Top real estate developers see more consolidation coming in 2021

Although residential sales faced a major set back in Q2, they made a comeback with help of pent up demand.

Top real estate developers believe that the year 2021 will be a year of consolidation and the premium segment will emerge as a strong segment for them.

Although residential sales faced a major set back in Q2, they made a comeback with help of pent up demand.

“Year 2021 will be the year of consolidation of demand towards financially stable developers with a good track record and quality projects.

"We also believe that “accessible Luxury” will emerge wherein our projects will offer an aspirational lifestyle that will be within the reach of a larger number of prospective home buyers,” said Vikas Oberoi, chairman of Oberoi Realty.

He said that the company’s major projects are getting ready for delivery in the next one to two years.

The company is also launching Phase 3 Goregaon in January followed by Thane in February or early March.

“We have been very prudent with our land buying and have managed to keep our leverage amongst the lowest in the industry.

"This prudence is paying us in times when most companies are struggling to keep afloat,” Oberoi said.

Mohit Malhotra, managing director of Godrej Properties, also expects the ongoing consolidation in the industry to pick up significant pace in 2021.

On the product and customer preference front, he expects some fundamental shifts on account of altered lifestyle possibilities for customers (as a result of the Covid-19 pandemic) such as preference for larger houses, higher demand in peripheral micro markets of cities and a premium for larger well-managed developments with superior amenities.

“We hope to continue with our growth momentum in 2021 and have been making continued efforts towards business development during the past 9 months. We expect a far more resilient demand in FY21 as we put pandemic woes behind us and the pace of consolidation in the industry is also set to pick up further," Malhotra said.

Many in the industry believe that pent up demand in the market will drive sales of residential developers for a few more quarters.

Home sales have fallen 50 per cent in the 2020 on a yearly basis due to the pandemic and the prolonged slowdown.

“This recovery is expected to continue in the next few quarters fuelled by affordability (attractive pricing, lower interest rates) and a reinforced desire to own a house and renewed interest from certain buyer segments such as NRIs,” said Ramesh Nair, CEO and country head at JLL.

Changing to the new normal

Sanjay Dutt, managing director & CEO, Tata Realty & Infrastructure at Tata Realty, said the company is already adapting to changes in consumer behaviour and new trends, and is well-positioned for success in a post-pandemic world.

“Digital launches of projects, virtual online tours and detailed explanations to customer queries via call center executives are just some of the ways we are trying to bring up the homebuyer sentiment.

"Our business focus would be to incorporate tangible, meaningful changes in our residential products and commercial offerings, further enhancing the elements of safety and wellness,” Dutt said.

He added that the company is committed to completing all 20 projects on time or earlier.

Niranjan Hiranandani, chairman at Hiranandani Communities, said, "The sales momentum will continue for the next year as demand for owned houses and also larger apartments will garner traction.

"The young millennial home seekers turn to be the first time home buyers with requirements of of safety, security and stability.

"We also observe the trend of upgrading home buyers to luxury and spacious apartments to accommodate the new normal routine of work or study from home that needs an additional flexi–space."

Hiranandani said for the company the new age home buyer’s requirements will continue to take centre-stage through 2021.

“Like other developers in the industry, we too, will focus on features that enhance home automation in the new design which embeds technology-plus lifestyles.

"So, an FTTP server for uninterrupted internet supply, power back-up generator set and smart security spaces/ car parking spaces will continue to be important in on-going and future projects,” Hiranandani said.

Trends which took the centrestage through 2020 and will continue in 2021 include residential realty reflecting demand for extra flexi space to accommodate the new normal, something which the Hiranandani Group has been providing, he said.

Also, demand for ‘business centers’ to meet ‘work from remote spaces’, which is being implemented in existing projects and factored in to projects on the drawing board, he added.

Bengaluru-based Puravankara is also going strong on its launches.

“For FY21, we are launching 11 projects, out of which four have already been launched.

"These 11 projects include 6 under the Puravankara luxury brand and 5 under the Provident affordable housing brand,” said Ashish Puravankara, managing director of the company.

Recently, the company partnered with IFC and IFC Emerging Asia Fund (EAF) and both the organisations will be investing $76 million towards the development of four residential projects under our Provident brand.

Two of these four projects are planned in Kochi and Bengaluru with a saleable area of 4.5 million sf/ft.

About 4,000 housing units will be built in the next 5-7 years, with other projects to be identified by 2021, Puravankara said.

“Also, we are focusing on expanding our product offerings in commercial/industrial asset classes to cater to increased long-term needs for quality office space, logistics hubs and other industrial facilities.

"For realising our aspirations in this business, we are leveraging on the expertise and network of international players via strategic partnerships, e.g., our JV with Morgan Stanley to develop warehouses in south India,” he said.

Photograph: Parivartan Sharma/Reuters