As the second wave of the pandemic has taken over but this time the real estate sector was not completely unprepared. The previously imposed lockdown 1.0 has taught the builders and developers how to handle such situations in a much better manner. However, the increase in the pandemic cases in cities such as Mumbai and Pune has led to the outward migration of the labourers again and the under-construction activities have been left underway.
Real estate experts have opined that the real estate sector is all set to boost again with the help of the vaccination. The construction activities are expected to start up as the problem of reverse migration will be solved to a great extent as the vaccination drive for those above the age of 18 years has started. Before we go through the impact of vaccines in real estate, let’s just briefly understand the limitation and impact the pandemic had on the real estate sector.
Second Wave – Lessons learned and implemented
The second wave of the pandemic was harsher than the first wave. The number of cases exceeds all the calculations. However, the situation in the real estate sector was not as gloomy as in 2020. According to the reports of a leading real estate consultancy, Mumbai and Pune, despite being the worst-hit cities, recorded 65-70% demand for the residential real estate sector in the first quarter of 2021. The main reason for this is that there is no stringent lockdown that has been imposed like the previous year whereby the construction works were brought to a complete halt.
We had witnessed reverse migration in 2020. However, that is not the case now, as in several states construction works are carried out using local labourers. CREDAI (Confederation of Real Estate Developers Association of India) has also assured construction workers of accommodation and medical facilities. They have promised the labourers enhanced hygiene and safety at construction sites.
Periodical Covid testings have been carried out on sites and medical isolation facilities are also made available. CREDAI has also announced and assured construction workers that they will provide around 2.5 crore workers with a free vaccination.
India’s vaccination drive & its impact on the construction activities
The introduction of the vaccination is all set to bring in momentum and rescue the real estate sector as the third driver for the vaccination began. The vaccination for those above the age of 18 years was introduced by the government after the record spike in Covid cases in India.
Several industry experts think that this will aid the construction activities as the labourers will get vaccinated at the earliest. These experts also say that the vaccination drive is expected to speed up and mitigate the risk factor. Several builders have requested the government to provide vaccination for the labourers that are between the age group of 20-45 years.
The distribution of vaccination is also expected to put the issue relating to reverse migration to rest as the labourers will feel assured and safe themselves after they are vaccinated. The labourers have been urged to return to construction sites after mandatorily conducting an antigen test following the government guidelines until they are vaccinated. Developers have realized the labourers to be an integral part of real estate activities and have stated their protection to be their paramount responsibility.
Vaccination and its impact on property price
The effect of the second and the third wave has not been translated into price movement in the residential realty market and like in 2020, the developers have continued to withhold the prices due to their limited profit margins. Experts believe that the liquidity constraints will weaken the price, in the long run, however its impact on the short-term is highly unlikely. The developers are taking cautious steps as the pandemic cases started going up once again and the country is slowly going into lockdown again. No drastic fall in the price of the property is not expected. With the help of vaccination drives, the industry is expected to regain its past momentum and avoid a complete washout.
The outbreak of the pandemic has brought in several challenges and has also restricted the movement. The construction sector was deeply affected by the pandemic as construction workers started migrating back to their hometowns during the first lockdown.
The second wave, despite being stronger than the first, was not very gloomy as the real estate developers and builders were equipped to face the second lockdown. The builders have also taken keen steps to ensure vaccination to the labourers as they have urged the government to make free vaccination available to labourers between the age group of 20-45 years.
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The Real Estate Sector get a boost after COVID Vaccination FAQ's:
The outbreak of the pandemic has affected the real estate sector largely as the purchase and sales transaction declined in the year 2020. The pandemic has put a halt in the construction activities as the construction workers started migrating back to their hometowns. The lockdown also imposed restrictions on-site visits which affected the transactions as they are highly dependent on person-person interactions and site visits. The lockdown imposed by the government has also led to the emergence of the work from home concept which further reduced the demand for commercial spaces in the country.
The effect of the second and the third wave has not been translated into price movement in the residential realty market and like in 2020, the developers have continued to withhold the prices due to their limited profit margins. The industrial experts think that even with the introduction of the vaccination, the price of the property will have no drastic fall.
As per the reports, the vaccination is expected to aid the construction sector as it will eliminate the challenges brought in by reverse migration. The labourers themselves will be assured of their safety and the construction activities are expected to boost.