“The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday’s logic” – Peter Drucker
COVID-19 has left no segment of the economy untouched. There has been disruption in business cycle across industry, including real estate, a segment which is a very integral part of the Indian economy. Downgrade in economic growth outlook, reduced disposable incomes, financial insecurity, doubt on capacity to service debts, migrations, etc. are some of the factors weighing down market sentiments. It is not even possible to estimate the longevity of this crisis.
Going by Charles Darwin’s theory of survival of the fittest, industry players who gauge the changing winds and adapt their strategies swiftly would be the ones to emerge as winners in the end. Our lifestyle, behavior, preferences and accordingly, the business models are going to undergo transformation.
“In today’s era of volatility, there is no other way but to re-invent. The only sustainable advantage you can have over others is agility, that’s it. Because nothing else is sustainable. Everything else you create, somebody else will replicate.” –Jeff Bezos, Amazon Founder
Five Key Trend in Real Estate
Trend I – Increased Demand for Integrated Townships
Given the experience of living through the lockdown period induced by Covid19, home buyers are expected to show increased preference towards buying home in integrated townships that do not only offer basic amenities but also provide self-sustainable ecosystems with a multitude of day-to-day facilities within the premises or within the township. If these facilities are provided, then the residents will not need to step out of their homes to meet their daily requirements.
Trend II – First Time Home Buyers may be a Big Segment
This pandemic has very explicitly brought to the fore one very important point – the importance of home ownership. The message is loud and clear. Your own home is the safest place to be in.
As it is, real estate has always been a very important asset class, but the need to own one must have got deeply rooted in the mind of the end users, more so now than ever. We may see many first time home buyers entering the market. Given the impact that the concept of social distancing is going to have in our minds for time to come, we may see many dwellers of co-living shared spaces now going in for independent homes.
Trend III – Bigger Size Homes
Given the increasing thrust on work-from-home, home buyers may consider buying bigger homes than they otherwise would have. The central idea being – having a dedicated work space within the home.
The property developers may also keep this changing perspective in mind while designing the layouts of the project and homes within. They will make attempts to strike an optimum balance between privacy and comfort which would go a long way to enhance productivity. They may also start including business chambers and meeting rooms as an important amenity within the complex.
Trend IV – Further Advancement Towards Digitalization
All the stakeholders right from the developers to the brokers to the consumers would explore more ways of going digital. Overall, attempts would be made to reduce the human interface to the maximum extent possible.
Developers may opt for ideas like online project launches, virtual project walkthroughs including high end technology to give realistic feel, strategies to shift entire buying process online, etc. Brokers, too, will put emphasis on having an online presence, more than ever now. Like other corporates, they too will focus more on virtual meetings, providing virtual property tours/ video walkthroughs, handling queries online, etc. Consumers, on their part, would want to do their research online and seek a lot of clarity from developers/brokers virtually before deciding to visit the project site/home. The brokers having well laid down virtual/digital presence may be preferred.
Having said this, given the nature of the end product and the quantum of investment involved (buying a home is usually the biggest size investment for most people), human interaction and physical visits cannot be totally done away with. But all the stakeholders (including home loan providers, housing societies, registration office, etc.) would attempt to replace physical movement and interaction to virtual platforms wherever possible.
Trend V – Industry Consolidation
These are unprecedented times. Real estate industry is grappling with liquidity shock, supply-side shock (material, labour) and demand shock, all at the same time. Since the last few years, the industry has already been facing a lot of pressure due to tight liquidity, rising prices of raw material, changes imposed by GST and RERA, etc. Only companies with deep pockets, lower leverage and sustainable business model will be able to sail through these tough times. In fact, few industry players are already out of the market and further consolidation is on the cards. This would, in fact, be good for the industry over long-term.
Stay Indoors. Stay Safe. Always remember – Rowing harder doesn’t help if the boat is headed in the wrong direction.
Neha Agrawal – Co-Founder, OPENMINDS
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