The year 2020 has been unprecedented with the coronavirus pandemic dishing out a volley of challenges globally and India was no exception. The last quarter of FY 19-20 signalled a positive recovery trend in-spite of economic slump due to a series of economic and policy reforms introduced by the central government. The pandemic induced total economic lockdown brought Indian economy to a grinding halt, wherein Indian real estate was badly affected.
It was arguably, the most challenging time that Indian real estate has witnessed. With migrant labour reverse-migrating; customers unable to visit project sites, liquidity crunch and breakdown in the supply chain, was a period of despondency. The silver lining to dark clouds was digital modes that came as a rescue to human interface, amidst enhanced automation and mechanisation. Real estate players had to quickly brace up and tune their promotional and interactive activities via digital platforms to communicate with their visitors and prospects. These digital tools equipped home seekers with most of the relevant data and details about the project, product, location and the developer’s track record.
Government and apex bodies came up with innovative fiscal measures to deal with the real challenge of liquidity funding. The cascading effect of the recent policy reforms led to severe liquidity crisis and the COVID-19 pandemic was the last nail in the coffin. While the government followed trials of ‘Jaan and Jahaan’—the economy witnessed survival of the fittest. The recalibrated unlocking of economy under ‘Mission Reopen’ gained momentum with economic activities springing back under the new normal situation. The liquidity measures introduced by the RBI and Union finance minister injected liquidity into the market for it to recuperate quickly. No doubt, that Indian economy has shown greater resilience and is now bullish towards revival from survival mode with GDP forecasts coming in positive scale.
The liquidity infusion and enhanced low cost credit measures definitely addressed the supply side of the economy, but the consumer spend would need demand impetus. To enhance the disposable income in the hands of consumers for inducing spends, pushed authorities to slash interest rates to its historic low, NO GST post OC received, slashed stamp duty at the state level, extension of credit guarantee scheme, advanced outlays of PMAY-U, and also thrust on affordable rental housing.
Indian economy is consumption driven, and the onset of festive season fostered the demand for housing in tandem with favourable market conditions. The media reports reveal improved home sales and enhanced property registrations nudging fence sitters to get converted into actual home buyers. The need of owned homes was underpinned in a pandemic crisis on grounds of comfort, convenience and community living.
The new normal routine urged redesigning of home layouts in order to encompass work\study\wellness from home culture and promote walk to work culture. The demand for efficient layouts with extra flexi space and luxury homes to upgrade the lifestyle topped the homebuyer’s wish list. There is also renewed demand for home automation and technology driven amenities on the drawing board of developers to fuel the growing demand of new age homebuyers.
Similarly, the pandemic has resulted in sanitation and hygiene gaining in importance, as has better ventilation and natural light and amenities like uninterrupted power supply, fiber-optic connectivity for robust Internet connectivity etc. The remote work culture, geopolitical uncertainties, currency depreciation and values of other investment assets went under sharp volatility, real estate as a safe bet investment highly attracted NRI communities across the globe to invest in safe nest back home. Gradually, there is a change in home buyer profile with female buyers and renters opting to buy their first home will be the largest segment of home buyers in FY20-21.
Commercial real estate was adversely affected with lockdown that led to work from home and remote work culture. But, walk to work culture is now building up on come back to office momentum which prioritises to promote employee networking culture, sanitisation, and wellness care. The renewed commercial spaces would need to adhere to the social distancing norms and need large office floor plates to accommodate the workforce. Also, decentralising office space for business continuity plans will augur the demand for co-working spaces, flexi space, and business centre in proximity at the peripheral locations
The future of the real estate industry would witness consolidations and JV’s and JD’s as a new trend. The process is separation of grain from the chaff, and branded developers with proven track record and financial stability will sustain —it will be survival of the fittest, to put it simply. Business models will change, and low debt ratio with financial implications being closely monitored will be the norm. The industry will continue to seek low cost financing. ‘Customer centric’ will be the mantra from 2020 which will grow into the future.
Even as a vaccine for COVID-19 appears to be on the horizon, it does not mean humankind will return to the old definition of normal. So, as social distancing norms as also sanitisation and safety precautions continue, the aspects of Work from Home as also Work from Remote will continue to gain ground through end-2020 and into 2021. The thrust to informal gig economy which results in changed parameters for workspaces will impact the requirements of homes cum working spaces. The most important aspect going into 2021 will be the need for real estate to be ‘cost effective’.
Another major change will be enhanced importance to sustainable development. Green real estate development is the future. So, recycling of water and waste, rain water harvesting, control over carbon emissions, green spaces and solar as also renewable power generation alternatives will be the watch-words through end-2020 into 2021.
COVID-19 has forever altered the way of living, and the realty market will foresee new trends and preferences that foster better quality of living. However, revival of Indian real estate sector is inevitable as it is the second largest employment provider. Nearly, 269 allied industries will have a multiplier effect with the regaining of the real estate and construction sector.
—Dr Niranjan Hiranandani is National President – NAREDCO. The views expressed are personal
(Edited by : Ajay Vaishnav)