State of cyclicals: Real Estate

Broadly, the real-estate sector could be divided into residential and commercial segments. In the residential segment, demand mainly comes from the migration and nuclearisation of families and customers looking for an upgrade. On the other hand, for the commercial segment, economic growth drives the demand. On the supply side, the availability of capital and land are key growth factors. In India, speculations over the price increase led to an oversupply of residential real estate. Therefore, despite a shortfall of houses in India, there was an unsold inventory of around 7.4 lakh units at the end of FY20. HISTORICAL PERSPECTIVE During the real-estate boom in 2000s, developers invested more in acquiring residential projects. This led to an increase in land prices, thereby resulting in a vicious cycle where gai