Has real estate lost its sheen? Lockdown 1.0 vs Lockdown 2.0

The first wave of Covid-19 adversely hit  the Real Estate industry to a great extent. With the economy already reeling under the pressure of Covid-19, the second wave has been a lot more devastating. But this time, the developers are better prepared for the consequences as the devil is known in the second wave, unlike the first wave.

Anil Pharande, chairman, Pharande Spaces said, “During the first lockdown, the fear of getting infected coupled with lack of work and affordable accommodation caused construction workers to abandon their sites and return home by any means available to them. According to the Construction Workers Federation of India, over 70% of India’s migrant population went back to their hometowns in 2020. The real estate sector was caught unawares – developers lacked any prior knowledge and expertise to handle the situation.”

Experts say during the current second wave, even as active cases have exceeded all calculations, the situation at construction sites is not as gloomy as it was in 2020. Pharande added, “In the first place, there is no stringent lockdown across the country as was seen last year, when all construction work came to a total halt after the intense 21-day lockdown was announced.”

Last year when India was under a nationwide lockdown, many state governments also launched stamp duty cuts. Even developers offered attractive discounts for the consumers to increase sales. According to data by the Inspector General of Registration, Mumbai alone witnessed as many as 80,718 properties, translating to a growth of 114% between September 2020-March 2021.

Mani Rangarajan, Group COO, Housing.com asserted, “The housing sales in top 8 cities of the country stood at 66,176 units in the January-March period, only marginally down from 69,555 homes sold in the same period of 2020, before the pandemic hit India.”

Reflecting the sentiments, the aggregate home loans portfolio of banks also grew by 9.1% in the year to Rs 14.59 trillion till 26 March. The low interest rates along with the growing culture of work from home has been some of the main drivers of growth in the real estate.

“The pent-up demand, stamp duty cut by varied state governments, multiple initiatives by the central government and RBI’s accommodative stance by pushing interest rates to multi-year low did help in driving sales for a lot of fence sitters, who invested in property because of higher affordability,” Rangarajan added.

Considering these grim times, are the consumers still looking to buy a property?Rangarajan says that because of the futility of most other asset classes and the increased need for safe housing, home ownership as a concept has gained huge popularity in the aftermath of the coronavirus pandemic. Because of this factor, housing sales would see an increase as soon as some economic stability is achieved once the second wave starts deteriorating.

While talking about the likelihood of consumers to initiate buying properties as an asset, he propounded that home sales in the Apr-June quarter are likely to see a fall due to the second wave. But, since the lockdowns are localized and fragmented unlike the last time, the market is highly likely to bounce back. The month of July may be a turning point for the housing market in India.