REAL ESTATE: POST-COVID 19

India’s real estate sector –both the residential as well as the commercial segment – has been impacted by the Covid-19 pandemic. The industry will need to reconsider pre-crisis priorities and accelerate new strategic initiatives to adapt to a “New Normal”. The sector will have to reinvent itself to understand, comprehend, plan and implement new innovative ways to meet the emerging new requirements.

While it will prompt the real estate sector to go back to the drawing board, it also offers new avenues to explore innovations as also to fast-track incorporation of new technologies, be it construction technologies and home automation. The planning would need to incorporate altered norms of social distancing, mobility, density and health considerations.

The Real Estate market has hit rock bottom with the pandemic as the numbers have gone down significantly.

• The global real estate investments have declined by 33%
• The market in Asia has been hit the worst with a fall of 45%
• The supply of office space declined by 27%
• The sales of residential property in India declined by 54%

houses would drive the buyers towards nearly completed projects, requiring the builders to put in much larger investments into their projects. Servicing these increased investments would create an additional financial burden, which will necessitate completing the projects in the shortest possible time for them to be able to sell their properties to the buyers to generate resources.

To minimise the construction time, the use of construction technologies would be imperative. These technologies would also be mandated by the non-availability of labour, especially migrant workers who may not return fast enough. Amidst all the crisis, the government reviewing its FDI policy for a 100% investment in real estate certainly presents a ray of hope. Companies with a good product mix of commercial, retail and residential properties would be the first to start gaining as the economy and realty markets recover.<.p>

No one is sure when will COVID get over, but it is going to change the reality sector significantly, most probably for the better. This is how we foresee the impact:

With Work from Home norms and more surplus available in the hands of investors, purchase of residential properties will see a rise. The residential property market in metros such as Bengaluru, Mumbai, Delhi, Pune and Chennai have witnessed an increasing number of young professionals vacating rented homes and paying-guest accommodation, or asking for rent relief. Many such tenants have moved to their hometowns or are in the process of doing so, with companies also extending the work-from-home option as there is no let-up in the pandemic situation.

Maharashtra government has also lowered the stamp duty from the existing 5 % to 2% in the Urban areas and from 4% to 1% in the rural areas starting September 1st till December 31st and will be pegged at 3% from January 1 till March 31, 2021. This will definitely give a push to the delayed purchases.