What does Covid-19 and it’s after-effects mean for Real Estate enthusiasts?

April 17th, 2020

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In the wake of a global pandemic brought on by the Novel Coronavirus / COVID-19 has brought the entire world to a standstill. All the industries irrespective of their domain and sizes have been affected in various degrees; the real estate is no exception as well. A complete nationwide lockdown and the imposition of Section 144 in various states lead to migration of laborers, financial instability, shutting down of companies, and disruption of transportation, bringing the entire sector to a grinding halt.

Despite the grim state of affairs at present, the real-estate sector is expected to recover and surge once the pandemic winds down, and businesses start to surge. The recovery for the sector will be a great opportunity for all the real-estate enthusiasts to invest in it. According to the study conducted by Savills India, a property consultancy, India will most likely see a slowdown in the current, and the next quarter, however, it is expected to benefit stands post the recovery.

Let us look at some of the expected after-effects of COVID-19 and its likely impact on the real-estate enthusiasts.

Demand-supply disruption:

Due to the uncertainty surrounding the current situation and its aftermath, the majority of the buyers are likely to defer their purchase plans in the first and second quarter of 2020. According to some real-estate giants, housing sales are likely to decline by 42% in the first quarter.

This is likely to result in a disproportionate supply to demand ratio, leading to a fall in the prices of real estate. Festivals are usually one of the busiest times of the year for real-estate developers both in terms of development and sales. Festivals like Ugadi, Akshaya Tritiya, Navratri, etc which are celebrated in March, and April see the maximum number of sales. However, due to the lockdown, there has been a huge decline in the demand; this could result in a significant price drop for properties once the lockdown is over. Real-estate enthusiasts will find the second quarter of 2020 to be a good time to invest in properties as the third quarter is likely to see a massive surge in the sector, and therefore investing early would prove to be very beneficial.

Price distribution:

Most real-estate developers and domain experts believe that prices would largely remain stagnant, but the development costs might go up. The reason for prices being stagnant is likely because of the decline in the rate of transactions. The market scenario has been unpredictable for quite some time now, several discounts already exist in the current prices, and therefore any further reduction is quite unlikely as per the experts.

Demand for Residential Spaces: Due to the changing landscape of the current work environment, there is likely to be a shift in the demand, the demand for office spaces will reduce and that for residential spaces will increase. Increasing demand for remote working options is likely to discourage investments in office spaces as more and more companies are switching to work from home options for all their employees.

This is also likely to boost the demand for high-end and luxury residential units as it no longer remains just a home, its functionalities re evolving and making it a lucrative investment for all urban dwellers.

So that was our take on the likely impact of COVID-19 on the real-estate enthusiasts. The second and third quarter of 2020 will be a great time for investment in this sector. However, it’s also a good idea to wait for things to completely settle down as the prices and inventories both are likely to see an unprecedented change.

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