We all are dependent on real estate industry some way or the other. Real Estate market is also an indicator of the country’s economical health. It is very natural for all of us to wonder what will happen to Real Estate industry after the Covid crisis. Watch this video to see what we think about the real estate market in long term perspective.
The No 1 question I have been asked in last 2 months is…What will happen to real estate market after the whole Covid crisis. Real estate is something we all are connected to, whether we like it or not. Lots of jobs & businesses even if not directly into real estate, are dependent on this industry. We all have some or the other real estate investment and if not, at least we have our house or our office and that is a big asset in itself.
My name is Anand Choksi & I am the Managing Director of the Real Estate Connect. We are one of the largest team of real estate consultants in the city and we truly believe In providing honest consultation to our clients.
So what is going to happen with real estate in the new world after the covid?
And here’s my honest answer….I DO NOT KNOW…The crisis we are into right now, is way too big and none of us has ever seen anything like this. So to tell what is exactly going to happen in few months is almost impossible for me. But here’s what I do know.
Real Estate as its nature, is a long-term game. If you are here for a short-term profit real estate is not the game to play.
Real Estate has been a timeless investment and product. Since the time humans have been living in the caves millions of years ago, home has been the greatest sense of security known to the mankind. In-fact, most of the wars in this world are fought for real estate. In today’s advanced age where the world is getting smaller with the reduced travel time and internet usage, the demand of the bigger and better housing is still very high. The person who was going out 8 to 10 hours a day to work and was feeling his house was small, what do you think he is now feeling after stuck inside for 2 straight months.
Mankind has gone through so many global changes since the time of evolution. We have seen large scale famines, World wars, Pandemics, earth quakes, recessions, depressions and what not. Every time there has been a challenge, humans have come out of it even stronger than before. Corona will also one day be long gone and forgotten.
Even in India we have seen so many challenges starting with partition of the country in 1947, multiple wars with our neighboring countries, dotcom bust, riots, global meltdown and after every challenge real estate market has soared. And this is not some motivational talk…there is a concrete science behind that. We are the second largest population in the world after china with 1/3rd of land size of China. The population density in India is one of the highest in the world. On top of this we are adding a population worth entire Australia every year! The demand of real estate will always remain in countries like India.
Real estate contributes to approximately 10% of India’s GDP…2nd after agriculture industry. It is also the second largest employer of the country after agriculture. Our government wants real estate to sell. The recent reduction in the interest rates and infused liquidity for NBFC and micro finance institutes is for the very same reason. Amidst all this, it is highly unlikely for real estate market to lose its steam in a long-term perspective. Will there be reduced demand for some time?...sure! Will there be some liquidity situation with developers for next 3-6 months? Yes its possible…but let me tell you one dynamic about Ahmedabad real estate market. Because of a very specific reason, developers in Ahmedabad are not as heavily leveraged on bank financing as much as you will see in other cities like Mumbai, Delhi Bangalore etc. With lots of personal equity in the business and less market outstanding, developers won’t be in desperate situations as you will see in other parts of the country. The same applies to the re-sale homes. Comparatively, the Gujarati home owner has very less borrowing for a property. If they don't get something close to their selling price, they will delay the sale to a later date when market is better. So basically, in a short term…lets say this calendar year it will be a little bumpy ride for real estate which will be true for any other industry and slowly as we come out of Corona we will see the industry getting back into the shape. Remember the psychological demand of better-quality housing has never been so high historically as it is today. And that is specially due to covid crisis. Once we start getting out of the crisis this high psychological demand will start converting into actual demand and as always real estate industry will continue to achieve new milestones.
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