Coronavirus certainly affected all the industries in various ways. However, real estate sector have been severely hit, bringing in new trends and a shift in the mindset of the people. Lets see consequences of COVID-19 in a brief manner as pointed out below:
Work from home becomes more relevant, demand for larger spaces have increased. This will also force developers to go ahead with smarter home designs in which each space can be better utilised. Eg. Like folding bed, thus the room can be used as study room during day time and bedroom during night. It is important since the purchasing power has not increased but, the need for larger space has increased.
- Increase in cost of construction:
There had been an increase in the cost of raw material as India imported steel, iron products, plastic and fibre from China. This can further lead to increase in price of real estate after 6 months.
NRIMaking up their mind to invest in residential property. There could be various reasons such as INR devalue, NRIs returning home, good deals, low-interest rates etc
- Owning house instead of renting:
Lockdown had forced service class people to think of buying own home and pay EMIs instead of rent.
- Shift towards virtual site tours:
People asking for digital presentation in looking for properties and making up their mind in buying residential properties.
- Demand for co-working space:
Co-working spaces flexibility in terms of rental period. They can be rented for a month, a day or even few hours.
- Fall in demand for conventional office:
Traditional office space may see a downfall. Since the tenants face difficulty to visualise and plan for post-pandemic scenario. Also, because of increased unemployment, number of employees are reduced.
- Buyers are avoiding discretionary purchase to keep cash in hand
With the world headed for a recession this year, and people worried about their income. Buyers are likely to postpone discretionary purchases and investors too seem to be preserving their cash for now.
- Demand for warehouses, data centres and healthcare is unaffected
Because of the growth of e-commerce industry, warehouses demand is unaffected because of supply chain management method.
- Impact on ongoing projects
Industry players are struggling to finish ongoing projects due to supply chain disruptions and the flight of workers to their hometowns, and are also saddled with a huge inventory of unsold properties.
- Companies relocating from China
Amongst COVID-19 prevailing around the world, Companies have planned to relocate from China making India the next destination for investment by these companies. Thus the commercial market might see a rise in the upcoming time i.e by 2021.
- Increased demand in peripheral locations
With the concept of work from home, the nearness to workplace is no more a stringent parameter and the demand in peripheral location gets a push.
- Decreased demand for affordable housing
For the affordable housing customer, having limited income and less access to “work from home facility’. Instead facing a loss pf pay or even job, have led them to rethink on their decision to invest in house. Thus the demand for affordable housing have gone down.
- Increased aspiration of having a roof over the head
In a situation of crisis, the people have tend to realise the importance of owning a house as a sense of security for them. Thus have made their mind in purchasing a house of their own. Thus there will be increased demand from end users and not from investors.
- Introduction of innovative offers by the developers
To overcome issues like inventory pile-up and cost overruns, developers are instead coming up with innovative offers—refundable booking amounts, cashback schemes, flexible payment plans, rental guarantees and freebies on booking are some of the popular offers.
- Delay of ongoing projects
Because of migration of labours, the ongoing construction activities of the projects are hampered and consequently the projects are being delayed.
- Almost a complete shift of real estate industry to online
Both the buyers and sellers shifted to online market in real estate. The pandemic gave a boost to online services like – virtual and 3D tours, online payment, etc. That is, right from finding a prospective client to converting it into sale.