Indian real estate went through one of its most challenging phases in 2020 as industries across the globe observed severe constraints in the wake of the COVID-19 crisis. The period witnessed some of the harshest upheavals in the real estate industry in modern times, encompassing even the otherwise robust office market of the country and testing the resilience of the sector to its limits. As 2020 drew to a close, the new year 2021 held renewed hope of revival with a slew of vaccinations announced to be administered. The industry had hardly breathed a sigh of relief with the commencement of the COVID-19 vaccination program before the second wave of the pandemic struck, bringing business activities to a standstill anew. Yet, despite the severity of the second wave, the real estate sector of the country strove to withstand the impact, signifying strong fundamentals ruling the market.
Here are the key highlights of the year:
Cushioning the fall
The fact that the real estate market in the country was able to somewhat ride out the newer adversities brought forth by the second wave pointed towards adherence of several learnings from the previous year. The sector was in a relatively better position in 2021 to handle the situation as most of the systems required were in place, technology playing a major role. From an economic perspective, a few of the indicators, including the GST collections and FDI inflow into the country, kept up confidence in the business environment. Thus, barring the second quarter of the year, the office market showed fair traction, attributable to positive expectations emanating from vaccination drives, increased mobility and the imminent return of employees to work. Institutional investment in real estate, too, saw substantial improvement in 2021, several large deals inked during the year.
Remote working remained unabated
The adoption of Work From Home, intended largely as a short term business continuity measure, continued to be the norm for most companies, especially in the IT/ITeS sector. Going by its acceptance, this concept of remote working holds broader implications in the coming times. The era of remote working had begun, proclaimed many. Yet, the jury could not concur if that were a boon or a bane for the industry, given the various complexities that it brought to the organisation.
Gradual opening up of offices in some, postponement in others
The vaccination drive had opened up expectations regarding resumption of businesses, leading several companies to open their offices and initiating a staggered return of their workforce. The pandemic having put the spotlight firmly on the well-being and sustainability of workspaces, in-house vaccination programs were taken up by most organisations as a part of their return-to-office preparations. However, the imminent threat of a third wave and the rise of the Omicron variant has led many companies’ office-opening plans to be postponed till a later date in 2022.
Preference towards hybrid/flexible work arrangements
If there was any lesson to be learnt from the pandemic in 2020, it was a change in workplace strategy. The advent of the second wave further reinforced this notion, leading organisations to enquire into their employees preferences. With most employees today desiring an equitable balance of remote working and working at office as their preferred workstyle, organisations are presently exploring various models of hybrid/flexible work arrangements that would achieve the objective of accessing as well as retaining a talented workforce.
Warehousing and logistics sector warms up to tech-led innovations
The pandemic not only brought the warehousing and logistics sector into the limelight but also led it to get recognised as an ‘essential services’ sector – one of the crucial lifelines that the country was reliant on. With customer bases accelerating at a rapid pace, warehouses enabled with automation and smart technology has become quite vital to achieve sustainable business growth. Implying cognizance, warehousing companies today are prepared to spend a substantial amount on technological innovations, thus boding well for the automation market in the sector.
Residential market on a stable trajectory while retail and hospitality continues to remain subdued
The residential market of the country has risen out of its slump and the combined impact of the pandemic-induced insecurity and increased need for home ownership has led to healthy sales and new launches. Buoyed by low home loan interest rates, stamp duty reductions in a few key markets and with various measures announced by the government for providing impetus to the sector, the market witnessed a moderate revival in 2021. However, the retail and hospitality sector continued to struggle during the year, seeing some movement towards the later part of the year with betterment of the economy.
The COVID-19 crisis has, thus, set in motion several necessary changes in the industry, compelling businesses to deliberate over adopting alternative avenues and more efficient ways of operations that would be agile and future-ready. Despite the various pandemic-led tribulations during the year, there is no denying the fact that the real estate industry of the country holds the potential to bounce back, sooner rather than later. With large-scale vaccinations underway and the economy gradually improving, we envisage the worst to have passed and hope to witness measured revival in the forthcoming period, given that the threat of the Omicron variant does not take an ominous toll.