Developers are Thinking Of Maintenance Charges Discount, Waivers for Tenants: Report

Several real estate developers in the commercial property segment are planning to offer discounts or waivers in common maintenance charges to their occupiers. However, there are no visible trends in favour of rental deferment or discount until now across top seven Indian cities, said a JLL India report.

Despite government guidelines, companies are more cautious and are functioning with 10%-30% of employees with increased focus on sanitization, employee health and well-being. In the markets of Mumbai, Delhi-NCR, Chennai and Kolkata, developers are open to discuss extra rent free periods in cases of new deals.

“Real estate as an asset class is here to stay; however, it is inevitable to reinvent, to stay relevant in this new paradigm. It is indisputable that the pandemic induced disruption is changing the rules of the game, but also accelerating the increased adoption of technology and artificial intelligence (AI) in processes ranging from marketing and sales to loan modelling and data management,” said Ramesh Nair, CEO and Country Head (India), JLL.

In the quarter ending March, the office market saw the net absorption fall by 30% to 8.6 million sq ft in, mirroring the moderation of quarterly economic growth to 3.1%. Expansion plans of many companies paused resulting from deferred deals, while real estate strategies shifted to re-negotiations of contracts and delaying fit outs. In the short-term, re-negotiation of contracts between landlords and occupiers is the underlying trend in the office real estate market.

“While the office sector is expected to lead the recovery cycle, the green shoots of recovery in residential real estate will be in tandem with overall economic growth and improvement in the current fragile employment scenario. Institutional investors are expected to assess the progress in each sector and are likely to focus on asset management and support projects for their last mile funding in the short term,” said Samantak Das Chief Economist and Head – Research and REIS, JLL.

Due to the pandemic, homebuyers have deferred purchase decisions, resulting in a 30% sales decline in the first quarter of 2020. In the short-term, developers will focus on restarting their construction activities and offloading unsold inventory.According to top residential developers surveyed by JLL India, there are Indications of price rationalization in Delhi NCR, Bengaluru, Chennai and Kolkata. Construction activities are expected to gradually resume nationwide and in major cities, projects are resuming.

Residential market’s revival hinges on intensity and duration of the pandemic. As consumer sentiments improve post the lockdown period, sales in the affordable and mid segments are expected to show initial green shoots of recovery towards the end of 2020, with the onset of the festive season, the report said.

While annual investments into Indian real estate crossed $5 billion for the last three years, 2020 started on a weaker note, the time period between January to March 2020 saw a 58% on-year decline in investments, with transactions paused. In the short term, the institutional investors are expected to be risk averse and cautious over the next few quarters leading to extended investment cycles.

(Source: Economic Times)