This Is How COVID-19 Has Impacted The Real Estate Market Of India – A Must-Read
After the nation was hit by the first wave of COVID-19, just when it seemed that the revival of the real estate sector was not far, the country was hit by the second wave of Coronavirus in a more deadly form.
So, without delay, let us look at how COVID -19 has affected the scenario of Indian Real Estate.
The positive impact of COVID -19 on the Indian Real Estate Sector is–
Home affordability has increased – While RBI has kept its repo rate unchanged at 4%, softening of home loan rates to as low as 6.65% annual interest has been a driving force to re-engage buyers in the real estate market. This is in contrast to the average home loan interest rate of 8% in January 2020, which is a big relief for existing buyers who have to cope with job loss and wage cuts yet manage their EMIs. Moreover, low property prices coupled with attractive offers from cash-strapped developers have helped boost demand for residential property.
Digital Adoption by Real Estate Industry – In an effort to recover from the blow of the pandemic, real estate agents have turned their attention away from traditional approaches and started using digital business strategies to market their properties or launch new projects. With no physical tours available during the lockdown, buyers are discovering new homes using virtual tours, drone footage, video calls, etc.
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The Negative Impact of COVID -19 at Indian Real Estate Sector is –
A near-stop situation for construction activities – With the imposition of international trade restrictions due to COVID -19, India’s availability of manufacturing materials and equipment has suffered a huge setback as China happens to be our nation’s main supplier. To make matters worse, workers from many under construction sites have returned to their hometowns. Both of these factors have negatively impacted the scheduled delivery of real estate projects, causing them to be delayed by at least 4 to 6 months. It has also increased the overall costs for the developers.
Reduced demand for business premises – With the intention of curbing the spread of Coronavirus infection, businesses had no choice but to announce remote working for practical and safety reasons. Thus, work-from-home culture became the new normal. But the concept of remote working has proved detrimental to the growth of office space rental companies, as businesses and co-working providers further shelved their expansion plans in the wake of the pandemic. It has been reported that net office space leasing has declined to about 35 lakh sq ft in Jan-Mar 2021 from about 70 lakh sq ft in the corresponding period of 2020.
What does the future look like for the Indian Real Estate in 2021?
It was expected that 2021 would be the year of recovery for Indian Real Estate Market. However, the recent lockdowns and restrictions on construction activities have forced investors to maintain a cautious mode. However, once the situation is under control and the rate of infection is brought down, the enthusiasm of buyers to own a flat/house will skyrocket as people have realized over time the importance of the sense of security that owning a house brings. But the pace of revival of the real estate sector will depend solely on how India deals with the second wave of the deadly pandemic.
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There is no denying the fact that COVID -19 has adversely affected numerous sectors of the economy, including the Indian real estate market.
However, if you are a financially stable investor, you should take advantage of the recently lowered interest rates on home loans to make a valuable investment in a real estate property in Kolkata.