Why Investments in Real Estate Housing Sector has Increased Post COVID-19?
The pandemic outbreak has resulted in the slowdown of the economy. The volatility of the stock market is on the rise and people are considering more secure investment options. The present crisis has emphasized on the importance of having own security and shelter when the times are tough. This has opened up the new era of real estate, which was previously underutilized. For most people, their priorities have changed and they are now realizing the significance of owning a house. This scenario is expected to shoot up the demand for housing sector in real estate post COVID-19.
Although real estate does not yield immediate results, it is a stable investment when compared to other market-driven investments, especially in the present situation. As the preferences of the people are now guided by the existing uncertainties, it has led to the rise in demand for residential real estate.
Following are some of the major factors that are contributing towards the rise in real estate investments during this time of uncertainties:
1. Technology Adoption
With the advent of technology in the form of online portals, there is a huge shift in the way real estate is being perceived. People who once favored searching the properties offline are now turning to these online property portals to save time and resources. Technology adoption to create virtual tours of the property has also gained momentum and now home investors are taking the virtual tour of the property. Virtual tours have helped many investors finalize or shortlist their homes.
2. Favorable Government Policies
Currently, in the post pandemic situation, the sentiment of home buyers is driven by lower rates for home loans, as offered by the Central Bank. Furthermore, the reverse repo rates have decreased from 4% to 3.75%. This can result in banks infusing their parked liquidity into market, which ultimately eases liquidity. This also enables Non-Banking Financial Companies (NBFCs) who have offered loans to real estate firms to avail similar benefits as the scheduled commercial banks. This is a huge encouragement in a challenging time like this. Loans for the commercial real estate sector is also expected to observe payment deferment for up to 1 year, providing developers with the time required to build and deliver their projects to meet the spurring market demand.
Falling Currency Attracts NRI Investments
The fall in the rate of the Rupees has further attracted NRI investments in the residential sector. This has led to an increase in the number of NRIs investing in mid-segment and affordable housing category. However, the time of investment, which is now, is the highly rewarding and most tangible asset in this post pandemic environment.
Pre-pandemic, the investment focus was commercial properties because of an exponential rise in the co-working spaces. However, at present, the consumer behavior has changed and they have now realized the importance of residential properties in the affordable and mid-segment. This has led to the rapid growth of the residential sector and the backing provided by the Central Government in the form of flagship initiatives have further increased the demand in the housing sector.