[TechSparks 2020] PolicyBazaar CEO on why COVID-19 has been 'the mother of all wake-up calls'
At TechSparks 2020, PolicyBazaar CEO Sarbvir Singh and Square Yards CEO Tanuj Shori discuss the impact of COVID-19. Panic buying of health cover has led to massive increase in demand for insurance products while demand for real estate has panned out as spending drops.
Sarbvir Singh and Tanuj Shori might not have had too much in common if the world had not turned topsy-turvy six months ago. Today, they stand on the opposite ends of a spectrum.
As CEO of PolicyBazaar, Sarbvir has been riding a tidal wave of triumph since COVID-19 hit India, thanks to panic buying of health and life insurance policies. Meanwhile, Tanuj, CEO of Square Yards, one of India's largest integrated real-estate companies, has been down in the doldrums after the pandemic gutted demand for residential and commercial spaces.
"Falling seriously sick or ill was considered a 'low probability event', historically. But COVID-19 has been the mother of all wake-up calls. Now, people can't say 'I won't fall sick' or 'I don't need health insurance' because everyone - from Amitabh Bachchan to Amit Shah - has fallen prey to this virus," said Sarbvir, speaking at YourStory's TechSparks 2020 event.
Awareness about insurance products and policies, Sarbvir said, has been the biggest boost the insurance sector has gotten over the course of the last six to seven months. It has also helped the ecosystem understand where it has been missing the mark.
"We're going in the right direction. People have understood why they need to buy insurance. But we've realised that affordability is a huge issue, especially since the salaried class has been hurt during the pandemic. Insurance players need to do better so that consumers can find it easier to purchase," he said.
Real estate has been a different story though.
People who had invested in projects have been delaying payments; new projects that pre-COVID-19 used to sell out in a few weeks' time are now seeing very few takers; corporates have stopped expanding physically and are increasingly moving to the work-from-home model, so commercial real estate has slowed. All of this has contributed to a slowdown in the economy as well.
However, the sector did see a little traction from investors and buyers who had been sitting on the sidelines for a long time, waiting to find an opportune time to loosen their purse strings.
"Post-COVID-19, everything went for a toss. The real estate market collapsed. But that collapse created opportunities for investors who were sitting on the fences, looking for deals of their lifetimes,” Tanuj said.
Even businesses that are continuing to occupy office spaces are renegotiating terms and getting deals they couldn't have got pre-COVID-19. "Challenging and soul-crushing" is how Tanuj describes recent times for developers, adding that not everyone had the balance sheet to sustain zero sales. Most of the smaller firms had to shut shop while the bigger ones have managed to live to fight another day.
The good news though is that demand is creeping up because of a decline in prices and developers' willingness to renegotiate. In fact, Tanuj said residential real estate could go back to pre-COVID-19 levels by the next quarter.
What the sector needs now is intervention from the government in the form of boosting demand, getting rid of indirect costs such as stamp duty, land prices, etc which contribute nearly 30 percent to the total cost, and push ahead with RERA, which hasn't realised its full potential yet.
"India cannot go to 9 percent GDP with the real state sector languishing. The government needs to intervene. Sentiment is improving, but significant new regulations need to come in and the industry needs to get structured as soon as possible," Tanuj said.
TechSparks - YourStory's annual flagship event - has been India's largest and most important technology, innovation, and entrepreneurship summit for over a decade, bringing together entrepreneurs, policymakers, technologists, investors, mentors, and business leaders for stories, conversations, collaborations, and connections that matter. As TechSparks 2020 goes all virtual and global in its 11th edition, we want to thank you for the tremendous support we've received from all of you throughout our journey and give a huge shoutout to our sponsors of TechSparks 2020.
Edited by Teja Lele