The Novel Coronavirus is perhaps one of the greatest threats the world has faced in the 21st Century. But how will it fare for the future of Indian economy 2020? What is the economic impact of COVID-19, especially in Indian Real Estate?
Before getting into details, we'll have to accept that things will never be the same again!
The COVID-19 much like it's predecessors such as the Black Plague of the 1350s and the Spanish Flu will forever alter the pace of the world and its growth.
The world was unifying with the help of technology and blending cultures, languages, and people onto a new path of progress. Countries such as India, with its youthful populace and digital prowess, were making tides undreamable to even the most developed nations across the world.
Sectors such as Retail, Rental Services, Commercial Real Estate, and Digital Technology Services were ruling the roost of Indian Economy Pre-Covid19.
India's major economic and technological zones, such as Bangalore, Mumbai, and Hyderabad, became the cradle of Indian Start-ups and a favorite hub of International Brands. These were the major factors backing the rise of Commercial Real Estate and Digital Technology Services.
Click to Read More about the Union Budget of 2020 and it's Impact on Real Estate
However, as soon as Coronavirus spread from Wuhan, China, it's impact was felt across the world, including India. However, the tremors were never fully realized until a month later, when COVID-19 claimed it's the first victim in India, on January 30th.
On March 24th, Indian Prime Minister Shri Narendra Modi ordered a nationwide lockdown following the success of the Janata Curfew on March 22nd.
It was initiated to contain the spread of the deadly Coronavirus across the Indian landscape.
However, for a growing economy like India, this was a colossal strike down. The lockdown in India became a double-edged sword which, while saved lives, also became a threat to the financial survival and future.
It even thwarted scholars attempts at making Indian economy predictions and baffled most of economists regarding the future.
Many industries are severely hit, and it is rather hard to ascertain the future of Indian economy 2020. The major industries which will be hit by the COVID-19 and lockdown will be Apparels, Consumer Durables, Automobile Industry, Restaurants, and Hotels.
However, specific industries such as Healthcare, Pharmaceutical Manufacturing, Waste Management, Telecom, and Media is bound to showcase unprecedented growth in the coming years.
In the real estate industry, both the residential and the commercial segments will have to face a mild impact. But more than the residential sector, the commercial section will have a higher hit rate because of the work from home scenario.
Most of the companies, especially the technological and digital firms across the country has realized that by enforcing a work from home culture, they are still able to retain the quality and quantity of workload.
Most of the companies are allocating funds to create personalized workspaces for their senior employees at their homes rather than spending it out on more commercial spaces.
Though there are chances of a severe recession across the globe, with many of India's major trade allies such as Italy, the USA, and China spiraling down due to COVID-19, specific sectors such as Real Estate, Media and Food Retail would only be mildly affected.
Food Retail would now have a higher market rather than directly dining out because of the hygienic culture we've grown accustomed to. The future of indian economy 2020 will rely heavily upon retail industries which again depend upon digital platforms.
This is mainly because Real Estate will be seen as the next proper investment option when the stocks and debentures will fail to perform. Real estate will double as an asset as well as long term investment. Furthermore, residential real estate does not have the backing of foreign investments compared to the commercial sector, which will remain in a rather lukewarm state.
The major players of Real Estate would be the Home Buyers. They will have the power to call the shots over developers. However, this will undoubtedly take a toll on the developers as they will have to sell off the properties at a lower rate to keep the flow going onward.
This would be essential to continue the momentum for under-construction projects. However, we can expect a lag in developers announcing new plans anytime soon.
The Homebuyers will also make use of the market trends and will invest more in real estate as they will be more confident of the value of Real Estate. If one observes the track record of real estate over the financial crises and the recessions over the years, it is evident that it bounces back with even higher prospects than any other sector of the economy.
Though the government ignored the sector except for the Affordable Housing Sector in the Union Budget 2020, it will be forced to accept the rising demands. It will further boost the tenets of home loans, making it favorable for ordinary citizens to attract more investments.
Click To Know more about the Best Affordable Housing Projects in Bangalore 2020
The payment schedules will probably be more flexible and extension of PMAY and income tax related benefits.
Furthermore, this will be a considerable boost to Real Estate Technology as there will be more of digitalization in the homebuying process. This will be boon to Proptech and Data Analytical Startups. The comeback of real estate will help in the upliftment of various other related industries, such as manufacturing and construction as well.
Since China has already lost its domain as the world's cheapest manufacturing and labor providers, the world shall turn it hopes to India. The governmental schemes such as Make In India and other related sectors will also see a rise in the coming years, thereby making our country a leader in the job market.
Once all the clogs run up together, we will witness further foreign investments in India, thus slowly aiding in overcoming the coming recession.
Foreign Investments will also boost back the commercial real estate sector, thereby making an overall rise from the ashes. Thus the future of Indian economy 2020 will rely heavily on the Real Estate sector.
As they say, " Real Estate will never go out of Style" & it might prove to be the redeemer!
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