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

India Plans Rs 200 Billion Risk Fund to Boost Infrastructure

India’s ambitious push for large-scale infrastructure growth is set to receive a major financing boost. The government is reportedly planning a Rs 200 billion risk guarantee fund to reduce uncertainty for investors and project developers.The fund aims to instil confidence among lenders and private players by covering risks beyond commercial considerations. It will primarily address losses arising from policy changes, land acquisition delays, or environmental clearances, while commercial risks will remain the responsibility of developers. This measure is expected to encourage banks and financ..

Next Story
Infrastructure Energy

India Launches Rs 1 Billion Green Hydrogen R&D Scheme

Union Minister of New and Renewable Energy, Shri Pralhad Joshi, inaugurated the 1st Annual Green Hydrogen R&D Conference in New Delhi, organised by the Ministry of New and Renewable Energy (MNRE). He also launched a new Rs 1 billion Call for Proposals to support start-ups innovating in hydrogen technologies. The scheme will provide up to Rs 50 million per project for pilot projects in hydrogen production, storage, transport, and utilisation. The conference features 25 start-ups showcasing innovations from electrolyser manufacturing to AI-driven optimisation and biological hydrogen solution..

Next Story
Infrastructure Transport

NGT Questions Bengaluru Tunnel Project Over Ecological Risks

Deputy Chief Minister and Bengaluru Development Minister D K Shivakumar’s ambitious Tunnel Road project faces scrutiny following a petition by a city-based citizens’ group. The Southern Bench of the National Green Tribunal (NGT) has issued notices to multiple government agencies, requesting formal responses.At the first hearing on 10 September, the tribunal directed notices be served to the State Government, Greater Bengaluru Authority (GBA), State Environment Impact Assessment Authority (SEIAA), Bangalore Smart Infrastructure Limited (B-SMILE), Ministry of Environment, Forest and Climate ..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Talk to us?