Volatility and Virus Perils
Real Estate

Volatility and Virus Perils

In the Indian scenario, we look upon festivals as auspicious times to make a new beginning. For real estate, Gudi Padwa is traditionally, the day when all new beginnings – be it booking a new home or moving into a new home – are considered to be done on an auspicious note. This year, things are a bit different, with the Coronavirus pandemic impacting all sectors of the economy.

The ‘challenging scenario’ is something real estate has been dealing with since the economic and policy reforms were introduced; the impact of what I call the ‘tsunamis’ – demonetisation through RERA and GST, among others – was major. Buyer confidence reduced, sentiments were impacted and sales dropped to low figures. Add to this the credit squeeze and last mile funding challenge, not to forget the NBFC crisis, ILFS and DHFL. Result: Troubles compounded.

In this extremely challenged scenario, housing, as a basic need, saw the buyer return. Not as much as would have been optimum, but still, the buyer was back, prospecting for the ideal home to buy. In this situation, we now have the pandemic, COVID-19.

Logically, the lock-down that COVID-19 results in, first impacts sales. Real estate is in that situation, where the home buyer was gradually returning, but COVID-19 has been a speed-breaker of sorts. The slowdown since end-February is apparent; and while site visits are marginally down, the decision-making process is hugely delayed.

The Pandemic menace has hit at a particularly sensitive time, that of the Financial Year closing (March 31). Across real estate companies, this is the time when statutory payouts and streamlining of balance sheet happens. This is a challenge for real estate as an industry, a representation has been made to the Government of India about a few economic intervention measures like rescheduling loan repayments, a one-time rollover for debt restructuring and deep interest rate cut – these will help salvage the economic challenges for real estate companies.

Coming on the eve of the festival, this is important because real estate is the second largest employment generator, and has a ‘multiplier effect’ on 250-plus allied industries need the support to face the challenge. This year’s on festive occasion of Gudi Padwa/Ugadi might see drop in launches across and delayed sales deal closure, with a direct effect on site visits by potential buyers.

When it comes to commercial real estate, the impact of COVID-19 in form of shutdown of retail outlets and malls as also entertainment and fitness centres has put commercial real estate deals on ‘wait and watch mode’.

Salvaging Indian real estate is critical, not just from the GDP growth perspective, but also for employment generation. This Gudi Padwa, if the Government of India has taken quick fiscal measures, the real estate industry will be able to save jobs and capital erosion, as also avoid default in payments. That happening, Gudi Padwa this year will truly be a festival of hope.

About the Author:
Dr Niranjan Hiranandani is President (National) NAREDCO (National Real Estate Development Council ). He is also the President of ASSOCHAM (The Associated Chambers of Commerce and Industry of India) and Founder & Managing Director, Hiranandani Group.

In the Indian scenario, we look upon festivals as auspicious times to make a new beginning. For real estate, Gudi Padwa is traditionally, the day when all new beginnings – be it booking a new home or moving into a new home – are considered to be done on an auspicious note. This year, things are a bit different, with the Coronavirus pandemic impacting all sectors of the economy. The ‘challenging scenario’ is something real estate has been dealing with since the economic and policy reforms were introduced; the impact of what I call the ‘tsunamis’ – demonetisation through RERA and GST, among others – was major. Buyer confidence reduced, sentiments were impacted and sales dropped to low figures. Add to this the credit squeeze and last mile funding challenge, not to forget the NBFC crisis, ILFS and DHFL. Result: Troubles compounded. In this extremely challenged scenario, housing, as a basic need, saw the buyer return. Not as much as would have been optimum, but still, the buyer was back, prospecting for the ideal home to buy. In this situation, we now have the pandemic, COVID-19. Logically, the lock-down that COVID-19 results in, first impacts sales. Real estate is in that situation, where the home buyer was gradually returning, but COVID-19 has been a speed-breaker of sorts. The slowdown since end-February is apparent; and while site visits are marginally down, the decision-making process is hugely delayed. The Pandemic menace has hit at a particularly sensitive time, that of the Financial Year closing (March 31). Across real estate companies, this is the time when statutory payouts and streamlining of balance sheet happens. This is a challenge for real estate as an industry, a representation has been made to the Government of India about a few economic intervention measures like rescheduling loan repayments, a one-time rollover for debt restructuring and deep interest rate cut – these will help salvage the economic challenges for real estate companies. Coming on the eve of the festival, this is important because real estate is the second largest employment generator, and has a ‘multiplier effect’ on 250-plus allied industries need the support to face the challenge. This year’s on festive occasion of Gudi Padwa/Ugadi might see drop in launches across and delayed sales deal closure, with a direct effect on site visits by potential buyers. When it comes to commercial real estate, the impact of COVID-19 in form of shutdown of retail outlets and malls as also entertainment and fitness centres has put commercial real estate deals on ‘wait and watch mode’. Salvaging Indian real estate is critical, not just from the GDP growth perspective, but also for employment generation. This Gudi Padwa, if the Government of India has taken quick fiscal measures, the real estate industry will be able to save jobs and capital erosion, as also avoid default in payments. That happening, Gudi Padwa this year will truly be a festival of hope. About the Author: Dr Niranjan Hiranandani is President (National) NAREDCO (National Real Estate Development Council ). He is also the President of ASSOCHAM (The Associated Chambers of Commerce and Industry of India) and Founder & Managing Director, Hiranandani Group.

Next Story
Infrastructure Urban

NHAI Defends Use of Mamallapuram Pond for ECR Project Ramp

                                                The National Highways Authority of India (NHAI) has informed the National Green Tribunal (NGT) that it was compelled to use a portion of a pond in Mamallapuram to construct an exit ramp for the East Coast Road (ECR) four-laning project between Mamallapuram and Puducherry. The clarification comes in response to a petition alleging that the construction encroached on the waterbody without valid justification.In its submission..

Next Story
Infrastructure Transport

Tiruvallur Begins Full Audit of Accident-Prone Roads

Tiruvallur, a fast-growing logistics and residential hub on Chennai’s northwestern edge, has begun a comprehensive audit of fatal and non-fatal road accidents across the district.Special task forces made up of transport, police, and revenue officials have started field investigations at high-risk locations such as Red Hills, Poonamallee, and Tiruvallur town.The initiative follows an alarming 188 road crashes, including 49 fatalities, reported in February alone. Tiruvallur Collector M. Prathap has directed officials to analyse five years’ worth of crash data to assess if road design flaws o..

Next Story
Infrastructure Urban

Modi Hands Over 51K Job Letters, Urges Youth to Drive Growth

Prime Minister Narendra Modi on Monday distributed over 51,000 appointment letters to newly recruited youth in various government departments and organisations, addressing them via videoconferencing during the Rozgar Mela.Speaking to the gathering, Modi said today marks the beginning of new responsibilities for the recruits. He urged them to strengthen India’s economy, boost internal security, help build modern infrastructure, and bring meaningful change to people's lives. The sincerity with which they perform their duties, he said, would directly impact India’s journey towards becoming a ..

Advertisement

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Advertisement

Talk to us?