Impact of Covid-19 on the real estate sector
The long-term impact remains unknown as the longevity of the crisis is uncertain
The COVID-19 situation remains fluid and uncertainty still looms on the possible economic impact of the outbreak. With the global impact of Covid-19 on multiple sectors already, Indian realty sector is by no means an exception. Given that the real estate sector contributes significantly to India’s economic growth, it is important to broadly analyse how the outbreak will influence this sector and it’s still premature to assess the current impact. However, a prolonged impact of the coronavirus could finally put some brakes on India’s real estate market.
The Government’s advice to restrict unnecessary travel following concerns over the coronavirus pandemic may lead to delays in decisions on the real estate space in the short term, but the long-term impact remains unknown as the longevity of the crisis is uncertain.
Assessing the current scenario, Mr. Kaushal Agarwal, Chairman, The Guardians Real Estate Advisory says, “The fear of contagion has dampened business activities across the globe. The impact on real estate will be significant, especially in the immediate short term. Affordable and mid-income housing that has been a silver lining for the sector, over the past several years, will also come under pressure primarily because its success depends on maximum distribution and volume sales. However, we see this impact to be a temporary one, keeping in mind the measures being taken by governments across the world. The situation is bound to recover sooner or later, once the impact is absorbed.”
The festive season which was expected to see a surge in demand owing to Gudi Padwa, Ugadi, Akshaya Tritiya, etc, which are considered to be auspicious occasions for launching new projects and also buying new properties, will not be the same this year. The housing market did witness some traction over the past few quarters due to lower home loan rates and reduction in stamp duty in some states; but owing to the virus outbreak and other factors like generally slow economy and pressure on liquidity, this trend is about to change.
Many developers are skeptical and have their reservations around the launch of new projects considering the current situation. New project launches are expected to see a dip this festive season; however, there will be a few exceptions of course such as projects which are already in the soft-launch stage and have already seen a fair amount of marketing spend. Vijay Khetan Group is planning to launch a new project Codename Amazon in Andheri East on the occasion of Gudi Padwa.
“Earlier we had decided to do a physical launch with channel partners and brokers. But now due to the Covid-19 situation and as a responsible company, we will be conducting a digital launch where we will accept requests and enquiries from customers online. We will then be providing time slots to the customers for site visits where there will be no crowd gathering but every customer will be attended one-on-one as per their respective allotted time,” Mr. Anuj Khetan, Director, Vijay Khetan Group said.
The government advisory to avoid social activities is certainly going to impact site visits and housing sales but these kind of digital launches will boost the developers’ confidence and help revive the real estate sector on the back of lower home loan rates and reduction in stamp duty in some states.
In a situation where the global economy is slowing down, investors and businesses are adopting a wait-and-watch approach; digitization might certainly help in combating the Covid-19 crisis to some extent.
Meanwhile, the Indian Institute of Architects Ludhiana Centre ( IIALC) member architects have decided to not only stop designing work in studios , suspend supervising constructions for few days but had also asked owners to stop construction activity specially on Sunday, 22nd March 2020 to fight against Corona Virus.