Residential real estate investment avenue: An analysis

 The resurgence of the real estate sector has been one of the positive stories of the ongoing Covid pandemic. In the pandemic year, low lending rates, reduced stamp duties, and the prevalence of work-from-home culture resulted in a K-shaped rebound in the residential segment. Not only the domestic sector, even FPI’s continue to have faith in the real estate sector. Affordable home prices, stricter regulatory measures along with increased transparency and greater consolidation in the sector have together created a profitable avenue for NRIs to invest in the Indian market.

For centuries, real estate has always been marked by an increase in the property's value. With more and more international corporations investing in India, real estate values have risen at a faster rate than ever before. It is all the more attractive for real estate investors in India in the post-Covid-19 scenario, with international investors eager to relocate their business from China to India. As people migrate to new cities, there will be more jobs, more influx, and more individuals eager to buy properties. As a result demand for real estate will increase.

There are differing opinions on whether the momentum will last or is just a passing-phase. When demand drops in cities where the Covid rise is strong, the uncertainty grows. As a result, the actual question is: what is Residential Real Estate in India's Long-Term Prospect? In the coming decade, three fundamental changes will take place:

The first is a shift in demographic structure. In India, nearly 60% of all home purchases are made between the ages of 35 and 55. That is where income stability and growth occur. This age group is also referred to as the prime consumer class. The 25-35 age group was the dominant cohort in the previous decade. As a result, the sheer size of the market, as well as the presence of more stable income groups, indicate that housing will be in high demand for a long time.

The rise in per capita income is the second key factor. With the expectation that the globe would return to pre-covid levels by 2023, India's GDP will rise at a rate of 6-8 percent per year, bringing it to roughly $8 trillion by 2030. With this GDP figure, per capita income will increase 2.5 times from its current level of $2000. People will have more money in their hands as a result of this.

The social structure is the third shift. The dependency ratio will fall from 6.5 in 2011 to 5.3 by 2031, according to the Technical Group's study on 'Population Projection' released in July 2020. The number of youngsters in the dependent group will also be reduced. This means that more and more households will be smaller, with fewer dependents, implying greater savings and disposable income.

There is a lot of demand for houses in the country. Favorable socioeconomic conditions, a young demographic, an unparalleled rate of urbanization and infrastructural improvement, and overall increases in household income will all aid the industry's growth. To tap into the market, however, considerable work would be required at all levels – government, organization, and individual.

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