What is The Position of Real Estate After Pandemic?
For those of you, who are interested to know the position of the real estate industry now, you must go through what India Ratings has to say. As a direct effect of the ongoing pandemic situation, the demand for residential properties has gone down by a good 25% from last year. The lockdown has further catalysed a rise in the levels of the unsold inventory to more than 15 quarters by the end of the financial year 2020.
The six key players in the real estate industry are Bengaluru, Hyderabad, Chennai, Mumbai, Pune and Delhi. Hyderabad and Bengaluru had the least quarters to sell off their inventories. Chennai had the maximum number of unsold inventories, followed by Mumbai.
Let us have a quick fact check:
The top 8 cities have shown a decline in home sales by 54% in 2020. Commercial real estate sale has gone down by 37% from a year ago in the first half of the year, the lowest in the last decade. CREDAI members in Karnataka have decided not to increase the property prices for the coming three months. There is an overall slump in real estate bookings. Real estate in Hyderabad, has seen an annual change of 9% from last year.
These figures make it quite evident that there is an exacerbation in the real estate sector now. You can’t expect brownie points to guess that the figures are not good due to the epidemic. The Indian government had imposed restrictions across the country to stop the spread of the COVID-19 pandemic. India is already one of the hardest-hit countries due to the epidemic. The real estate sector is the worst affected. The upcoming residential projects in Hyderabad have suffered greatly. It was exhibiting positive growth in the month of March when suddenly there was a complete halt in all kinds of sales, construction and launch activities.
A look into the developers’ condition
The big real estate companies have low debt leverage. They will be able to combat the storm and will start doing well from quarter 3. There will be resizing of the properties, provision of extra amenities, special schemes for payments and discounts for creating the lost demand.
Noida is the only city to witness a 0 launch in quarter two. A metro like Kolkata has seen a 92% fall in new launches of properties. It witnessed the launch of only 550 new units in the second quarter. A survey reveals that 42% of the population believes that the next six months will be a very tough phase. The residential properties have already received a setback as there are no new bookings. To add on to this, the ones which were already started, it will be quite difficult to launch them due to a standstill in construction activities and an exodus of the migrant workers.
A picture of Hyderabad
Residential properties in Hyderabad have started seeing some healthy appreciation, though. This is because the city has some of the best housing options at low prices. The reputed builders in Hyderabad, have faced a short-term delay in their project launches and construction activities, due to the lockdown. Due to this situation, the buyers might not get relief in terms of the money they have to shell out.
Gradual recovery has started, though, with a cooling-off period of 12-24 months. Experts predict a U-shaped recovery in the residential sectors and a faster V-shaped one for the commercial properties.