Real estate is the sum total of how micro-markets work as also customer sentiment across different segments, translating into actual transactions. The COVID-19 pandemic is impacting the economy in general and real estate in particular. As of now, we are going through a 21-day lockdown, which translates into no work at sites, no walk-ins so consequently, no sales.
Marketing and blocking of apartments are being done through alternative platforms (digital, online and telephony) by leveraging technology, which has provided a working alternative. Obviously, new technologies will gain in terms of usage and importance, and not just in these aspects, but also in terms of construction and planning/ design/ architecture.
Assuming that post the lockdown, we will get back to normal life, the 21-day break in business and commercial activities will have created a gap, filling which will take time – and how long is anyone’s guess.
Projections that we are seeing at present are guesstimates and given that at present we are through with just one-third of the lockdown, twice of that yet to go.
So, housing sales will drop as will new launches, unsold inventory will largely remain stagnant, delivery of new homes will be impacted and the affordable segment being most price-sensitive is expected to be hit the maximum – no arguments there. But to give each of these a number, and term it as anything more than a ‘guesstimate’ would be unfair.
The authorities have come up with measures to combat the economic impact of the lockdown, more measures will be implemented – and how much of a positive impact these will create is something we all are hoping will be positive. We pray these work out better than expected.
So, commercial real estate will see a slowdown in terms of absorption as the economy comes to terms with the new paradigm post the pandemic. Work from home (WFH) will see an initial reduction in offtake of office workspaces until someone does the math as regards the efficiency of human resources when it is WFH as compared to working in the company’s workspace.
It will take some time before the scare of being in a crowded space is overcome, so under construction Malls will take longer to be ready for fit-outs. Retail spaces will also adapt to being more of ‘experience and buy’ rather than ‘price-sensitive purchase’ with the added aspect of ‘home delivery’ for the end-user (the customer).
To conclude, present-day calculations suggest we might see a 20 percent drop in off-take across real estate segments – so long as other factors remain constant. One hopes that this actually happens and that things return to normalcy at the earliest.
The author is the president of NAREDCO and ASSOCHAM, and is Chairman and Managing Director of the Hiranandani Group