The second wave of Covid-19 has put brakes on the recovery of the real estate sector. Property consultants suggest that sales have started falling since April and the situation is likely to worsen if the situation does not improve.
Economic activity in many states has been hit hard due to the second wave of Covid-19 in India and some important sectors have started facing losses due to the prevailing situation. Real estate is one such sector that has been affected.
For a sector that staged an impressive recovery after the coronavirus pandemic in 2020, the second wave came as a rude shock. There has been a dip in property sales, new project launches and commercial rentals since last month due to semi-lockdowns and other localised curbs imposed by states to contain the virus spread.
According to reports, homebuyers have become cautious in view of the Covid situation and avoiding any property site visits even if they are interested in buying a home. A number of transactions have also been put on hold as consumers are now opting to reduce spending on non-essential items including homes.
Real estate activity has suffered in key cities like Mumbai, Delhi, Bengaluru and others. For instance, the Mumbai Metropolitan Region (MMR) in Maharashtra has witnessed a drop in property registrations.
A recent report by Anarock Property Consultants indicates that the second Covid-19 wave coupled with the expiry of the stamp duty cut period impacted the monthly growth momentum of Mumbai’s housing sector.
In Delhi, where a sharp surge in Covid-19 cases has brought economic activity to a standstill, the real estate developers are struggling as well.
Many experts suggest that the demand for housing sales, especially the luxury segment, has witnessed a dip in April 21. While most developers suggest that the situation will not be as bad as April 2020, they are worried that the sector will take a big hit if the Covid-19 situation does not come under control soon.
COVID DISRUPTS HOUSING RECOVERY
The second wave came as a shock for many real estate developers, who are struggling on all fronts since April. While homebuyers have reduced drastically, a shortage of labour has led to delay in project completions. This could led to additional cost factors for real estate firms.
Prashant Thakur, Director & Head Research, ANAROCK Property Consultants recently said that the April-June quarter will “certainly be impacted” by the rapid spread of the virus. Other property consultants seem to agree, but add that it is too early to say if the impact will be widespread like last year.
The managing director of a real estate consultant firm quoted in a livemint.com report said home sales may dip 25-30 per cent drop during the April-June quarter.
It may be noted the impact of the second wave has mostly impacted sales in the luxury and high-value segment. In contrast, the affordable segment — costing up to Rs 45 lakh — has been upbeat; it is one of the reasons that has kept the Indian real estate afloat, according to a PropTiger.com report.
Mani Rangarajan, Group COO, Housing.com, Makaan.com and PropTiger.com, suggested that housing sales had almost reached pre-Covid level in January-March, driven mainly by low-interest home loans and stamp duty cut by the Maharashtra government.
However, Rangarajan feels that the recent outbreak of the second wave of Covid and semi-lockdown in many states may “put a brake on the revival of the housing demand seen during the last nine months”.
“Though It is too early to assess the impact, we need to keep in mind that the real estate industry is more prepared this time to handle the situation. The sector has taken a giant leap in the adoption of digital tools for marketing and sales during the last year,” he observed.
Many developers have started delaying new project launches as they expect sales momentum to suffer in the wake of the Covid-19 pandemic. While they plan to resume launches in the second half of the year, a lot will depend on how the country manages to tackle the second wave.