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

Emerald Finance Joins Baya PTE to Boost SME Bill Discounting

Emerald Finance is a dynamic company offering a spectrum of financial products and services including its flagship Earned Wage Access (EWA) in India, has entered into a strategic partnership with Singapore-based Baya PTE through its Indian subsidiary. This collaboration aims to strengthen bill discounting services for Small and Medium Enterprises (SMEs), enabling faster access to working capital and improved cash flow management.The initiative is designed to support SMEs that supply to large corporates such as JSW Steel, Delhivery, and PVR INOX, among others. By facilitating timely invoice dis..

Next Story
Infrastructure Urban

BLS E-Services Crosses Rs 5 Bn Revenue Mark in FY25

BLS E-Services, a technology-enabled digital service provider, announced its audited consolidated financial results for the quarter and full year period ended 31 March 2025.Speaking about the performance and recent updates, Shikhar Aggarwal, Chairman, BLS E- Services said, “We are delighted to report a remarkable performance in FY25, as we achieved several milestones during the fiscal year. FY25 marked our highest-ever financial performance, as we surpassed Rs 5 billion milestone in Total Income during the year, which was reported at Rs 5.45 billion, a notable YoY growth of 76 per cent. The ..

Next Story
Infrastructure Urban

Chemco and Kandoi Launch Rs 4.50 Bn JV for rPET FIBC Units in Gujarat

In a landmark collaboration aimed at redefining sustainable packaging in India, Chemco Group, one of the country’s largest PET converters, and Kandoi Group of Industries, a leader in technical textiles, have announced a strategic joint venture to build two fully integrated greenfield manufacturing facilities in Vapi and Dahej, Gujarat. With a total investment of Rs 4.50 billion, the initiative will focus on producing FIBC (Flexible Intermediate Bulk Container) bags entirely from recycled PET (rPET).The upcoming facilities will offer a closed-loop system from PET bottle collection and washing..

Advertisement

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Advertisement

Talk to us?