How will the Impact of Coronavirus effect Indian Real Estate
The world is currently experiencing the impact of coronavirus. The alarming news is that this is only the beginning. Though experts are providing projections about the expected drop in the economy, the real situation could be bad. The virus will cause severe disruptions in the growth and development of the countries. It might even undo certain advancements and force the segments to start from the beginning. Though we are currently discussing the impact on the common man, the future of the medium and large scale industries seems to be bleak as well. The current priority is to curb the spread of the disease. There is no cure or vaccine for the disease yet, and it questions the recovery rate of the patients. The World Health Organisation advises specific regulations that can minimise the damage on a health front. The lockdown and self-quarantine would reduce human contact and transmission. However, this approach also has a negative effect on trade and commerce. The closed borders and reduced transportations prevent the seamless transfer of raw materials and finished goods. Economists predict that major segments would be affected by the CoVid 19 pandemic. The real estate industry would also experience significant disruptions before reverting to the current condition. Let us take a preview on how the coronavirus will impact the real estate.
Effect on Individual sectors
Real estate is an umbrella terminology that compromises four major sectors. Each avenue has a unique target group with defined requirements. Though there might be an overlap of consumers, the purpose of each category is quite distinctive.
This is one of the high volume sectors of the real estate industry. The number of consumers purchasing new houses has been on the rise in the past decade. There also has been a spike in prices due to the demand for properties in prime locations. The customers with high per capita income and Non-residential Indians view this market as a secure investment market. The companies with the assistance of digital marketing agencies in India were introducing new projects and deals. However, the impact of coronavirus could have a detrimental effect on this avenue. Economists predict that the demand will drop due to the job insecurities and changes in the pay scale. Most companies are functioning with minimal resources in the current scenario. This would limit their ability to source funds required for seamless operations and employee salary. The business owners are battling with the responsibility of handling this gap. Real estate companies with existing inventory could struggle to find consumers willing to invest. The unpredictability factor would cause a drop in property prices in the upcoming financial year. However, there is a strong possibility that these demands might arise once the market reverts to the existing condition.
This comprises of retail, hospitality and commercial sectors. The lockdown reduces the footfalls to the malls and retail outlets. This sale would increase only after the formulation of a cure or vaccine. Since the significant gathering events are cancelled, the hospitality segment is also taking a downward fall. The office spaces would be empty at least for the next few months. The companies are struggling to handle their losses with guidance from online marketing companies and industry experts. They are highly unlikely to invest in new commercial real estate procedures. The impact of coronavirus would have a decisive role in the fall and rise of the real estate segment.
What would be the significant challenges faced by the real estate industry?
The significant challenges in this segment due to impact of coronavirus are the lack of adequate raw materials, shortage of labour and drop in consumer demand. India imports a fair share of the raw materials from other countries. For instance, we import steel from China which is now closed for health concerns. Though India is the second-largest manufacturer of the products, we do have issues in meeting the industry requirements in terms of quality. The limited availability of the product in the market would cause a sudden surge in the prices. However, the adverse effect is the price wars post the lockdown period. This shortage will pose a challenge for construction companies to complete their projects in the proposed duration. This would increase the overall production cost and the other surcharges. The authorities are insistent that people should be indoors at all prices. This forces the labours to migrate to their native towns and villages. They are unable to manage the expenses of living in a metro city without a steady revenue source. This adds burden to the companies who cannot continue the project without the required resources. Because of the impact of coronavirus the global economy is crashing, causing heavy losses for most segments. The recession can make companies terminate their employees to save costs. There is no clarity about the pay structure during the quarantine period. This would cause a drop in demand, at least for the first two quarters. However, the plus side is that it provides an opportunity for the local manufacturing companies to provide materials to the construction segments. This will pave the route for new employment opportunities for people in the allied sections and increase the revenue opportunities within the country. SEO experts are devising innovative strategies to influence consumer decisions.
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How will CoVid 19 impact the investments and venture capital funding?
The impact of coronavirus would cause a delay for companies planning to venture into the REIT model. The Real Estate Investment Trusts allows investors and capital funding companies to invest in a segment rather than a project. They can invest in the commercial or residential projects of the real estate company. The organisations utilise the resources to complete the task, and the investors benefit from the project. Though the concept is novel to India, a few companies have already taken the initiative. Some brands like Prestige Estate and Blackstone Group were in the process of launching their REIT in this financial year. The online marketing companies assisted these organisation to develop the launch plan. However, the changes in the demand force the real estate firms to reconsider their decision. Though the market is expected to recover over the next year, there is no guarantee for the outcomes. The lack of a vaccine or cure for the virus adds to the volatility factor. The angel investors are not willing to take risks in the industry. The Government announcement regarding the taxes for the profit has not been favourable to the cause. Nevertheless, the Securities and Exchange Board of India (SEBI) is offering specific leverages in terms of compliance requirements to motivate the buyers. This could have a positive influence, but it might not be enough to push the investors towards REIT in the present situation.
What will happen to the Real Estate stocks?
The straightforward answer to this question is that the stock prices will fall before rising again. The stock markets across the globe are crashing and are recording a new low point due to the impact of coronavirus. There is a strong possibility that the investors might face some losses during this period.
What steps do the companies take to protect their employees?
There are over 9000 confirmed cases in India, and the numbers are increasing daily. Though the lockdown approach has curbed the spread to a certain extent, it has not stopped it completely. Newer cases are confirmed every day from various parts of the country. The companies have undertaken different steps to protect their employees and stakeholders from the impact of coronavirus.
However, it is exceptionally improbable to close the operations completely. Most organisations have identified alternative working options to ensure that they sustain their brands during these times. The management instructs its significant workforce to work from home. This minimises their exposure to the disease while commuting to the office. This also provides space for the essential resources to function with adequate social distancing. The companies have stopped property viewing practices and have switched to remote viewing. This allows them to showcase the houses and buildings to the potential audience without compromising their safety. The maintenance crew periodically disinfects the premises at periodic intervals to ensure hygiene standards. The employees are screened regularly to check for any symptoms of the disease. Because of the impact of coronavirus the construction has been halted for all non-essential projects to protect the contract labourers from exposure. They provide the staff with the necessary protective gear that will ensure their safety within and outside the premises. The real estate companies embrace a full-fledged online marketing and communication system with assistance of digital marketing agency. This limits the direct interaction between the people and also establish a reliable interaction channel with the consumers.
How can apartments and societies contribute to minimising the spread of infection?
Social Distancing has become the need of the hour. However, apartments and residential complexes have multiple families sharing in the limited space. The companies take measures by maintaining the hygiene standards of the arena. They implement different techniques for societies with and without infected patients. The residents are instructed to stay indoors. The security team strictly monitors the entry of strangers into the building.
What are the schemes launched by the Government to support the segment?
The schemes will primarily support the companies to handle the insolvency, salary payment, tax reliefs and banking schemes. The Government has identified some of the crucial avenues of the problems. The welfare system is crafted based on the present state. There is a possibility that more benefits could be added in the future. The primary benefit of the company is the threshold increase for IBC 2016. This will provide the real estate firm with adequate time to improve their condition. Various beneficial schemes are listed to protect and ensure the livelihood of construction and migrant labours. The authorities are providing them with a relief package to assist them in handling this tough time. Banks allow companies to take a small delay for their EMI payments. This helps the companies to utilise the funds for other essential expenses. The extension of tax filing dates also lowers the stress largely.
Various factors have a direct and indirect impact on the real estate industry. The segment is dependent on foreign markets for their raw materials. The labour migration to their native regions would delay the project deadlines. This would increase the overall construction cost and develop an uncertainty in the market. The demand in the market would decrease due to the global ripple effects. The insecurities in the job market and extended lockdown periods can cause consumers to sell their properties and even reconsider the purchase decision. The current prediction state that there would be a significant decline in the market. However, on the plus side, this could motivate the local companies to manufacture the necessary raw materials. This could enhance the cash flow in the country and play a critical role in the recovery process.
Nevertheless, the real estate company is prone to these fluctuations in lieu of the global market. The industry tends to adapt and embrace the available resources to rejuvenate and attain development. It is natural for the companies and the employees to panic and stress over the gravity of the situation. However, the Indian market also tends to adapt and innovate effective strategies in the time of crisis. The seo experts would be able to provide guidance on the marketing segment.