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Indian real estate had grown massively in the 2000s which lasted for almost 10 years. The next stage was predictable; money-hungry developers leveraged themselves & launched projects more than the people and the market could absorb. The massive supply flow coupled with the lack of transparency in the system resulted in a lot of pain not only for developers themselves but also for the economy, the banks as well as the consumers.

Along with correcting the excesses of the earlier cycle, real estate entities had to deal with extreme circumstances like the implementation of nation-wide demonetization, Goods & Services Tax (GST), NBFC crisis & forming of RERA and finally the 10 years ended with Covid linked disruption in the economy. Real-estate Sales which peaked at 4.35 lac units have come down to stabilize around 3 lac units p.a. for the last few years during these 10 years.


When covid19 struck, the discussion was circling around how the worst real estate will be affected – loss of jobs, restrictions due to physical distancing like on construction, worker migration on halt, high ticket purchases will be postponed as to no disposable income with the consumer, etc.

Although, the last one year has turned out to be anything but what was predicted. Aided by a variety of factors, real estate demands all over the nation has surprised everyone. This has especially benefited large organized players in the field. Footfalls have increased materially & transactions are happening at a brisk pace. The segment that has seen the most upsurge is the luxury segment.

Sceptics believed that, this was just a pent-up demand flow but the sentiment behind is slowly turning more optimistic and the change is here to stay. It's safe to say that foundation has been laid down for a sustained revival of the residential real estate industry.

Recent stats from Mumbai residential real estate registration data for Aug- 2021 (1st month after stamp duty was reinstated to 5%) reflects strong demand movement. In August alone, we have witnessed property registrations of 6,784 units for Mumbai City, which is 16% higher than 5,873 units registrations in Aug-2019 & 2.5 times of Aug-2020 sales of 2,642 units. (Source: Knight Frank).


Interesting touch-points from consumer survey by Anarock Agency.

– Pricing & developer credibility & trustworthiness are the two most important factors considered while buying a property followed by design and location according to consumers.

– Prevailing best & lowest home loan rates have been a major factor driving residential property sales despite the pandemic strike.

– 71% of property seekers are looking to buy for self-use which earlier was 59% Pre-Covid period.

– 46% of people preferred ready-to-move-in properties before covid which has declined to 32% after Covid.

– 25% showed interest in buying properties priced Rs.0.90 -1.15cr post covid where the number for the same is 16% pre covid. 27% of people were looking to buy out properties priced more than 45 lacs post-Covid which was cut down to 36% pre-Covid.

– 32% of people were looking to buy second homes while 41% of people are mulling over it for self-usage.


Let us look at the key factors driving sector revival.

1st factor: Affordability at its best

India as a country has never seen such low home loan interest rates; EVER. The salary growth factor, the decline in property prices factor and the decline in interest rates factor have resulted in the best affordability in the last three decades. Such convergence of rental produce vs rates of interest must result in improved demand.

2nd Factor – Supply Fix Consolidation

Official structural reforms in the last handful of years have started the process of phasing out smaller & unorganized developers from the market. The COVID-19 pandemic was the final blow towards K.O as it tilted the whole scale in favour of established & organized developers. The extent of supply flow from certain entities can be seen from the major reduction in the number of builders & developers.


In Financial Year 2021, 25% of sales is coming from ready to move in projects vs ~10% in Financial Year 2013, while RTM (ready to move in) projects comprise just 15% of the total unsold stock (Source: Propequity). There is an increased preference & drive of willingness to even pay a premium for projects by developers & builders with an established & proven track record. This tilts the balance of control firmly in favour of big developers who have gained a big chunk of market share during this period of uncertainty.

In the last 5 years, demand has matched or even surpassed the supply leading to inventory reduction, nationally. Some of the unsold inventory remained unsold due to developer & builder issues, hence actual inventory is even lower than it.

3rd Factor – Better outlook at jobs and wages

After initial rationalization of salaries & wages during pandemic shock, most corporates have reinstated & even increased employee salaries. IT sector is an example. The hiring momentum of IT companies clearly tells us that it has been hard too retain talent & some companies have even given two hikes in a single year to cope-up attrition.

Salary hikes are not just restricted to IT, alone. Many large industries are going through tailwinds & are raising salaries to reward & retain talent. Despite a lower base, Quarter 1 Financial Year 2022 numbers depict the strong hiring & salary trends across all sectors. Real Estate is supposed to be one of the key beneficiary of this.

4th Factor – Govt. Regulatory support

Be it the central government, the state governments or even the RBI; the regulatory framework for all the industry sectors have improved over these years. Affordable housing also had help because of these regulatory changes.


Steps have been taken to bring more transparency, regularised affordability, and funding inflow. Recently, relaxation of stamp duty added to the demand push which also helped in bringing the stats up for the same.

New regulatory statutes & processes have encouraged clean verified ownership, accountability of the property, & faster execution due to less simple paperwork, which comes off well for the businesses too & also helps the consumers in the process.

Factor #5 –Influence of Veblen Effect


The Veblen Effect is the positive impact of the commodity price on the quantity demanded of that commodity.
Real Estate Industry qualifies here for this since the demand does increase greatly with the anticipation of an increase in prices. Customers are now quite convinced that prices will never go down any further & have started to inch up their investment buy-in chunk. Developers have now a grip over this fact 7 have started to play the psychology of the consumer. We will see a lot more announcements of price increases by developers to see where the consumer stimuli stop to respond and then descends to the new-original demand flow benchmark.

Real-Estate Business Models Has Seen Changes:


Big developers have discarded the simple land banking model. Focus is now on timely execution of projects, quality of the construction, improving brand perception in people’s minds & most importantly, the sales pace. Tricks to achieving a reasonable IRR is the agility & skill to sell the project quickly & be able to command govern the price negotiations banking on the quality.


– Timely delivery of the unit to create brand loyalty & loyal followers & added services to keep the relationship alive.

– Accelerate delving into modern technology & construction techniques to finish faster & smarter.

– Embrace strong corporate relations & inculcate the ESG model

– Maintain financial discipline & increase the number of pipelines.

– Diversify development portfolio.

– Investments in upgrading labour force skill sets or hiring skilled labourers directly.

Earlier, developers launched the projects & later applied for approvals which led to unnecessarily elongated timelines for constructing the project; after the launch. After RERA came into force, developers can no longer launch any kind of project without approvals from the official & have to wait for at-least 6-12 months on an avg to launch a project. Hence, time spent to launch a project after buying land has been increased while construction timeline after launch has reduced largely.

Among many other paradigm shifts in the country that the pandemic has brought, digitization of services and support has been a significant one that pushed us into a different phase of our age. As per reports, 60 per cent of the entire property buying spectrum has now gone online which was 39% pre-covid period.

Balance Sheets Have More Weight Now

As larger developers continued to gain out of the whole current setup, the balance sheets too have shown great improvement over the last couple of years which created an ethical environment for them in relevance to the cost of debt. This interest saving is making them even more competitive in this environment against unorganized players.


Builders and developers have a great grasp and grip over assessing the dynamic market cycles after pandemic and knowing where they stand within them. This shift is bringing in a lot of insights and understanding of the economical shifts and impacts due to COVID19. They now can predict a lot of changes and can take actionable steps to maintain and grow even in morbidly dreading times like these.

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