In an exclusive interview, Amarjit Bakshi, CMD, Central Park talks about the impact of the Covid-19 outbreak on the luxury housing segment, and the industry's expectations from the government for revival.
Unlike affordable and mid-income homes, luxury housing remains largely insulated from a slowdown. The COVID-19 lockdown witnessed a short-term dent in realty sales. However, both high net-worth individuals (HNIs) and ultra high net-worth individuals (UHNIs) may drive luxury housing purchases in the post-COVID-19 world due to the pent-up demand, feels Amarjit Bakshi, CMD, Central Park.
In an exclusive interview with Sanjeev Sinha, he talks about the impact of the Covid-19 outbreak on the luxury housing segment, and the industry’s expectations from the government for revival. Excerpts:
What has been the impact of the Covid-19 outbreak on the luxury housing segment? Has the segment faced any decline in demand during this period?
The exposure to avant-garde lifestyle and the rise in high net-worth individuals have fuelled the demand for luxury housing in the past few years. Unlike the affordable and mid-income housing, luxury housing depends more on personal wealth rather than on home loans. Luxury housing has remained largely insulated from a slowdown if the past statistics are anything to go by. According to an Anarock report, the post-demonetization period witnessed an increase in supply by more than three times since the first half of 2017. Moreover, the new luxury category supply increased by 40 percent in the first half of 2018 over one year to 7,350 units across the top 7 cities.
The COVID-19 lockdown witnessed a dent in sales in real estate in the short run. However, high net-worth individuals (HNIs) and Ultra High Net-Worth Individuals (UHNIs) are expected to drive luxury housing purchases in the post-COVID-19 world due to the pent-up demand. This will boost sales and clear the glut of unsold homes. The luxury housing market is expected to see a quick rebound as the end-users at the top of the pyramid are affected marginally and their benchmarks of sophistication remain the same. Our luxury offering – Bellavista Suites at Central Park Resorts – is our landmark project that caters towards expatriates, CXO/CEOs and MNC professionals. It has received an encouraging response so far with a good number of queries and customer visits. Our uber-luxury penthouses, Sky Villas, have also seen an increased number of visits.
Is this a good time to invest in the real estate sector? What are the key locations to buy a property in NCR?
Real estate has been a preferred asset class for investment. The backdrop of depreciating rupee and falling oil prices have further accentuated the prospects of investment by NRIs and overseas investors. The post-COVID-19 scenario is likely to witness the consolidation by established market players. Gurugram has emerged as a preferred residential and commercial hub in the past decade due to the burgeoning millennial population, the presence of leading corporate firms and a spate of infrastructural developments. Sohna Road in Sector 48, Dwarka Expressway, Cyber Hub in DLF Phase 3, New Gurugram and Sohna towards Nuh have emerged as realty hotspots in Gurugram. The Haryana’s proposed Industrial Policy will boost investment prospects, generate employment and livelihood and accentuate the prospects of real estate in the region.
Why is Sohna Road becoming the next realty destination in NCR?
Sohna Road has emerged as a real estate hotspot owing to the strategic location, good connectivity and a spate of infrastructural developments. Sohna Road is located 28 km from the airport, 17 km from the railway station, and 12 km from NH-248A. It is well-connected to Gurugram and NCR through NH-48, Golf Course Extension Road and Netaji Subhash Marg, and is accessible to corporate hubs of Cyber City and Udyog Vihar. The region has a vibrant presence of reputed schools, retail hubs and hospitals. The upcoming developments such as Integrated Hisar Aviation Hub, KMP Economic Corridor, IMT Sohna, Global City Gurugram and a Multi-Modal Logistics Hub at Narnaul will bolster connectivity and improve real estate prospects in the region.
What is the outlook and strategy for the near future once the pandemic is over or more relaxations are introduced?
The COVID-19 pandemic can be regarded as an inflection point for the real estate segment. Going forward, we expect the pervasive role of technology in real estate with developers leveraging 3D walkthroughs and Virtual Reality, among others, to facilitate the buying process and sustain the momentum of sales digitally. The overall hygiene, health and wellness concerns will work in favour of developers with sound credentials and an enviable track record. Another factor that will assume importance is the hyperlocal model of the luxury real estate segment. Compact units with the provision of flexible workspaces that fit well into the buyer’s preferences are likely to witness an uptick in demand. With the work from home being the new normal, we are likely to see a shift towards a preference for weekend homes from being an aspirational want to now as a need for a safe, secure and prudent real estate investment.
What steps are needed to revive the sector and what help is expected from the government?
The government has undertaken a slew of initiatives to keep the economy afloat amidst the lockdown. The economic package announced by Hon’ble Finance Minister Nirmala Sitharaman has paved the way for economic revival. The extension of the timeline for completion of real estate projects, the reverse repo rate cut by 40 bps from 3.75 percent to 3.35 percent, and deferment of interest payment on loans for three months will play an instrumental role in reviving demand in the next few months.
We foresee the government to take crucial steps to facilitate ‘ease-of- operations’ and a ‘single-window’ mechanism. The fiscal and banking policies towards home loans and the ‘industry-status’ approach towards developers will also be beneficial to real estate. Also, a special focus must be given to achieve ‘Housing for All’ by 2020 as well as the implementation of the Smart City project.