India’s Real Estate Bright Spot Amid Coronavirus Pandemic
By Magnolia Realty | Mar 24, 2020
Coronavirus has already shaken India’s economy and changed many people’s lives. As this pandemic intensifies, it will surely impact the real estate market, especially the residential housing market. While many real estate investors and developers are watching the market, and the situation could worsen or better, all depends on the length of time of the spread of the virus. As far as the residential real estate market is concerned, it is moving, albeit slowly. The silver lining is people are not cancelling their transactions, though site visits have delayed or cancelled.
In this period of time, social distancing is a critical aspect because people are avoiding meeting each other. Many real estate agents help their potential customers using online photo albums and virtual tours. Also, they ask buyers to drive around the neighbourhood to get the feel rather than meeting people on site and make a gathering.
We can segregate the buyers into three different price points and analyze the effect of coronavirus on the residential real estate market.
First Time Buyers from Low to Middle-Income Group
Most of the first time buyers in India are from the middle-income group who are generally purchasing a house and they have little the way of saving for a down payment. These people also have a little financial cushion for downturns in earnings. This group includes small business owners, government employees, a local mom-and-pop business, teachers and others.
Accordingly, real estate developers will take the greatest hit from this segment in the coming weeks, and in the worst scenario months. With first-time buyers are unable to make a decision, available residential stocks of real estate developers risk getting gobbled up.
The second rung of real estate buyers seeking homes is move-up buyers or people who purchase properties thinking of investment or trading up to bigger or more expensive homes. These people are generally business owners and professionals of higher ranks. These people have a good salary and can work from home during the crisis.
These people also have sufficient savings for a down payment and won’t affect their spending on a daily basis. People who are investing in the property will not dither by Coronavirus pandemic. Everyone is cautious and it is still difficult to get people into the investment mode, but still, this group is hopeful and ready to talk if the approach is correct.
The third pool of people is purchasing properties because of the luxury quotient. These people are thinking in terms of wealth, not income when it comes to purchasing a property. This group is unpredictable. They can purchase a house with cash or large down payments but they also most likely to have significant stock portfolios that have taken a wild gyration due to Corona pandemic. Some people may see an opportunity to buy because of low-interest rates and other offers by developers while some may not want to withdraw assets.
Possible Solutions For Real Estate Developers/Agents
- Many potential buyers are looking at this scenario as an opportunity and seek developers who sell them with a great package or people who are seeking lower rate refinance.
- Social distancing is now the keyword. Real estate agents and sales personnel can help potential buyers narrow down their choices and refine their imaginations by showing photo albums, layout plans, details of amenities and facilities and virtual tours.
- Work on the database and segregate buyers who are in ready to invest in properties despite the current situation. If they are not ready to come to the site, reach them, explain them and encourage them for online booking.
- This period is a great opportunity to work on branding, so use social media for your brand positioning, post blogs, create videos and explore other avenues.
Unlike employment data that works on short-term outlooks, housing market works on longer-term usually reported quarterly or annual statistics. So, the disruption of coronavirus that could last for three to six weeks is basically the time a potential buyer to go from an offer on a property through loan approval to closing. This is a big challenge for real estate developers but people need a place to call home. Eventually, the real estate market in India will recover and so will we.