What is the impact of coronavirus on real estate in India?
Due to the coronavirus pandemic, one cannot think of a business that has not been impacted. The pandemic has hit the markets very hard as most parts of the world are shut down to contain the spread of the deadly virus. As per several reports, banking, retail, real estate, and auto are among the worst affected sectors.
The novel virus has hit the real estate to an all-time low level in March (quarter-end). As per a survey report, both the residential and commercial real estate sectors will face a crisis in terms of project launches, sales and prices.
The following factors have impacted the real estate in India:
1- The projects are delayed as everything is shut down due to the pandemic. Construction work is on halt and will be delayed for months. Even after the upliftment of lockdown, developers will take time to resume the construction work as most of the labourers are in their hometown.
2- In addition to this, there's also a demand and supply disruption as India is under complete lockdown to contain the spread of the highly contagious virus. In the present scenario, there's uncertainty and people have deferred their plans to invest in real estate. Also, the developers have postponed their projects which were scheduled in March-April, leading to low home sales.
3- According to experts, there will be no change in the prices and the prices will resume on the same level after the lockdown is uplifted. However, there can be an increase in the cost of raw materials as India imports steel and iron products, plastic, fibre, etc. from China. As most parts of the world are shut, the production in China is decreasing day by day which may lead to an increased cost. The increased cost of raw materials will reduce the profit margins for Indian developers.
4- As per a report by ICRA, the retail commercial sector will be impacted as the country is under lockdown as announced by Prime Minister Modi to contain the spread of the virus.
The real estate in India will be adversely affected due to the pandemic that has infected over 2 million people globally. Developers have delayed their project launches, people are not investing in real estate due to uncertainty in the market, factories are shut down, construction work is halted as labourers have left for their hometown. Even after the upliftment of the lockdown, the real estate sector will take time to end the economic distress.