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The effect that the outbreak of coronavirus left on the real estate sector in India is quite prominent. With people facing economic distress as a result of job losses, demand and sales of properties have fallen sharply. The real estate developers are in a tough spot as the fall in sales has blocked cash inflows. However, it might be noted that the number of property enquiries has started to rise, indicating a recovery phase. Currently, the number of enquiries in the top cities is around 50% of that in January-February on an average.
Bengaluru is on the top of this list, with the property enquiries at 70% of that in the pre-COVID period. Gurgaon has recorded around 65% too. Even before the pandemic, these two cities were among the fastest growing real estate hubs in the country. Naturally, they are also witnessing the fastest recovery.
The number of site visits has fallen considerably, as most people are staying home for the sake of safety. However, there has been an improvement in the rate of site-visit-to-closure conversions. Right now, only serious buyers are taking the risk of visiting project sites. For example, in Gurgaon this conversion rate was at around 4% to 5% in the pre-COVID period. Now, it has reached 8-10%. In Hyderabad too, it has risen from 8% to 15%.
A number of other notable changes have also emerged in the real estate market in all the major cities. More and more buyers are opting for larger homes, such as 3 BHK and 4 BHK. Earlier, smaller homes were more in demand. This indicates the rise in demand for properties among end-users as many families which lived in rented homes are now starting to buy their own residences. This trend is prominent in Mumbai, Bengaluru and the NCR. In Hyderabad, the demand for 3 BHK homes was already high before the pandemic and this trend continues.
The demand for homes in sophisticated residential complexes with various amenities seems to be predominant. With people forced to stay at home due to the pandemic, more and more buyers are inclined towards residences with leisure and fitness amenities such that they don’t have to venture outside too often. The demand for affordable homes is also quite high as the purchasing power of most property buyers has fallen due to the pandemic.
In Mumbai, the demand for new homes is particularly high among those who used to live in rental accommodation till now. The same trend is visible in Bengaluru, where most of the buyers are business owners and IT professionals. In Gurgaon, 30% of the demand lies among investors while the remaining 70% buyers are end-users. Judging from the recovery rate, the real estate sector in India would grow well after the pandemic.
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