Real Estate Sector Looking at Recovering Sales after Lockdown Ends

By : 360 Realtors

28 April, 2020

The pandemic has already affected the real estate sector adversely by causing a fall in property sales.It is expected that funding from banks and NBFCs would soon become negligible. With another liquidity crunch in sight, the developers are hoping that after the lockdown ends, sales will boost once again.

However, the sales would not be as high as the developers had expected as the outbreak has affected the buyers’ sentiment badly. It would be difficult for the real estate companies to sell their unsold properties as most buyers prefer newer projects. However, the end user market would have grown considerably if the pandemic had not struck.

The Indian realty sector was already suffering from a credit crunch and a liquidity crisis in the recent years. Property sales had fallen drastically in most of the real estate hotspots. This was primarily owing to the short-term ill-effects of several reforms which were originally aimed at improving the economy.These reforms decreased the purchasing power of many buyers, resulting in a fall in sales and thus lack of enough credit for the developers. This, in turn resulted in unfinished projects, bringing the industry to a standstill.

Lately the real estate sector was showing signs of recovery. The government had taken a number of steps including a funding window of INR 25,000 crore to help finish the stuck projects. The developers had been hoping that this slight increase in demand emanating from this period would help push up the sales.

It is however certain that due to a sharp price correction expected to take place after the lockdown, the market will be more buyer-friendly. Industry players also feel that with a large pool of units that are yet to be turned around, the overall sentiments will move towards the favourable side at a gradual pace.

A number of developers are already announcing special offers on their properties. Some of these include discounts, free club membership, benefits in registration, etc. It can be noted that plots are doing well in the real estate industry, as buyers love the idea of being able to own a fully personalized home. It is expected that plots would be leading the sales in the sector for now.

From an investment point of view, this crisis has also opened up diverse options for NRI investors who are moving in to capitalize on the host of attractive properties, especially in the commercial segment. A devaluation of the Indian rupee & a large measure of volatility in other asset classes such as stocks & gold price fluctuations, preferences of NRI buyers are expected to pivot towards Real Estate. With transactions beginning to pick up, hope still prevails that the housing sector will emerge from these headwinds & reorient itself towards a more stable outlook.