State of Real Estate post Pandemic
By Dr R Kumar, Chairman & Managing Director, Navin’s
It is too early to predict when and how the COVID-19 challenge will end. Under such circumstances, it will involve plenty of guesswork to predict how any sector will revive or behave after the event. We are still in the thick of the event. Right now, the focus shall be to ward off the threat of the pandemic. First thing we should be focussing only on problems currently on hand and stay safe at home and maintain social distancing, follow hygienic procedures like frequent hand washing, wearing protective masks etc.
The world has to move on, COVID or no COVID, hence we need to reinvent ways to move forward, although carefully. There are several positives this lock down period gifts us with. From the perspective of the customer, it also offers an invaluable opportunity to do some online research on the home you always wanted to buy. There are not many newspaper Advertisements to confuse you. You can do a leisurely search online go into the depth of offers and offerings rather than making a hurried decision, especially when you are buying such an expensive product which is going to play a crucial role in your lifestyle afterwards. Even the developers will be more willing to share details and offer clarifications, now that they too have time. Understand the location and conveniences nearby like commuting to work and school, usable amenities provided, stage and progress of construction, technology adopted and design of the project and apartment, actual and usable carpet area you will be getting, total cost of acquisition and cost per sqft of carpet area. Other things to keep in mind for consideration would be the reputation of the builders, online reviews, checking with friends and relatives who have had previous dealings with the developer you are evaluating, approval and legal compliances etc., before you make an investment.
Interest rates are now at the historic low and your EMIs will be lower. Additionally for NRIs the Rupee is at its lowest value so they will be paying much less compared to pre-Corona period. So rather than getting bogged down, get active. Get positive. Move ahead and strike deals. The builders may now accept lower booking amount that too through payment gateways. You can select the home online (AI also provides you with ability to view the apartment virtually. The builder will also share a video shot if flat is ready), and book your home online, make payment online. Of course, make sure once the curbs are lifted you and near ones visit the project and make sure what you saw online matches with reality.
From Real estate and construction sector perspective, by its very nature creates value in the form of long-term assets. It may take may be a few weeks or may be a couple of months for real estate and construction industry to get back on its feet and run full stream. But that will happen soon after the passing of the COVID pandemic. However, the phase of revival of the other sectors will influence the real estate sector as well. The economic revival of the country is the key. Though various predictions and apprehensions are being expressed, the real economic recovery could be much simpler and faster. A lot also depends on the kind of economic stimulus, packages and other monetary and fiscal measures that will be taken by the government is very important.
In fact, the current downfall impact on the economy is one due to the psychological aspects of human and market behaviour rather than the actual effect of the pandemic itself. The government initiative on fiscal, monetary, and financial measures will go a long way in addressing the psychological impact of the pandemic. In my opinion, things could be back to normal after the corona in a matter of few weeks or months. Honestly, if you look at the real losses, it could only be the loss of production and interest losses (which government can set to zero) during the corona period. Just by setting the corona months off every calendar a new beginning can be made without much loss. It is just like taking off the months of March, April, May out of the 2020 calendar. Then the world goes back and starts running as usual.
However, there could be lot of gains from the corona period which should not be lost sight of. People would have learned to cut down on lot of wasteful expenditure, unwanted travel and gathering, learnt of true values, cut down on all extravaganza learning to work from home, more online interactions, increased efficiency, lesser load on public utilities, healthier and hygienic practices. All these will go a long way in reducing wasteful expenditure, increasing efficiency and healthier community. These could be positives from “the corona period” may far outweigh the losses from the same.