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Corona Virus crisis severely affecting Indian Real Estate

BY Realty Plus

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Authored by Nimish Gupta, MD, RICS South Asia The world over, outbreak of the sudden and fast multiplying ‘Corona virus’ has impacted markets and economies. The unexpected rise of the virus, stemming from Wuhan, China as its epicentre, ambushed businesses and industries causing turmoil and uncertainty, globally. It remains to be seen how India will deal with the calamity but as of now there are 214 cases of COVID in the country with the count rising daily. The situation in Indian real estate, like other sectors remains unpredictable as it is too early to give a final conclusion to the situation. However, repercussions have started to be felt with the Health Ministry advising ‘social distancing’ and practicing certain precautionary measures which are necessary to contain and prevent the spread of the disease. Real estate developers have either stopped or cut the spend majorly on their sales and marketing efforts. Construction activities have been curtailed as most sites do not have the required proper infrastructure to maintain health and hygiene. This will eventually have a cascading effect on the jobs of labourers, architects, civil engineers etc. working at construction sites. The ongoing projects that are being built with international collaboration have been impacted with the government imposing travel and visa restrictions on foreign entry. Deals have been pushed to the future leading to capital loss. The demand for residential will be affected as buyers and investors will shy away from locking their capital in physical assets, in an unstable environment. Given the current situation, it will make more sense to conserve cash and preserve liquidity. If the outbreak is not controlled, we can even look at salary cuts. With companies postponing and deferring new hiring, the number of vacancies in the sector has already come down. This will further have a dampening effect on the ability of employees to spend on real estate and will prove to be challenging for housing demand. Major countries in Europe, USA and China have implemented a ‘close-door’ policy and imposed embargo on international travel. This has led to the tourism & travel industry conceding heavy losses and in turn, having a detrimental effect on the hospitality sector. Many travelers have decided to cancel or postpone their bookings as advisories issued by various countries discourage travel between nation. Commercial real estate which till last year was doing exceptionally well, looks to suffer with corporate occupiers delaying decision – making to rent or buy spaces till the picture becomes clearer. These steps have the potential to cause major implications to the macro-economic and social dynamics in the country, if allowed for a longer period. However, there is still a silver lining to the cloud. One of the key areas in real estate that we require to buckle up is automated facilities management. It makes sense and value to invest in technology related to facilities management. Technology can go a long way to aid support services in the absence of a full-fledged staff. It can also help deal with the current crisis by lessening human to human contact. To handle the immediate emergency, FM providers need to train FM workers on how to maintain and sanitize workplaces. With most of the staff being unavailable, it is important for organizations to teach their staff on how to handle maintenance and keep operations running smoothly. At construction sites, the industry needs to re look at the way health care is being provided to construction workers. Scanning through remote guns, sanitizing in between shifts and wearing gloves at all times on construction sites should be made mandatory. Masks should be worn by personnel who display signs of ill health. An additional advantage that can be viewed by learning & development teams of a real estate organization is to look at enhancing the skills and knowledge of their employees by helping them undergo training programs or pursue a professional qualification, during this slightly leaner period. Professionals can also take these as individuals. This will increase their value and add weightage to their CV. There are many short-term online courses available in the market which will help them to upgrade their professional competencies in the chosen line of work. Utilizing this time for self-growth, will also aide in fast tracking their career as they will be prepared to lend their expertise to the sector by virtue of staying abreast with evolving requirements. The market will be keen to make the most of their acquired learning to tackle challenges that are born, in wake of the virus. Pursuing a qualification can also aide in garnering respect and confidence in a professional’s ability to cater to the needs of the market. Hopefully, the situation will become well – defined in a few weeks from now but till then let’s hope that the real estate sector manages to hold the fort and emerges stronger out of this man made predicament.

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