The impact of COVID-19 on the Mumbai Real Estate scene
Mumbai - November 11, 2020
The breakout of Coronavirus was unprecedented and brought upon many changes in the world within a very short time.
The real estate scene also has been heavily impacted by this outbreak. In the first few months since Corona started to spread, construction activities came to an abrupt halt. Laborers started reverse migrating – that is, going back to their homes in whatever ways were possible immediately, and this made the resumption of these constructions unimaginable in most cases even after many more months.
A report by India Ratings and Research (Ind-Ra) had said that the ongoing COVID-19 pandemic is likely to push overall residential demand down by 25 percent, in comparison to 2019. And maximum decline in sales was seen in the affordable housing segment, i.e. homes priced up to Rs 50 lakh. The retail sector, too, has faced the brunt of the corona virus lockdown. Months after this, while the commercial market seems to be recovering slowly, the retail sector still remains affected. The rise in COVID-19 cases has impacted retail consumption the most, as people have been avoiding crowded areas like eateries, movies theatres, and shopping malls.
Recovery plans and predictions :
As the nation started to gradually open up after lockdowns, real-estate enquiries have also been beginning to pick up. According to reports, these are at almost 50 percent of the Pre-COVID-19 levels in Mumbai and other top cities.
It has also been observed that while domestic audiences are still in the wait and watch mode, the Non-Resident Indians (NRIs) are actively exploring the Indian market for deals available. The primary reason for this might be attributed to return of several Indians from various countries (especially the middle-east) during this time and lower housing loan interest rates due to the drop in business.
In the longer term, it is predicted that the residential real estate segment will be the quickest to bounce back. The majority of lost has the potential to be gained back in the latter half of 2020 or at least the first half of 2021. The retail market however, including hospitality and commercial real estate sectors are not likely to recover as fast. The working spaces may have to undergo some design remodelling, since larger spaces would have to become the norm, considering the needs to maintain social distancing. And creating larger spaces also doesn’t necessarily mean the prices per square foot may decrease.
At this point we can only predict these based on current circumstances and with the minimal information at hand. The government’s capability in dealing with the rising cases, treatments and employing precautionary measures will also play a significant role in its effects on the real estate sector as a whole, which in turn will decide the fate of the real estate scene in Mumbai as well.