“Roti, Kapda, Makaan” – that has been the dream of the average Indian since time immemorial. And, that is precisely what has kept the housing sector buoyant through the highs and lows of economic development in the country. The demand for affordable housing, particularly in urban areas, is likely to remain undiminished in the decades to come. The unmet demand for affordable housing is one of the greatest challenges that a rapidly developing India is now facing. According to a report by Care Ratings, “The potential demand in residential real estate i.e. affordable housing offers 6-8 billion square feet development opportunity in India over the next 3-4 years”.
Support from government policies
The government policies over the past few years have been very supportive of the real estate sector. On 25 June 2015, Prime Minister Narendra Modi launched the Pradhan Mantri Awas Yojana (PMAY),‘Housing for All’ by 2022 scheme. The focus of the scheme is to address the phenomenal rise in demand for housing, particularly in urban areas. It is anticipated that by the year 2050, India’s cities will be home to a burgeoning population of about 814 million (up from about 400 million). To address this need, the PMAY provides subsidies on home loans for those from the lower-income groups. This in itself is a huge boost to real estate development in the country and to the affordable housing segment in particular. Over the past 4-5 years, we have seen a sharp spike in the demand for flats and apartments in the growing suburbs of major towns. The sale of 2bhk flats in Ghodbunder Road (in Thane West), for example, has seen a marked increase, due in large measure to the scheme and encouraging government policies.
The onset of 2020 has brought on a new challenge for the country – the Novel Coronavirus disease (COVID-19). Currently, by end-March, there has been a significant slowdown of the economy. This is an unprecedented national emergency and the lockdown announced by the government is likely to impact all sectors of the economy. The international credit rating agency, Moody’s cut India’s GDP growth forecast from 5.3 percent to 2.5 percent. It stands to reason that the real estate sector of the country will also feel the impact of this slowdown but it is likely to be a more oblique impact. The aftermath of the Coronavirus may also bring a number of opportunities for the Indian economy. The global pandemic and trade and travel restrictions could stimulate more indigenous production. This, in turn, should stimulate growth and add to the growth of real estate in the country.
While the global pandemic caused by the coronavirus has indeed been a setback, the long-term outlook for the real estate sector does not seem any worse. If anything, the need for housing should see a boost when the lockdown ends and the country starts out on its path to economic recovery. This pandemic and the ensuing lockdown have prompted people to reassess their basic needs, the most important of which is a home to relax in, an oasis for the family. Sales of luxury flats in Thane and other suburban areas should certainly see a boost. The Tier-II cities of the country should also expect a significant growth in the housing sector when we put these tough times behind us.