Realty woes and market opportunity
What the real estate sector has been working on to stay afloat and do better. July 2020
To delve deeper into the outcome of the COVID-19 crisis on the real estate and building industry and how the industry is coping in the current scenario, CONSTRUCTION WORLD hosted an exclusive video interview with Jaishankar.
On group’s operating performance: “FY2020 has been a record year for Brigade Group. In fact, in FY2020, we recorded the highest sales in residential projects in the last 30 years. So it is a big achievement for us. We did 4.25 million sq ft of new sales in the range of 3,500 units, averaging to about 300 units a month. As far as leasing in concerned, we have done 2.5 million sq ft of leasing of office space in Bengaluru and Chennai. Our hotels have performed well, except for the last two weeks of March, because of the lockdown. Overall, in FY2020, business was good. We were expecting a better year for FY2021, but now we will need to relook at the entire business scenario post the lockdown.”
On the status of under construction projects: “In the last two weeks, construction projects have come to a standstill. To be precise, construction projects came to a standstill for March 25. We hope to resume it as soon as the lockdown is lifted. We have been able to reach out to 10,000 workers – to be precise, 9,500 migrant workers are staying back and we are taking care of their welfare in terms of providing ration, goods, and are transferring money to their accounts so that they can send back some amount of money to their home town. In addition, our team is guiding them on physical activities, counselling as well.”
On the recovery process: “In my personal opinion, construction sites are safer than labour colonies or tenements. In construction sites, natural social distance is maintained regularly. There is a certain amount of social distancing always maintained due to the nature of the work. I have personally felt that community transmission can be much more in the places they live because they will be living in tenements where four to five people will probably be living in a small area. I don’t expect any major issue at construction sites as long as they follow the safety precautions on site.”
On construction sites: “I personally believe that construction sites are safe places to work because they are exposed to natural elements, unlike say offices which are air-conditioned. The virus may spread in an air-conditioned atmosphere than a natural atmosphere.”
Impact on hospitality projects: Hospitality projects are unfortunately one of the bigger sufferers until the travel business restarts with foreigners coming on tours.
Social distancing in restaurants and malls: In restaurants, social distancing can be planned. I maintain the same view for air-conditioned malls. Generally, malls are not over crowded on weekdays, and on weekends we can restrict the number of people entering the malls on an hourly basis, instead of shutting down the malls completely.
Real estate prices: Particularly in some areas I don’t see any deferring of real estate prices because it has always been a very affordable market, for instance the cost of our average selling prices are in the range of Rs 5,000-5,500, or in many cases in affordable houses, it is selling at Rs 4,000-4,300. So I don’t see prices coming down. As far as demand is concerned, everybody would like to wait and watch, even as a developer it is difficult for us to predict whether things will go back to normalcy as soon as the lockdown is lifted, but sooner or later we will know.
Practical timeline for recovery: I think it will take by the end of the first quarter of this fiscal. In the current situation, what we need is government support. I feel the government support is insufficient. The announcements made are welcome but I think it is insufficient considering the size of the Indian economy. Notably, it is said that the stimulus offered is just 1 per cent of the Indian GDP, whereas most countries have come up with a stimulus ranging from 5 per cent to 15 per cent of the GDP, for example, Germany has come up with 5 per cent of the GDP, the UK has come up with 5 per cent, the US 11 per cent, Singapore 15 per cent, and New Zealand has with 10 per cent. So in that way they have been much more proactive. The Indian Government should categorise industries into at least three categories that require immediate and best attention. We all hope India will come back winners.
MR Jaishankar will also be a guest panellist in Construction World's on Tuesday, April 14. If you haven't registered yet, do so here.
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