Lockdown Will Result In Stalled Construction, Delays In Projects and Loan Repayment

New Delhi: The current lockdown in the country will result in a vicious sequence of stalled construction, delays in delivery of projects, delays in repayment of loans and debt servicing to banks. There will also be an overall degrowth in demand due to poorer employment scenario and salary cuts. 

These factors have led to a marked downturn in marked sentiments of the real estate stakeholders in India. The index of sentiments of developers has declined to an all-time low of just 31in the first quarter (Q1) of2020.

The index, jointly prepared by Knight Frank - FICCI –NAREDCO says that the ‘future sentiment score’ reflecting the real estate industry’s market expectations has also dropped into the pessimistic zone at a score of just 36 in Q1 of 2020. The same score was 59 in Q4 of 2019.

“The pandemic has created an unprecedented condition which is impacting global markets and societies. There is already a severe shortage of liquidity due to the complete standstill that most economies have come to,” said Shishir Baijal, Chairman and Managing Director of Knight Frank India.

The sentiments of developers and other stakeholders of the industry with regards to economic scenario for coming 6 months paint a poor picture. As many as 76 percent of the stakeholders expressed the opinion that the Indian economy is headed for a downward spiral. As many as 70 percent of the stakeholders said that the flow of funds to the industry may become scarce or remain at the current levels in the next 6 months.