This article discusses the impact of coronavirus Impact on the Property Market entire globe, especially in context to the property markets and whether real estate is a safe investment to make during the pandemic.
Is Real Estate Still A Good Investment In 2020?
Investors in the Real Estate Market are in a dilemma as to whether they should invest in properties or not. This impression is due to the outbreak of the pandemic that had taken almost the entire world into quarantine for more than half of the year. The virus has affected all parts of the globe and has taken away sufficient lives to be termed as deadly. Thus, people are now more concerned about their health than any other conditions in which they are living.
Crisis in the global economy has not only hit the stock market and other sectors of the economy but also the real estate by various means such as:
- The outbreak led to lockdown in the entire world and scarcity in labours working in the real estate zone as most of them remained at their homes.
- This led to a delay in the development of ongoing and undertaken projects.
- People are now more concerned about investing in food and health instead of buying properties or stocks.
- Unemployment is on the rise due to which there is cut down in investors.
- Staying at home feels like an imprisonment sentence therefore not many would be interested in investing in another property.
- Since buying or investing in real estate requires huge capitals, people are now more concerned about saving instead of spending.
Therefore, if you are planning to invest in real estate during the current economic situation being hit by the Coronavirus, you should be aware of the upcoming challenges which you will have to face in the following years. The virus is still not contained and the vaccines are yet being tested thus, imposing threats not only to the health of the people but also their Financial conditions.
However, real estate is one sector which does not fluctuate instantly with the economic instability as it has always been a long-term investment option. Even in normal circumstances, investments made in real estate requires you to hold patience as the returns it brings in the form of the surplus is earned in a long-term investment plan, thus real estate continues to remain an exclusive asset to invest for achieving long-term goals.
COVID-19: Real Estate Implications
(Covid-19) Coronavirus Impact Property Market has left remarkable implications in the Real Estate Market for not only the builders and investors in properties but also the buyers and tenants of homes. Both commercial and residential properties have undergone implementations to remove burdens from the tenants and the landlords as well. Countries across the globe have changed their norms and regulations in terms of real estate planning and procedures. Extra precautionary measures regarding safety and hygiene of the surrounding are one of the major upgradations brought to this zone.
- In countries like the United States, Europe, Germany and France evictions are temporarily prohibited. Many mortgage lenders have suspended the payments. Moreover, construction programs have been halted and only supply of medical facilities and essentials are allowed.
- In many parts of Asia, landlords have provided discounts on rents and in Singapore; legislations are passed to safeguard commercial tenants who are unable to pay their rents for six months.
- Uncertainty in the global commercial real estate has led to low and slow output which restricts and limits the investor’s diligence making it challenging to imply transaction codes.
- Delay in project launches is evident as Lockdowns (Coronavirus Impact Property Market) are still being observed in most states. Restrictions imposed on travelling and social distancing are some of the new trends the world observes.
Investors around the world are turning to negotiators to bring about income stability along with occupational density. Price discovery and asset management are some of the other fields in which the investors are eyeing their interests.
Impact of COVID 19 on Real Estate Sector under GST
The ruling party governing the Indian economy had imposed Goods and Service Tax (GST) since 1 July 2017, on the Indian market following which consumptions of goods and services were charged with payments of value-added taxes under the same heading of GST throughout the country.
However, with the current economic situation where the world is facing a major crisis and India observing lockdown now and then, the uncertainty regarding the payments of GST in the real estate keep alluring the air. This is because the real estate sector that serves the government with GST is the commercial property segment which has received a severe setback since the lockdown has been implemented.
In cases when a situation arises that is beyond the control of human beings, real estate investors, property owners or tenants can refuse to pay the taxes by demeaning the contract to be void under “Force Majeure” and the doctrine of “Frustration of Contract”.
Q1. Is real estate a worthy investment to indulge in?
Ans. Investing in real estates can prove to be one of the most stabilized and consistent sources of revenue in the long run.
Q2. When is GST applicable?
Ans. Goods and Service Tax (GST) is applicable when there is a supply observed in the market.