Did you know that India’s biggest property market of Mumbai recorded 1.1 lakh property registrations in 2021? It was the first time India recorded a bar high of over 1 lakh in the country’s financial capital.
But as the dawn of the Coronavirus pandemic came in with a new wave, the Indian real estate sector was stifling. It almost bought the transactions to a halt as the country tried to complete the lockdown.
Ever since the market has gone through many steps towards recovery. And just when the nation approached revival, it was stuck by another variant of Coronavirus, Omicron. However, it is still to early to predict the consequences and impact of this variant on the real estate market, its sales and demand, etc.
But let’s take a look at the probabilities, shall we?
The Year 2021 from the Real Estate Perspective
After a challenging period of 2020 with the COVID-19 pandemic, the real estate industry saw quite a hike in 2021. With the initial expansion of the economy, normal conditions began setting in the economy of the organized and unorganized sectors.
From the down market of 2020, the Gross Domestic Product saw a remarkable turnaround in its growth during 2021. The policy by the Reserve Bank of India played a significant part in this area by lowering the interest rate.
The lower interest regime also played an essential part in the real estate sector during 2021. Besides these low rates and reasonable pricing, the demand for homes took an upward curve. The affordable, mid, and luxury housing segments faced a high demand. And the end of 2021 also showed signs of normalcy.
How Omicron May Impact the Housing Market
Although 2021 began to see normal conditions by the end, the new variant of the virus, Omicron, has blurred the positive probabilities this upcoming year. Before the variant came in, the 2021 real estate market rebounded healthily.
But in spring 2021, 10% of the homeowners had to decide to sell their properties within 12 months. By fall, this category of people rose to 26%. These factors bought a tidal wave of home sales in the upcoming year. But then, Omicron came in, and December 2021 saw the beginning of a dip in new listings.
The Possible Effects of Omicron in the Real Estate Market
Although it is said to be too soon to predict the impact of Omicron on the real estate market, here are some probable effects of the variant. Experts have crucially analyzed the market statistics and come up with some ups and downs that may take place due to Omicron in place.
Costs May Increase
The apartment costs may see a rise of 5-10%. Additionally, the end-user level may see a hike in the costs of raw materials, and the bookings of existing properties or new launches may undergo an adverse effect.
Although the long-term effect of Omicron is not yet predicted, the current market does not expect any slowdown in bookings or launch in new properties due to the variant. The President of CREDAI, Harsh Vardhan Patodia, says that the festive momentum will continue for some considerable time now.
Sales Likely to Rise
Knight Frank India recently expressed that irrespective of the second wave of the pandemic, the new year is likely to observe an increase in property sales beyond the levels of the year 2020. That is due to the pent-up demand, festive sales, stronger employment, lower home loan interests, and the gradual recovery of the nation’s economy.
Recently, the statistics showed a surge over a mark of 4000. The index covering the companies of Overoi Realty, DLF, Sobha Developers, and more closed at 4,081 up to 2.90%.
The Executive Director of Knight Frank India, Sharad Agrawal, rightly expressed his views on the real estate market after the emergence of the Omicron variant. He feels that the property market is adept at the real estate cycle and will witness a turnover from the festive season. It has a clear sense, and the market is durable enough to sustain some quarters.
The Bottom Line
With the threat of the new COVID-9 variant of Omicron, the real estate industry seems to have a durable understanding of the market trends. Experts believe that the impacts of the variant won’t be very effective on the real estate sector. Although the entire prediction is yet to be revealed, India’s commercial real estate industry is likely to move towards achieving a massive 32 million square feet. It is based on the up pace of the sales of commercial properties in India post the second wave of the pandemic.