The Covid- 19 pandemic outbreak has eroded business and growth across sectors. The Indian real estate has also faced a significant setback due to the pandemic while already reeling under existing challenges related to liquidity, NPAs, to name a few. Now, the second wave has influenced the future sentiments of the real estate stakeholders in the country. The restrictions on mobility have enfeebled the market outlook for at least the next couple of quarters. The first quarter of 2021 has seen a healthy 44% growth as per the Knight Frank report, but the second wave has now become a matter of concern.
However, with the foresight of the first wave and the precautionary measures taken by the government, the residential real estate sector is hopeful of sustaining stability. The vaccination drive will also help alleviate the impact of the second wave while mobilising the sectors to push the economy on the growth track further.
Increased end-user interest
Despite the pandemic, mid and affordable segments continue to sell well, as the end-user interest for these segments is high during the pandemic. Developers are leveraging technology platforms to redesign properties for flexible space utilisation and capitalise on customer’s mindset towards owning a house as a safety precaution against Covid-19. Enhancing the developer incentives and facilitating the mortgage regime will boost this impetus further.
Due to this end-user demand, the developers mainly focus on completing the existing projects and sales conversions. The sales of ready-to-move-in projects and those nearing completion are garnering greater interest from homebuyers. This is an excellent opportunity for the developers to clear most of the unsold inventory too. With potential homebuyers showing interest in capitalising in homes, developers should encash this by warranting the stability of prices.
Today, the pandemic has drilled in the significance of maintaining a healthy lifestyle in everyone’s mind. To further attract potential buyers, the developers are looking at creating projects with amenities that are focused on providing individuals with an active and healthy lifestyle. Providing key amenities focused on better lifestyle and health would not only ensure the safety of the consumers, but it would also make the decision-making process faster in terms of buying a property.
With millennials emerging as a critical customer class, the demand for digitally enabled homes and larger unit sizes to accommodate home offices may also increase in the next few quarters.
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Govt. to continue its support
As the real estate market in India is the second-highest employment generator in the country and housing for all being the primary agenda for the government, the sector is looking at the government’s decision to enable access to cheaper capital finance and tax cuts, thus enhancing the end-user demand. Extension of selective stimulus measures is also expected as the government remains focused on growth recovery and employment generation.
Expressively, the housing segment will remain at the top of the government agenda this year. The government may push this by aiding the mortgage environment, catalysing affordable housing projects and affordable rental housing complexes (ARHC), and finalising the Model Tenancy Act. With the government continuing to extend its support through policy, taxation, and stamp duty cuts, this year will see increased sales with further interest from buyers to own a home, understanding that the Indian real estate industry has now become a buyers’ market.
To mitigate the execution risks, the industry will go through an intense overhaul and consolidation mode through a higher number of JVs / JDs. We can expect the industry to be significantly more organised soon.
This article is contributed by K R Ramesh, Executive Director –Operations, Shriram Properties Ltd.
(The views expressed here are solely those of the author and do not necessarily represent or reflect the views of RoofandFloor)
