The coronavirus pandemic that broke out towards the end of 2020 created havoc on civilization and human existence. Many businesses, organizations, and industries suffered a massive dip in their margins and clients. The real estate market was no exception to it. Before that, anticipations were made that 2020 would turn out to be a recovery year for India’s real estate sector and mainly the housing section.
However, there were numerous roadblocks to the growth path, such as the GST Implementation, RERA Realty Law, Demonetization, and the NBFC crises that resulted in the Real estate market dip. The market slowly began to flourish back as the havoc of the pandemic again hit globally. Later on, the lockdowns started, and the market was completely crushed from the core.
Rise of Digital Technologies and Use of Electronic Media by Developers
Due to social distancing and lockdown, developers started developing digital technologies to introduce newer projects and ventures. Gradually, the pandemic led to growth in the digital world, and even real estate switched to the latest technologies after analyzing customer intentions. Sales in real estate were surging by October 2020 as the interest rates of home loans began to decrease by 7%, and customers started numerous available benefits like low housing prices.
The real estate market was highly impacted by the arrival of the lockdown and people getting more conservative with their finances. While things seemed to get better, the COVID-19 virus hit back with the new mutant, Omicron.
How Did Coronavirus Affect Real Estate Market?
With the loss of jobs, businesses dipping down, and the slashing of salaries at organizations, there was a drastic change in property transactions. The world came to a standstill after the lockdown, and the real estate market struggled badly with the blues. Post that, the real estate market came up with numerous steps to attain the recovery.
The real estate market has endured numerous setbacks after the pandemic’s 1st, 2nd, and 3rd waves. However, it will show gradual recovery as of now. Experts have mentioned that the market can completely recover by 2021, which was also evident. The market revived as the inquiries began, people started making site visits, and sales also started increasing.
With increasing healthcare issues and partial lockdowns, the Real estate market has experienced yet another hit! Again, the market got stumped as April 2022 marked an even more fatal and dreadful wave of COVID-19. The latest variant proved fatal and considerably impacted cities like Delhi, Mumbai, and Pune.
Influence of Covid-19 on the Real Estate Market
A considerable impact of the coronavirus wave on real estate is evident as the sector faced a tentative loss of over Rs.1 Lakh crore after the pandemic broke out. This led to a big financial glitch for the real estate developers.
The reduced capacity of buyers to take loans resulted in reduced residential sales in the top 7 Indian cities. The dip was significant, with almost 4 Lakh units in 2019-20 and 2.8 Lakh units in 2020-21. Outstanding loan portfolio on home loans was also significantly high during this time.
The extraordinary scope of COVID-19’s impact on Indian real estate may be gauged by the sector’s loss of over Rs 1 lakh crore since the pandemic broke out (Source: KPMG). According to the research, the pandemic resulted in severe financial constraints for real estate developers. The loan crunch reduced residential sales in India’s top seven cities from four lakh units in 2019-20 to 2.8 lakh units in 2020-21. At the end of FY-21, the outstanding loan portfolio of home loans in India stood at a whopping ₹22.4 lakh crore, growing 12.1% since its size in FY-20. Also, between FY-17 and FY-21, the Indian home loan market grew by 32% CAGR.
Wrapping Up
The real estate market has witnessed a fall of over 40% in the first half of 2021-22. Towards the end of 22, the market slightly started returning to normal, and the sale of inventories started surging. With the rising work-from-home culture, there was also a negative impact on offices leasing commercial spaces. The net lease rates were reduced by 33% last year, and the count of unsold residential and commercial inventories was raised by 71%.
Reduced mobility of people due to lockdowns and decreased purchasing power resulted in the negative impact of COVID-19. After the mass vaccination efforts, the market slowly started reviving, and the positive impact was evident on property values and sales. Initially, developers slimmed down their profit margins, and slowly, the market started taking back the pace. Real estate experts are optimistic about further revival and growth of the Real estate market in the coming times!
