The year 2020 was one of the most turbulent years globally, impacting businesses, economy, and human lives. While it was the year that changed the way people lived, worked, and played; 2021 and beyond will be the years that will fuel economic growth. Abhinav Kanchan, Sr Vice President of Sobha Limited writes for Track2Realty.
With the vaccination drive in full swing, there is renewed optimism, and the country’s economic momentum seems to be picking up. In particular, the real estate sector is witnessing new interest from homebuyers as seen in Q1 FY22, spurred due to positive government policies, initiatives taken by the developers and pent-up consumer demands. This is a new phase of real estate growth, innovation, and investment, contributing towards making India the world’s fastest-growing major economy.
The real estate Industry has gone through a transformational phase post demonetization, GST, RERA, Benami Property Act (2016) and NBFC crisis. While RERA addressed consumer queries and provided faster solutions, it has also helped bring more accountability and credibility into the sector. This has triggered consolidation within the sector. The weaker players continue to exit the market due to increased compliance costs and complexity. Those developers who were serious with their product and had willingness to deliver on time with transparency gained in strength. Such consolidation with serious players augurs well for the sector.
Abhinav Kanchan
As the industry had begun settling post the reforms, the ongoing pandemic has caused disruption in many ways. With consumers becoming risk averse, looking for more reliability and ready to settle with renowned developers alone – the trend towards consolidation is evident. Interestingly, the pandemic led to a paradigm shift in the industry.
Few forward-looking developers were quick in adapting to the pandemic appropriate behaviour at their workplaces, introducing AR/VR technologies, enabling virtual tours of the site, and facilitating online payments. These steps helped gain consumer interest and backed by pent-up demand and a low-interest rate regime, more home buyers came to the fore. Only some of the top organized players seem to show their will and have adapted to the new normal situation quite well.
The pandemic has led to rise in demand for larger homes with workspaces. Some are going for second homes and villas in gated communities in the suburbs as work-from-anywhere culture has set in. Given these changes, many smaller developers have been able to consolidate their projects with major developers to manage liquidity, quality of construction, brand visibility, and expectations from homebuyers.
Several seasoned builders have taken over languishing projects of smaller developers and are helping them deliver their projects on time. This has called for increased joint ventures and monetizing of fixed assets. The latest reports indicate that sensing the opportunity, some of the leading real estate players have also started entering into joint development agreements with local realtors to increase their footprint.
The industry leaders have already adapted to change in consumer behavior and are well-positioned for success in a post-pandemic world. Considering that the industry is maturing, newer trends in housing are emerging. The recent uptake by youngsters and millennials has evolved as they seek more safety, security, and stability not only in terms of financial investment but choosing a well-established developer for their home purchase. They rely on online modes of reading, researching, and booking a house.
The trend has also inclined buyers to upgrade towards luxurious and spacious apartments to accommodate the new Work-From-Home situation that requires an additional flex–space. Another large chunk of property buyers, the NRIs, have taken the pandemic as an opportunity to buy second homes for financial stability and extra income. They too have been dependent on online viewing of properties.
NRIs prefer investing with credible developers to match their international quality needs and secure payments. With digital methods cropping up, NRIs, investors, and thousands of home buyers have received the trust of developers who can provide solid digital infrastructure, comprehensive implementation capabilities, contact less experiences – leading to safe transactions.
At present, the industry seems to be headed towards consolidation of well-established developed companies specializing in delivering quality projects at reasonable prices on time. With consolidation, the landscape of housing will become more robust and accountable and will continue to grow. This trend will help bring significant changes in tier 2 and tier 3 cities as well. Once the sector becomes more accountable and transparent and people start getting their homes on times, more respectability will flow in.
With consolidation some of the best practices of the established players will be adopted by the industry. The adoption of a customer-centric approach and the execution capability will emerge stronger in the coming years. Greater transparency will lead to improved consumer sentiments and drive the sector to the next phase of growth.
Additionally, customers stand to gain as they will get better price and better product from established developers. Even developers can identify the needs of the customers better and will aspire to match it with superior performance. At the end it helps create a customer friendly landscape and a more mature industry with better professionalism.
Track2Realty is an independent media group managed by a consortium of journalists. Starting as the first e-newspaper in the Indian real estate sector in 2011, the group has today evolved as a think-tank on the sector with specialized research reports and rating & ranking. We are editorially independent and free from commercial bias and/or influenced by investors or shareholders. Our editorial team has no clash of interest in practicing high quality journalism that is free, frank & fearless.
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