The coronavirus pandemic almost crippled the fledgling real estate sector.

While liquidity issues and construction delays adversely impacted supply, economic uncertainty muted demand.

The crisis, however, spawned many new trends, including Work-From-Home (WFH). The pandemic also created a need for stability and security that comes from staying in an owned home versus a rented one.

Its economic fallout - low-interest regime, stable property prices, lucrative discounts offered by builders, and extension of credit linked subsidy scheme under Pradhan Mantri Awas Yojana (PMAY) – was a boon in disguise for the residential real estate sector.

In addition to avoiding the risks that come with living in a rented space, owning real estate is also seen as an important asset in one’s investment portfolio.

Demand for residential real estate has increased driven by millennials expecting lesser mobility in the future as work-from-home culture takes hold coupled with a growing sentiment shift towards asset creation post-pandemic.

Indian millennials lacking dedicated workspaces due to space crunch at home realised the benefits of bigger yet affordable lifestyle homes. With mortgage rates at an all-time low, demand for 2BHK and 3BHK homes have increased so that they can carve out their own office spaces within homes without family members having to step on each other’s toes or having to share work stations within the same living room.

As the need for having a separate workspace mounted in a work-from-home economy, millennials are also looking at properties in the suburban areas or tier II/III cities as (comparatively) lower property valuations would enable them to afford bigger spaces. They are keen to buy a 3BHK unit, the cost of which is comparable to 1/2BHK in cities. Additionally, these properties in lesser crowded and pollution-free suburbs offer a better quality of life. Strong connectivity and availability of robust data services across the country have also made it easier for Indians to look favourably at these locations and continue to work seamlessly.

Although Covid-19 continues to spread its tentacles throughout the country, signs of economic recovery, the low mortality rate in India coupled with the introduction of vaccine have Indians breathing a sigh of relief. However, remote working will continue to be the preferred mode of working for corporates across the world because of the benefits it offered in an atmosphere fraught with concerns about the physical wellbeing of employees.

The 25-40 age bracket who until now did not give much priority to buying a home as it gave them the flexibility to switch jobs and hop cities are now more than ever serious about owning a physical asset.

High-income individuals as well as those approaching retirement age are choosing alternative locations like hill stations and beach destinations since their home is not only going to be their personal haven but also their professional arena.

With self-owned homes such as villas, row houses, independent floors, providing for better social distancing, the demand for plotted developments is on the rise. Buyers are considering plot purchases so that they can build a house, with all amenities and facilities suited to their individual requirements. To cash in on this trend, developers are offering even smaller plots of 1500-2000 square feet.

While it may be myopic to say that the real estate markets in the bigger cities are going to suffer because of the changes brought in by the work-from-home situation, it is certainly safe to say that remote working has brought the focus back on peripheral locations and suburbs of big cities, apart from tier-II and tier-III cities.

Stable property prices and declining interest rates - which have reached a historical low, thanks to the accommodative monetary policies being pursued by the Reserve Bank of India for boosting economic growth, had prospective home buyers feel the time is apt to buy a property and keep the EMIs low and affordable.

Incentives introduced by the government of India for first-time homebuyers to promote affordable housing positively impacted buyer's sentiment. From providing interest subsidy under the Credit Linked Subsidy Scheme (CLSS) on housing loans, to reducing the tax burden on under-construction houses, the government has taken steps to ensure that affordable housing becomes attractive for first-time homebuyers. Under the CLSS scheme, a buyer who takes a housing loan from a bank, housing finance company or other financial institution is eligible for an interest subsidy of up to Rs 2.67 lakh.

Festive offers and schemes being offered by different developers at present are the icing on the cake making buyer's more confident about their purchase decisions.

Among other learnings from the unprecedented times that the world is facing today, the importance of owning a home has re-established itself amid the

COVID-19 crisis. In addition to avoiding the risks that come with living in a rented space, the pandemic has forced people to rethink their investment strategies by making bare the limitations involved in other investment assets and tilting it in favour of owning real estate.

This sentiment turnaround, along with the support measures launched by the government, will provide the residential sector with enough impetus to rise to its full potential in the coming quarters.

The author is Chairman, Ambuja Neotia Group

DISCLAIMER: Views expressed are the author’s own. Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/ organisation directly or indirectly.