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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

Last updated: 2 weeks ago
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  • #51

    #51

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

    As per real estate experts and developer lobbies, the biggest challenge that developers face is the rising cost of construction materials – both cement and steel. Apparently, cement cartels have been charging 50-60% more than the average price.
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    • #52

      #52

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

      Demand in residential sector to decline 25% due to Covid-19: Ind-Ra

      Of the six key markets, Hyderabad and Bengaluru had the least quarter to sell inventory while Chennai had the maximum unsold inventory, followed by Mumbai Metropolitan Region as of FYE20.
      NEW DELHI: The overall residential demand would decline over 25% year-on-year in the financial year 2020-21, after registering a fall of 5% year-on-year in FY20, due to the ongoing COVID-19 pandemic, according to India Ratings and Research (Ind-Ra).

      A stable demand, combined with prudent launches by players, had restored some supply-demand balance over FY18-FY19. However, the COVID-19 related lockdown resulted in a rise of the unsold inventory levels to over 15 quarters at end-FY20.

      Of the six key markets, Hyderabad and Bengaluru had the least quarter to sell inventory while Chennai had the maximum unsold inventory, followed by Mumbai Metropolitan Region as of FYE20.

      Residential sales were down 5% yoy to 266 million square feet (sf) in FY20 across the top six cities in India.

      National Capital Region has seen the maximum decline in FY20; while Bengaluru has seen a recovery, Hyderabad has continued with its strong growth momentum in terms of the area sold.

      Furthermore, the affordable housing segment, which grew steadily over FY17-FY19, has seen the maximum decline in during FY20.

      The residential sector continues to under-perform as an asset class, impacting the investor demand. Hyderabad is the only market which has shown a price CAGR of a high single digit, while the other markets have lagged behind with sub-par price CAGR of 1%-2% over the last five years.

      Moreover, disbursements from housing finance companies and wholesale non-banking financial companies to the real estate sector declined steeply in FY20. However, there was a slight uptick in the last quarter in disbursements by non-banking financial companies, based on Ind-Ra estimates.

      The agency believes that the sales will be hampered until the ongoing COVID-19 situation stabilises, and thus cash flows for Grade-I residential players could also come under pressure.











      https://realty.economictimes.indiati...nd-ra/76968648
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      • #53

        #53

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

        Home sales have gone down to 54% in top eight cities of India by the month of June and most of the sales were seen only in the first quarter, and that too for properties below Rs. 50 lakh, indicating a growing demand for affordable housing.
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        • anujwadhwa
          anujwadhwa commented
          Editing a comment
          Sales might have come down but prices hasn't.
      • #54

        #54

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

        anujwadhwa Like said earlier - prices won't come down easily as developers are not ready to sell at lower rates owing to the costs incurred on developing thier projects.
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        • #55

          #55

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

          Prices of Properties which were not selling pre-Covid days because of various reasons like location, construction quality etc. have been decreased very nominally by some small Builders in some smaller towns.
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          • #56

            #56

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

            In the first half of 2020 new home launches dropped by 46% across top eight cities in India.
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            • #57

              #57

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

              New launches dipped 90% in the second quarter across top 8 real estate markets in India.
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              • anujwadhwa
                anujwadhwa commented
                Editing a comment
                will builders cut margins?
                will price be corrected?
                will builder realize they selling over priced homes which people are not interested in buying?
                Last edited July 23 2020, 04:33 PM.
            • #58

              #58

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

              Organised realty players better positioned to tackle Covid-19: ICRA

              Cancellations are also expected to increase, especially for more recently launched projects with lower customer advance build-up.
              NEW DELHI: Large realty players with established market positions, strong balance sheets and adequate liquidity have weathered the storm better than smaller players, who have been finding it difficult to cope with the prevailing market conditions, as per ICRA.

              The agency expects the already ongoing consolidation of the sector to accelerate further, with larger, more established players gaining increased market share.

              Mahi Agarwal, assistant vice president and associate head of the agency, said, “Homebuyers had already been leaning towards developers with an established track record of on-time and quality project completion, which had resulted in large, listed players reporting healthy sales and collections between April-December FY2020, despite the prevailing liquidity crisis and unfavourable supply-demand dynamics.

              The ongoing economic uncertainties have led to reduced discretionary demand from home-buyers, and also resulted in an increased focus on conserving liquidity, leading to deferment of new purchases and delays in meeting payment demands raised by developers in recent months.

              Although certain developers with adequate project portfolio flexibility have responded to the slow-down by making payment structures more attractive and offering sales schemes in order to offload unsold inventory, a significant reduction in the overall sales traction remains likely.

              Cancellations are also expected to increase, especially for more recently launched projects with lower customer advance build-up.

              The players who are able to weather this storm are likely to focus on phase-wise launches going forward, with de-densification of housing projects becoming a key part of project plans,” added Agarwal.

              According to ICRA, sales saw a dip of 11 per cent year-on-year in Q4 FY20. This decline remained significantly lower than the 30-40% year-on-year reduction witnessed in sales across key markets at an overall industry level.

              It notes that with the longer period of disruption in Q1 FY2021 however, sales and collections metrics are likely to show a higher impact relative to Q4 FY2020, both for listed players, as well as for the industry as a whole.

              Thus, overall operating cash flows for most developers, including the listed players, are expected to witness significant moderation in the current year, resulting in increased reliance on available liquidity and/or refinancing to meet committed outflows.

              The larger, organized players have, however, maintained considerable liquidity buffers, mostly in the form of free cash/liquid balances and undrawn bank lines, which can be used to meet debt obligations, despite a reduction in collections and operating cash flows, although the undrawn bank lines may have some conditions associated with disbursement.











              https://realty.economictimes.indiati...-icra/76997919


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              • #59

                #59

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

                Commercial real estate saw a decline in absorbtion of around 37% compared to last year, lowest in the last 10 years.
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                • #60

                  #60

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

                  anujwadhwa Given the scarcity of demand for real estate at the moment, the prices have not been cut substantially. As a matter of fact, some studies reveal that the prices may either remain stagnant or even increase in the time that follows. Talking about builders realising that they selling at higher prices - Well, are they not aware?
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