In India, we are seeing a resurgence of commercial activity in the digital domain. Online home sales are now beginning to gain serious traction. Despite the lockdown, top real estate developers have been able to resume at least 15-20% of their business due to increased digital penetration. Existing digital sales capabilities are being ramped up rapidly to sustain operations even during lockdown. Online e-commerce operators like Flipkart and Amazon are already gearing up to start deliveries after the government announced a relaxation for certain enterprises.
“For instance, listed player Godrej Properties reports that they have sold as many as 500 homes (or 17% of their total quarter sales) in the second half of March alone. The company reportedly sold 3000 homes worth Rs. 2,380 crore in the last quarter of FY 2020. Interestingly, the number of homes sold (as well as the value of sold units) was the highest that the company achieved in any quarter of FY 2019-20. Other listed developers will report similar sales figures once they report their quarterly results after the current lockdown extension,” informed Prashant Thakur, Director & Head – Research, Anarock Property Consultants.
Meanwhile, the Southern India Chamber of Commerce & Industry (SICCI) has welcomed the recent Government of Tamil Nadu notification that has consolidated the revised guidelines issued by the Government of India. The notification has clearly stated the need to promote the underlining principle of safety and security and at the same time allow permitted activities. It has given broad guidelines with regard to Standard Operating Procedures for social distancing in offices.
SICCI feels that there is need to restart manufacturing and production to jumpstart the economy. As of now, this is at a standstill and social distancing is the need of the hour. Enterprises can be divided as highly, moderately and least labour intensive. According to SICCI, those with least labour requirement and willing to comply with safety requirements should be allowed to start operations. Industries with moderate labour support can be allowed to function with marginally more than minimum requirement subject to social distancing and other compliances.
Does life take advantage of situations? Does crisis bring opportunities? Do calamities and catastrophes result in better development? In most cases, yes, like how Japan bounced back after the bombings of Hiroshima and Nagasaki. There are many such instances. Covid-19 is no different, except that in this case, the whole world is reeling under the virus attack, where thousands, if not lakhs of people are already dying.
High labour-intensive units should be considered for minimum requirement that would be product/industry specific. So long as the establishment abides by the requirements, they should be given the right to choose their workforce. SICCI suggests that the Government of Tamil Nadu should come out with bold measures and set an example in permitting the functioning of industries. R. Ganapathi, President, SICCI, said, “A joint action committee may be formed inviting industry associations for early resumption of early industrial activities.”
In a major move to boost liquidity in the market, the RBI has announced several additional measures to accelerate the economy and facilitate bank credit flows. Among the various measures announced, the allotment of Rs. 10,000 crore to the National Housing Bank is commendable. It will help provide capital to HFCs and eventually provide major relief to developers battling liquidity issues. Further, the RBI has reduced the reverse repo rates by 25 bps and it now stands at 3.75%.
Anuj Puri, Chairman, Anarock Properties, said, “This is another big step as the rate cut will definitely send out positive signals in the current times and will enable banks to lend even more. Also, in another major relief to developers, the RBI has further extended the date of commencement of commercial operations (DCCO) of project loans for commercial real estate projects which are delayed for reasons beyond the control of promoters. This is indeed a big move and will bring much-needed relief to cash-starved developers.”
While it was widely expected that prices would rise in 2020, the pandemic has set a different tone. Prices will mostly remain stagnant and developers will tread cautiously. Some cash-starved developers with high unsold stock may also consider reducing prices for a short period.
According to Thakur, “The rupee’s depreciation against the US dollar has been a factor of considerable interest for NRIs considering Indian real estate as the most sensible investment option. However, the recent stock market volatility, coupled with the favourable rupee-dollar exchange rate in the time of the coronavirus crisis, present a significant opportunity for NRIs to consider investing in Indian real estate. In fact, a significant portion of NRIs who previously favoured the stock markets will now focus more on real estate.”