(By Rishu Garg - Co-founder @Credit Dharma)

As India's real estate sector gears up for a transformative year in 2024, we sit down with industry expert Rishu Garg, co founder of Credit Dharma to explore the trends shaping the market. From technological advancements to shifting buyer preferences, Garg provides a fresh perspective on what lies ahead for investors, developers, and homebuyers.

What recent trends have you observed in the real estate market?

 "The market is incredibly dynamic right now," says Rishu Garg. "We're seeing strong demand, especially among younger buyers. About 58% of potential buyers are looking for residential apartments, while 30% are interested in residential plots in the southern regions—compared to 20% in the north."

“The market's valued at around $350 billion and is projected to expand to between $900 billion and $1 trillion by 2030.” Garg notes.

 There's a significant boom in tier-2 cities where returns on investment are higher. Job creation in these areas is fostering financial comfort among residents. Interestingly, many who moved to tier-1 cities are now investing back in their hometowns.

The first quarter of 2024 saw unprecedented residential sales with around 75,000 units sold, supported by stable economic conditions and positive buyer sentiment. The demand for affordable housing remains robust, bolstered by government initiatives like the 'Housing for All' scheme."

What role do you think technology plays in shaping the future of real estate?

"Technology is fundamentally changing the game," Garg explains. "Virtual and augmented reality have revolutionised property viewings. Prospective buyers can now take immersive virtual tours from anywhere, which not only enhances engagement but also speeds up decision-making."

Artificial intelligence is transforming property search and management. AI algorithms analyse vast amounts of data to provide personalised property recommendations, improving the home-buying experience. Plus, AI-powered chatbots offer 24/7 assistance, streamlining customer interactions.

The Internet of Things is paving the way for smart homes. Connected devices enhance security, energy efficiency, and user convenience by allowing homeowners to monitor and control their environments remotely.

“The shift towards better quality lead generation, digital land records and streamlined online mortgage transactions having expedited closing times." Garg Adds.

Sustainability and green buildings are becoming more important. How is this trend impacting the real estate sector in India?

"Sustainability is a critical focus now," says Garg. "Developers are increasingly prioritising green buildings and eco-friendly practices in both commercial and residential projects. This shift aligns with global standards and caters to environmentally conscious consumers willing to pay a premium for sustainable features."

He highlights, "The Indian government has recognized this, implementing regulations and initiatives that promote green building practices. Certifications like GRIHA and LEED encourage developers to adhere to environmentally responsible construction methods. Investors are also driving this shift, seeking projects that align with their ESG goals. Properties with green certifications are likely to see enhanced value and market attractiveness."

In your opinion, how has the COVID-19 pandemic reshaped real estate trends?

"The pandemic has significantly reshaped trends," Garg observes. "With remote work becoming the norm, many people sought larger living spaces away from crowded urban centres. Buyers are looking for homes that cater to their evolving lifestyles, leading to heightened interest in suburban and less densely populated areas."

He points out, "The pandemic also accelerated the adoption of digital technologies in real estate transactions. Consumers are more comfortable using digital platforms for property searches and mortgage applications. Virtual tours and online listings have surged in popularity, allowing potential buyers to explore properties remotely. AI and VR technologies have gained traction for property selection and shortlisting, enhancing the buyer experience."

Recently, there's a trend where first-time homeowners prefer buying over renting. Why do you think this is happening now?

 "Rising rents and fears of random eviction have led many to see homeownership as a more stable alternative. First-time buyers today are making more informed financial decisions, leveraging resources and data to assess market conditions." Garg explains

He notes, "Increased disposable income is another factor. As economic conditions improve, people have more financial flexibility to consider purchasing homes. The market dynamics are also favouring buyers, with more homes available for sale and builders offering incentives like tax benefits."

What are your thoughts on buying real estate solely as an investment compared to other investment channels?

Real estate offers several advantages as an investment.Garg explains. "It's a tangible asset—you own a physical property, which provides a sense of security. It can generate consistent income through rentals, offering steady cash flow that's often more predictable than stock dividends." Garg explains

He elaborates, "Properties can appreciate over time due to factors like location and demand, yielding significant returns upon sale. However, real estate is generally less liquid than stocks and requires a substantial upfront investment. It often requires active management, which can be time-consuming but can also lead to better returns if managed well."

What are your thoughts on the Airbnb rental yield model? Who should consider starting an Airbnb business, and what suggestions do you have for someone exploring this space?

"The Airbnb model can be profitable, with yields ranging from 7% to 12%, depending on location and market demand," Garg notes. "However, investors often overestimate occupancy rates and underestimate costs, which can affect actual returns."

He advises, "Those with decent disposable income, time availability, and an understanding of market dynamics should consider starting an Airbnb business.

What are your thoughts on the property flipping business? Is it a good secondary income model, and what challenges does it currently face in India?

"Property flipping can offer high profit potential, with successful flips yielding profits," Garg explains. "However, it comes with significant challenges in India."

He highlights, "The initial investment is high—starting a flipping business typically requires substantial capital, which can be prohibitive. Regulatory hurdles exist; flipping is often restricted during the under-construction phase and is only permissible after obtaining an Occupancy Certificate. Market volatility can affect sales and profitability, and short-term capital gains tax can be as high as 20% on profits made within two years of purchase."

"While it can be a lucrative secondary income, it's essential to be aware of these challenges and navigate them carefully," Garg advises.

China's real estate market has entered a stagnation phase, with many empty buildings and no buyers. Do you think a similar situation can happen in India? Are we in a real estate bubble?

He explains, "Our real estate sector is still developing, with demand driven by urbanisation and a growing middle class. We haven't seen the same level of speculative overbuilding as in China. Government initiatives aimed at boosting affordable housing and infrastructure development help stabilise the market. Plus, we have a younger population, which may sustain housing demand over the coming years."

"Despite challenges like high mortgage rates and property prices, the overall outlook remains optimistic," Garg concludes. "Favourable demographics and rising disposable incomes position the Indian real estate sector for robust growth across various segments."