The pandemic has taught the real estate industry to align, adapt and amend businesses, says NAREDCO.
In March last year, people across the country were trying to wrap their heads around the novel coronavirus-outbreak. When the World Health Organization declared it a pandemic on March 11, most were already aware of its seriousness. At 8 pm on March 24, 2020, Prime Minister Narendra Modi made a landmark announcement - a nationwide lockdown for 21 days to curb the spread of the coronavirus pandemic in the country. The lockdown continued in some form or the other for the next few months, but businesses were never the same. Schools, colleges started shutting down, big events started getting cancelled, people started donning masks, but the real estate industry continued to pull through, not wanting to incur major losses.
For many industries, this was a transformative year and one of them which underwent a turbulent change was the real estate sector which is one of the country's largest GDP contributors and also the largest employment generators. As we completed the first anniversary of the unprecedented lockdown, let's find out from the real estate experts on how the year unfolded for them and understand their key learnings from the days gone by for the day ahead.
From achieving greater maturity and better business models, real estate developers streamlined revenues and innovations, and as they continue to deal with challenges, they are already playing the role of a catalyst in reviving the country’s economy. In a sink or swim situation, the entrepreneurial spirit truly came through - with many reputed developers finding their own way to pivot and carve a niche.
Runwal Group mentioned that during the lockdown, they were already functioning from homes and sales activities never stopped. "All our employees were working from home and were putting more effort than the pre-lockdown period to make sure sales and collections kept rolling. In fact, we were amongst the very few developers in the country who did exceptionally well during the lockdown period as well. We have been using online and digital channels extensively to conduct business during the lockdown. From digital advertising to online meetings and virtual project tours, we have been utilizing every possible avenue to connect with customers, channel partners and vendors. We are already looking at integrated online sales tools to manage the sales flow and customer interactions. We shall further ramp up these channels for use in future as well," informed Subodh Runwal, Managing Director, Runwal Group.
Runwal said "We had ensured the migrant labourers were there at the labour camps all along so that helped us in fast movement when we resumed back after the lockdown. We have been taking care of all health and food requirements of these labourers to ensure they stay within the project and do not pose any health hazard to society at large."
Another leading developer The Wadhwa Group had introduced a virtual sales experience centre for their customers in these unprecedented market conditions to guide and support their buying decisions by giving them an option to virtually transact.
Navin Makhija, Managing Director, The Wadhwa Group said, "During this pandemic, the consumers have very much realized the importance of owning a well planned, well designed and a well ventilated home - a valuable asset one can always fall back onto. We have always been following a buyer-friendly approach in all our sales and marketing processes. For marketing, we were majorly using digital platforms and portals as people were consuming more digital data and were spending ample time online. For sales, we had a virtual platform with guided tours for clients to bring them closer to reality. Clients too were quite comfortable having initial information and project walkthrough online. In fact, 30% of our sales were coming in through our virtual platforms."
"We are also carrying out site visits with prior appointments so that we are able to regulate social distancing and ensure safety & well-being of our team members and customers. On-call support, WhatsApp Assistance, virtual site tours and online booking features are made available to enhance the customer’s experience," Makhija added.
In the initial few months of lockdown, the sector was believed to be badly affected however, policies and measures introduced by the Government helped revive the sector recording an upward trend in property buying activity especially in Mumbai. Further, the decision of Maharashtra Government to cut down stamp duty registration fees resulted in sales of nearly 10,000 units per month. Besides, 50 per cent discount in premium payments to developers offering complete waiver in stamp duty to homebuyers and installment facility to pay other developmental charges helped the cash ridden developers largely.
Applauding the policy measures, Ashok Mohanani, President - NAREDCO Maharashtra said, "Due to the impact of COVID 19, the Government and the apex bodies came up with plenty of fiscal measures in the past one year to deal with the major challenge of liquidity and tide over the lockdown period. The various measures introduced by the RBI, Union Finance Minister along with both the Central and Maharashtra Government injected liquidity into the market and has already spurred the demand and revived confidence in the real estate industry.”
“Also,” he said “the unanimous decision by NAREDCO Maharashtra to waive stamp duty completely on the sales of residential properties till December 31, 2020 added to the home buying euphoria and supported the Government’s efforts to push housing demand in the state. On behalf of the real estate fraternity, we at NAREDCO urge the State Government to extend the reduced 3% stamp duty charges for another two quarters so that home buyers continue to be encouraged and invest in their dream homes."
On the real estate revival Kaushal Agarwal, Chairman, The Guardians Real Estate Advisory said, "The last one year has been a memorable time for the India Real Estate sector. One that the sector will largely be remembered for its turnaround.”
Immediately after the announcement of the nationwide lockdown it was largely believed that the real estate sector will see an unprecedented correction in prices, some believed it could be as steep as 20% from the existing levels. Thanks to the policies and measures of both the central and the state government, the sector was saved from undergoing a steep reduction in its prices and instead witnessed a revival in business and volumes, Agarwal said.
The RBI, taking a cue from the measures announced by the central government, drastically reduced the repo rates leading to reduced cost of borrowing for homebuyers and homeowners. On the other hand, several state governments especially the government of Maharashtra introduced a temporary reduction in stamp duty charges leading to substantially reduced cost of transaction for prospective homebuyers. These measures have been very effective and highly successful in reviving the fortunes of the sector at large."
“Changes aside, what we did notice was a 360-degree shift in the way the real estate sector perceived success. Now it is up to the Government and the entire real estate fraternity to keep the momentum going,” Agarwal said.
"The real estate sector in India is expected to reach US$ 1 trillion by 2030 and it will contribute 13% to the country's GDP by 2025. The Government should keep a continuous check in the form of reforms that will give a fillip to the real estate sector and will indirectly help revive the economy which has received a dent due to the impact of the pandemic," Mohanani pointed out.
Commenting on the way forward, Agarwal explained, "In order to ensure that the momentum continues, the affordable housing industry needs to become a point of focus for all stakeholders. It is this industry that has been hit the most as a result of the lockdowns and subsequent restrictions on travel through public transport. A period of no transaction cost for affordable homebuyers will serve as a short-in-the-arm for demand revival and driving customers to the booking counters. The RBI should also continue the accommodative stance so far as the lending rates are concerned, the same will leave more money in the hands of consumers who have or will avail home loans."
After one year of lockdown, the pandemic has taught the real estate industry to align, adapt and amend businesses as well as reinforce the strategies so as to make the most of the ongoing situation and this is what new normal means to them.