Covid-19 Implications on the Real Estate sector and Outlook

2020 was an unprecedented year globally that saw frequent lockdowns across nations, huge demand destruction, instability and uncertainties due to the COVID-19 pandemic. The country-wide lockdown imposed in India from March 2020 due to the COVID outbreak had impacted business and industry alike.

As most of the economic activities came to a grinding halt, the real estate sector too witnessed a disruption in the raw material supply chain, leading to limited availability and rising input cost. Due to migration, availability of labour was a challenge, which severely impacted the construction activities at the project sites across the country. Apprehension of economic slowdown and probability of job losses led to a weakening of consumer sentiments.

Both RBI and the Government took several steps to revive the economy through multiple packages, policy changes and reforms. RBI did cut repo rate by 115 bps in 2020 while the government announced economic packages and permitted developers to extend project deadlines by six months through the Real Estate Regulatory Authority (RERA) citing force majeure.

The pandemic has further accelerated the process of consolidation and technology adoption in the sector.

Adoption of Tech in Real Estate

The pandemic forced the Real Estate sector to more widely adopt innovative methods and channels to reach out to the potential clients especially through increased focus on technology.

  • Increased use of digital tools such as virtual site visits, online sales portal, 3-D walkthrough, chatbots, drone shoots, video calls and in-house data analytics platform to identify potential customers
  • Many activities like buying, selling, renting, property registration and home services like visitor management, loan assistance etc. shifted online
  • Companies adopted artificial intelligence (AI), virtual reality (VR), ERP/CRM tools and such technologies that will pay in the long term


Demand slowdown in residential segment due to Covid curtailed housing sales, project launches and price rise across India’s residential market.

  • Work from home scenario resulted in buyers being more inclined to look for larger apartments while upgrading from current homes. Developers grappling with the liquidity crisis, tepid sales aligned themselves to the needs of homebuyers by reducing ticket-sizes and offering lucrative schemes
  • There was a rebound in Q3 FY21, supported by the pent-up demand, festive demand, low interest rates, price cuts by developers and measures taken by some state governments like in Maharashtra of reducing the stamp duty and construction premiums
  • Sales momentum was strong in the Mumbai MMR and Pune markets, attributed to a large extent to a limited-period 300 basis points cut in stamp duty by the Maharashtra state government

Commercial Office

The stoppage of business activity across all markets during Q2 2020 and companies resorting to work-from home weighed heavily on occupier demand in 2020.

  • Transactions in 2020 fell 35% YoY to a six-year low but it bounced back in Q3 FY21. The IT sector dominated markets Bengaluru, Hyderabad, Pune and Chennai saw an unprecedented spike in QoQ transacted volumes during Q3 FY21
  • The pandemic could result in innovative solutions or rostered work shifts and timings with many companies adopting a hybrid model of work from home and presence in office
  • Offices are changing and becoming more collaborative, flex space, co-working and technology enabled, which was changing even pre-COVID. Now COVID has accelerated these changes
  • Focus on sustainability and societal impact of companies would increase and is likely to accelerate the importance of Environmental, Social and Corporate Governance (ESG) to all stakeholders – occupiers, developers and investors


  • The impact of travel restrictions, limited flight and trains, quarantine protocols, event cancellations and individuals’ reticence to travel have resulted low occupancy in the hospitality sector
  • Focus on safety and hygiene protocols, personalized packages, home delivery from in-house restaurants, special events, staycation options are expected to be trend in the near future till the time major chunk of population is not vaccinated


  • One of the worst impacted in the Covid-19 crisis with closure of malls and low footfalls after re-opening with restrictions. Increased focus on safety and hygiene protocols, air quality, improvement in sanitisation will perhaps bring back people to their malls
  • Retailers are also increasingly adopting digital marketing, personalized promotions, predictive analytics, in-store automation to curate immersive experiences for their customers.

Industrial Warehousing and Logistics 

  • E-commerce and Third-Party Logistics will be the biggest catalysts for change post COVID-19; a higher preference for larger tech-enhanced spaces and networked supply chain. The pandemic forced operators to concentrate on supply chain risk mitigation and resilience
  • Evolving trends such as expansion of omni-channel retailing, online groceries and the integration of technology with warehousing were expedited in this period and is likely to continue


After the successful listing of first Real Estate Investment Trust (REIT) by a JV of Blackstone and Embassy in April 2019, Mindspace and Brookfield have also listed their REITs in the FY 2021. As per sector reports, it is estimated that 270-mn sq ft of office stock would be eligible for REIT, translating to a potential investment of ~ USD 33 bn.

Once the majority of population is vaccinated, shared economy segments like co-living, student living,  and senior citizen living will also witness a revival.