COVID pandemic has shaken our entire world not just economies, businesses but also the society. Much has changed since the Coronavirus hit the world in December 2019. Amid countries applying numerous measures to contain the pandemic, businesses came to a halt across the world, forcing monetary agencies to slash growth forecasts for the global economy, recent report from MOODY's, GOLDMAN SACHS, IMF show the same result .
While the ill effects of the pandemic are already being felt across world, varying opinions are emerging on COVID-19's impact on the real estate sector. A more shocking fact emerges research agencies are predicting a near-term halt in growth of real estate in India. PropTiger.com data show housing sales in India's eight major cities declined by 66% in the period between July-September 2020. The lockdown, brought most economic activity in the country to a halt, it has hurt all sectors, including real estate. The inauspicious impact of the Coronavirus is visible on housing sales in the last quarter of the last fiscal because March is usually one of the biggest month for sales," says Dhruv Agarwala, group CEO, Housing.com, Makaan.com and PropTiger.com.
But central government is trying hard to give some relaxation to this sector, The Centre announced higher tax breaks and lower interest rates on home loans to make purchases more lucrative, apart from setting up an Rs 25,000-crore stress fund for stuck projects. The demand halt in the residential segment has already curtailed housing sales, project launches and price growth in India's residential realty sector, which has been under the pressure caused by big regulatory changes, such as the Real Estate Regulatory Authority (RERA), the Goods and Services Tax (GST), demonetization and the benami property law.
Companies not only in India but worldwide have provided work from home facility to their employees which has led to decrease in office demand that has further led to downfall in revenue generation. Majority of malls were empty during look down and even now many of them have little crowd that led to less investment in new property, new ventures. Another sad news for real estate business is that now many home buyers have also post poned the buying of new houses because of majorly two factors-
1) Chances of Getting infected from virus.
2)Uncertainty of their own financial condition.
3) Fear of losing their jobs.
Delay in supply of construction material is another significant reason for downfall of real estate sector many of the workers have returned to their native places in month of may June. Due to scarcity of cheap labor it has become very difficult to operate functions under same price. But covid has changed many things for sure in our realestate business, like- With the forced lockdown and continued Work from Home (WFH) and online schooling, people are now eyeing larger homes - even if they have to move to the peripheries to fit their budgets. There's high demand for 3 BHK. The increase in demand for big houses in not a bad sign for this sector but now the housing plan needs a change. It has been known fact that the sector, especially residential segment, has already been struggling with project delays, regulatory changes for last few years. And How the coronavirus will affect it, is a new question. There is a belief that the residential market would be affected more as the problem of labor, delays, finance and sale will only get worst. The estimate is that people will lose jobs and would not take a long-term loan when they are not confident about the future. The developers may not be able to sustain the present debts and would go bankrupt if the government does not come out with a relief sooner or later. Even labor would not come back to big towns as they will feel comparatively safer in the villages, which might end up increasing production cost. With labour unavailability, the costs of building homes would go up due to increase in cost of labour and the low supply will result in increase in cost of materials .
Dispite all our fears and less expectations, real estate in the post-covid world will most likely survive and eventually thrive as an asset sector, though it will have many changes and many different things. Decentralization, redistribution and restructuring will be the major themes of this mega transformation which is also the need of time. The good news for India is that in the long-term housing demand trend remains constant due to a young population which continues to enter the workforce in large numbers. In the last few years, there has been a huge shift in mindset among first-time homebuyers who began to favour a rental home, different from the established choice of Indians to buy homes. there will be increasing preference to move away from the polluted, congested parts of the city. Cities like Bengaluru, supported by metro rail connectivity, are already witnessing a shift toward the suburbs. In those sub urban area there will be a huge demand of housing and that will help real estate to flourish again. With better connecting network, satellite towns will emerge and we saw that in case of National Capital Region, this could get replicated in other metros like Mumbai , Bengaluru this will get a huge jump for real estate market.