Property prices are likely to be down by 10-20% across the country as the COVID-19 pandemic stalls real estate business.
The outbreak of Coronavirus is set to expedite the woes of the residential real estate sector that has already been reeling from the adverse impact of the prevailing liquidity crunch. The virus has stalled businesses across the country and property prices may come down by 10-20%, said Pankaj Kapoor, chief executive of real estate consultancy firm Liases Foras.
Real estate sector was one of the first businesses to get suspended in India due to the novel virus outbreak, which has so far claimed about 72 lives. Since then, prices in most markets have held steady despite lending and shadow banking crises.
In the last year, liquidity crunch at shadow banks forced companies to offer discounts as they were after all big lenders to both developers and property buyers. However, reduced construction outflows, attributable to a slowdown in project execution activity, are expected to decline in net cash flows.
Nevertheless, the buyers can now expect far steeper cuts. Ram Raheja of S Raheja Realty in Mumbai says, “It is a complete buyer’s market. So if somebody wants to do the deal, they have reduced prices.”
According to a report in January by PropTiger, an online real-estate portal, the country has unsold units worth some 6 trillion rupees and that is just the number of nine major residential markets.
The impact of the 21-day nationwide lockdown would be felt across residential and commercial properties. It could get difficult to maintain cash flows.