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.
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  • Originally Posted by anujwadhwa
    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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  • 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) .. 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 ) .. 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
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    3 Comments
    • anujwadhwa3 months ago
      Brother you are just not making any sense...
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  • 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.


    https://www.indianrealestateforum.com/forum/other-forums/general-real-estate-discussion/17982-indian-real-estate-news?p=2676497#post2676497
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  • 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.












    https://realty.economictimes.indiatimes.com/news/residential/covid-19-over-15-lakh-units-under-construction-may-come-to-a-halt/74805907

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  • 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.

      Ankit Sharma
      ETRealty
      March 28, 2020, 09:08 IST

      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.













      https://realty.economictimes.indiatimes.com/news/industry/covid-19-may-worsen-woes-of-residential-real-estate-sector-icra/74857232
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  • 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.










    https://realty.economictimes.indiatimes.com/news/residential/residential-demand-could-fall-by-7-10-in-fy20-ind-ra/74857378
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  • 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.











    https://realty.economictimes.indiatimes.com/news/residential/covid-19-impact-residential-realty-sector-stares-at-major-liquidity-crunch/74959487
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  • 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.












    https://realty.economictimes.indiatimes.com/news/industry/real-estate-steel-others-set-to-be-worst-hit-by-coronavirus/74965005

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  • 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.indiatimes.com/news/industry/covid-19-defers-several-large-realty-deals/74981293
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    1 Comments
    • GlobeSon2 months ago
      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.
  • 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/property-prices-are-headed-for-a-big-correction-will-realtors-see-the-light
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    2 Comments
    • GlobeSon2 months ago
      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.
  • 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.com/forum/city-forums/mumbai-real-estate/23776-mumbai-real-estate-news?p=2676998#post2676998
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  • 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?
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    3 Comments
    • GlobeSon2 months ago
      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.
  • @anujwadhwa that could be true. There must be more than the registered figures.
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  • @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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    • GlobeSon2 months ago
      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.