Will Investors Return To Real Estate Post COVID?

Since the global pandemic has hit the world, people have gone online and have been constantly glued to the news. It is the time when everyone has seen how sensex and gold prices have tanked leading to huge financial losses to investors. The high uncertainty of these investment vehicles has come out as good news for real estate.

Investors who have burnt their pockets in equity will now look to pick up real estate assets. These investors are not particularly interested in the configuration but concerned more about the long term asset and the returns it would fetch them. Overall, it is just a matter of few months. In fact, smart ones have already started putting in money foreseeing the returns from well thought out projects that are in accordance with the new lifestyle sense of people in post corona era.

The other set of people to come and invest in real estate are the first time buyers and the end-users. With low home loan interest rates, this is an opportune time for people to invest in real estate. The real estate boom started around 2003-04 wherein the home loan rates were close to 7%.

This led to immense growth of the sector and it is after a gap of 15 years that interest rate are once again near 7-7.5%. Surely, it will help the sector in post Covid-19 time. The recent fall in home loan interest rate is mainly owing to various measures announced by RBI including reduction in repo and reverse repo rate as well as infusion of liquidity in the banking system to the tune of 3.74 lakh crore. The apex bank has also announced infusion of another 1 lakh crore in All India Institutional Finance and NBFCs including Micro Finance Institution.

This is for the first time in the last 15 years or so that home loan rates of major banks and housing finance companies has fallen below 8% with SBI offering the lowest rate amongst all. With real estate being an interest sensitive sector, it will help the sector attract buyers and investors. In fact, during pandemic many tenants were harassed by landlords making them to think of investing their savings in having a roof on their head.

Another factor that will attract buyers and investors to real estate is low pricing at this juncture. There has not been any increase in real estate prices in last one year. Considering the inflation and cost of construction it can be said that buyers and investors are getting property at 20 per cent cheaper rates.

Residential segment takes care of the housing needs of the citizens and there always will be a demand for it. With increase in population and growing economy, the sector will keep on getting good business with regular flow of investors who by now have realized the utility of investing in real estate assets and at the same time safeguarding your investment. Real estate may now see an influx of people ready to buy even the smaller units as their first investment. Real estate will also come up with innovative ideas thereby offering more options to prospective buyers and investors.