Real estate sector seems to be out of the woods after a long dud period. The property market is back on the radar as homebuyers are on a shopping spree thanks to limited supply, ample liquidity and rock bottom interest rates. Quarterly housing sales in Q1 2022 are at an all-time high since 2015 with around 99,550 units sold across the top seven cities, reveals latest ANAROCK Research data. This is a 71% yearly rise against around 58,290 units sold in the same quarter a year ago. New launches have also witnessed a tremendous growth of 43% from 62,130 units in Q1 2021 to over 89,150 units in Q1 2022. Among the top seven cities, Mumbai Metropolitan Region (MMR) and Hyderabad saw the maximum new supply, accounting for 51% of the total new launches. Whereas, MMR and NCR region saw the highest unit sales. The two regions combined, accounted for over 48% of the total sales in the top seven cities, with NCR witnessing an over 114% yearly jump. The impact of the third Covid-19 wave, says Anuj Puri, chairman at ANAROCK Group, was significantly lower than of the preceding two waves. "The unrelenting appetite for homeownership amid the pandemic has coupled with a growing certainty of impending price rises to speed up housing sales velocity. We are witnessing a bull run in the housing market."

The year 2022-23, as per Subhash Goel, managing director, Goel Ganga Developments, will be the year of recovery for the property market. The recovering housing demand, reopening of offices and government support towards the affordable housing segment are collectively helping in a solid recovery of the real estate sector across India. Goel adds that the potential homebuyers who were waiting for the pandemic to get over are keen on investing in the real estate sector and considering the prices are still reasonable with developers are offering great discounts to serious buyers. House Price Index is at a decade low.

Buoyant commercial and office spaces sector

As the coronavirus has receded and the companies have started resuming operations from offices, the recovery of commercial real estate is encouraging and aiding in a full-scale recovery. If the latest data compiled by the real estate consulting firm Cushman and Weikfield is referred to, the net office absorption is expected to rebound strongly, at 30-35%, and will reach up to 29-31 million sq ft (MSF) by the end of 2022. Owing to the resumption of office activities, says Subhash Goel, the fresh supply could reach 45-46 MSF in 2022 alone. "These are very positive signs of a recovering and resurgent real estate sector across India."

Declining unsold inventory

Despite spiralling new launches in this and the previous quarter, unsold inventory in the top seven cities, shows data by ANAROCK Research, saw around 2% yearly decline – from 6.42 lakh units towards Q1 2021-end to around 6.28 lakh units by Q1 2022-end. Even on a q-o-q basis, unsold stock saw a 2% dip across the top seven cities. Chennai, MMR, and NCR saw the highest yearly declines in Q1 2022 - by 11%, 10% and 9%, respectively.

Millennials adding to housing demand

The new-age generation, which relocated from Tier II and Tier III cities to Tier I and metros, is now in the favour of having their own house, instead of renting one. This is also now adding to more demand for the sector. "The new investors or the homebuyers demand spacious houses, with luxury and a large number of amenities, to showcase their lifestyle," says Shubham Arora, founder and director of Sheer Bulls. He adds that housing is now a style statement and the notorious pandemic instigated parties and gatherings at home only.

Another reason for the demand for the housing sector is the work from home option or the remote work culture, where people will visit their offices, but only occasionally. Installing workstations at home, with more than one working partner, is adding more demand to carry out the activities smoothly.

Dull returns from other assets is icing on cake

Lacklustre return of other safer asset classes is adding to the demand of real estate sector as well. According to Shubham Arora, barring the volatile equity markets or the unregulated cryptocurrencies, safer bets like bonds, FDs and gold have failed to offer better returns to investors. "This is giving a major push to the real estate sector as well," he adds.

Experts estimate that the low-interest rate is there to stay for a couple of years. Thus the home buyers can apply for higher amount loans which broaden their choices to buy bigger homes complemented by enhanced amenities and better lifestyle. Considering the panoramic view of the industry, the future of the sector seems rather promising. Taking a positive turn, the sales in real estate are expected to reach their peak in a couple of years, says Arora.

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