In March 2020 when the first wave of the Pandemic hit India almost all of the real estate business came to a halt along with the other businesses in India. The real estate investors and developers faced losses up to 1 lac crore rupees. They were forced to stop work on their projects due to the fact that they could not adhere to the working norms in place due to the spread of the disease. Getting credit became a problem. The main effect was faced by the commercial segment as most of the corporates put on hold their decisions on renting or buying new working space due to the Covid pandemic till the situation clarified. The corporates initially were expecting that the employees would be back in their offices by the third quarter of 2020. The biggest losses were suffered by the Hospitality Industry as all hotels closed down due to the travel restrictions imposed.
The second hardest hit was the Retail segment. The shops and markets shut down and owners were finding it almost impossible to pay the rents due to the total closedown of their business. As the pandemic receded in the second half of 2020 it was expected that all businesses will make a very quick comeback.
Although the hospitality industry in some of the places in India like in Goa did recover due to the partial lifting of travel restrictions in the second half of 2020 and the hotels in Goa started doing well again the Retail Industry did not make the same recovery. In the first quarter of 2021 however, the hospitality industry showed a substantial recovery due to the people raring to go out after their lockup and hotels in some of the tourist destinations started doing well again. The retail sector however was still not doing that well as the footfall in the markets and malls was still restricted due to the post covid restrictions being in place and the average business trend was only up to 70% of the business which they had been seeing before the pandemic struck.
The one segment which has seen steady recovery is the residential segment of real estate. According to an industry report the property searches for residential properties have seen a growth of 30 to 40% . From that a major segment is the affordable housing segment but also the luxury segment has shown significant promise. Because of the work from home option the people are not compromising on the size of the residential properties. This segment is expected to grow steadily in the coming second half of 2021 as millennials are also taking an interest in buying property.
The steps taken by the Government like reducing the GST has shown a positive result in helping to pick up the demand for affordable housing. If these trends continue and with the rapid vaccination going on there is the expectation that the pandemic will be controlled in the coming six months and the real estate industry will be on the road to recovery.
