focused towards ready-to-move-in (RTMI) projects.

The market position in real estate does not remain constant and continues to change in accordance to the demand and supply of available homes, market conditions and the sudden global breakout of an infectious pandemic has now brought the market into a position which shows signs of changing anytime.

Factors that are influencing market conditions:

The past few years had witnessed a demand that favoured sellers’ but sudden changes in market conditions, government regulations and aid saw the scale tip towards buyers. With the recent outbreak of the pandemic, it has led to the significant change of the real estate from a buyers’ market to a sellers’ market mainly influenced with following:

  • In the second half of 2018, there was an increase in the supply of ready-to-move-in (RTMI) projects in the affordable and luxury segment. It was met with a luke-warm response but demand started picking up over the course of 2019. The ongoing situation of COVID-19 has also added to the increased demand of RTMI houses as large number of people who want to secure their wealth are investing in this segment, several NRIs returning to the country are also making investments into RTMI
  • Developers who have witnessed a large number of RTMI inventory being sold in the recent months during COVID-19, and if the absorption rate of demand and purchase continues to grow, the RTMI inventories will be exhausted by the end of 2020. This will result in developers changing their approach to attract potential customers by restricting the number of offers to customers & potential buyers as well as an upward revision of prices. Thus, converting the market that benefits developers.
  • The inclination of families to convert monetary wealth and disposable income into an investment on land and residential properties has also shown a worthy acceleration in demand in the middle of the previous decade. The single-family housing showed a stronger growth rate and added favourable conditions for developers to explore a new category of potential buyers. For example, cities like Bengaluru is considered a high volume & low-value real estate market when compared to cities like Mumbai & Delhi which are high value & low volume markets.

Hence, markets in India that have these favourable elements have also seen a surge in demand.

Investing in the development of real estate sectors:

The introduction of Government aid and regulations led to an evolution in how real estate business would operate. However, changing economic factors, market conditions and the sudden Pandemic also contributed to a stronger shift from a buyers’ market to a sellers’ market which includes:

A gradual shift of business schemes: In the recent past, during the predominance of the buyers’ market in the real estate industry, the business schemes were established in a customer-pleasing manner. The developers were introducing offers like EMI flexibility, deferred payments, and access to other privileges as a bid to attract more buyers. With the increasing demand for real estate, the supplies were getting less which in turn provided the developers with an upper hand. They have the power to decide how and when the investors should purchase their property which clearly indicates the shift of the real estate sector from a buyers’ market to a sellers’ market.

The emergence of artificial intelligence: The steady emergence of Artificial Intelligence (AI) and Machine Learning (ML) has revolutionized digital technology in these sectors’ operations. These technologies have enhanced the efficiency of computing and processing power of statistics such as pre-processed automation of data and converting useful information into insights that can be acted upon.

The emergence of AI has allowed businesses to understand the market and respond in real-time, be more transparent and acquire valuable information and data into customers and markets. With these factors, developers can launch projects with customers in markets that make it more favourable for them. With the outbreak of COVID-19 and the prolonged lockdown period, there has been a restriction in the movement of the customers and developers’ staff. AI has brought forth a new way of engaging customers going forward.

Increasing demographic trends of population and offices: According to the World Demographic trends reported by the UN Secretary-General, “The Global demographic trend by 2050 are as follows: ageing due to prolonged life, continuing urbanization, declining fertility and shrinking household size”. In other words, the above statement significantly highlights developing countries like India, standing with a population of 135.26 crores and an annual growth rate of 1% may not able to match the volume of demand due to the irregular supply. In addition, developers are able to create an environment that favours their operations in the sector. The Pandemic has further added to the decline in conditions that benefited investors and may not see a change anytime soon. (The data and figures mentioned here are SOURCED from the “Knight Frank Report_india-real-estate-July-December-2019”)

Thus, with all the general measures taken for improvement and all the necessary Government regulations and aid, the demand for real estate is increasing, thereby turning the real estate industry from a buyers’ market to a sellers’ market. The outbreak of a global pandemic has played a role in this conversion in the industry, keeping the span of buyers’ market short-lived. With an increase in demand for RTMI homes and upward revision of prices, the real estate industry is now once again becoming a sellers’ market. It can be clearly noted that the price of land is appreciating in value with more developers possessing a controlling stake in demand of the real estate industry.

Disclaimer: This is a company press release. No journalist is involved in creation of this content.