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How will Coronavirus COVID-19 outbreak effect or impact Real Estate in India

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How will Coronavirus COVID-19 outbreak effect or impact Real Estate in India

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  • How will Coronavirus COVID-19 outbreak effect or impact Real Estate in India

    Do you think Coronavirus (COVID-19) outbreak will effect or impact Real Estate in India?

    Obviously like every other industry like IT, Retail, Manufacturing is going to get huge negative impact of this CoronaViurs outbreak. If I talk about Real Estate, surely Under Construction projects will be halt and many of them will be delayed.

    Let's discuss more of it, how it will effect more on Residential property, Commercial, Under construction, Unsold delivered, Plots rates, Upcoming Smart Cities and Resale Properties in Delhi NCR.
    Last edited June 4 2020, 07:11 PM.
  • #2

    #2

    Re : How will Coronavirus COVID-19 outbreak effect or impact Real Estate in India

    Originally posted by anujwadhwa View Post
    Do you think Coronavirus (COVID-19) outbreak will effect or impact Real Estate in India?

    Obviously like every other industry like IT, Retail, Manufacturing is going to get huge negative impact of this CoronaViurs outbreak. If I talk about Real Estate, surely Under Construction projects will be halt and many of them will be delayed.

    Let's discuss more of it, how it will effect more on Residential property, Commercial, Under construction, Unsold delivered, Plots rates, Upcoming Smart Cities and Resale Properties in Delhi NCR.
    Please note that this thread has been moved to the appropriate sub forum.
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    • #3

      #3

      Re : How will Coronavirus COVID-19 outbreak effect or impact Real Estate in India

      Hi,

      This Corona virus thing looks a planted news to me(I can say a lot of things around it but don't want to .. so cutting the long story short .. its a mini global slow down planned by certain governments[planned collectively]) .. in the next 10 days .. what I anticipate is that positive news would come out and things fall back in place .. that's my estimation.

      There's no such thing like any virus or something .. and more specifically : No .. this will not impact RE .. the bad RE fundamentals are already in open and can be easily seen(any1 who spends little time exploring the RE sector could easily estimate this) ..

      Cheers
      Rahul

      Comment


      • anujwadhwa
        anujwadhwa commented
        Editing a comment
        Why and what makes you think it's planted??

        Are you kidding me how can Central Government can plant this?

        You mean in next 10 days Virus will be disappeared and things will be normal?

        HahaHaha are you alright?

      • rahk2012
        rahk2012 commented
        Editing a comment
        anujwadhwa : I said certain governments [not central government].. plz read carefully before commenting ..

        certain governments include : Us / china /India / certain European countries also involved

        PS: there are a lot of ppl like you with high gullibility factor ..

      • anujwadhwa
        anujwadhwa commented
        Editing a comment
        Brother you are just not making any sense...
    • #4

      #4

      Re : How will Coronavirus COVID-19 outbreak effect or impact Real Estate in India

      [h1]Realtors see 9-month construction delay over corona Read more at: http://timesofindia.indiatimes.com/articleshow/74819763.cms?utm_source=contentofinterest&utm_medi um=text&utm_campaign=cppst

      Read more at:
      http://timesofindia.indiatimes.com/articleshow/74819763.cms?utm_source=contentofinterest&utm_medi um=text&utm_campaign=cppst[/h1]
      Last edited March 26 2020, 08:06 PM.

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      • #5

        #5

        Re : How will Coronavirus COVID-19 outbreak effect or impact Real Estate in India

        One month's lockdown can erode 8-10% of construction firms' Q4 revenue: Report

        According to ratings agency India Ratings, fourth quarter of every fiscal typically accounts for 30-35 per cent of the annual revenue of construction companies, of which a month's lockdown can erode 8-10 per cent.


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        • #6

          #6

          Re : How will Coronavirus COVID-19 outbreak effect or impact Real Estate in India

          Covid-19: Over 15 lakh units under-construction may come to a halt

          NCR has 27% or over 4.25 lakh units in various stages of construction. All these units were launched between 2013 till 2019-end.
          NEW DELHI: More than 15.62 lakh units (launched between 2013 till 2019) are under construction in the top seven cities, according to ANAROCK Property Consultants.

          Prashant Thakur, director & head (Research), ANAROCK Property Consultants says, “Another fallout of the lockdown is that many key markets will have almost zero construction activity at the project sites. This will further strain several developers’ financial health."

          Of this, Mumbai Metropolitan Region (MMR) & National Capital Region (NCR) together comprise 57% or approximately 8.90 lakh units. MMR currently has the highest under-construction stock with nearly 4.65 lakh units – 30% of the overall under-construction stock.

          NCR is close behind with 27% or over 4.25 lakh units in various stages of construction. All these units were launched between 2013 till 2019-end.

          Mohit Goel, CEO, Omaxe said, "Both real estate sales and recoveries have been halted as a result of the lockdown arising out of the coronavirus pandemic. As for real estate prices, there will be no change as transactions are not taking place. The prices will resume at the level it has halted."

          Pune has nearly 2.62 lakh units under construction, followed by Bengaluru with 2.02 lakh units & Kolkata with approx. 90,670 units

          Chennai & Hyderabad together comprise just 8% (approx. 1.18 lakh units) share of overall under-construction units.












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          • #7

            #7

            Re : How will Coronavirus COVID-19 outbreak effect or impact Real Estate in India

            Covid-19 may worsen woes of residential real estate sector: ICRA

            The three-month moratorium on term loan instalments announced by the RBI today also provides comfort on overall developer cash flows during this period.
            NEW DELHI: ICRA, a rating agency, expects the net cash flows of residential developers to witness some decline on account of the coronavirus outbreak

            “A prolonged outbreak may result in recessionary dynamics which would have a deeper impact on project cash flows and execution abilities. Such an impact, combined with the ongoing credit squeeze and existing inventory overhang in the sector, would likely result in significant credit pressures going forward”, said Mahi Agarwal, assistant vice president and associate head at ICRA.

            However, reduced construction outflows, attributable to a slowdown in project execution activity, are expected to limit the overall decline in net cash flows, at least in the case of a short-term disruption.

            The three-month moratorium on term loan instalments announced by the RBI today also provides comfort on overall developer cash flows during this period.

            A longer outbreak may significantly impact developers' cash flows and project execution abilities, giving rise to wider credit negative implications. Well-diversified developers with strong balance sheets and adequate liquidity are expected to be better-positioned to manage the risks arising out of this event, including reductions in collections and disruptions in project execution.

            Agarwal said, “Demand risks for the housing sector are likely to increase, given the rising apprehensions on overall economic growth and contagion related fears leading to reduced walk-ins, thus resulting in some decline in new sales and the associated collections.

            Committed collections receivable from already booked sales may also get impacted to some extent, given that mile-stone based payments may get deferred and some buyers may delay payments on account of economic uncertainties arising from the looming possibility of job cuts and pay cuts as the crisis extends.

            Developer ability to remotely issue and follow up on demand notices will also have a significant bearing on collection efficiency levels.”

            Cost savings are also likely on account of the prevailing decline in commodity prices, thus leading to some trimming in outflows.

            RERA guidelines also provide for a one-year extension in project execution timelines, in case of events beyond promoter control. Thus, regulatory risks are also reduced in the case of a short-term disruption.













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            • #8

              #8

              Re : How will Coronavirus COVID-19 outbreak effect or impact Real Estate in India

              Residential demand could fall by 7-10% in FY20: Ind-Ra

              Overall residential demand would fall by 7%-10% in FY20 and 10%-15% year-on-year in FY21, across the top six cities in the country, said Ind-Ra.
              NEW DELHI: India Ratings and Research believes that residential real estate sector, save the Grade-I players, is likely to see increased cash flow gaps and liquidity pressure in the next two to three months, given the diminished sales due to the COVID-19 led three-week lockdown.

              The company believes that Grade-I players would be able to tide over the next few months, given their financial flexibility, on-book liquidity and access to capital/project funding lines.

              The revenue and liquidity challenges for residential sector may rise with the length of the outbreak and the severity of the after effects of the pandemic.

              Overall residential demand would fall by 7-10% in FY20 and 10-15% year-on-year in FY21, across the top six cities in the country, in the event the coronavirus-led lockdowns and/or other social distancing measures last up to next two-three months.

              However, the quarter-to-sell inventory may remain stable at 14-15 quarters in FY20 and FY21, supported by limited launches and/or deferment of launches due to the lockdown-led construction halt as well as exacerbated funding challenges for the sector.

              With limited sales in the next few months, cash flow gaps could widen and debt servicing could be a challenge, especially for players with negligible new project funding lines/overdraft limits and/or on-balance sheet liquidity and/or support from a stronger rated parent with diversified operations.

              The affordable segment, with ticket size up to Rs 50 lakh, constituted approximately 35% of the total sales by value during nine months of FY20. However, this segment witnessed the sharpest decline in the sales volume in nine months of FY20 of around 10%, corroborating with the slowing economy and manufacturing pace.

              Ind-Ra believes recovery of the affordable housing segment would take longer than that in the mid ticket or higher ticket segments. However, any government policy intervention and relief measures, if announced for the affordable segment, then the recovery could be more transient.










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              • #9

                #9

                Re : How will Coronavirus COVID-19 outbreak effect or impact Real Estate in India

                Covid-19 impact: Residential realty sector stares at major liquidity crunch

                The segment, except for affordable housing, was already under pressure, generating negative cash flows from operations that resulted in higher leverage and increased refinancing risks for the builders.
                MUMBAI: Sluggish sales over the next few months due to the Covid-19 pandemic are expected to pose major liquidity and financing challenges for thousands of builders focused on the residential real estate sector across the country.

                The segment, except for affordable housing, was already under pressure, generating negative cash flows from operations that resulted in higher leverage and increased refinancing risks for the builders.

                Over the last two years, smaller developers had resorted to striking joint ventures and alliances with bigger peers to overcome this challenge, but now even the large developers are reviewing their growth strategies given the grim economic outlook.

                “The bigger worry for the already weak and credit starved residential real estate sector is that it is likely to see increased cash flow gaps and liquidity pressure during the course of the year, as new sales and residential demand may take a further hit on account of the economic fallout from the pandemic,” said Harsha Sodhani, associate director at India Ratings and Research.

                According to Sodhani, new sales and collections from already sold units could also slow down as housing finance companies as well as banks become more selective and tighten their home loan disbursements criteria.

                Refinancing risk for the developers could increase as lender’s risk aversion to the sector increases.

                Due to widening cash flow gaps, smaller developers will struggle to service debt and interest payments and that may prove to be an existential crisis for those who do not have new project funding lines, balance sheet liquidity or support from diversified operations.

                Industry experts are of view that the change in business environment, led by scanty demand pattern and financing squeeze, would result in new partnerships and different power equations.











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                • #10

                  #10

                  Re : How will Coronavirus COVID-19 outbreak effect or impact Real Estate in India

                  Real estate, steel, others set to be worst hit by coronavirus

                  While telecom, fertilizer, FMCG, pharmaceuticals and food industry will see a low impact and have higher resilience according to a report by ratings agency Crisil.

                  MUMBAI: Real estate, airlines, auto dealers, gems & jewellery and steel are the sectors that are expected to be the worst hit and have the least resilience in the ongoing Covid-19 crisis. While telecom, fertilizer, FMCG, pharmaceuticals and food industry will see a low impact and have higher resilience according to a report by ratings agency Crisil.

                  Meanwhile, ratings agency Moody’s revised the outlook on India’s banking system to negative along with 12 others in the Asia-Pacific region, citing coronavirus related disruption. “A sharp decline in economic activity and a rise in unemployment will lead to a deterioration of household and corporate finances, which in turn will result in increases in delinquencies,” Moody’s said. Moody’s affiliate ICRA said that asset quality stress for lenders is likely to reflect with a lag of 1-2 quarters after the removal of the moratorium.

                  According to Crisil, the impact of the pandemic would be determined by the intensity and duration of lockdown, duration of the epidemic and the fiscal & monetary steps that would be taken in response. “It is a black swan event and puts us in a situation which cannot be modelled,” said Gurpreet Chhatwal, president of Crisil Ratings. The agency had recently cut its growth forecast to 3.5% and now believes that there are downside risks to even this number.


                  Around 4% of debt rated by Crisil is in sectors that are the least resilient category, mentioned earlier, and these are likely to see an adverse impact on credit quality. The sectors are expected to be weak performers because of the discretionary nature of goods and services and weak balance sheets. Of the 35 sectors that a Crisil study has looked at, 27 will face medium to a high level of disruption in the short erm.

                  “Nevertheless, there are a sizeable number of sectors, which we believe are displaying a high degree of resilience and are expected to bounce back over the next six to nine months. Nearly 44% of debt is residing in sectors that are expected to be in the higher resilience category. These include pharma, fertilizer, oil refineries, power & gas distribution, and transmission,” said Somasekhar Vemuri, senior director at Crisil Ratings.

                  On the lending side, home loans are seen to be the most resilient in the current environment. “The majority of the borrowers are salaried and we are not yet seeing any job cuts to any material manner. The gold loan segment in the near term is likely to be impacted in terms of collections coming to a standstill, but we expect it will recover quickly,” said Vemuri.












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