With the real estate sector witnessing increased transactions and positive consumers’ demand after the COVID-19 pandemic-induced lockdown, the National Real Estate Development Council (NAREDCO) has said the worst is over for the sector, but more financial support is required to bring it back on the growth trajectory.
It also said demand for commercial office space is expected to be back to 80 percent of the pre-COVID level after July as more people return to work after vaccination.
“There is a positive sentiment visible across the economy, and as GDP growth happens through the V-shaped recovery, the aspect of recovery in commercial real estate, especially office spaces, remains a concern in light of ‘work from home’ as also ‘work from remote location’. Similarly, while the SWAMIH Fund has done well, there are many stalled and delayed projects, recovery of which will need ramping up of the quantum of the fund as also allowing financial institutions to participate in the process,” said Niranjan Hiranandani, National President, NAREDCO.
“Home loan interest rates are at historic lows; some states have reduced stamp duty rates. What is also needed is support for project finance, and I hope positive steps happen – and soon. As the vaccination drive shifts into high gear with the public-private partnership, one expects normalcy to return by June-July this year,” he said at a virtual session on Reality of Realty Investments.
During the webinar, panelists spoke about the improving customer sentiment post various policy announcements by the governments and the segments that have seen traction during the pandemic. Experts also said growth momentum should be sustained and developers should not increase prices.
“There is a huge opportunity we all are sitting at. Interest rates are the lowest and developers have been sensible about the pricing and government initiatives, such as the reduction of stamp duty, have played an important role. People are venturing out and buying homes. Developers should continue giving their best to ensure the rates don’t go up. Government benefits are not going to be there forever. If they (NAREDCO) could also pitch in for digital signature and can make this process easier through ministries then it will be really helpful for the sector,” said Renu Sud Karnad, Managing Director, HDFC Ltd.
Rajiv Sabharwal, Managing Director & CEO, Tata Capital, was of the view that the demand for commercial real estate will be back to 80 percent of the pre-COVID level after July when people return to their workplaces.
“Residential sector seems to be doing extremely well across segments, and we are seeing growth happening at all stages we need to create houses in the right price bracket if we want to create a sustained growth for this sector. It is important that developers keep prices in check if demand is to be sustained,” he said.
As for commercial real estate, demand is expected to be back to 80 percent of the pre-COVID level after July as people return to work. People are gradually going back to work, the banking sector is working in full capacity. If there is a segment which will take slightly longer that is the retail segment, he said, adding that incentives introduced during the pandemic to boost the sector should not be withdrawn immediately.
Sanjay Dutt, Managing Director and CEO, Tata Realty And Infrastructure Ltd, was of the opinion that 4 percent occupancy in office buildings, nearly 98 percent rent collections and close to 25 mn sq ft for new office development in 2020 speaks volumes of how the corporate world sees the role of corporate space in terms of productivity of an employee in a controlled environment versus work from home.
“Retail estate sector is the most critical sector. If the economy has to grow this sector must grow. It comprises four sub-sectors housing, retail, hospitality and commercial. The growth of this sector is well-complimented by the growth of corporate environment and the demand for office space and urban and semi-urban accommodation,” said Saloni Narayan, Deputy Managing Director, Retail Business, State Bank of India (SBI).