Impact of Coronavirus on Indian Real Estate
January 13th, 2021
2020 was deemed to be a redemption year for the Indian real estate sector, especially for the housing segment. After all the business interruptions caused by the GST implementation, demonetisation, RERA realty law, and the NBFC crisis, the market was steadying its posture.
As COVID-19 hit globally, the redemption was thwarted. The National lockdown imposed by the Indian Government for over two months to prevent the spread of the deadly virus collapsed the hopes in the Indian real estate market.
The initial two months of the year was fruitful as the business ran as usual. But since mid-March real estate activities came to an unexpected halt because of the lockdown. Till September, all construction activities were stalled because of labour unavailability, and sales went down on account of concerns over economic growth.
Most developers and brokers decided to stick to digital technologies to launch their new projects and ventures. However, the pandemic paved the way for the digital world and the adoption in real estate helped transform properties like the way customers intended.
On the bright side, the sales improved a lot from October onwards, as the lowering of interest rates on home loans to about seven per cent, attractive offers, low housing prices paved the way for buyers.
As per leading reports, India’s residential real estate market is on the path to a decisive return of serious homebuyer enquiries. However, luxury homebuyers used this situation to invest in premium properties as exciting discounts, and partial payment facilities granted by the builders during the pandemic conditions.
Now the authorities have taken steps to open main parts of the economy, including the real estate and construction sector. The construction sector has to carry out activities with proper safety and sanitation norms and proper education for workers working at these sites.
According to a recent report by KPMG, the COVID-19 crisis is likely to reduce the amount of investment into the construction and allied sectors from 13 to 30 per cent, which will directly impact the Gross Value Added (GVA) by this sector as well as its employment generation potential. The report also indicates a hike in labour cost, up by 20-25 per cent, for the skilled workforce engaged in the construction industry.
Even though the world has faced similar outbreaks like this in the past, all has been easily recovered by introducing new innovative ideas and more. Calamities like this bring in a whole new opportunity for the government and builders to try out a different approach.