Real estate market in Tamil Nadu post COVID 19
The Impact Of COVID-19 On The Indian Real Estate Sector
Coronavirus took the world by storm, India included. And as the country went into a complete lockdown, it proved to be a major setback for various industries, and real estate was no exception. Due to the crashing of industries, many lost their jobs, and layoffs became a real struggle. This had a direct impact on their homebuying and investing decisions, with several potential real estate investors finding it difficult to stick to their investment decisions.
Sure, real estate is one of the safest investment avenues, with the probability of appreciation and returns still consistent and high, despite how volatile the market conditions may be. However, this did not help the real estate sector during the coronavirus pandemic, as many real estate investors had to go back on their decisions to buy property due to the uncertainty the future posed. Both the commercial and residential sectors of the industry faced a dip in the first half of 2020. While residential real estate came down substantially due to unemployment and other monetary reasons, commercial real estate, especially the office sector, faced a pitfall due to the work-from-home culture that came into existence.
|99 Acres reported from Cushman and Wakefield’s study that the net leasing of office spaces declined to around 35 lakh sq. ft. in Jan-Mar 2021 from approximately 70 lakh sq. ft. in the corresponding period of the year 2020.|
The next section of the article will discuss how Tamil Nadu’s real estate market coped post-COVID-19.
On The Road To Recovery: Tamil Nadu’s Real Estate Market Post-COVID 19
Tamil Nadu is the second-largest state in the country economy-wise. In the financial year 2019-2020, the state had a Gross State Domestic Product (GSDP) of 13.13 trillion and an annual growth rate of 8%. Tamil Nadu is home to a much preferred and growing InformationTechnology destination with an 11% share of the country’s total IT investments. The numbers speak for the state’s strength, and it comes as no surprise that real estate is a booming industry in Tamil Nadu.
With Chennai’s real estate sector dominating Tamil Nadu’s real estate industry, let’s take most of our observations from how Chennai has recovered with regard to real estate post the pandemic.
The real estate sectors across all major cities in the state, including Chennai, faced trouble during COVID-19. However, after the first wave, Chennai’s real estate market, especially the residential sector, proved its resilience by upping sales in the second half of 2020. According to Anuj Puri, Chairman, ANAROCK Group, “…New launches and absorption gained further momentum during the second wave this year, driven by rising homeownership sentiment amidst the pandemic. The mid and premium segments dominated the market, with demand primarily driven by the salaried class.” The residential segment had hopped onto the recovery bandwagon way ahead of the other segments like commercial real estate.
The impact of the pandemic has comparatively been harsher on the commercial property sector. The commercial real estate sector in Chennai lagged behind in its recovery mainly due to the ‘new normal’ that was the work-from-home culture. With many corporations adopting the remote work culture, the demand for commercial spaces decreased drastically in 2020 and early 2021.
However, in the better half of 2021, commercial real estate also began witnessing a slow yet steady growth, thanks to businesses reopening offices and the emergence of the hybrid work culture that is safer and more employee-friendly. Since then, the commercial real estate sector has been witnessing steady growth, as businesses open offices on a hybrid basis and industries continue to see development.
Overall, the Indian real estate sector is displaying an upward trend post the pandemic. According to Housing.com, 70,623 units were sold in Q1 of 2022 as compared to 66,176 units sold in Q1 of 2021, showing 7% annual growth. On the supply side, a total of 79,532 units were launched in 2022 Q1 as compared to 53,037 units in 2021, showcasing YoY growth of 50%.
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