Doomsayers have been painting a gloomy global outlook for most sectors in the past few weeks. But if you study the trends carefully and read between the lines, there's a silver lining lurking among the bleakest of the dark clouds on the horizon. Real estate all over the planet may be in a slump, but if you are prudent, it might still make sense to book the house in India you had been planning to for a long time.

What's happening in India?

India has been hit too, in tandem with the rest of the world. According to media reports, current estimates reveal a substantial drop in demand and supply across various real estate segments in 2020. Housing sales, for instance, could witness a 25-35% yearly drop in 2020 against the preceding year. Residential sales in 2019 stood at approx. 2.61 lakh units across top 7 cities and may now fall between 1.70 lakh and 1.96 lakh units. Likewise, new launches may also witness a 25-30% decline during the same period – from 2.37 lakh units in 2019 to anywhere between 1.66 lakh and 1.78 lakh units, says a report in the Financial Express.

The nationwide lockdown has completely halted construction activity – project delays could run into several months for well-funded projects, and a couple of years for others. Nearly 4.66 lakh units across the top 7 cities, earlier slated for completion in 2020, now face a high risk of delays.

Construction activities have come to a grinding halt as allied businesses such as steel, heavy machinery and other raw materials are heavily dependent on Chinese import.

The brighter side

From an investor's perspective, however, there's a brighter side to the gloomy outlook in India. Gold is at its record high and the stock market is crashing since the announcement of coronavirus as a global pandemic in March this year. For NRI investors looking to make a shift in investment, real estate can be one sector which can still create an alternate sound investment opportunity.

Developers, on their part, have been quick to adapt as well. Many have launched virtual reality and augmented reality solutions through which customers can log in to websites and see how the under-construction projects look like. Global property consultant CBRE launched a digital platform in India in April for listing of commercial properties in these times.

Responding to the changing situation, realty stocks are also showing mixed responses. Major players such as DLF, Prestige, Mahindra, Kolte Patil have registered a decent growth. However, Sobha Developers have registered good growth in the month, especially since they launched an online portal to clear the unsold inventory in April, say media reports.

On a different note, the massive reduction in the Repo rate (75 bps), Reverse Repo rate and CRR by the Reserve Bank of India (RBI) will lower the cost of borrowing for the real estate sector and will help the projects delayed due to want of funds. The deferment of home loan Equated Monthly Instalments (EMIs) will help the borrowers and business community utilise funds for the priority activities. The deferment of dates for key filings such as ITR, composition scheme, and Aadhar-Pan linkage will ease the burden of compliances, experts point out.

Another good news is that while new project launches are being staggered by developers, the available ready-to-move-in inventory continues to see interest during the ongoing lockdown period.

On the side of steel and allied components for which the Indian real estate industry is heavily dependent on imports from China, the coronavirus outbreak might be an opportunity for Indian businesses to increase the production capacity and give a thrust to the “Make in India” campaign. Towards this, the Indian Government is encouraging the steel companies to increase production capacity and grab a larger market share. The Ministry of Steel, Government of India, is preparing a strategy paper for producing 10 million tons of special steel at the cost of Rs 50,000 crore with 50,000 employment potential in the present scenario.

With Chinese supply lines are skewed, this could spell an opportunity to explore other markets to procure raw material and decrease dependence on Chinese imports and a blessing in disguise for the indigenous production of imported goods such as metal panels, steel bars, heavy machinery and coke.

Why buy in India now?

For NRIs who have been looking to invest in Indian real estate for a while, this could perhaps be the right time to take the plunge, provided due diligence is done.

Investors will need to assess if they are in a position to service the financial obligations that come with buying property – the down payment, the EMIs, operating costs such as maintenance and insurance and property taxes - without dipping into savings.

With the rupee depreciating close to 10 percent to a dollar, and the resultant discounting on the property due to sheer rupee depreciation, NRIs could find this a worthwhile time to book their next house in India online.

Anarock’s consumer survey for H2 2019 had indicated that for 68 percent NRI participants, real estate was considered the best asset class for investment, followed by 16 percent favouring stock markets. The currency depreciation, coupled with record low prices and organic impending growth of Indian real estate markets could well be the factors that can help NRIs make up their minds about putting their money in Indian real estate.

Many developers have already rolled out ideas in the field of online marketing, including interactive e-brochures and curated content for social media, making it easier for non-resident Indians to check out different properties before finalising.

Factors to consider

A few simple checks to ensure that you are finalising the right property would help in times when you are physically unable to carry out the checks.

Before starting serious negotiations with a real estate seller, you should do a background check of the builder/seller, the prevailing market conditions, the pros and cons of one's own budget and the qualities and condition of the property one intends to buy.

It would also help to inquire about the unsold inventories stuck with the builder, check the RERA website for details on project approvals and timelines, study if the listed prices on the builder's website and other real estate websites have decreased over time, and by how much. This will help in establishing if the builder is doing a distress sale or is ready to wait for the right buyer to pay the price that he expects.

Buying from branded and reputed developers, paying a token amount and blocking a unit till such time as you can visit the property and finalise the deal would make better sense too.

Historically, in the real estate sector, returns have been highest when purchases are made prudently in times of distress or fear. As an NRI, if you have been considering and looking at Indian residential properties for a while, this could just be your time to strike gold!