The ongoing COVID-19 pandemic is one of the largest factors altering the world, in recent times. In response, businesses across sectors are likely to innovate and see a new recharged way of doing business. In such a scenario, the real estate sector is undergoing changes in demand pattern, opening up avenues for opportunities and rejuvenation. To make sense of what is happening, RICS along with Colliers International hosted a webinar that brought together experts from various fields of real estate. The webinar highlighted strategies and opportunities sensed by leaders across industries in changing times like now, and in the world after COVID-19.
In this context, Arpit Mehrotra, Managing Director, Office Services (South India) shares key takeaways from the session and presents his views on the current and near-term impact of the covid-19 situation on the real estate sector.
- Office Market - In the short-term, consolidation of flexible space sector, re-gearing of lease terms and delayed decision making appear to be the key trends. The market fundamentals will remain unaffected in long-run.
- Retail Market - The retail sector has been deeply impacted as their operations came to complete halt due to nationwide lockdown of malls, shopping complex, multiplexes, etc. The sector might see a dynamic shift from the current fixed plus revenue share models to revenue-share deals, being structured in majority in the near future.
- Residential Market- With social distancing becoming a new normal and academic session under scanner, the budding sectors of co-living and student housing may take a backseat, resulitng in slower growth rates than predicted earlier.
- Economic Effect - By the end of lockdown, the ecosystem shall not return to normal immediately, it might take longer period for a vaccine to be developed. tested, administered and then provided to a large section of the population. The real economic recovery could take long to achieve the same level of output prevailing before the covid-19 crisis.
- Post Lockdown Scenario - After lockdown ends, immediate resumption of work with marginal workforce guidelines, standard operating procedures needs to be in place. The empathy to new work environment.
- Employee well-being - The focus will be on wellness of the employees, contract workers and vendors. An important aspect is to maintain mental well-being of employees, and the same can be done via conducting regular workshops for employees and training them on how to take care themselves in the time of crisis.
- Job Security - Clear communication at regular intervals is the need of the hour, in order to make the employees feel safe and secure. HR engagement activities shall hold an importance more than ever to keep employees motivated and to stay in touch with the organisation. Conserving talent and cash is key during these times.
- Business Continuity Planning (BCP) - BCP is critical activity to be undertaken by an organisation. It involves investing into resources at present in order to mitigate loss that could be caused in unforeseen future during times of crisis. It is advisable to do trials of BCP plan in different situation as old or current BCP plan may have loopholes. Thus, identification and rectification of these loopholes must be addressed well in time. Easy tools should be planned for business management.
- Data Security - While employees work from home, it is important to enhance security via end point protection. Proper training should be provided to employees to ensure data security and carry the same sense of responsibility while they work at home.
- Relief from Landlords - Landlords are acting quick in passing on the benefits to the tenants in countries where relaxation policies are being put in place by the govt. In India, it is still under work in progress, meanwhile, landlords have assured tenants that there shall be no interruption in building operations and server operations, enabling work from home for their tenants.
- Lease re-gearing - In coming months, we expect the tenants pushing for the inclusion of the word ‘pandemic/epidemic’ in force majeure clauses while deals are being structured.
- Capex investment modify existing layouts - Cost implications will largely depend on the current layout. The organisations already providing ample space to the employee shall not face a huge impact. In existing setups, we might not see immediate changes, however, ensuring proper space distribution will be a part of new space design and layout.
- Future opportunities for India - India is and will be a preferred destination for services technology firms. In order to attract more firms and achieve the best out of this situation, the govt. should help in infrastructure development and ease of doing business. The manufacturing sector and cyber security firms will be on high focus.
- RESET or RECHARGE of the commercial real estate sector - The current situation does poses challenges, but also provides a silver lining with several opportunities. If adequate steps are taken on timely basis, it can set India on the path of exponential growth trajectory. The uncertainty around the current situation makes it too early to ascertain the exact impact on the economy & future.
Do watch the recording of the webinar here.