Real estate was affected heavily by COVID. Projects had stalled, buyers had deferred their purchase and all activity had come to a standstill. With labour wanting to go back to their hometowns in these times of uncertainty, construction work will take a big beating and will take a long time to get back on track. Very few construction firms have taken care of their labour and provided them with food and shelter during these trying times. Real estate is labour intensive and with reverse migration taking place and with no signs of labour returning in full force at the moment, several projects are set to be delayed.
Developers are also wondering if labour will actually return for contend themselves with making a smaller living in their hometowns. There are several schemes that are promising to take care of these migrant workers today and they are no in a hurry to come back to work. Under-development projects are the most affected in this scenario, with no clarity on when full-fledged work will restart. Completed projects will definitely benefit in this scenario as more buyers will move to buying completed apartments and villas instead of waiting for the under-construction projects.
It is likely that real estate prices may drop in this scenario but there is a speculation that input prices are likely to rise. There might be delayed in procuring construction materials also as cement factories, steel and other allied industries are also facing a shortage in labour and effects of lockdown.
With RERA in effect there is also a fear that not living up to timelines might result in penalties. RERA gives builders an extension of a year to complete the project but with the current uncertainty, many builders are not confident that the timeline would be adequate. Also working with the available labour force might mean having to dole out more wages.
But all these might not guarantee that buyers will come back. Many buyers will look to delay purchase as they are facing their own uncertainties in their businesses and professions and taking on the burden of a home purchase might not be a priority.
How quickly the work can be restarted will determine the health of the industry. Real estate alone cannot start up, all the allied services related to real estate need to start in order for the industry to survive this COVID-19 crisis. The sector will bounce back strongly if there is a bigger push to ensure that the real estate companies are supported in getting back in business as this is the largest manforce employing industry.
Ensuring market liquidity will help companies gain their confidence and also prepare them to handle shorter timelines in completing projects. Buyers need to have more incentives from banks in order to take out home loans. Developers in the current time might be looking to layoff workers but in the long run, they need both skilled and unskilled workers in order to quickly get back on their feet.