Due to the ongoing pandemic called COVID-19 the economy worldwide has taken a hit. Even India has not been spared by the wrath of this pandemic. Every sector has seen the impact of this pandemic. The real estate sector which is one of the biggest contributors to the Indian economy has also taken a massive hit. It would be an understatement to say real estate builders in Mumbai are struggling at the moment. If real estate developers in Mumbai who are thought to be cream of the crop are struggling you can guess what the market is like for the rest of the real estate. Let us see what impact COVID-19 has had on different sectors of the real estate market.
1. Impact on the housing market.
2020 was expected to be the year that the industry was expected to bounce back and recover but due to the ongoing pandemic, the recovery has been halted even after new initiatives that were launched by the government to encourage people to buy a property. There are a few anomalies though. Residential property in Goregaon still is in high demand and has seen the market remain steady for them. Due to pandemic lockdown, the construction of new projects has come to a complete halt. With everything being shut it is easy to understand why we cannot expect the revival of the real estate industry this year.
2. Impact on homebuyers.
People just before the start of the lockdown were tempted to buy houses because of the tax rebate and other offers that were given by the government to home buyers. With property seekers unwilling or unable to undertake site visits, this could result in the postponing of purchase decisions. House buyers are also not sure about the security of their job and have postponed the plans of buying the house to a later date when they are sure that their job is secured. The majority of people have put aside their house-buying plans for at least the next six months until the market has a chance to open up again.
3. Impact on real estate builders in Mumbai.
Real estate developers in Mumbai were holding onto unsold stock worth rupees 6 lakh crores according to data from various developers. The import of raw construction materials has been delayed and the construction activities have come to a complete halt due to lockdown. However, the government sympathizes with the developers and has come up with many plans for the real estate company in Mumbai to survive. The government is offering a lucrative stimulus package and is also giving people an EMI holiday during which the developers need to just pay the interest.
4. Impact on the commercial market.
Companies worldwide have announced remote working for employees to contain the virus spread, triggering a debate if work-from-home could replace office spaces in the future. There are chances of companies giving up on office spaces entirely. Whether it happens or not the predictions seem to be gloomy. If corporations truly adopt work from home ideology the commercial real estate can see a big dip in their revenue soon. There have already been offices that are giving up on the idea of office space and have decided to make work from home the centre of their functioning. It is expected to see a slowdown in growth momentum that the commercial real estate market had.
It is also important to note that even though you might see some decrease in prices the prices won’t be lowered significantly as the cost of building the project will increase significantly. COVID-19 has affected the real estate market but like a phoenix, it will rise again as soon as we move on from this pandemic.