- by Ramesh Jogani, Managing Director, The Real Estate Company (TREC)
The entire economy has been impacted by Covid 19, real estate being no exception, but the entire pandemic has taught us one thing that a home is the safest place and once normalcy is restored people will be heading to buying real estate as we all know, it not only provides financial security but provides shelter, safety and security unlike any other asset class.
Impact on price: As an initial reaction, while it is naturally assumed that prices will fall, we must remember one thing that, real estate for sometime now has already been under pressure and accordingly prices have witnessed a correction. Any further correction would make it unviable for the developer to finish the construction. It would be wise not to go for further bargain hunting and lead to a case where a fool and his money are soon parted. In time the fence sitters on realizing that there is no further fall in price will come forward to buy. I do not foresee any substantial fall in prices from hereon.
A forward impact on demand: Real estate is one asset class that has consistently given large returns over long periods. Real Estate will emerge to be the preferred asset class as opposed to every other asset class which in recent times have taken a huge beating thereby, restoring faith in real estate. Covid 19 has now placed ‘Home’ in the ‘WANT’ and not merely in the ‘NEEDS’ segment for consumers. This indeed is the best time to invest/ buy in real estate.
A catalyst of unity: This is for the first time that the industry stands united. Various bodies of real estate have come together under a common umbrella, have identified problems, addressed them and are making a united common approach for intervention by necessary authorities. Adversity unites and it is indeed very heartening. And while the general perception is that developers lack empathy, we have seen the humane side of developers who have been engaged extensively in CSR activities at an individual and association level.
Regulatory stimulus is the need of the hour: A lot needs to be done for real estate sector. As far as development is concerned, while the development community is raring to go and I do not see any lack of will on part of developers to resume development at full throttle. However, faster approvals will need to be provided. We will also need to mitigate challenges that have occurred due to shortage of labor and disrupted supply chain.Remedial measures will need to be undertaken at both the central and at the state level.The central government can provide and stimulate growth by providing measures like one-time restructuring of loans, wavier of penal interest, decrease in interest for housing, additional loans to the construction industry and reduction in GST. The state government can aid the developers by reducing stamp duty, reducing and deferment of premiums this will give an impetus to the industry in turn leading to higher demand, an increased confidence, provide employment opportunities and will help restore the economy as real estate is one of the larger contributors to the GDP. I believe that the government is inclined to offer support, but will do so only after the lockdown opens up for they believe, it will have no major impact during the lockdown and will be effective only post that. But I am of the view that it should be immediate as the lockdown should not stall the execution of various announcements as time is of essence and I believe that the faster they act, the faster the economy will revive.
At an organization level, we will have to Re-augment our strategy, Realign our Purpose & Restore Faith while continuously being innovative in our outreach, empathetic in our voice, and work in a manner that emotionally connects and benefits all stakeholders.