The pandemic shook up the global business environment. But as they say, the show must go on and it did. The Indian real estate market, which might have slowed down in the initial stages of the pandemic is on the rise again.
As we watch this upward tick in the Indian real estate market, it isn’t unnatural for one to wonder how long this will continue. And if the market will be even strong enough to sustain the current level of growth.
With the Union Budget 2022-23 in tow, developers are looking at the Indian government to help alleviate some of the stress faced by the Indian real estate market. Whether that will be enough to keep the real estate sector’s head above water, is still to be determined.
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Third Wave’s Affect on Home Buying in India
The second half of 2021 was a blessing to the Indian real estate market. The slowdowns experienced in the first and second waves were made up for post the second wave and things looked up and up for the real estate sector. However, the third wave of COVID-19 and its new variant, Omicron, surely put a damper on real estate sales in India.
While lockdowns aren’t being imposed, consumer mobility has been gravely restricted by curfews implemented throughout the country. This has directly resulted in a lack of site visits which are crucial for sales.
Clicbrics has played a big role in the digitization of the real estate market in India by providing virtual site visits from the comfort of one's own home. While the Indian consumer is still, largely, getting accustomed to the endemic-friendly real estate market, real estate sales in the first quarter of 2022 are expected to decline.
The biggest saviour of the real estate sector currently is the positive sentiment around homeownership that came through due to the pandemic creating high uncertainty around rentals.
Despite the slowdown in sales in January of 2022, experts predict that the first quarter of 2022 wouldn’t end the same as it started. It is expected that home sales will return to pre-third-wave levels by the end of March 2022. This has encouraged a lot of developers to keep working on their new launches in 2022.
Some cities like Mumbai and Delhi NCR also show a promising recovery rate in real estate sales as compared to other states like Kerala, or Karnataka.
Since the third wave isn’t showing an impact on the economic condition of the country as severe as the two waves before it, the real estate market isn’t expected to suffer the slowdowns it did in the last two waves.
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Third Wave’s Affect on Rental Housing in India
Rental housing however is a whole other story.
While the third wave might not have affected the home-ownership segment of real estate, it has astronomically affected the rental market all across the country.
Rental housing in India faced a lasting impact during the first two waves of COVID-19. While the rest of the real estate industry bounced back and showed robust growth, the rental market was still struggling before the third wave hit.
Top cities in India recorded a fall of 5-15% in demand for rental housing during the first lockdown. The only growth that this segment of Indian real estate saw was after the second lockdown when many corporations started moving out of the work-from-a-home model and expected employees to move back closer to the workplace.
The unexpected arrival of the Omicron variant which acted as a catalyst for the third wave in India interrupted these plans and forced corporations to stick to the work-from-home model again. This caused the rental uptick that some major cities were seeing to plateau.
The rental market is expected to revive in the second quarter of 2022, in case the third wave is dealt with properly and kept under control. However, the possibility of a delayed fourth wave in the third or fourth quarter of 2022 might revert the growth of the rental market.
If COVID-19 contagion within communities is controlled and a fourth wave does not arrive offices will be able to move back to the work-from-office model in the second quarter of 2022. Major cities like Mumbai, Delhi NCR, and Bangalore, where a majority of corporations are situated, might see an uptick in rental housing demands and thus in rental housing costs.
While a property price crash might sound like an interesting idea to those in the market to buy a property or invest, it is in fact a dangerous phenomenon. Any changes on the Indian real estate scene directly impact the other industries in the country. The Indian real estate sector, although still devoid of an industry title as per the government, is expected to contribute a hefty 13% to India’s GDP in the coming year.
One can only predict so far when it comes to real estate. The pandemic has definitely taught us the lesson that the human variable is one of the strongest variables in the business world. Even with enough investment available, the human variable can completely shake up the real estate sector. Thus, any of the predictions for the third wave of COVID-19 need to be heeded with discernment.
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