2021: A turning point for real estate

Real estate is the top investment option all over the world. It is usually preferred more over other popular investment options, like gold, mutual funds and sovereign bonds. Property is a necessity these days. It is, in fact, an asset that can be beneficial in future. This is the reason why real estate, property with land or buildings, is of much value.

Why real estate?

Investing in real estate is safe and without any risks. Land does not disappear overnight like stocks. Real estate investment can be done by anyone regardless of one's qualifications. It is an asset the demand of which will ever increase. Even renting out the land or building is sure to give a steady source of income.

Real estate before and after Covid-19

Investing in real estate has always generated a steady cash flow in the past several years without any risks. The rate of the land depends upon various factors, but the real estate industry was an ever booming one as property is essential to accommodate the ever growing population.

But, with Covid-19, things have changed drastically. Just like most of the business enterprises, the real estate industry too was hit hard. Not only health risks, but also people's willingness to buy or sell property has declined. Developers and dealers find it difficult to get permits for business because of the pandemic, resulting in delays, lack of funds and low rates.

Human density has a major role in any pandemic. After the first two waves of Covid-19, people have been preferring to own assets where human density is low, indicating a revival of the real estate sector. Moreover, during the pandemic, assets like industrial facilities, and data centers had significantly less declines. On the other hand, assets like hotels, malls and schools have become less favourable. The trend of getting things, like education, shopping, business meetings etc. done online has been the need of the hour. This may accelerate faster as one prefers to stay in the comfort of home with the pandemic around. But, it is true that demand for certain real estate assets, such as hospitality properties and short-term leases, has increased.

It is uncertain how far the real estate sector is affected in 2021 with Covid-19 still in play. The demand for homes, workspaces, gymnasiums etc. dominates the market. Individual spaces are what people are looking for in 2021 as they are homebound and need more space. In towns and cities, quality infrastructure will always be wanted; hence, developers with a sturdy financial back up can make headway in the real estate industry.

Since the beginning of 2021, people have been preferring less crowded areas. They are opting for affordable locations that are well connected as well as less populated. As a result of this, real estate dealings can increase in the countryside as well. Therefore, the industry has to focus on improvisations with an eye on the future and the effect of the pandemic.

(Inputs from Aman Trehan, Executive Director, Trehan Iris)