This year saw the property sector reach a breaking point. As the aftermath of the coronavirus spread all over the globe, and as India had to put in place multiple lockdown scenarios, the repercussions on the property sector was seen all over the place.
Sharad Mittal, chief executive officer of Motilal Oswal Real Estate, stated that cashflows were affected profoundly with sales arriving to a stop and costs staying unchanged. Problems linked to the workforce meant that it took a few extra months to jumpstart activity again after the lockdown ended.
The months of March to July turned out to be the last straw for lots of developers who were faced with lots of issues in recent times.
The central government and the RBI instated a few measures to bring up liquidity and offered bonuses to help the economy and the property industry, while a few state governments have lowered stamp duty charges for some time. The effects of these measures were seen from July.
But, Satish Magar, President of CREDAI National, thinks more needs to be done. The worldwide economic crisis had a bad impact on the nation’s demand for properties this year. Construction activities were all of a sudden stopped in Q1 as an outcome of the coronavirus measures and work and income instability robbed the marketplace of its potential purchaser-base which lead to almost zero in demands.
There are things that offer a glimmer of hope for recovery in the industry at a less than wished for pace. The phases published by the Government of India and the bank lower the consequences of the virus to some point, but don’t talk about the persisting issues of the property industry that were affected by the number of factors over the past years.
Yet, the virus had a role in shaping the sentiment, tastes and wishes of home purchasers. Online home sales are beginning to get traction. There was a big shift to digitization because of to the pandemic; those who prefer offline asset search now turned to online property websites to look for their dream residencies. There has also been a big surge of virtual tours wherein home-purchasers are choosing the same either to shortlist or to finalize their homes.
The CRE sector saw stability in 2020. As remote jobs started to gain traction and firms started exploring a long-term plan around it, CRE developers also started checking expansion strategies, getting a break to the bull-run which CRE had during the past years.
While the majority of developers are checking expansion plans, some saw challenges in existing portfolios. Rental collections in grade A office portfolios were stable thanks to IT/ITes, financial services and tech companies boosting robust outcomes.
As operations started in phases, firms may want a more distributed workforce from now on. It would thus be reasonable to think that the workplace will be decentralized and that groups of workers would be more widely allocated and linked via tech.
They are seeing a burgeoning tendency to a hybrid way of working, where a part of the workforce can work remotely from time to time. But, the biggest number of companies will keep the conventional physical space way of work as they get at an optimum remote work/labor intensity for themselves.
As far as the office segment goes, this’ll carry on to be affected as the rationalization of workspace by the corporate industry has led to an inventory pile that is expected to take two or three years to clear up. The bonus supply that is made even with subdued demand will more so affect the event.