The online world is all about interaction. The reason why social platforms grew so quickly is that they appeal to the need of communicating with others.
We at RICS SBE had a live Q/A session with Prof. Amol Shimpi (Associate Dean & Director, School of Real Estate & Infrastructure) allowing us direct interaction with our audience and addressing their concerns real time. Below given are a few questions that were raised and have been answered by our expert faculty and Associate Dean and Director – Prof. Amol Shimpi:
1. The lockdown started in late March and since then, the government is slowly opening all the activities. How has this lockdown and COVID-19 impacted Real Estate and Construction sector?
Construction has been slow and a workforce up to 20-30% is available on site. However, a lot of planning and detailing development took place during this period. Once the lockdown is completely over and transportation links are restored, we would see a huge boost in construction and infrastructure activities. If you look sector-wise in real estate, industrial and logistics have been least affected. It is expected to bounce back and register more growth than last year. There are multiple job opportunities also floating in this sector.
- Commercial real estate appears to be affected quite a lot as offices are still not allowed to operate at full capacity and WFH trend has caught on. But, we can conclusively say that this is a temporary phenomenon and corporate will have to switch to WFO as soon as public transportation is restored, and lockdown is lifted. Productivity is getting seriously affected. A blended version of WFH, work from head-office and work from smaller offices where employees reside, is likely to take over as a permanent trend. This would lead to demand in office space but in a different way.
- Retail Real Estate is affected hugely, but the space is likely to come back with changed priorities. From mere shopping destinations, the malls are likely to bounce back as complete Family Entertainment Destinations and organized retail real estate players are likely to be benefitted the most. There are already signs of large buyouts in this domain by institutional investors and REITs are likely to hit the street in this space.
- Residential Real Estate has been passing through an extended phase of low sales and pressure is laid on the sale pricing. However, the customers have realized that a house with good amenities and facilities is an integral component of our survival. Demand is being seen in plotted development, villas and townships which are well planned and developed with integrated workplaces, retail, sports and recreation facilities.
2. How is Commercial Real Estate looking now since most of the workforce is still working from home? What trends do we expect in the post-COVID-19 era?
As mentioned earlier, the WFH component is not likely to be more than 20-30% at its best. The corporate has realized that the productivity gets affected, decisions get delayed and overall experience is quite strenuous. Most of the houses where their employees live are not geared for peaceful work from home scenario. The corporate sector has realized this thought and are revising their plans.
- Rationalization in office space requirements and the COVID-19 health and hygiene guidelines have led to a lot of refurbishment projects which would be executed in the last six months of the financial year. The rates for commercial real estate are quite attractive at present. The developers are eager to strike the deal enticing corporate with long term view to take their call on office real estate. Post COVID-19, more outsourcing is likely to happen in India and practical approach for the corporate is to take over space, so that they can lock the rates for the next nine years.
- Overall, it is believed that the performance of this sector would surprise the naysayers at the end of the financial year with a remarkable comeback. Plenty of job opportunities would be available in Corporate Real Estate, Commercial transactions, Facility Management and fit-out management as a result of this dramatic revival in the sector.
3. Contrary to what most people believe, according to a recent survey by JLL, over 50% of consumers want to buy a new home in the next six months. What is your take on this? Do we expect Real Estate to bounce back quicker than expected?
As mentioned earlier, Residential Accommodation is one of the three primary needs. Its importance as a dwelling space and as a safe and sound investment has been highlighted during the pandemic. The customers are taking a long and hard look at their strategy and a clear shift towards owning the accommodation has taken place.
- The customers staying in old quarters of the city, in the old and dilapidated buildings, have increased their efforts to find a new place and get shifted at the earliest. No one can predict the exact timelines for the pandemic to get over or the possible recurrence; the best approach would be to get shifted to a place where you and your family would feel safe and protected.
- I believe that home loan interest rates are at an all-time low and real estate sector’s enhanced preference as a safe investment would prompt more and more buyers to take their calls. The festive season is around the corner and we have started seeing the offers making rounds and site visits even during the restrictions. Therefore, I believe that the real estate sector is likely to make a quick turnaround than expected.
4. Home loan interest rates are at their lowest right now. Will we see an uptick in more people taking interest in buying a home?
Housing loan interest has already veered to an all-time low level. The income tax benefits for the affordable housing segment has also been a positive factor. More and more home loans will be taken in the remaining six months of the year. One more factor would be- additional loan accounts be created, because the customers planning to pay on their own would be required to seek assistance.
5. In the post-COVID-19 era, what technologies should the industry be focusing on? What disruptions would we see happening?
There would be a pressure on manpower supply for the next six months to two years. The automation which we were talking about for a long time would advance.
- Right from land surveying, construction management, fit-out management, sales, marketing and facility management, it would be everywhere. There would be a serious cost-benefit analysis before embracing a technology, but it would be hard to decelerate the pace of technology-assisted built environment practices.
- Right from Artificial Intelligence, Virtual/ Augmented Reality, Robotics, Data Analytics to Sophisticated ERP systems technology would be everywhere and there would be no option but to start planning to embrace.
- Major disruptions are likely to take place in transactions, material procurement and facility management space. The valuation will also be not far behind.
6. A question that most people here would have is, how do all these trends affect job roles in the industry? Who is likely to succeed in the career?
My opinion is different here. Built Environment Industry needs to have an interaction with the stakeholders before reaching any conclusion. Technology can only assist or speed up the process at best but cannot replace site visits, team meetings and inspections.
- Unlike other industries where automation have led to widespread job losses, built environment industry would not have a complete wipe-out of traditional job roles but a lot of modifications would have to be brought by the existing workforce. They will have to unlearn, learn and relearn many things and would have to enrich the personal interactions by being techno-savvy without losing the personal touch in the process.
7. Recently, many opinions have emerged that aspirants looking for a career should take up study now. Is it wise to take up study now?
By all means, you should take up the studies. A paradigm shift is expected to take place in the manner we do business.
- Traditional roles and positions would have changed completely in the post-pandemic business era. If you do not want to turn dinosaurs of the tech-driven era, the time is ripe to take the education, preferably through internationally accredited programs, enhance your skills, competencies and knowledge, earn a professional qualification or two, such as MRICS, improve your adjustment quotient and get valuable experience through internships and capstone project research. So, whenever the tide turns, the steering wheel of the ship is in your hand instead of getting offloaded as extra baggage.
- It is completely up to you whether you want to become captain of the ship or would like to be offloaded as a passenger no one wants.
Wishing you the best for your future.
About RICS SBE:
RICS School of Built Environment (RICS SBE), Amity University is an industry led academic institution which delivers specialized undergraduate and postgraduate programs to students ambitious to work in real estate, construction and infrastructure sector. It also aids as a hub for research and development of technical proficiency in built environment.