Coronavirus outbreak happened in Wuhan, China which lately spread in India. It impacted the business sector sentiment severely. The Real estate industry in India has been affected as new launches have been put at bay, site visits have dipped even the construction activities have come to a halt.
WHO (World Health Organisation) declared a global health emergency due to coronavirus on March 25th, and because of the lockdown, the business sector was severely impacted. Even the real estate industry has also been impacted due to Covid 19. Due to which there would be difficulties in procuring raw material which will reduce construction activities of ongoing real estate projects in the coming months even if the lockdown is lifted. All their new projects have been postponed.
India has been affected by the Novel Coronavirus, the virus is spreading like fire in the country. And it drastically changed everything, even our real estate sector, it was already struggling to re-emerge from the past turbulence of structural changes, liquidity crisis & policy reforms which again went to fallout.
The outbreak has resulted in plenty of uncertainties regarding trade and especially imports, not only from China but worldwide. This impacts the real estate sector the most. Moreover, with the current 36 -day nationwide lockdown getting extended, and no news around international trade getting open to the public. This will have a direct bearing on the prices of articles used in the construction industry in India like steel and other articles. Difficulty in procuring raw material would mean that the construction activities of ongoing real estate projects would be greatly reduced even after the lockdown is lifted in the coming months.
Despite the increase in the cost of raw material for construction and uncertainties around labour returning to metro cities from their hometowns post lockdown, property prices are expected to increase. This would make things difficult for interested buyers as it would create chaos for the owners in the resale market. And if Covid 19 will keep impacting the economic supply chains, then the decision regarding commercial investment may stray from real estate.
And if we talk about the people who were looking forward to investing in real estate, they might re-calculate their investment due to decrease in pay, lack of jobs etc. which will immensely increase till COVID 19 exists. Therefore, the housing sectors would witness a reduction in new launches and drop down in demand. Furthermore, due to these things, the demand for commercial real estate would also get curtailed.
After seeing all genuine crisis the industry facing, Confederation of Real Estate Developers Association of India (CREDAI) issued a statement where the following policy was sought from the Ministry of Housing and Urban Affairs:
The CREDAI has brought forth the proposal of the addition of Covid-19 as a force majeure condition in light of the country-wide lockdown which has led to nearly no economic activity and necessitated Work From Home arrangement in the private sector. The pandemic has further led to the complete shut-down of public and private transport except for those dealing in performance essential services.
In most the states, the workforce in construction-related work i.e. the informal sector, come from villages and small districts around the major cities where the majority of construction activity takes place. Due to severe labour shortage and strict government directives as mentioned, all the construction related work has come to a halt. Covid-19 has become one of the main of the reasons which would prevent developers from completing their projects within the estimated timelines as provided in their licenses under RERA registration
According to some reports, the impact of novel coronavirus on the real estate sector has been so immense that the well-funded projects have gone on halt and could take months to complete, while other projects could be delayed by two years.
Moreover, another industry body, National Association of Real Estate Developers Council (NAREDCO) has urged the government to allow construction work at project sites subject to adherence of safety measures and lift the lockdown on the same. The said request has been made to minimize losses and for finishing urgent maintenance and facilities like rainwater harvesting pits, storm drains, etc. before the onset of the monsoon.The Real Estate Sector contributes to 13% of the national GDP, is the second-largest employer in the country and has a direct effect on around 250 allied industries. Hence, it is of utmost urgency that the Government relaxes certain regulations to help the builders fulfil their commitments.
The Real Estate Sector contributes to 13% of the national GDP, is the second-largest employer in the country and has a direct effect on around 250 allied industries. Hence, it is of utmost urgency that the Government relaxes certain regulations to help the builders fulfil their commitments.