According to a cross-section of real estate industry experts, affordable housing will be one of the most affected sectors due to the ongoing nationwide COVID-19 lockdown.
According to ANAROCK, a property consultant, nearly 40% of new launches added across the top 7 cities of India during the past few years have come in the affordable housing segment. The government’s strong push on ‘Housing for All’ mission and extension of several sops to the homebuyer and developer of this segment led to a wave of affordable housing developments.
“Amidst the current COVID-19 outbreak, we believe that the most affected segment of the working population is the target group for affordable housing developments. These homebuyers with limited income and lack of work from home facilities may have to face loss of pay or even jobs and may reconsider their purchase decisions. With affordable housing units accounting for around 36% of the overall unsold inventory across the top 7 cities as of Q1 2020, this segment was already being tested and the current pandemic outbreak has further worsened the situation. In our opinion, the unsold inventory in the affordable housing segment will register an annual increase of 1%-2%,” the report says.
According to Deepak Parekh, Chairman, HDFC Ltd., prices of real estate will have to come down. He feels that price will come down by at least 20%. On the other hand, NAREDCO is of the opinion that price may come down by 10-15%.
Rajnish Kumar, Chairman, SBI has the following suggestions for the developers:
- Industry should look to reduce construction timeline by using precast fabrication.
- Improve investor perception about real estate industry by adopting course correction.
- Days of real estate price rise are behind us, focus on clearing inventory.
- Push state governments and local body to reduce land price to reduce cost of construction.
- Engage on thorough market research before launching any product.
There is near unanimity in the industry revival of real estate industry may not happen in 2020. In the beginning of the year there were lot of hope about the revival of the industry. However, outbreak of Coronavirus and subsequent lockdown have completely changed the scenario.