As we welcome 2020, it’s time to take stock of what’s in store for the real estate industry. The year 2019 saw the real estate market being buffeted by commercial demand, more millennials buying property, prestigious developers establishing their presence in second-tier cities, and a rise in affordable housing and rental properties.
What are the trends expected to shape the real estate sector in 2020? Let’s take a look.
Co-living spaces are based on the concept of communal sharing. Like hostels, the residents in co-living spaces share facilities like business centres, lounges, and recreation rooms but retain private living quarters.
According to a 2019 report from FICCI and JLL, the Indian co-living spaces market is expected to grow at a CAGR of 17% and touch around Rs 1 trillion by 2023.
A concept driven by millennials, co-living spaces are already popular in India’s metro cities, and 2020 will see it percolating down to Tier-II cities like Indore, Ahmedabad, and Jaipur. A thriving startup culture and the shift to sharing rather than owning property are two of the other key factors that will drive the growth of co-living spaces in the new year.
Similar to co-living spaces, co-working spaces promote the sharing of a work environment and the facilities associated with it.
According to research by Inc42, there were 720 co-working spaces in India in 2018. Of the total office space leased out, co-working centres accounted for 8% in 2018, as per the JLL and FICCI report, and touched 12% in the first quarter of 2019. In 2020, it is expected to continue on a robust growth path as the concept expands to Tier-II and Tier-III cities, and large corporates shift towards shunning expansive offices for cost-effective, flexible work environments.
The real estate industry, like other sectors, has embraced disruptive technology in the last few years, which has brought transparency and accessibility to an otherwise fragmented and opaque industry. Collectively known as property technology (proptech), big data, AI, VR and other new technologies are progressively being incorporated into real estate business functions.
Indian proptech startups received US$ 242 million in funding between 2016 and 2018, according to data from Inc42. A 2018 report from JLL points out that India is the proud home of 77 out of 179 funded proptech startups in the Asia Pacific. Along with co-living and co-working spaces, proptech is poised for further growth and redefine the real estate industry in 2020.
Foreign investment and REITs
Real Estate Investment Trusts (REITs) have been an alternate financing lifeline for many global real estate markets. India’s introduction of its first REIT in March 2019 came as a bold step that supported the cash-strapped real estate sector.
ANAROCK data estimates that REITs can bring more than US$ 25 billion to India in the next three years with the renting or leasing out of approximately 150 million square feet of commercial space.
The big success of the Embassy Office Parks listing will attract more favourable policies, tax reforms, and global investors, which are some of the factors expected to propel REITs in India in 2020 and boost the real estate industry.
The demand for student housing in India has shot up due to the increasingly rapid migration of India’s young population from small towns and villages seeking higher education and jobs in cities.
Surprisingly, only 20% of the demand is currently being met. The student housing sector is expected to add at least 600,000 beds across India over the next three to four years. The year 2020 will see student housing come into prominence as the Indian government works on its “Study in India” programme with its goal of having 30% students in the 18-23 age range opt for higher education by the end of the year.