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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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  • #11

    #11

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

    COVID-19 defers several large realty deals

    Several realty developers with limited access to liquidity and customer advances had already entered into joint ventures and development management agreements with relatively deep-pocket partners.
    MUMBAI | BENGALURU: The Covid-19 crisis has forced real estate dealmakers to stall multiple transactions in advanced stages of negotiation and was expected to be closed by the end of the financial year in March.

    Before the Covid-19 outbreak, the real estate sector was set for a phase of consolidation and the institutional investors were actively scouting for opportunities.

    Several realty developers with limited access to liquidity and customer advances had already entered into joint ventures and development management agreements with relatively deep-pocket partners.

    "Everything is on wait and watch mode. Almost all key decision-makers have hit the pause button on transactions. We can take a call on deals that originated even before the outbreak of Coronavirus, only after the scenario stabilises. It's not only about travel restrictions but also to do with the impact of current developments on economic growth projections," said Ambar Maheshwari, CEO, private equity, Indiabulls Asset Management Company.

    Maheshwari had two live deals at advanced stages of discussion before the Covid-19 mayhem started and were expected to be concluded by March end.
    Apart from Indiabulls Asset Management Company’s private equity fund, some other funds and companies actively discussing deals include Tata Realty & Infrastructure, Mapletree Investments and Prestige Estates.

    Transaction advisors and dealmakers are of the view that these transactions would be picked up only in the second half of the year , provided the situation stabilises over the next quarter or two.

    But the valuations will be hit and assets will be revalued in the backdrop of revised economic growth outlook.

    “It is inevitable for those private equity firms who believe in medium to long term, to find the valuation even more attractive…I expect second half of the year to witness gradual flow back to markets,” said Sanjay Dutt, MD & CEO, Tata Realty & Infrastructure.

    Indian real estate attracted more than $5 billion private equity inflows in 2019. Of this, over 66% or $3.3 billion, was infused in the commercial real estate. Meanwhile, both the retail and residential segments also saw an uptick in investments in 2019 against the preceding year, ANAROCK data showed.

    “The number of transactions will be one in 10 where the commercial agreement has been signed. Everyone is looking inward. Everything will depend on how the virus is contained in India and the US,” said Shobhit Agarwal, MD & CEO – ANAROCK Capital. “Currently US, followed by UAE, Canada and Singapore are the biggest investors in India.”

    According to an industry official, a deal worth Rs 2,500 crore for commercial business park and a 25-acre land worth Rs 800 crore in Bengaluru have been delayed due to the lockdown.

    “People who are sitting with cash would like to preserve it. There will be short term impact but that depends on how long this crisis continues,” said JLL India’s Executive MD Juggy Marwaha.

    The new obstacle, once overcome, would also likely increase the pace of consolidation in the sector. The outbreak of Covid-19 will result in pressuring several realty developers with incomplete, long-haul housing projects stuck due to legal or financial complications to handover them to established developers.










    https://realty.economictimes.indiati...deals/74981293
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    • GlobeSon
      GlobeSon commented
      Editing a comment
      What is interesting is in crisis times builders are ready to tie up with anybody, offer 18% interest in money market, or come up with subvention schemes, but will not reduce rates or offer deep discounts to customers.
  • #12

    #12

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

    Property Prices Are Headed For A Big Correction


    Smart Cities - Mumbai (Dhiraj Singh/Bloomberg via Getty Images) Snapshot

    Calendar 2020, even fiscal 2020-21, is likely to test the real estate market like no previous year, thanks to the Covid-19 pandemic that has brought almost all economic activity to a halt. When people are worrying about the availability of daily necessities and the possibility of losing jobs, the last thing on their minds will be the purchase of high-priced property.

    This is good news for some, bad news for others. For those who already own properties, resale values could fall. For those with EMIs to pay, banks may ask for higher monthly EMIs or more lump-sum prepayments to compensate for the drop in collateral values.

    For those who have invested in under-construction properties, there is the prospect of delays, and even RERA (the Real Estate Regulation Act) may not come to their rescue. Reason: regulators may well accept realtors’ pleas that the Covid situation is an extraordinary one, and delays in the handover of properties must be accepted.

    On the other hand, those who are yet to buy property may find that 2020-21 will provide a buying opportunity at much reduced prices. Quite obviously, buying ready property is the best option in the current scenario. Investment in new launches may be risky unless the realtor is really well-funded.

    Here’s what the experts are telling us right now.

    Pankaj Kapoor, chief executive officer of realty consultancy Liases Foras, has been quoted as saying that property prices will fall by at least 10-20 per cent across geographies, and land prices by as much as 30 per cent.

    Niranjan Hiranandani, one of the country’s biggest builders, has said that residential property sales are down by as much as 70-80 per cent due to the lockdown and the need for physical distancing. Consumer confidence is unlikely to return for some months now.

    Property consultant Anarock reckons that both new launches and residential property sales will be down by 25-35 per cent in the year ahead.

    Clearly, what we are likely to see in the coming quarters is a buyers’ market, where sellers will be keen to book or sell property with steep discounts.

    This is obviously a big crisis for the real estate sector and bankers, who will both see a sharp fall in profits or even losses, the former due to discounts and higher holding costs for unsold inventory, and the latter due to a sharp fall in property values. Banks will have to either provide for higher non-performing assets in the commercial and retail sector, or stretch repayment periods for retail borrowers. Or both.

    For existing buyers of under-construction property, the risk is greatest, as they would have already agreed to pre-Covid prices, which may not hold now. They face the prospect of delays in the handover of properties if their realtors are well-funded, or even losses, if builders are unable to complete projects at all.

    For realtors, there is now the additional probability that those who have already booked properties by paying nominal initial amounts will now opt out even at a small loss. This is because new property prices will fall, and so will second sale prices. Those may look more attractive than continuing with existing contracts.

    While some government help will surely be forthcoming for both realtors and buyers, a lot of the answers really lie within the sector itself. If they opt to take losses now, and get their 'investors' to also take haircuts, they can drop prices more sharply and revive the market faster. The market won’t revive if they want to hold on to list prices.

    The choice is between a sharp correction now, or a time correction of price where sales will stagnate or even fall for several years before stabilising.














    https://swarajyamag.com/economy/prop...-see-the-light
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    • GlobeSon
      GlobeSon commented
      Editing a comment
      For those who have recently booked property, the wisest thing would be to exit the property deal even at a loss. It makes no sense to go with a huge loan when economic uncertainty looms large, and property market crash is imminent.

    • GlobeSon
      GlobeSon commented
      Editing a comment
      Instead of cutting down unrealistic property prices, builders will start demanding sops from the government like reduction in stamp duty, VAT and relaxation in RERA compliance.
  • #13

    #13

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

    Covid Impact: Maharashtra stamp duty collections plummet 40%

    “This is largely because property registration offices were shut during the COVID19 lockdown,” said Sandeep Reddy, co-founder, Propstack - a real estate and financial data intelligence provider.


    https://www.indianrealestateforum.co...98#post2676998
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    • #14

      #14

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

      How are the construction workers being affected by COVID-19 and how are developers helping out the 8.5 million construction workers in the country?

      Comment


      • Malvish
        Malvish commented
        Editing a comment
        As per an estimation there are around 8.5 million construction workers in the country and hence during these trying times the centre has directed states to use the Rs 31,000-crore welfare fund for their aid.

      • anujwadhwa
        anujwadhwa commented
        Editing a comment
        I think may be more than 8.5 Million, 8.5 is registered figure.

      • GlobeSon
        GlobeSon commented
        Editing a comment
        Didn't you read about construction workers walking 400 kms back, with their families, to reach their hometowns?
        There are others from UP and Bihar who couldn't even make it back.
    • #15

      #15

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

      anujwadhwa that could be true. There must be more than the registered figures.
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      • #16

        #16

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

        GlobeSon That was a very desperate situation for the workers and their families. Walking away from a city they have been giving their best to in such a situation. No transportation, no food, no security and no assurance.
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        • GlobeSon
          GlobeSon commented
          Editing a comment
          Employers have a responsibility towards their workers in crisis times. Construction workers are hit hard as they belong to unorganized sector, and are hired through contractors. Soon, we will see builders lobbying for covid sops and benefits, though the plight of construction workers may not change.
      • #17

        #17

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

        Highrises Of Nightmares! Why Coronavirus Will Extend Slowdown Period In Real Estate Sector

        With banks reducing lending rates, people would buy property as lower EMIs match rents. Bloodshed in financial markets will impact homebuyers’ sentiments for investing in cost-intensive real estate



        Revival of the Indian real estate sector, one of the largest employment generators, seems to have hit another brickwall in the wake of the panic generated by the spreading coronavirus, the rising death toll and an economy in temporary lockdown. Many had been looking forward to 2020 heralding the return of buyers for commercial and housing properties, given the government incentives, particularly for affordable housing segment, and the recent lowering of interest rates. In addition, the recent turmoil witnessed in the financial markets had raised hopes that investors would look at real estate as a safer investment option, considering that property prices have dipped in many cities.

        “One could previously have surmised that the downfall in the stock market would have benefited real estate. However, considering the present scenario and its inherent challenges, inv­estors will largely stay away from this sector as well,” states Anuj Puri, chairman, Anarock Property Consultants. He feels the bloodshed in the financial markets will further dampen homebuyers’ sentiments for investing in cost-intensive real estate. As such, the wait-and-watch scenario will get ext­e­nded, affecting housing sales in the coming quarter.

        Indeed, such a cautious sentiment may even extend the slowdown period in the real estate sector, which witnessed a sharp fall in demand post the global financial crisis in 2008. India’s demonetisationin November 2016 did further harm.

        The raft of problems plaguing the ord­inary buyer of property is exemplified by say, Mr X, a former ICICI emp­loyee who bought a house in 2015 in Gardenia Aims Glory in Sector 46, Noida. “The developer gave us an alibi that due to some government intricacies, registration process would take time but will happen within a year. Four years later there is no sign of that,” says Mr X, who doesn’t wish to be identified. His second property at Neemrana, bought for Rs 25.5 lakh in 2012 has depreciated in value, and is worth Rs 18 lakh. Similarly, the Noida property which he got for Rs 48 lakh is now worth Rs 38 lakh. Though Mr X would like to relocate to Gurgaon, he is unable to do so, given the low market rates of his properties. While everybody is saying it’s a buyers’ market (where buyers determine prices), for people stuck in a limbo like Mr X it is neither a buyers’ nor a sellers’ market. The year 2020 started with a hope that things would look up. COVID-19 is likely to delay the good news.



        However, Jaxay Shah, chairman, CREDAI National, is optimistic that the current slowdown will not have additional repercussions on the realty sector as it deals with tangible assets. “Real estate remains the safest investment option in spite of odds. It will see slower global production cycle due to ‘supply chain issues’ which may lead to delayed deliveries of critical components especially Chinese, Southeast Asian and European components,” says Shah.



        Despite a supply side impact, non-lending by banks and unfinished projects, the government has continued to emphasise infrastructure development andincentivised affordable housing and initiatives which have been supporting Real Estate Investment Trusts (REITs), co-living and student housing in India, points out Anshuman Magazine, chairman and CEO, India, Southeast Asia, Middle-East, Africa, CBRE.

        Farshid Cooper, MD, Spenta Corporation, is hopeful that the industry will witness an upward trend in the next six to eight months. A large amount of foreign capital is also seen to be chasing commercial assets as they continue to yield 8-10 per cent ret­urns annually.

        Currently, the tourism and the hospitality sector have borne the brunt of the global pandemic—cancellation of visas for foreigners as well as strong travel advisories issued by many countries, including India, has hit it hard. Reports abound of weddings and conferences being postponed, leading to cancellation of bookings at venues and hotels. Luxury hotels, in particular, are reeling under the blow. With many states closing borders to keep away even domestic tourists just ahead of the holiday season, things look bad.

        Many project developers are, however, optimistic that real estate may not face any significant long-term imp­act “as confusion and fear is likely to reduce by June 2020”. Shah, moreover, is banking on a government stimulus package if the COVID-19 threat continues in the form of lower investment and debt cycle to help developers get cheaper loans for construction. “RBI is likely to revise the monetary policy in line with global trends to allay fear of massive recession. This may also help in lowering interest rates for home loans to a record low,” he says.

        Hakim Lakdawala of Goodwill Developers, expects the real est­ate sector to be booming in the coming financial year thanks to ref­orm initiatives, including RERA (Real Estate Regulatory Authority), GST, REIT, Benami Transaction Amen-dment Act and Pradhan Mantri Awas Yojana. “The new tax regime and extension of the date to sanction housing loans by a year introduced during the Union Budget for the FY20 will ensure surplus funds in the hands of potential home-buyers, acting as a positive tool in recuperating consumer confidence and prompt investments,” Lakdawala states.

        With banks beginning to reduce lending rates, more people are exp­ected to take advantage of the incentives to buy residential property as the lower EMIs would almost match their current rents. Knight Frank in a report states that housing prices either rem­ained flat or fell during 2019, and 61 per cent of the project launches were under the affordable housing segment.

        Saurabh Garg, chief business officer of nobroker.com, points out that as buying is impacted when economy goes up or down “there might be a short-term imp­act due to COVID-19 but overall we are still positive and feel 2020 should be a good year. Interest rates have come down and builders may also offer better deals”. Based on the queries on his portal, Garg states that around 64 per cent people living on rent are interested in buying properties in 2020.

        Magazine shares this hope. Real est­ate investments are expected to rem­ain stable in 2020, he says, pointing out that PE funds, foreign developers, sovereign funds, etc. are taking an act­ive interest in these assets. The only catch is the lack of built-up and leased office, retail/logistics assets, which is expected to push buyers towards alternate segments/greenfield options.













        https://www.outlookindia.com/magazin...-sector/303020



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        • #18

          #18

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

          Coronavirus impact: Real estate sector to incur loss of Rs 1 lakh crore

          Naredco seeks a $200 billion package from the government to kick-start the economy. Affordable housing to make a comeback first; Property prices may fall by 10-15 per cent.

          Representative image



          The real estate body Naredco has estimated that the sector would incur losses of Rs 1 lakh crore on account of COVID-19 and the subsequent lockdown and sought a $200-billion package from the government to kick-start the economy.

          It also demanded that the ban on construction sites be lifted and provisions of the insolvency law should be suspended for at least six months to prevent the 'wholesale takeover' of Indian companies.

          "This is probably the worst recession I have seen in my 40 years of career. There is real demand erosion that has taken place," Naredco President Niranjan Hiranandani told reporters through a video conference.

          "We have cancer in the economy. We need chemotherapy. Crocin tablet will not help," he said.

          He also said that property prices may fall by 10-15 percent and there could be lay-offs and salary cuts in the absence of any relief package.

          The sector seeks an urgent infusion of nearly $200 billion which can be pumped into the market in a staggered manner to retrieve the business cycle without incurring further economic loss. The industry seeks working capital to ensure that the Indian economy doesn’t tank, business organisations don’t default and saddle banks with NPAs, as also cause job losses, he said.

          He also sought a 50 percent cut in the GST rate for a period of six months for all the sectors.

          Hiranandani pointed out that global investors are waiting for Indian stocks to fall in value, to take over these listed companies at throwaway prices. “Hence in lieu of protecting the Indian companies, suspension of NCLT law for at least 6 months is imperative to salvage capital erosion,” he said.

          He feared that good Indian companies will be acquired by foreign firms at a cheaper valuation through bankruptcy proceedings. "We need to protect our companies, banks and NBFCs," he noted.

          The real estate body stressed the need for a roll-over as was done in 2007-08, pointing out that the present situation was far worse and definitely warranted both, the roll-over as also the availability of low-cost credit, if the Indian economy was to survive the crisis.

          “Deficit financing, if needed, can be implemented. The situation is bleak; we need to ensure that we come out of this not just alive, but also with a vibrant, functional economy,” he said.

          The revival story post the pandemic would largely be driven by the need-based customers, and the ‘affordable housing’ segment should be first off the starter’s block, he told reporters.

          “I don’t think the high-end market will be as prominent as the affordable housing segment as that is the segment where the government has been giving interest subvention giving GST at 1 percent and also giving loans up to 90 percent,” he said.

          The challenge that real estate would face was whether they wanted to work in the high-end segment or affordable segment. “It is like the automobile industry; India sells million-plus Maruti cars vis-à-vis a few thousand luxury cars. It is the same in real estate, the Maruti car segment – affordable housing – has much larger demand, and real estate business will have to adapt to the changing circumstances,” he said.

          On the possible fall in prices after the pandemic, he said price-points would come down as there would be some ‘desperate to sell’, but this would again depend upon location and type/ segment of individual projects.

          “It is not prices, we need a vibrant economy. The success of any business will depend upon this. Industries across India, including real estate, will be driven by demand rather than price correction,” he said.

          He also said commercial realty may bounce back over a period of six months to a year, and this will obviously have an impact on the residential segment.

          Speaking at the conference, Naredco Vice-Chairman Parveen Jain said the construction work should be allowed at the sites where workers have stayed put and not moved to their villages.

          Jain demanded that the government should send advisories to all regulatory authorities under RERA to extend the timeline of completing projects by one year. The timeline for other compliances with RERA should also be extended.

          The vice-chairman demanded that states should provide a moratorium on different payments to be made to development authorities.


          First Published on Apr 9, 2020 05:31 pm








          https://www.moneycontrol.com/news/bu...e-5128051.html

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          • GlobeSon
            GlobeSon commented
            Editing a comment
            NCLT was bringing Indian crony capitalists to task after decades of freewheeling, lack of regulation, and looting conducted by promoter-bank-politician nexus. If Mr.Hiranandani wants the government to put off the NCLT, then one would really doubt his intentions (and that of the real estate lobby that he represents).
        • #19

          #19

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

          COVID-19 impact: Mumbai region residential bookings down 78% in February, March from January

          During these two months, total number of customer walk-ins dropped by almost 80%, while 7,766 confirmed scheduled site visits were cancelled due to COVID-19 in a span of 30 days.

          By
          Kailash Babar
          , ET Bureau|
          Last Updated: Apr 03, 2020, 12.06 PM IST

          Getty Images

          WorldIndia


          MUMBAI: Bookings of residential apartments in Mumbai Metropolitan Region (MMR) in the last two months of February and March have declined 78% from January owing to the impact of Covid-19, said real estate developers and experts operating in the country’s most expensive property market.

          During these two months, total number of customer walk-ins dropped by almost 80%, while 7,766 confirmed scheduled site visits were cancelled due to COVID-19 in a span of 30 days of the study conducted among 100 members of developers’ body CREDAI-MCHI and various real estate experts.

          Home loan collections have also declined 250% in March as against January, showed the study that was conducted between February last week and third week of March. While there was a 200% rise in cancellations in the third week of the study, the trend normalized to average figures in the last week of the study conducted by the developers' body.

          In commercial segment, the study showed that existing tenants are likely to delay lease renewals to the second half of the year and will renegotiate rent free periods until lockdown. Construction of office spaces is expected to be delayed due to disruption in the supply chain of vendors. Co-working spaces could face long term impact as seat based short term leases might see a fall due to a surge in ‘work from home’ productivity during lockdown.

          The nation-wide lockdown will adversely impact the operations of Industries and immediate investments in Industrial properties. However, overall impact on the industrial assets will be low and recovery will be relatively faster than other real estate asset classes.

          Due to the higher yields and stability in Indian office market, the study believes the investments will remain stable except for short term hiccups.

          With Embassy REIT giving almost 48% return until the market crashed in the first week of March, India will witness an increase in investments as investors are still very bullish about the Indian office assets in the long term.











          https://economictimes.indiatimes.com...w/74962195.cms
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          • GlobeSon
            GlobeSon commented
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            when there is a lockdown, how will people even visit the property?
        • #20

          #20

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

          Employers have a responsibility towards their workers in crisis times. Construction workers are hit hard as they belong to unorganized sector, and are hired through contractors. Soon, we will see builders lobbying for covid sops and benefits, though the plight of construction workers may not change.
          Yes, I think all would agree on that. Good employers take the responsibilities of their employees and do everything in their power to aid them during any crisis. But in a still unorganised sector like real estate where labourers and their issues are rarely talked about or acted upon, what can be expected? The goverenment seems to have some provisions in place but when will they be implemented? The plight of labourers has always been neglected or given less priority and during the ongoing crisis it has become so much difficult to manage.

          The governemnt will have to come up with practical provisions for labourers and see to their fulfillment. Today's
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