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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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  • #21

    #21

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

    Real estate prices may crash up to 20% post Covid-19: Deepak Parekh

    For potential home buyers, it will be an excellent buying opportunity, Parekh said.

    By
    Ami Shah
    , ETMarkets.com|
    Last Updated: Apr 15, 2020, 09.05 AM IST


    Parekh said Indian real estate market was already going through prolonged pain for various reasons such as economic stress in certain segments, high leverage, tight liquidity and rising non-performing assets (NPAs) in construction finance.

    Mumbai: Deepak Parekh, Chairman of mortgage lender Housing Development Finance CorporationNSE -3.56 % (HDFC), on Tuesday said the real estate prices in the country would correct by up to 20 per cent in the wake of coronavirus pandemic and the resultant nationwide lockdown.

    “Prices of real estate have to come down, and will come down,” Parekh said in an address to real estate developers at a webinar organised by the National Real Estate Development Council (Naredco). “I believe Naredco’s estimate is around 10-15 per cent. One must be prepared for even 20 per cent,” he added.

    For potential home buyers, who have job security or cash flows, it will be an excellent buying opportunity, he said. "Real estate is an immensely important asset class, and the value of global real estate was more than the value of all the stocks and bonds combined," he said. Deepak Parekh said Indian real estate market was already going through prolonged pain for various reasons such as economic stress in certain segments, high leverage, tight liquidity and rising non-performing assets (NPAs) in construction finance.


    "The irony is that while the government announced incentives for affordable housing by various means, they coincided with the world’s deepest crisis," Parekh said.

    The global economic slowdown coupled with coronavirus pandemic is likely to negatively impact residential real estate demand in the country this year.

    According to the rating agency India Ratings, residential real estate demand is expected to decline in financial year 2019-20 (FY20) after showing a slight improvement over FY2017-2019.

    Parekh warned developers against high leverage, and said it is going to work as a double-edged sword. "In good times, it amplifies your profits. In bad times, it destroys you. Be careful of the perils of leverage,” he said.

    He also advised developers to use the moratorium as the last resort, as it would just mean pushing the can down the road. He advised them to resort to equity for fund raising even though it would mean dilution of valuation and ownership. “Enhance the equity cushion. You need a higher cushion of equity,” he said.

    The industry veteran also asked the developers to focus on completing existing projects, rather than launching new ones. “Take home less money, keep the money in the company. Cut your home-running expenses. Be a little more stingy in your expenses,” he said.

    On the state of the world economy, he said it never shrunk so quickly before.

    Parekh expects global economy to shrink by 2 per cent in 2020 due to Covid– 19 Pandemic. Among G20 countries, he sees only three – India, China and Indonesia -- to have a positive growth.

    On the stock market, he is of the opinion that Indian equity hasn’t marked a bottom yet.

    For the year to date, benchmark equity indices Sensex and Nifty have shed 25.61 per cent and 26.09 per cent, respectively, as coronavirus spread across the globe, leading to a flight to safety.

    According to Parekh, one need not be gloomy about Indian macroeconomic scenario.

    “First, we have enough foreign reserves. India is one of the top countries receiving foreign funds from NRIs. This helps to balance our currency. The currency risk is less because we get so much inflow. Second, India is not a manufacturing-based country. We are service-based economy. Certain services have been impacted, but IT, call centres, banks, online services etc. are working to some extent,” he said.

    He also pointed that India had the third-largest base of startups.

    “I have lots of confidence that these startups will perform well and come up with unique solutions. They have a future with great possibilities,” he added.









    https://economictimes.indiatimes.com...campaign=cppst
    Last edited April 16 2020, 06:04 AM.
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    • #22

      #22

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

      If we talk about only Delivered / Ready to Move-in apartments in Noida Gurgaon, demand for them is going to increase as they have less risk since they are delivered and project is not controlled by Builder any more.
      Last edited April 19 2020, 09:46 AM.

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      • #23

        #23

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

        [h1]How COVID-19 will impact Real Estate market of Affordable Housing? Video by Magic Bricks... click the link to watch the YouTube video.[/h1]
        Last edited April 20 2020, 07:39 PM.

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        • #24

          #24

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

          Covid-19 Impact: India real estate institutional investment down 58% in January-March

          The impact of change in the investment climate was reflected in the asset allocation.

          By
          Kailash Babar
          , ET Bureau|
          Last Updated: Apr 20, 2020, 07.20 PM IST
          The decline was influenced by several events, including the COVID-19 outbreak and several high-profile issues in the domestic banking and finance sectors in late 2019 and early 2020.
          MUMBAI: Institutional investment into Indian real estate sector has declined 58% from a year ago to $712 million during the quarter ended March. Total investments in financial year 2019-20 witnessed a decrease of 13% at $4.26 billion--the lowest for four years, showed a JLL India report.

          The decline was influenced by several events, including the COVID-19 outbreak and several high-profile issues in the domestic banking and finance sectors in late 2019 and early 2020.

          “The impact of COVID -19 virus has been unthinkable in its scope. Investors are expected to remain in a wait-and-watch mode, with caution and risk aversion is expected to drive the dominant behavior of institutional real estate investors over next few quarters,” said Ramesh Nair, CEO and Country Head, JLL India.

          The impact of change in the investment climate was reflected in the asset allocation, as investors parked more funds in more secure and stable office spaces. Investments in the office sector rose to $2.9 billion during the year from $1.8 billion a year ago. The Mumbai Metropolitan Region’s investments share grew to 43% of national investments in 2019-20 from 23% in 2018-19.

          “Ongoing financial woes as well as an unprecedented global crisis of the pandemic have unsettled the investment climate across the globe, including India. The currently situation is extremely fluid and it is still too early to provide a detailed, quantitative assessment of the COVID-19 impact on economic activity, industries and the real estate market,” said Samantak Das, Executive Director and Head of Research, REIS, JLL India.

          Das expects, office space followed by warehousing, could witness return of investments, while residential sector to revive with government support and concessions.

          Around $8.7 billion of platform funds were announced during 2017-2019, accounting for 60% of the total funds since 2012. Warehousing sector attracted highest interest with 38% share of funds announced as the sector witnessed transformation, post Good and Service Tax reform. Office sector platform funds account for the second largest share of 29% as large investors prefer direct acquisition of assets.

          Out of USD 4.4 billion invested in office space during 2018 and 2019, investors have been aggressively chasing returns as options of leased quality office spaces have reduced over the years. Further, investors are entering into joint ventures, platform deals or forward sales with more complexities to manage risks in under construction projects.

          Sovereign wealth funds held $29 billion worth of assets under custody (AUC) in India as of December 2019. Real estate accounted for 22% of the AUC, amounting to $6.6 billion. The Union Budget had recently announced concessions for SWFs investing in infrastructure including affordable housing and logistics, but recent declines in crude prices may impact their surplus capital available for investments.

          The IL&FS crisis brought a halt to real estate lending by non-banking finance companies (NBFCs) and housing finance companies (HFCs) due to funding issues. A reduction in Non Performing Asset levels and capital support from the government to the commercial banks has led to gradual revival in lending to the real estate sector. Outstanding bank credit to real estate developers grew by estimated Rs 26,200 crore between March 2019 and March 2020 registering a growth of 13%. Ends
















          https://economictimes.indiatimes.com...w/75253574.cms

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          • #25

            #25

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

            anujwadhwa has contruction started all around?

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            • anujwadhwa
              anujwadhwa commented
              Editing a comment
              I am not aware of but yes saw some videos of Signature Global, they have started some sites where labour was already residing and now they have take great precautions. Also, one in my neighbourhood a Building was constructing, so they have also started working as labour was staying at the site only.
          • #26

            #26

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

            How will real estate in top Indian cities cope with the departure of migrant workers? The way and the conditions in which the migrant workers have returned to their hometowns will keep most of them from ever coming back to the top cities anytime soon.
            Last edited June 4 2020, 12:10 PM.

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            • #27

              #27

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

              Real estate in top Indian states and cities will now have to depend on homegrown workforce for a long time it seems. For instance, the Confederation of Real Estate Developers’ Associations of India (CREDAI), Pune, is gearing up to hire youth from across the state to be trained to fill up the city's real estate and construction sector that has been left vacant by the departure of migrant workers to their hometowns.
              Talk TRUE; Talk IREF

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              • #28

                #28

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

                Originally posted by Malvish View Post
                Real estate in top Indian states and cities will now have to depend on homegrown workforce for a long time it seems. For instance, the Confederation of Real Estate Developers’ Associations of India (CREDAI), Pune, is gearing up to hire youth from across the state to be trained to fill up the city's real estate and construction sector that has been left vacant by the departure of migrant workers to their hometowns.
                That could be a way but what is there to train? The only workforce that they would need desperately is the labourers and I believe there is nothing much to train to be a labourer - desperation and poverty are training enough to join in. It could be more of a mental training to carry out menial tasks that they had never done before.

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                • #29

                  #29

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

                  Originally posted by Malvish View Post
                  Real estate in top Indian states and cities will now have to depend on homegrown workforce for a long time it seems. For instance, the Confederation of Real Estate Developers’ Associations of India (CREDAI), Pune, is gearing up to hire youth from across the state to be trained to fill up the city's real estate and construction sector that has been left vacant by the departure of migrant workers to their hometowns.
                  Originally posted by movedin View Post

                  That could be a way but what is there to train? The only workforce that they would need desperately is the labourers and I believe there is nothing much to train to be a labourer - desperation and poverty are training enough to join in. It could be more of a mental training to carry out menial tasks that they had never done before.
                  So, now the governments or industries will train poor and desperate people on how to be a 'labourer'? So, do the industries believe that they can replace the migrant workers by calling in local workforce and training them?

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                  • #30

                    #30

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

                    Originally posted by coinwise View Post
                    So, now the governments or industries will train poor and desperate people on how to be a 'labourer'? So, do the industries believe that they can replace the migrant workers by calling in local workforce and training them?
                    The real estate sector should not forget that the majority of migrant workers who have departed from major cities are labourers and not architects or engineers. So will now there be a new course called 'Diploma in Labouring'

                    Jokes apart, it is going to take many years to fill up void left by the migrant workers, a majority of who will not be returning anytime soon.
                    Last edited June 10 2020, 11:53 AM.

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