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COVID-19: Impact On Real Estate Industry In India

With builders pulling all levers to stay ahead in the game, going digital is the way forward as developers with end-to-end digital solutions performed noticeably better in the lockdown as well.

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The year of 2020 brought the world to a screeching halt as the COVID 19 pandemic unsettled various verticals of the world. The businesses are struck hard, the markets have seen a record low and COVID-19 has also disrupted the real estate sector, which was on a growth trajectory since the last few years. The major industry contributing to national economy stalled as almost 1.3 billion people went under quarantine since 21st march 2020.

As per ANANROCK H1 2020 PAN India Residential Market report - Q2 2020 was the most impacted quarter with launches being the lowest since 2013. During this quarter, the new launch supply declined by 97% over Q1 2020 and 98% over the same period last year.

Both the residential and commercial real estate sectors are hit in terms of launch, sale and purchase. The lack of materials and labours have made the whole process slow and unpredictable. Although the investors and builders have braced themselves for the delays, the recovery of the real estate sector has been pushed farther away!

The bounce-back of Real estate sector majorly depends upon the labours. And the situation of labours is not looking very promising!

The effects of this pandemic can be divide into three parts – the situations of labour, the current status of the market and the road of recovery ahead.

As soon as the lockdown was announced, the labours and lower segment families started facing a financial crisis. The people with daily wages also came face to face with their worst nightmare and had a hard time sustaining the living here. Most of the workforce migrated to their home towns, and the ones stuck here did not have any source of income.

Talking about the situations of labour, we can say that they are in a catch 22 – a vicious circle wherein the symbiotic relationship is disrupted by the lack of either of two. In this case, the labours do not have any work as the construction material is not available as per the requirements, and if there is sufficient availability of the raw materials, many of builders have paused the work.

According to the expert property consultants ANAROCK 4.7 lakh, residential units planned to complete in 2020 may face hurdles due to migrant workers heading home and the chains of the raw material disrupted.

In these times of crisis, companies took it upon themselves to make the survival of the labours easy. The labours, site workers and other human resources at construction sites were provided basic health kits, dry rations, a shelter to live and financial backing.

Although the nationwide lockdown imposed in March 2020 severely impacted the new launch activity in Q2 2020, labour shortage will not alter the work at projects as a major component of workers decided to stay back and continue working. Hence, there won’t be any foreseeable delays in deliveries.

However, the situations seem to be improving. The work is gearing back and the Real Estate sectors, both commercial and residential, is setting up for a great start. The supply of construction materials have started, and the manpower is also coming back to the site.

With the hope that the fiscal year second half brings good news to the Real-estate developers, the companies are making amendments in their ways of working.

Companies have also reformed their ways and has worked like a Trojan to align with all the current technological means to improve customer interaction and communication. Even though RE sales is highly dependent on physical site inspections, Customers are now interested in virtual site visits and are opting for online payments.

According to a futuristic perspective, the builders and developers are now looking forward to the government schemes, subsidies, relaxation on loans and interest rates. However, the experts predict that financially strong and organized players are likely to occupy 75%-80% market share in the coming years.

With builders pulling all levers to stay ahead in the game, going digital is the way forward as developers with end-to-end digital solutions performed noticeably better in the lockdown as well.

However, it’s not all gloomy and dark in the corona-age, there are also a few learnings that the real estate developers have taken with them. Let’s start by saying that it’s always a good idea to innovate with time and rectify any inherent flaws. Also, it is vital to adapt to technology to deliver the best to the customer.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

Tags assigned to this article:
real estate

Nikhil Madan

The author is Managing Director, Mahima Group – a leading Real Estate Builder and Property Developer

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