Housing Development Finance Corporation (HDFC) chairman Deepak Parekh is confident that the strong demand for housing in India is here to stay, with technology playing a bigger role in the real estate sector.
Parekh foresees property technology, or proptech as it is known, to change the landscape, with 3D printing, modelling and increased use of tech in all spheres of the sector.
He was addressing the 4th CII Real Estate Confluence virtually, sharing his thoughts on “What’s Staying, What’s Changing?”
The Indian real estate market was on an upward cycle and had staged a strong comeback after taking a hit following the coronavirus outbreak, Parekh said.
"In over 50 years of my work life, I have not seen housing affordability better than where it is today. I have not seen such easy liquidity conditions and interest rates at such low levels ever before and I have not seen such a burning desire to be a homeowner than in these current times", opined Parekh.
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He sees the residential housing as the “big star”, as the desire to own a house had only grown stronger. The demand for housing was continuing to grow among first-time buyers and also those who moved up the property ladder, he said.
Income levels were rising faster than real estate prices because of which the younger generation could afford homes sooner in their life. Thus, the affordability of homes should not get affected, the 77-year-old Parekh said.
In terms of housing prices, Parekh said barring a few metro cities, the affordable housing segment remained stable and the “sweet spot for housing is still in the price range of Rs 5 million to Rs 10 million”.
However, it was important to keep a lookout on the price hike in building materials like steel and cement, as those costs could get passed on to homebuyers.
The HDFC chairman also enlisted three measures that would help affordable housing. First, shorter construction cycles, second, faster regulatory approvals, and third to enable credit input on GST for under-construction properties.
When it comes to the changes in the real estate landscape, Parekh said the emergence of data centres and India looking to position itself as the global data centre hub.
Tech and clean building
He also spoke about proptech and how construction technology was at an exciting juncture with 3D printing, building information modelling, etc. Home improvement technologies would also see more innovation.
"Don't underestimate the power of India's startups. Home improvement technologies are going to see more innovation, so keep up with the emerging tech", he advised.
Parekh also forecasted that all incremental funding to financial institutions would have ESG covenant embedded in it and the sector must be prepared for that.
The construction sector must also stay ahead of the curve by working towards a lower carbon footprint and reduced emissions.
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Talking specifically about Maharashtra, Parekh said there was merit in continuing the reduced charge on premiums as higher premiums hampered development. Civic bodies could earn more in revenue through discounts.
Predicting better days ahead for the real estate sector, which has had a few rough years, Parekh stressed that the reputation and track record of builders was what mattered the most.
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