So far, 2020 was a nightmare for most industries, including Indian real estate where COVID-19 collided with all segments, causing varying degrees of damage.
Commercial office space growth – on a bull-run over the last six years – has also hit the pause button as many large companies explore the work-from-home option. Residential sales are severely impaired due to the pandemic’s underlying uncertainties.
The collision was not a terminal event, though, and the sector can emerge from the wreckage with cuts and bruises but otherwise intact. In the housing sector, sales need to pick up. The market fundamentals are still strong, especially since the pandemic’s underlying mantra of ‘stay at home and work from home’ has made home ownership a new priority.
For the housing sector, COVID-19 couldn’t have come at a worse time. Many aspiring homebuyers were on the verge of making purchases when an avalanche of uncertainties struck and forced many onto the fence of indecision. Simultaneously, a new buyer segment entered the arena - millennials. This previously rent-favouring demographic took an unexpected U-turn and started exploring the housing market as convinced buyers.
Yet, the uncertain environment is seriously impacting overall demand. Even with discounts, real estate buys are massive investments and buyers need more confidence to make such financial commitments. Boosting demand is therefore not solely up to developers – this has to be a collaborative effort involving the government and banks, as well.
It’s all very well to exhort developers to cut their prices to push sales, but this is still a very incomplete narrative presenting only half of the story. To overcome issues like inventory pile-up and cost overruns, many players have already topped off major discounts with additional offers like refundable booking amounts, waived statutory fees, cashback schemes, easy payment structuring and assorted freebies.
Even coupling these interventions with existing Government measures and bank incentives have not sufficed to revive housing sales appreciably. In last two months, there were also various government and RBI measures geared towards tackling supply concerns. However, what the sector needs is measures that will bolstering demand, as well.
Let’s take a look at what the government and banks can do to get the ball rolling again.:
The revival of the Indian housing sector must be a partnership between industry stakeholders, the government and banks. Reviving housing demand is obviously integral to the government’s Housing for All by 2022 vision. For lack of any statements to the contrary, this vision is still on the agenda. So is making India a 5 trillion economy – which, again, is not possible without a convincing real estate revival.
Anuj Puri, Chairman of ANAROCK Group is a highly respected industry authority and thought leader with 30 years' experience in leveraging Indian and global real estate opportunities. His company ANAROCK has a staff complement of over 1800 qualified and experienced professional, with offices in all major markets in the country, dedicated services in Dubai and a global footprint with over 80,000 preferred channel partners.