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Residential bookings in MMR fall by 78% in Feb-March due to COVID-19
03 Apr 2020
Photo: For representational purpose
CREDAI MCHI has released a research study, titled ‘COVID 19 Impact: Real Estate’, conducted via a survey and research of over 100 leading Mumbai Metropolitan Region (MMR) developer members as well as various real estate experts and professionals. It highlights the impact of COVID-19 or the Coronavirus on the MMR real estate market and showcases a comprehensive analysis of the adverse implications of the virus on the residential, commercial and industrial real estate asset classes.
The pandemic has currently brought the entire industry and the economy to a slowdown, proving to be a force majeure situation. This report attempts to underline the substantial and unprecedented impact that it has had on the sector at large. It further highlights the possible change in trends and individually analyses the extent of COVID-19’s implications on each asset class.
Key findings of COVID-19 impact on real estate
Residential
Residential bookings have fallen by 78 per cent (a month, from February 2020 last week to March third week) as compared to January 2020.
250 per cent drop in home loan collection in March 2020 as compared to January 2020.
Total number of walk-ins dropped by almost 80 per cent in a span of 30 days.
7,766 confirmed scheduled site visits were cancelled due to COVID-19 in a span of 30 days of the study.
While there was a 200 per cent rise in cancellations in the third week of the study, the trend normalised to average figures in the last week of the study.
Commercial
Pre-commitments will form a significant part of leasing in H1 2020.
Existing tenants might delay lease renewals to H2 2020 and will renegotiate rent free periods until lockdown.
Construction of office spaces to be delayed due to disruption in the supply chain of vendors.
Co-working spaces could face long term impact. Seat based short term leases might see a fall due to a surge in ‘work from home’ productivity during lockdown.
Industrial
Nation-wide lockdown will adversely impact the operations of industries and immediate investments in industrial properties.
However, this pandemic is an opportunity for the Indian industrial industry which is still in its nascent stage.
The overall impact on the industrial assets will be low and recovery will be relatively faster than other real estate asset classes.
Investments
Due to the higher yields and stability in Indian office market, the report believes the investments will remain stable except for short term hiccups.
With Embassy REIT giving almost 48 per cent 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.
CREDAI MCHI President, Nayan Shah, says “As a leading industry body, CREDAI MCHI stands in solidarity with the government to deal with this natural calamity – COVID-19 and work towards a sustainable long-term solution for the betterment of the economy at large. However, there is no denying that the Indian real estate sector is currently in survival mode. Due to COVID-19 and the subsequent lockdown, the Indian real estate industry, along with its allied industries, are experiencing a substantial slowdown in activities. This report by CREDAI MCHI emphasises the struggles of the sector at this point in time and highlights the impact experienced and anticipated by more than 100 leading developers of MMR and various real estate experts and professionals across MMR.”
