The key to this industry's early recovery is technology playing a vital role in reaching out to customers
The Indian real estate industry was on the cusp of a transformation in early 2020. Having undergone several structural reforms in the preceding years, the implementation of the Real Estate (Regulation and Development) Act (RERA) was finally beginning to bear fruit and fulfill the demand for increased transparency in the sector. The Indian government’s call to provide ‘Housing for All’ had also brought affordable housing to the limelight, boosting demand for the previously suppressed sector.
That was until COVID-19 hit India.
As cities went into lockdowns to combat the pandemic, the real estate industry, much like all others, was taken by surprise. Ironically, in the months that followed, the sector managed to accomplish a lot of things that would have otherwise taken time. It found support in proactive government initiatives, the finance industry to provide contactless financing to home-buyers, and renewed NRI interest.
But the key to its early recovery was the industry’s quick adjustment to the post-COVID world, with technology playing a key role in reaching new customers. As it braved the many curveballs presented by the pandemic, the real estate industry in India created trends that will potentially define its future.
The switch from physical to digital
Before the pandemic, it was unlikely for a prospective home buyer or tenant to finalize a property without a physical visit. People changing cities would even look for temporary accommodations until they found a house that fit their bill. But COVID-19 ushered in a wave of video tours. The industry quickly realized that this was the right time to give its customers the chance to digitize this process. From making apartment listings accessible to arranging video calls with property owners and even grooming relationship managers to address any concerns home-seekers might have about a property, the industry proactively helped customers ease into the digital shift.
This trend, gaining the most prevalence in Bangalore, Chennai, Mumbai, Hyderabad, Chennai, Pune, and Delhi-NCR, has allowed buyers and tenants to shortlist properties online, without the need to visit multiple properties. Some online real estate platforms and society management apps have introduced payment gateways to help tenants pay their rent and maintenance fees in a contactless manner, to reduce the risk of accidental transmission.
To the industry’s surprise, many home-seekers quickly warmed up to the idea of online video walkthroughs. Within the first two months of lockdowns, for instance, NoBroker.com reported 200 transaction closures in which tenants finalized their homes without an actual property visit. Other digital tools, such as AR/VR-based virtual property visits, also found greater traction with both consumers and property developers.
Moving with the demand
A crucial factor behind the industry’s successful navigation of the pandemic was its ability to identify shifts in demand and adapt to them. For example, it became clear early-on that home-seekers, in search of safe and hygienic homes, were choosing shared accommodations over PGs. So real estate players ramped up co-living spaces that would not only be safer but would also provide additional amenities like a kitchen and laundry. As the lockdown propelled people to spend more time online, especially consuming online video content, real estate’s marketing arm shifted the weight of its focus to the internet to find, reach, and engage prospective customers.
The most crucial shift in demand came from commercial to residential properties. COVID-19 turned homeownership into a priority in light of the challenges posed by months-long lockdowns. To reach these customers, developers identified properties that not only offered comfortable living but also incorporated work-from-home spaces. They also explored leasing and financing options, like 10:90 and 20:80 payments plans, that would boost buying confidence in homebuyers and help them transition from interest to purchase intent.
For NRI buyers, who were also looking for residential properties after COVID-related uncertainties impacted their stay in foreign countries, the real estate industry emerged as a reliable investment arena. Developers offered these buyers luxury homes with world-class amenities at affordable prices, while real-estate platforms employed AR/VR-powered tools to provide virtual tours and finalize deals online.
In keeping with the changing winds of demand, developers also set their eyes on South India and tier-2 cities for both domestic and NRI home buyers. The pandemic forced a large chunk of India’s organized workforce to migrate back to second-tier cities like Pune, Cochin, Mangalore, and the outskirts of tier-I cities. Coupled with government schemes like the Pradhan Mantri Awas Yojana and the economic uncertainties resulting from COVID-19, the circumstances boosted demand for affordable housing options in these cities. Timely attention to these areas has unlocked the benefits of subsidies, tax benefits, and institutional funding for the real estate industry.
Boosting business models with end-to-end services
One of the more innovative steps taken by new-age players in the real estate sector was to digitize beyond the scope of property discovery and rent/purchase, tweaking their business models with offerings that provided end-to-end services to their consumers. Some real-estate players, for example, launched comprehensive property management services for homeowners who had properties in cities other than the one they were residing in. These services not only helped them find new tenants and prepare rent agreements but also proved essential in tackling critical tasks like timely inspections, repair, and maintenance. Some of these platforms even provided rental guarantees, where homeowners would continue to receive rents even when their property remained vacant.
Similarly, for new home buyers and renters, proptech platforms provided services like packers & movers, home cleaning, painting and repairs, and even credit financing. Given the uncertainties presented by the pandemic, these steps proved to be a game-changer for both domestic and NRI home seekers.
For the Indian real estate sector, expected to be worth $650 billion in 2040, COVID-related challenges proved to be an inflection point. Tackling them proved that flexible businesses, which look for creative and tech-driven strategies to tackle challenges and identify the needs of their customers, can get past and even thrive despite unpredictable and unfavorable market conditions. With pre-COVID data indicating a housing shortage of about 25 million units, opportunities are ripe for businesses that are ready to adapt with time.
The author is the Founder and CEO at NoBroker.com