No possibility of price correction in affordable housing: Nayan Raheja

In an exclusive interview with Sanjeev Sinha, he shares his views on the current trends in the realty market and how the sector is coping with the Covid-19 crisis. Excerpts:

How has Covid-19 impacted real estate and how is the sector coping with it?

This is an unprecedented crisis and in the short run every sector suffers in such times. The real estate sector was also adversely impacted, particularly in the initial few days. Now, there are primarily 4 trends arising: The migrant labour issue has led to depletion of labour across sites in the country, thereby leading to overall slowdown in construction. Also, collections are temporarily afflicted as the Indian Middle Class grapples with rising unemployment and banks are relooking at the housing loan eligibilities.

Thirdly, the timelines of completion are being pushed ahead due to force majeure conditions leading to legal ramifications. Fourthly, and most importantly, there is a fresh interest in ready stocks of housing, plots, farms as well as in pre-leased commercial/retail assets down the line as real estate is proving to be the only option to deploy funds in these times where capital erosion is protected. Also, the mid-to-long term prospect of India as well as real estate per se remains intact.

We believe that once things normalize, the real estate sector will be the first one to bounce back. We are already witnessing initial indications of it. We have been emphasising on virtual tours, video calls etc during the last couple of months and we are happy to tell you that our traffic has returned to pre-Covid levels and we are achieving new highs in organic traffic with both existing and new buyers returning to the market. As real estate has perhaps been the only asset class that has not seen value erosion or volatility in this market, a significant chunk of buyers are increasingly looking at real estate for protection of their investments.

There are some reports that due to this pandemic, the importance of having one’s own home has been reinforced. Will it revitalise the real estate sector?

The last few months have really made everyone realize the importance of having at least one roof over their head which they can call their own in times of an emergency. We are seeing a large part of people staying on rent wanting to shift to their first house, whether in an affordable/mid segment housing or plotted/floor development. We are also seeing a lot of middle class wanting to shift to larger homes with provision of a home office. Furthermore, as work from home culture is gaining traction, this is likely to boost the demand for houses. The time is also apt for owning a house as the interest rate is at a 15-year low and the GOI is extending subsidies through the CLSS scheme. Combining all these factors, there cannot be any better time to buy a dream home.

With increased focus on wellness, health and hygiene, what kind of changes do you foresee in terms of designing and architecture of projects?

Amidst the pandemic, people are likely to opt for bigger houses, independent floors, villas or even farmhouses as they have realized the importance of open space as well as health and hygiene. The demand for societies with focus on sanitization, touchless amenities and enhanced inclination towards natural living is likely to increase in the near future. There is an emerging trend of Decentralized Sustainability or “Vikendrit Atmanirbharata” as our Hon PM says. The demand for wellness amenities such as yoga studios, meditation rooms, spas, gymnasiums, tennis courts and jogging is likely to witness an upsurge. We are looking at providing sanitization tunnels in ground floor lobbies, touchless lifts, sensor operated bath fittings, washbasins on floor lobbies and provision for home offices in our projects nearing completion.

With organic living in focus, what kind of impact do you see on the demand for luxury housing and large plots?

Amid the Covid-19 pandemic, the importance of healthy living is gaining importance as never before. This will certainly boost the demand for luxury offerings with larger areas to offer. We also believe that people will increasingly opt for organic living and they would prefer buying large-size plots, wherein they can meet all their daily needs of fresh and green vegetables straight from the source, thus unadulterated, fresh and Corona-free. As such, we see the demand for plots going up substantially over the next few quarters, be it residential, affordable, commercial or farmhouse plots.

Real estate is facing labour shortage these days due to reverse migration of labourers. What is your company’s plan for handling the issue?

We have been able to manage the labour crisis much satisfactorily as we provide them better services and facilities. When compared to the number of labourers present during January-February, there is some drop in numbers, but we are hopeful of making up the number soon. For this purpose, we have recently started running a referral programme, where we are offering about Rs 2000 to each labourer for getting another labourer. We are focusing on providing better amenities and sanitation. We are procuring air coolers, bedding and bunk beds etc for them. Also, for migrant labourers, who are returning, we will be using our partly-completed projects for rehabilitating them.

Home loan interest rates are at 15-year low now, but they have not yet resulted into any kind of substantial gain for the sector. Why is it so?

The Indian economy is passing through a challenging phase and the subdued growth over the last couple of years has adversely affected the demand for properties. There were initial signs that the worst may be over and as GDP was bouncing back towards normalcy, the Covid-19 pandemic hit us. Little doubt, there have been pay cuts and massive layoffs across the sector due to the pandemic. Hence, most of the people are in a wait-and-watch mode, and as such the benefits of lower interest rates, which are at a 15-year low, have not accrued for the sector. But once things stabilise, the lower rates would benefit the sector in getting its lost mojo.

Do you foresee price correction in the real estate sector?

We don’t see any possibility of a price correction happening. Already, prices are at their lowest. Just to put some perspective – According to a recent report by PropTiger.com, property values in a majority of India’s prime residential markets have seen dismal growth in the past five years. As per the report, amongst the top nine cities, it is Hyderabad with a CAGR of 7% that recorded the highest increase. The Gurugram and Noida markets, on the other hand, reported decline in property value in the same period. Thus, the chances of any further reduction in the prices are very remote, particularly in the affordable housing segment. If any, the prices may reduce a bit in the luxury segment.