The best medicine for COVID-19 in the present scenario is one’s own home, and going forward, this adage will hold true.
As global economies grapple with an economic fall-out in the wake of COVID-19 pandemic, and the clamour for a stimulus package for economic revival grows; India’s response so far has been more focused on ‘saving lives’. Industries across the Indian economy – including real estate – have supported the government’s steps; consider the decision on imposing the lockdown as also extending it. Now, with the situation looking grim and bleak, the focus needs to re-shift from saving lives’, it is now the right time to also focus on ‘saving livelihood’.
Perhaps, the biggest takeaway in terms of ‘the way forward’ is that demand for owned houses will grow. Those living in rental homes have realized the importance of being in their own homes; NRIs facing challenging times in their present domiciles are looking at creating a safe haven ‘back home’ in India; those who have faced challenges in terms of investments losing value in the aftermath of the pandemic in paper market are seeing the obvious advantage of shifting to real estate as the asset class of choice. So, real estate will be ‘positive’ for both end users and investors. The reputed developers with better credit ratings and best delivery track record will gain traction with an enhanced confidence level among the potential home buyers in the backdrop of this crisis.
As an industry, real estate will adapt to a tech-savvy future in terms of digital platforms for sales and marketing as also adopt enhanced automation at sites, given the obvious challenge of being dependent on migrant labor. Work from Home (WFH) has created the need to tweak architecture design. The ideal demand coming up for additional space for home offices is on the rise with more efficient layout. Also, the importance of common amenities, business centres and more open spaces will contribute to the new demand criteria’s post Covid world.
Proximity to the workplace will be highly valued as Work from Home may be just stop gap arrangements. Commercial real estate is likely to witness larger floor space keeping social distancing and safety aspects as new normal. The industry has already stepped ahead to adapt and adopt best practices to imbibe new normal norms which is a matter of survival of crisis. From an internal perspective, joint ventures and developments will be the way forward. ‘Reasonable and practical’ will be the ‘mantra’ as industry players consolidate and work together. The obvious way forward in terms of funding will be equity instead of debt, and translating theory into actual practice is a direction laid forward.
The real estate business has been going through challenging times over the past few years, liquidity crisis tops the painstaking issues, and unsold inventory is a problem that needs solutions while last mile funding issues have created stalled and delayed projects. The economic reform and stimulus package announced by the RBI and the Government of India will surely help sectors in lurch with reinvented thrust.
The economic reforms with the stimulus package announced by FM will be beneficiary to the MSME and other micro sectors in the long run. However, industry feels a lack of an immediate curing measure for the ailing economy. However, supply-enhancing measures have been take care of, we seek demand revival booster by quick reduction in GST rate across the economy for an stipulated period of time, reduction in stamp duty combined with low home loan interest rates to help convert fence-sitters into actual home buyers while enhanced tax benefits on home loan EMIs would also help. The industry awaits positive developments on these aspects, which will make it easier for a consumer to make a purchase.
To sum up, for the end user, this looks like being the best time to buy, given the positives which buying one’s own home translates into. Having said this, developers will have to factor in aspects like job security as also salary cuts for the home buyer, these will need hand-holding to help the buyer through the difficult times. We will see a redesign; the new paradigm will be a home that also powers WFH while homes in peripheral areas will get a boost. The best medicine for COVID-19 in the present scenario is one’s own home, and going forward, this adage will hold true.
(By Dr Niranjan Hiranandani, National President, NAREDCO)