The COVID-19 pandemic and the following lockdown to control its spread had led to stoppages in construction, resulting in a reverse migration of labourers. This phenomenon had created issues in project executions. However, with the return of the same, the future outlook is looking more optimistic.
The Indian real estate sector, like every other industry, faced disruption around all their operations such as construction and supply chain during and for a while, after the lockdown. It began to register a slowdown since March 2020, when the Central Government announced a nation-wide lockdown to curb the spread and effects of the virus. The lockdown, as stated in the beginning by the Central Government was supposed to be a matter of few days, but, the growing number of COVID-19 infections gave it an extension for more than 70 days. Due to the introduced limitations, construction activities were not permitted.
The situation got complicated when migrant workers returned to their hometowns even though developers took it upon themselves to ensure that they did not face any problem during the lockdown. The fear of the disease was too much for them to handle, and they decided to head back to their hometowns.
The exodus of labourers led to a deficit scenario in metro cities during Unlock 1.0 after the government granted permission for construction sites to continue work; the sites had to operate with locally-available workforce only. Developers trained the new labourers and utilised the workforce on a rotational basis at multiple projects to cover up for the time lost during the lockdown.
Gradually, the workers found out that there are no jobs for them in their hometowns, which made them return to metro cities; this resulted in speedy construction activities at various projects, and supply chains improved once all states ended the lockdown. Many of the reputed developers and regulatory bodies are also now providing workers with accommodation and health support. Medical insurances and check-ups have also become few of the essentials at various sites.
With the economy showing signs of recovery as the labourers return, the realty sector will also bounce back to its pre-COVID-19 levels. Now, developers will be able to deliver projects timely; daily wage-earners would have a regular income source, new launches and agreements that were halted due to COVID-19 will also gain momentum.
Liquidity issues in the sector would also get resolved as buyers are coming back to the market. This is being seen from many studies which show that home buyers are preferring to buy over renting after understanding the value of owning a home. Such a psychological shift is supported by the demand-stimulating measures taken by the Reserve Bank of India (RBI), such as slashing the policy repo rate to record levels, thus, making home loan Equated Monthly Installments (EMIs) affordable.