Real Estate Sector Remains Resilient in 2020.

Global investments, innovative manufacturing, redesigning of spaces, technological advancement have been visible within the Indian Realty sector.

India's property market has grown immensely in the past ten years. Robust occupier interest, the rise of organized real estate developers, and the entry of institutional capital has accelerated the growth of the realty sector. However, the shifting sands of the Covid-19 pandemic have changed the very definition of 'normal'. The changed behaviors exhibited by every individual due to Covid-19 is expected to alter the way consumers and businesses use and interact with real estate. As a result, it can be safely said that the sector is now entering an era of innovation and creative problem-solving.

In past few months, multiple global investments, strong supply chains, innovative manufacturing, redesigning of spaces, technological advancement has been visible within the Indian real estate sector. While some sectors such as office, residential, logistics and warehousing have proven to be more resilient than others and are looking forward to an early recovery of business. The government has been focusing on developing a 'self-reliant' India by leveraging the strength of the country's domestic demand. The government and the RBI have made timely interventions to minimize the impact of the pandemic on the economy, including the real estate sector - the second largest employer in the country after agriculture.

Recovery on the Fast Track

The engines of global economy are gradually coming out of the shadows of Covid-19 and all-round efforts are being made at various levels to mitigate the impact of the global pandemic. Although the market remains cautious, we are witnessing a growing momentum in sales, purchase and leasing of property as developers offer attractive packages and payment schemes. Occupier enquiries and inspections have also improved across the real estate spectrum in all major cities.

Commercial real estate segment could very well become the flag-bearer of recovery in the real estate industry. At an overarching level, the office sector, in particular the future of the workplace, has been witnessing a lot of debate. Most of this debate has been centeredon how office space would be used and designed, what role would tech play and what status would the workplace hold in terms of its physicality amid changing work patterns. Despite this conundrum, the resilience of the office sector has remained intact due to its strong fundamentals which include our large pool of skilled and relatively low-cost talent, supportive export-oriented policies, extensive regulatory backing to the tech sector and average rental at a dollar.

In the residential sector, signs of a revival are already being witnessed with sales in the mid-market segment picking up across all metro cities. There has been a sustained interest in mid- and affordable housing segments due to the end-user demand. Technology is also playing a big role in building contingency plans and enabling data-driven decision-making. Developers are using tech-based solutions that enable buyers to inspect properties online and finalize deals digitally which involves a mix of AR/VR techniques. Virtual tours, online platforms, drone shoots have gained more prominence as buyers are adopting digital at a fast pace.

Amid this talk of resilience, one sector that is expected to shine through this unprecedented situation in the near term is Industrial & Logistics (I&L). The Covid-19 pandemic has heightened the demand of warehousing and logistics due to the increasing dependence on e-commerce and to maintain necessary inventory levels. As dispersion of essentials was allowed during the lockdown, leading e-commerce players were allowed to stock food items in their warehouses and utilize railway freight, leading to the creation of a hub-and-spoke model in this universe. Hyperlocal delivery also became prominent as ecommerce players began sourcing their deliveries from neighborhood stores to meet customer demand. We are now witnessing greater collaboration between various e-commerce platforms as they strive to improve the last-mile delivery network.

Government Measures to Support Real Estate Sector

The government and the central bank have made timely interventions to minimize the impact of the pandemic by pumping in much-needed liquidity into the system and improving the confidence of investors in the country through measures such as extension of project completion timelines and other statutory compliances. From reducing circle rates, providing liquidity schemes, increasing tax benefits for first-home buyers, to relaxing norms for the real estate sector, these steps only indicate strong growth and revival for the overall economy.

The RBI has maintained an accommodative stance directed towards preserving financial stability and strengthening consumption, thereby giving a push to economic recovery, thus giving a boost to the real estate sector. RBI's decisions to relax LTV guidelines and rationalize risk weights for home loans will further encourage homebuyers. Further, liquidity schemes directed at housing finance companies and NBFCs is expected to provide a foundation for the recovery of the real estate investment segment.

Transformation through Technology

Technology has emerged as the key enabler during these times. While the use of tech across real estate was a key trend in the pre-Covid-19 era; post the outbreak, this trend has accelerated. Tech such as PropTech, augmented reality (AR), virtual reality (VR), cloud and blockchain, which were previously considered unattainable, are now being widely and innovatively used.

In the office space, touchless tech in the form of door sensors, apps for operating lifts and infrared thermal scanners are being assessed closely to minimize touch points at the workplace. FM services too are gaining a tech edge with several occupiers considering techniques as such as UV sterilization to cut down manual cleaning work. Employee collaboration and engagement over digital platforms is now becoming a norm, as is monitoring their productivity through digital tools. At the same time, ensuring data security is becoming more critical, causing occupiers to ensure that adequate IT infrastructure is in place along with their data security protocols.

In the I&L space, we are witnessing growing automation of the warehouse and industrial units as well as tech percolation across all facets of the supply chain, such as warehouse management systems, robotics for sorting facilities and increased use of fleet management software. Meanwhile, developers as well as retailers are either embracing or are willing to embrace technologies such as consumer analytics and in-store automation to collect data on consumer profile and behaviour. In the residential space, developers are using tech-based solutions that enable buyers to inspect properties online and finalize deals digitally which involves a mix of AR/VR techniques. Virtual tours, online platforms, drone shoots have gained more prominence as buyers are adopting digital at a fast pace.

Safety & Wellness-the Core Focus

The focus on health and safety has only heightened after the COVID-19 pandemic. an integral part of the real estate sector. Workplaces are now witnessing growing dependence on prophylactic risk mitigation measures for returning to 'normalcy'. This is expected to lead to percolation of practices such as physical / social distancing, frequent sanitization of sites, mandatory PPE, and active screening practices. We have also seen increasing instances of companies setting their own global standards which exceeded local / state government guidance regarding health and safety practices. Several companies are now providing doctor consultations, developing health and fitness programmes, promoting healthy eating and exercising as well as continuously monitoring both physical and mental wellbeing of employees. Further, there is now an increased focus on the role of the heating, ventilation, and air conditioning (HVAC) system and how it can assist in the indoor air quality (IAQ). Many different types of IAQ technologies and practices are now available for many different types of HVAC systems.

Going forward, we believe that workplaces would continue to prioritize the health and safety of their employees. They could institutionalise wellness into buildings and workplaces by improving the seven pillars of Wellness - air, water, light, fitness, nourishment, comfort and mind.

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