In an exclusive interview, Mohit Goel of Omaxe Ltd shares his views on the real estate sector's performance in the post-lockdown phase as well as his outlook for the company's commercial projects.
The enquiries and sales in the real estate sector are picking up post-lockdown, albeit some shift in demand and preference of homebuyers. The developers’ agility to adapt to this new demand is the key to quick recovery of the sector. So far as commercial real estate is concerned, contrary to popular perception, the retail segment has emerged as a strong asset class, especially those with 2-3 years’ delivery horizon. The office segment is struggling with oversupply and may take longer to revive, says Mohit Goel, CEO, Omaxe Ltd.
In an exclusive interview with Sanjeev Sinha, he shares his views on the real estate sector’s performance in the post-lockdown phase as well as his outlook for the company’s commercial projects, including one in Chandni Chowk. Excerpts:
How has the real estate sector been doing in the post-lockdown phase?
The enquiries and sales in the real estate sector are picking up post-lockdown, albeit some shift in demand and preference of homebuyers. The developers’ agility to adapt to this new demand is the key to quick recovery of the sector. The RBI’s liquidity support has been helpful, but it is pertinent that measures to shore up demand must be taken. Being an end-user driven market, the demand has picked up faster in tier 2-3 cities due to a host of reasons like the government’s industry and infrastructure push, corporates looking for cheap real estate, and skilled workforce that are staying back or returning and higher capital appreciation.
As for Omaxe, in terms of brand equity, we are the number one developer in cities like New Chandigarh, Lucknow, Ludhiana, Indore, Faridabad and other tier 2 and 3 markets and, therefore, the demand for our projects is climbing up. We have also started an online booking platform and it has shown encouraging results.
How much time it may take for revival? Can this be expected this year? What the government can further do for its revival?
Revival in overall demand in the sector may take up to 3 quarters, subject to how the pandemic evolves. Even today, there are constraints in funding, supply of raw materials and movement of people. The government must ensure these obstacles are removed at the earliest. The lending rates are at an all-time low and fence sitters with little help from the government are willing to jump on the bandwagon. The debt restructuring announced must be sped up.
As per an Anarock report, the residential real estate segment is witnessing a decisive return of serious enquiries, which are now at 50% of pre-COVID-19 levels in the top cities. What is your take on this?
The demand in the residential real estate segment is gravitating towards reputed developers not just in top cities, but also in tier 2 and 3 cities. As a result, developers with a strong balance sheet and good delivery record are witnessing an upsurge in demand. These developers understand the ground realities and are able to adapt faster. Omaxe has a strong delivery record, clocking more than 123 million sq. ft. across India till date, one of the highest in the industry.
Commercial real estate was doing better than the residential segment till the onset of the pandemic. That is, however, not the case now. When do you think the commercial segment will get its mojo back?
Contrary to popular perception, the retail segment of real estate has emerged as a strong asset class, especially those with 2-3 years’ delivery horizon. There will be a strong shift in both investor and shopper sentiments for organized retail space in good locations. The reasons for this are manifold, namely, good rentals, capital preservation and appreciation, and liquidity or re-salability.
The office segment is struggling with oversupply and may take longer to revive on the back of cost-cutback measures that corporates have undertaken, including work from home etc.
How are your commercial projects doing now? When will the Omaxe Chowk project get completed? What is its USP?
In terms of sales in Omaxe Chowk, we have returned to the pre-Covid levels and there are indications of strong demand going forward considering the lack of organized supply in the vicinity in Chandni Chowk and the preference of businesses for organized space in an established marketplace where footfall is certain. The return that this property will deliver to its investors when the mall will be operational in July 2022 is unprecedented.
Omaxe Chowk in Chandni Chowk is a one-of-its-kind project of utmost infrastructure value not just to Delhi but for India. It is a multi-level parking-cum-commercial project developed in PPP with North DMC. Chandni Chowk is visited by 5-6 lakh people daily and with the ongoing redevelopment, of which Omaxe Chowk is a part, this number will go up substantially, thereby giving a boost to business, shopping and tourism activities. The project has a direct entry from the Chandni Chowk Metro station.
With parking of more than 2100 cars and 81 tourist buses, the project will also house India’s largest food court on the second floor with a potential to attract footfall throughout the day unlike other food courts. Retail space on the ground and first floor will have gold and silver jewellery, bride and groom wear, accessories etc. Our endeavor is to create a destination which offers product variety and cost-effectiveness. There will be edutainment points to keep visitors engaged throughout the day. Omaxe Chowk will be a preferred destination for shoppers considering the fact that the post-Covid shopping behavior will also see a shift towards more hygienic organized malls. We are working to make Omaxe Chowk the best Mall in Asia where sales by retailers contribute a certain percentage to GDP.
Are you also planning any new project? Any other plans of expansion?
Expansion in tier 2/3 cities is an ongoing process. We buy land to expand our integrated township projects in these cities. As for Delhi, we are scouting for more commercial redevelopment projects. Our experience in Chandni Chowk and the future of organized retail spaces in an established marketplace in the coming times have given us the confidence that commercial redevelopment is not just the need of the hour, but also an emerging preference for businesses and shoppers.