Although the second wave is unlikely to result in a significant decline in real estate prices, there will be some cascading repercussions.
From May 1, 2021, forward, all residents above the age of 18 are eligible to get the COVID-19 vaccine as part of the pandemic’s second wave vaccination campaign. Over 200,000 cases of COVID-19 have been reported in India in the previous month.
If we couple this with a huge vaccination campaign already underway, threats to the recovery may be reduced, and economic activity in the second half of 2021 is likely to go up. The wider reach of vaccines will ensure management and increase construction activity, which will benefit realtors.
The realtor community is cautiously optimistic while being cautious. Since the Coronavirus-induced lockdown was lifted eight months ago, the real estate business has gradually recovered. People realized the benefits of owning a home after the first lockdown period in April/May 2020, hence the second wave of COVID-19 would have little impact on the industry.
Although the second wave is unlikely to result in a significant decline in real estate prices, there will be some cascading repercussions. Not directly as a result of COVID-19, but rather as a result of the restrictions put on the general public’s movements and the delayed supply of other support services, such as processing documents for applying for house loans, getting the agreement for sale or flats registered, or contacting sales and marketing professionals for more information about the project.
Despite the vaccine campaign providing some hope, the real estate market is anticipated to have a difficult year in 2021, if not a complete washout.
The government’s next phase of Covid-19 vaccination, which is aimed at residents above the age of 18, is a great initiative. It will boost construction conversation by assisting labourers in getting vaccinated as soon as possible. We can expect that the vaccine campaign will be accelerated even more, reducing the risk factor.
It would also solve the issue of reverse migration, as the workers will feel safe after being vaccinated. As per government rules, antigen testing is required for all migrant workers until they are vaccinated. Laborers are the most important and integral component of the real estate development process, and we must take the best care of them.
Large and medium-sized developers may not be as concerned about the current situation as smaller developers are. While the big players are already taking the required safeguards on the ground, small developers and redevelopment projects may not have adequate room for labour camps.
The year 2021 was predicted to be a year of recovery, and the Union Government’s vaccination campaign bolstered that belief. However, the recent uptick in many parts of India (particularly Maharashtra) has prompted the investor community to exercise caution.
One of the major impediments to the expansion of the real estate sector has been the lack of credit. Financial institutions have been forced to avoid riskier investments due to the already uncertain environment, which has been exacerbated by the recent revival of the pandemic. This could exacerbate the real estate sector’s already dire financial situation.
While this may be the beginning of a full-fledged, slow-but-steady recovery, much will depend on how well Asia’s third-largest economy manages the difficult task of getting the vaccine available to its enormous population despite supply-side issues, given its poor health and transportation facilities. The same element will have an impact on the overall economic recovery scenario, which will shape the future of India’s residential real estate industry. As a result, India’s economy is still in bad shape.
India’s economy will decrease by 9.6% in FY 2021, according to the World Bank’s Global Economic Prospects, due to a sharp drop in consumer expenditure and private investment. In 2021, growth is predicted to return to 5.4 percent. According to the International Monetary Fund, India’s economy will fall by 10.3 percent in FY 2021, before expanding by 8.8 percent the following year.
(By Akash Kohli, Founder & CEO, Elante Group)