In the coming quarters, investors are likely to be cautious with their decisions and might assess secured options to invest in the sector.

The COVID-19 pandemic has brought the construction activity and business cycles to a standstill. As a result, various deals have been put on hold and the coming quarters are likely to have muted investment activities. However, with evolving situations worldwide, the leasing activity might be driven by renewals and consolidations in the coming quarter, but several deals that were in advanced stages and got pulled back might get converted towards the end of the year. In the coming quarters, however, investors are likely to be cautious with their decisions and might assess secured options to invest in the sector, says Ashish Arora, Director-Distribution, Viridian RED.

In an exclusive interview with Sanjeev Sinha, he talks about the pandemic’s impact on the real estate sector, how companies relocating from China may be an opportunity for India’s office space market, and the key things which can get the investor’s confidence back in the market. Excerpts:

How has COVID-19 impacted the real estate sector in India? When is the revival expected?

The COVID-19 pandemic has brought the construction activity and business cycles to a standstill. As a result, various deals have been put on hold and the coming quarters are likely to have muted investment activities. Under the relaxations given by the government, business activities are now picking up the pace and we expect the sector to pull through. However, the supply chain disruption and the return of migrant workers from several cities might hinder the construction activity to come back in full swing in the near time.

Unlike the residential sector, the commercial market had witnessed great traction over the last couple of years, but the pandemic outbreak has interrupted its growth momentum. With the evolving situations worldwide, the leasing activity might be driven by renewals and consolidations in the coming quarter but several deals that were in advanced stages and got pulled back might get converted towards the end of the year. Therefore, we expect the commercial sector to rebound around the Q4 2020 or Q1 2021.

Have you adopted any new strategy to combat the impact of lockdown on your business?

The nationwide lockdown made every business to explore remote working possibilities and real estate was not an exception. We integrated new strategies in our business model and tried optimizing virtual tools and online platforms to make the most of the phase. The entire ecosystem was facilitated on the digital platform which played a significant role in keeping the ball rolling for the business.

Various companies are now expected to relocate from China. Do you think this can be an opportunity for India and especially for India’s office space market?

Yes, various companies are contemplating relocating from China, and India must eye this opportunity. This might be a great opening to pull back the economy. The advantages of affordable and skilled labor, low cost of land, and demographic dividend might enhance India’s prospects as a manufacturing and investment destination. According to industry reports, the government has initiated talks and is exploring the opportunity to attract foreign investment along with the manufacturing units based in China. However, a lot would be required to get these companies in India, especially in ensuring greater agility and hassle-free operations.

Since the World Trade Center is a globally-acknowledged brand, and thus located in the prime cities of India, can WTC Noida, WTC Chandigarh or WTC GIFT City be the preferred choice of these companies if they relocate to India?

The global network of the World Trade Center makes it a preferred destination for the companies to have an internationally-recognized address. All three projects i.e. WTC Noida, WTC Chandigarh, and WTC GIFT City are located in the prime cities, thus generating a lot of interest from the business community. At present, the global economy is in the doldrums, creating a huge impact on the businesses across. The global health crisis has changed the business dynamics and the World Trade Center is globally prepared for new ‘normal’. Considering the evolving situations worldwide, projects which are ready for possession would be preferred by investors for safer investments. The WTC projects are in the advanced stages of giving the possession which bodes well for them, hence making it a safer zone for potential investors.

Owing to these factors coupled with the exceptional facilities and services, the WTC projects are lucrative investment destinations. With the connection across 330 centers in 100 countries, the World Trade Center provides a wide range of opportunities to its customers. As a member of a World Trade Center, companies get the opportunity to leverage the global ecosystem to generate business and trade leads. Therefore, we are optimistic to get the attention of the companies moving in the region.

What are the key things which can get the investor’s confidence back in the market? Will they look for more secure investment options?

The disrupted business cycles have shaken the market sentiments all-time low, pushing the buying decision distant in the future. A collective approach needs to be formed by the government, industry bodies, and private players to sail through this phase. Getting investor’s confidence back in the sector is the need of the hour, which can be done with the joint efforts of all stakeholders. While industry players expect liberal policies, relaxations, and stimulus packages from the government, they themselves need to restrategize the business models and stand together with their existing investors in these difficult times. Looking at the long-term goal of revitalizing the real estate sector, industry bodies need to put the challenges ahead and chalk out an aggressive blueprint for the recommendations.

In the coming quarters, investors are likely to be cautious with their decisions and might assess secured options to invest in the sector. Backed with the strong growth record in the last couple of years, commercial real estate might attract investment through REITs. Being one of the most secure and great options for a fixed return on investment, REIT might lead to strengthening the market sentiments in the post-COVID era.

REITs are one of the best-performing asset classes available and overseas they have been successfully delivering competitive returns, based on high, steady dividend income and long-term capital appreciation. Owing to better rentals as compared to other real estate properties, REIT buildings are a considerable investment option. However, the objective to get the sector back on the growth trajectory cannot be achieved alone. Apart from the company’s aggressive strategies, the sector requires favorable reforms from the government.