Even though the pandemic significantly influenced the industry in 2020, brighter days are predicted in 2021. The demand for residential real estate will be high in the coming year, owing to the rising importance of house ownership among consumers and investors.
Last week, Housing Secretary Durga Shanker Mishra stated that while India’s real estate sector experienced a setback during the first and second waves of the COVID-19 epidemic, housing demand has recovered in the nation.
While demand and supply were both negatively impacted during the first two months of the April-June quarter of 2021, when most states remained in partial lockdowns to contain the second wave of the coronavirus spread, data showed that in June, when states began the gradual opening-up process, home sales and new launch numbers began to pick up.
The housing secretary also mentioned that the Indian real estate industry is expected to reach $1 trillion by 2030, spurred by growing demand and significant changes over the last seven years, while speaking at a CII virtual conference. Similarly, Mishra predicted that the number of people engaged in the industry would increase to seven crores in the future years, up from 5.5 crores in 2019.
In contrast with this, according to real estate giant Hiranandani Group, the industry might suffer a minimum 20% drop in off-take in the first three weeks after lockdown. “There is no way of knowing how long recovery would take or if it will be a ‘return to normalcy or a ‘new normal,'” said Niranjan Hiranandani, founder and MD of Mumbai-based realty firm Hiranandani Group.
Due to legal, economic, and fiscal reforms, the real estate industry is undergoing difficult times, which credit constraints and debt difficulties have exacerbated. According to the Indian Chamber of Commerce (ICC), clients for under-construction projects default on 65 percent of payments.
In a statement, ICC Director Rajneesh Shah stated that the real estate industry, which has been in a recession since last year, is currently witnessing over 65 per cent payment default from consumers paying construction instalments.
Moreover, after the second wave of COVID-19, the building sites have been shut down due to the coronavirus epidemic. Customers can’t get in touch with site offices or sales offices. Raw material cannot be delivered since the stakeholders are unable to do so. The ‘break’ in traditional manufacturing and sales operations caused by the lockout impacts ongoing and planned initiatives.
Furthermore, real estate businesses use digital platforms to conduct sales and marketing operations, with social media accounting for a more significant portion of the communication strategy. However, it is not the same as it was before the epidemic. Returning customers to sales offices will necessitate a new communication structure.
According to industry analysts, financial institutions must aid the recovery process by providing liquidity to developers and restructuring loans. Furthermore, banks should offer new convenient products to purchasers to encourage them to buy. The real estate industry contributes significantly to GDP growth and supports over 250 auxiliary sectors. It is also the economy’s second-largest employment generator.