Today, most economies across the world are struggling to stay afloat. The impact of the pandemic has been global, forcing markets to come to a near stand-still. A recent report by the World Bank states, ‘the baseline forecast envisions a 5.2% contraction in global GDP in 2020’, while ‘advanced economies are projected to shrink 7%.’
Suffice to say, the Indian economy has felt the impact of COVID-19 and the subsequent lockdowns equally. Growth is at 3.1%, down from 4.7% in the previous quarter. A recent report by CRISIL shows that around 52% of the debt is in sectors that fall in the medium-resilience category, including automobile manufacturers, power generators, roads and construction; while 4% of the debt is found in the least-resilience category, including airlines, jewellery, auto dealers and real estate.
In response to the economic slowdown, the Government of India has announced a stimulus package of Rs 20 lakh crore or 10% of the GDP to kickstart the economy. However, the industries in focus are limited to agriculture, MSMEs, DISCOMs, and NBFCs. While the stimulus can provide the economy with a brief push, it is not enough to reverse the economic damage that the country has been reeling under since March this year.
Real estate in focus
The downward spiral is not an unfamiliar one for the industry. Starting in October 2018, reform-driven regulations like RERA, demonetisation and GST started the industry on a downward spiral, creating a favourable environment for serious players with the right intentions and agility.
What the pandemic has achieved is to effectively expedite the rate of market consolidation, only this time it is the serious players who find themselves in complex situations. The lack of site visits and low property sales have created an inventory pileup of ready-for-sale properties to the tune of Rs 6 lakh crore across India’s top nine cities.
Moreover, the pandemic has forced a halt on the development of under-construction and new projects across the country. The impact of which also produced a domino effect onto allied industries like cement, steel, electric, paint, plumbing, 3PL, gardening, elevators and security.
Plus, reverse labour migration from cities and breaks in supply chains are impeding intended paths to recovery. What this means for the industry is that real estate developers with weak balance sheets and low consumer engagement will experience the pain more than before.
For a sector that contributes to 6% of India’s GDP and is the second-largest employer in India, these statistics display why the industry deserves a shot in the arm. However, we can deduct that from Mr Piyush Goyal’s recent advice to real estate developers on selling at discounted rates. Mr Goyal is the Union Minister of Commerce & Industry.
If developers cannot expect a lifeline from the government, they will have to implement strategic changes in how their businesses work to stay afloat. And the only viable option is to introduce deep-industry technology into existing processes.
Technology, the enabler
The key reason for the inventory pileup, low property sales and stunted cashflows is the physical disconnect between real estate developers and homebuyers. In a situation where real estate developers must fend for themselves; change must be introduced at a process-level.
Now, using technology to enable process optimisation is not a new concept. At Sell.Do, we have been enabling real estate developers in India to reduce costs with technology solutions since 2014. However, the ecosystem is ripe for an industry-scale transition to digital technology across the board. Process optimisation can help cashflow streams to stay open and reduce costs. Thus, helping reduce the rate of market consolidation in the process.
Real estate-specific technology
The need of the hour is to incorporate contactless and online technology into existing offline sales models. Contactless pathways can help developers resume operations by addressing all changing trends – from new customer segments to changing customer demands.
CEO at Sell.Do
“A workable alternative for real estate developers to resume operations is to connect themselves and homebuyers with industry-focused technology that can replicate offline sales models with online walkthrough, online bookings, digital payments and digital marketing. Moreover, an integrated solution can help reduce costs.”
“Now, costs for most developers run up to 8% on average. Optimising these processes can be an easy starting point to reduce costs by up to 5%. Enabling such technology can help the industry keep its engine running smoothly.”
Contactless pathways can help bridge the gap between real estate developers and homebuyers while supplying enhanced customer experiences to homebuyers. Only this time, all stakeholders can do so the safety of their homes. Moreover, Sell.Do’s Integrated Solution includes Real Estate specific CRM (Customer Relationship Management) module to streamline business processes even further.
Focusing on long-term growth is key
Those businesses that want the best chance of survival will have to prioritize digital investments to experience its impact on long-term strategic goals. And those that decide against investing in industry-specific technology at the earliest will possibly create ecosystems with weak balance sheets and low consumer engagement.
While it is encouraging that the ‘best in the business’ brands like VTP and Amanora Park Town have integrated real estate CRM software into their existing processes, many more must cause the change to reduce the rate of market consolidation.
While we only speak about one sector here, if the same is applied by most sectors, we could even envision a rebound by mid-2021. While it is premature to identify the precise impact of the outbreak, industries across India can be prepared to prevent widespread crises that might come our way in the future.
Long-term growth is integrating technology across all business verticals. For real estate developers in India, integrating real estate CRM software for sales and marketing can be an excellent place to start.