While the adverse effects of the pandemic are already being felt across the world, varying opinions are emerging with regards to Covid-19’s impact on real estate, a health emergency that has force launched the biggest ever work from home experiment globally, putting a question mark on the relevance of workspaces in a post-Coronavirus world.
Amid countries applying extreme measures to contain the Coronavirus outbreak, businesses have come to a grinding halt across the world, forcing monetary agencies to slash growth forecasts for the global economy. While the adverse effects of the pandemic are already being felt across the world, varying opinions are emerging on COVID-19’s impact on real estate, a health emergency that has force-launched the biggest ever work from home experiment globally, putting a question mark on the relevance of workspaces in a post-Coronavirus world.
India, where the economic growth is already set to slow down to a record 11-year-low, a prolonged lockdown, which started from March 25, 2020, and has been extended till May 30, 2020, would further worsen the situation in Asia’s third-largest economy. Note here that the lockdown in India is now in its fourth phase amid a dramatic rise in the number of infections. As of May 25, nearly 1.40 lakh Coronavirus infections were reported in India.
As is evident, research agencies are predicting a near-term halt in the growth of real estate in India. PropTiger.com data shows housing sales in India’s nine major cities declined by 26% in the period between January-March 2020.
“While the Chinese economy has been reeling under the impact of the Coronavirus contagion since December 2019, the situation started to get worrisome in India only in March 2020. Following the spike in a number of infections, the government first announced a 21-day lockdown on March 24, and then extended it till May 30, keeping in mind the severity of the situation. The lockdown, which has virtually brought to a standstill most economic activity in the country, has hurt all sectors, including real estate.
On the contrary, deal volumes in office space in India increased 27% year-on-year in 2019, to an all-time high of over 60 million sq ft, showed a Knight Frank report. However, any predictions made before the sudden outbreak of the global calamity stand retracted as the government gets busy devising plans to stop businesses in general and the economy in particular from sinking deeper into a slump, amid impending fears of the rupee declining to a low of Rs 78 against the US dollar.
While the real extent of the damage is hard to grasp in a scenario where every day is making a great difference, one thing is for certain – India’s realty would suffer short term shocks on account of the contagion.