Should one buy property post-lockdown in Indian Real Estate? It is the million-dollar question facing prospective buyers today. There are many ifs and buts and there are no easy answers as well. On one hand, there is this insurmountable problem and there is a ray of hope on the other hand in the form of potential of India inherent in the country.
Everywhere people are asking- will real estate prices in India continue to drop till 2020? There is no denying the fact that the novel Coronavirus crisis has engulfed all hopes and aspirations of the business community that was sparked during the times before the virus struck with a vengeance.
The fallout of the Lockdown because of the Pandemic has had the following effect on the Indian Real Estate:
- It has brought all the construction activities to a grinding halt and eroded the market of its potential buyers.
- The property transactions are touching new lows every day during the countrywide lockdown and there seems no light at the end of the tunnel.
- There are some imminent challenges in the form of the interdependence of supply chains, reverse migration of labourers, cost overruns and liquidity constraints.
- This period in Indian history is one of the most dreaded and blackest indeed.
Now the following questions are posed before the Indian Real Estate community:
- Will coronavirus affect house prices? Steel is required for construction but the traders are unable to visit China to procure steel from there. That is because of the lack of flights and other transport and it is an open secret that China is the biggest manufacturer of steel.
- Is lockdown the right time to buy residential property is in the minds of many investors and property buyers because the scarcity of steel and other materials for the building is putting a big question mark on the future of housing industry.
- Which city in India is best for real estate investment? Nobody can say for sure which city or state of India is an oasis for real estate investment.
- The foreign investors are mulling over the question is it the right time to buy a property in India?
Despite the prevalent negative sentiment and increase in construction prices with added uncertainties, the property prices have now the potential to witness some corrections. There is panic selling by the people who have lost hope and whose confidence in the market has been shattered. It is expected that the market will correct itself in an unprecedented situation because of the sound fundamentals inherent in the Indian real estate market. Fall in prices might prompt a certain group of buyers to fish in the troubled waters and these people are many in number. They would like to buy cheap now and sell it at an extraordinary profit when the situation turns around to a favourable mode. For the time being, everybody is waiting for the festive seasons of October that may kindle a desire in people to go for the purchase during the auspicious events.
How will Coronavirus Affect Indian Real Estate?
- There is a heavy reliance on China for steel and steel-related products because China is number one in manufacturing steel. Steel production in China is coming down that pushes the cost of procuring materials for construction with the fallout of increase in the prices.
- The profit margins of the builders are also going to be slashed drastically. But there is an opportunity in sight.
- It is an opportunity for Indian business to rev up production capacity and give a boost to ‘Make in India Campaign’.
- There is Government support coming in encouraging companies in the steel sector to increase production capacity to bridge the gaping gulf.
- The government of India is coming up with a strategy to facilitate the production of 10 million tons of steel in a year.
- The boost in the steel industry will result in an expansion in the employment base.
- If people start getting employed, they will be expected to spend from their savings to acquire property and other goods and services. It will be a good omen for the economy.
- The market is poised to explore other avenues to procure raw materials and it will lead to lesser dependence on China for imports.
- It’s going to be a blessing in disguise for the indigenous industries sitting idle.
- Over the years India has attracted FDI in the real estate sector and the feat can be repeated once again. India has far too many pre-constructed infrastructures and unoccupied factory shades to be leased or rented by the new investors.