COVID-19: Real estate comes to standstill

Virus outbreak to impact construction activity, transactions and rentals across all asset classes over the next few months

By Author  |  Published: 28th Mar 2020  12:02 amUpdated: 27th Mar 2020  10:33 pm
Real estate
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Hyderabad: Novel coronavirus is impacting the real estate, the sector that contributes to 10 per cent of the GDP. The virus outbreak is likely to impact the construction activity, transactions and rentals across all asset classes over the next few months.

Explaining the scenario, Satish Magar, president, Confederation of Real Estate Developers’ Association of India (Credai) told Telangana Today, “Construction activity has been hit in the last two weeks across the country.

Developers are taking care of the construction workers. The lockdown situation has significantly impacted real estate, bringing everything to a standstill. We have sought the government to provide a six-month moratorium and the government could provide a three-month moratorium. There is absolute uncertainty on how long the health crisis will continue. Assuming normalcy returns in May, it will take at least three months to resume the construction activity.”

As anticipated, the Covid-19 pandemic has considerable consequence on the Indian housing sector. Residential sales saw a 42 per cent year-on-year drop in the first quarter of 2020. Residential sales in the top seven cities stood at 45,200 units, against 78,510 units a year ago. Meanwhile, new launches too fell by 42 per cent annually from 70,480 units in Q1 2019 to about 41,200 in Q1 2020, according to Anarock’s research.

Anuj Puri, chairman, Anarock Property Consultants says, “Given the ongoing global healthcare calamity, it’s no surprise that housing sales and new project launches across India’s top seven cities decreased both on yearly and quarterly basis. As expected, monthly data trends reveal that March, the month when most advisories and lockdown were imposed saw a steep decline in both new launches and housing sales against the preceding two months.”

The effect of coronavirus is expected to have a differential impact on the commercial real estate sector. The retail commercial space comprising mainly of mall operators will be impacted in a major way due to its closure across the country whereas in the office space segment, the repercussions are likely to be marginal.

Anshuman Magazine, chairman & CEO, India, South East Asia, Middle East & Africa, CBRE, said, “Office leasing demand as of now has been unaffected due to a sustained appetite among the US and EU based corporates for India as an outsourcing destination. However, the global impact could potentially result in delayed decision-making, curtailed capital expenditures, thereby slowing down portfolio decisions in the short term.”

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