Good morning, Melbourne, Australia's second largest city and a real estate hotspot has spent 248 days in lockdown since March 2020 as you read this, the highest duration among all cities globally.
Back home, housing finance companies are feeling the heat from the lockdowns too.
And while technology is making every stakeholder of the real estate system happier, Gurgaon builders are allegedly pleasing the water tanker mafia.
Read on and you will see.
It Spared No One
Affordable housing loan companies are now facing headwinds too.
With the average affordable home loan borrower struggling to make ends meet for the last year and a half, new loans as well as existing ones are officially declaring the dire straits as their new address.
What Is An Affordable Housing Loan?
Subsidised low interest loans that serve economically weaker sections, low income groups, SC and ST, and women who reside in the outskirts of Metros, Tier I, Tier II and Tier III cities.
Typically, such home loan borrowers come from a household with an annual income of INR 3 lakh to 18 lakh.
Okay, So What's Up?
Nothing. In fact, the total loan books of affordable housing finance companies(AFHCs) only grew by 10% to INR 60,468 crore as of June 30.
This is far below the last five-year average of 24%, per Icra Ratings' latest report.
How Come?
There are two big reasons, brought about by one big pandemic.
First, the growth in the loan book moderated to 10% y-o-y in FY21 and Q1 FY22 due to the lockdowns, thanks to the second wave of COVID, while portfolio remained flat as on June 30, as hard hit folks weren't exactly lining up to buy new homes.
Second, the loan EMI collections for these companies were impacted severely. Unlike the moratorium available in Q1 FY21, there were no such cushions this time.
This increased delinquencies, especially in the softer buckets (0-30, 30-60 and 60-90 days past due), where borrowers could not pay EMIs month after month.
The Way Ahead?
"With steady improvement in collection efficiencies since June 2021, forward bucket movement is likely to be contained for most (AFH) players."
"Though resolution/rollbacks could take longer as it would be difficult for the borrowers of these AHFCs to clear multiple instalments at the same time.", said Manushree Saggar, VP, Icra.
Forward Tech
The one question that keeps most of us going is - 'what next'?
Though real estate is one of the last sectors to embrace technology, here are three emerging proptech trends that the industry is hugging with hope and pride.
#1. Blockchain - Blockchain can help the real estate sector big time through tokenization. Tokenization is akin to cryptocurrency and can be used for seamless and transparent division of a property.
With fool proof ledgers, property can be turned into tradable shares or tokens that could be stored on a blockchain network.
For builders, tokenization means enhanced freedom and flexibility to raise capital. Investors on the other hand can deploy funds more efficiently, and property owners get maximum control over their equity.
#2. Virtual Reality - Often, buyers struggle to envision what a property rendering will look and feel like in real life. With virtual reality tech, buyers can see the finishes, the scale and even the views without having to get off their couches.
Not your average 3D walkthrough that takes an hour to load but we're talking VR glasses and augmented reality that immediately transports buyers into the very space they want to buy.
#3. Shared Housing Tech - A lot of folks are not looking at real estate as just a full-time residence but also as a way to cover costs, enhance equity and build generational wealth. Think Airbnb and VRBO, etc.
Emerging tech is now enabling landlords to market their properties as short-term rentals where the average daily rent can be much greater than a traditional long-term lease.
Half A Cup Extra
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Not In The Pipeline
Despite being one of the most expensive cities to live in, Gurgaon's residents are often left high and dry when it comes to civic amenities.
What will boggle your mind even more is that when long-awaited solutions are finally made available, no one wants them anymore.
Whoa! What Just Happened?
For the last several years, over 30,000 families living across 18 new sectors of Gurgaon have been demanding clean, piped water supply.
However, since a new piped water supply began this August as per residents' demands, developers of only 25 of the 56 affected housing projects along the Dwarka Expressway have applied for this water connection.
The rest are still either drawing groundwater or supplying potable water via tankers, costing residents a lot of money.
Next Step?
Seeing this cold response, the department of town and country planning (DTCP) is issuing notices to the remaining developers, asking them to apply for the water connection within the next fortnight.
Gurgaon is already in the dark zone and illegal groundwater extraction, which is highly detrimental to the fragile environment, needs to stop immediately.
All help to secure the connection is promised by the DTCP and so is the guarantee of penal action in case of evasion.
Business As Usual
Praveen Malik, vice-president of the United Association of New Gurugram said to the press, “There is a nexus between some builders and the tanker mafia, which is why they are deliberately not taking water connection from the GMDA."