"Vaccination initiatives will have a significant impact on the sector building confidence, and the States that will take proactive steps in this direction will gain," says Harsh Vardhan Patodia
Real estate will see fresh demand in housing and warehousing segments, while the office and commercial space will be on the path to recovery in the coming months. Vaccination initiatives will have a significant impact on the sector building confidence, and the States that will take proactive steps in this direction will gain, Harsh Vardhan Patodia, president, Credai National tells Y V Phani Raj in an interview. Excerpts-
Covid has brought both opportunities and challenges to the real estate sector. When the Covid hit, buyers had some apprehensions over investments, and many suffered due to job losses. Developers also faced challenges with supply chain bottlenecks and project delays. Reacting to the situation, the government intervened and extended project completion timelines and introduced a moratorium for six months after the first wave. Credai has sought the Centre to offer a moratorium after the second wave. Distress funds are however available for developers.
On a brighter side, the housing market saw higher demand and digital platforms aided in meeting fresh demand. Demand for houses, larger houses and greener houses emerged during the last 15 months. It is a compelling time to buy houses as the prices are at the bottom. Commercial space which is coming for renewal will have to retain momentum, and recovery may be expected in the coming months. Office space may slow down for some time but will not tank.
Different regions of the country have experienced different levels of severity, impacting the real estate sector. Revival will largely be dependent on how quickly people in each State will get vaccinated. This will determine how each market will achieve a turnaround. States will have to ramp up vaccination to build confidence.
Credai recommended its member developers to vaccinate their labour/construction workers so that the construction activity is not impacted. This will address project delays. If the construction is on, labour will come back to the site. During the first wave there was panic, but now normalcy is returning. Labour availability is no more a concern.
Commodity prices have gone up in the last 12-15 months. These prices are hurting the developers in terms of cost and will have an impact on absorption that developers are aiming for. We cannot push prices beyond a point in the market. We are talking to the government and respective industry bodies to bring in rationality in prices and if there is some formula which can be worked out. The prices are slowly cooling, and we are approaching governments in different States to ensure that developers are not burdened by higher commodity costs.
Corporates are working out new modalities to meet their operational needs. Coworking space demand will go up in future. Coworking and coliving will coexist and there will be fresh demand in the hybrid format in the new normal.
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