Demand for homes likely to rise due to coronavirus: MD Niranjan Hiranandani

Indian real estate is coming out of the challenges of economic and policy reforms, and the credit squeeze has added to the challenges, says Hirachandani

The Covid-19 pandemic is expected to pose further challenges to real estate developers, who have been battling lower sales and liquidity crunch in the past couple of years. Niranjan Hiranandani, managing director and co-founder of the Hiranandani group, talks to Raghavendra Kamath about the impact of the lockdown and how his company is looking to handle the crisis. Edited excerpts:

A rating firm said residential demand would fall 7-10 per cent in FY20 and 10-15 per cent in FY21. Your comments.

In the present scenario, with the Covid-19 pandemic having brought the economy to practically a standstill, it is difficult to assess how quickly recovery will take place. However, shelter is a basic need, and housing is the one segment in which demand is always greater than supply. Having negotiated the pandemic, many families living in rented accommodation will find owned homes a better alternative, and once we are out of the pandemic, this should result in demand increasing.

And then, it also depends upon how we as a nation negotiate the pandemic — and its economic consequences. Hopefully, we will emerge victorious — and demand for homes may rise as a result of the pandemic.

Do you think the lockdown will push back recovery in residential real estate by a couple of years?

It all depends on how long it takes to lift the lockdown and get back to normal economic activities, as also the measures which the authorities take — the three-month EMI (equated monthly instalment) deferment and the steps announced last week are fine, but if we also see a one-time roll-over of debt as had been done during the Lehman Brothers crisis, as also other similar measures, recovery will be faster.

Analysts say debt servicing and liquidity will be a big issue for developers. Your comment.

Obviously. Indian real estate is coming out of the challenges of economic and policy reforms, and the credit squeeze has added to the challenges. Even as the industry suggested economic and policy support to overcome the challenge, the pandemic has added to the problem. Given this, it is appropriate that the authorities grant policy and economic ‘lifesavers’ for real estate. If that happens, the aspects of debt servicing and liquidity will not be such a big issue — but it all depends on how the authorities take up the aspect of “lifesavers” for real estate.

As a company, how do you plan to recoup business losses and push up sales?

Indian real estate has faced ups and downs over the past few decades, as a business organisation, we have also braved that. We are a lean and mean organisation, we are flexible and adapt to new market scenarios. Consider that we have switched to on-line and digital platforms to overcome the challenge which the lockdown brings to sales and marketing activities. After the pandemic, we will quite simply work longer hours. We have introduced new products in existing locations, and they offer features at price-points that the potential buyer requires. So, we were on the pathway to adapt.

Analysts say new leasing in commercial leasing would come down sharply. your comments.

That is a no-brainer: demand for commercial leasing will depend upon the economic recovery, as also how the potential lessors respond to both, the new market conditions as also the new offerings in that segment. There has been growth in demand for commercial leasing over the past couple of years, driven by rising demand for leased commercial spaces. That won’t get cancelled, what we may see are some delays. And, if the economic recovery and turnaround in the Indian economy is quick, demand may actually continue at present levels, if not rise.

 Experts say that affordable housing would take longer to recover as the segment is price sensitive. Your comment.

The last six months have seen mid-range housing posting higher demand as compared to affordable housing, it all works as per market sentiment and buyers’ choices. All segments will take time to return to levels which were existing when the Covid-19 pandemic struck. Yes, affordable segment is price sensitive, but having said this, let me add that the assumption as regards how long any segment will take to recover also depends upon the economic package that the authorities come up with. The pandemic has brought in the importance of living in one’s own house, and across segments, this will result in demand — let us wait and watch how fast demand for each segment bounces back as a result.