Covid has impacted real estate across asset classes — residential, commercial and retail, including the relatively new models such as co-working and co-living. Projects will be impacted in the coming three to six months while the overall impact can be seen in the next 12-18 months, says an expert.
Talking about the current scenario, Sharad Mittal, CEO, Motilal Oswal Real Estate Fund told Telangana Today, “Residential sector in India has been facing challenges in the pre-Covid times due to the NBFC crisis. Covid added further challenges due the lockdown. But the IT cities in India such as Hyderabad have responded well to the situation and are seeing 50-55% sales activity compared to the pre-Covid levels while large cities such as Delhi and Mumbai suffered. Residential sector may come back to normalcy by March 2021.”
Real estate prices in India had been stagnant for the last seven years and may remain so for another two years. However, compared to the increase in income levels, real estate price growth rate has been low, and this may improve affordability in the coming years.
Commercial space got affected due to a large number of professionals shifting to work from home. Companies which were looking to take fresh space may pause their decisions for some time. Future demand and rentals may get impacted to certain extent.
“Every real estate segment had its own learning curve and maturity cycle. Covid is testing the entire co-working and co-living models fairly early in their journey. They will go through their share of challenges, consolidation and maturity. A lot of capital has been committed in these segments in the past, but there will be impact and consolidation in the near term,” Mittal noted.
Retail segment will get impacted. Occupier’s business is shut and revenues are taken a hit. Long-term behavioural change will be seen in the near future due to social distancing and fear of Corona spread. Shopping will be affected while entertainment and dining may be less impacted. As online buying is improving, it may push warehousing growth in the coming years.
“While the rest of India is impacted, Hyderabad is uniquely positioned in the real estate sector. Office space has shown steady growth over the years. I see a bright future for the real estate space for the city, despite the challenges raised by the pandemic,” Mittal added.