When it comes to the recovery of the asset class, the market doesn’t spread its gift with equal generosity. The historic high growth curve of the stock market post Covid crash in March 2020 didn’t make every company’s share valuable. Similarly, in real estate there are certainly some clear winners & losers during the pandemic, finds Track2Realty analysis.
New Normal is an evolutionary concept world over and there are guesstimates all around as to what would be the new normal once the Covid wave settles down. Questions like whether Work From Home would be a long term reality and future of real estate usage is on top of everybody’s mind.
The much-talked about K-shaped recovery has not only been with reference to the stronger developers growing at the cost of the weaker players, but also in terms of the various segments of the real estate offerings. There is no denying that the usage of the real estate spaces has already been witness to a major shift. The once sweet home where you landed up after a day’s hard work is your workplace; and retail space has been shifted to the digital world.
The bigger question today is: which are the segments of real estate that are winners and losers of Covid wave? Aditya Kedia, Managing Director, Transcon Developers points out that the global crisis may have impacted most of the sectors, but the country’s property market, particularly the segment of luxury homes has witnessed unprecedented demand. The pandemic has turned the aspiration for a better and luxury lifestyle into a necessity, hence, the industry has witnessed many discerning home buyers moving towards investing in luxury residential properties.
“Buyers are keen on capitalizing in bigger and better homes replete with wellness and recreational amenities like e-decks, sports facilities, open areas and landscapes, and gymnasiums offering quality living. Also, Work From Home which is currently the new normal has increased the demand for larger deluxe homes that integrate workspaces. In the coming years, we anticipate the demand for luxury residential spaces to grow further,” says Kedia.
Aditya Kushwaha, Director & CEO of Axis Ecorp also agrees that the luxury and the residential sector will be the winner once the pandemic is over. People that have been living in rental houses have started to think about owning their own space. This is driving the sale in the affordable housing that has been doing well in the past as well. Apart from this, the luxury segment is booming. The luxury housing sector had shown a marginal increase in 2020, as compared to 2019.
“With the work from anywhere concept setting in post pandemic, the commercial real estate segment has been hit the most. Companies that had office space on rent or lease looked at it as another expense that they could cut back. An August 2020 report suggested that 6.3 million square feet of office space was surrendered in Bengaluru alone and other cities in India posted similar trends. Even as the vaccination drive picks pace, it will be a while till offices resume to have their entire workforce under their roof and this would continue to hurt this segment for the rest of the year and even beyond,” says Kushwaha.
Amit Modi, Director of ABA Corp is of the opinion that Work from Home culture introduced during the pandemic is here to stay forever, especially after the sustained cost benefits experienced by the employers across the service industry. Encouraging workforce to Work From Home has only saved cost in terms of leasing rentals, housekeeping and facility management costs to name a few for the employers. It has also increased productivity for the employees working from the comfort of their home rather than painful peak hour transit to and fro the office.
“Two major impacts that may be seen both in long as well as short term is that firstly, the need for more rooms or living space within an apartment will definitely see a rise in demand for bigger apartments. This generally also means an acceptance and demand for luxury housing. More and more homebuyers will ask of segregated living spaces to work and unwind under the same roof. At the same time Office Spaces and Co-Working will see a long-winded revival curve, majorly due to existing fear factors around the pandemic,” says Modi.
Winners post Covid
Flexi Homes
SOHO (Small Office Home Office) Homes
Homes with wellness features
Plotted development on periphery locations
Tier II property markets
Logistics
Healthcare real estate
Losers post Covid
Retail
Office
Co-living
Co-working
Hospitality
Big crowded cities
Opinions emerging out of the sector are both momentary impulse as well as panic. But a balanced view suggests the mobility would be limited in the near to medium term outlook with apprehensions towards the crowded places. Retail space will hence incur significant short term losses, and the market may be witness to a decline in retail rentals, while consumers get more and more comfortable with online shopping, and cloud kitchen concepts. There would be more and more emphasis by the employers to move towards a hybrid model, whereby a major work force will not be required to physically occupy the office space in future.
In a nutshell, in the post Covid market, irrespective of the pace of real estate growth, it will be redefined, fuelled by more need-based built-to-suit developments. People would look for houses that are practical, feature-packed and enable them to focus on their work-life balance. The market also promises to expand to new geographical locations, at the cost of the matured & saturated metro cities. Concepts like Luxury & Affordability will have a new definition as the homes will be evaluated on the basis of functionality & reduced cost of doing business & employees productivity.
Ravi Sinha
@Ravitrack2media
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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