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Lockdown hits real estate market, cycle of buying and selling stalls

JULY 24, 2020

Pune: Property consultant Ibrahim Shaikh has seen a staggering fall in client interest over the last week. “Even a week ago the client footfall was more or less normal, but now the count has gone down to zero giving way to inquiries being made over calls,” he pointed out, adding hopefully, “The market should pick up once things go back to normal. Till then, safety is of the utmost importance.”
One man’s spending is another man’s earning, but the entire cycle falters in the midst of a highly necessary lockdown and successive curfews in view of the Covid-19 pandemic.

Builders, sellers, suppliers, furniture shops and other personnel attached to the industry have also been hit. “If there are no people seeking our services, supply of material ceases to matter. It is a global pandemic. I cannot say what the repercussions may be in the long run, but, for the time being, it is a positive move on the people’s part to follow the quarantine effectively,” said interior designer Bharat Solanki.

Khushnam Chauhan, a real estate consultant, spoke of the short and long term effect on the finances of everyone involved in the business. “Right now, we are in the process of closing almost done deals. The pandemic has had a cascading effect. People seeking houses have declined drastically. The number of people selling houses have also reduced. A seller refused to meet because she had a child at home and she did not want to take the risk of physical interaction and that’s how it should be. There is no new business coming our way, inquiries too are dwindling,” Chauhan added.

Suparna Pillai, a banker, said, “Wherever a property investment is involved, short term and long term gains come into play. Property holders need to file for capital gains in the form of reinvestment, pay a 24% tax or sign up for government bonds for five years at least by July end usually. But they need to complete necessary transactions, such as buying of property or investing in it by July end. As per finance minister Nirmala Sitharaman’s announcement of March 24, the fiscal has been extended to June 30 offering some relief to property holders with capital gain accounts.”

“With this 21-day lockdown business will come to a grinding halt triggering an economic slump which will require months to recover. Some people with no option to work from home will face a money crunch,” she added

Vasant Pillai, a Retail specialist and Suparna’s husband, had been seeking to rent out a property in Mumbai to a new tenant in April. “Our present tenant was supposed to leave the house by March-end. Now, I cannot go to Mumbai to close the deal, neither can he find some other accommodation in such trying times. We have decided to allow him an extended stay,” he said.

“This time around the demand for accommodation increases. I have properties in Pune and Powai as well. The situation has definitely hit choppy waters,” he added.

Financial advisors and bankers say it’s too early to opine on the impact on the economy but did express that the situation was dire with the Sensex declining at a rapid pace.

Realtor S Pirani said, “Societies are not allowing entry to outsiders. They are exercising caution and following the mandate of social-distancing and rightly so. It is just a business, our lives and safety of loved ones comes first.”

Most employers in the real estate business have granted their employees paid holiday so that they can stay safe and in quarantine along with their families.

“Clients have postponed meets and business is being conducted virtually. I closed shop on March 17. Financially, we have definitely been impacted,” said realtor Charu Bhatnagar.

Real estate advisor Khalid Memon said nothing concrete could be said about the impact felt by the realty sector until the first week of April, after the retraction of the lockdown. However, most businesses are positive that things would look up post the lockdown.

Source : Times of India.