Real estate has been and continues to remain the country’s economy’s backbone, contributing 6-7% to the GDP and being the second largest employment generator across more than 220 industries. This sector has been one of the biggest wealth creators in the past few decades.
We are entering the third decade of this millennium. Our time tested faith in real estate seems to have been shaken more recently by the pandemic and earlier by the policy trauma triggered through Demonetization, GST & RERA. All of these are leading to a sharp correction in the real estate markets across the country. Globally too, the lockdowns and subsequent unlocking process of economies have redefined the social, economic, and behavioral milieu at the societal and individual levels. These challenges and changes have given rise to certain distinctly noticeable trends like digitization, and remote working has become mainstream, enhanced focus on health and fitness, and increases the sharing economy’s importance. The changing essence of homes where home and work-life merge with a finesse (often challenging).
Digitization is a new reality; online consumption of information, products, services, transactions, and the accompanying trust on devices impacts how real estate is perceived. Remote working, e-learning, and e-meetings are the order of the day. Buyers and Developers are now ready to adopt virtual tours, drone shoots, and 3D experiences. Physical site visits remain important, but AI & VR will be commonplace, and creating the experience will be of utmost importance.
· Focus on Health & Fitness; the Environment and Quality of life have entered the next orbit of consumers’ expectations. The value offerings often being served as luxury so far will have to become the new norm. More democratization in value offered is expected.
· Work from Home residences; the age of shared economy has brought the importance of homeownership to the forefront; buyers are looking to upgrade homes based on size and amenities. ‘Work from anywhere’ is also adding newer opportunities for the Developer to offer value homes at B-towns and Urban peripheries. Commercial real estate; Satellite offices in micro markets will find easy takers – price point being a major attraction.
Despite the short- term disruption caused by the pandemic; the long-term prospects look encouraging. Vaccine availability and its access to a large section of the population have brought-in some cheer, and the prospects of a turnaround are looking brighter. Coupled with sweeping changes in America, the global markets are likely to be flushed with liquidity. It is expected that a delightful chunk of this will flow into the Indian markets. As per a report by Savills India, PE investment in the Indian Real Estate sector may attract inward flows to the tune of $6 Billion in 2021, up 30% YOY.
Insights for the Developer: Given the above backdrop, the Developer has to approach the market with a fresh perspective and develop innovative solutions to address the dynamics of an evolving market scenario. From Unorganized to Organized: Traditionally, real estate has been an unorganized sector, the advent of RERA, though, has changed this completely and will force the entire value chain i.e., the broker/ agent, the contractor, the Developer, the consumer,
To function in a transparent and well-defined ecosystem within a legal framework Greater accountability: Functioning within a predetermined framework, the Developer will have to put in greater effort in operations within the new evolving operational and legal framework, Raise standards through design closure, backed up by market need analysis and fulfillment of plans through predetermined financial closure to ensure adherence to all goals and targets on the parameters of proposed cost, time and quality.
Construction Technology: The Developer’s responsibility lies in bringing the best and more sustainable technology to the otherwise labor-intensive sector- offering mechanization where possible. The bottom line will be affected by the change of traditional construction and development methods to explore and adopt new technologies for cost and time optimization matching international standards.
Market Access: Increasing digitization means better and easier access to the consumer and leveraging the new age tools to reach out to them. As a positive fallout, the pandemic accelerated the pace of digital adoption in real estate, contributing majorly to transforming how properties are sold in the country from now on. With site visits not being possible during the lockdown, real estate developers and property brokers swiftly adopted digital technologies to launch new projects and market their properties, with a fair amount of success. It is also a great time for the consumer to invest since prices have stabilized, interest costs have lowered, and the rentals have seen a marked increase, making real estate a desirable option.
With the budget around the corner, the Developer is looking at some more hand-holding from the government to inject greater optimism in the economy and real estate industry. More land and labor reforms, single-window clearances for ease of project completion and delivery will also render more transparency into the entire industry to the mutual benefit of the Developer, the consumer, the regulator, and the government.