WHO has declared Coronavirus a pandemic, since then the world’s share market is in red. If you look at the Indian share market, it is down around 35% compared to the usual market.
One virus has collapsed the world economy, and there’s a fear in the market.
The Coronavirus is spreading like a fire.
Does Coronavirus affect Indian real estate?
Let’s check whether the real estate will be affected by Coronavirus.
The answer is YES.
The Indian real estate market is affected by Coronavirus.
We will find out whether the effect is negative or positive.
Many factors affect Indian real estate as coronavirus spreads.
Lower customer demand
Due to Coronavirus, people don’t want to get out of their homes to stop the virus spread, which is a good thing. But for real estate, the months of March and April is the best season. Maximum bookings take place at this time. But customers are inside their house; there is a nationwide lockdown, and people are not visiting the projects. This lockdown has ceased all the bookings, and it is affecting the real estate industry. However, this is a short term problem. The investors have not canceled their plan; they are on hold due to the virus. The investors will come out and book once after the effect of the virus gets down.
Foreign direct investment
In the Indian real estate market, more than 28% of investment done by China, Singapore, and Hong Kong. 28% of investment is a huge amount. Due to coronavirus FDI has withdrawn their money. It directly impacts the market. Many new projects launching have stopped due to a lack of investment. It also results in a slowdown in the industry. As soon as the impact of the virus gets down, the investors will come back. FDI is a big reason for the downturn.
Construction material shortage
China is the production hub of the world. China is also the biggest exporter of steel and iron ore. India imports steel, wood, tiles in large quantities from China. The production in China wholly stopped due to lockdown, which has resulted in a shortage of material in India. This supply has also lead to a price hike of the content in India. Hence, the developers have stopped the project construction, or the work has slowdown. Once the production in China resumes, the rates will become neutral.
Lower interest rates
99% of people in India mortgage property. There’s an economic slowdown due to Coronavirus. Banks and NBFC are offering loans on the lowest interest rates. We can also hope that shortly, RBI may reduce REPO rates. The interest on home loans will reduce further. Less percentage of interest will attract investors, and this could be a positive impact.
Short term slowdown = long term benefits.
Share market crisis
If you follow the share market, there is a trend. After every one or two decades, the share market falls that leads to recession, emergency, or slowdown. We have already seen this in 1991, 2001, and the 2008 crisis. The investors switch their money in gold, dollar, and real estate whenever the market crashes, which leads to the rise of these industries. It is a good sign for the real estate. The real estate will rise.
The Indian real estate industry is already affected negatively by the Coronavirus. However, it is a short term problem. As soon as the effect of the virus reduces, the real estate industry will be back on track.
Now is the perfect time for real estate investment. It will give maximum returns compared to other investments.
Indian real estate didn’t show any growth in the last seven years. It has already seen the bottom rock. It’s time to BOUNCE BACK.