COVID-19: Impact on the Mumbai Property Market

The spread of the Corona Virus, has impacted most industries & businesses. The real-estate industry, which was already under a lot of stress, will now have to face with more problems related to further lack of demand, slowing of construction and lack of liquidity in the system.


Observations, Forecasts & Trend Analysis:

1. Once the lockdown is opened up, slowly, steadily, and probably phase-wise, the Property market may take quite some time to open up - we anticipate about 2 ~ 3 quarters at least, for things to get moving.
2. Currently, the Property prices are in ‘suspend mode’, and hence, there is no way to gauge what the new levels would be - only time will tell, as and when things open up.
3. Property prices may eventually fall to their lowest levels, in the last 8~10 years. However, this will depend a lot on the demand & supply of different categories of property - eg. Residential demand-supply in gated complexes, will be different from the demand & supply in stand-alone buildings in a locality like Goregaon.
4. Many people, having lost money in the Stock Market, lost faith with Banks, and upset with the reduction of FD rates, may tilt towards buying Property, which may be considered as a much more ‘stable’ asset from now on.
5. Home-Loan rates have already reached their lowest levels in last 16 years - Currently @ 7.25%, they may fall even further in the next few weeks.
6. Under-construction properties may further lose their sheen, due to the uncertainty surrounding completion of the same, for want of funds & shortage labour by the Developer.
7. Buyers, who were not invested in the Stock market, may find the Property market very appealing with Prices reduced, Home Loans @ 7.25% & Stamp Duty reduced to 5% now.
8. New & ready properties with OC, will sell well, much more than older properties which are available on re-sale basis.
9. Smaller & stand-alone buildings, with lesser Residents, (as against large gated complexes) may get back into fashion, as these are easier to handle & manage, during a crisis.
10. Gated-complex projects may increase the ‘Business-Center’ space in their Clubhouse / Amenities to allow more people working from home, to use it for meetings & video calls.
11. Individual NRI’s may show a renewed interest towards the Indian Property market for investments.
12. Investing in office space, in India, may be considered as the most ‘stable’ property investment, currently available in the World.
13. Commercial Property may be preferred as an investment, compared to Residential property, due to the current demand & supply balance, and due to the higher ROI available from Commercial Properties.
14. Owners may sell Residential property investments to buy Commercial properties for better returns in the future.
15. In the short & medium term (only), many Start-ups / New companies, may prefer small offices compared to Co-working spaces, to ensure ’social-distancing’ and improve safety of people & data.
16. Investors may prefer buying smaller offices, with a higher percentage of their ‘own contribution’ and a lesser percentage of the loan.
17. In the short-term, pre-leased sale transactions may not conclude, since many tenants may be re-negotiating their rentals with their owners, which may further impact the sale price of the property (downwards).
18. Buyers may look to buy small offices, close to their Homes for rental income in the short term and for future use in the long term.
19. Banks may lose their reputation as the ‘most stable’ tenant for commercial properties.
20. Rental values for Restaurant properties may fall, as restaurants will lose revenue & customers to Central Kitchens.