Real Estate 2020: The Trends Of Tomorrow
Early January, when experts sat down for their annual appraisal for the markets, the real estate was a mixed bag. Based on past trends in India, the commercial real estate sector, especially in urban areas, seemed promising as it had been consistently growing for the past few years. However, the fate of the residential sector suffering from an inventory build-up, high-prices, and credit shortages was looking bleak. That was a different era, the corona virus changed the world into something else completely. Thus, many wonder, what does Real Estate 2020 hold for us.
Commercial Real Estate Segment: 2020
March saw a paradigm shift in the global economy, governments which would previously encourage people to go out and participate in the economy started urging people to ‘work from home’. This meant that establishments like shops, gyms, malls, multiplexes, and many more became a temporary dead asset. This would have a ripple effect across the economy as spending decreased drastically, leading to what some call, one of the worst recession of our times. Office spaces also closed temporarily but with minor adjustments to their operations, they could somewhat absorb the damage. Now, with Unlock-1 starting, offices can resume their operations but the coveted commercial establishments like malls, restaurants, gyms, etc are nowhere close to starting, their fate lies on the miracle vaccine, which is at the minimum estimates not possible till December. Thus, if the market reacts rationally, the retail properties sector have a buyer’s market. Risk tolerant concerns can capitalize on this situation and maximize prospective gains. With regards to office spaces, while some people might want temporary spaces, owing to the drastic changes caused either by social distancing norms or reduction of the economy, the prices of these establishments will not change much for the short-term.
Residential Real Estate Segment: 2020
This segment already had a bleak future, to begin with, large inventory pile-up, the reluctance of promoters to induct price rationalization, difficulty in credit & brunt of new regulations. To add to this quagmire, the lock down, migrant crisis & recession make things much more difficult. Price rationalization is the need of the hour from the owners but past experiences across the board indicate a low chance of that. However, on the demand side, one can naturally see an increasing need for more spacious and ready-to-move properties. History shows that after pandemics and other public health crises, the demand for residential real estate increases. The public health is heavily correlational to the living conditions of the public.
However, one must note that rational supply and demand theories have often failed in the Indian real estate regime as most of the deals depend on a case by case basis. case basis. Let us know your thoughts about the trends of tomorrow, in the comments section below. This year has been tumultuous, we have witnessed a pandemic, a locust plague, two cyclones, a self-inflicted migrant crisis, a possible recession, and all this before June. The most important advice, we can share is not the trends of tomorrow but that you take care of your health and well being.