Impact of Covid-19 upon the Indian real estate sector:

  • Battling with several disruptive policies, margin compressions, tight liquidity is nothing new to a real estate sector.
  • The consolidation massively affected the sector especially when got hit with severe Covid-19 pandemic since the beginning of 2020. Damage was done especially when many developers were thrown out of the business during the distribution of high market share.
  • Property transactions were brought to a near-halt last year when the nation went into a complete lockdown between March and June. Since then, the market has taken several strides towards recovery, but before the damage is recovered, the condition was more worsened by the pandemic’s second wave continuing till date.
  • Experts say the recovery of the realty market in India could now prolong until 2022.
  • Not only this, the mass exodus of migrant workers and laborers harshly affected the construction sector to put a forced pause, which directly and indirectly slapped the real estate sector tight hard.
  • The pandemic forced the real estate sector to employ digital business strategies, which led to a rapid transformation of sorts because this was the only ultimatum to save the sector and other relevant sectors. Resultantly, the share of virtual site visits increased manifold within a span of 2-3 months.

  • With several cities like Mumbai, Pune and Delhi NCR undergoing partial lockdowns, and masses struggling for healthcare, the realty sector has seen another blow. This is because buyers have once again come down with their tantrums for not visiting the conducting sites. In return, the properties stagnated with transactions.
  • In over all the Indian real estate suffered a loss of more than 1 lakh crore Indian rupees in the past year alone.
  • A serious liquidity crunch for the real estate developers shortened enough residential sales from four lakh units in 2019-20 to 2.8 lakh units in 2020-21 across the top seven cities of India.
  • By the first quarter (Q1) of the Calendar year, 2020 (CY20), the net leasing of office spaces declined from around 35 lakh sq ft approximately up to 70 lakh sq ft in the corresponding period of the year 2020.
  • Also due to the reduction of visiting of malls and shops during the second wave, the retail segment got badly hit with a declination of up to by 55-60 percent across India.
  • The price movement has not yet translated in the residential market after the introduction to the second-wave pandemic. This feature therefore allowed developers to continue with the withhold prices due to limited profit margins.
  • The second wave of COVID-19 would have little effect on the industry because after the first lockdown stage in April/May 2020, people realized the value of owning a home for themselves.
  • People do understand that the sector wont drastically drop its prices but there will be some domino effects.
  • Despite a positive hope due to the vaccination drive, the year 2021 is expected to remain challenging for the real estate sector, if not a complete washout.