The millennial workforce is driving change
Mani Rangarajan, Group COO, Housing.com, Makaan.com and Proptiger.com in conversation with Realty+ Looking beyond the crisis, how do you perceive the situation of residential & commercial real estate? With the ongoing crisis, consumer behaviour may undergo a drastic change. Both residential and commercial segments in real estate will suffer a significant downfall due to the unprecedented situation. But Indian economics’ fundamental is strong and we are likely to make a strong comeback which even RBI has projected for next fiscal year. RBI has already announced several measures to offset the damage including a sharp reduction in interest rates both repo and reverse repo. Besides, it has also infused liquidity in the banking system which will help all interest-sensitive sectors including real estate sector. It is likely that the government will also announce some measures for Indian Industries particularly those impacted by it in severe proportion. As India has a huge housing shortage estimated to be around 11 million, we believe the demand will come back within next couple of quarters. But in the short term, the demand will remain low for the time being. Impact on Co-living sector? In the short run, it would impact each and every sector including the emerging segments like Co-living. But in the long run, it would be the fundamentals, which would act as the guiding factor. Much like the way co-working has changed how traditional commercial work spaces operate in India, co-living is transforming traditional renting. It is the highly mobile millennial workforce along with ever growing migrant student population, which is driving the change. Country’s young population wants flexibility in housing, which allows them to move quickly in a highly dynamic work environment and co-living perfectly fits into their scheme. A report by group company PropTiger.com estimates that co-living is set to become a Rs. 2-trillion market by 2023 in top 9 cities of India as the demand for such spaces continues to grow among the country’s student and single working population. Thus, there may be some temporary blip, the long term story may remain intact. Do you think developer should slash prices? In the last few years, property values in a majority of India’s prime residential markets have seen dismal growth mainly due to prolonged demand slowdown. According to a recent PropTiger.com report, at 7% CAGR, Hyderabad has witnessed highest increase in value of property among key markets between March 2015 and March 2020. While in markets like Mumbai and Bengaluru, the appreciation in value has been dismal, Gurugram and Noida markets, on the other hand, saw a decline in property values during the same five-year period. Considering, the above facts, it is amply clear that the scope of further reduction in prices is very remote. If any, it will be confined to luxury segment. How would the luxury housing be impacted? The demand for luxury homes remains muted in India’s nine prime residential markets as more than half of such units launched in the past three years remain unsold data available with PropTiger.com showed. The demand for luxury homes fell post-demonetization, and that trend has not changed much since. The on-going crisis involving the coronavirus pandemic is likely to further impact demand across the residential real estate sector in H1 FY21 including luxury housing. Amid the gloomy scenario for luxury housing, the only ray of hope is the steep depreciation in Indian currency, which has made Indian property prices about 10% cheaper for NRIs, thus making it a relatively more attractive investment proposition than last few years. What opportunities can come out of this time for real estate? Looking at the social distancing getting ingrained in people and their enhanced sense of sanitization may lead people towards a more digitized world. In real estate, we are likely to see more online activities be it for searches & discovery or closing the deal by using technology. Real estate will also come up with innovative ideas thereby offering more options to prospective buyers. For example, we have launched a relief package named Housing Cares, under which the company will offer discounts and extended validity on its products. This move will enable every partner - brokers, sellers, and developers - to make up for the lost time through heavy discounts on all ad packages, extended validity of up to one month on packages, flexibility to choose launch date of services and attractive discounts and benefits on visualization products. In fact, now at housing.com rents can be paid through credit card. However, site visits cannot be ruled out completely but people will make more use of technologies like 3D visits, slice view of project, video call with builder and brokers, initial online payment, etc.
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