While the COVID-19 has by and large dented the confidence level of the real estate developers, Aditya Kushwaha, CEO & Director of Axis Ecorp believes there is a silver lining for the players who are forward-looking in their approach. In an exclusive interview with Track2Realty, Kushwaha asserts that the Work From Home trend would shift the focus from top metro cities to open spaces in and around the tourist destinations. He, therefore, urges the government to look at the Holiday Home segment as a priority sector.
Ravi Sinha: 2020 has generally been a bad year for the sector. Have there been any positive developments that bode well for the year ahead?
The real estate sector was already in bad shape before the Covid-19 pandemic, which has only added to the troubles of the distressed industry. April and May were probably the worst months when the economy was broken badly, however recently there has been a good spike in the recovery of the real estate sector and demand for home loans has gone up evidently.
Even the tax collections on account of GST has been on a surge. These are surely good signs of growth in the sector during the unlock process in the country, and while it is a positive development, it is not reflective of a recovery in the sense of the economy moving from a trot to a gallop.
With policy support from the Central Government, the real estate sector is displaying signs of growth, and sales numbers are increasing across cities. To boost housing demand, the Finance Minister had announced measures like an additional outlay of around INR 18,000 crore for PM Awas Yojana. This relief is expected to lift the demand, particularly in the affordable and mid housing segments.
Likewise, a record low rate of Home loans, relaxation on Stamp Duty in a few states & RERA Regulation have been instrumental to motivate investors to invest in Real Estate.
Ravi Sinha: Demand has been mostly muted. What makes you so bullish?
Aditya Kushwaha: Due to the COVID-19 pandemic, the concept of a holiday home or a second home has gained widespread acceptance. With most of the corporate professionals working from home, geography is no longer a constraint. The need for a perfect balance between work and personal life has fuelled the concept of a weekend retreat in a holiday home.
From the investment perspective, second homes in non-metro cities are a relatively safe investment option with higher capital appreciation compared to homes in metros, especially during COVID-19, when alternative options such as mutual funds, shares have seen diminishing returns. These properties can be rented out to home-stays and tourism businesses, a booming market promising an assured and stable source of income to investors.
Ravi Sinha: Any silver lining for you at the company level?
Aditya Kushwaha: COVID-19 has thrown some unprecedented challenges for the industry throughout this year, however, technology in the real estate sector has played a crucial role during the lockdown.
Tech-enabled companies have been successfully harnessing their tech abilities to sell their projects even during these testing times. Axis Ecorp is also a tech-enabled, process-oriented organization, and so has sailed through the most challenging times.
We are glad to share that at Axis Ecorp, we have seen an uptake in the Holiday Homes and secondary housing sales from NRI Market and have sold out INR 50 Crore value stock since lockdown announced in India for our landmark project Axis Blues, a premium smart service suites project located in Dodamarg, North Of Goa through digital sales alone. We are targeting further to achieve a minimum INR 70 Crore more sales volume within the next 6-8 months in the holiday home segment only.
Ravi Sinha: What has been the catalysts of change?
Aditya Kushwaha: Government’s corrective announcement and on-ground activation of such schemes like – Housing for All, Record Low rate of Home Loan, Relaxation on Stamp Duty in few states, Economic package, Atmanirbhar Bharat Abhiyan, Revision on FDI Policy, REPO rate & Inflation control have been instrumental in giving a much-required impetus to the real estate industry.
Further, due to global uncertainty, the possibility of NRI coming back to India is high, and we have observed that they are willing to invest in real estate to utilize savings. Amid the pandemic, the overseas investment in the Indian market has also significantly grown owing to the fall of Indian rupees against the US dollar. NRIs are considering Indian real estate as the most sensible investment option during COVID-19.
Ravi Sinha: What kind of policy support would help revive the sector in 2021?
Aditya Kushwaha: To speed up the Government vision of ’Housing for All’ and to give a flip-up to the struggling Real Estate sector across the country, the industry looks forward that Government should re-visit the present limit of INR 2 Lakhs for Interest on Housing Loan U/s 24(b) of IT Act, and Cap of this INR 2 Lakhs in interest should be done away. It will be instrumental in allowing some tax relief to buyers and providing a much-needed push to the Industry.
We are hopeful that the upcoming Union Budget will relax income tax norms, offer single-window clearance, and GST reforms. Additionally, helpful measures like easing out of the liquidity issues that are being currently faced by the sector will boost investment in real estate.
Additionally, we hope that the Government gives ‘Industry Status’ to the Real Estate sector as a whole including Secondary Housing and Holiday Homes. Currently the same has been conferred only to Affordable Housing. This is a long-pending demand that is expected to help developers raise funds at lower costs.
More so, the Government needs to push the active NBFCs to extend liquidity to the Realty Sector and should declare that the rental income received from any Holiday Home-based & Tourism centric zones would be free from GST, to give further impetus to the holiday homes segment.
Ravi Sinha: To what extent do you agree that post-Covid the real estate sector would evaluate its cost & benefit to get beyond the top 10 cities?
Aditya Kushwaha: The Covid-19 pandemic has altered how we live, work, learn, and play. The overall health, hygiene, and wellness concerns during COVID-19 have significantly shifted the focus towards spacious holiday homes set amid luxuriant greenery, away from densely packed Tier I cities. Further, riding on the wave of sustainability and prospective investment, the Holiday Homes/Second Homes has emerged as a sought-after option for the segment of buyers whose jobs and lifestyle quotient have remained unaffected in the wake of pay cuts.
The trend has changed, and now the Real Estate scenario has moved from top metro cities to tourist destinations. Investors have a strong belief that they could find better entry prices, flexibility, and sizable returns. There’re good avenues for youngsters beyond top metro cities. It is essentially because of the Work From Home concept the demand for holiday homes is gaining traction, and there are more takers of holiday homes and secondary housing in Tier-II cities.
Even, for the Tourist States like Goa, the Goa Government has been working in partnership with Software Technology Parks of India (STPI) to create the infrastructure to facilitate software exports and promote tech entrepreneurship in the region. As tech companies become location agnostic, options like Goa will beckon more strongly and not just remain a utopian dream of the Next Generation.
Ravi Sinha: What are the advantages and disadvantages of getting into the new property markets of Tier-II cities now?
Aditya Kushwaha: The demand has been increasing rapidly over the last few years in Tier-II cities owing to better employment opportunities, infrastructure growth, and connectivity improvements.
While Tier-II cities offer better value-based pricing and larger spaces and lower cost of construction, there are also constraints like easy approval of FDI for projects in these cities. This can be made easier by the Government through policies and tax level initiatives and benefits that could entice people to stay back in the city.