Wellness, community living and sustainability will be the key components for new smart homes post-Covid.
By Niranjan Hiranandani
As our nation celebrates its 75th Independence Day, it embarks upon a futuristic journey towards ‘Shine India’ globally. The construction and real estate sector is a fundamental building block for an accelerated and employment-inclusive economic growth.
Today, let us glimpse through the traverse of the Indian real estate growth story with its hits and misses.
The story of evolution
Evolution has happened over several decades, where the real estate sector has been successful to mirror the Indian economy, reflecting economic prosperity. The growth curve started from navigating an opaque unstructured business to the deep impact of bureaucratic pressures, delays amid licence raj, to transparent and compliance mechanism friendly in the Era of RERA.
The stages of Indian real estate development such as the first planned cities in the 1950s and 60s (Chandigarh, Gandhinagar), which are today known as ‘Smart Cities’, to policy initiatives and upgradation (Maharashtra Regional and Town Planning Act, 1966) till the recent set up of important institutions like NHB, HUDCO, MMRDA — represent substantial nodes of development.
Liberalisation and entrepreneurship
The 1990s saw the economy overthrow the shackles of licence raj and excessive restrictions. As the liberalisation reforms kicked off, India Inc saw spikes in emergence of the domestic entrepreneurship class along with global entities optimistically venturing in India with long-term goals. Simultaneously, real estate asset gained eyeballs from global Indians as the preferred asset class to invest in a ‘nest back home’.
The period from the new millennium 2000 to 2008 saw a series of policy tweaks skewed towards business growth. India grew as an IT and ITeS power, reflecting well on the real estate sectors of cities like Bengaluru, Hyderabad and Pune. The FDI policy and the adoption of the PPP model were the big bang reforms of the decade. The black swan year of 2008 saw global economies crippling with the Lehman Brothers crisis. Indian real estate slowly paved its way out of the quagmire, but undercurrents lasted for a substantial time.
Tsunamis and reboot
The new government in reign from 2014 rolled out bold steps by introducing various structural reforms focusing on economy, industry specifications and taxation. Demonetisation is an apt example of reforms which impacted real estate in the manner that a Tsunami would. ‘Short-term pain for long-term gain’ is an adage which somehow has not reflected in terms of the pain being ‘short’. Real estate has witnessed the price points being stagnant since demonetisation, and there has been little upward movement since then. If one considers inflation and prices remaining stagnant, the burden borne by real estate becomes all too apparent.
Watershed years of regulation
The enactment of the historic RERA legislation acted as a game changer in alignment with peak global practices. By bridging the gap between trust deficit and accountability, it has helped the sectorto get an organised modus operandi. The financial and compliance mechanism introduced the transparent and structured line of performance. But the industry pegs hope that the onus of beyond control delay due to bureaucratic regime should also be considered under RERA and penalty be levied where earlier only developers were represented as the culprit.
GST, the next big tax reform aimed at ‘one nation, one tax’, changed the rules of play to
bring in uniformity across the board. This also opened the floodgates for new sunrise sector of logistics and industrial parks to flourish beyond any geographical boundaries.
The pathbreaking reform of insolvency and bankruptcy code witnessed the age of the homebuyers as an equitable stakeholder. These reforms have been inclined towards customer centricity.
The devastating impact of the Covid-19 pandemic on humankind underpinned the value of owning a house. The homes that brought stability and safety also acted as a safe bet investment in comparison to other volatile paper assets. The concept of ‘homebuying’ was elevated.
Economy building block
The sector is a wealth creator, providing shelter with quality of life, which went on to become the second largest job creator after agriculture. It supports growth of 270 allied industries and is also among the leading drivers of GDP growth. If the dream is for India to grow into a $5-trillion economy, real estate will play a major nation-building block. Real estate today is structured and streamlined. Not just that, it is an economic growth driver, it also boasts less than 2% NPAs — a small number, which speaks volumes. Going ahead, it is about mergers and takeovers, about consolidation and joint ventures. And, the buzzword is: ‘new asset class’, which includes data centres and co-working or co-living shared spaces.
To meet the ambitious goal of Housing for All, affordable rental housing will play a catalytic role. Demolishing old archaic tenancy act rules have opened a new canvas for industry to accord dreams of millions of migrating home seekers. Rapid urbanisation will fuel the growth of rental housing a win-win scenario for both developers and home owners. Real estate now also attracts millennial professionals and next-gen entrepreneurs. Formal degree academic courses have been tailored to suit industry needs by educational institutions. The new-age real estate is powered by intellectual human capital who have not just been through formal education, but have also been reskilled and upskilled to drive along the dynamic future course.
Crystal ball gazing
The Covid-19 disruptor accelerated living in a digital era. Digitisation has transformed the business continuity plans and future roadmap. Automation will play an integral role as technology makes major inroads into construction and real estate development. Be it sustainable eco-friendly green homes or smart tech homes, all will delve into great advancements. A major role will be played by new age prop-techs across the spectrum of real estate business functions. Artificial intelligence (AI) and machine learning (ML) will form the base of the new age tech-enabled real estate.
The reinvented epicentre of the real estate sector with development and policies will gain momentum towards the ultimate ‘Customer Delight’. The new millennial segment, which traditionally were renters, are now among the leading segment of ‘first home buyers’, where female home buyers saw a rapid emergence. Considered as a future wealth creator, the new investment options include globe favourite REITS and InVITS.
As homes evolve, so does home buying. From digitally powered sales, home financing to documentation process will soon shift to blockchain tech platform. Wellness, community living and sustainability will be the key components for new smart homes post-Covid. To sum up, the future will be a success story scripted by policies defining the product through new practices and narratives. As India celebrates the onset of 75th Independence Day, let us all come together and work towards the goal of a truly self-reliant Aatma nirbhar Bharat – Jai Hind!
(The author is National President, NAREDCO. Views expressed are personal.)