Equities, Gold Recover, Housing Gets Lucrative Again

• The equities market yielded to the pandemic during the 1st phase and crashed 29% between December 2019 and March 2020 at the onset of the lockdown.
• Gold appreciated in 1st wave of the pandemic, corrected by 4% between Dec 2020 & March 2021
• Housing prices across top 7 cities remained largely stable during the COVID-19 pandemic (March 2020 to June 2021)
• Post COVID-19, residential price appreciation has been 7% after a long phase of range-bound pricing.

Investments are aimed at maximum returns and do yield those when chosen wisely. While there are numerous options available today, gold, equities, and residential real estate have withstood the test of time.

Gold remained a favourite investment for Indian households due to its liquidity and investment size flexibility. Equities are highly volatile and easily impacted by social, political, and economic upheavals. Real estate, always considered a long-term investment, gives portfolio stability, and appreciates with time. The physical nature of the asset, unlike stocks, also ensures limited wealth erosion.

The Bear of the 1st Wave of Pandemic

As the COVID-19 pandemic beset the world towards the end of 2019, global stock markets buckled and crumbled under unprecedented business uncertainties. India, an integral part of the global economy, also saw rough times – the BSE Sensex declined sharply by 29% between December 2019 and March 2020.

Gold, considered a ‘safe haven’ investment in time of turbulence, went northward and appreciated by 4%. Residential real estate prices in India remained stable as there were uncertainties about the execution, development, and sales of the projects. All sectors, including real estate, were challenged on how to navigate the tempest.

The Lethal 2nd Wave (April 2021 – June 2021)

The 2nd wave was more toxic in India, creating an acute healthcare crisis that claimed many lives and led to the re-enforcement of lockdowns. However, all asset classes stayed steady on the back of business continuity learnings from the 1st wave.

The stock markets exhibited resilience and investors again became active as many scrips were available at attractive valuations. During this period, the Sensex regained a growth trajectory after a minor correction of 1% in April 2021 compared to the previous month. Gold, though lower than the previous peak, appreciated again, while residential real estate remained stable.

The Post Pandemic Recovery (September 2020 till date)

The Sensex has recorded the highest appreciation in value and volume since the pandemic receded. The 3rd wave early this year caused a minor aberration and was short-lived. Gold continued regaining lost ground and would have remained in a stronger position had it not been for the global economic turmoil, geopolitical tensions, and supply chain issues.

Prashant Thakur, Sr. Director & Head – Research, ANAROCK Group, says, “In all this turmoil, residential real estate has exhibited exceptional resilience and is now on a growth path. The weighted average price across the top seven cities has appreciated. While price is a function of supply and demand, the favourable change of sales exceeding supply continued even during the pandemic. Analysis shows that the available housing inventory is on a steady decline.”

Performance Over Pre-Pandemic Levels

Source: ANAROCK Research. Data for the top 7 cities of India only.

Source: ANAROCK Research

(Prices are for BSP on SBUA. Data for the top 7 cities of India only)

Source: Compiled by ANAROCK Research

All assets have exceeded their pre-pandemic levels. Compared to the September 2019 levels, the BSE Sensex has recorded an appreciation of 52%, gold prices have increased by 34%, and residential real estate by 9%. These readings indicate that the worst impact of the pandemic is behind us. Economic growth, despite global uncertainties and the headwind of rising inflation, is likely to be robust.

“The COVID-19 pandemic reaffirmed the necessity of owning homes, since it provides more than mere accommodation – it also gives security in times of generalized financial instability,” says Prashant Thakur. “Gold and stocks, on the other hand, are volatile and subject to market risks.”

Currently, real estate activities are in full swing and both demand and supply are increasing rapidly. As residential launches increased by 76% and sales by 61% in H1 2022 compared to the pre-pandemic levels of H2 2019, housing is all set to witness further traction during the festive season, leading to further price appreciation.

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