The coronavirus outbreak has not only impacted human lives but also affected businesses across the globe. Even, the Indian real estate industry has been affected as new launches have been put on hold. In a bid to understand the impact of the lockdown on the realty sector, we spoke to a few names from the industry to understand how it will affect the sector and if there are solutions to overcome the losses once the lockdown lifts.
While talking to Free Press Journal, Dr Niranjan Hiranandani, President of ASSOCHAM and NAREDCO, said, “The COVID-19 pandemic is impacting the economy in general and real estate in particular, and there have been absolutely no reported price variations from my fellow member real estate developers at NAREDCO.”
Hiranandani also stated real estate is not witnessing any reported change in price points, given that the entire nation is under a lockdown. “Assuming that post lockdown, we will go back to normal, the 21-day break in business and commercial activities will have created a gap, filling which will take time, and how long is beyond anyone’s guess,” he added.
Seconding Dr Hiranandani, Yogesh Jaiswal, Director Le Calssique Realty Pvt. Ltd. also said the real estate sector has been badly hit by the pandemic. “The Indian real estate industry has been badly hit by the pandemic and no respite in the near future immediately. But with the threat of infection through affecting human lives, the real estate sector is already experience a major dip in property visits and a reduced buyer interests,” Jaiswal said.
A report released by Anarock Property Consultants states India's residential real estate has been severely hit by nationwide lockdown and sales could fall by 35% across seven major cities during the 2020 calendar year following the outbreak of COVID-19 in the country. The report also suggests that the pandemic would also adversely impact commercial (office and retail) real estate segment, which has been performing well for the past few years despite slowdown in the overall property market.
“We may see prices falling by min 5% to 10% on the total consideration value. Rentals doesn’t look like dipping for commercial as of now,” Jaiswal added.
With sales figures dipping, Jaiswal further explained how new project launches make no sense. “There is no sense of having any new launches at this point in time till such time digital launches are figured out as an alternative.”
But, Hiranandani disagreed with the projections and called it as “guesstimates”. “Projections, which we are seeing mentioned in media reports at present are guesstimates, and given that at present we are through with just one third of the lockdown, twice of that yet to go. The 21-day lockdown translates into no work at sites, no walk-ins so consequently, no sales – and logically, no change in price-points,” the President of ASSOCHAM and NAREDCO said.
Talking about how developers will hold on to prices for sales, Yogesh Jaiswal said, “Sales figures have dipped sharply and the decline will continue for the next 2-3 months. The developers will still hold on to prices and rather offer schemes and sops for sales, which they know will be temporary in nature and will not impact their brand value. But eventually if the situation worsen or government lockdown prolongs beyond 45-60 days, then chances are extremely high that the realtors will soon be cutting through their prices. Cost of holding up will be too high for most of the developers to sustain.”
When asked if the real estate sector has come up with plans of tackling losses incurred due COVID-19 outbreak, Satish Magar, President, CREDAI National said, "Till now we don't know anything yet. Only once this lockdown gets over and when life returns to normalcy can we sit and strategise how to tackle the situation. It’s not only the real estate sector which is suffering, all sectors are, but at the end people need houses to stay.
He further added that the present priorities for developers is to take care of customers whom they have to deliver houses and look after their daily on-site labourers. "Today we are only focusing on how to take care of labourers. With help from government we are taking care of those who are still at work site, providing them with food and shelter," he added.
On the other hand, CREDAI, apex body of Private Real Estate Developers Associations, in a statement said that with realty sector not receiving payments from customers, there is no way it can honour its obligations of interest and principal or meet the deadline to the customer as when it comes to delivery. Further the statement said that interest rates on all real estate project loans are re-fixed at the repo rate on which banks borrow from RBI. Principal repayments for real estate projects falling due over the next three months be put off and recovered in instalments over the ensuing 12 months. CREDAI also assured that that the relief will be passed on in it’s entirely to the customers.
