In an exclusive interview, Ankur Gupta of Ashiana Housing Ltd talks about the pandemic's impact on the realty market and shares his business outlook.
The Covid-19 pandemic has affected almost all the industries and real estate is one of them. Although, in the short term, it will prove to be a dampener for the realty market in India, however, in the long term, the situation may be quite different and the sector will bounce back because of various factors working in its favour, feels Ankur Gupta, Joint Managing Director, Ashiana Housing Ltd.
In an exclusive interview with Sanjeev Sinha, he talks about the pandemic’s impact on the realty market and shares his business outlook. Excerpts:
How Covid-19 has impacted real estate and what have been the repercussions to the operations of your company?
In the short term, COVID-19 will prove to be a dampener for the real estate market in India. However, in the long term, it would be very interesting to watch because home loan rates have been reduced, consumers have realised the importance of buying homes and as soon as they find a little bit of security and the scare around the pandemic subsides, I think they will start buying homes. We are finding a lot of strength around that. The other thing is that from a financial point of view, real estate has come out as a better or more preferred investment option now. The next 2-3 months could be challenging. However, from the mid-term perspective, it will be interesting to watch how the sector will shape up with very crucial trends and developments.
In terms of our company operations, we needed to change the way our company worked, specifically meetings becoming virtual or telephonic and adopting the work from home concept. We have adapted to working through this by improving the technology. Our on-ground manpower has to become a lot more disciplined on managing masks, sanitizing hands, maintaining physical distance. Since there are various rules and regulations owing to the lockdown relaxation, we have been adhering to them while dealing with our consumers. We have also been contemplating on how to re-start the construction work as it is dependent on the sufficient availability of raw materials. Luckily, we were able to accommodate most of our labour community by paying them on time and hence we do not face a challenge with man power.
How has the business of Ashiana Housing Ltd been so far, particularly in view of the disruptions caused by this pandemic?
There has been an impact on the business, just like every other business that has been impacted by COVID-19. With various measures from the government being announced recently along with internally implementing several strategies and ways to overcome the challenges that we are in today, it would be a matter of time when things would be back to normalcy. We have made it our mission to make sure all our maintenance services are looking towards the comfort of our consumers, and we keep our customers informed.
The private equity (PE) investments in real estate have declined. How do you think the market will pave its way out of this crisis?
PE investments definitely have an impact on the sector. If the PE investment declines, the supply in the real estate sector will be negatively impacted, which in turn will show its repercussions on the pricing and demand. As we reduce supply, in the short term things may not be affected. However, as soon as confidence comes up and supplies are constrained, one will see real estate bounce back quite heavily this year.
Which is the most recent government directive for real estate that you think will make a positive difference in the sector?
The most crucial government directive is the reduction in the interest rates that has made the largest difference in the sector. The affordability in the segment has gone up by almost 15% with the recent reduction in the repo rate by 0.75%. I hope more and more banks will follow suit and there will be a big impact on the market.
What, according to you, will be the situation of under-construction properties?
I believe under-construction properties of branded developers will keep selling. Non-branded developers will have a larger issue on cash flows and they will only be able to sell after delivery.
Do you think people will still be keen to invest in real estate? Why?
In a situation like the one we are currently in, people do not have any other investment options. Even if any property at, say, Ashiana Housing Ltd is rented, the owner gets about 2 ½ – 4% return on the capital, which is almost the same as in case of FD. However, the real estate sector is more conducive to an uptick in appreciation and hence can be considered the best investment option. Hence, if you see overall, the prices are wonderful, interest rates are good, supply side is negatively affected, and investment options are fairly minimal. I think all these parameters will considerably have a positive impact on the real estate sector.
Any key government intervention that you feel is needed to regain the market strongly?
Right now I do not think any intervention is needed. The pandemic has affected almost all the industries and real estate is one of them. However, it is just a matter of time and we hope the sector will bounce back soon and regain strongly.