A lot has changed in the real estate ambit since the Coronavirus pandemic

2020 Redefined the Real estate Sector

From a lockdown juggernaut to the long arduous path of recovery, real estate in the post-Covid world has learnt a lesson of survival like never before…

Indian real estate sector is one of the major employment driving sectors with a multiplier effect on 269allied industries. The residential commercial, retail and hospitality are major verticals of the real estate sector. The positive GDP growth as an outcome of improvised economic activities will in turn complement the growth in the real estate sphere that ranks third in terms of direct, indirect and induced effect in all sectors of economy. The Covid 19 pandemic had disrupted the real estate sector with emphasis on Jaan over Jahaan initially in total economic lockdown.

The labour-intensive industry was hugely impacted with migration of labourers. The sector which is the second-largest employer in the country after agriculture witnessed a huge reverse migration of its labour force –fearful for the safety of their family– to their villages during the pandemic. The sector which was facing liquidity issues since the NBFC crises days observed the situation worsening. Developers were forced to stall their projects due to shortage of workforce and paucity of funds.

Fiscal Measures to Rescue-

Rising to the occasion, the Central government and Reserve Bank of India announced outlay measures to infuse liquidity and enhance credit availability.  So far, the government has announced Rs. 29.87 lakh crore stimulus packages in 7 instalments since the COVID lockdown aimed at economic revival. The extension of RERA deadlines, the allotment of Rs 10,000 crore to National Housing Bank, debt recast, loan moratorium and the amendment in the Insolvency and the Bankruptcy code were some of the relief measures for the real estate sector. The Reserve Bank of India has also reduced the key interest rates and allowed on tap TLTRO to make credit available to 26 stressed sectors identified by Kamath committee. The Emergency Credit Line Guarantee Scheme (ECLGS) was extended to 26 sectors including real estate. These sectors would have access to additional funding facilities as it contributes to economic revival and helps in employment generation. 

While all these measures were taking care of the supply side of the issues, the government did take some steps to revive demand as well. The Union ministry of housing recommended all the state governments to consider a reduction in the stamp duty rates to boost demand. The Maharashtra government reduced stamp duty from 5% to 2% up to 31^st Dec 2020 to 3% for the period of January-March 2021. The additional outlay of Rs 18,000 crores to the Pradhan Mantri Awas Yojana will give an extra push for the ‘Housing for All’ mission. This is over and above the Rs 8,000 crore announced by the government in the budget. The government also offered Income tax benefit to assist developers’ clear inventory and boost demand from home buyers. The relief involves amending the Income Tax Act to allow a 20% differential between the actual sale prices of land or building and the stamp duty value.

Altered work culture and new stipulations

The year has also altered the way people work and live. It has paved the way for work from home and remote working culture. Digitalised operations turned headwinds into a new innovative direction discovered under the pandemic era. Digitization salvaged the sustenance of business continuity plans and altered modus operandi across the industries. Developers too geared up to cater new requisites to incorporate new normal.  Suddenly, there is an exponential demand on home automation, uninterrupted power supply and robust digital infrastructure that tops the priority charts be it residential or commercial realty segment.

Real estate sector plays a crucial role in climatic change and the future lies in sustainable living, sustainable practices and sustainable development. Important sustainable development features like rain water harvesting, sewage treatment and water treatment plants for recycling, ample green ecosystem to control carbon emissions, solar renewable energy for alternative power generation are the important elements that a developer needs to factor in.

Time is ripe and right to buy or invest in residential housing with favourable external market conditions. Also, commercial realty is bound to bounce back once pandemic loosens its grip with vaccine around the corner. The GDP forecast on positive scale will definitely pent up commercial demand with rising demand in logistics, cold chains and warehousing segment to address supply chain disruption gap, data centres in lieu of digital economy mission and IT\ITes sector continues to grow in gaining importance of digitization services and software’s. Though the World Economic Outlook report hints at a long and difficult ascent for the Indian economy in its road to recovery, sectors like infrastructure and real estate with proper push and incentives would act positively in stimulating the economic growth. Real estate sector in India is expected to reach a market size of US$ 1 trillion by 2030 and contribute 13% to the country’s GDP by 2025. Retail, hospitality, and commercial real estate are also growing significantly, providing the much-needed infrastructure for India’s growing landscape.