Key Highlights
- The global economic slowdown had already hurt the real estate sector with low sales all across; the pandemic and the lockdown which followed it have made the situation worse for the sector
- This has seeped into the residential, commercial and retail real estate segments, where the residential and retail segments will be the hardest hit whereas commercial will be least impacted
- The Government has made certain provisions to help the housing projects under the RERA guidelines, but there seems to be a lot more which is left wanting by stakeholders of the sector
- The situation might stabilize a few months down the line, and a lot of change in the dynamics will perhaps be seen in the retail sector (malls, cinema halls, etc.) given the changing lifestyle of consumers and enforcement of social distancing protocols
The real estate sector in India was anyway going through a difficult period of its own, where the economic slowdown in India had majorly affected consumer spending across various socio-economic strata. This meant an over-supply of projects, especially in the residential real estate domain and a low demand.
Cometh early 2020 and especially when the COVID-19 (novel coronavirus) pandemic took over the world, the demand was further shaken. This in turn translated to short-term and medium-term problems for the commercial and retail real estate segments.
While commercial real estate is expected to pick up and stay relatively unaffected owed to the growing demand of office spaces (since the common consensus says that working from home can’t be used as a permanent working model), malls and entertainment centers in the retail real estate segments have seen low footfall since early March due to them being asked to shut down, a move which was then followed by a country-wide lockdown.
What was however unexpected was the mass labor exodus, something which created a lot of mismatch in terms of containment of the pandemic as well as led to a significant halt on construction related activities, with only a few states commencing construction activities.
This has led to a strong industry sentiment, where a lot is expected from the Government in terms of intervention, while the industry players are looking at alternate ways to stay steady or disrupt the market with new offerings, be it venturing more into warehousing or leasing existing office spaces for storage operations.
To know more about how the pandemic has impacted the real estate sector in India and understand the nuances of the impact across its underlying segments, we spoke to Suman Sapra, who currently leads the Tax And Regulatory Services at Coinmen as a Manager.
Her inputs include discussing the impact of the pandemic, the labor exodus and its consequent problems for developers, the possible change in purchasing habits, the provisions to soften the blow on the sector by the Government as well as possible crisis management by the industry.
The full conversation with Suman can be accessed on the link shared below, as it forms the latest episode of our flagship podcast series, The Big Picture:
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