We are unreasonably Bullish on the Indian Residential Real Estate sector, especially after the outbreak of COVID-19. We were too influenced by the practices in the West - to live out on a rented house and not slog for your entire life to pay for the property which yields no return.
COVID-19 has technically changed the game.
With almost every company across the globe planning to shift at least 25% of its workforce permanently to Work-from-Home capacities, the demand for the Residential House is going to surge.
In every individual’s P&L, Rent accounts for the largest line item. With a pay-cut across the board, its difficult to manage such heavy items. Psychologically, it is more taxing than the Interest Expense because at least your subconscious knows that there is no addition in my Asset - No legacy to be carried forward.
Government however comes out with some form of Moratorium. But it is really difficult to seek one from your landlord.
I expect the residential Real Estate prices to crash 10-15% over the next 12-18 months, post which we break the 7-8 year streak of under-performance.
Investment Perspective - look out for buyout opportunities in Direct Real Estate or Invest in Housing Finance Companies, Banks with focus on Retail Mortgages (Housing Loans / Loans Against Properties) and Construction companies.
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