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Pace of vaccination to decide fate of commercial real estate going forward: experts

Housing sales likely to bounce back in the second half of this year as it happened in 2020 after the first wave of COVID-19; ready-to-move stock to witness traction

 The commercial leasing market is expected to remain muted during this fiscal and its revival will depend on the pace of vaccination. The office leasing segment is likely to improve from the next financial year when employees return to their workplace, real estate experts said at a webinar.

“The vaccination programme would be a game changer for commercial real estate. Demand for the segment will be dependent on the pace at which vaccination takes place. If large number of employees are vaccinated, faster will it be for them to get back to the workplace and that would drive demand for commercial spaces. Impact on commercial space take up may be lower this fiscal or remain muted like last year but may go up significantly in the next financial year,” said Mudassir Zaidi, executive director, North, Knight Frank India.

He was speaking at a webinar titled 'Ins & Outs- Impact 2020 on Real Estate Investments & Road ahead' was organised by industry body PHDCCI.

As for the residential market, he was of the opinion that demand for ready-to-move-in inventory is likely to remain high and so would demand for near ready inventory and plots.

“Homebuyers will continue to remain risk averse. We are expecting a K-shaped recovery this year and only credible developers who have adhered to timelines are likely to do well,” he said.

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COVID-19 Vaccine

Frequently Asked Questions

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How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

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Commenting on the outlook for the sector post the second wave of COVID-19, Ashwinder R Singh, CEO Residential, Bhartiya Urban, was of the opinion that housing sales are likely to bounce back in the second half of this year as it happened in 2020 after the first wave of COVID-19.

“There are four aspects that drive the real estate market – demography, interest rates, economy and government policies. The demographics are favourable considering that there is interest among millennials to buy homes, there is a V-shaped recovery of the economy, the rate of savings has gone up and there is a going to be a bump up in demand as most people will utilise their savings and the low interest regime to buy homes,” said Ashwinder R Singh, CEO – Residential, Bhartiya Urban and author of the book ‘The A to Z of Residential Real Estate.’

“The going is expected to be great for ready-to-move projects even though availability of ready stock remains a challenge. Housing units which are even 80% complete would be in demand in the next six months,” he said, adding there is an increase in demand for homes among millennials after the pandemic.

Addressing the webinar, real estate  body Naredco's chairman Rajeev Talwar said, "we need to cut down the stamp duty by half". He pointed out that the government of Maharashtra had reduced stamp duty by half from September to March this year and that had helped in reviving housing sales.

Several developers in Maharashtra had also volunteered to pay the remaining stamp duty on behalf of homebuyers, he said, adding developers should look at constructing smaller and affordable homes for women.

Rohit Goyal, Senior Director – Capital Markets, India, Cushman Wakefield was of the opinion that housing prices have bottomed out and construction costs have increased by almost 12%. “Going forward more developers may be encouraged to complete inventory faster and sell and higher prices,” he added.
Vandana Ramnani
first published: Jun 17, 2021 07:43 pm

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