Although economic recovery is on the horizon, the third Covid wave could push it back if not effectively managed
In 2020, the real estate sector dealt with everything from the halt in construction activities to labour migration, from low site visits to sales scares. The pandemic compelled the real estate sector to adopt digital business strategies, resulting in a rapid transformation. As a result, within a few months, the percentage of virtual site visits increased dramatically. Sales had begun to approach pre-Covid levels in most cities, and everyone was expecting that the sector would fully recover in the later part of 2021.
On the other hand, the revival of coronavirus in a more lethal form by March 2021 has fuelled concerns much greater than last year. The real estate market has taken another hit due to partial lockdowns in many cities and people unable to get healthcare. Buyers have withdrawn from site visits once more, causing property transactions to slow. The recovery will be dependent on the way India deals with the second and third wave of Coronavirus.
The sudden spike in cases after March 2021 affected the recovery cycle, which was inching towards pre-Covid levels as Q4 2020 and Q1 2021 ended on a positive note after the government's immunisation drive picked up pace. Consumers are cautious of visiting malls and stores, which has harmed the retail sector in the second phase. Retail mobility in India has decreased by 55-60 per cent as a result of partial lockdowns and curfews across cities.
People have realized the importance of owning a real estate asset, so the second wave or partial lockdowns will have little impact on the sector. Recent studies have shown that people are looking for bigger sizes in houses and also exploring built-in offices to cope with WFH scenarios. The real estate market is more optimistic this year because it is better positioned to deal with the crisis. Large and medium-sized developers may not be as concerned about the current situation as smaller developers are.
Lockdowns and limitations on construction activities are also likely to disrupt the timely completion of real estate projects. Following a record high in Covid-19 cases, vaccinating all over 18 years of age is a brilliant idea. It will improve construction activity by assisting labourers in getting vaccinated as soon as possible. We hope that the vaccine campaign will be accelerated even further, reducing the risk factor. Several developers are doing all they can to look after the workers; some are offering accommodation and food, while others are paying for their tests and medicine. Many developers are prioritizing the vaccination of their employees.
The year 2021 was predicted to be a year of regeneration, and the Union Government's vaccination campaign bolstered the belief. Compared to the previous three months, buyer sentiment for owning a real estate asset is even higher. As a result, the sector is highly optimistic about achieving higher sales figures than in previous months. Since the lockdowns are causing job reductions and wage cuts, the picture will clear once the pandemic is under control and the outbreak rate is reduced.
Overall, the real estate sector is no stranger to difficulties. Whether it was the 2008 economic downturn or the NBFC crisis, the real estate sector has met the problems head-on. Though recovery is on the horizon, the second and third wave could push it back another six months if it is not effectively managed.
The author is Director, Gulshan Homz.
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