Puravankara Ltd, the biggest residential real estate brand in Bangalore, said it is making changes to its apartment designs to attract work-from-home customers, but believes that employees will shift back to the work-from-office model in another 12-18 months.
The company has been seeing strong demand for its residential flats, as buyers increasingly prefer to go for well-laid out and well rounded apartment projects instead of lower-priced ones. This is seen as a fallout of people spending most of their time at home in the COVID-19 era.
The Bangalore-based, residential market-focused company sold almost 1 million square feet of real estate during the first three months of 2021 — it’s highest ever sales for a quarter without any new launches. In fact, the preceding Oct-Dec quarter too had set a sales record of 0.93 mllion sq ft, which was broken by the latest quarter.
The strong demand helped it increase prices almost on a monthly basis for several months.
“Across Puravankara, we have increased prices and we have been able to hold on to our sales velocity. So. we’ve been constantly reviewing prices on a monthly basis and wherever possible, have been increasing prices,” said Chief Operating Officer Abhishek Kapoor, explaining the company’s Q4 performance to investors.
Purva projects tend to be among the most well-rounded in the market, especially in the Rs 50 lakhs to Rs 1.25 cr mid-segment. They tend to offer a well laid-out garden, a well-stocked club house, sporting amenities, gyms and ample recreational facilities — things that are more in demand in the era of lock-downs and work-from-home.
Because of all this, demand is shifting sharply to organized players, it said: “The customer has become more discerning now. I think he understands that a product that is available from a category B or category C developer at a great discount may not be the right buy because the concern is of the capital that the customer is deploying into the project.”
People now pay more attention to their purchase these days, company officials explained. Hence, someone who may have gone for a local brand now prefers to go for Purva or Provident, the company’s more affordable brand.
“..there is a general step for people to take one step higher, one size bigger. So, from a product that is smaller than a Provident product, people are upgrading to a Provident product. While there is work from home and this pandemic that is going around, I don’t think people’s affordability has changed.”
WFH TWEAKS & OFFICE PROJECTS
At the same time, the Banglaore-based company is making some tweaks to its designs — even for the more value-oriented Provident projects — to appeal to the WfH crowd.
“We are trying to make certain design changes within the Provident apartment itself, in terms of creating a certain niche in terms of facilitating work from home if required. We are also looking at certain community business centers within projects as a part of the club-house, which will give residents that flexibility,” officials said.
However, they also continued to maintain that the work from home trend is temporary.
“On a general point, I think the disruption in the office [segment] would probably be there for a year, year and a half,” said Abhishek Kapoor. “I don’t think believe it will be more than that.”
Meanwhile, there have been predictions that demand for office space may plummet as companies shift to the work-from-home model, affecting the fortunes of real estate developers. Companies like TCS have said most of their employees will work from their homes in the future.
Puravankara, despite being more focused on the residential side of the market, has been investing in the commercial segment in the last few years. Officials said the company has several plots in Bangalore suitable for office development, including on the Bellary Road. They said Puravankara will develop these plots only after studying the evolving market sentiment and trends, but don’t expect any major decline in the demand for office space.
“Yes, there will be concepts like flexibility in terms of timing, or coming into office five days a week, which may affect the demand by 5-10%,” Kapoor said. “Companies who, nine-ten months ago made announcements that 50% will be work from home, 100% will be work from home, I don’t think that’s the reality.
“I don’t think everyone has the flexibility to have that working space at home or the quiet corner, besides the fact that there is a flexibility and efficiency of collaboration that you can’t get at home.”
“I think the office space [segment] should normalize over the next year and a half. By the end of this year, once the roll out of the vaccination is quite comprehensive, at least in the urban areas, I think companies will want their employees back in the office. What we’re hearing is that a lot of companies are getting feedback from their employees to get them back into the office…
“This will stabilize. It’s a short term trend.”
SECOND WAVE DISRUPTION
The company said the second wave of COVID-19 has resulted in “muted” sales during the first quarter (Apr-Jun 2021), but have not been as disruptive of the company’s construction operations.
“During the first time around [in 2020], the only hindrance was the physical lockdown – people were still at home, the genuine home buyers were still considering, reviewing taking calls. During the second wave, people were falling sick, members of families were falling sick, there were some fatalities as well. So it was more muted.
“I think this month, we are seeing some turnaround and we hope that by July-August, the numbers should come back…For the full year, we are confident of the momentum of sales to continue.”
On the other hand, the massive, months-long disruption of the company’s construction activities are not likely to be repeated this year.
“The first wave was when the labor really dropped significantly, very very significantly. And to come back to normalcy, it took us time because of the reverse migration. But in this wave, yes, there was an impact, but it wasn’t as severe as the first wave, and we are trying to come back to normally more quickly. We are confident that in the next two months, we should be crossing our numbers prior to the second wave.”
In addition, the company has been vaccinating its workers, including labourers. Altogether, said the company, there has been a marginal increase in the cost of labor, but it is the jump in raw material prices that have pinched harder.