By Ram Raheja
With people relegated within four walls to mitigate the COVID crisis, the importance of a safe life and owning your own home was highlighted like never before. This, along with a series of government initiatives to support the economy, brought monetary policy rates down to record lows to invigorate consumption and stimulate growth in all sectors.
Also, compared to stocks, real estate has proven to be the best long-term investment asset. Unlike equity investments, real estate investments are not subject to market volatility. As a result, real estate is a safe asset to invest in. It is also a safe and concrete asset that will protect one’s future.
According to the Knight Frank report, with private equity players hoping for a new residential business cycle, the residential segment has seen investments worth USD 234 million in the first quarter of 2021, which was 64% of what was observed throughout 2020 and 38% of what was observed in 2019. In terms of volume (number of transactions), investment activity reached 100% of the 2020 levels and 39% of the 2019 levels in the first 3 months of 2021. This strong rebound in investment volumes was mainly due to investor activity in the residential sector. and office segments.
Furthermore, institutional investment in real estate is likely to increase by 4 percent to $ 5 billion (Rs 36,500 crore) during this calendar year with investors looking to acquire attractively valued properties amid the COVID pandemic, according to the Colliers India real estate consultant.
A significant percentage of home buyers are buying new homes because of the pandemic rather than despite it. This trend is predominant in the demand for updating. The pandemic has brought office, school, university, and regular household activities within the confines of the home, making families realize the importance of having additional space in their homes, thus creating new demand. from larger home improvements that may not have been a necessity before. . Also, with most people working from home; larger apartments, mainly 2 and 3BHK. are in higher demand.
Another interesting trend is that home ownership, which was being put off due to the ‘uberization culture’ of recent years, has made a comeback due to the pandemic. One thing that has changed dramatically as a result of the pandemic is that people are now more concerned than ever about their health. As a result, the types of residences in demand have changed. Today, people want a holistic living room, an oasis where they can live a healthy lifestyle.
The growth observed in recent months has been driven more by demand and less by price, which makes it more resilient and sustainable. Strong fundamentals such as increased affordability, transparency and alignment in supply and demand will keep demand for residential real estate investment optimistic in the long term.
(Ram Raheja, Director, S Raheja Realty. Opinions expressed are those of the author).