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June 24, 2020

COVID – 19, Impact on Real Estate & Future

By Mr. Haseeb Noor

COVID – 19, Impact on Real Estate & Future

The world is set for change post Covid – 19, so is real estate markets across the globe, the impact on the Indian real estate markets would be something to watch for as it would a tremendous bearing on the economy and the construction industry which contributes substantially to the GDP.

In order to foresee the future it is imperative to understand the impact first, at the outset with outbreak of Covid-19 and the consequential events witnessed steep fall in Stock markets around the globe, loss of employment to both skilled and unskilled workers, further fall in GDP which was already reeling, dip in demand and sales of non- essential goods including automobiles, capital goods, precious metals etc., to name a few besides manufacturing, exports, trade and commerce coming almost to a standstill, obviously the slow down having a cascading effect on various sectors projecting a grim and stressed picture overall, casting apprehensions on the impact on the real estate markets in terms of demand, volume of transaction, pricing and valuation of the properties.

In fact it is premature to ascertain the impact of Covid- 19 on the real estate market, certain changes are evident post Covid – 19, however to comment precisely or assume based on the apprehensions of slow down or fall in real estate market would be inappropriate at this point of time.

It is estimated it would take about three months for the markets to normalize from the temporary setback the market would suffer, this time would be required to overcome the fear of pandemic and events that followed which resulted in liquidity crunch, slowdown in earnings and more importantly mindset of people to settle and look at things afresh with positivity. This period would witness renegotiations, waiver of rents, interest, postponement on payment of installments and even termination of contracts in a few cases.

Post the said period of three months, we would hopefully see regeneration of interest from prospective buyers and tenants but with different expectations and three to six months from then one can expect decent quantum of transactions across all segments which means reasonable volume of transactions by the end of this year.

Residential and commercial leasing followed by commercial sales should stabilize faster than the other segments. Residential sales (apartments and villas), land, hospitality, warehousing, plotted developments and industrial properties would attract reasonable demand say by this year end. It would not be surprising to see a upsurge in prices and a vibrant market in the last quarter of 2021 indicating a boom in the offing.

A major correction in pricing is rather unexpected for the reason, pre-pandemic itself the market/pricing was corrected due to the recession over couple of years. Even minor correction on account of economic slowdown arising out of pandemic should be looked at as an great opportunity for investment with flexibility expected in mode of transaction.

Indian Sub-Continent with a vast population of 1.33 billion comprising of large skilled and unskilled labour ,real estate markets regulated by RERA, stressed condition of Banks, insecurity of overseas jobs, support expected from Government and with strong and reliable Builders fraternity ably supported by the professional realtor fraternity will instill confidence to invest in Indian real estate vis-à-vis other European, American, Middle East and Far East countries in the current situation. There should be no hesitation in the world looking to India as investment destination.

Let’s look forward to India as Vibrant India – JAI HIND

 

 

 

 

 

 


Haseeb Noor