COVID-19 to recalibrate real estate preferences for the new normal

June 07, 2021 11:28 AM

The pandemic may delay the recovery process by a quarter or so, but it may not damage the long term story for the realty industry.

The pandemic has underscored the significance of agility and resilience as the key to survival.

While the Indian economy witnessed a promising start to 2021, the second wave of coronavirus cases across India have brought untold hardships to people and put a temporary brake on the road to recovery. The COVID-19 pandemic has prompted us to ‘reflect, reassess and rethink’ to gear for the new normal. The post-COVID scenario will not just alter the homebuyers’ preferences and developers’ strategies, but also usher in a new dawn in Indian real estate.

Being the fifth largest economy in the world and a significant contribution to the world economic growth, it is important to note that India’s COVID crisis threatens not only its own but also the world economy. Hence, while the wounds of the second wave would stretch grave, the government and businesses jointly need to modify the current retort to the virus, to augment the road to recovery.

While experts believe the second wave may diminish by June, the means to rebuild the economy must start now. Although the pandemic will definitely have an impact on the current growth the industry was riding on, but the silver lining, if any, remains the fact that it has struck at a time when the Indian real estate sector is the most matured and resilient than it ever was, thanks to the much-needed reforms.

The pandemic has underscored the significance of agility and resilience as the key to survival. Companies that are flexible enough to adapt themselves in tune with the changing requirements over time have inevitably commanded an edge over their peers. It has also prompted companies to rethink their business strategies and organizational structure.

What does the current situation say about the evolution in typology?

It’s an opportunity to reconsider everything – how we build up communities and addresses to be even more resilient, healthy, attractive, sustainable, and be creative at the same time.

As we advance to the post-COVID phase, sustainability will be the centerpiece of the real estate narrative, with developers bracing for this trend using eco-friendly construction techniques and introducing an array of wellness features in self-sustained-gated townships. Instead of price point, the focus is on the ability of homes to enable deeper emotional connection with oneself and foster a sense of community. The conscious attitude of buyers is also demonstrated in preference towards amenities that lead to overall well-being.

The health and wellness concerns have led to an evolution in project design and architecture to a huge extent. Location, the ecosystem, facilities, and state-of-the-art amenities have emerged as sought-after desires of today’s buyer. One thing that the pandemic has reaffirmed is the significance of a lifestyle in harmonious co-existence with mother nature. People will prosper in places with light and air and views!

Instead of thinking only about saving the bottom line, projects should be designed keeping in mind ‘carbon neutrality to not just reduce energy consumption, but also offer means of renewable/reusable resources, for the modern and evolved homebuyer. The demand has already led to increased incorporation of green building features and energy-efficient technologies into newer projects.

In future once the pandemic starts to subside, to turn away from isolation and fear, and to turn towards a newer appreciation for community, buyers would look for spaces that bring them together through common experiences within the safety and comfort of their own neighborhood. At the same time, there will be a shift to a demand for spaces that better reflect a new way of chasing life, that will include superior personal space. The designs will encourage touchless tech features. From a micro requirement point of view, theme-based residences uniquely tailored to customer preferences will start to become the norm.

The focus has now pivoted from offering merely a superior product to a wholesome customer experience.

What does the future look like for businesses?

A report recently released by PropEquity called out NCR having observed a rise in both home sales and new launches by 6% and 136%, respectively in Q1 2021. COVID-19 has reinforced the significance of home as an address and investment asset amid diminishing luster in alternative asset classes. A CII-Anarock COVID-19 Sentiment Survey has highlighted that approximately 24% of respondents have already booked properties amid the pandemic.

Work from home has become the fulcrum for shaping homebuyers’ preferences. Suburbs of metropolitan cities and Tier 2 and 3 cities have emerged as the new locus for real estate development. Amid work from home, at least 43 percent of respondents expressed a preference for living in peripheral areas. A spate of infrastructural developments and enabling policy framework has also accentuated the prospects in these cities.

The opening of the vaccination drive to all adults implies a positive turnaround for health and economy hopefully in the next six months. While the existing restrictions will impact the delivery of projects, real estate is poised to witness an upward growth trajectory if the 2020 statistics are anything to go by. A Knight Frank report highlights that residential sales witnessed an uptick by 44% Y-o-Y in Q1 2021, bolstered by the revival in sentiment.

Call for action

In a heartening endeavour, the crisis has witnessed corporate, civil society, and government coming together to tackle healthcare challenges. In the real estate sector, collaboration and innovation will be the key to steering through these unprecedented times. Developers and stakeholders need to brainstorm collectively to address problems such as shortage of labour at construction sites, customer retention, and boosting sales. Against the backdrop of economic stability prospects, the interplay of technology and innovation, and thrust by the government, real estate will once again be able to pave the way for an exciting time ahead.

While the second wave is a severe worry, the industry continues to be buoyant that the actions undertaken by the government last year has put in place the building blocks needed to push the growth. The pandemic may delay the recovery process by a quarter or so, but we are optimistic that it will not damage the long-term story for the industry.

The possibility for growth in Asia’s third-largest economy, with its sizable supply of assets pending demand, remains huge.

(By Karan Kumar, Chief Marketing Officer, DLF Ltd)

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