May 21, 2020: Although the residential real estate sector expected zero sales from the first quarter of the new financial year, the lockdown has surprisingly brought people closer to wanting to purchase a home.
The current pandemic has had an unanticipated impact on the residential real estate market. With families spending more time at home, organised real estate players have observed a rising interest among buyers. The potential buyers also include NRIs, who are seeking digital presentations from developers across the metro cities. A weakening in the rupee price and lower interest rates are also factors contributing to the decision.
With work-from-home becoming the new normal, even existing buyers are changing their existing bookings as they look for larger apartments. While numbers are still not comparable to the March quarter sales, large developers say there is latent demand but for it to translate into sales, the job market and economy has to respond better.
Many developers feel that there will not only be a recovery but a rebound in residential. Being locked up in homes for two months has triggered the decision-making in favour of purchase decisions. A noticeable recovery may take 6-12 months as real estate is a highly suppressed category, but it is expected that first time home-buyers and mid segment buyers would be feeling encouraged to take the plunge given the experience in the last two months.
As per research, the demand was seen to be picking across India’s top 7 cities over the last two years with unsold inventory levels declining by 7% in 2018 and 4% in 2019.
In the first 40 days of the lockdown, the Maharashtra government has reportedly seen sale of only 3,806 properties, which earned the state a meagre amount in registration fees. Typically, the state government earns `25,000 crore a year from the real estate sector. While many state governments have allowed online registrations, developers say that they expect demand to not just return but rebound.
There are some very interesting patterns as far as demand is concerned. Developers and real estate companies have been witnessing enquiries from people who have never visited the site and are responding to digital advertisements. It can be said that consumers are realising the importance of owning a home. People have started research and are at least willing to transact. Stronger demand revival is expected once the lockdown is lifted, provided people have job certainty.
Although the outlook for the residential sector looks more promising compared to retail and commercial, a visible recovery is at least two years away. Developers believe that the trend of digital sales will also pick up in times to come as innovative sales and marketing solutions are being worked upon and drone shoots and virtual tours are becoming more and more common.
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