Trends That Will Shape The Real Estate Market In 2019

Trends That Will Shape The Real Estate Market In 2019

It’s complicated. In the course of compiling its annual Emerging Trends report, the Urban Land Institute found that the only certainty in its outlook for 2019 was uncertainty. Expert analysis points to a more complex, multi-layered series of overlapping trends, with unpredictable results, as opposed to a few strong narratives.

Sustained Demand For Office Space

Robust GDP growth is expected to fuel expansion and attract real estate investment. Office space absorption in 2018 has grown by a healthy 20 per cent since the last year. This is due to renewed interest from banking tenants and expanding IT companies. This trend is expected to continue in 2019 as well.

Rise Of Co-Working Office Culture

The entrepreneurial ecosystem in India has been growing continuously, and this has had a multiplier effect on several sectors, one of which is conventional office space. Over the past five years, the concept of co-working space has really caught on, and now has more than 200 players.

Alignment Of Supply Of Residential Units With Demand

The residential real estate market has been witnessing rising demand over the years. This is due to a growing population, rise of nuclear families, urbanisation and increasing disposable income. But due to a price mismatch, the sale figures haven’t seen much improvement. Real estate developers are trying hard to match the size of residential units to the budget of the end-users. Home buyers too are now more informed. The government’s push for affordable housing might see better traction in affordable housing segment.

Warehousing

With residential real estate not being able to match the price with the budget of the end-users and good quality office space in short supply, logistics is the sector that is attracting real estate investment. The introduction of GST has helped merge India’s 29 states into a single market. Also, there has been a structural shift in the logistics sector, with many small fragmented networks being joined into a large distribution chain that has centralised hubs. Growth of online shopping is another factor that is helping this sector grow.

Financial Stress

There has been an on-going crisis with NBFCs (non-banking financial companies), which has slowed down the distribution of funds for the commercial and residential real estate projects. With banks and NBFCs becoming cautious, real estate developers are finding it difficult to arrange funds for new products, and are being forced to opt for other financing routes. These routes often increase their cost of capital. If the ongoing crisis with banks and NBFCs is not resolved soon, the sector might need more time to recover.

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