Realty Sector Losses Pegged at Rs 1 trillion by FY21-end
The coronavirus pandemic has had a detrimental impact on most sectors and economies and the consequent loss to Indian real estate sector is projected at Rs 1 trillion by the end of FY21 as per the KPMG report.
On the residential real estate market front, the credit crunch is expected to result in a contraction in residential sales across top seven cities to 2.8 lakh-3 lakh units in 2020-21 from 4 lakh units in 2019-20. In the commercial segment, despite the lockdown scenario and subsequent easing of restrictions, the IT-BPM sector is anticipated to continue driving demand for office space, it said.
Supply chain disruptions is likely to push up prices for raw materials. Limited room for passing on price hike and slow sales will lead to dampening of developer margins by 10-20 percent for pushing sales. About 40-60 percent fall in the overall retail supply may be likely in next four quarters primarily on account of lower consumer spending, delayed leasing, rental corrections coupled with construction cost and time overruns, the report said.
Closing agreements and relocation of slum dwellers to transit camps will be difficult during the outbreak, delaying slum rehabilitation related transactions. Approval processes backlog to increase, slowing down overall development pace.
Long term impact of the pandemic may lead to changing trends in interior layout and designs, increased technology use and adoption of augmented and virtual reality.