The epidemic may subside, but its lessons will be prolonged. Quotes from lockdown or economic ruin? Focus on how some sectors will change
This is another segment that will observe cross currents which may affect the final result. Let’s see what works for the industry. As social distance is ideal, there will be reluctance to travel on public transport and the natural consequence will be greater demand for automobiles and there will be a choice between a two-wheeler and a car depending on one’s income level. This will generally increase the demand for vehicles which will lead to more traffic congestion on the roads. In particular, people in larger cities will prefer two-wheelers because of their adaptation to traffic jams.
Due to the tendency to work from home a countervailing force will be in low demand form and offices also prefer their employees to work from home to save office space. This will reduce the demand for vehicles which will be used for leisure activities instead of commuting to work. Several have left office space and introduced part-time work-from-home rules where workers come to the rotating office and work with existing or cut office space. This makes travel less stressful and therefore can reduce the need to own a car.
The industry needs to keep this factor in mind as long as these new trends emerge and cement.
This industry also has to fight with different forces. Companies now realize that where employees can work quite efficiently from home, the demand for office space may decrease. Thus, commercial property must see a decline and the sector must be prepared for the same. We have also seen an increase in co-workplaces in urban India where professionals prefer to rent general offices where overheads on tenants are unexpected. Over the months of lockdown where everyone has been working from home tenants have realized that it is possible to do business from home and will therefore reconsider their options. Therefore, this whole business concept will be at risk and the spaces that have been set up in the last few years will work with less power. This can lead to lower rents and lower promoters’ income.
Commercial property is also published in malls and retail setups. Kovid’s influence has had a profound effect on both of them. Companies with their own showrooms were forced to close in the first few months of the lockdown and will reconsider options based on demand. It holds for clothing, toys, cosmetics, phones, electronics, etc. Competition from ecommerce format has always existed and will increase sharply in this situation. The malls have already reached surplus capacity in big cities and will be further challenged with access restrictions and SOPs that affect footpaths. So there will be a slowdown in the construction of new installations.
Even on the residential front there will be developments that could change the way people live and so the realities affect the players. Metropolitan cities and other urban areas that have been hit by the epidemic may not be the first choice for most people to buy a home. Traffic jams and slums will affect because and where there is work people may be forced to work, where alternatives will be used. Similarly, the tendency to have multiple homes in places like Mumbai and Delhi will be a thing of the past as investing in satellite cities and towns will make more sense in terms of clean living.
One can only hope that the long-term effects of the epidemic will change the way people live their lives, where hygiene prevails and the people of the city change their way of life. This could mean building more homes that are spread out in remote suburbs that facilitate social distance and instead of being in crowded tenements that people in industrial-based slums prefer to stay out of town and travel safely. . Individuals need to find more space in the home because families locked in small apartments cannot conduct business, education and leisure in limited space as family members fight for space and network connectivity.
While no one can ever be sure of the possibilities and how individuals react to these, the commercial part of the story must rule and so real estate developers must be prepared for such a changing situation.
This is a part of India that has to innovate for sure. The airline industry is always under the pressure of high debt and high losses. Some have occasionally broken this link, but often have not succumbed to the syndrome. The shutdown effect in this industry has intensified and will continue to be challenging.
Travelers are of two types, business and leisure. Both engines have to fire to keep the industry going and there are problems. Business travelers will take time to come back because home practice work has shown that business can be conducted from home and there is no need to travel anywhere to meet clients, customers or executives. This new style of work has also benefited companies that have saved costs because the work is being managed through technology without going outside. While travel elsewhere has traditionally been considered an entitlement or perquisite, especially when someone has moved to a corporate position, companies will now be more prudent. Also, executives may be apprehensive about traveling and therefore prefer to do it from home. In addition to the Fear Syndrome, companies will also be willing to pay for such trips, which in turn will add to the overall business potential.
Retail sale through bricks and mortar
The lockdown has forced everyone to move to e-commerce and supermarket options where available. Some big players have been able to grab customers ’wallet shares during this period and have paved the way for investment in the area by providing groceries at competitive prices. E-commerce has always had its advantages where doorstep delivery has made it an attractive option. Amazon in particular has made significant gains in the pantry business, which has grown significantly over the years. This is not good news for the local retail outlets of the Ma-o-Pop variety. Their business was affected by erratic and irregular supply which made it difficult to meet the needs of the customers. This was at a time when Amazon, Flipkart and other existing platforms such as Big Basket and Grofers were able to penetrate the doorsteps of several families with their financial influence and supply chains. The local Kiranas will have a hard time with this lost land and will probably have to run out at some point due to the limited financial situation. Such businesses will still survive in rural areas but will see a distinct change in metro and larger urban areas.
Quoted from ‘Lockdown or economic ruin?Madan Sabnavis with permission from Atlantic Publishers and Distributors
Lockdown or economic ruin?
Atlantic publisher and distributor
Page 222, 595 Rs