Consumer scrutiny is stronger now

Consumer scrutiny is stronger now
The Financial Express, January 9, 2010, Page 1

Harshavardhan Neotia

2009 has been a sort of rollercoaster ride, which has fortunately ended on an upswing. The year started off on a rather worrisome note for the economy in general because of the meltdown that started in September 2008 in the US. The real estate sector was particularly adversely impacted, with an air of uncertainty enveloping the business environment.

In India, real estate prices had begun to soften, home loan rates were heading northwards and investors shied away from the market. Even end-users of residential as well as commercial properties tended to defer their decision to purchase and, by and large, the off-take was very sluggish.

As the year progressed, we noticed that the Indian economy stood fairly resilient to the global meltdown. Our banks were still as strong, there was consumption, though low, and there was some hope building despite the gloom. Moreover, housing still being a basic necessity for millions of people in our country, started to catch on.

From the middle of 2009, therefore, we began to see some rise in confidence and a positive sentiment emerged even resulting in some investments and movement. Though the investor community still chose to wait and watch, end-users were crawling back. We saw most of the resurgence being led by the housing & residential sector and some movement even in the commercial & retail sector.

One of my prime learnings and observations with regard to the post-slowdown recovery is the emphasis that a buyer now lays on projects that are well conceptualised, backed by a credible developer with a sound track record. Though buyers were conscious of investing with developers with a good record even earlier, post-slowdown, this factor has emerged even stronger and the consumers’ sense of scrutiny and discretion has enhanced.

What this implies is that for a project to now succeed, it must be carefully planned and executed, abiding by strict deadlines, and must deliver the promised quality. Such projects will certainly be winners.

The retail business has also started behaving differently, post-slowdown. The retail business is more akin to hospitality than realty now.

Developers of malls are expected to keep them attractive by inducing a high level of sustained engagement by way of events, promotions and good maintenance.

Also, increasingly, retailers are weary of the high running and maintenance cost of malls and so they must be designed right from the beginning in such as way that they can be maintained at relatively low cost. Malls must provide for a complete family experience rather than just an avenue for shopping.

Real estate developments even in the commercial and office spaces have become more experiential in nature. Corporate houses are looking at providing a healthy work-life balance to their employees though workspaces that provide a wholesome environment coupled with good infrastructure. Corporate houses are even willing to pay a premium for such an offering.

I am very positive about 2010 and I believe that the worst is now behind us. With quality, timely delivery, good concepts and meticulous execution being the watchwords for the real estate industry, I see a robust pick-up in the coming year. 2010 will certainly be far more promising than 2009.