2021 has arrived. And arrived with a new vision, transformed mission, and changed goals for every one of us. Getting over past years’ setbacks, the world is now looking ahead into the future with much anticipation, high expectations and great enthusiasm. On personal front, people have started reviving the plans that they had to forcefully put on hold. They have started reshuffling their priorities and restructuring their lives and lifestyles to fit into the new mould. On professional front, trades, businesses, services are trying to get back on their feet. They have changed their style of functioning to adapt to the new normal. Many have opted for a paradigm shift in business strategies, planning and execution procedures to expand horizons and woo new customers. Broadly speaking, life has hit the reboot button, and the commercial machinery around the world is trying to create new opportunities, new possibilities, and new prospects in 2021.
So, in times when it’s all happening around us, when things are not looking as good as they used to be, when the air is filled with scepticism and uncertainty, what is the impact on consumers and investors? Where do they stand in this new normal which is quite abnormal for every one of us?
Well, as far as customers and consumers are concerned, altered time and tide not with standing, they have various sources and resources to fall back upon and to make decisions. However, for an investor, it’s testing time. An investor today is faced with the dilemma of how, and how much to react to this existing volatile situation. Because an investor would be staking his / her fortune to earn a fortune, and with almost every business sector passing through rough weather, it’s become all the more imperative than ever before for the investor to look before leaping.
Well, in this complex and complicated scenario, there is one sector today, which has started to regain its lost sheen. It’s started to once again shine brightly like a Pole Star. The real estate sector of India, and that too specifically the real estate in Mumbai.
The real estate builders in Mumbai are beginning to see sunshine after years of darkness. After almost bottoming out in the year 2020, this year the real estate in Mumbai is seeing a slow but steady upswing. And leading the way is residential projects in Mumbai, more particularly the luxury properties in Mumbai.
According to surveys conducted by India Real Estate Report 2020 and no broker, the trend looks pretty healthy and positive. Besides, even the industry experts have expressed their confidence that the trend is here to stay and is likely to only get better from hereon. Leading developers in Mumbai too are of a similar opinion stating that real estate in Mumbai has a good future beginning in 2021. The two surveys outline seven reasons to back their claim and motivate the investors to come forward and invest in ready as well as upcoming residential projects in Mumbai.
1) Favourable policy changes: The demand for residential projects in Mumbai, especially luxury properties in Mumbai was facing ‘demand hurdle’ since quite a long time. However, steps and measures by policymakers, like considerable reduction in home loan interest rates, lucrative offers by lenders, attractive discounts on the purchase price offered by real estate developers, and last but not the least, and most impactful too, reduction in stamp duty charges, has turned the tide in favour of the buyers. Maharashtra government’s decision on construction premium and levy policy would help raise the demand as the decision will mean reduced prices of residential projects in Mumbai, especially upcoming residential projects in Mumbai.
2) Rise in liquidity: As the year 2021 moves on, it is expected that easy liquidity inflow from global central banks would keep the interest rates low and funds would invest in scrips which yield high returns. It is, therefore, a general sentiment that the luxury properties in Mumbai, as well as overall commercial real estate, is likely to see a boost in investment riding on the back of SEBI’s amendment of REIT rules.
3) Increase in Foreign Direct Investment: With an emphasis on Atmanirbhar Bharat and Foreign Direct Investment (FDI) post the pandemic touching an all-time high, vacancies in retail real estate in Mumbai in particular and India as a whole, has shown a substantial decline. Commercial real estate sector has always been performing better than residential real estate sector, and the expectations of Indian economy bouncing back in 2021 is encouraging FIIs to pump in liquidity into Indian real estate commanded by real estate in Mumbai. Indian industry experts are expecting this revival to not just continue but gain momentum in 2021.
4) Real estate sector still the second largest employment generator after agriculture: The pandemic has failed to dislodge real estate from being the second largest employment generating sector after agriculture in India. Lead by Mumbai, the real estate sector is still considered as the most secure and high yielding investment sector compared to other options. Post-COVID, the demand for budget homes and luxury flats in Mumbai is on the rise with people, especially the millennials, preferring to buy their own home as against living in rented premises.
5) High disposable income: One may argue that the year 2020 has put breaks on the steady inflow of income of the people, but come to think of it, on the other hand, it has helped people save on many of their daily and monthly expenses. This has resulted in more money in customers’ pocket and a substantial increase in disposable income. With the mathematics of home buying now favouring the home-buyers, and real estate developers offering attractive schemes, there is a steady rise in demand for new residential projects in Mumbai and all over India.
6) Change in Buyers’ Preferences: The 2020 pandemic has brought in a paradigm shift in buyers’ choice of residential properties in Mumbai. Customers are now expected to opt for expansive layouts, better security, cleanliness, and elaborate amenities. The same is expected to happen in commercial real estate. Experts are of the opinion that since the businesses would look to consolidate their expenses, they would go for satellite office spaces at locations outside of prime business hotspots.
7) Improving Growth Prospects: With mass vaccination programme about to role out, it is anticipated that the Indian economy will be back on track within the next one to two quarters. Moreover, PE investment inflow into the real estate sector is expected to grow by 30% in 2021 indicating speedy economic growth. On the back of this, it is expected that the prices in tier 1 cities, would remain pretty stable with substantial growth in particular sectors because of high demand.
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