India’s real estate has picked up momentum in the last quarter and is on the verge of recovery. It hit one of its lowest points after the pandemic stopped construction all over the country. COVID-19 resulted in a delay in the buying and selling of projects for the developers. This gap was further widened due to a shortage of labour and workers as people moved back to their hometowns. Fighting these hurdles and obstacles, the industry is now back on track and has witnessed an upward growth trajectory. Homebuyers, however, remain wary of under-construction projects by Grade-II developers. Rating agency IndRa pointed out that with the formalisation of the sector, Grade-I and strong local players have gained market share and brands, thus winning customer preference. This blog talks in detail about the market trends and grading systems to look out for.
The real estate rating agency, India Ratings and Research says that “the momentum of housing market growth is expected to continue in 2022-23 on the back of a strong demand and Grade-I realty developers are likely to generate strong sales owing to the ongoing consolidation in the market.” Also, the Indian Brand Equity Foundation mentions that “In the first half of 2021, India registered investments worth US$ 2.4 billion into real estate assets, a growth of 52% YoY.”
Reports suggest that residential sales shot up by 46% year on year in 2021-22, especially across the top six cities of India. Pune and Bangalore witnessed the maximum one-year increase. The changing demands and preferences of homebuyers and their bias towards the IT cities are seen with an over 50% rise in 2021-22. This trend is also highlighted in other studies. Savills India studied the Indian market and its real estate demand patterns. Its findings indicate that by 2025, real estate demand for data centres is expected to increase by 15-18 million sq.ft.
In the previous year, it was the mid-size segment which had a dominant share of sales in all micro-markets, including Bangalore (68%), Chennai (57%), Hyderabad (76%), MMR (49%), NCR (48%) and Pune (51%) in the Financial Year 2022.
A few key takeaways for the market include:
Surge in demand for residential properties:
With increased urbanisation and rising household income, there has been a rise in demand for real estate. India is reportedly among the top 10 global price-appreciating housing markets.
Increase in organised retail real estate:
The organised retail real estate stock is estimated to increase by 28% to about 82 million sq.ft by 2023.
Increase in urban housing demand:
Around 88 crore people are expected to live in urban areas in India by 2051 as against the current numbers of 46 crore people.
It is worthwhile to note that real estate and construction is the third-largest sector in FDI inflow. FDI in the sector, including construction development and activities, stands at an estimated US$ 52.48 billion.
It is also safe to say that real estate in India has shifted gears with the rising demands. This in turn, leads to a demand for quality assessment and regulation. With various laws, bodies and third platforms in place, real estate has become more regulated, professional and accountable.
Among the first steps taken for the housing sector was the National Housing Bank, which was created in 1988. The objective of this refinance agency was to make the housing sector affordable and it was later given the power to regulate housing finance companies till 2019. This body was set with the intent to make finance and land available at cheaper rates.
Today’s buyers look for credible real estate developers and quality-certified projects and aren’t willing to settle for less.
CRISIL Real Estate Star Grading is the body in charge of grading and assessing real estate projects in the country. It addresses two critical needs of developers and buyers:
- Improved transparency and objective benchmarking of projects, and
- To help buyers identify quality projects within their cities and vicinity
CRISIL follows a step-by-step procedure in assessment and grading.
- In the first step, it rigorously scrutinises the projects for the quality of legal documentation, construction-related risks, and financial flexibility/viability of the project. It also looks into the background and the track record of the developer
- The CRISIL Real Estate Star Grading is based on an eight-point scale, which differs for every city, with City 7-Star being the highest and City 0-Star the lowest
- The expert analysts analyse and verify the information developers provide, undertake a site visit, and interact with project stakeholders before preparing the grading report and presenting it before the CRISIL grading committee. This Committee then assigns the score. The rating is made public by CRISIL once the developer accepts the grading
RGS Realty, born out of the excellence of Sukhwani Constructions, is known for its foundations, complete with goodness and quality. Their finesse and expertise are seen through their Grade-I build spread around Pune. With their ethics and motto, they’re here to “Build Good”!
To know more about RGS Realty and what they do, visit www.rgsrealty.com
Source:
- https://economictimes.indiatimes.com/industry/services/property-/-cstruction/housing-market-on-firm-footing-consolidation-in-favour-of-grade-i-developers-continues/articleshow/92548378.cms
- https://www.constructionworld.in/latest-construction-news/real-estate-news/real-estate-demand-for-data-centres-likely-to-rise/27363
- https://www.moneycontrol.com/news/business/banks/further-privatisation-of-banking-sector-feasible-but-needs-more-than-10-years-say-experts-8783451.html
- https://www.constructionweekonline.in/business/17864-real-estate-demand-for-data-centres-likely-to-increase-by-15-18-mn-sq-ft-by-2025-savills-india
- https://economictimes.indiatimes.com/industry/services/property-/-cstruction/residential-realty-performance-to-improve-in-fy22-grade-i-developers-to-gain-says-report/articleshow/81426709.cms?from=mdr
- https://www.crisil.com/en/home/our-businesses/sme-solutions/sector-gradings/real-estate/crisil-real-estate-project-grading.html?keySearch=getAllProp