COVID 19 Short & Long Term Impact on Real Estate Market
Coronavirus or COVID-19 is all that everyone is talking about! The novel disease has moved beyond its point of origin in China’s Hubei province to the rest of the world and no one can accurately predict how long the Coronavirus will last or when effectual vaccines can be rolled out. As the adverse effects of the pandemic are already being felt across the world, differing opinions are emerging on COVID-19’s impact on the real estate sector. Let’s analyze the short and long term impact on the real estate market.
Understanding COVID 19 Short & Long Term Effects on Real Estate Market
Impact of COVID-19 pandemic on the construction activities
India, where the economic rise is already set to slow down to a record 11-year-low, the 21-day lockdown announced on March 24, 2020, has worsened the situation in Asia’s third-largest economy. With lockdown, both the construction and sales activity has come to a complete halt across the entire real estate sector. On several sites, the construction workers have gone back to their home towns. However, the situation would continue the same and will only recommence gradually (after the lockdown). This will cause the project delays (around 4 to 6 months) of most of the real estate builders.
Impact of COVID-19 on the homebuyers in India
The current crisis has impacted the home-buying decisions of most of the investors postponing purchase decisions. Though the RBI has announced a 75-basis-point repo rate cut to bring it down to 4.4%. The step would only come as major support for the existing buyers, who might struggle to pay EMIs in the short-term because of the lockdown and in the medium terms in the event of job loss.
Impact of COVID-19 on the home sellers
If you have not already listed your home, consider whether or not you must sell now. If you don’t, wait for some time. Still, if you wish to sell then consider the impact of selling sooner at a lower price, than risking a future sale amid unknown circumstances.
Impact of COVID-19 on office space
As companies worldwide have announced remote working for employees to contain the virus spread, office utilization rates will fall as remote working increases. Besides, landlords with exposure to short-term leases are the most vulnerable as a delay to investment activity and softer rental growth.
Impact of COVID-19 on mall developers
The impact of COVID-19 in the form of the shutdown of malls and retail outlets has put commercial real estate deals on a wait-and-watch mode. Even after lockdown, people will take time to regain the confidence to throng public places in large numbers. This could bring a fundamental shift in how mall owners will now look at their properties.
What are the Indian real estate projections after coronavirus?
- Prices might move slightly skywards despite the slow demand
- Project culmination deadlines to extend, pushing completion farther
- Site visits to drop, impacting sales numbers
- Home loan interest rates to fall after the repo rate cut to 4.4%
- The overall cost of the project to increase amid delays and supply constraints
- Remote working to gain traction in the future as businesses embrace work from home culture
- Occupancy levels in office spaces to decline in the near term as remote working picks up
- NRI investment in real estate may improve amid rupee fall
Conclusion
Overall the real estate professionals will see a dramatic drop in the sales due to the pandemic’s impact as it’s impossible to predict how long COVID-19 will impact the global health and economy.
