How these 5 Indian real estate firms are innovating amidst market decline due to COVID-19
When the COVID-19 pandemic started spreading in India, it exacerbated the problems plaguing the country’s real estate industry. Sharp dip in buyer interest and number of property visits and increase in the amount of unsold inventory compounded the sector’s existing issues such as rising NPAs in construction finance, high leverage and tight liquidity.
Real estate companies in India have lost projects, current projects have been put on hold, labour is hard to come by, and cash flows are severely impacted.
Despite this, many of them are not waiting around for the market trend to change; they are finding new ways to keep their operations running smoothly and their customers satisfied.
In view of the impact of the COVID-19 pandemic, SMBStory lists five Indian real estate and construction companies that are innovating amidst the crisis:
Tushar Mittal, Founder and CEO, Studiokon Ventures
In 2009, Tushar Mittal started interior solutions business(SKV) with just Rs 12,000 that he saved during his short stint at real estate company DLF. He took no external funding over the next 11 years, and built SKV into a Rs 200 crore turnover company with over 250 employees.
“We have had no investors and no external funding. We have backed ourselves at every step of the way. Today, we have built turnkey interior solutions for over 200 offices for clients such as Amazon, Google, ZS, British Council, Adidas, PepsiCo, NTT, DLF, Tractebel, etc,” he says.
SKV wants to launch its own range of furniture, and also seeks to emerge as a technology-driven construction giant in the interiors space. However, SKV’s cash flows have been affected due to COVID-19 and this has put a dent in its plans.
Because SKV now requires more labour to address the skilling gap, its projects have been adversely impacted. Sales of its office fit-outs is largely dependent on demand from companies which have to be doing well.
“While cost pressures have certainly increased for us, we are working on strategies to overcome these issues and survive the COVID-19 crisis. We are trying to develop asset-like models, and with more acceptance of technology in the post-pandemic era, we are excited to see the opportunities it will bring,” Tushar says.
Gulshan Nagpal, Founder and MD, Gulshan Homz
After building a house for his family, Gulshan Nagpal was inspired to start a reliable and transparent real estate business. He started Gulshan Homz in Delhi in 1989, and began constructing independent homes in East Delhi. The focus later shifted to building premium multiple housing projects in the Delhi-NCR region.
Today, 31 years since its inception, the business has carved out a niche for itself in high-end luxury residential projects, it claims, adding that in FY20, it sold 522 units across its three projects – Gulshan Ikebana, Gulshan Botnia, and Gulshan Bellina in Noida.
This three-decade-old real estate firm was not spared by COVID-19. The pandemic has made it go back to the drawing board and devise effective strategies to handle the situation.
To sell its spaces during these times, Gulshan Homz is reaching out to customers digitally and giving them virtual tours of the sites. The company’s director Yukti Nagpal believes it is the only way of staying connected with the existing and target customers amid the current COVID-19 crisis.
“Digitisation and virtual tours have been started by realtors, and this has helped them reach their target audience and close substantial sales even during the lockdown,” she says, adding that the firm wants to venture into real estate for the commercial and hospitality segments in the post-pandemic era. It aims to build more malls, hotels, and offices, and also enter several other real estate segments.
Ram Raheja, Director, S Raheja Realty
Started in 2003, S Raheja Realty’s legacy dates back to Girdaridas Raheja and his brothers, who came to Mumbai from Karachi and started a real estate business in 1955. Today, S Raheja Realty is a prominent developer of luxury housing, redevelopment, affordable housing, corporate development, and second homes.
S Raheja Realty has developed numerous projects in luxury housing, primarily in Mumbai. In the previous decade, it ventured into the affordable housing market in mini-metros and Tier II cities.
A well-diversified real estate company like S Raheja Realty claims that while it did not face challenges with labour or its projects, it had to find a way to keep its teams and departments connected amid the COVID-19 crisis. It started leveraging various digital platforms to ensure this, and tapped into social media to connect with existing and potential customers.
“Social media is the future of marketing as social distancing will continue to be the norm for a while even post-lockdown,” says the company’s director Ram Raheja. While Ram may be thinking of business in the post-coronavirus era, he remains cognisant of the fact that even before the coronavirus pandemic, India’s real estate market was going through a rough patch.
Despite an impending price correction and the perennial policy-driven challenges real estate developers in Mumbai face, S Raheja’s overall vision to address the luxury real estate market will remain the same. In the near future, Ram and his team intend to continue focusing on Mumbai and “set a statement for quality lifestyle.”
Yogesh Jaiswal, Founder, Le Classique Realty
It was Yogesh Jaiswal’s desire to build a reliable and professional channel to connect real estate developers with buyers that inspired him to start Le Classique Realty in Mumbai in 2019. The company acts as a channel partner that helps project developers sell their properties in bulk.
Today, the business’ top-line revenue is between Rs 18 crore and Rs 20 crore. It has already sold real estate inventory worth over Rs 100 crore, Yogesh claims.
Le Classique currently has over 350 real estate units worth Rs 700 crore in its inventory, and hopes to sell them all in the next 18 months. With sales dropping due to the pandemic, this is easier said than done.
“Public sentiment is just not viable for new purchases, and there is a fear of project delivery being postponed. For us, extensive calling and keeping in regular touch with our clients has become a daily norm now. We ensure every development in our projects is regularly updated to our clients,” he says.
But this wasn’t an easy decision. Yogesh says he was in a dilemma whether to furlough staff for the time being or keep going. “We asked ourselves if we would be able to deliver results even in this situation. Our team was scared looking at the ongoing job losses and salary cuts across companies. So, we decided to keep going and stick with our team. We have been working relentlessly towards generating leads and finding interested clients, and we’ve been pushing our clients towards online payments,” he says.
Aayush Chaudhary, Founder and Principal Architect, ACad Studio
Seeking to solve the problem of mismanagement in construction, Aayush Chaudhary teamed up with his experienced father Ravi Chaudhary and started ACad Studio in Gurugram in 2018. The construction consultancy firm was started with Rs 5 lakh initial investment. The father-son duo began managing small-scale construction projects with the help of Building Information Modelling (BIM) technology.
The company now claims it clocked Rs 2 crore turnover last year. Some of its clients include OYO, Carrier Midea, individuals who own penthouses or flats in luxury apartments, and landowners in Gurugram.
When the pandemic brought the Indian economy to a grinding halt, all of ACad’s existing projects were put on hold, and its upcoming projects were dropped. The firm decided to use the downtime to focus on its existing clients, and build strong relationships with them.
“We started to enhance the designs of existing projects and provide clients with better options. The market had come to a standstill, and acquiring new customers was difficult. We also faced a shortage of labour on-site, as most of the labourers went back to their hometowns. This increased our costs of construction, and forced us to rework our calculations,” he adds.
Despite this, Aayush remains confident of his plan to expand into larger-scale projects such as group housing, commercial construction, and urban development. “There are a lot of firms offering the same services, but the way we do it is completely different. Our project management sets us apart from these competitors, as a lot of them do not use the technology and techniques we do,” he says.