While the pandemic has brought radical changes in the way people work and work-from-home (WFH) has become the standard protocol of following Covid-appropriate behaviour world over for almost 18 months now, Niranjan Hiranandani, co-founder and managing director of real estate giant Hiranandani Group, expressed optimism that 10% GDP growth will lead to rise in requirement for commercial space.

In a dialogue with Kailashnath Adhikari, during the webcast of Visionary Talk series held by the public policy and governance analysis platform, Hiranandani said that with a lot of people very comfortable WFH,  a large number of people would want to continue to do so provided the company is satisfied that WFH operation is efficient and good enough operation.

He said there will be certain advantages to the employers that they don’t need office space to that extent with WFH. But the downside is that “you cannot monitor people as much as you want to, besides other factors like interconnecting with people and bringing up companies. They find it extremely difficult to say they there will be bonhomie and a part of time when you physically working together. I don’t think there will really be a WFH which will be 100% paradigm. Provided the companies are comfortable 10%-15% people will be able to WFH and commercial space may see a downturn of 10%-15% and rest will come back.”

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Unlike earlier when people would be cramped up in offices like packs of sardines, that has changed today, he said. Social distancing, lesser number of people per sq ft and with more room available, going forward there could also be multiple hub-and-spoke offices within a city centre as not many people have enough space to WFH and are very uncomfortable.

To illustrate his point, he said in the next two-three years, the Hiranandani group will add 3 million sq ft of commercial space in Mumbai region alone. “We are heavily committed to the fact that in the next couple of years India will grow, GDP will grow, commercial space requirement will grow and specially the need for A grade offices will grow much more than anticipated. Corporate entities, both Indian and multinational as well as IT sector, require office and commercial space,” he said.
 
He added that the pandemic led people to start valuing their homes as earlier they never got to spend so much time at home. “Today having been stuck at home for more than 15 months they want better quality homes with amenities and surroundings and this has led to a spurt in demand for housing  in both  affordable and premium. With Covid, there is requirement of value of having a good quality home in affordable as well as premium sections.”

Responding to a query on the huge amount of completed and unsold inventory on one hand and partly constructed and abandoned inventory on the other hand spoiling the skyline of Mumbai city, Hiranandani attributed the troubled state of affairs to a mismatch between users’ needs and the actual product in terms of price or size.

He said even though many people would buy a house if it is affordably priced, there is a mismatch between supply and demand and that is one of the reasons due to which this scenario has happened. Flats that were ready and did not have a mismatch got sold within this period.

Secondly, he said, where housing has a mismatch with infrastructure or price point or the size of tenements do not meet the demands of the market place you will problems. When Parel area with many large mills and other properties started redeveloping, unfortunately no good infrastructure came up in that area in terms of roads and railways. “When you don’t develop infrastructure pari passu with development of housing then there is a problem. Housing cannot be developed in isolation. It needs water, roads, police station, hospital, education centres, gardens and all supporting infrastructure.”

Lastly, he said, “projects got stuck due to mismatch in funding, financing and other issues which have become complicated since demonetisation took place. Subsequently ILFS went into disaster, there were problems with GST and with RERA coming in… and all these things coming one after the other many companies went into NCLT and had problems in the market place. NBFCs like ILFS had to stop funding as it went into liquidation ... all these complications created problems of incomplete buildings and construction problems... all sorts of complications continue to rule the roost.”

On real estate investment trusts (REITs) and infrastructure investment trusts (InvITs) in real estate, Hiranandani said they are safe investments, give good dividends over a period of time, give opportunity for capital appreciation. “REITs will continue to be very good investments.”

InvITs, he said, would be hundred times larger than REITs and provide bigger investment opportunities in the next five years and even match REITs over a period of time. Both instruments are very sophisticated.