The outbreak of coronavirus has cast a negative impact on almost all industries across the globe. Although the impact in India has been relatively late, it has disrupted business cycles. Like all other industries, the real estate sector is also like to bear the impact. In this post, you will come to know how the residential and commercial real estate industry in India stands.
About coronavirus and safety measures
It is believed that the novel disease originated from the Hubei province in China. Over the last month, it has spread to different parts of the world. The impact of this disease has been such, that the WHO (World Health Organization) has declared it to be a pandemic. In India, restrictions have been imposed on international travelers. Even most of the tourism industry has been locked down. Due to these restrictions on travel, the real estate industry may bear a negative impact in the short term. However, the long-term impact remains to be assessed.
In order to remain safe, healthcare professionals have recommended certain measures:
- Wash your hands frequently, even if you are at home.
- Use masks when you are outdoors.
- Avoid public gatherings, as you might become a carrier of the disease.
- Wear gloves when you are outdoors.
- Consume food containing a lot of Vitamin C, as it will strengthen your immunity system.
How has coronavirus affected the global real estate industry?
The spread of coronavirus has already affected the international real estate market. Particularly, several cities in the UK have witnessed a slowdown in the real estate sector. Besides, California and New York have also experienced similar conditions. Presently, the overall global economy is undergoing a turbulence. The IMF has already declared that the global economy would be going down by at least 0.1%, due to the disruption. Even in India, people are working from home. The IT sector might not be affected to a significant extent. However, other sectors, particularly housing, would bear the damage.
In the coming months, the rates of mortgage are likely to remain down. Due to the outbreak of the pandemic, it is likely to further decrease. From the perspective of homebuyers, this would be a positive development. However, in the USA, domestic buyers are likely to be discouraged, with the fear of recession coming up. In the West, the financial volatility has already reduced the demand for luxury properties. If this happens in India, investors in the other segments are likely to invest more. Therefore, the Housing for All mission of the government would probably get a boost.
How real estate in India is likely to perform, compared to other industries?
Presently, all industries have been disrupted in some way or the other due to the pandemic. However, real estate investors need not worry much. While the tourism industry has been completely shut down, the banking and IT sectors are also suffering to a significant extent. The loss is yet to be calculated, given that in some states the government has instructed all educational institutions to remain closed for the time being.
The demand for real estate, however, is not likely to decrease. Although restrictions on transportation have been imposed, and flights are being cancelled, people who have already invested in real estate are enjoying the returns. Once the situation comes into control, the opportunities are likely to open up.
However, NRI investment in Indian real estate is likely to go down. Particularly, the commercial real estate sector would suffer, given that a large number of NRIs have been investing in real estate over the last couple of years. The sales figures are likely to dip for the time being. However, the demand for sophisticated commercial space remains high. Once the restrictions are removed, the real estate industry is likely to bounce back to health.
Therefore, it is evident that the real estate industry would be safer to invest in, as compared to other segments. The stock market is already witnessing a downward trend. It would not be wise to make an investment in stocks at this point of time. Investing in residential and commercial real estate, instead, would fetch you better returns in the coming months.
Why is it safe to invest in real estate?
Considering the increasing land prices, it would be wise to invest in real estate in India. While other industries would require a good amount of time to recover from this crisis, real estate investment can give you consistent monetary returns. Besides, volatility in real estate is comparatively lower. Therefore, people are looking forward to make investments in residential and commercial properties. Regardless of where you are and the situation in your city, you may go for a real estate investment now.
If you are a property buyer, you are actually sitting in a good position, as the overall market has weakened. Particularly, people with secure jobs can take advantage of this situation. However, another group of people are experiencing a reduced income. They might be going for the wait and see approach. Therefore, people having the buying power should go ahead at this point of time.
Well, there’s another buyer group, who are presently in various jobs. However, they are not sure about how their pay would be affected due to the economic turmoil as a result of the pandemic. They are confused about whether they should invest now. These buyers would stay out of the housing market for the next few months.
In general, real estate has got the stability to provide recurring income to the investors. Unlike the share market, it experiences low volatility. Besides, property prices have consistently soared over the last few years. Even if they come down for a few weeks now, the investors would not be affected much. Once the situation comes under control, they will continue making good money from their past investments. New investments, however, would be lower, as predicted. In a nutshell, the real estate sector is well-off, as compared to several other sectors. It would be wise to go for an investment now.