The deadly corona virus doesn’t seem to have spared anybody or anything. Leave alone humans, it’s one of the few pandemics that’s locked down the entire global economy. We have already started experiencing its negative effects on all sectors of the economy. Here we evaluate the coronavirus impact on real estate so far.
How COVID-19 has Affected the Real Estate Market
The corona virus vibes have pushed down the Indian real estate market to an all-time low. This was clear from a quarterly sector report ending March, from the Economic Times. Experts predict both residential and commercial properties to be hit hard. A serious blow is likely to leave an impact on property launches, sales, and rates.
To make matters worse, we cannot expect this virus impact to end anytime soon. With the closure of commercial offices across the country, no new supply additions is in the pipeline. Besides that, the situation is likely to be at its worst in the coming 6 months, according to a review.
There’s not much hope in the leasing sector as well. More than 50% of the inspection respondents are of the view that leases are likely to remain below par. As far as rental appreciation in the future is concerned, chances are bleak there too. Rents are either expected to remain slow-moving or dip further given the instability in the economic situation.
Coronavirus Impact on Real Estate: Buyer Confidence to Go Down
The residential property market in the nation has been in the face of weak demand for a while now. The current economic slump is further likely to decrease this demand. Most important, it’d be a difficult phase for the launch of new projects and completion of the ones in progress. This is likely to be because of the huge shortage of labour amid the current lockdown. Not to forget, halt in the construction process has also sent buyer confidence to an all-time low. People aren’t hopeful of on-going projects completing anytime soon (even after the lockdown’s lifted).
Besides that, until the market starts picking up again, restoring end-user confidence is going to be challenging. Interestingly, the buyer sentiment had started showing progress in the December ’19 quarter. It had been stagnant at the below 50 levels for two quarters in a row.
However, since the outbreak of the deadly virus, this sentiment score has further dropped to 31 in the quarter ending March ‘20. The unenthusiastic buyer attitude is most reflective in the western and northern parts of the Indian real estate market. This is because these two regions of the country have the biggest hit of Corona.
Summing Up
COVID-19 lockdown has stopped the progress of the real estate sector, much like the other industries. Even after the lockdown, the market would be able to bring back normalcy only if the government provides a strong fiscal drive. Whether that happens or not remains to be seen. Moreover, for that to happen, it’s most important to perk up the buyer confidence first. Well, this is both for Indian and foreign investors.
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