A new year and a neoteric decade are upon us. Resolutions have been made; goals have been set and the excitements for the adventures of 2020 abound. What lies in the lead for the real estate market in 2020? Will 2020 deliver the goodies for the Indian real estate market? The year 2019 has been grinding for everyone connected to real estate - starting from property developers to real estate agents and most importantly to the sellers and buyers. However, looking forward to 2020, there will be some economic and social shifts, a wider range of opportunities, larger risk and return, and new drivers of value that you need to look at if you are interested in the real estate industry. Let’s take a look at real estate predictions for 2020 or beyond, so you know what to expect.
Looking forward to 2020 and beyond, the real estate investment industry will find itself at the rapid economic and social change. This changing real estate landscape will have substantial implications for the real estate investment community.
World population growth and increasing GDP per capita will impel this expansion. In 2020, investable real estate will grow more than 55% compared to the year 2019 and then will expand by a similar percentage in the following decades.
One of the biggest silver linings for real estate in India has been the attainment of commercial real estate in recent years. Commercial properties have always shown an incredible movement and amount of office transactions throughout 2019 (both in terms of sales and lease) have been encouraging indeed. Commercial rentals across major cities in India have also performed very well with some of the world’s biggest social media, e-commerce, IT, and entertainment companies increasing their physical presence in India. Thus, the positive traction in the Indian commercial real estate sector is expected to spill over to the Indian residential real estate sector in 2020, leading to growth in the residential real estate transactions in India.
Cities will present opportunities ranging from low risk in advanced economy core real estate to high risk or high rewards in emerging economies. The greatest social migration of all time will drive the biggest ever construction surge.
Co-working spaces have become one of the popular real estate trends in India in the past couple of years. 2020 could bring a new dimension to this growing category in the Indian real estate. As the young generations redefine the “new normal” in terms of working or doing business, co-working spaces could evolve as a strong individual real estate segment in 2020 and beyond.
In the past years, home prices declined in many markets as sales volume fell. The BJP led government has been proactive with regards to the nominal housing segment in India. Equally, the traction in the affordable housing and budget homes segment has been extremely encouraging and the government is expected to announce positive measures for this segment. Thus affordable housing (home cost below Rs 50 Lakhs) could play the biggest part in the story of Indian real estate.
The real estate sector is expected to continue adopting new tech in the coming years. Technologies that are expected to find applications in the sector include online home selling platforms, smart home tech, and apps. Artificial intelligence and predictive analytics are expected to play a key role in real estate. Also, machine learning is progressively being used in public spaces concerning urban planning and property design.
Population growth and citification bring along with them the necessity for more eco-friendly real estate development. It’s predicted that by 2050, it will require 50% more energy, 40% more water, and 35% more food to support the population. This means new properties will be designed with a “green blueprint” in mind. As, we are already seeing buildings starting to include renewable energy technologies and waste reduction, the future of real estate marketing is concentrating on more and more green as this is what people will be looking at (in the coming years and beyond).
Real estate brokers, the investment community and the developers will need to partner with the government to attenuate risks of schemes that might otherwise be uneconomic. In many emerging economies, the government will take the lead in developing citified real estate and infrastructure.
Real estate investors and buyers have been setting up shop in second-tier cities because of high real estate prices in first-tier ones. These capital movements are seen to result in economic growth and greater value for the real estate properties in second-tier cities.
New wealth from the emerging economies will intensify competition for key assets. The investment community will need to think laterally to earn agreeable returns. They might have to develop assets in fast-growing subsectors, such as retirement, agriculture, etc.
From the above, real estate predictions – it appears that we are going to experience another healthy and solid real estate market for the year 2020 and beyond. Cheers to the New Year and new possibilities!