Real Estate during COVID-19

The fearful time, scaring the genuine buyer to defer the investment idea

By 2030, India needs 25 million more affordable housing units to oblige to growing urban population.” IBEF Report, Dec. 2019

Real Estate and Stock market are directly proportionate to Investors’ Sentiments. Investors’ Sentiments shift with market fluctuations which further is the dependent variable on economic growth rate, Stock Market, New business startups and much more.

A data excerpt from IBEF December 2019 Report shows the distinguished difference between demand and supply of residential apartments. This looks hopeful and positive until COVID-19 struck us and everything stopped.

Since the whole world is under attack of ‘invisible enemy’, every business -small or big, every industry, every manufacturing unit has stopped operating. For the last 1 month, India is under lockdown and nearly 80% businesses have been motionless.

In this kind of environment, Investors’ sentiment dips and one turns to be defensive. In addition, the leaders and forums recommend to stay ideal for the time being, leaving the market ‘dry’.

COVID-19 has majorly affected

  • Businesses at commercial places like shopping malls, residential markets

  • Business Owners as they have more liabilities – Paying off salaries, Rent, Inventory cost etc

Who is affected yet recoverable?

  • Salaried people – Their jobs are at risk, Unpaid Salaries but once the operations start, their jobs and salaries will be on track. Loss of a few months will disturb the payment cycle but is recoverable.

  • Opportunist – This is the best perfect time for Opportunistic Real Estate Investments when people are fearful and opportunist takes the deal lower the market rate.

Today’s Problem: Prospective buyer, but postpones the plan for a year

Here I have a funny example where I would like to compare weather with real estate prices.

India is considered to be hottest country in May-June period by tourists. In May-June, the temperature in India ranges from 17 degree Celsius to 50 degrees Celsius across states, like a city in Himachal Pradesh records 17 degree Celsius whereas a city in south India records 50 degrees Celsius. The average of weather record of all states makes India a hotter country.

Similarly, considering sales of all states in any research report shows slowdown in real estate market. This also doesn’t mean that leaving slow-moving states, one must invest in other ones.

There are two inferences to it.

  • Either we consider the average sales of real estate of all states and believe in the fall of demand.

  • Or we look deeply into each market and pick the best deal in a promising market.

Making the calculation easier for you:

  • Evaluate real estate on parameters discussed

  • Evaluate real estate investment differently the state first where the property ticket size is already competitive compared to international market rate, resale is value is worthwhile, construction quality is high and one can negotiate.

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