The covid-19 pandemic has and will have a lasting impact on the Indian real estate sector. Shorter term impacts have been the inevitable slowdown in sales activity during the period of the lockdown (though this slowdown has been smaller than a lot of people predicted it would be), as customers were unable to venture out of their homes and visit sites to make their purchases. This was exacerbated by the economic slowdown which accompanied the pandemic, resulting in enhanced job-insecurity and business stress, which caused customers to delay their home buying decisions further. Furthermore, until markets assume normality, the majority of developers have delayed launches, resulting in falling inventory levels nation-wide.
On the flipside, the pandemic has stymied the move away from home ownership and towards renting, which trend was steadily playing out in regions such as the Mumbai Metropolitan Region. A historically buoyant stock market and the concerted governmental push towards the consumption of financial assets culminated in younger consumers opting for an ‘asset-light’ lifestyle, when compared with their parents and grandparents. The resultant shift was away from ownership and towards renting their primary homes. However, with the onset of the pandemic, a lot of these consumers saw the value of these financial assets fall significantly, almost overnight. Coupled with heightened job-insecurity, lower salaries and worse-still, lay-offs, they not only saw their hard-earned wealth erode, but had the added worry of potentially not being able to pay their monthly rentals and in some cases, lose the roof over their heads during these troubled times. The homeowner, on the other hand, saw no discernible impact on the value of their investment. Furthermore, those with outstanding home loans saw a reduction in their EMIs and interest cost, as a result of the large reduction in benchmark rates by the Reserve Bank of India (RBI) in response to the pandemic. And added to this was the forbearance granted by the RBI in the form of principal and interest moratoriums granted for the period of the pandemic. These factors caused revived interest in real estate as an asset class, with significantly improved demand over the past few months, as the country has started ‘unlocking’. This trend reversal is bound to be a sticky one and will continue to play on the minds of this and subsequent generations of homebuyers.
The very fact of the pandemic-induced lockdown and the consequential requirement of working from home has further led consumers to view their homes as more than just a place to spend evenings and weekends. The home now needs to provide far greater utility to its occupants and a direct fallout of this is that consumers are now more and more willing to upsize from their existing homes, such that they have both, more space and more utility (for example, an additional bedroom which can act as a home office). This is a fundamental shift from the trend which played out during the pre-pandemic period, where consumers opted for smaller and smaller homes in and around the city, and we anticipate that this fundamental shift will remain. Space coupled with amenities now are top-of-mind considerations for the average homebuyer.
And of course, necessity being the mother of invention, the current conditions have seen a marked shift in the way real estate is sold. Digital media and e-commerce have become a far greater part of a developer’s repertoire than they previously were. Because consumers are now spending much longer online, data is richer and digital marketing tools are much more sophisticated. Real estate is now sold by leveraging these tools more deeply. This trend, exacerbated by the covid-19 induced pandemic, is one which is definitely here to stay.
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