Construction Industry Growth Factors Post Pandemic

 

During the pandemic, both the construction industry growth and the real estate sector in India experienced major setbacks. Of course, every other sector of the global economy did as well. The real estate and construction sector, have recovered more forcefully then most.

A report on 99 Acres.com claims that since the pandemic started, India's construction industry growth has lost close to INR 1 billion. There was a shortage of liquidity for many real estate developers and construction sector.

Residential sales in India's top seven cities fell from 4 lakh units in 2019–20 to 2.8 lakh units in 2020–21 due to reasons including credit scarcity. In the first half of FY21, the entire construction sector and residential demand decreased by more than 40%.

The construction industry growth is slowly making a comeback. Not that COVID-19 gone or that the globe is totally free of its grip. On the other hand, the industry has learnt from the first and second waves and is now better equipped to fight the virus while carrying on with daily operations.

Housing sales in India have increased by 71 percent, hitting 90 percent of pre-COVID-19 2019 levels, and are one of the most key criteria of the country's real estate recovery and construction industry growth. According to a Money Life.in report, the Mumbai Metropolitan Region (MMR) took the lead in this race by selling a robust 76,400 units.

While sales in Hyderabad increased, jumping from 8,560 units in 2020 to 25,410 units in 2021, a huge 197 percent! Pune has also established itself as a strong competitor, with sales rising by 53% from 23,460 units in 2020 to 35,980 units in 2021.

But what is it that has pushed this growth during or after the pandemic that forced every industry and nearly every person in the globe to reach a low point in their finances? Let's examine a few causes behind the resurgence of the construction industry growth.

Five Factors Contributing to the Post-Pandemic Construction Industry Growth in India's Real Estate Sector

1. Stamp Duty Reduction (Maharashtra Specific)

Residential sales in Maharashtra were able to withstand the pandemic wave that hit the construction industry growth in 2020, when it was at its highest point. We are glad to the Maharashtra government for lowering the stamp duty from 5% to 2% and providing assistance to the state's struggling real estate and construction sectors.

 

Many statewide buyers on the fence who had to deal with additional issues like EMIs, registration fees, etc. Found the drop in the percentage to be a big comfort. The three percent decrease lowered costs and inspired consumers to rush to developers and construction sector to reserve homes and take advantage of the service. It not only raised the sales but also helped the sector in keeping a particular level of sales.

2. Reduced Loan Interest

This is yet another element that, together with the nation's construction industry growth, saved the real estate and construction sector. The repo rate was lowered by the RBI to 4%. As a result, banks lowered their interest rates to as low as 7% and occasionally even less. If you quickly compare the house loan interest rates offered by different banks today, you'll discover that the majority of them are offering rates below 7%, such as 6.5%, 6.9%, etc., depending on the applicants and their applications.

For the residential real estate and construction sector in India, the present interest rate is seen as a 15-year low. For those who wanted to own their homes and seek returns on their investments, it encouraged many to apply for home loans, helped raise sales for many developers, and helped the construction sector thrive.

3. Customized Offers from Developers

Builders and the construction sector, which were on the receiving end of efforts to revive India's real estate sector by the government and banks, were equally active in their fight for survival. To sell their units, many developers from big cities like Pune, Mumbai, Bangalore, Hyderabad, Chennai, and Delhi developed custom payment plans like 20:80, waivers on registration fees, GST, stamp duty, cash back offers, etc. Many were successful in selling a sizable portion of their stock.

4. Stronger Emergence of the Best Market Players

The pandemic also led to real estate industry merger and construction industry growth. Only the best and most totally professional builders with good financial standing have so far managed to endure the hard times. As a result, prospects were introduced to workers who were highly committed. They received first-rate housing options and first-rate customer service. Real estate sales were somewhat aided by the stronger rise to prominence of the best and top market participants within the industry.

5. The Need to Invest in Something Substantial

One of the few industries that have a consistent yet significant appreciation each year is the construction sector. A Deloitte analysis that was included in a Business Standard story claims that India's real estate and construction industry growth are headed for some prosperous times. In addition, having something tangible by your side has also contributed to the real estate and construction sector better recovery. This is especially true when dealing with uncertainties like COVID-19.

 

Even though the future will always be unclear, the current trends and projections look positive and upbeat about the consistent construction industry growth in the coming years. These elements make India's real estate and construction sector, particularly the residential sector, one of the greatest places to invest.

 

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