In a matter of weeks lives of us has been changed in a way we never imagined before. We cannot meet, shop, socialize the way we used to do. Physical distancing has indirectly changed the way we used to interact with physical spaces. The outbreak has made the demand of physical spaces go down. This has created unprecedented crisis for real estate sector. Beyond this challenge we are likely to see transformative and lasting changes in this sector. But the bigger question presently is should we buy real estate assets amidst lockdown? Should we invest on a property investment? While most of us would obviously say No as the economy has been severely hit by this pandemic. In this article I would like to highlight some of the key points as in what are the pros and cons of investing your hard-earned capital during this time.
Let’s start off with the benefits associated with investing in real estate amidst pandemic.
The reserve bank of India had announced a cut in the repo rate (the rate at which RBI lends money to commercial banks) which seems like an obvious decision by the apex bank to revive the economy. But this will bring down the home loan interest rates as, most of the banks have launched repo-rate linked home loan products which currently stands at 4.4%. This could be a perfect deal breaker for the ones seeking home loans.
- There has been a decline in the demand as well as supply for houses, amidst lockdown as no one is going to buy houses. Also, after lockdown it will take a long time for developers to resume the construction work as achieving 100% operating efficiency would certainly take time, this can bring an upward trend in the prices of the properties. Which means you have to pay more than what you are paying today.
- Due to less demand, builders are desperate to clear their inventory to generate liquidity which means there is a great room for price negotiations with builders and agents.
- When it comes to investment real estate is certainly a safer option than other high return generating investments. It can be both a source of income as well as a capital appreciation at the same time. Hence, it is one of the perfect assets one must have.
- While one must not overlook the other side i.e. cons of investing in the same. There are certain things that one must keep in mind while purchasing a real estate property.
- With the lockdown prevailing across the country, projects are actually on hold so one must digest some project delays as an unavoidable consequence.
- Along with delay comes another issue i.e. liquidity as the sector is cash starved, builders might struggle to pick up the pace. So, you may run out of liquid cash.
- There is a probability that price rise may not happen after the crisis.
- You cannot physically go and see the property.
In spite of above points, experts are saying that this is the best time for the home seekers to buy a home having said that every opportunity asks for a cost be it in terms of monetary risk or some other intangible cost, this is indeed a great opportunity for buyers a silver line deal either grab it or it’s gone.