The COVID-19 pandemic brought the term “new normal” into our lives, with all activities — from work to fitness to schools — shifting indoors, and online. And along with it, came a fresh realization — indeed there is no place like home.
However, just like other industries, the construction sector was also initially severely disrupted after the nationwide lockdown in late March. The unavailability of workers (due to the migrant exodus to their hometowns), and the temporary disruption in the supply chain of materials, compounded the problem, resulting in delayed projects, delivery dates being pushed, and buyers postponing their home-buying plans.
But, now, with the relaxation of the lockdown in the second quarter of FY 21, resumption of economic activity, stimulus packages offered by the government and the return of migrant workers, has again set the wheels of the sector running back on the path to recovery. And year 2021 looks promising.
The good news is, the sector is already showing signs of revival. The lockdown has given potential home buyers ample time to make a decision and leading developers too are tweaking their strategy to accommodate consumer demands in the post-pandemic era. Here’s a look at some of the game-changing factors that will be responsible for the slow but steady revival of the real estate sector in the near future.
Home is Where the Heart is!
The lockdown saw the entire country’s population collectively spending an unprecedented amount of time indoors. From working out at home, to signing up for online classes, to working long hours in the ‘home office,’ to seeking ways to entertain ourselves at home, in the aftermath of the pandemic, our lives will continue to center around our homes for the foreseeable future. Not surprisingly, this has heightened the sense of security that owning a home brings, making people realize the importance of having real estate as an asset in their investment portfolio.
Work from Home Regime is Here to Stay
Work from home has slowly but surely become accepted in offices across industries. As COVID-19 restrictions are eased, the ‘Work from home’ trend will give way to ‘Work from anywhere’. This augurs well for real estate across the country, particularly well-connected cities and technology hubs such as Mumbai, Bangalore, Pune, Delhi NCR etc., which are conducive to employees working from home.
Strong Consolidation Game
With the introduction of regulatory reforms like RERA, PMAY, GST, and the government’s efforts to weed out liquidity issues, consolidation in the real estate sector commenced a few years back.
This means stable and credible players with the ability to raise capital and adhere to RERA norms, guaranteeing quality construction, timely delivery and transparency, will be more sought after by the consumer. Bigger players will gain better momentum in the market and the signs are already visible with sales hitting pre-COVID-19 levels once again.
Overcoming obstacles using digital technology, and by keeping their finger on the pulse of the customer, organized developers are able to expand their reach with the right product across tier II & III cities and even target the global market and attract profitable investments from NRIs, further boosting their sales.
Infusing Affordability with lucrative Interest Rates
The stimulus measures announced by the RBI and the government have jointly provided some reprieve, which will play a huge role in attracting home buyers. For instance, RBI’s recent monetary policy decision to keep repo rate and reverse repo rate unchanged will improve the affordability index. It will do so by ensuring that low home loan interest rates will continue for some time, rekindling the interest of buyers who were still on the fence.
In addition to the improvements announced in the recent past, such as linking the Loan-To-value (LTV) ratio to new housing loans, measures such as reduction in stamp duty, GST concession, etc., will be instrumental in breaking industry’s slowdown chain and infusing affordability for homebuyers. In fact, it is a win-win situation as the reforms will also allow developers to drive faster and profitable conversions on unsold inventory and make room to focus on further expanding the business.
What a homebuyer wants?
With people spending more and more time at home, the list of amenities and facilities expected by the buyer just got longer. Consumers demand thoughtfully designed, larger homes, safe outdoor spaces, high quality connectivity infrastructure which lets families work from home, stream content, conduct video calls etc., simultaneously. The home needs to be reimagined.
It is now multi-faceted, it’s your gym, school, office, restaurant, social gathering space; it needs to be conceived to deliver to the multi requirement. We will see a greater incorporation of technology in homes to ensure reduced contact and social distancing.
Thanks to the pandemic, health and hygiene are a top priority, which means the availability of quality medical facilities nearby will become important. So will the proximity to green spaces and entertainment options such as cafes, indoor sports recreation facilities, lounges for senior citizens, vehicle-free secure zones for kids, etc. Projects tailor-made for new-age customers, with a focus on thoughtful design (such as designated workstations in bedrooms, considering work from home options) and technology (great digital connectivity for home offices and digital entertainment) will see high interest from potential buyers.
Entering Digital Realm
The pandemic has thrown unique challenges, which in turn have caused a major reconfiguration in the way businesses operate today. No doubt technology has taken centre stage and the digital medium has become the primary mode of engagement.
Whether it is an interactive AI powered chatbot, now also configured with WhatsApp, or 3D walkthroughs, developers are adapting to more accurate, interactive and efficient communication channels that can replicate the on-ground experience well and answer questions of potential customers while keeping the new normal of social distancing in mind.
While the wheels of real estate revival have been set in motion, in order to fast-track this growth in the long run, there are many more factors that need to be implemented. Changes like substantial reduction in stamp duty across states, rationalization of GST rates, income tax benefits on home loans, and the long-standing demand for an overall industry status which will help the sector be privy to legal and procedural benefits such as capital and interest subsidies, single window clearance, etc. are needed.
In 2021, the joint strategies of regulatory bodies and the government will, hopefully, attract more consumers, investors, institutions, and break the slowdown chain once and for all.
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