Impact of COVID-19 on Indian Real Estate
The year 2020 was considered a recovery year for the real estate sector in India, especially for the housing section. With the business disruptions caused by demonetization, the GST implementation, the NBFC crisis, and the RERA realty law, the market had slowly started to gain its strength. However, as the pandemic hit globally, the recovery halted. The lockdowns imposed to prevent the spread of the virus crushed the hopes of the Indian real estate market.
Developers Turn to Digital Technologies
Most brokers and developers stuck to digital technologies to introduce new ventures and projects. However, the pandemic charted a road for the digital world, and as the real estate sector adopted the latest technologies, properties transformed just as the customers intended. On the positive side, sales began to improve from October 2020 onwards, as the interest rates on home loans were decreased to about 7%, excellent offers were introduced, and other benefits like low housing prices brought in more and more buyers. Many reports state that India’s residential real estate market is on the road to a pivotal return with inquiries from serious homebuyers.
The real-estate market has indeed taken several strides towards full recovery, and just when it seemed that everything was just getting better, the world has been struck by another mutant or variant of the virus, called Omicron.
The Scale of Impact Till Now
The extraordinary scale of the impact of the pandemic on Indian real estate can be evaluated by the fact that the real estate has suffered a loss of over Rs 1 lakh crore since the pandemic struck. According to the report, the pandemic has impacted the cash inflow for the real estate segment. The credit shortage, in turn, reduced the residential sales from close to 4 lakh units in 2019 to 2020 to 2.8 lakh units in 2020 to 2021 across the top tier cities in India. Based on a report by Liases Foras, the pandemic-led lockdown has resulted in a rush of unsold inventory from over fifteen quarters at the end of FY 2020 to over nineteen quarters towards the end of H1 FY 2021. The unsold stock was impaired by terribly low sales in Q1 and diminished recovery in Q2 2020.
Impact of COVID-19 on Retail and Commercial Real Estate in India
Residential sales have already been affected, and in addition to that, the work from home concept also affected the development of office space leasing organizations. Based on a report by Cushman and Wakefield, the net leasing of office spaces reduced to close to 35 lakh square feet from January to March 2021 from close 70 lakh square feet in the corresponding period of 2020. As Q4 ended on a positive note with the immunization drive picking up pace, the sudden increase in positive cases across India from February 2021 onwards did help with the recovery cycle, and occupiers remained careful in the April to June 2021 quarter.
Impact of Pandemic on Property Value
As of now, the second wave of the pandemic has not affected the property value of the residential segment. Like last year, developers are withholding prices because of restricted profit margins.
Though the real estate developer community is positive, they are also cautious at the same time. Jitendra Khaitan, the Managing Director at Pioneer Property Management Ltd., states, “the real estate industry has witnessed a gradual recovery since the lockdown was lifted.” The second wave of the pandemic did not affect the property value in the industry much, as people realized the value of being a homeowner after the first lockdown.
NRI investment in Real Estate Amidst COVID-19
The main purpose of Non - Resident Indians (NRI) to invest in real estate has always been rental returns. However, the uncertainties of the pandemic have motivated the NRI community to own a house in India. With deposit rates falling around 6-7%, and the low value of the rupee against the Dollar, the NRIs are actively looking to invest in the Indian real estate segment.
The pandemic enforced the use of virtual visits, and this has enabled the NRI to invest in real estate online.
How is Indiaassetz Helping NRIs
As discussed, the NRIs invest in real estate for rental returns. For an NRI, it may be difficult to come in and get involved with the nuances involved in real estate. Indiaassetz can help with any sort of wealth investment decision - be it buying or selling - by engaging in grass root level conversations. With our help, you may not even need to visit India for any real estate investments.
Calamities such as these bring in a new opportunity for the builders and the government to try new approaches. so there is still a long road ahead for Indian Real Estate.