A REAL ESTATE LOOK AT 2021
A REAL ESTATE LOOK AT 2021
Excerpts from my conversation with industry leaders at the virtual 12th Realty+ Conclave's South Themed ‘Building Resilience’ interaction.
The year 2020 has taught us so many lessons. It has changed standards and practices across every field. It might have brought the world to a grinding halt for a good part of the year, but one positive outcome (silver lining, maybe?) of the year is the fact that humans have gone back to the basics - putting family first, ensuring a safe home and making savings a habit for a secure future.
At the 12th Realty Conclave, our discussions revolved around the same sentiments. Here are excerpts from the discussion.
HOME BUYING PRIORITY SEES A SHIFT IN OUTLOOK
Earlier, a home buyer took anywhere between three to four months to decide on purchasing his or her home. The pandemic has shuffled things. While there is the investor market, we are seeing a surge in end-user buyers (buyers buying for their use). The decision makers at home are moving quickly. They now take just two to three weeks to decide on a purchase. The volatility of the stock market has made them take a hard look at their investments. Now, not only does a home look essential from a future standpoint, it is also a safe place to park their money.
Low interest rates and the introduction of the Real Estate Regulation Act a few years back, has made real estate a more structured and transparent investment for the buyer. Developers have to adhere to norms and policies. What is also helping the cause of real estate today are the initiatives the state governments and centre are laying out. Maharashtra is leading by example with a cut in Premium FSI charges and reducing registration charges - which we are seeing in Bengaluru now. We are in talks with the Tamil Nadu Government to bring in such initiatives, some of which, even if short-term, will give a much-needed boost to real estate as an industry. Overall, with a positive buyer attitude, constructive regulations and a supportive government we are headed towards better days.
DESIGN CHANGES FOR A POST COVID WORLD
Today safety, security and hygiene cannot be taken for granted. While social distancing, masks and sanitizers will not be a permanent part of human interactions, the pandemic has sure made us more vigilant and aware of our surroundings. With work-from-home becoming a way of life, it is quintessential that developers future-proof new projects. This is where Green Building Norms come in handy. All industries are now embracing technology like never before. Real estate is no exception.
I am very proud that we at Akshaya, have been spearheading the cause of a greener tomorrow for many years now. Since 2010, all our projects are certified green buildings. Efficient infrastructure, lush landscaping, natural cross-ventilation, bright corridors, lower density of homes per floor, rain water harvesting, water recycling, elder-friendly features and useful amenities are a standard part of every Akshaya home.
We now have Alexa powered smart homes. We have homes with a home-office design for work-life balance. We offer 10-year maintenance for all our projects so everything is taken care of for the future. Our new project Twin D is at the forefront of these developments.
Indian resident-buyers now get to experience what our NRI customers once exposed to, in their resident country. Technology and daily life now go hand-in-hand in ways that we never imagined a few years ago.
WHY PRICE RISE IN INEVITABLE IN REAL ESTATE
There are six reasons why we will see a price rise. Here they are in a nutshell.
1. MANPOWER - We are currently operating with a 65% labour workforce. While the migrant community has started to return, it will take a while before we are at 100%.
2. MATERIAL COST - There has been a rebound lately, but productivity is low. Steel is at 60% production, Cement is at 40%. Sand is facing trouble with viable transport.
3. DEPLETING AVAILABLE STOCK - In the last few months, home-buyers have preferred to buy ready-to-occupy homes rather than invest in future projects. This has caused existing inventory to dry up.
4. NO NEW LAUNCHES - Since March 2020, there have been near-zero new project launches across the industry. This imbalance of supply and demand has led to a hike in market prices of real estate.
5. SLOWER APPROVALS - In real estate, procurement of new land for development and the process to get government approvals for purchase forms the core of the business. It is estimated to take anywhere between 12 to 18 months for fresh approvals(for large projects) to be issued.
6. GOVERNMENT TAXES & CHARGES - A major chunk of government funds are being redirected to fight the pandemic and reboot the economy. To counter the revenue shortage of the state, the government has had to hike various fees with a direct implication on real estate. Hiked EB deposits for all approvals and development cost, and increase in guideline value of land have led to an overall increase of total costs.
We also discussed why buyers will always look at the track record and pedigree of the developer, before he or she makes a purchase. And how it is vital for the developer community to instill confidence in the buyers mind by following industry standards, transparency and ethical practices. We have to recalibrate project sizes, home sizes where needed and embrace technology.
As you know, these principles are the foundations on which the Akshaya brand was built on and we continue to be a beacon of development and innovation in the real estate industry.
Thank you for your time. I wish you a very very Happy New Year. Stay safe and take care. We're all in this together.