It is hard to imagine that something as tiny as a virus, can take on the world, wreck its existing order, and alter business dynamics forever. Business ideas and models that were still in embryonic stages in the minds of business leaders, matured in fortnights, and went into motion.
Digital became a new sensation overnight as companies embraced digital apparatus to enable business continuity from a work-from-home mode and ride out this crisis. Internet became the most consumed fodder, second only to oxygen, if we may jokingly say so, as people glued themselves to their digital gadgets binging on everything from new delectable food recipes to web series to everything online, which didn’t catch their attention earlier.
Online businesses dealing in essentials found their demand to surge beyond expectations and stocks ran out fast as people avoided physical contact and went digital to meet their needs.
While real estate may not fall under the ‘essentials’ category, the demand for affordable homes went north during the initial months of the year which continued till the first couple of weeks of lockdown. Home sales had picked up and the real estate sector was well on its course to stand on its feet after a turbulent 2018-19.
However, the pandemic outbreak and subsequent lockdown threw cold water on its hopes as property sales slumped, and construction of planned projects came to a screeching halt.
In light of this situation, the real estate sector increased its reliance on technology and whipped up online business models, taking into account virtual reality, machine learning, AI, and other technological tools to tide over this calamity.
The paradigm shift ticked the sales graph in the residential real estate category. Real estate developers leveraging the potential of technology and analyzing the sentiments of homebuyers, milked the opportunity and converted that into impressive sales, at a time when business sales were at the nadir.
But there’s little to rejoice at this new-found business opportunity as possible job losses and pay-cuts forced many potential homebuyers to shelve their dreams. The hit is more profound in the commercial and co-working sectors as they struggle to find takers in the present volatile situation.
Though the wings of the economy have been de-clipped now with unlock 1 coming into force, apprehensions have clouded the minds of real estate experts, about when the property sector will see the good times again.
It can’t be denied that opportunities for the real estate sector have surfaced despite the lockdown, which can set the stage for the real estate sector to find its feet again. Here’s a lowdown.
- Cheaper home loans to spur sales: Home loan rates continue to be the force behind healthy real estate sales. Consumer sentiments are piqued by a correction in home loan rates as homebuyers can get borrow at cheaper rates. To cheer up the real estate sector, the Reserve Bank of India slashed the repo rate by 115 basis points. Homebuyers may not take this bait now, but this development will convert into healthy real estate sales in the long run as the economy improves.
- Digital push: The real estate sector’s intent to go digital wholeheartedly has been given a thumbs up by homebuyers. This new trend of contactless shopping for homes through virtual reality and 3D walkthroughs will become a mainstay in the long run. It will cut overall costs for real estate developers, give their inventory a better reach among homebuyers and enhance sales in the long run.
- Ready-to-move-in properties to sell like hotcakes: With gold and equities losing their credibility during the pandemic, consumers will find solace in a more stable asset and real estate will be their optimum choice. Ready-to-move-in properties will thus gain prominence among homebuyers as they will take advantage of low-interest rates and buy affordable homes with attractive payment plans in major cities. This demand will provide much-needed stimulus for the real estate sector.
- Rental returns to uptick real estate sales: The pandemic has snatched jobs and killed income routes for millions of citizens. It has become a wake-up call for people who are now in search of a steady income source that can take them out of such unforseen crisis in future. And real estate investment seems to be the best bet. Demand for homes will spike post lockdown as investors will look to gain perennial rental income from their property. The rental returns can also go up in future giving investors good ROI.
- Reverse migration to propel property demand in micro markets: With job losses being a worldwide phenomenon at present, NRIs returning to India will look for jobs in their home country. The top 7 micro-markets will be their prime choice for home shopping. The benefits of healthy living at a low cost will amplify the demand for homes in Tier 2 and 3 cities.
In the months to come, the real estate sector will be in an opportune position as it will lead the baton to make the world safe and hygienic. The culture of gated communities will gain currency and people will look to shop and chill out in well-sanitized entertainment zones, fuelling the need for commercial real estate development. Technology will go hand in hand to realize this change, bringing more transparency in real estate dealings and help the real estate sector chime with the good times again.
