As the pandemic continues exacting a serious human toll and menacing economies across the globe, business leaders working on a war-footing & balancing dozens of critical priorities are starting to focus on one burning question: “How can we ride out the crisis and emerge stronger to tackle future economic forces?”
It's hard to single out one sector that escaped the clutches of this evil invisible entity. From automobiles and hospitality to tourism and retail, every industry has been razed to its knees. However, the story of the real estate sector is different.
The property sector was under severe stress in 2019 owing to credit squeeze, high leverage, rising non-performing assets, NBFC debacles and GST complications. Also, coming out of a multi-year demand slowdown and changing regulatory environment, the real estate sector was hoping for a propitious start in 2020. Demand for affordable housing had picked up, consumer confidence warmed up and growth parameters looked stable for a fabulous opening.
The pandemic came unannounced and took away the reassuring smile out of the real estate community leaving behind heavy creases on their foreheads that are still deepening as time passes.
According to latest reports, housing sales had plunged 80% across India’s top seven cities in the second quarter of 2020 in comparison to the figure in the corresponding quarter last year. Residential sales took a tumble from 68,600 units in Q2 2019 to a paltry 12,720units in Q2 2020.
If we take new launches into account, the numbers are horrible, to say the least; a 98% dip in the second quarter with just 1,390 units launched. These launches are attributed to just four projects-two in Bangalore and one each in Pune and Kolkata.
And with the lockdown easements going on across India, it’s hard to say that the recovery process for the real estate sector will see rapid traction. Going by a KPMG report, the battered real estate sector may take 6-12 months to recover initially. Developers will have to focus on liquidity improvement, layout efficiency maximization, re-negotiation of contracts and re-calibration of business operating models.
What went wrong for real estate sector?
Ask any naysayer and he will quip that the present situation of the real estate sector was inevitable. Not paying heed to the evolutionary trends & changing consumer expectations and turning a blind eye to the burgeoning importance of technology gave a stinging blow to the real estate sector.
Not to mention the financial baggage and poor understanding of demand-supply dynamics that rubbed salt into its wounds.
The lockdown hit the final nail on the coffin of the real estate sector as sales tanked, liquidity routes froze, construction activities stopped, and most real estate developers became sitting ducks.
Job losses, health insecurities and bleak employment scenario nationwide compounded the problems of the real estate sector as homebuyers shelved off their plans.
Real estate developers also made matters worse for themselves. Majority of small and medium real estate players who relied solely on offline route to sell properties went nearly bankrupt due to the lockdown; facing mind-boggling losses as they were unable to approach clients or conduct property visits.
The cost of not transitioning to digital in accordance with worldwide trends was huge as only top developers with deep pockets were able to milk the digital real estate sales opportunity banking on their digital infrastructure and by coalescing with top brokerage firms like Square Yards.
Square Yards makes a huge impact on digital sales
In three months of lockdown, top real estate developers registered phenomenal sales with Square Yards. Real estate biggies like Godrej, Lodha, Piramal, Rustomjee, to mention a few, stitched an accord with us and brought a windfall in sales.
Square Yards automated the complete value chain of a real estate transaction - starting from presales with online virtual tours and 3D walkthrough capabilities, a real-time inventory blocking engine integrated with multiple payment gateways and a robust post-sales module for submission of online applications with digital signatures.
The platform has joined hands with leading banks to enable instant and paperless sanction of home loans, completing the entire home buying cycle for home seekers, without them having to move an inch from their homes.
Our enterprise tech solution EDGE helps real estate developers to complete end to end digital transactions on their website. The platform enables listing of projects online and contains brochures, plan layouts, 3D layouts & VR walkthroughs.
EDGE includes digital mortgage application integrated with credit bureaus, identity and income verification services that ensure homebuyers get a single window to complete their online property transaction and make a well-informed purchasing decision.
Digital platforms to be the guiding light for the real estate sector
Real estate developers understood the potential of digital sales platforms and took the online tack to enable business continuity. Homebuyers looking at the ease of touring homes through virtual mediums, booking inventory online and transacting digitally without any hassles gave a thumbs up to this novel trend.
With the pandemic refusing to play down, it is safe to say that physical property visits and real estate transactions will not come back soon. The digital trend will move on boastfully as real estate developers will look to innovate digital real estate buying for better, life-like experiences; at the same time, homebuyers won’t be turning away from this wonderful experience of home shopping.
Looking at the future, the real estate sector will emerge to be a winner with Digital Platforms being its daily driver. Safety concerns and fear of contractions will still play in the minds of the real estate community and homebuyers. However, with changes in business practices, structural transformations, product design efficiencies, and a never-back-down zeal, the real estate sector will be able to ride out the crisis well and come out as a sunshine sector again.