Rent trends will largely mirror the demand curve: Niranjan Hiranandani

In a Q&A, the chairman of Hiranandani Communities explains that the pandemic has prompted the millennial to move from being a renter of residential property to an owner

Residential sales have made a comeback in Q3 of the current calendar year due to pent-up demand from homebuyers. The demand for large, premium properties has also shot up. Niranjan Hiranandani, chairman of Hiranandani Communities, a leading property development company, talks to Raghavendra Kamath on his outlook for both segments of real estate and road ahead for the property sector. Excerpts:

What is your take on pent-up demand for residential properties? Will it last long?

According to me, pent-up demand will sustain, as shelter is a basic necessity and crucial need of human existence.  The pent-up demand as we move out of 2020 and into 2021, reflects a palette of different ‘hues’ across shades and colours. To give an example, the millennials who have traditionally been ‘renters’ have realised the importance of having their own house, and opting across 2020 – as their rental tenures ended – to buy their own homes. Some of these rent agreements will end across 2021, so the segment will continue to make its presence felt. We will see a similar pattern across segments which have pent-up demand because of the pandemic and the lockdowns. Obviously, at some point of time, these will have bought homes; but by then a new segment will emerge.

What kind of residential properties do you see attracting maximum demand?

We see demand for mid-sized apartments from the fencesitters who are turning into the first-time homebuyers. Simultaneously, there is pent-up demand in the larger luxury apartments space which homebuyers are looking to upgrade their lifestyle and quality of living. The need for flexi space to integrate new living habits such as remote or work-from-home, study-at-home, wellness and fitness at home, open green spaces for self–rejuvenation is in demand post pandemic crisis. The demand for ready-to-move-in homes is nearly 75 per cent and about 25 per cent of the demand is for under–construction property from branded developers with proven track record and healthy financial stability.

What is your outlook for commercial real estate? How do you see rents behaving in 2021?

Commercial real estate will bounce back to near normalcy, but the rate of recovery will differ across segments and in some instances, across micro-markets. Rent trends will largely mirror the demand curve. Premium properties will continue to be in demand; albeit at rentals which will be ‘status quo’ or even at rental points which reflect the demand/ supply ratio. The vaccination is around the corner and that will fuel the positive outlook for commercial spaces which is supported by strong fundamental demand and uniqueness of commercial spaces. Segments such as retail, entertainment, hospitality and F&B will take longer to return to pre-COVID19 pandemic levels through 2021, although the vaccine will definitely make a huge positive difference.

What is your wish list for real estate in budget?

The revival of the real estate sector is imperative for GDP growth, additional employment generation and draw investment from the domestic as well as global investor’s bandwagon. As pandemic has dished out volley of challenges be it structural or cyclical for the sector, the budget expectation are on the lines of rationalization of taxes, impetus to affordable rental housing, encouraging extension of SEZs for enhanced job creation, introducing innovative liquidity measures, and ease of doing business in the legal and regulatory framework.

Are you planning any new launches in 2021?

The company is focusing on the completion of the on-going projects and obtaining occupational certificate which attracts no GST for the home buyers to make a deal. As we restore the construction activities in full swing with migrant and local labourers back to work, our primary target is the completion of current projects and make ready to move in apartments available for the home seekers.

We have recently launched luxury three bed ‘Admiro’ collection at Hiranandani Fortune City, Panvel, Navi Mumbai project. Few more new residential launches are in the pipeline at Powai, Thane and Panvel too. We have also announced the launch of a new villa plotted development in our township project Hiranandani Parks, Oragadam, Chennai. We have also launched new boutique retail office spaces ‘Solus’ in Hiranandani Estate Thane, and further new commercial office space development in the pipeline for 2021.

What are your plans for data centres, warehousing, and other asset classes?

The group already has the expertise for building data centres, it has the land suitable for data centres as also the most important - expertise of power efficiency. These put together, will create efficiency-plus datacentres, with operating costs estimated to reduce by 20 per cent. We have an ambitious plan of potentially investing about Rs 3,500 crore in datacentre business across Navi Mumbai, Chennai, and Noida to begin with. The group has already made Rs 1,000 crore investment in its first data centre gone live at our Hiranandani Fortune City township in Panvel.