With construction work at a complete standstill, projects getting deferred, the already ailing real estate sector has been crippled with the COVID-19 pandemic. The sector now looks at government support to bring business back on track!
But there is a silver lining - the transformation the industry has undergone in a matter of days.
Changes that industry stalwarts had imagined would only happen in a distant future have happened overnight. For instance, from the time when a physical property visit was indispensable to rent or buy a property, to today where startups are seeing numerous customers finalising properties for rent, via video walkthroughs!
While the concept is not new and is being practiced in most developed countries, for India it is a giant leap! Amit Agarwal, Co-founder & CEO of NoBroker.com, a tech-based brokerage-free real estate platform, tells me he was overwhelmed to see many owners and seekers already onboarded on the shift.
"To our surprise, many home-seekers were quickly onboarded on the process. We thought we would pilot it, but what we have today is over 200 successful cases of tenants finalising homes only via video walkthroughs and without an actual property visit. Come to think of it, it is not phones or books or vegetables that one is ordering or booking online. It is a home that people would stay in. It is a big decision," Agarwal said.
A similar sentiment echoes Uday Lakkar, Founder and CEO of co-living space CoHO.in, ‘The use of virtual tours of CoHo properties have increased with newer tenants who are approaching for moving in post the lockdown’.
"So its technology seems to be saving the gigantic industry that has been pulled down by multiple factors. From online discovery to online rent payment and rental agreement, technology has helped the sector come a long way. And video-walkthroughs are poised to give a new facelift to the staggering sector," believes Amit.
"Now that customers have had a taste of it, we hope that the trend continues beyond the lockdown period. We will continue to make this experience even better and smoother as we believe that technology has the power to achieve which could only be thought of and wished for in real estate," he said.
With social distancing getting engrained in people and the enhanced sense of sanitisation setting in - may lead people towards a more digitised world, believe many real estate players. And another sensational aspect of the change that they are seeing is the payment of rent, via credit cards!
With more than 85 lakh registered users, Saurabh Garg, Co-founder & CBO of NoBroker.com says his portal has seen a sudden uptick, a jump of 34 percent in the number of people availing the service of rent payment via credit cards (comparing February and April 2020). ‘Credits cards offer the much-needed buffer period or flexibility for tenants to make the payment. It ensures that the rent gets paid to landlords in time and tenants do not have to face a liquidity crisis. They get almost 45 days of the free credit period.’
In fact, Housing.com today also launched the 'Pay Rent' platform on its mobile app to facilitate rent transfers using a credit card. The 'Pay Rent' platform will allow users to transfer rent directly to their landlord’s bank account and generate digital receipts instantly.
This also shows that the pandemic has set into motion a more disciplined and more efficient way of closing transactions that would only benefit the real estate sector.
But on the other hand, consumer behavior may undergo drastic changes. Mani Rangarajan, Group COO, Housing.com, Makaan.com, and Proptiger.com say ‘Both residential and commercial segments in real estate will suffer a significant downfall due to the unprecedented situation. But Indian economics’ fundamental is strong and the sector is likely to make a strong comeback which even RBI has projected for the next fiscal year.
RBI has already announced several measures to offset the damage including a sharp reduction in interest rates both repo and reverse repo. Besides, it has also infused liquidity in the banking system which will help all interest-sensitive sectors including the real estate sector. It is likely that the government will also announce some measures for Indian industries particularly those impacted by COVID-19 in severe proportion’.
A strong comeback in the long term may be true, as almost 30 percent of people in India live on rent and 13 percent in their parent's house reveals the RICS - Knight Frank report, 2019. So the demand may come back within the next couple of quarters, but in the short term, the demand will remain low.
And this low demand has led many players to come up with innovative ideas that offer more options to prospective buyers. Group COO of one of India’s largest digital real estate companies, Mani says ‘We have launched a relief package named Housing Cares, under which the company will offer discounts and extended validity on its products. This move will enable every partner - brokers, sellers, and developers - to make up for the lost time through heavy discounts on all ad packages, extended validity of up to one month on packages, flexibility to choose launch date of services and attractive discounts and benefits on visualisation products’.
"It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change" - Charles Darwin
Tech-enabled, co-living player, CoHo.in is quite literally following this theory to the tee. The venture has launched ‘Project Darwin’ for its team to adapt rapidly to the constant changes, especially for a business with high physical touch-point like co-living and student housing. CoHo also claims that its taking many measures to ensure the emotional and psychological well-being of residents and the staff present in their operational properties.
Founder and CEO of CoHo.in, Uday also says that the impact of the ongoing pandemic on the co-living industry will not be just a temporary phase. ’Currently, the industry might see distortion in the value chain, cash flow mismatches, reduced spending propensity by the consumer, but in the long run, the product might augment with more cleanliness and hygiene measures taken, more digital community engagements. The use case of the offering would still remain strong, with a few modifications in the new world order’.
Moreover, the newer trends of work-from-home will benefit co-living as it shall expand its scope and augment its offering to capture this demand. With weaker buying sentiment, real estate supply will see more unsold inventory and alternative uses of assets like managed rental living, co-living and student housing could gain more developer/asset owner interest over the coming quarters believes Uday.
While the industry awaits government support and hopes for a few revisions in GST, stamp duty, registration charges and lower interest rates, one thing is for certain, once the pandemic is over the real estate sector would have entered a more efficient, a more digitally equipped era!
First Published: IST