COVID-19 hits real estate sector demand in India
The beginning of the year 2020 came along with the global economic slowdown. COVID-19 pandemic worsened the situation for the already struggling global economy. The negative impact of these two factors is clearly visible on the Indian real estate sector.
Although the demands have improved in the FY20 when compared to FY2017-2019, the deadly virus is expected to decline the demand in the current fiscal year. Nation’s projected economic growth which stands at 5.5 per cent and the financial market meltdown are also resulting in adding numbers to unsold inventories.
As per the recent data available of the top six cities in India, the residential property sales fell four per cent y-o-y to 204 million sq ft in nine months of FY20 from 279.6 million sq ft in FY19. The affordable housing segment suffered the maximum decline in the nine months of FY20.
When it comes to unsold inventories, Chennai has maximum number of unsold inventory followed by MMR. Pune and Hyderabad have the least unsold inventory in April-December FY20. NCR on the other hand, recorded maximum decline in the said period while Hyderabad continued to grow with exponential growth momentum.
The real estate sector across India was expecting surge in demand during the festive season of Akhsaya Tritiya, Gudi Padwa, Navratri and Ugadi. These festivals are known to be auspicious. During this time of the year, developers launch new projects as many people buy new properties. Due to the deadly virus, the condition is not the same this year.
Due to the pandemic, the developers are sceptical about the market conditions. Many experts believe, it is going to result in 20-25 per cent fall in the new project launches this festive season. On the part of the buyers, the virus has made them uncertain about their jobs, which is impacting their decision to buy a new property.
Although the impact of the virus is not that extreme as compared to that of China or Italy, experts believe it slow down the Indian economy which might result in the delayed decision making and diminishing fund expenditures.