Real estate could not have been at a worse spot. Cyclically it followed a course of booms and troughs, but now the COVID-19  or Coronavirus pandemic has been a multi whammy of sorts. There is unsold inventory yet to be taken off the shelves, there is an issue of project delays , there are over leveraged balance sheets, and there is a whole rising stock of affordable housing. Furthermore, the commercial real estate area is facing the worst onslaught of COVID-19 with malls, theatres, offices, under lockdown  and the prospects of attracting footfalls seems a pipedream. Construction World conducted another successful webinar on ‘The Real Estate Challenge’ , powered by JSW Cement , which witnessed great success with over 600 attendees tuning in to hear what our esteemed panellists have to say on India’s way forward in real estate. The webinar began with presenter Pratap Padode, Editor-in-Chief, Construction World and President, FIRST Construction Council, welcoming the guest panellists to the session. The panellists included industry stalwarts – MR Jaishankar, Chairman & Managing Director, Brigade Group; Sangeeta Prasad, Managing Director & CEO, Mahindra Lifespaces; Ramesh Nair, CEO & Country Head, JLL India; and Dhruv Agarwala, Group CEO - PropTiger.com, Housing.com, Makaan.com. The scenario “Real estate was suffering even before COVID-19,” said Pratap Padode, Editor-in-Chief, Construction World and President, FIRST Construction Council. “The government had announced a rescue package of Rs 250 billion to revive stalled or unfinished projects.” Speaking on how this package has that turned out, said Ramesh Nair, CEO & Country Head, JLL India, “Approximately 4.5 lakh units have been stalled. In terms of the rescue package, the government has done a good job and has also started disbursing the amount. However, the government also needs to start looking at a one-time settlement, like we did in 2008. Second is to have a subsidy like we have one for affordable housing projects. Thirdly, in terms of the Alternate Investment Fund (AIF), even private players should be allowed for the last mile funding. I think then there will be a lot more capital coming in and lesser stalled projects.” Real estate prices Speaking on price change in real estate, Dhruv Agarwala, Group CEO, PropTiger.com, Housing.com, Makaan.com, shared, “Prices for residential over the past five years have more or less remained flat. Further, with falling interest rates, home loan rates are at a multi-year low. We have also seen wage inflation at about 8-9 per cent. What we saw in the quarter – ended December 31,019, was a fall of residential sales by 30 per cent and launches decline by 44 per cent. So, there has not been an uptick of sales as expected. Completion of stalled projects would bring confidence in the market.” Commenting on interest rates for real estate, said MR Jaishankar, Chairman & Managing Director, Brigade Group, “As far as business is concerned for real estate developers, the rates will not change because it is related to NCLR rates. For the developer to get benefits, it depends on the banks and institutions. Banks should reduce interest rates – it is much required. Last year has been good for us at Brigade – in residential sales, leasing, hotels as well as retail malls. We have seen a 60-per-cent jump in our sales in FY2020 as compared to FY2019. We are primarily focused on south India and we need to see what the coming year is going to be.” Adding further, said Sangeeta Prasad, Managing Director & CEO, Mahindra Lifespaces, “The last few years have shown us that the market is determined by customers and not by us developers. Buyer confidence is not only based on pricing, it is also based on market macro economics. Residential prices have largely remained flat. Some states have done corrections in Ready Reckoner prices. But let’s also look at the supply chain level. The prices in making a house, a building has not gone down. So, there are many more levers required other than just pricing.” Further added Nair, “If you look at 2009-10, it was a sellers’ market. Today, it is a buyers’ market. In 2008-09 the products were largely two-bedroom, three-bedroom; today, everyone is building what the market wants. Although there has been a market crisis in real estate for the past five years, and now with COVID-19, I am still bullish; although I don’t see prices correcting by 25-30 per cent.” In agreement, added Jaishankar, “It is only wishful thinking to expect a 30-per-cent drop in prices. It may only happen in Delhi-NCR and some parts of Mumbai. While GST and RERA are welcome steps, it has had an impact on developers – developers have seen inflation, we are in single-digit profits. Going forward, we don’t know what the situation is going to be. In fact, we were going to increase the prices in April, but now we have to look into it.” Commencement of construction activities The next few days are going to be critical in terms of safety, asserted Prasad. “There is a selective start. We as developers will have to start construction as soon as possible. Many of our sites have workers whom we are taking care of. The only worry is that all of us want to be with our dear ones during such a crisis. And our fear is of the workers leaving the construction sites once the lockdown is uplifted to go to their villages. We also need to see how the supply side works in the next few days, and whether cement and other materials are being delivered to our sites. We definitely want to start construction – it will only help us.” In complete agreement on the recommencement of construction, added Jaishankar, “We developers are willing to restart work. At Brigade, we have 9,500 workmen at various project sites. We don’t know after the lockdown is lifted how many will go back to their villages, so we will have to see what happens. November to April is called the golden period of construction, and this time we have already lost one and a half months of it. Also, the supply chain is equally important – we need to get steel and various other materials. In that sense, about 70-80 per cent sectors need to be working because construction is a sector where so many sectors are related to it. So we also need to look at the supply side.” Role of technology Speaking about how technology will play a role post the COVID crisis, Agarwala averred, “One thing I see during the crisis and post the crisis is a fundamental shift in consumer preference. Thousands or millions of us are using technology during this crisis. Even groceries or other services who had not adopted technology earlier have now become adopters. We are going to see a fundamental shift in the way businesses have adopted technology and a shift in business model. Many of us are if we can be remote even after the lockdown is lifted. This fundamental shift in consumer behaviour will see a shift in business models and in how real estate functions.” Owning a home better than renting? The most important concern in the next few months is going to be fear of loss and salary cut. “While renting is generally seen as a preference, considering times like these where one has to be at home, it increases the thinking of buying a home. These are times when one needs to look at owning a home,” said Nair. Home is our safe haven, added Prasad. “Our home is also going to contribute to what you do. The way the home will be designed post-COVID – considering I need my personal space, my family space and my professional space – will be so different. The use of technology and design will be required. Take for instance, the balcony in home – which had become so costly to include in a development because of FSI, will now be thought of differently – because now you would want to go and look out at your balcony during a lockdown like this. So, the office-home juxtaposition will determine how a space design will shape up post-COVID.” Speaking about working from home, Jaishankar believes that while he does not mind working from home one day a week after the lockdown, “life is not only about working!” he exclaimed. “We are social animals – we need to interact with colleagues, one also learns a lot when interacting with people. I believe after the lockdown is lifted, 100 per cent of the people will move to office. If my engineers work from home, my sites will not work!” On a concluding note, Padode thanked the esteemed panellists for being part of this extremely successful webinar on the subject. Also check our webinar on ‘The Architect Challenge’ here.  Also check our webinar on ‘Infrastructure: National Infrastructure Pipeline – the Rs 102 trillion opportunity’ here.  Stay tuned for Construction World’s FREE webinars. View our complete webinar calendar and previous webinars here.