Highrises Of Nightmares! Why Coronavirus Will Extend Slowdown Period In Real Estate Sector

Revival of the Indian real estate sector, one of the largest employment generators, seems to have hit another brickwall in the wake of the panic generated by the spreading coronavirus, the rising death toll and an economy in temporary lockdown. Many had been looking forward to 2020 heralding the return of buyers for commercial and housing properties, given the government incentives, particularly for affordable housing segment, and the recent lowering of interest rates. In addition, the recent turmoil witnessed in the financial markets had raised hopes that investors would look at real estate as a safer investment option, considering that property prices have dipped in many cities.

“One could previously have surmised that the downfall in the stock market would have benefited real estate. However, considering the present scenario and its inherent challenges, inv­estors will largely stay away from this sector as well,” states Anuj Puri, chairman, Anarock Property Consultants. He feels the bloodshed in the financial markets will further dampen homebuyers’ sentiments for investing in cost-intensive real estate.  As such, the wait-and-watch scenario will get ext­e­nded, affecting housing sales in the coming quarter.

Indeed, such a cautious sentiment may even extend the slowdown period in the real estate sector, which witnessed a sharp fall in demand post the global financial crisis in 2008. India’s demonetisationin November 2016 did further harm.

The raft of problems plaguing the ord­inary buyer of property is exemplified by say, Mr X, a former ICICI emp­loyee who bought a house in 2015 in Gardenia Aims Glory in Sector 46, Noida. “The developer gave us an alibi that due to some government intricacies, registration process would take time but will happen within a year. Four years later there is no sign of that,” says Mr X, who doesn’t wish to be identified. His second property at Neemrana, bought for Rs 25.5 lakh in 2012 has depreciated in value, and is worth Rs 18 lakh. Similarly, the Noida property which he got for Rs 48 lakh is now worth Rs 38 lakh. Though Mr X would like to relocate to Gurgaon, he is unable to do so, given the low market rates of his properties. While everybody is saying it’s a buyers’ market (where buyers determine prices), for people stuck in a limbo like Mr X it is neither a buyers’ nor a sellers’ market. The year 2020 started with a hope that things would look up. COVID-19 is likely to delay the good news.

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