Useful Strategies for Surviving Impact of COVID-19 for Real Estate Sector
Like every other segment of the economy, the Indian Real Estate Sector too is reeling under the deadly impact of the Coronavirus Pandemic. But like it is with every crisis, this pandemic too may throw up opportunities for buyers as several Developers with unsold inventory may be forced to sell at Discounted Prices.
When working life gets resumed after COVID-19 lockdown, it is highly expected that the pricing and rates of Real Estate Inventory will come down. To cope up with this situation, here are some of my recommendations:
- In case of Ready Inventory, since there will be financial crunch, the target of developers should be to sell the inventory at earliest. Even if they have to sell it at certain reduced price. Less profit is better than question on survival in this hard time. While Luxury Housing may see a 20% reduction in prices, developers would offer freebies to buyers investing in the mid segment.
- Homebuyers are vary of buying a high-ticket item such as a house. There are serious confidence and trust issues. A developer offering 20% upfront discount would be looked at with suspicion. There could be perception issues. Many people are of the opinion that real estate will not be making sales or at least not making big transactions. However, it would be a very good opportunity for those who have job security (along with savings & bank loan) to use this opportunity to buy at reduced price. (ex- IT professionals in Jobs, Doctors & Medical staff at hospitals, and others having fixed pay). Thus, it is recommended to target such people.
- In case of developers, involved in more than one project, it would be advisable to focus presently on sales of project having ready inventory.If no ready inventory is there with the developer, then only those projects should be focussed on which are near completion for sale. New projects & projects having long time near completion should be delayed.
- Reduction in prices or discounts alone may not be a motivator for this segment. The developer may decide to entice them with intelligent freebies. The biggest challenge in the market today is the revival of demand. That can be achieved either by reducing property prices, bringing down the cost of financing or mortgage rates and introducing a better tax structure for both direct and indirect taxes.
Deferred Payment Plans Without Subvention may become Popular
- One may see developers coming up with deferred payment plans such as 10:90 plan which means that the buyer may have to pay an upfront amount of 10% and 90% at the time of possession. Such payment plans may also be offered for ready-to-move-in projects. This means that the buyer may have to pay 10% at the time of moving in and perhaps the remaining 90% within a year
- Additional brokerage can also prove to be an assistance in generating sales. Remember, the target should be to offload the inventory even by making compromising to survive this tough time.
- Developers may also offer freebies such as GST and stamp duty waivers, additional gadgets in the house..