As cities go into lockdown mode to contain the spread of Covid-19, homebuyers will have to brace themselves for another wave of delayed project deliveries. More so, the strict advisories for complete lockdown will impact housing sales during the upcoming festivals of Gudi Padwa, Akshaya Tritiya, Navratri and Ugadi—considered auspicious occasions to buy homes.
“The momentum in the housing market, which began to show some potential over the past few quarters, would likely slow down in the first half of 2020. There is definitely a fall in the site visits by potential homebuyers, says Ashok Mohanani, chairman of EKTA World and vice-president, NAREDCO Maharashtra. “This, in turn, will have a cascading effect for sales of property. This season may see a decreased velocity in sales due to host of factors including the restrictions imposed on citizens.”
Already, many key markets have almost zero construction activity at the project sites. “This will further strain several developers’ financial health,” says Prashant Thakur, director and head, research of Anarock Property Consultants. As many as 15.62 lakh residential units across the country’s top seven cities are in various stages of development. “These include all under-construction units launched between 2013 till 2019-end. Even this figure is conservative—the number of units will be higher once Q1 2020 data comes in,” adds Thakur.
Mumbai currently has the highest under-construction stock with nearly 4.65 lakh units, which is about 30% of the overall under-construction stock. NCR is close behind with 27% or over 4.25 lakh units in various stages of construction. “Both these regions already have a backlog of lakhs of delayed/stalled units,” says Thakur.
Among the three southern metros, Bengaluru has the maximum under-construction stock of nearly 2.02 lakh units, followed by Hyderabad with 64,250 units and Chennai with the least stock of nearly 54,200 units, as per data shared by Anarock Property Consultants.
“Once the crisis is under control, the government will have to dole out various economic measures to bail out severely-hit sectors, reconsider its fiscal deficit targets and start spending,” says Thakur. All impacted real estate projects, he adds, will have to be excused from construction delay penalties under the respective states’ Real Estate Regulatory Authority.
“India Inc will continuously seek economic intervention from the Government like suspending Bankruptcy Law for a few months, rescheduling loan repayments, a one-time rollover for debt-restructuring to salvage the economic challenges for real estate companies,” says Niranjan Hiranandani, national president of NAREDCO, an apex national body for the real estate sector.