Impact Of Covid-19 On Real Estate Market
Authored by Samir Sureja – Director, Gurukrupa Group The highly contagious novel coronavirus has brought macro-economic activity worldwide to a standstill. India too has been no different with the central government putting the nation on complete lockdown. The times we are going through is something we have never witnessed before and I believe the central government as well as the states have done an excellent job in trying their best to contain the situation. It is just a matter of time everything goes back to normal. All in all, we are on the right track. To help the business side of things the government of India has taken measures to boost the sector by announcing various stimulus packages. Recently the RBI undertook measures to ensure that finance is kept flowing to keep the domestic economy protected. Injecting a substantial amount of Rs 2.8 lakh crore via various instruments is also a great step to ensure liquidity in the system. The decision to reduce the repo rate by 75 basis points to 4.4 percent has proven to be a much-needed step considering the present situation of the country. THE HOUSING MARKET Housing is an important segment and a basic necessity to humanity. I believe the intrinsic domestic demand for housing will continue to exist once the situation normalizes. With the country on lockdown, under-construction projects will be likely to face a certain delay in delivery. However, the solution lies in the ready to move in properties. The major benefit of buying a completed apartment is that buyers are completely aware and know exactly what they are buying while inspecting the apartment. The decision of investing in a ready-to-move-in property is not solely based on what is shown in a sample flat or on mere site layouts. What you see is exactly what you get. Once the situation subsides and life gradually returns to normal, the ready to move in segment of real estate will be the saviour to those looking to invest in a home. In terms of tax, the implemented Goods and Services Tax (GST) levies a five percent tax on purchase of under-construction properties. Ready properties, however, are left out of the ambit of GST. Another advantage for the Ready-to-move-in segment of real estate. THE TECHNOLOGICAL WAY In 2020, technology permits us to do things that were improbable even just a few years ago. Today, we can sit in the confines and comforts of our homes and explore entire properties before purchasing. A decade ago, real estate would have been completely shut down during a situation like this. However, the present situation is very different. As walk-ins are not possible at a time like this, customers can use digital platforms and apps to do adequate research on properties of their choice. The Ready-to-move-in segment of real estate is the best option right now. As the property is ready for customers to look at before they finalise their decision, there is no risk of discrepancies with the promised layout, features or amenities. In fact, this time of social distancing can be used to take a look at virtual tours and photos of the property itself. The industry is focused on upgrading their technology to provide 3-D tours, video tours, robust photos and live-chat tours that enable our potential buyers to see properties virtually. With this we can limit the face to face interactions and still continue making robust sales. In the real estate industry, these new technological tools will have a lasting impact on the way transactions occur. LIFE BEYOND THE PANDEMIC Coronavirus or no, the world has to move on. As we move forward, we need to reinvent ways to create success. It may take a few weeks or may be a couple of months for real estate and construction industry to get back on its feet and run full stream but we will recover. As the Indian Real Estate industry remains the second highest employer in India, second only to agriculture, it is imperative that the sector is subjected to rescue measures to ensure it continues to be one of the strongest pillars of the Indian economy. According to data release by the India Brand Equity Foundation (IBEF), the real estate industry contributes over 6% to the country’s GDP, with some estimates claiming that it will contribute 13% by 2025. Owing to such a high degree of value creation and dependency of individuals and allied industries livelihood, it is the need of the hour to strategize and implement the way forward. The times are ambiguous but the government’s measures will help developers survive the uncertain. In fact, the current impact on the economy is moreover due to the psychological aspects of cautious human nature rather than the actual effect of the pandemic itself. Currently, the only thing that we are seeking is how we can keep the situation safe and our customer’s safe, and how we can keep business in order. This unprecedented situation has helped us relook and reimagine the industry and the way forward.
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