Impact of COVID-19 on Real Estate in India.
Updated: Jun 1, 2020
Will Real Estate in India bounce back after the most dangerous COVID-19 crisis?
COVID-19 is an inflection point for Real Estate not only in India but all around the World. With developers struggling to maintain a balance between ensuring compliance to policy regulations, financing, market demand and labour shortage. The COVID-19 pandemic is spreading rapidly which leads to slip down of global economy and Real Estate is the one which is going to face lots of serious issues. In the absence vaccine and of an established treatment, social distancing has emerged as the only choice to contain the corona spread. Lock down in India was started in 25 March, 2020 until present date, while we are not still sure about the market growth. Barclays has pegged the expected losses to the Indian economy alone at $234.4 billion, which is something we must be worried about. The impact of COVID-19 on the real estate sector in India is evident through a halt on site visits, documentation, negotiations, and closure of deals. A Naredco report foresees the Indian realty sector enduring losses to the tune of Rs 1 lakh crore due to the pandemic. The festive season this year was gloomy for the real estate sector with no new projects being launched amid low sales. In the commercial real estate sector, the impact is visible through a delay in leases, a halt in expansion plans of office spaces, and almost negligible sales due to the shutdown of malls. Architectural changes in office buildings such as better ventilation, social distancing etc. will cater for recurrence of Covid 19 like situations. Also, there will be a renewed focus on co-working spaces as consumers will increasingly seek flexible working models. Large investments in the health sector by both the government and private sector are expected in the next 5-6 years. In the retail segment, landlords are likely to reconsider their rental collection models based on high base rent or gross turnover, whichever is higher, to a no or less base rent and high gross turnover model. Until then, it can be concluded that COVID-19 is an inflection point for commercial real estate with developers struggling to strike a balance between ensuring compliance to policy regulations, financing, market demand and labour shortage. We hope so that everything recovers soon and we are back to healthier life. - 24 Realtors, Pune.