Real estate businesses need to re-imagine, adapt to survive in the next normal
MUMBAI, India: Confederation of Indian Industry (CII) in association with JLL as Knowledge Partner, organized the 12th Edition of CII Realty & Infrastructure Conclave 2020. A virtual thought leadership forum attended by the country’s top real estate professionals, this conclave has been one of India’s leading platforms for experts to discuss opportunities, share insights and predict the course for the industry for over a decade.
Delivering the welcome speech for the conclave, Ramesh Nair, Chairman, CII Realty & Infrastructure Conclave and CEO & Country Head, India, JLL, said, “These are dynamic times. We all agree that no sector has escaped the slowdown caused by the pandemic. The stakeholders of the real estate need to prepare for long-term impacts of the pandemic. But this is also a time to innovate and re-imagine. Ongoing changes will only accelerate the pace of transformation that would have taken many years, otherwise. It is time to reinvent spaces, rethink strategies, bring collaboration into workplaces and make them more human.”
He further added, “The office is here to stay, but its format and functions may change significantly. With significant levels of capital available, investors continue to see real estate as a valuable asset class. This has brought many investors who took a ‘wait and see’ approach at the onset of the pandemic back into the market. While office will lead the recovery, the worst is behind the residential sector. Home loans rates are at its lowest in 15 years and developers are offering attractive discounts, payment plans and schemes. Since May, each month has been better than the previous month for our industry. Growth prospects look brighter for the remaining months of 2020 and 2021.”
Speaking at the keynote address Christian Ulbrich, Global CEO & President, JLL, said, “Offices of the future will be less about densely packed floors, and more about providing flexible creative hubs for people to interact, socialise, innovate and learn – the things people have missed most during lockdown.”
Christian further added, “Post pandemic, as many businesses embed a blend of home and office working, central business districts will revive to again become the beating hearts of major cities across the globe.”
“The retail, hospitality, and commercial segments within the real estate sector were growing significantly, thus providing the much-needed infrastructure boost for India’s growing needs. Due to the pandemic, the worst impacted sub-segment of the real estate sector are the retail and hospitality sectors,” said B Thiagarajan, Deputy Chairman, CII Western Region MD, Blue Star Ltd. “Demand for warehousing is now increasing due to an increase in E-commerce activities. The non-resident Indian (NRI) investment in the sector is very prominent. We have seen a hike in the numbers of enquiries from the NRI community,” he added
As businesses open in a staggered manner, companies need to be prepared to face the short-term jolts and be ready to embrace the impending prospects of growth in the medium to long term. While globally, all stakeholders in the real estate industry are preparing themselves for long-term impacts of the pandemic, this is also an opportunity to reinvent. Real estate businesses will have to understand, comprehend, plan and implement innovative ways to stay ahead of the curve. Real estate as an asset class is here to stay, however adaption is important to survive.
Adoption of technology will be the key going ahead. Corporates globally are revaluating real estate strategy to make it more resilient to shocks. De-densification, splitting up of offices will gain momentum as more focus will be on collaborative technology. More corporates will adopt flexible working practices. The phenomenon of Work from Home (WFH), at best, a supplement to the traditional way of working from office. There will be an increased focus on health, safety and wellness features and the importance of property management to expected to grow.
Workplaces will undergo massive design modifications. There will be a combination of core and flex, long term and short term and urban and suburban. One thing is for sure, the future will be hybrid. Apart from creating a human experience, landlords and corporates will have to provide a sense of safety and security. There will be a greater demand for better quality office buildings which have the best technology systems and sustainability features. Office is here to stay but the format will change.
The Residential Story
While there are certain uncertainties, the worst is behind for the residential sector. With interest rates at their lowest levels and developers offering more flexible to accommodate buyers’ concern, this could be the best time to buy a property. There is also renewed interest from Non-Resident Indians (NRIs) and joint families. Residential sales in the affordable and mid segments is expected to show the fastest turn around. Consolidation in the market is likely to further speed up.
The current situation has given developers an opportunity to innovate, reinvent and revisit their strategies on maintaining business continuity to navigate through this pandemic. While the primary focus is shifting to overall well-being, the focus on health, sustainability and wellness is renewed vigor and is gaining prominence across asset classes. But a broader recovery is expected in 2021.
There are positive signs aplenty. With the economy opening gradually, retail footfalls have started picking up, office absorption levels improving and industrial production accelerating. Hotels have been allowed to re-open and many companies are planning a reentry into their offices. Over the next couple of quarters, all eyes will be on the ability of India to survive or contain the pandemic.
As the country’s most anticipated annual real estate event, CII’s annual Realty & Infrastructure Conclave provides a fitting platform to the foremost stakeholders of the Indian real estate industry to discuss, debate and share their vision for the sector’s collective and progressive growth.