Concerns about risk factors of the market and shrinking incomes have led to a sluggish demand in the real estate sector. Ketan Sengupta, CEO, Bengal Peerless spoke to BE's Kuntala Sarkar, regarding how the real estate sector is performing during pandemic.
Q. Considering sinking family earnings due to the pandemic, are you planning to focus more on middle income or affordable real estate projects?
A. Currently, we have a project like Avidipta-II which is catering all three segments like LIG, MIG & HIG. Whereas the LIG and MIG segments have already been sold out through lottery prior to the pandemic, our focus is now to sell our HIG inventories.
Q. How do you observe the centre and the state government's role to aid the sector as the small-scale players are in real distress?
A. There are tough challenges for small-scale developers as the market is not at all conducive. The low home loan interest rate proposed by the RBI helped customers to increase their real estate asset portfolio whereas the additional nine months to complete the projects as per RERA guidelines proposed a big relief for the developers. The government should work on an incentive scheme that will be aimed at bringing back the market segment. Banks should also offer easy construction finance to small scale players who are in distress.
Q. Please share insights about the demand scenario of pre-developed projects? Are you planning for any acquisition from stressed developers?
A. New launches are getting delayed due to the pandemic and the market is slowly reviving. The Covid-19 pandemic has accelerated demand for houses across all segments in Kolkata due to reverse migration. Buyers are now preferring smart homes and integrated townships. Companies have to ensure their brands are properly positioned in digital platforms which are the foundation for long lasting relationships with customers. As Bengal Peerless is a joint sector company with the West Bengal Housing Board, we cannot form any acquisition with other developers.
Q. Real estate developers in West Bengal are being given an additional nine months period without any penalty for completing projects under HIRA. How is that helping Bengal Peerless?
A. This will not only help Bengal Peerless but will give a boost to this sector as the lockdown had led to the stoppage of construction works and related activities for over two months. Moreover, unavailability of full-strength of labourers and disruption in the raw material supply chains delayed the process further. The adverse impact on inflows could further affect developers’ ability to execute projects on time. The additional time of nine months will give developers a sense of relief to make up for the delay and avoid penalty.
Q. How is Bengal Peerless concerned about the present performance of the luxury real estate sector in Bengal?
A. Luxury real estate is a niche sector. We are offering world-class amenities and state-of-the-art design and specifications to our customers. Recently we have engaged Sourav Ganguly as the brand ambassador of Avidipta-II. Things are slowly falling into place and we are confident of giving on-time delivery, creating customer delight by adhering to the culture and values of Bengal Peerless.
Q. Due to the lockdown, a section of companies is switching to work from home and businesses are preferring online modes. Do you think it will leave a mark in the commercial real estate sector?
A. Work from home and online business has some impact on the commercial real estate but not all businesses can run entirely in the WFH and online modes in the long run. Demand remains intact, although decision-making for the corporate real estate sector could face delays due to travel restrictions and as businesses scramble to cope with the larger economic impact. Commercial real estate space planning in new supply will be important as to maintain social distancing among staff, the requirement of space per person would be more than earlier. Architects and builders will have to look into this.
Q. Do you think 2021 can be a pull back or retreat for the sector? What will be your marketing strategy for the current and new projects?
A. The demand for residential real estate could show signs of pick-up in 6-12 months - once the pandemic settles. With unlocking of various activities, this industry will take about a year to get back on its feet. The real estate sector has to understand the irreversible changes in consumer values, habits, consumption patterns, social behaviours and preferences.
We will focus on Avidipta-II as our current project and we are planning to streamline disciplined approaches to consumer segmentation and move to faster marketing and communications agility through digital marketing. In the next FY, we can focus on new sales channels and would be extracting value from the existing innovations to drive product positioning. Cash flow management will be the key. We need to keep our morale high for the same.