Post Covid-19 Trends In The Commercial Real Estate Sector

Pankaj Kr. Jain, Director, KW GroupHaving completed his BE from Marathwada Institute of Technology, Pankaj has been associated with KW Group for over 21 years now.

The real estate sector is preparing itself with the new avenues and opportunities as the unlock phase has started across the country. According to Savills report, post COVID-19, there would be a fresh start for real estate sector and the commercial segment is expected to bounce back rapidly once lockdown is lifted. With the government’s support and their series of initiatives, the Indian economy will propel for sure. This pandemic has not only affected the health but also has severely impacted all the industries because it was a total break for all of us. The lockdown impact was witnessed in every industry and the real estate sector too had no exemption because constructions were stopped at the project sites and so were the sales. Slowly but steadily, it is now coming back on track.

The government’s support of extension of deadline for completion of real estate projects and the Reserve Bank of India’s decision to allow moratorium on all loans with deferment in interest payment on these loans for six months are life-support relief for the real estate sector. Moreover, another cut in the reverse repo rate by 40 bps from 3.75 per cent to 3.35 per cent will further inject liquidity into the economy. The commercial realty sector could possibly witness the following trends post COVID-19.

• Social distancing has now become necessity since it is one of the best preventive solutions for the ongoing pandemic. Today, every business sector have comes up with new norms for safety reasons. Companies are now required spacious offices or work place to follow social distancing. Presently all firms operate on maximum density. Offices will have to operate at 30 to 50% density to adhere to the social
distancing guideline. The new safety norms would result in de-clustering of large work space. Even work from home cannot replace the importance and necessity of modern high quality work places.

• With the expansion spree, the IT/ITeS companies could possibly go for rationalization of manpower and optimize their real estate portfolios in various cities and metros.

• Technology has even helped to evolve the real estate because of wide usage and reach. It has made very easy for the investors to start their business right from virtual tours to e-registering the properties.

Post COVID, the demand for commercial space, especially the retail segment, will undergo a massive change

• People are investing more and more in the commercial properties because today is the era of the entrepreneurship and owing an own business. The expansion would increase considerably because of the remarkable commercial spaces in the peripheral areas. The design and quality have set new standards, meeting all the demands of commercial real estate. It has further led to the movement of businesses and employment centers, townships with mixed developments, etc, across all the areas.

• Post COVID, the demand for commercial space especially the retail segment will undergo a massive change. There will be high demand of common spaces with open sky and independent access to shops. The shopping centers with own air-conditioning and maintenance would be preferred.

• Travel will not be an option for few days to celebrate the special days so malls will not regain their focus and momentum till time unknown. People with high disposable income will focus more on entertain and recreational activities in high street retail shopping centers.

• As NRI’s are coming back to India, there would be possible increase in terms of investment for new business avenues. Various people have migrated to hometown with no intentions to make a comeback to metro cities. People with businesses will definitely try to set up their business in the hometown as they would want to be with their loved ones. Such demands were already on a rise from a while and post COVID crisis, it is likely to move further. NRIs and HNIs too would start investing more in commercial real estate after the pandemic is over. The primary reason being the interest rates are at the lowest, leading to real estate becoming a very attractive proposition.

Investors will also continue to invest with regards to new trends. Due to this investment, there would be increase in development of suburban hubs which offer a balance of restaurants, retail, entertainment, etc, encouraging for more of physical and social distancing. There is a very high permutation for tremendous investment in commercial real estate sector post-COVID-19.