In the wake of Coronavirus that has already spread across 70+ countries, including India, affecting almost over 90,000 people is also accounting for global jittery for global real estate. As of now, the impact in India will be of unlimited nature as long as the outbreak lasts. According to a recent report released by CBRE (Why the Corona Virus Outbreak Could Have a Lasting Impact on Asia-Pacific Real Estate), there seems to be no material impact as such across the retail market. Both online and physical retail has shown growth as a large number of brands continue to enter and expand accordingly. The demand for leasing office is also quite unaffected. In a scenario where Europe and US-based corporates are looking to outsource a range of business operations to India, robust demand for leasing is supported by improved economic sentiment as well as a sustained appetite. The logistics and industrial sectors are also far away from witnessing any significant impact. In fact, the growth has been promising to owe to a wide range of incentives from prospective suppliers and promotion from the government side as well as demand from all local third party logistics and e-Commerce businesses.
The China Factor
With China being the largest trading partner for India, the manufacturing chain runs a chance of being affected. As such, a series of disruptions across the supply chain might force prospective traders to bank out for other markets sourcing for both raw as well as finished products. This, in turn, is bound to impact the costs at large, as mentioned in the CBRE report. While that was the sunny side up, the story for the Indian real estate market across popular apartment hunting choices like a 2BHK apartment in North Kolkata, seems to ring a different note altogether. Property consultants all over the world are worried about one and all short term impact, as China remains the most prominent force for cross border property deals, especially across the North American and European markets. China itself has taken the worst hit with the virus being originated in Wuhan. However, the good news is the infections have been slowing, and hopefully, an antidote will be on the way for universal good.
The wealthiest Chinese buyers are, in fact, the largest purchaser for luxury properties to the likes of branded residences across both the US and Europe. The market top end is thus expected to run soft at least for a short duration. In all probability, buyers will carry less incentive for purchase as things are left unclear as to when one gets to visit the property. In the long term, the virus can supposedly weaken or bring down sales figures, realty consultants opine.
Europe is one such market where the property market has witnessed a strong foothold from the Chinese community. As a matter of fact, the Chinese are one of the most active buyers of properties across countries like Germany, London, Italy, Cyprus, Portugal, and Lisbon. Appreciation of property and a glimpse of high-end lifestyle are the chief motivating factors for the Chinese to invest in buying second homes across such markets. With a plethora of lifestyle and other luxury products, the Chinese community bears a strong affinity for all things beautiful. It is, by comparison, the biggest buyers and collectors of art and vintage items. For them, such luxury properties are like trophies that they want to flaunt as a part of their unique collection. Compared to the Indian market, Chinese homebuyers are much faster in making decisions and aren’t that conservative-minded.
In some cases, they would make their decision right over the phone. One can’t possibly imagine an Indian doing the same when looking to buy a flat. So, it’s only understandable how the impact of Covid-19 has crippled the whole economy at large and the overall activity across the lifestyle property market. Following the restrictions on travel, the market has witnessed a lesser number of road shows in a span of six months, which have also contributed heavily to impact the property market.
What’s The Fix?
The impact of Coronavirus on Indian real estate market won’t be that heavy, opine realtors. However, the effect may restrict buyouts across the luxury property market that directly depends upon the furniture and other fixtures, wholly imported from China. All imports from China have witnessed a slowdown, albeit as an obvious consequence of the rising pandemic. When one takes a look at the possession dates as well the interior work schedule across the luxury real estate market, there’s no denying that there is going to be a good amount of delay. As such, the supply of fixtures, furniture, and other fittings that are being extensively used across luxury houses all over India are significantly imported from China and are bound to witness the impact. What makes the scenario even more depressing is the lack of alternatives owing to the price at which the contract terms have been decided with the Chinese manufacturers. With the impact of the virus being somewhat difficult to estimate, it is still not clear as to how it’s going to play in the long run, and everything boils down to keeping a close vigil at a macro level.