Apart from affecting the human body, the pandemic brought drastic changes to all areas of life and business. The world has changed enormously in a few months and people started adapting to the new normal. They have stopped being blindly afraid, but are anxious and cautious for a long time. Offices are closed and the companies started going online, the tourist industry, hotels, shopping have come to a standstill. The construction is suspended and the real estate market, which was so stable and profitable yesterday, became unprofitable, unpredictable, and unpromising.
Did the pandemic affect the real estate industry?
Like every other sector, real estate too has been severely impacted by the outbreak of a pandemic. In the first three months of the pandemic outbreak, it brought construction activities to a halt and significantly affected and destroyed the market of its potential buyer-base. With property transactions sinking to near-zero during the nation-wide lockdown between March and June 2020, the realty sector faced the most difficult times ever. The interdependence of supply chains, reverse migration of labourers, sudden financial crisis, cost overruns came to the fore and emerged as some of the emerging challenges. Developers faced severe liquidity constraints and homebuyers lost the significant interest to buy the property after the job market getting severely affected. All these led real estate to touch the lowest of lows during the nationwide lockdown.
Impact of Pandemic on commercial and retail real estate in India
As per the studies, the Indian commercial real estate market is relatively stable and not as volatile as the stock market. However, as the global supply chain is getting affected by the pandemic, a resulting impact will be seen in commercial markets as well. If the immediate-to-short term effect is considered, commercial leasing and co-working activity will be hit tremendously. However, in the longer term, the commercial real estate segment will bounce back quickly. The lost output has the potential to be gained back by the latter half of 2020.
Is the real estate economy preparing for its recovery?
As the country is progressively bouncing back after the lockdown, the real estate markets have also started showing signs of recovery. As per several leading research reports, India’s residential real estate market is on the path to a decisive return with serious homebuyer inquiries, which are at 50 percent of the Pre-COVID-19 levels in top cities.
The Non-Resident Indians (NRIs) are among the list of people who actively inquire about the property deals available. The primary reason for this trend might be attributed to a weaker rupee, the return of several Indians from the Middle East, and lower housing loan interest rates.
Apart from NRIs, the slowdown caused by the pandemic is being used by the luxury homebuyers as an opportunity to invest in premium properties. According to studies the luxury homebuyers have readily invested in premium properties during the Corona virus pandemic. The primary reasons behind this are the attractive discounts and deferred payment facilities offered by the developers during the pandemic situation.