Pandemic Impact on Real Estate
The recent spread of new strain of Covid 19 and recent restrictions by many governments including Government of Haryana have pushed the gain in growth and recovery of industrial productions, revival in consumption, overall employment and economic growth back to negative. The RBI credit policy and home loan rate hike further added to the woes of reviving sentiments of customers and investors in real estate market coming back to purchase real estate assets for end use or investments have now been impacted from all sides.
Migrant workers mostly vanished from construction sites, and death toll figures and adversities around scaring them to leaving their worksites for safety to return to their villages again, hence affecting the progress in construction work badly. As there is loss in works and depleting of jobs although temporarily in every industry, there is no sign at least in near future for any recovery in real estate market. The market was already having ample supply to cater to the need of customers for another 2 to 3 years, if all projects get completed and situation gets normalised, but as this second wave of pandemic turned out to be more severe and fatal, with shortage of vaccine and mounting pressure of health and medical services due to steep hike in positive cases, the crisis multiplied manifold to an unimaginable scale, and we all witnessed how system gets collapsed, which really hammered its severe blow on our economic activities and consequently demand side dried up so fast, which ultimately prolong the consumption of existing supplies of real estate products for another five to six years even on conservative scale.
If we take note of pandemic impact on real estate, we need to the understand the sentiment of people who made investment and grew their portfolio with earnings, but this time the sentiment will only improve, if the market conditions will be supported by economic data and corrective measures applied to gain back the lost confidence. It can recover faster only if the government intervenes and support industries and economic activities with required relief measures. The overall interest rate should be rationalised with easing tax burden further down on corporate and individuals, with restructuring debt policy to enthuse up the industries with relief measures, so as to bring the engine of growth back on the path of recovery. Otherwise, the real estate market has no reason to recover from the second blow of pandemic. We need to learn from developed countries, how the relief measures infused by those governments to control the overall damage to their economic growth, affirmed their willingness to take their country out of the crisis. Real Estate is well connected to all other industry, it’s growth is indication of health of economy, saving and wealth of its citizens, who believe in savings for bad days as insurance to safeguard themselves against any unforeseen crisis or against any sudden need for large chunk of money for any important work. They by choice or otherwise keep their savings invested for return or appreciation in real estate products. But such a kind of crisis if keep on repeating for any uncertain number of times, the real estate market shall remain heavily impacted or will be the last asset class to recover and lead on its own without government and concerned institutions playing some positive and constructive role for reviving the sentiment.