Corona to deal Rs 1 lakh crore blow to real estate in India: Report
New Delhi: The already beleaguered realty estate industry in India will be deal with Rs 1 lakh crore blow by the current corona pandemic. There will be “doom and gloom” in the industry in the short term period of next 6-12 months, according to a report by KPMG.
However, there will be steady recovery in the next 12-24 months in the industry which supports about 250 other industries.
The retail segment of the real estate industry will be hit hard and the footfall in malls will go down by 50-60 percent and even overall trading density in malls will be lower.
The commercial real estate segment is, however, expected to do ell given the growth in IT-BPM sector which will overcome the current lockdown and overall negative sentiments.
In the current fiscal, the housing sales in the top seven cities of the country is likely to settle at 2.8 lakh-3 lakh units level. This will be significantly lower than 4 lakh houses sold in the previous fiscal of 2019-20.
Even the hitherto best-bet ‘affordable and mid-income housing’ will be majorly impacted due to the corona pandemic in the short term due to fears of job loss and income. In the second half of 2020, however, there will be a recovery. The raw materials prices are likely to go up due to disruptions in the supply chain and the developer margins will be impacted to the extent of 10-20 percent in their efforts to push sales as there is limited room for passing on the price hike of the raw materials.
The co-working centers in various major cities accounted for around 7 million square feet of space take up in 2019 but is likely to see major headwinds in the coming 9-12 months. The current short-term leases and the tenancy mix mainly of freelancers and start-ups, together with high capital expenditure requirements in the co-working industry will now cause business model challenges. The co-working operators may need to re-visit long-term business model and strategies for continuity of business.
The corona virus outbreak will also cause changes trends in interior layout designs of projects, especially commercial projects. There will also be higher use of technology and adoption of augmented reality and virtual reality in the real estate industry.