The second wave of COVID-19 has halted the recovery rate of the real estate sector. It has unprecedentedly disrupted the activities of new project launches and sales. Unfortunately, the pandemic has once again put a brake on the operations of the sector. As per industry experts, the sales have started falling since mid-April and the situation is likely to worsen in case the third wave persists.
Real estate is the only sector that marked an impressive recovery from the aftermath of the pandemic. It had witnessed historic sales from the last three quarters, but now the relentless rise of new COVID-19 cases in the second wave comes as a shock for many real estate developers. Realty developers are bothered since their money and new project launches are at stake. They are apprehensive about the future of the real estate sector as things won’t come under control for a very long time in case the deadly third wave of COVID-19 hits India.
Prominent issues that continue to dictate the real estate market in the second wave are migration of labour, flattening sales, upsurge in the prices of construction, cash flow issues, and the decline in buyer sentiment. Amid all these problems, the real estate sector needs the support of the government, in the form of implementation of stress funds, further reforms, stimulus packages and most importantly the sector needs the support of labourers.
According to the latest industry reports, homebuyers who were interested in buying new homes have become scared of the life-threatening coronavirus and due to a surge in COVID cases, they are avoiding visiting sites. The same is the case with renting homes, landlords are paranoid to rent their home to absolute strangers.
In the second wave of COVID-19 prices are likely to remain stable and if the condition continues to be the same or worsens at some point in time, then a fall in property prices is also expected. More than ever, realty developers are playing safe as they do not want to disturb the momentum by unnecessarily upscaling property prices.
Particularly, real estate activities have come to a near standstill in the Mumbai Metropolitan Region (MMR). In no time, the Mumbai region exponentially witnessed a drop in property buying. The factors that impacted Mumbai’s housing sector is the sudden surge in COVID-19 cases coupled with the rollback of the stamp duty cut.
Impact of the second wave on residential property prices
Contrary to everyone’s expectations, the year 2021 has been full of uncertainties and oodles of surprises. Earlier, experts were predicting a full-fledged recovery of the real estate sector, but now things have started taking a 360-degree turn. The second wave of COVID-19 has had an adverse impact on the demand in the housing sector, which had recently got back on the track of recovery. Such a scenario has made homebuyers speculate whether the prices of housing units would fall further or not. As per industry experts, prices are unlikely to reduce further but no one can accurately predict the fate of fluctuating real estate markets.
COVID disrupts construction of ongoing projects
The second wave of COVID-19 is significantly impacting ongoing project constructions as labourers have started migrating to their hometowns. The shortage of labour will lead to delays in project completion, thereby thrashing the real estate sector severely.
Real estate is a labour-intensive sector and the impact on the industry will be severe if the labour does not return to work anytime soon. Pretty soon, it can turn out to be bad news for homebuyers as the shortage of labour can delay the completion of under-construction projects. In a nutshell, the decline in the availability of construction labour, coupled with the increasing price of cement and steel discourages the construction of ongoing projects, thus adversely impacting the real estate sector.
Industry experts believe that the April-June quarter will get severely affected by the swift spread of the contagious virus. All eyes are on the progress of the vaccination drive since it is the only hope that can bring the real estate sector back on track. There is hope for revival in the third quarter, however, if the speculated third wave is to hit the country, it could prove devastating for the sector. As of now we can only wait and watch with bated breath as to how the future months will unfold.
