News: Covid crisis could further delay the completion of your dream home, finds study -02-04-2020
Updated: Apr 02, 2020
Even as the realty sector was already grappling with issues like poor demand and liquidity crisis resulting in delays in project completion, the coronavirus pandemic has made sure that the recovery in the sector isn't around the corner.
The ongoing coronavirus crisis has already started showing its impact on the economy with the manufacturing PMI coming in at a four-month low for March. The economic growth which was already in the throes of a slowdown, is likely to shrink further in the fourth quarter of the current fiscal as the coronavirus deals a massive blow to almost all sectors ranging from construction to hospitality to financials.
The real estate sector is the second largest employment generator in the country after agriculture. Even as the sector was already grappling with issues like poor demand and liquidity crisis resulting in delays in project completion, the coronavirus pandemic has made sure that the recovery in the sector isn't around the corner.
According to Anarock Consultants, the housing sales will come down by 25-35 per cent in 2020. Also, projects that were scheduled to be completed by 2020-end face high risk of delays.
Since many construction labourers are migrants, the report observes that the sector may face a major challenge in terms of labour shortage after the lockdown is over.
"Construction activities are set to be delayed with many developers and contractors facing shortage of labour and a more pronounced liquidity crisis," the report observed.
"Residential sales in 2019 stood at approx. 2.61 lakh units across top 7 cities and may now fall between 1.70 lakh -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 -1.78 lakh units.sales in 2019 stood at approx. 2.61 lakh units across top 7 cities and may now fall between 1.70 lakh -1.96 lakh units," the report highlighted.
Even the affordable housing segment will bear the brunt of Covid-19. Fears of job loss and salary cut will prevent the target group from buying affordable properties and this could mean an estimated rise of 1-2% in unsold stock within this segment in 2020, the report pointed out.
Offices spaces will not be immune either with absorption to fall anywhere between 17-34% as occupiers will reassess their position once the crisis gets over.
Since the US companies comprise 40-50% of office space leasing in India and considering the impact of Covid-19 on the American economy, it is likely that the interest will be subdued in 2020.
