Impact of Covid19 On Various Real Estate Sectors in India?
The Covid 19 vaccination drive starting today has made the whole nation look up to with reviving hopes. India is looking forward to vaccinating approximately 300 million people to go to the front line workers. There are 3,006 session cities across the country to administer the vaccination process. This COVID 19 vaccine update seems to be the ray of light amidst the darkness spread by the pandemic. The pandemic disrupted the markets, and almost every industry has faced the challenges brought by it.
The various sectors like real estate, tours, and travels that have come to a brief pause due to the pandemic are now hoping to restart with the vaccination drive launch. Real estate has experienced a jolt with the sudden halt in the projects due to the inadequate manpower and monetary resources. The COVID-19 vaccine drive serves as the hope for the real estate industry. Though it takes substantial time to revive the earlier trends, the vaccine drive is seen as a move that certainly spurs the markets. Let us know how the vaccine impacts property prices and the various sectors.
Impact on Real Estate
The property prices depend not only on the demand and supply but also on the unsold inventory that has to be cleared. Any uncleared inventory leads to falling trends and affects the markets adversely. The pandemic has impeded the transactions to a great extent stalling the purchase process.
The unsold inventory stands at a whopping 13 lakh units in the top 60 cities of the country and stands at 9.5 lakh units in the country’s top eight cities. This unsold inventory might take 50 to 60 months to clear. The massive figures if prolonged, introduce falling trends in the prices.
The introduction of the vaccine acts as a back-stop on the stalling markets and the falling trends. Considering the stalling projects and the unsold inventory, the developers prefer to stick to the original prices rather than increase them even after introducing the vaccine.
The vaccine drive is expected to heal the hardly hit commercial sector by arresting further vacancies formed due to the work-from-home culture.
The demand for ready-to-move-in properties has risen significantly. This might inch up the residential prices once the vaccine hits the markets due to the increased safety and easing mobility restrictions. Also, the projects that have a short gestation period might witness a surge in demand and price.
The residential properties are anticipated to be the prime sector that witnesses a positive impact in sales due to the COVID vaccine’s launch. This is because the long been work-from-home or work-from-anywhere culture might come to an end, may not be immediately but slowly and steadily.
The relocation of the working professionals from their home stations to the working locations might stifle the demand for the rental properties. This demand is expected to bounce back not at once but over 12-18 months.
In the aftermath of the pandemic, you would want to buy a home as a whopping 67% felt that home was a necessity rather than a luxury. The pandemic has brought a change in the people’s mindset, which resulted in the trends shifting towards the homes’ sales even in the suburbs, and this trend is expected to stay further. The Covid vaccine drive is presumed to boost the trends.
The consolidation of office spaces was a cost-effective strategy in the pre-COVID era. But, the social distancing norms have flipped it all at once. The trends might drift towards the spacious offices as the normalcy restores. The restrictions on the distance between the people might introduce the demand for new office spaces in the micro-markets. The micro-markets are sprucing up with this evaluation and creating additional office spaces, and this trend is expected to last for a year.
Even if the vaccine would be introduced in another couple of months, the work-from-home culture might continue for about a year, owing to the space constraints and the distancing norms. The working professionals’ rolling might be observed, and the work-from-home might disrupt the office leading up to 20% in the mid and long term. Further, there would be an increase in the data centres, healthcare, and warehouse.
Real Estate has exhibited incredible resilience in challenging times like pandemic with the industry-changing the winds towards other investment options like warehouses and data centres. The markets have absorbed the reduced interest rates and government initiatives like stamp duty cuts, and an increase in demand has been experienced. The COVID vaccine is expected to adjust the trends to get back on track slowly and steadily. As the country is all set to immunize, various sectors hope to build the safety factor and scale up the trends to go further and beyond!
Covid 19 Vaccine FAQ's:
Yes, the vaccine can prevent COVID-19. The COVID-19 vaccine is expected to roll out soon, and the vaccine drive has started.
The vaccinated area might experience a swell and pain-causing redness around the injection site. Fatigue, fever is expected to cause discomfort in the initial three to five days of the vaccine.
The COVID-19 vaccine is expected to stabilize the property prices and stop them from falling. Commercial property vacancies are expected to reduce after the vaccine hits the market.
The COVID-19 vaccine introduction might see the working professionals’ return to the working places, which might spur the demand in the rental sector.