India GRI Premium Knowledge Session

The aim of the session was to look at the ground reality, in the changing times of Covid. Understand and analyze the favourable and unfavourable factors.

Commercial: How are tenants reacting to possibilities of unlocking? How much has WFH become a reality? Are employees wanting to come back to office spaces?

• The work is continuous, with less people in buildings and campuses.
• Things will change rapidly over a few weeks.
• People coming back into office depends entirely on office policies.
• The development is reasonably slow and deserted currently.
• A decline is seen from September 2020 in commercial demand.
• Offices are not more than 25% occupied.
• The 3rd wave will have an impact of its own on commercial space.
• Investment plans are robust and looking for opportunities, a little change in the underwriting as per ground realities.
• The tenants are not in a hurry to go back into the offices.
• A vacancy level in commercial space is increasing, with flight towards quality.

Residential: What has been the shift in buyer mindset with respect to: sizes, prices, open spaces, upgrading? What impetus will the Model Tenancy Act have on this segment?

• The initial three months of the second wave were tough.
• However, 2020 was good, despite the pandemic outbreak.
• Now, a shift towards better quality can be observed across all residential markets.
• Factors like hygiene, environment, etc. matter more to the home buyers.
• The developers are bullish about acquiring land and adding more qualitative factors.
• The Maharashtra government reduced 2% stamp duty from September to December 2020, encouraging people to buy and register for houses.
• There was a boost seen in the residential resale up to March 2020.
• A drop is seen since April 2021 enquiries and sales.
• New projects now need to avoid or minimize external funding.
• The tower by tower sale technique has proven helpful during the covid phase.
• An interesting development and demand of compact studio type houses are seen.
• The segments in residential that are moving very fast are near completion, ready to occupy and affordable housing.
• Online selling of houses did not pick up well, as people still opt for physical verification of properties.
• The best trend observed in residentials is that people are still paying instalments, despite the external conditions, which brings a positive boost to the cashflow.
• Covid taught a lesson that home is a need to everyone and hence, a change can be seen in the ticket size and layouts of the properties.
• With increasing demand, lands are getting better absorptions.
• The Work from Home culture has forced people to have quality homes.
• There are few new launches, and the on going construction has been very slow because of the reduced number of workers and increased prices of raw materials.
• Once the market opens up, there will be more cashflow, resulting in faster construction and development.
• There is a great boom expected in the industry in next 2-5 years, with quality improvements.

How are new age asset classes viz. Warehousing, Data centers, Healthcare, Senior Living etc. being looked upon? Is there more acceptance to these in light of a slowdown in the traditional sectors?

• Commercial developers did move towards data centers and warehousings to diversify.
• Only a few focused on building shopping spaces.
• The specialists have clear strategies to move ahead in the market.
• Developers having a portfolio of combinations of residential and commercial are seen working better in restructuring and development.
• Developers are also diversifying within the portfolio and looking at senior living, warehousing, etc.
• It is sensible and recommendable to have a mixed portfolio.
• The pressure and weightage of projects are now on sales of properties.
• One of the important factors to keep in mind is to attract, groom and retain the best talent.
• For getting into data centers, leasing of the same can be done in the initial phases.
• The uncertainty will not be for a long time, however, its impact will be there for 1-2 years.
• The demands on the warehousing front looks promising with new developers. NBFCs and cash out strategies.

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