Super Corridor Blogs
Posted on 12 May 2023
Due to the COVID-19 pandemic, there has been a complete lockdown in the economy. Because of the continuous rising volatility of the stock market people are looking at more secure investment options. This pandemic has made people realize the need for shelter and protection in tough times. With the pandemic, a new era of selling real estate which was underutilized as of now. The priorities of most people have changed and they are realizing the importance of owning a home which will increase the demand for real estate in the post-COVID-19 pandemic.
The Real Estate sector might not yield immediate results but by being less unstable than the market-driven investments and it is definitely a safer bet in the current situation. The demand for residential real estate projects is likely to increase as the millennials are key demand drivers and their preferences are now dictated by the current contingency. Some of the factors due to which demand will be increased are:
Government Policies
The home-buying sentiment is coming from the reduced home loan interest rates announced by the central bank. The revised repo rate from 4% to 3.75% will promote the banks to ease liquidity. Allowing NBFCs, who have given loans to real estate companies to get similar benefits as given by the scheduled commercial banks, at a challenging time like this is an encouraging sign. Commercial real asset class loans will also observe a momentum as deferment of payment up to 1 year which will allow developers more time to construct and deliver projects on time thereby spurring demand in the market.
NRI Investment
There is a high chunk of NRI interested in the Mid Section and the affordable housing category. Moreover, with the declining value of rupee, their interest has further increased. This is the best time to invest in the most tangible and rewarding asset in the post-pandemic world.
Adoption of technology
Due to the pandemic, there has been a major shift in the use of online portals for buying houses; people who used to prefer offline property searches are not comfortable with searching for their dream home online. Demand for virtual tours or visits made by homebuyers to finalize their homes has also been increasing.
In the Pre-COVID situation, the focus of investment was in commercial property, with an exponential rise in the sale of co-working offices. Now, with the change in behavior or consumer, the millennials and first-time buyers are looking to buy residential properties in the mid and affordable segment. The affordable housing segment has grown at a rapid pace with the backing of the Central Government through its flagship initiative of Pradhan Mantri Awas Yojana (PMAY). The current decision like a reversal of repo rate, an extension of the RERA deadline, and the recapitalization of NBFCs alongside reserving INR 10,000 crores for National Housing Bank (NHB) will ensure a smooth flow of capital to HFCs whilst expanding the credit support to developers. All these steps will increase the support of buyers and will help in increasing the chance of higher purchasing power. This segment has always had a great demand and post Covid-19 it will increase manifold as fence-sitters will buy them.
The government further enhanced the housing segment by extending the Credit Linked Subsidy Scheme (CLSS) for the middle-income group up to March 2021. Also, it opened a new investment class in the form of an affordable rental accommodation scheme for the migrant laborers and urban poor. Another trend that would help in increasing the demand for affordable homes is that of reverse migration. This shall increase demand on affordable housing in Tier-2 and Tier-3 cities and also help the developers to reach this city as well.
Our future is highly dependent on policy support and economic stabilization and hopefully, amidst the festivity of 2020, the markets are seen tk be stable. The developers are optimistic for the upcoming quarters which will see a positive outlook in the demand.
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