Interview: Second wave of consolidation is imminent: Krish Raveshia-Azlo Realty

The office spaces in the post corona era will have to be very different in terms of design to make sure that required SOP and social-distancing measures are followed. There will also be another wave of consolidation in the realty sector and the smaller players will be out of the scene. In an exclusive interview with, Krish Raveshia, CEO, Azlo Realty talks about various aspects of real estate, particularly commercial real estate market in Mumbai. Here are the excerpts:  

Q) What are your expectations from the festive season for the commercial segment (in terms of sales of property? Will it be on par with last year?

We are in the middle of festive season and the sentiment is broadly positive. A combination of unlocking, policy measures, pent up demand has led to the high demand seen in Q3. Buying a property during festive season is considered auspicious. Developers launch new projects ahead of the festive season, offer discount and lucrative offers to take the advantage of the high demand during this period. Schemes like cash discounts, lower interest rates, no cancellation charges and stamp duty waiver are being provided to attract the customers.

With the government unlocking the economy, offices are calling back employees to work from office, this trend is positive for the commercial real estate sector. We expect demand in Q4 to be better than what was witnessed in Q3 due to a combination of many reasons. The sales figures may not be at par with last year. We expect situation to be far better in Q1 and Q2 of 2021.

Q) How is the current office space absorption, specifically Mumbai and MMR?

We are witnessing a reversal of trend, with businesses asking their employees to report to office for regular work as restrictions are lifted. A trend of companies preferring to move towards suburbs is witnessed for reasons of lower cost and convenience of travel for employees. We expect the situation to pick-up further momentum in next 1-2 quarters. 

Q) Can WFH pose a threat to the office space segment?

Work from home has been a good alternative to normal work from office. But, broadly this trend is more out of compulsion than choice. Many studies have revealed that employees miss going to office, face-to-face meetings, regular brain storming sessions with colleagues. 

More efforts than usual are put in training and development of employees which becomes a lot difficult if done digitally. Work from home can be a transient phenomenon at best, most offices will ask employees to work from office as per the restrictions in the region. Office space for post COVID era will need dynamic design and layout to ensure that the required measures are followed.

Q) Any new trend or buying behavior you notice during COVID?

Consumers’ attitudes, behaviour and purchasing patterns are changing. The need of the hour is spacious home and office space to ensure social distancing. People are avoiding long travel, would prefer to work in vicinity.

Going forward the trend of opting to stay near a workplace will pick pace. Consumers want value for money and a steady return on their investment. The response to the lower stamp duty and festive offers has been robust. The same is witnessed in September sales and high traction in October and rest of Q4.

Q) Will COVID and new regulations lead to a consolidation in the Indian real estate industry?

The Indian real estate sector witnessed massive shake-ups post Demonetisation, RERA and GST. These regulations led to formalisation of the sector. The unorganised players found it very difficult to comply with new regulations. Together the 3 regulations resulted in streamlining and regulate the largely unregulated and unorganised market. A second wave of consolidation is imminent, as sweeping changes in business practices, evolution of new strategies, reforms in product design and shifts in consumer behaviour have taken centre stage, pushing smaller players out of the equation.

Q) What are the policy measures government should take to give a further boost to the sector?

The government should ensure enough liquidity and funding is available for businesses and end consumers at competitive rates. Further, ‘Ease of Doing Business’, single window clearances should be put in place to boost confidence of businesses. I understand from reports that government is working on another stimulus package. It needs to be targeted and focused to address sector specific issues.