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Real estate in India shows resilience on the face of COVID-19
Financial Express  |  April 7, 2020

Sanjeev Arora

The world is grappling with the outbreak of COVID-19, a deadly virus that has resulted so far into thousands of causalities. Originated in the Wuhan district of China, the menace has crossed over the Chinese contours & has spread around the world like a wildfire. It has adversely impacted Europe as well, with major economies such as Spain & Italy forced to a countrywide lockdown. The adverse impact of COVID is visible in Northern America, Far East Asia, South East Asia, Iran & Middle East. In India as well more than 4000 COVID cases have been registered. If not put under control, the crisis might widen.

 

Such a major crisis is also having a wide-scale impact on the global economy. As Chinese manufacturing has been badly hit, the global supply chain has been disrupted. The negative impact of the disruption is expected to reverberate around the globe. Likewise, tourism & retail are some of the worse hit sectors worldwide as revenues have plummeted drastically in the past few weeks. Amidst such a mounting crisis, it is unlikely that India, which is already suffering from economic slowdown & liquidity crunch, will remain unscathed.

 

Reduced Site Visits & Transaction Numbers

 

The downtrends are also visible in the housing markets, marked by a slowdown in site visits, transaction volumes, & new launches. There is a visible contingency fuelled by the tide of information (many of which are even distorted), which are undermining the sentiments.

 

In markets like Gurgaon & Noida, site visits have eased out by around 20%, as per the initial research by 360 Realtors. In Markets like Pune & Mumbai, the slowdown is larger. Even in Bangalore, the initial study has shown that site visits have dipped by around 35% in the last two weeks. Reduced site-visits are also affecting the transaction volumes in these cities.

 

It will take some time to gauge & evaluate the exact long-term impact of COVID on the Indian housing markets. If the crisis continues, it is likely to trigger a further crisis. Delays in buying decisions, dwindling demand, & slowdown in investment will naturally increase.

 

However, the current COVID-induced crisis is not devoid of hidden opportunities for the sector. Earlier as well the sector has shown resilience & successfully absorbed many shockwaves such as RERA, Demonetization, GST implementation, NBFC crisis, etc. Amidst such a crisis, the real estate fraternity is once again looking forward to investing more into online platforms, digital walkthroughs, innovative transaction spaces, etc that can render hassle-free experiences to homebuyers. Such innovations & their wide-scale use can cut down on physical sit visits & simplify transaction cycles.

 

Real Estate Might be the Safe Haven

 

In the mid-term many investors & buyers might pivot to the Real Estate in big volumes, as Real Estate is believed to be a safe tool to invest. As the stock markets have slumped in India, a hard asset such as Real Estate becomes a natural choice for many buyers & investors to park their capital, neutralize any possible inflationary pressure, & mitigate market-induced risks.

 

Property prices are already low in most of the major markets. To push existing inventories, developers are coming up with exciting discount offers & freebies. This might be an apt time for many investors to utilize their surplus capital by purchasing Real Estate.

 

Can India Fill the Gap in Global Supply Chain

 

There are also other potential opportunities for the country. After the outbreak of the COVID, factories across China have shut down, resulting in the collapse of manufacturing & export. The economic growth forecast of China has been revised to 2.9% from an earlier estimate of 4.8% by S&P.

 

As the forces of global trade-flows are in doldrums, India can be one of the key factors to determine the flow in the near future. This might be an opportune time for Indian manufacturers & exporters to fill in the current gaps in the global supply chain. Through, targeted efforts both from the public & the private organizations, the Indian manufacturing sector can be set for higher growth trajectories & deepen its foothold internationally. This will also help in economic growth in the country & positively boost the demand.

 

(By Sanjeev Arora, Director, 360 Realtors)