Year 2019 is an important year for India as the general elections to Indian Parliament will be held during the months of April and May. In other words, first half of Calendar 2019 will be a period of uncertainty both politically and economically. This is a bad news for some of the sectors including real estate sector whose revival hopes are dashed to the ground now at least in the first half of the year 2019. Health of architecture and home improvement largely depends upon the health of real estate and thus, home improvement sector too may see dull first half in 2019.
As far as 2019 trend is concerned it will largely depend upon and influenced by variety of factors like sustainability, climate change, green construction, pollution control (air, water and noise – all included), smart city, etc.
From 20,000-sq.ft of green space in 2003, India achieved a significant milestone and historical landmark, of crossing 5 billion sq. ft of green building footprint in 2018. In last one year, GRIHA has certified 50 buildings in Delhi as green. That is almost one building per week which shows that the concept is catching up. However, India has less than 2 per cent green buildings. That also shows that whatever has been achieved so far is negligible and there is lot of space to be covered. Concept of green construction is catching up and year 2018 by far was the best year for green construction in India. This trend is likely to be maintained in 2019 also and the pace may gather further momentum in 2019.
There is a reason for being optimistic in 2019 about green construction. Many states have already incentivised the green construction in India like Haryana, Punjab, Rajasthan, Uttar Pradesh and West Bengal. Maharashtra has come out with draft regulations to incentivise green construction and so is Karnataka. Telangana has promised to come out with one soon.
Green construction and green buildings will be one of the hottest topics of 2019 which in turn will impact the trend in home improvement sector in 2019. Both designs and constructions will be guided by green code and there will be marked shift in the use of green materials in 2019.
Green power and energy efficiency
India’s solar power capacity crossed 26 GW in 2018. In one year, that is 2018, our solar power generation capacity has gone up by 25-30% which is a commendable performance. In less than five years, India’s solar power generation capacity has gone up ten times. India has set itself a target of 100 GW generation capacity by 2022 of which 40 GW will be rooftop solar power capacity. In other words, solar power will remain main focus of government’s policy initiative in next couple of years. Solar power operated lightings, appliances, etc. are likely to become popular.
Monsoon in 2018 was below normal and as such we are likely to face water scarcity in major towns and cities in India. So, conservation of water will become all the more important in 2019. Water and its absence will always remain in our mind no matter where we are – in kitchen or bathroom or on field designing a building for a client. Technology and products which help in conserving the scarce water will always be a favourite of the users and it will be more so in 2019.
Warning bells of pollution and its impact on normal life has been ringing since long but we rarely took notice of it and now we are paying a price (a heavier one) for it. Pollution, be it air, water or noise, has invaded our homes and has taken away our piece of mind and health and has added to our stress. We are forced to look around for a locality to live in which is cleaner, less noisy and crowded with greenery. We have become conscious about pollution free environment especially in last few years – now we care about what we inhale and what we drink and hear! These facts will remain in our mind and influence our decision while we design and decorate houses too.
GST & e-way bill system
GST was expected to be one of the most disruptive taxation systems ever introduced in the country post-independence. Indeed, GST caused disruption but it was more due to uncertainty and unawareness about the law, its operation and its implication. On ground, it has increased the paper work for the tax payers with related harassment.
When GST and subsequently e-way bill system was introduced, it was expected that unorganised sector which is dominant sector in India, will have a tough time and eventually the sector either has to join the mainstream, that is, organised sector or subordinate them. However, nothing of that sort has happened and for the unorganised it is business as usual scenario.
However, things are changing slowly and the government is tightening its surveillance mechanism and once the proper and efficient surveillance mechanism is in place, the unorganised sector may find the going difficult for them. However, pace and direction of this surveillance mechanism will all depend upon the new government which will come up after the general elections in May. When the market moves from unorganised to organised sector, there will be gradual shift from the consumers towards branded goods. This will be major secular shift having long term impact in the economy.
E-commerce has changed the way we buy goods and also has helped the seller to expand his reach to nook and corner of the country. E-commerce is today influencing what, when where and how to buy. However, rules governing e-commerce in the country are still in evolutionary stage and are often subject to lobbying by interested parties. This has often brought uncertainty to the rules and taken away the transparency in formulation of rules. Often consumers interests are ignored to uphold the interest of sellers because of their strong trade association. For example, recent tweaks announced towards the end of 2018 on foreign direct investment in e-commerce. These announcements have unnerved many e-commerce big players in the country who have to re-draft their strategies. Recent changes in rules are designed to assuage the small trader lobby, ahead of general elections. The new rule will discourage the practice of discounts, exclusive offers and cash backs. However, only the 2019 budget may throw clear picture on government’s e-commerce policy initiatives. But budget 2019 will happen in the second half of 2019 and till then we have to live with policy uncertainty.
E-commerce has played an important role in promotion and expansion of home décor products including furniture, home textiles, bathroom accessories, kitchen electronic appliances, etc. E-commerce players’ disruptive pricing policy, though harmed the smaller players, have helped in market expansion. But the recent change in rule may alter that and to that extent it may impact the 2019 trend.
Turkey as a sourcing point
Till recently and even today for many, China is the only source for their home improvement material requirements like tiles, boards, furniture, glass, etc. However, of late, some importers are finding Chinese products not so cost competitive. According to them, labour cost has gone up substantially in China thus taking away major advantage enjoyed by Chinese ‘Sweat Shops’ till now. So, some of the importers started looking out for alternative suppliers from where they can get their requirements at competitive rates. They found Dubai as an alternative for China for some of the items as many multinational companies have opened their units there. Proximity of Dubai especially to Western and Southern India where most of the construction activities take place also added to the advantage. However, Dubai’s advantage as a major source for Indian building material requirements didn’t last long, again due to rising cost in Dubai. Further search for safe and cost effective source for our building and home improvement materials led our importers to Turkey, a European country with all the features of an emerging market. Series of meetings between two countries, at government and business level show that trade between two countries is set grow in the coming years. If that happens, it will be good news for home décor industry in India as Turkey is an established player in furniture and marbles.
During last few months, we have seen lot of volatility in the stock market which is a bad news for those who want to raise funds from the capital market. Many real estate companies were planning to raise money through Real Estate Investment Trusts (REITs) but the volatile stock markets are acting as deterrent. REITs are investment trusts that work similar to mutual funds with the only big difference being that instead of using the money collected from investors to buy stocks and bonds, in case of REITs capital is deployed to own real estate assets. The Trust will earn either from capital appreciation or through rentals on commercial properties like office, shops, malls and hotels. While rentals provide quick and regular returns, capital gains are usually long term in nature.
A stable capital market would have helped many real estate projects to take off and would have contributed to the recovery of the sector. But that may not happen in the near future and realtors may have to weight some more time. A healthy real estate market would have provided icing on cake for home improvement industry.
India is transitioning and that is visible
A glance through exhibitors’ profile at ET Acetech indicates changing consumption behaviour and rising aspiration level among urban consumers. This time at the exhibition, participation was more from manufacturers of new-age advanced products’ like lightings, differentiated floorings, decorative items, luxurious home décor products, etc. which cater mainly to high end customers. There was a muted presence from traditional segments like tiles, plywood, faucets, pipes, laminates, etc.
Exchange of words with promoters of various home décor products and also a close survey of various products introduced in the market in recent past reveal many interesting facts about the industry. It speaks about the intensity of competition and also changing patterns of consumers behaviour. Intensity of competition has forced the players to be on their toes always, introduce more new products with new features with regular intervals and reach out to new markets.
In case of tiles, it is the size that matters now! At least leading manufacturers believe so. However, they are also, at this juncture of time, unsure about when, where and how much shift will take place towards large sized tiles. According to leading players large tiles segment is a niche category and the size of the market is small but growing. So, leading players like Kajaria and Somany are preferring to outsource their large-sized tiles requirement than produce the same through inhouse facilities. They may go for their own facilities to manufacture large-sized tiles at their facilities once there is visibility on demand side and also market grows into a decent size.
Due to oversupply kind of situation, new capacity additions have abated and in Morbi, no new capacity addition is foreseen during the year. Of course, some capacity additions are happening in wall tiles segment which according to some players is a ‘happening segment.’
Demand scenario for plywood sector too is challenging and that may not change in 2019 abruptly. In the first half, we may not see price hikes and the manufacturers may take decision in the second half depending upon the market condition. One interesting development, according to leading plywood manufacturers, is that there are some signs of market share shift from unorganised to organised sector. This is likely to pick up pace in 2019. Also, you may get to see more new branded products introduced by the organised players in lower and mid-end segment to attract more customers from unorganised to organised sector. Many may get inspiration from Sainik 710launched by Century Ply last year which has been well accepted in the market.
With the recent sharp fall in crude prices, laminates manufacturers may not go for another round of price hike in 2019. Most of the leading laminates manufacturers have already increased the price in October 2018.
Overcapacity in MDF segment has taken away manufacturers’ pricing freedom and the segment is likely to see continued intense competition in 2019 also. MDF manufacturers may introduce value added products like different variety of pre-laminated MDF to attract more customers. Due to competitive pricing and easy availability, MDF may be preferred in furniture making too and this trend may pick up momentum towards the year end.
In case of plumbing pipes switch over from PVC to cPVC is expected to gain momentum during 2019. According to leading players with pricing differential between cPVC and PVC pipes narrowing down to 10%, there has been increasing cannibalisation and preference towards cPVC pipes. Further, cPVC is stronger, more corrosion resistant, and more flexible than PVC. It also withstands higher temperatures than regular PVC. In due course (may not happen in 2019) use of cPVC in plumbing may be made mandatory.
PEX (cross-linked polyethylene) pipe with its inherent advantages is likely to be preferred more in home plumbing in 2019. PEX is an intuitive system of tubing and fittings that is flexible enough to move around obstacles in floors and walls while also being tough enough to withstand corrosion and hot water. PEX is often preferred over PVC due to its better hot water-resistant qualities.
An interesting development on new products front during 2018 was plastic underground sewage systems including manhole, overhead tanks and septic tanks and also readymade toilet blocks and public urinals. As these products were introduced towards the end of 2018, consumer acceptance or otherwise could not be assessed and only during the current year we can come to know about public reaction to these products. Even if these products are accepted in the market, it may take some more time before they become a trend and it is too early to expect that to happen in 2019.
Some interesting developments on ceiling fans front too. Many new players have entered the field and as a result competition has intensified. To remain relevant, players are introducing new features in fans which hitherto was the most neglected product segment. Fans attached with chandeliers have been introduced in the market in the premium segment. Havells has introduced decorative lighting premium fan products starting from Rs 8,000-9,000. Most of the new products have been launched during the latter part of 2018 which give a clue as to what to expect in this otherwise uneventful segment in 2019 and also in the coming years.
Water scarcity in 2019 is staring at us and water conservation will be the main theme while designing the bathrooms during the year. Trend will be towards water-efficient fixtures that will help you save water, energy, and money. Water-conserving dual-flush toilets which have been made mandatory in Gujarat public toilets likely to become popular during the year and more states are expected to follow the Gujarat government’s example.
Wooden flooring to become trend in 2019
Year 2019 is likely to be year of wooden flooring. Aesthetics of wooden flooring is gaining acceptability and with increased income and wide usage of air conditioning, it is likely to gain wide acceptability in the country. Further, entry of new players like HIL and Greenpanel Industries into wooden flooring segment will help in creating awareness about this type of flooring and will ensure market expansion.
Also, the mindset of the people with respect to home improvement is changing. People now want different types of flooring for different rooms and also want to change the flooring over a period of time even if it is not damaged or not lost its look. Because people now a days do not want to stick to one design for too long and want change frequently.
Due to these factors people now have started looking at wooden flooring as a flooring option. Also, wooden flooring has certain advantages over traditional flooring materials. For example, once laid, wooden flooring doesn’t require anything in terms of periodical maintenance except regular cleaning. On the other hand, marble floors require polishing after sometime to maintain its original look which is not the case with wooden flooring. Also, wooden floors can be washed with less water.
Engineered wood assortment with natural wood colour and design would be the most favoured one. In high end segment, solid wood flooring will be the preferred material for flooring.
Trend clearly indicates that good old granite is slowly making its exit and solid surface countertops in quartz is becoming popular. Trends are leaning toward the use of materials such as quartz, granite and marble which have a unique and natural pattern. Quartz provides variety in colour choice, durable, no chipping and its sustainable and grain quality is hard to beat. It is also easy to clean and maintain with its beneficial properties which enables it to resists the toughest spills, and retain its lustre for many years and often does not require polishing or waxing.
Similarly, in case of flooring, stone and wood-look floors in different materials will be favoured ones. Hardwood floors bring a rustic sense of warmth to the space. Darks, lights and high variations top this year’s colour trend.
Problem of dust and insects force us to have closed cabinets in the kitchen. Closed cabinets however are less conducive to today’s homeowners, preferring more open space. The solution and the trend thus are glass-front cabinets! Painted cabinets or shelf walls with clear or coloured glass are all great options depending on your style.
Another trend is kitchen design that fosters social interaction. Island, U-shaped and L-shaped benches are the perfect way to create an inviting connection between kitchen and dining/living spaces.
Talking of colours, as style evolves and kitchens change their look, most people are opting for a metallic accent colour. It is all about high contrast and in addition, the Golden or copper tones are a kitchen trend that makes its way into our kitchen, year after year.
Green is the key word in lighting and energy efficiency will be at the top of the criteria list. When choosing the fixtures, preference will be towards using dimmer switches, which help keep energy usage down, as do automated lighting control and the use of LEDS. Gold will remain one of the trendiest finishing this year. We will see lots of furnishings such as ottomans, stools, tables, decorative cushions and, of course, lighting.
In case of office lighting, emphasis will be on natural lighting and ventilation. However, one may have to compromise on ventilation if the locality is prone to air pollution. In general, emphasising freshness of the product through high colour rendition, the right level of illuminance and using the right light colours are decisive criteria. Setting the right colour temperature matching the product makes the surface look more natural. The interplay of variable colour temperatures across the store creates different atmospheres within the store and enhances the emotional and biological feeling for customers. Gentle illumination is also an important factor to consider in lighting.