Warren Buffett once said that it is wise for investors to be “Fearful when others are greedy, and greedy when others are fearful.”
This statement is somewhat of a contrarian view on current real estate markets but will prove right in coming future for real estate.
Had any other sector except essential goods and Digital marketing done extra-ordinary sales?
Has any one in hotel & tourism industry done turnover ?
Has textile or garment industry prospered in last 5 months ?
Has jewellery industry in huge demand due to Increase in gold rates ?
Has automobile industry exceeded sales during Covid-19 ?
This reminds the famous quote by Franklin D Roosevelt:
“Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full and managed with reasonable care, it is about the safest investment in the world.”
Then why everyone is keen and criticising real estate industry about no sales and prices fall ?
As per the quote of Franklin Roosevelt, what can be the reason for sales in real Estate & due to Covid-19 has reason for buying home changed?
- Every person wants to buy bigger home than what they currently live in. Post Covid-19, had that emotion changed ?
- On the contrary people have realised the importance of home and specially bigger home.
- Has Covid-19, reduced the population in India.
- Increase in population only creates demand in real estate for new home or bigger home.
- Also due to Covid-19, have people started living in joint family ?
- Separation of family is the main reason for increase in demand of house.
There are various such reasons that will keep the demand of homes intact. However due to financial condition home buyers will postpone their buying of home but not cancel it.
Due to Covid-19, Hotel or tourism industry have lost their business forever but buying of home cannot be cancelled but only got postponed.
During lockdown, where no other business sales figures are coming only real estate industry sales & rentals have been registered.
As per quoted by Abhishek Khandelwal from Propstack, compared to Jan-Feb 2020 sales when there was no lockdown, there has been ——% of sales in month of July 2020 when there was partial lockdown and people are still under stress.
Home buying is one of the biggest emotional buying of a person in his lifetime and it still happens during lockdown indicates that Real Estate will surely be on track in near future.
Home buying will not happen only due to reduction in prices but it will happen by gaining trust.
In last few years, the trust was one of the main factor due to which the home buyers remained away from the under construction projects and now looking only for ready to move in homes.
Many Developers themselves have to be blamed for this situation, where once customers & investors trusted blindly and booked the homes from builders on Bhoomi Pujan and all homes used to get booked.
But many builders misused the funds and delayed the project due to which the trust of home buyers is missing today.
However, there are no measures or any incentives expected from Government and the demand of sales will be extremely selective, developers have to come with some innovative ideas to regain the trust of Homebuyers.
- The developer should adhere to the quality & delivery timelines.
- Developer should not only look the quality of construction but more green homes, better living standard homes.
- As the home buying is emotional decision, the developer themselves will have to traditionally interact and deal with the home buyer and their family.
- Post Covid developers will have to adopt mixture of virtual reality and personal touch with prospective buyers.
- Developer should not depend solely on sales and marketing team and check whether any over commitments are not done by then to make sales happen.
- It’s harder to get the finances from banks and NBFCs, hence limited projects to be executed and concentrate on them.
- As quoted by Suchit Punise of Modulex, Construction industry is the only industry in last decade which has not changed drastically from its traditional style.
Factory built modern homes will be the future in India and every developer shall look as unique feature for their project.
- Modern homes are built offsite, thus reducing pollution at site.
- 90% of the construction is done at the factory.
- Short built time, 24 storey building constructed, assembled & finished in approx 8 months.
- Fixed cost and time guarantee
- No dependency on migrant labours
- Earthquake resistant, sound proof floors & 30% reduced maintenance cost with 60 years guarantee.
The real estate future is bright but the home builders will have to come up with innovative ideas gain the trust of all home buyers.
This is the right time for buyers as all are fearful but at same time buyer should also be cautious and not become greedy on price, not compromise on quality and look for proper agencies to do due diligence before investing.
Nayan Dedhia
MD, Toughcons SwaNirman
Self Redevelopment Coach
www.societyselfredevelopment.com