Before COVID-19 and after COVID-19, the Future of Real Estate

Before Covid-19, the real estate industry was in a state of flux.

Economy of India

Even before COVID-19, the Indian economy had been confronted with a number of obstacles in terms of legislation such as GST, as well as a liquidity crisis that affected real estate. Agriculture generates the most jobs, followed by real estate and construction.

Purchasing Patterns

People were hesitant to acquire the home because of the price increase, which should ideally be based on the location, function Object {[native code]}, and specifications and amenities provided by each project. Bookings were made once a customer visited the site and learned more about the project’s features and payment options.

You can work from home.

Work-at-home was not on CIOs’ must-do list prior to the coronavirus. Prior research found that the influence of work-from-home arrangements did not extend to the contemporary setting because these arrangements were largely limited to a small number of individuals and/or businesses, and were frequently self-selected.

Real estate brokers have a diverse skill set.

Real estate agents had limited knowledge of advanced social media marketing abilities and a poor understanding of force majeure law.

In the near and medium term, pre-Covid19 issues relating to reduced demand and liquidity pressures continued to limit sales.

After COVID-19, the impact of COVID-19 on the real estate business

Using digital media and doing transactions online

Unlike other industries such as banking, telecommunications, or aviation, real estate is undergoing a massive consolidation phase. In all of these industries, the majority of transactions have been moved to a digital media.

Customer purchasing selections have an impact.

Following COVID-19, the majority of home buyers are still eager to purchase properties with a price reduction. In these difficult times, those who have not invested in real estate in the last ten years are considering it. People in the middle class are now focusing on affordable housing projects, and those who were searching for a luxurious home before COVID-19 have extended their demand for additional sq.ft / BHK to transform it into an office space, making working from home more enjoyable.

COVID-19 has influenced more than 80% of purchasing decisions in Tier-1 cities for the time being. Despite this, home buyers in Pune and Bengaluru have decided to purchase a home following COVID-19. Before the national lockdown, buyer decisions in the marketplaces of Delhi/NCR and Mumbai were already idle, and this will continue after the crisis. According to a survey, 67 percent of home buyers still want to buy a home despite having a limited budget. If consumers turn to ready-to-move-in properties, rapid and adequate supply will be critical to recovery.

With price uncertainty looming large across markets during the lockdown, Bangalore and Pune have seen the smallest price reductions, at 5% and 2%, respectively, compared to other cities such as Hyderabad and Ahmedabad, Mumbai, which have seen significant price increases in the recent year. In the previous 12 months, residential real estate in Hyderabad has appreciated 15% year on year (YOY), while prices have dropped by 9% due to the lockdown.

Homebuyers may seek down payment terms that are less stringent. Woodwork and kitchen fixtures would require the least amount of post-purchase effort, and site visits would be limited to films and images, as well as online documentation and a registration.

RBI’s policies

With inflation now out of the RBI’s worry window due to weak demand, there is considerable room for another policy rate drop of 50-75 basis points. Low interest rates are possible because home loan rates are linked to benchmark rates. The Reserve Bank of India’s decision to prolong the moratorium on term loans for another three months is expected to relieve real estate developers and borrowers of interest payments till the end of August. The lowering in policy rates will benefit all sectors, particularly real estate, which has been impacted by the Covid19’s demand contraction and liquidity pressure.

The moratorium has been extended for another three months.

Borrowers who take advantage of a moratorium can extend their interest payments out over the course of the financial year and convert the accumulated interest into a term loan at the end of the moratorium period. This will provide some relief because the borrower will not be required to repay the loan’s accumulated interest until the moratorium expires.

RERA has granted a six-month extension to the completion date.

Following the lockout, ongoing real estate projects were suspended, resulting in a reverse exodus of labourers back to their homes. There was also widespread interruption in the construction material supply chain, which harmed construction activities across the country. The RERA statute includes a clause that allows for force majeure.  Due to the COVID-19 pandemic, all registered projects with a completion date, revised completion date, or extended completion date that expires on or after March 25, 2020 will have their registration and completion date, revised completion date, or extended completion date automatically extended by 6 months. On or after March 25, the six-month extension will be granted to projects that have already received a one-year extension under the RERA Act.

In each such registered real estate project, the authority will issue new “Project Registration Certificates” with revised timelines. The time limit for registering real estate developments under RERA has also been increased to six months. The deadline for certain compliances that were due on March 31 has been extended to June 30 without the need to pay a late charge.

A decrease of three months’ moratorium is also available for all loans with an additional rate of interest.

Real estate agents’ skill sets are being improved.

Real estate brokers are learning about social media marketing as well as other legal aspects such as force majeure, and bookings are now done online with discounts and offers.

Real estate recovery time

Rapid absorption will characterize the real estate recovery phase, presenting new opportunities within specialized real estate segments. With a staggered recovery, the real estate sector’s long-term forecast in the next 18–24 months is anticipated to be positive.

Work from Home is being implemented in all segments and sectors.

The coronavirus is putting remote work to the ultimate test, and on a massive scale. Many of the employees who have been instructed to work from home as a result of the coronavirus may have little or no prior experience doing so, at least not for an extended period of time. This means you’ll have to be proactive and adaptable when working outside the office, and you’ll have to work quickly. The first stage is to figure out who can work remotely, who can’t, and who should, if at all feasible, work on-site.

Although it may appear that anyone with an office job may work from home, this is not always the case. Compliance standards may prevent you from doing so, or security constraints may preclude specific job tasks from working in unsecured places.

Companies must have the tools, policies, and practices in place to keep remote workers connected and contributing to assignments, projects, and overall corporate goals before they can begin to embrace a remote working environment. People working in tradable sectors require greater personal interaction, and Work from Home opportunities are limited. This might cause a significant amount of disturbance. Companies and sectors that can’t allow employees to work from home for any reason are closing or restricting public contact.

It not only reduces the chance of infection, but it also allows employees to continue contributing to the company’s operations without being interrupted.

Because Wi-Fi is not fast nor secure enough to access some vital websites, productivity will suffer. Communication would be difficult or non-existent, and security problems could arise.

Other Consequences of the Real Estate Lockdown

In comparison to other governments throughout the world, there has been a strict lockdown over the past 1-1.5 months. There will be a significant decline between April and June 2020. There was a significant loss of employment and revenue. Furthermore, due to a lack of building materials and a labour shortage, construction activity has been totally halted, which will have an influence on the previously stated deadline for possession. The cost of raw materials has risen by more than 20% in the last five years.

The government has taken a number of steps to help the economy recover from its slump.

Following the Covid-19 scenario, Indian real estate/infrastructure will become an attractive market for both domestic and international investors. In the future quarters, we might expect incentives and reductions.

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