The overall gloom cast over the real estate industry on account of the COVID-19 pandemic has brought to light several unconventional methods to keep the dreams of homebuyers alive as developers strive to stay afloat. In fact, the pandemic has proven to give the necessary impetus and stimulus for people to invest.
India’s real estate market can be regarded as the second-highest employment generator in the country after agriculture. By 2025, this number is expected to rise, and the sector is predicted to account for 13% of the Indian economy. It could become a major wealth creator in the forthcoming decades, with the boom in the housing requirements; provided that all required reforms are executed in a timely manner. Since the COVID-19 pandemic struck in March last year, just like several other industries, the construction sector was also badly hit by the nationwide lockdown. The unavailability of workers due to the migrant exodus, and disruption in the supply chain of materials all over the world, there resulted in many delayed projects and extended delivery dates. The plans of buyers to purchase homes was also postponed, fueled by this and by income contraction due to the pandemic.
However, the relaxation of the lockdown in the Second Quarter of FY21, resumption of economic activities, return of the migrant workers, and economic stimulus packages, gave the much-coveted push on its way towards recovery in 2021.
Currently, there exist numerous signs of recovery of the sector which could revive the industry at a slow but steady pace in the future. At the outset, with the unprecedented amount of time spent indoors for the sake of life safety, a multitude of alternatives have opened up for activities that would have normally been done offline i.e., online classes, professional and informal events, etc. It is apparent that for a considerable amount of time, especially with the second wave of COVID, our lives are going to revolve around our houses for a considerable amount of time.
This paradigm shift has increased the importance of having real estate as an asset in one’s investment portfolio and has heightened the sense of security that owning a home brings. The ‘Work from Home’ culture has strongly contributed to this phenomenon as well. With home offices being the common trend, this phenomenon is predicted to pave the way to the ‘Work from anywhere’ trend. This holds especially true for cities and technology hubs across the country, such as Mumbai, Delhi, Pune, Bangalore, Hyderabad, etc.
From the legislative standpoint, with homebuyers gaining more and more confidence in the real estate facilitation and recovery mechanisms such as RERA, Insolvency and Bankruptcy Code, etc. the erstwhile issues surrounding possession and delivery and enforcement of the lack thereof, while still subsisting, doesn’t plague the potential investment in the avenues. Moreover, with the tax exemptions and caps being put in force by the Central government to lure investors into owning part of leisurely properties, i.e. fractional ownership incentives, is also an indicator of the dynamic nature of the real estate sector, with alternatives in force to ensure that sector in question does not succumb to market collapses.
In addition to this, government incentives are offered under the Zero GST scheme, i.e. nil-GST provisioning for pending and underway construction projects so as to not hamper the foundation of real estate projects. The Zero-GST scheme puts on a decent show of faith of the government and RBI in the potential of the real estate sector to yield handsomely in the upcoming years, therefore considering it essential to provide such a boost as it requires. The erstwhile moratorium put in force by the RBI to protect personal loans has also gone a long way in securing their positions as credit-worthy loan-payers. The much sought after relief has enabled the average taxpayers to be able to secure a position, amid the economic collapse, to be able to pay such mortgages, loans. etc. off, in a fashion that doesn’t render them crippled financially.
These incentives put forward by the government are nothing short of unwavering dedication towards the revival of the real estate sector and its allied avenues. While these ventures might affect the central and state coffers in the short run, the economists and jurists of renown claim these incentives to be of the utmost urgency and prudence in order for the Indian economy to function as a whole again. Therefore, it goes without saying that affordable housing and middle-class buyers hold the key for the revival of a sector losing its sheen due to tot the pandemic. Given the correct legal framework and taxation incentives, the recent boom should be further encouraged to revive the sector in view of the prevailing ‘Work from Home’ and ‘Work-action culture to gauge the much-needed buoyancy in the market.