The COVID-19 continues to undermine growth in the Indian realty sector, as demand has softened in most of the major cities, as per the report by 360 Realtors. The distress is more visible in markets like Gurgaon, where a sharp 70% monthly reduction in transaction volumes has been registered. However, in other IT-centric markets like Pune, & Bangalore, the deceleration is more indistinct, as realtors can sell properties through online platforms.
Interestingly, the 34-page report revealed a steep rise in enquiries. In Pune, the monthly enquiries have grown by 220%, while in Bangalore the rise is pegged at 140%.
“Due to lockdown, most of the people are working from Home (WFH), which is giving them ample time to research & learn more about properties. Although COVID has triggered uncertainty & volatility in the market, it is also enabling wide-scale behavioural changes. Across the value chain, spurred adoption of the digital medium is visible.” Quoted Mr Kansal, Founder & MD, 360 Realtors.
The report further revealed a slowdown in commercial assets such as retail & office, which were otherwise appearing robust before the outbreak of the crisis.
Although this might be too early to gauge the overall impact of the COVID on the office Real Estate, there might be a possible compression of 10-25% in the office rentals. The report further revealed that renewed leasing will be in the range of 20-25 million Sq. Ft in the year, a notable dip of around 50%. However, strata leasing & small ticket size sales (INR 50-70 lacs) will continue to infuse momentum. Developers are also floating attractive offers such as 10:90 plans, wherein one just have to pay 10% as a token amount to make the booking. Even this amount is refundable, in case the buyers wish to withdraw.
The time ahead will see active participation from NRI buyers as well. Propelled by the devaluation in rupee value, NRIs investments in Indian Real estate are climbing up.
In 2015-2019, retail in India racked up Private Equity capital of USD 5 billion. Institutional money was entering in large volume in Indian retail Real Estate, lured by its long term growth potential. However, following the social distancing norms & lockdown, malls, high street, & other big retail have been hit hard. Small retail & e-commerce continue to perform well.
As per the report, the times ahead will see unprecedented makeovers in Indian retail, as most of the retailers will pivot to an omnichannel distribution model to contain future risks. Retailers will also do hard bargain with mall owners to shift to a revenue-based rental model at least for another 9-12 months.
The report also indicated wide-scale regulatory changes in terms of safety standards, property management framework, layout manaegement etc. For instance, in retail, there will be more emphasis on touchless transactions. Likewise, offices might be mandated to allot a larger space for employees. Developers & organizations need to plan & adapt their business models accordingly.