Once having a dud period, the real estate sector in India is experiencing a sharp rise and seems to be out of the woods. Data shows that quarterly housing sales in Q1 2022 are at an all-time high since 2015 with approximately 99,550 units sold across the top 7 cities. With this rapid recovery in the sector, investors are gaining confidence, when it comes to investing in housing once again. According to one expert, the bull run in the housing market continued in the first quarter of 2022, with approximately 10% q-o-q and about 70% y-o-y growth in sales. Ever since the Russia-Ukraine war, with gold prices being pushed up to $2000 per ounce, investors were flocking to it.
With other equities falling and rising, investors have also reclaimed the gold nugget sector of real estate which has robust potential to grow. PE inflow in the real estate deal market has shown a surge with 1.7x growth on a Y-o-Y basis in 2021. However, the decline of marquee investments due to a cautious approach resulted in a fall in deal value representing a 50% decline in value in 2021 when compared to the same period last year. The investor enthusiasm and recovery in CY2022 indicates further investment in data centre construction, due to increased consumer demand and record low home loan rates in this asset class for long-term returns due to increased urbanization and demographics.
With the real estate sector paving the way for alternative asset classes and opportunities, a higher degree of accountability, reliance and transparency has been established. This has all bred an ecosystem where investors feel more comfortable parking money in real estate assets. But is there a dichotomy leading to dissimilar views of what stakeholders can expect from the real estate sector? A report by the DPIIT remarks that the real estate sector saw a foreign investment of about $52 billion between April 2020 and June 2021. While that sounds lucrative, receiving funding is still deemed to be a Herculean task and there's a public consensus that real estate may not be lucrative with returns not being great. Yet, overall, real estate is definitely part of the upper echelons of prudent investments. Add to that a couple of legislative frameworks and corporate governance like RERA being inculcated in the sector, as well as the various changes that overturn and upend, such as the COVID-19 pandemic, GST and demonetization. What does it all mean for where the realty market is and how will it cope?
All in all, is the real estate market strapped to a rocket? With the sector being at an interesting junction, what does this evolution mean for the sector? How does something that's seemingly antifragile, that was once unorganized and unstructured, become brimming with potential and promise? What's the room to innovate and grow? What is its new avatar to behold?
The VCCircle Real Estate Summit 2022 is going to bring together real forces of nature in the form of cutting-edge tech enterprises, developers, policymakers, financial corporations and more to explore what's to come and what can we expect from this new avatar of real estate.