How does the Coronavirus pandemic affect luxury Property demand?
How will the Coronavirus impact luxury homebuyers in top Indian cities and holiday destinations and the luxury homes segment? We are investigating
The state of luxury real estate projects is even worse if affordable and mid-segment housing projects in Kharghar are struggling to find home buyers right now. The Coronavirus pandemic and the subsequent shutdown in different countries have created an unprecedented market climate and cash-rich home buyers are putting on hold their plans to purchase properties.
Does COVID-19 affect real estate sales?
With oil prices collapsing, and Western economies taking the heaviest blow from the pandemic, the market turmoil has hit the rich. Financial liquidity is low, and the timeline for the crisis to end is not finite. Experts around the world have recorded a drop in sales of luxury housing, especially at hotspots like New York, Paris, and London. Though luxury ventures experience marginal traction in India, queries were curtailed over a period of time.
“The luxury industry, due to global volatility, is expected to contract for a limited period of time. Following the pandemic, there were a few transactions that were finalized before the lockdown. New queries have slowed as people hold back their final decisions, “says Ashwin Jain, president of the Property Professionals Association (APP) -Delhi / NCR.
“While the Coronavirus pandemic is expected to slow down the real estate market, we continue to see interest from potential customers for our vacation homes in Goa, as most are economically backed up,” says Lincoln Bennet Rodrigues, founder, and chairman of the Bennet & Bernard Company.
In other markets, buyers, particularly in cities, are adopting a wait-and-watch approach. This could lead investors to favor suburban, second-home markets, which combined with lower risk can deliver better value propositions.
Will property prices fall because of Corona?
Luxury accommodation is divided into three segments – vacation homes, condominiums or villa properties. Even when Rodrigues says buyers investing in their vacation homes are not price-sensitive, this also means prices may not fall in the near future. Buy property in Kharghar other luxury property builders who are developing apartment complexes in Gurugram, Mumbai and Bengaluru were also trying to woo customers by offering refundable reservations and price assurance, but no clear indication has been given as to whether they are planning to offer price discounts.
In addition to the demand and supply equation, construction costs will play a major role in deciding in the near future on the cost of luxury properties. Because supply chains have been disrupted and building work stopped, under-construction projects will face significant challenges in avoiding material wastage, etc.
“Many developers in India rely on China to supply fixtures, furniture, and fittings, and to some extent, this will be impacted. Going forward, as the duration of the crisis is unclear we will have to keep an eye on the overall macro level. A silver line in all this is that this crisis has provided an opportunity for developers to rethink their strategy and make the segment more attractive to buyers, “maintains Rodrigues.
Luxury housing future in a post-pandemic environment
In the pre-pandemic era, when the Indian economy was waning, key luxury developers, including Lodha Developers (now known as Macrotech Developers), announced a shift in focus to manage their cash flows, from luxury to affordable and mid-segment housing options. Flats on Kharghar the contrary, south India based developers were more optimistic and launched a number of premium range projects. That was the time when there were positive market sentiments regarding ready-to-move projects in Mumbai and Bengaluru and many developers, including Sobha Ltd, were planning to enter Delhi and Hyderabad with premium offers. Those plans were now put on hold.
Although wealthy and affluent would continue to invest in the property market, developers will need to be prepared for a paradigm shift in customer preferences and behavior. From sustainable designs to changes in lifestyle, these luxury homes would now be seen with personal havens, especially if one faced a lockdown where life would be easier. Furthermore, according to industry experts, the demand for luxury properties will shift from urban to holiday destinations with good connectivity, in terms of transportation & internet, a serene environment and easy access to all amenities.
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