The impact of Coronavirus on the real estate industry was significant during the initial months of the Lockdown last year. With migrant labourers returning to their villages and a fall in disposable income caused by shrinking economic activity, the real estate industry saw one of the sharpest slumps in recent years.

However, like many sectors of the Indian economy, the real estate industry soon made a resilient comeback. Based on the available data, the top 8 tier I cities witnessed a 9% year-on-year rise in residential property sales in January to March 2021 quarter when compared to the previous year. Many factors were responsible for this turnaround. Lower costs of financing and digital marketing strategies were a few that lead to a quick recovery of the demand, and experts are hopeful for this trend to sustain.

Even though we are still dealing with the second wave of the pandemic, once the number of cases subsides, several factors will contribute to boosting the property demand.

People Have Realized The Importance Of Owning a Home

Last year, the aftermath of the Covid pandemic made people realize how important it was to own a home. Many uncertainties come along with living in rented accommodation. Despite the financial crunch caused by the Covid-19 pandemic, many tenants had to continue paying their monthly rents to the landlord. Rented living spaces also have restrictions as to the overhaul that you can perform. All this makes living in rented accommodation difficult for tenants.

Contrast this with owning a home. One does not have to pay a monthly rent, let alone dealing with a landlord. To give some relief from the economic downturn, the government had even stepped in to announce a 6-month moratorium for loan repayments, including home loans. This took care of the financial crunch faced by homeowners having outstanding home loans. On top of this, owning a home also brings a feeling of emotional well being and long-term financial security.

The impact is such that even those families who had been living in rented accommodations for years are now looking forward to owning a home. This factor will contribute to an increase in demand for homes.

Record Low-Interest Rates

The cost of financing is an important factor that buyers consider before purchasing a home. At the heart of it is the interest rates on home loans. While the Covid-19 did not result in a decrease in property prices, the fall in interest rates made buying a home affordable. This has been one of the best news for the real estate industry.

RBI’s reduction in repo rate to 4% translated into home loan rates falling to record low levels. This has boosted the demand for homes. Favourable policy decisions of central and state governments to spurt demand like reduction of stamp duties have also helped. Stamp duty is a percentage of the transaction value that home buyers have to pay state governments as tax. Real estate developers feel that the overall lower cost of financing is boosting the demand for real estate.

Increase in Digital Engagements

Site visits are one of the major activities that lead to property transactions. Customers want to check the property site to know the progress of the under-construction work. Similarly, for finished projects, customers want to see whether the original plan matches the finished plan. The restrictions put in place because of the second wave of Covid has disproportionately impacted site visits.

To tackle this problem, real estate developers came up with innovative strategies like Virtual Tours and immersive tech. In fact, some companies are promoting virtual tours as no-contact home-buying to increase digital engagements at their properties. Along with this, companies have decided not to cut down on digital ad spends. These strategies are helping lure customers to invest in the property market.

Moreover, people have become more tech-savvy than what they were a decade ago. There has been a paradigm shift in how individuals make purchase decisions by using online platforms. This is one of the important reasons why digital engagements have been steadily rising over the years in the real estate industry.

NRIs Community Look Forward to Owning Homes in India

Until a few years back, NRIs had been primarily investing in real estate to earn rental income from tenants. But over the last year, as the pandemic exposed them to several uncertainties of living in a foreign land, NRIs realized how important it was to own a home in India. They are now looking forward to owning a home with an aim of settling in the future.

Along with this, the fall in interest rates and depreciation of the rupee against the dollar results in real estate becoming a lucrative investment opportunity. Real estate developers have been quick to encash this trend by giving virtual property tours to NRI customers. NRIs are now browsing and investing in real estate through online channels.

The trend is highlighted in a recent report. According to the report, NRIs invested $13.1 billion in FY 21 that is expected to grow further by 12 % to $14.9 billion in FY 22.