The real estate sector in India has adjusted well to the new normal. The pandemic may have eroded the business values and growth prospects of the industry temporarily, but it could not shake its strong foundations. After a brief lull, the housing market bounced back in a promising fashion, backed by fiscal stimulus and government incentives. However, the secret sauce behind the stupendous housing sales post-pandemic has been the trust homebuyers reposed in the property sector.
Effective implementation of Real Estate Regulation and Development Act,2016 (RERA), the country’s first real estate regulator, has been pivotal in instilling faith of homebuyers on the property sector even amidst a ferocious pandemic wave. This transformative legislation ushered a new era in the Indian real estate sector and played a defining role in reforming the sector, ensuring transparency, financial discipline, accountability and citizen centricity.
RERA and other housing amendments have helped in creating a climate of trust between real estate developers and property buyers by ensuring that project delays, quality of projects and pricing of the property can be dealt with an iron hand. Real estate regulators in different states/union territories have played a crucial role in reviving the sector post pandemic by providing necessary financial cushion to developers to complete pending projects and ease the burden of inventory pile up.
Though homeownership suddenly became a top priority for people when the economy opened after the nationwide lockdown, it is the transparency and credibility that has permeated the property sector, that injected courage in homebuyers to buy their dream home in a volatile situation. Homebuyers rushed in hordes to buy their dream home taking advantage of attractive payment plans, low-interest rates, reduced stamp duty rates and lower stamp duty rates.
With urbanization levels slated to cross 55% in the next decade and the real estate sector poised to grow to US$1trillion by 2030, it is fair to say that housing market buoyed by the trust instilled by homebuyers is in a promising space. However, there are some business initiatives that the sector needs to adopt to keep that hard-earned trust from withering away.
Put the finger on the pulse of homebuyers: The real estate sector may have won the trust of homebuyers with its game-changing legislations. However, with the pandemic still in full bloom, there has been a change in the homebuying behavior of consumers. Real estate developers today can’t win homebuyer’s confidence with under-construction units as buyers are not willing to take any risks. Understanding the sentiments of homebuyers with respect to conducive pricing, appropriate sizing and offering ready-to-move units, is integral to attract consumers and spell success in business.
Adopting real estate building technology to fast-track projects: Technology has played a stellar role in changing the paradigm of the real estate sector with the introduction of automation and other efficiencies including design, construction, and project management. Real estate developers should adopt technologies that improve quality, cost efficiency, assured project delivery timelines, consumer experience and environmental sustainability. Homebuyers today want homes that are sustainable and come with new-age technologies like IOT, building automation and Artificial Intelligence. Faster adoption of technologies will not only help to control construction costs and speed up construction but also simplify the home-buying process as well.
Keeping debt levels low & refraining from excess credit: High debt levels and high financial leverage can be a bane for real estate developers as proved in the past couple of years. Branded developers who were cautious about high debt levels have fared better post-pandemic since they weren’t affected by liquidity problems and scripted stupendous sales in the last two quarters of 2020. This exercise has also helped developers to meet project deadlines and earn the trust of homebuyers. Homebuyers do their own homework before choosing a particular project built by a developer. So, it’s better developers don’t have a messy slate.
Make digitization a way of business: Today most of homebuyers are millennials who are tech-savvy and swear by the internet to shop, be it a car, or even a house. Real estate developers that have digitized their business and have a good internet presence are considered credible by millennials and trusted more than those who are still running business analog. Property virtual tours, online booking and secure digitized transaction modules are the order of the day today. having these tools in a real business is a blessing.
The real estate sector has fought the first wave of the pandemic bravely and rose in a Phoenix-like fashion, thanks to a phenomenal response by homebuyers. Property sales in Q3 and Q4 FY21 have been unbelievable, to say the least, which proved that homebuyers have full trust in the real estate sector and won’t stay as fence-sitters for long. However, real estate developers shouldn’t be complacent looking at the response, but make sure that they implement new business models, optimize their real estate portfolios and re-calibrate their finance and operations machinery, to cater to the changing expectations of homebuyers and keep their sacred trust alive forever.