Nagendra Shaw, Director of Shree Balaji Realcon and N K Realty, shares his opinion about the impact of the second wave of the Covid 19 pandemic on the Indian real estate market, focusing on the Kolkata market.
Q. What has been the impact of the second wave of the Covid 19 pandemic on the Indian real estate market?
A. The impact of the pandemic on the Indian real estate sector was stifling to the point that it brought property transactions to a near halt last year when the nation went into a complete lockdown between March and June 2020. After a series of lockdowns and restrictions, the country started to get back on its feet by July 2020. Since then, the market has taken several strides towards recovery and just when it seemed that revival was not far, the country was struck by another wave of the pandemic. However, with an aggressive vaccination drive across India, the real estate sector has started showing signs of a sustainable recovery and it may be anticipated that the market could recover completely by the last quarter of 2021.
Q. What will be the impact on the prices of the offerings?
A. The effect of the second wave of the pandemic has not translated into a price movement in the residential market. Like last year, developers continue to withhold prices due to limited profit margins.
Q. What do you think about the real estate market in Kolkata?
A. The real estate market in Kolkata is climbing out of the Covid-19 hole. The growing need for home ownership and stable employment scenarios led by sectors like Information Technology (IT) and healthcare are driving the housing demand in the city. Although Kolkata joined late, it has become a preferred choice for IT companies and has also become a preferred alternative for start-ups. This change is followed by major infrastructural developments in the city such as the East - West metro and proposed government projects such as the SEZ in New Town - thus adding to the market value of the city’s real estate offerings.
Q. How did the sector perform in the last quarter?
A. Record low home loan rates, sops offered by realty developers and growing need of home ownership helped to push the sales momentum after a lull April – June quarter, that was marked by the pandemic resurgence and restrictions imposed by various state governments.
Q. Is there any impact on housing affordability?
A. Household incomes have witnessed a sharp increase of 7- 9% from the low base of 2020, while housing prices remain stagnant in almost all of India’s prime residential cities.
Q. What about real estate investors?
A. Time has reinforced the significance of real estate as a tool for prudent and risk averse investment. 60% of survey respondents (of a recent survey done by an investment firm) have chosen real estate as a mode of investment in the future. In a time when the fragility and fatigue in the financial market persists, tangible assets like real estate offerings will be the go-to option for investors.
Q. Has there been any positive fallout of this pandemic for the real estate sector?
A. Since the first lockdown was imposed in April 2020, people realised the value of home ownership. With people forced to work from home, the demand for home office spaces has witnessed a new high. Buyers are now keen to invest in a home of their own, a trend that is common among many living in a shared apartment. Furthermore, many rent payers had to vacate their apartments, giving in to the pressure of the landlords asking to vacate. As a result, the demand for property sales witnessed a rise during Covid 19, owing to the growing uncertainties in the financial sector.