Post-Pandemic Growth of Real Estate and Construction Industry in India

Affects Of Covid-19 Real Estate

Post-Pandemic Growth of Real Estate and Construction Industry in India

The Indian real estate sector suffered a major setback during the pandemic. And, of course, so did every other industry across the globe. However, very few have bounced back as strongly and convincingly as real estate.

According to a report published on 99, India’s real estate has incurred a loss of around INR 1 crore since the pandemic’s onset. Many real estate developers faced a liquidity crunch.

Additionally, factors such as credit shortage led residential sales to plummet from four lakh units in 2019-20 to 2.8 lakh units in 2020-21 across India’s top seven cities. The overall residential demand dropped by over 40 percent in the first half of FY21.

Nevertheless, the industry is steadily making a convincing comeback. It isn’t that COVID is over, or the world is completely free from its clutches. However, the world has learned its lessons from the first and second waves, and it is now better prepared to combat the virus while continuing with routine business on the other hand.

One of the most significant signs of the Indian real estate recovery is housing sales that have grown by 71 percent with about 2.37 lakh units sold across the country, thus reaching 90 percent of the pre-COVID 2019 levels. The Mumbai Metropolitan Region (MMR) led the race here by recording a healthy sale of 76,400 units, as mentioned in an article published on Money

Hyderabad, on the other hand, witnessed a whopping 197 percent increase in sales climbing from 8,560 units in 2020 to 25,410 units in 2021! Pune too has proved itself a significant contender by witnessing a 53 percent increase in sales from 23,460 units in 2020 to 35,980 units in 2021.

But what is it that has fostered this growth during or after the pandemic that compelled every sector and almost every individual in the world to hit a financial low? Let’s explore a few reasons concerning the revival.

5 Reasons for the Post-Pandemic Growth of the Real Estate Sector in India

1. Stamp Duty Reduction (Maharashtra Specific)
In 2020, residential sales in Maharashtra sustained the pandemic tide, which was at its peak then. Thanks to the government of Maharashtra that reduced the stamp duty from five percent to two percent and gave the otherwise sinking real estate sector of the state a helping hand.
The cut in the percentage proved a huge relief for many fence-sitting buyers across the state, who had other concerns such as EMIs, registration charges, etc., to deal with. The three percent reduction brought down prices considerably and encouraged people to rush to developers to book homes and avail of the facility. It not only helped the sector keep up with a certain extent of sales but also accelerated the sales pace.

2. Reduced Loan Interest
This one’s another factor that proved a life-saver for the real estate sector of the country. The RBI reduced the repo rate to 4%. That resulted in banks reducing their interest rates as low as 7 percent and in some cases, even lower. Today, if you do a quick check of home loan interest rates of various banks, you’ll find most of them offering a rate below 7%, which is around 6.5%, 6.9%, etc., based on applicants and their applications.
The current interest rate is considered a 15-year low for residential India’s real estate sector. It encouraged many to apply for home loans and has helped boost sales for many developers, who were longing to buy their homes and seek returns for their investments.

3. Customized Offers from Developers
While everyone, including the government and banks, were attempting to revive India’s real estate sector, builders, who were on the other hand of the receiving end, were equally active in their quest for survival. Many developers from major cities such as Pune, Mumbai, Bangalore, Hyderabad, Chennai, Delhi, etc., came up with bespoke payment schemes such as 20:80, waivers on registration charges, GST, stamp duty, cashback offers, etc. to sell their units. Many succeeded in selling a considerable part of their inventory.

4. Stronger Emergence of the Best Market Players
The pandemic also resulted in consolidation across the real estate industry. It has been seen that only the best and thoroughly professional builders with sound financial health survived through the tough times. As a result, prospects got connected with professionals with high commitment levels. They were provided top-quality home options and excellent customer service. In a way, the stronger emergence of the best and the top market players across the sector encouraged real estate sales.

5. The Need to Invest in Something Substantial
Real estate is among the few sectors that undergo a steady yet substantial appreciation every year. According to a Deloitte report published in an article in Business Standard, India’s real estate sector has good times ahead. Besides, the need to have something substantial by your side, especially to deal with uncertainties such as COVID-19, has also helped make real estate a stronger comeback.
While the future would always remain uncertain, the current trends and projections seem hopeful and optimistic about the sector’s steady growth in the years to come. These factors make real estate, especially the residential section, one of the best investment realms in India.

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