The first wave of COVID 19 greatly affected the real estate sector as there was the restricted movement of people and goods all over the country. The second wave came as a severe shock to a sector that had made such an amazing comeback from the coronavirus outbreak in 2020. Due to intermittent lockdowns and other localized limits imposed by the government to contain the virus’ spread, there has been a drop in property purchases, new project debuts, and commercial rentals. The sector’s recovery from the COVID -19 crisis will be slow and difficult. For the successful resurrection, demand has to be increased.
Resurrection after the second wave
However, two main quadrants of Indian real estate are moving on the path to recovery after the second wave. While the residential quadrant experienced healthy growth, the office segment remained lagging.
The graphs for both residential and office segments had curved up from the troughs of the lockdown-induced June 2020 quarter. Sales of houses in tier-I and tier-II cities registered strong growth. This was driven by factors such as a cut in stamp duty by some states (Maharashtra and Karnataka), low home-loan rates, and discounts from builders on top of static or declining prices.
The growth figures provided by the key research firms are different, given differences in their coverage. For the March 2021 quarter, Anarock put it at 29% comparing last year’s statistics with this year’s statistics whereas Knight Frank put it at 44%. But both figures indicate that the residential sector is recovering, and has witnessed higher sales than in the pre-pandemic period.
While the trend in the office market is positive, growth remains a long way off. Net absorptions (new space taken up minus old space given up) were 36 percent lower in the quarter ending March 2021 at Jones Lang LaSalle, and 49 percent lower at Cushman & Wakefield.
Stability in Prices
It’s been a buyer’s market for the past year. While unsold homes are abundant, including a significant pool of ready homes with lower ownership risks, six of the seven major markets have either remained steady or dropped in price. According to data from real estate portal 99acres.com, prices in 30 percent of the 537 areas it tracks throughout these seven markets fell in the March 2021 quarter compared to the March 2020 quarter. The price increase was only up to 5% for the remaining 43% of areas.