Property market has once again emerged as a preferred safe bet investment amidst market volatility

- Dr. Niranjan Hiranandani

CMD, Hiranandani Communities

How do you view the real estate market performance in terms of project execution and delivery last year? How is the scenario this year and how do you visualize the future trend?

The system reboot of the Indian Real estate sector on the account of structural policy reforms has led to transformation in the sectoral modus operandi. The Covid pandemic led to consolidation in the real estate market as liquidity, migrant labour crisis, and supply chain disruption brought feeble developers to grind halt. This led to stalled projects in addition to overhang of unsold inventories.

The pandemic crisis also played a catalyst role in triggering the home ownership sentiment and fueling the spurt in homebuying. The dearth to move in ready spacious homes was reflective in record high property registration numbers in primary as well as secondary property market. This sustainable home buying rally helped to knock off piles of unsold inventory across key markets, paving way for developers to gear up for new inventory. The festive quarter of FY 22-23 is witnessing a rise in project launches to capitalize on optimistic homebuyer sentiments amidst volatile times. The investor bandwagon is also skewed in to invest earned disposable income from the capital markets into property asset class for safe returns.

The project execution strategy has to be fundamentally tweaked by aligning it to the financial goals and execution competency. The digitalization wave has nudged industry layers to integrate modern technology and automation in construction as well as project designing. The new launches will display renewed taste and preference of homebuyers in the new normal period. The efficient designing for optimum space management with wellness induced amenities are revived choices of home buyers. The on-time delivery of homes has become pivotal for the developers to keep transparency and trust of the homebuyers.

The real estate market faces many challenges in terms of material cost and interest rates. How do you assess the scenario?

The rising inflationary prices of fuel and food is causing financial undercurrents in the consumption buoyancy of the homebuyers. The geo-political upheavals due to war has created historic highs in Brent oil prices and exposed fragility in the supply-chain disruptions. The import & export ban levied to protect the domestic economic interest has resulted into shortages and jacked up raw material prices. This builds pressure on developers to squeeze profit margins in order to absorb inflationary price escalation without hurting homebuyers' financial index. The ensuing festive quarter will see exciting festive bonanza by the developers to sustain homebuying rally and clock an uptick in sales velocity. As the global economies will stabilize on the account of ceased war will tame hardened interest rate and spiraling head inflation. The Indian economy has weathered rude shock with strong resiliency and improvement in growth momentum. The consumption story augurs well for the GDP growth of India, which will further foster the growth of real estate market.

In spite of many policy measures such as RERA and government schemes, there is still a lack of transparency in the real estate sector. What is your view on this?

Indian real estate is witnessing sea-through changes in trust, transparency and timely delivery sentiments post the introduction of Act of RERA. The financial discipline and compliance mechanism devised by RERA will further bring in accountability and consumer fair practice in play. Maha RERA has also set up a conciliation forum for dispute redressal out of legal wireframe. This will help to resolve staggering issues in the sector and enhance the consumer confidence index in the sector soon. Digital interface and single-window clearances will help enhancing transparency levels eliminating the risk of human intervention causing lack in trust sentiments.

How will next-generation design and technologies play a major role in the building construction in the coming years?

The construction industry in India is at the cusp of disruptive change with new materials, building technology, software, digitization, and artificial intelligence changing the way we conceptualize, build, and use our buildings. These technologies are not only cost-effective, but offer advantages higher earthquake resistance, more durability, smooth finishes, and lower maintenance. Tech automation helps reduce the turnaround time, and improve the quality and durability of construction. Technologies like pre-fabrication and factory-controlled environment provide many solutions and overcome challenges like building in hazardous environments and quality ambiguity, and also ensures material and cost efficiency.

Global Housing Technology will be adopted for best and efficient practices keeping climate risk at bay. Green engineering with sustainable materials and amenities will mitigate risk of environmental hazards. Recycling and reuse of materials will contribute to reducing carbon emission.

What are the sustainable practices adopted in realty construction? How is sustainability playing a key role in building materials, product solutions and technologies?

The rising climate risk has induced real estate developers to act cognizant of sustainable development goals. Climate resiliency promotes a net zero carbon emission ecosystem, green engineering, sustainable designs and renewable materials, recycling construction waste to make it more efficient. The future developments must incorporate sewage and wastewater treatment and recycling plants, solar panels, EV charging stations, rainwater harvesting, terrace and vertical gardens, and other energy efficient structures to make it eco-conscious features for self-sustainable living. The smart eco-towns are essential in the new normal post pandemic and alarming climatic risk. The zero energy and green buildings with LEED certification will be a conscious move towards sustainable future materials like bamboo, precast concrete slabs, recycled plastic, reclaimed wood, reclaimed/recycled steel, etc can be integrated in the construction material list. Also, Biophilic designs with improved air ventilation, HVAC systems, open layouts, ample natural light, and green vegetation can enhance sustainable living quotients.

According to you, what are the future opportunities for real estate developments in India?

As per NITI Aayog, Indian real estate is estimated to contribute more than 15% to GDP growth. The growth of this labour-intensive sector has a snowball effect on 270 allied industries in terms of employment and investment generation. The mega infrastructure in developmental stage is to augment real estate landscape by building end-to-end connectivity. The real estate sector post Covid pandemic is witnessing rise in alternative asset classes like Data Centres, Warehousing, Industrial Parks, Student housing, Flex spaces, Co-living and Senior citizen living. The growth avenue in residential and commercial real estate is huge with a bearish Indian economy growth story. Rapid urbanization and job opportunities are driving workforce across geographies, spurring the demand for rental housing and commercial spaces. The industry is churning a roadmap for dispersed commercial and retail portfolio with hub-and-spoke model and high street retail model to mark its inward presence.

Market consolidation has opened up new business financing models, strengthening organized, branded and financially disciplined players. The dire need for improved corporate governance and transparency has nudged system reboot with structural policy framework. The new investment platforms like REITS and InViTs are picking up pace in the real estate sector. Property market has once again emerged as a preferred safe bet investment amidst market volatility. The affordable housing is gaining market share in tier and peripheral cities due to reverse migration and remote work culture brewing up. The industry players have redesigned their project models to befit the renewed taste and preferences of new-age homebuyers with wellness and smart home automation taking centre-stage. Gated township with work near home is a way to future living.

Hence, Indian real estate growth is bullish with overall economic growth propelling in the backdrop to become $5 trillion economy.

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