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Understanding the Impact of Covid 19 on Real Estate Industry of Bengal

Posted by : Realtech nirman on | May 11,2020

The state of Bengal was on the road of rapidly becoming a better place with improved living standards and the quality of life of the people. West Bengal has come a long way from the days of yore. The state’s GDP growth also began to scale higher than the national average. On its part, the government of West Bengal is taking giant strides to make the business sentiment in the state more vibrant. The present leadership of the state was able to rise to a transformed ecosystem that encouraged a palpable growth in the technology sector in the state. However, the pace towards the dream goal of the state experienced a rattling crash with the outbreak of the most horrifying pandemic of human history, COVID-19.

The outbreak and its short term impact

The outbreak of COVID 19 has led to economic fallout in almost every developing and developed country of the world. Businesses other than essential items have witnessed a massive backdrop and may take several months to be back on track. The effects of Covid 19 on real estate and construction companies depend majorly upon the region and asset class. Some of the sub-sectors like developers and retailers are going to witness immediate impacts while other multifamily sub-sectors like Manufactured Housing Communities (MHC) will likely face lesser impact. The sub-sectors related to office and industry are directly proportional to the working spaces and respective supply chains. It seems the short run impact would be definitely reflected in the transactional volume. But, tax reliefs by the government is definitely a saviour in this global crisis. 

Potential long-term impact seems positive

Before Covid 19, real estate companies had many strong factors like availability of capital for investments, renting activities and strong ratio of a company's loan capital (debt) to the value of its ordinary shares (equity). It's showtime for the soldiers of real estate companies, they need to deliver results and speedy economic recovery with available capital and opportunities. Liquidity of cash is another important factor in determining the impact on owners and occupiers. Owners who had leased their property for longer periods may see less or no impact at all. 

Immediate steps to be taken

The definition of a leader is justified by the way he or she deals with a crisis. Here, a three dimensional strategy is required - understand the intensity of the crisis, thrive towards the larger goal and march triumphantly into the normal situation. The priorities should be safety and wellbeing of people and tenants, fulfilling the short-term liquidity needs and considering the shortcomings of working remotely.