The contagion of COVID-19 has adversely affected every walk of life, businesses have gone back to the drawing boards to chalk out sustainable plans. The government and financial bodies are constantly working on developing plans for different sectors to be able to help them in their business revival. The predictions made for economy and cash flow post lockdown are proving to be volatile. In all this real estate sector is facing a different challenge - will prices of units come down?
Like for every industry and sector, real estate too is facing the same difficulties. It is also trying to take care of salaries and other expenses despite no work being done during the lockdown. No other industry or segment is being questioned on prices and in fact prices of many commodities have increased. But for real estate - an asset which is permanent - the challenging part are the prices.
First we have understand that prices in real estate majorly depend on the prices of raw material, land cost, cost of permissions, etc. Answer lies in the fact that no other cost or price is coming down, then how should developers workout plan to make things easier for buyers.
The developer community works to fulfil the homebuying dreams and provide people with asset that has long-term value and mostly is depreciation-proof. This community has been demanding that the Government should ease out high costs of raw material, provide relief in GST, give ITC, etc. All these has been to make prices more affordable for the valued customer.
Covid-19 has been an unfortunate situation that has affected all and sundry, salaries are getting impacted, jobs are being lost, supposedly safe investments are showing downward trend, etc.
There have been suggestions that real estate should come up with offers or reduction in prices. Many developers are working on this possibility and trying to workout solutions. The sector has faced the similar situation post-2007 financial crisis. At that time realtors experimented with various models and came up with offerings that were within the range of buyers. That was the time when terms like all inclusive rates, affordable luxury, etc came into prominence.
The predictions related to reduction in property prices looks like a far-fetched dream. However, the sector will definitely come out with innovative ideas to ensure that even the fence-sitting buyer or investor will come forward.
Real estate has been able to keep the sales going even during lockdown by utilising online platforms. Leads have been generated and bookings were done; the volume was below the normal levels but it showed that people are interested in real estate assets. It appears that for people the safety of their investment is of prime importance and they have realised that instead of putting money in unstable vehicle they should go for real estate.
In fact, there are factors that point towards a difficult time to control prices. Even while construction activities have been resumed in certain areas, the limited transportation is disruptive to the entire supply chain. Raw materials already available at the sites can only be used. To keep the work going, procurement of new raw material is necessary. The launch of Shramik trains has also led to the large scale displacement of daily wage earners to their hometown, which will have an impact on realtors