Real Estate Market trends during COVID-19 Pandemic in India

The catastrophic effect of Corona Virus on the Indian real estate sector was reaching to the point that it brought property transactions to a near-halt since 2020 March last year when the nation went into a complete lock down for 3 months. Since then, the real estate market has taken several steps towards recovery & just when it the market sensed the sentiments of revival was not far, Indian Real Estate market has been struck by second wave of the virus, this time, far more dangerous.

Indian real estate market got few inquiries and site visits to constant curbs on the construction activities, the crisis caught the real estate sector unawares. After a series of lock downs & restrictions, the country started to get back on its feet by mid of June 2020.

Due to this Pandemic forced the real estate sector to employ digital business planning & strategies which brought few transformations.

We at LINDO anticipated that Residential and Commercial Property market in India could recover completely in 2021, expecting that inquiries, site visits and sales had started nearing the pre-COVID levels in most cities. However, the emergence of COVID 19 in a more lethal form by March 2021 creates fears far worse than 2020. With several cities like Delhi, Gurugram, Noida, Mumbai, Bangalore, Hyderabad undergoing partial lock downs, and masses struggling for healthcare, the Indian Real Estate  sector has seen another downturn which was worse than 2020 last year.

Buyers have retracted once again from conducting site visits, thus slowing down property transactions. The industry experts are of the opinion that the recovery will be highly dependent on the way India deals with the second wave of Corona virus and Govt vaccine policy.

The scale of impact till now

The unprecedented scale of the impact of COVID-19 on Indian real estate can be gauged from the fact that the sector has incurred a loss of over Rs 1 lakh crore since the pandemic broke out (Source: KPMG). According to a report by KPMG, the pandemic resulted in a serious liquidity crunch in Indian Real Estate market for developers. The credit shortage brought down the residential sales from four lakh units in 2019-20 to 2.8 lakh units in 2020-21 across the top seven cities of India.

The restricted movement and cautious buyer sentiment translated into an unprecedented increase in the unsold inventory as well. According to a report by Liases Foras, the COVID-19 led lock down resulted in a surge in unsold inventory from over 15 quarters at the end of FY-20 to over 19 quarters towards the end of H1 FY21. The unsold stock got exacerbated by abysmally low sales in Q1 and dampened recovery in Q2 2020.

We at LINDO ADVISORS feel that recovery of real estate market in India could now prolong until 2022 but demand for ready to move in apartments with big size space will see some ray of light but office space won’t see any good demand this until 2022.