How the budget pans out for the real estate sector, only time will tell, but one thing is for sure, strong fundamentals are vital for the revival of housing demand
The year 2020 was meant to be a year of recovery for the Indian real estate sector, especially the housing segment. After three years of business disruptions caused by demonetisation, implementation of GST and the realty law RERA, and the NBFC crisis, the market had started stabilising.
ut all hopes were thwarted as the COVID-19 global pandemic hit India, forcing the government to impose a national lockdown from March 25 for over two months to curb the spread of the deadly disease.
Instead of recovery and growth, 2020 brought more pain and distress in the realty sector, shaving off 40-50% of business in the residential segment from an already low base
Impact of COVID-19 and lockdown
The business ran as usual for the first two months of the year, but all real estate activities came to a sudden halt in late March with the lockdown. Although the economy started to unlock from June onwards, the situation remained grim through September as construction activities were stalled because of labour paucity, while sales were down on account of concerns over economic growth. The threat of job losses loomed large, which had a major dampening effect on consumer sentiment.
With no site visits possible during the lockdown, real estate developers and property brokers swiftly adopted digital technologies to launch new projects and market their properties, with a fair amount of success. As a positive, the pandemic accelerated the pace of digital adoption in real estate, which will go a long way in transforming how properties are sold in the country going forward
Festival brings cheer
Housing sales began to improve from October onwards due to pent up demand and festival euphoria.
The softening of interest rates on home loans to around 7% and rock bottom housing prices coupled with attractive special offers from cash-starved developers were positive factors that paved buyers' return to the market, albeit at a slower pace.
Reduction in stamp duty on registration of properties in Maharashtra was a definite game-changer. It was a significant catalyst for higher sales in two key markets -- Mumbai Metropolitan Region (MMR) and Pune during the last three to four months of the year. This trend is likely to continue as the stamp duty cut is applicable until March 2021.
In an age of shared economy of Uber and WeWork, the pandemic has brought the importance of homeownership to the forefront of buyers' minds. The need for larger homes drove sales as we witnessed several buyers deciding to upgrade their homes solely based on size. The market feared huge cancellations of apartments booked before COVID-19 hit home, but thankfully the situation remained in control as there were only a handful of such requests. The demand from NRI customers was also encouraging during this period
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