Page 14 - Banking Finance May 2020

HOUSING

for reverse-migrating Indians in Decentralisation of operations to en- them avoid revenue shortfall, though
smaller cities may prove to be challeng- sure business continuity will be a trend students may use force majeure as a
ing." reversal from prominent consolidations reason to claim refunds," said Gaurav
over the past few years. Karnik, Partner and National Leader -
Anarock's recent consumer survey,
Real Estate, EY India.
conducted during the lockdown period
indicated that of the respondents who Rent for student housing
A few universities have reached out to
preferred to invest in Tier-II & -III cit- facilities may decline
ies in 2020, 61% are end-users and al- If Covid 19 crisis continues for long, the operators asking them to collect fees
most 55% are aged under 35 years. At on a monthly basis rather than collect-
rent for student housing facilities may ing a full year in advance to reduce the
least 47% of respondents are focused
decline by 20 to 25 percent in the next cash flow impact on parents. Some
on affordable properties priced within
few months. The sector may also con- operators are hoping for regulatory
Rs 45 lakh, followed by 34%, who are
solidate with some smaller operators intervention that supports rental ex-
looking for mid-segment homes priced
exiting, resulting in stronger players emptions for tenants in such scenario.
between Rs 45 and Rs 90 lakh.
with a sustainable financial and opera- However, the regulation may also
The residential segment will see mani- tional model, a new report has said. force the operators to pass on the sav-
fold increase in demand for township The current situation of COVID-19 has ings to their students, the report said.
projects, which offer a controlled en- resulted in major changes affecting all
vironment. In terms of supply, township four stakeholders of this segment- the The report noted that many operators
projects have less than 5% overall colleges/educational institutions, stu- may lose out on three to four months
share in the top seven cities as on dents, asset owners and the student of revenue due to the delay in com-
date. Further, market consolidation is housing providers/managers. mencement of the academic sessions.
expected with the increased prefer- Some costs will also increase since
ence for branded developers. Finan- In case the spread of COVID-19 contin- there will be greater pressure on sani-
cially strong organised players are ues for a longer time frame, the real tation and cleanliness. If students de-
likely to occupy 75%-80% market share estate prices, or rent for facilities, may cide to practise social distancing or
in the coming years, the report said. undergo decline by 20-25 percent in operators offer it as a differentiator,

In office real estate, social distancing the next few months and operators they may also see lower occupancy.
norms may increase the per capita of- with a longer-term view can look to
fice space allocations even as a seg- lock in these rentals, the report by EY In terms of bed configuration, on an
ment of employees will work from has said. average, the number of three or more
home. During the last decade, per bed categories to other categories is
capita office space allocation reduced "The B2C model, where most students 45 percent. Assuming a 15-20 percent
from 100-125 sqft to 75-100 sqft, a pay monthly, has seen a larger impact. reduction in capacity, the effective loss
trend that continued till the pre-Covid- Students who have left are less likely in revenue for a 200-bed facility would
19 period of January 2020. Safety and to pay their monthly rentals for the be approximately Rs 15 lakh per an-
hygiene will become the top priorities, remaining two months. But most op- num which results in about 40 percent
even as contactless operations and erators have two months of refund- reduction in margin. A part of this can
automation will increase. able security deposit which may help be recouped through higher fees.

14 | 2020 | MAY | BANKING FINANCE