Chintan Vasani: Covid-19 scenario and Future Trends in INDIAN REAL ESTATE Industry

India’s Medical personnel, police force and essential workers are doing a tremendous job in fighting the Covid-19 pandemic and we feel super thankful and proud of them.

Besides the outbreak, the current scenario is a big challenge for our countries economy and Real Estate sector alike.

Real Estate is a multiplier and many industries are directly or indirectly connected to it. Cement, Steel and many industries rely on Real Estate. It’s one of the highest Job creator for India.

When Real estate is bought, Government earns around 28% of what a Buyer pays in form of direct or indirect tax. Real Estate sector alone can change the economy of our country.

Post lockdown, the biggest challenge for the real estate sector would be restarting the construction work as a great percentage of migrant labourers have gone back to their hometown and would take time to come back.

Monsoon is nearing and a lot of labourers might opt to get into agricultural activities. Contractors would play a pivotal role in getting construction site back into action.

If we see the opportunity side for real estate sector, it has a proven track record of being a safe investment bet with steady growth rate. In last few years real estate sector has seen tough times due to change of laws and other factors.

Due to higher rates and long commitments people avoided investing in real estate. Due to this, sectors like equity markets, mutual funds, derivatives, fixed deposit in bank and post office saw a steady increase Pre Covid-19.

There are a few positive outcome expected due to the pandemic outbreak in the near future, like automobile sector will be in demand due to social distancing norms and people would want to own vehicle rather than travel by Radio Taxis and public transport. IT sector will be in demand due to digitalisation.

Millennials have avoided investing in a house and opted for renting an apartment. Pre Covid 19, they spent very less time indoors. During weekday they were at workplace and on weekends were either at a shopping mall or a movie theatre.

In the lockdown period and staying home for more than a month, they have understood the importance of owning a house and the safety it comes with.

Affordable homes had a steady demand and most of the current and upcoming projects have been designed accordingly. There could be a demand of bigger homes as a home buyer would want an extra room to set up a home office to take care of Work from home or a Multi purpose room. This can be taken into consideration in designing future projects.

A lot of recent reports suggest IT companies opting for work from home and commercial real estate demand going down. But many industries have avoided this particular trend in the past and it is practically impossible for them to get any or higher productivity from their workforce. The other driving force of steady demand in commercial real estate in India is availability at the most competitive and lowest price compared to other Asian, American or European business hubs. Reports of multiple businesses moving base out of China and looking for alternative are positive reports for Indian Economy and Indian Real Estate Industry. Our population and Human Resource is our biggest strength for FDI’s and FII’s to explore the Indian market and invest in India.

As per our current research and analysis, for coming 24 months, people will be cautious in spending on travel, hospitality and entertainment. Spending huge amount in luxury goods and marriages will also see a downfall.

An investor who has seen his investments in equity markets and mutual funds go down will avoid his exposure. Fixed deposits will have lower returns and hence less subscribers. This savings can very well get diverted to Real estate with it proven track record.

We can see a steady demand in residential and agri lands and as banks are reducing Interest rate for home loans, it will be a big boost to the industry. For the growth of the real estate sector, Developers have to be more active digitally.

They have to be equipped with Virtual Site tours, Online booking and Payment platforms. A decent part of Marketing budget should be allocated to online marketing activities.

Real Estate Channel partners would also have to upgrade and grow digitally. Post the pandemic outbreak the entire industry has come together in form of Webinar’s and digital interactions and it’s a good positive start.

Investing in Real Estate is Investing in the growth of the country as Government earns a huge part which is used in infrastructure and other developments. The foreign exchange rates will also boost the NRI investments in coming days. Things will get better from where we are and very soon people will forget Corona.

Chintan Vasani is the Director of B D Vasani Group which is Indians premier Taxtation Consultancy firm having business interests in Real Estate and Finance. He is the Founder and Managing Partner of Wisebiz Realty, a Real Estate Market Research and Strategic Planning Company.

Chintan is a strong advocate of sustainable and conscious living. With Wisebiz Realty, he wants to maintain the legacy, superior quality and yet build the category on the pillars of responsibility and sustainability.