Real estate can be a fluid industry that adapts and evolves quickly. However, there will always be a handful of problems in such a dynamic sector that investors and agents have to navigate. The challenges that they face in the real estate market can impact their business significantly, Opines Hirav Shah, India’s Most Trusted Real Estate Astrologer cum Strategist.
With uncertainty in other sectors of the economy, dealing with these challenges is at the top of their list of priorities.
Which are these impactful real estate problems and current issues, that investors, entrepreneurs and agents need to jump?
Shah Lists Them Down Clearly.
Irrespective of our economical stature each one of us looks forward to that one house that can be called our dream home. Be it a single room with a roof, a 1/2/3bhk apartment’, penthouses’/villas’ or it can go beyond, but the bottom line is we want our own space.
Covid-19 has impacted a lot of us in various ways, some industries have benefited enormously, and on the other hand, many of them have shut down or are on the verge of shutting down. Except a few of the verticals all of us are at struggling to survive and fight this pandemic.
The market has further gone down, property rates have further gotten slashed, and on the other hand, there were people who encashed this pandemic situation by negotiating with the developers and owning their dream homes.
There is a well-said Proverb –”something is better than nothing” or “a bird in hand is better than two in the bushes”. In this fight for a survival situation, the real estate industry, or for that matter any industry’s first objective is to meet their daily operations.
Big companies and real estate firms, who followed practices of offering standard pricing and payment plans to their customers’ have now come up with huge discounts and flexible payment plans. People working in sectors which have been least impacted, people with secured jobs and on time salaries have cashed in on the opportunity and have owned their dream homes’.
As vaccines have been made available, things will be returning to their normal situation hence all we can predict is that, “Covid-19 is not here to stay and nor are these offers and opportunities”.
2. Economic Renewal
Despite the short-term disruptions, the real estate sector continues to attract interest from occupiers and investors looking at the long-term horizon. With 90% relaxations provided by the government post COVID, employers and employees are seeking the right balance of in-office and remote working options.
In 2021, a steady flow of investment has been seen, as easy liquidity by global central banks have ensured the interest rates to be low, and hence funds have been chasing investments with high yields. Following SEBI’s amendment of the rules of REITs, an inflow of investment in real estate that offers lucrative returns, as compared to other investment avenues, has been observed.
With improving growth prospects, real estate prices in the prime cities are expected to stay stable, with upwards growth in certain pockets as demand grows.
So, the real estate sentiment has improved, but not robust yet.
3. Capital Market Risk
The post-COVID-19 economy will be constrained by long-run potential GDP growth of only 1.5 – 1.6 percent. That is the ‘new normal’ for which people need to prepare.
Capital market risk rounded out the top three issues of concern as the last few months have presented not only real time volatility of the capital markets, but also confirmed how quickly debt and equity capital liquidity can stop flowing when risk and returns are difficult to measure.
One thing being seen is that volatility has spiked which makes pricing debt more challenging. While pricing stability and liquidity appear to have somewhat returned, late payments and loan defaults have seen a significant increase.
This is a critical issue affecting the real estate industry in 2021. Millennials are increasingly finding it difficult to find affordable housing near their places of employment. With millions of individuals under 40 struggling with student loan debt and rising healthcare costs, even modestly priced real estate can be difficult to afford.
As per a study, the housing shortage could become the worst ever in history. There will likely be increasing demand, yet a tight supply of what is considered “reasonably” priced housing options. Real estate professionals will need to find solutions to the problem of increasingly out of reach housing for people.
5.Adapting With Technology
Finally, the real estate industry will need to face the challenges of keeping up with advancing technology. This is also one of the problems with real estate agents globally. This will include smart technology in the homes and apartments that home buyers will be looking for as well as technology in the real estate industry itself. New technology in real estate includes Buyers that directly bypass agents when purchasing a home from the seller.
Video marketing and virtual tours have been around for quite some time, but will almost certainly continue to evolve and require realtors to keep up with this technology. Many potential buyers may want to be able to completely view an entire home online before making an actual visit. If a real estate company doesn’t keep up with the latest technology they could potentially lose a significant number of sales.
The future belongs to those entrepreneurs and realtors, who can adapt to the tech- changes.
Knowing which rooms and spaces are available is helpful, but understanding how they are used makes the actual data much more valuable and can lead to significant changes that cut costs and enhance productivity.
Substantial improvements can be made when actual room and space utilization is recorded, analyzed and understood. Consider a company that just implemented a flex-work program. Many of the mobile workers who used to work from their office cubicles are now working remotely—leaving their personal workspace in the office empty for the majority of the work week. By knowing exactly how much of the space is being used and how often, the company can repurpose the vacant cubicles and other unused spaces, or retract its overall real estate footprint, contributing to a reduction in its real estate expenses.
Likewise, rooms and space can be repurposed to increase productivity.
Everything from bridges and roads to mass transit are in dire need of repair and upgrade. Infrastructure needs can affect where companies want to build or relocate, which ultimately affects the real estate industry.
When businesses decide not to come to a certain area, this means private home buyers won’t be coming along either. Crumbling infrastructure can also affect the homeowners that already live in certain areas. Potential homeowners often make decisions regarding where to buy that are dependent on access to particular highways and dependable transportation in the area.
8.Natural disasters and Climate change
Despite all the data and research, natural disasters are unpredictable and this plays havoc on homeowners and developers and increases risk to homes, both single-family and multifamily.
Immigration affects the skilled and unskilled labor pool. Additionally, immigration impacts both residential and commercial real estate, and affects both urban and suburban areas.
Residentially, changes in immigration policy mean fewer new households, reduced rental/owner demand and reduced broker transactions. Policy as we know, is contentious, it’s an issue to be thought about today but will have larger implications in the next 3 to 5 years.
10.Competition from Nontraditional Markets
This is one of the biggest commercial real estate problems. Traditional real estate agents will continue to face stiff competition from nontraditional sources. These sources include options such as fee-for-service brokers and virtual realtors. While most brick and mortar real estate agents will almost certainly have developed an online presence and implemented new technology, it’s still not the same as a company that completely operates online.
Realtors that still operate from an actual building will face increased competition from companies conducting business completely online. Some of the basics will still apply, however. Providing excellent service and being available to your customers will always help a business succeed. Providing local expertise is another way that agents can meet the challenge of competing with virtual realtors.
Real Estate can lead to Real Big Money provided you stick to it for long and beat all associated issues, Says Hirav Shah, Real Estate Investment Adviser and Property Astrologer.
Meanwhile, having managed his father’s real estate business for a short period, Hirav knows the process and struggles in and out. His expertise in providing a timeline for clearance of unsold properties or inventory is unprecedented and everybody in the industry knows about it.
Lastly in Real Estate Business,
You need to STRATEGIZE.
You need the TIMING to be right, aside everything else.
You need ASTROLOGY by your side for your success and prosperity, Concludes Shah.