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Real Estate Challenges Ahead Amid COVID 19 Crisis

Real Estate Challenges Ahead Amid COVID 19 Crisis

Description

Real Estate Sector In India

Real Estate in India is generally providing the largest number of job opportunities after the agriculture sector. Real estate sector is providing Residential housing, commercial sale and commercial leasing. In 2019 it attracted around $5 bn, with the major proportion into the commercial market.RERA, Demonetization and GST has impacted demand which further gots stagnant due to economic slowdown, NBFC crisis and low buyer sentiments.

Impact On Residential Housing Segment

There is a halt in the constructive activities of the Residential housing segment due to insufficient supply on proper raw materials due to lockdown in COVID-19. The because of this pandemic in the whole world leads to Fall in sales and collection from customer because of a fall in demand, rescheduling

of new launches. As well as luxuriant projects were impacted too. The financial assets are also falling down in its value and liquidity as well. Hence there is a Tightening norm by NBFCs and HFCs for disbursement of fresh loans.

Impact On the Commercial Real Estate Segment

Under COVID-19 the demand for commercial sectors low-end as work from home and co-working is in increase.FDI expected to be on hold owing to limited new leasing activity. Invoking of force Majure clause causing renegotiating of agreement between

tenant s and landlords leading to weakening of cashflow. As well as there is slow down e-commerce due to this lockdown and would result in lowering the demand for warehousing facilities.

Migration Measures

In migrant measures there were several kinds of extensions such as Extension of period of registration of all registered project s where completion date, revised completion date or extended completion date expires on or after 15 March 2020 and statutory compliances by 3 months by Maha RERA. With this, there is a3 months moratorium on the term loan and interest on working capital till 31 s t May 2020 by RBI and Suspension of fresh insolvency action for 6 months by lender or creditor.

Conclusions

The sector is facing a lot of back locks in sales due to the lockdown in COVID- 19. It is further expected to lowdown due to pessimistic buyer sentiment. In this developer is having lower leverage so it will be easy to sustain in tough or hard times. Hereby office spaces and warehousing facility is expected to recover faster as compared to any other kind of real estates classes.