At the onset of the year, the real estate sector that was already going through a prolonged period of a slowdown was pinning great hope on 2020. The industry was expecting a revival. The markets showed signs of incremental growth in the first quarter and it seemed that the ascent would keep up the momentum.
However, as the nationwide lockdown was imposed in March, the adverse impact was visible in the $180 billion housing market as well. COVID-19 has been a destabilising factor since. In most major markets, sales have plummeted by around 60 percent in the last six months.
As business activities slow down across the country, the sector will continue to suffer from muted demand for some more time and it may take at least two quarters to normalise.
Here’s a look at some trends that are here to stay.
The crisis has resulted in digitisation and wider technological adoption in the sector. From sales and marketing to collections and CRM support, technology is playing an important role.
At a time, when physical interactions are restricted, online media will play an important role in driving marketing activities. Besides digital marketing, there is a spurt in online content and social media. Similarly in CRM, we are seeing API integration, which is bringing the entire operational process online.
Going forward, virtual reality will be used to showcase properties digitally without the need for repeated physical site visits The millennial population will drive the change. The recent success of virtual property shows and the growing popularity of webinars points to this trend.
The Online-to-Offline (O2O) model will be inclined towards the online medium with actual site visits now getting pushed back to the final stage of decision making.
Demand patterns will evolve
The crisis has challenged the popular notion to own a home in the central part of town. With the rising work-from-home culture, people will now opt for larger homes in the outskirts. Going forward, new launches may take place in the periphery. Interest in township living is also on the rise.
In the new normal, buyers are looking at second homes, independent farmhouse living, and holiday homes.
Should buyers expect price cuts?
Property prices have already corrected over the years and a further decline may not be feasible. Price of land, too, is unlikely to come down. Large scale disruptions, increasing labour and construction material charges are all going to add up to costs.
Attractive schemes are here to stay
To push demand, developers will continue to provide attractive schemes. Some freebies such as registration charges, club membership fees and other facilities may be offered. There may also be some innovative payment plans.
Government intervention is the need of the hour
Real estate constitutes around 8 percent of India’s GDP. Governments, both at the central and state level, must provide a policy impetus to drive demand.
Recently, the Maharashtra government decided to reduce stamp duty rates until March 2021. Madhya Pradesh has also taken a similar initiative. This has helped revive market sentiments to some extent. Other states should also follow suit.
More initiatives in the form of a reduction in GST rates, income tax benefits should also be considered.