As coronavirus wreaks havoc across the world, almost all sectors, including the real estate sector, are suffering heavy losses. According to a recent report by independent property consultancy firm JLL India, there has been about 30 per cent drop in net absorption of Grade A office space to 8.6 million sq ft in India from January-March, compared to the same period last year.
In the wake of 21-day nation-wide lockdown, all kinds of construction activities have been stopped since March 25. This has resulted in a shutdown of works at construction sites, forcing migrant labourers to return back to villages.
Experts predict landlords may have to sit on locked capital or completed buildings, and that leasing activity will mainly be driven by renewal and consolidation works. "With fresh take up of spaces likely to be limited over the next couple of months, landlords might have to sit on locked-in capital (completed buildings) for a relatively long time period," Ramesh Nai, CEO of JLL India told The Times of India.
Another consultancy firm, Colliers, has also said gross office space absorption, including net absorption and under-construction properties, has increased 4 per cent to 12 million sq ft in the same period. It believes a complete picture regarding the impact of the pandemic may start reflecting from April.
The country has been facing an unprecedented crisis due to the coronavirus pandemic, which has stalled all major businesses across the country. With losses mounting by the day, India's real estate market may see a significant price correction for the first time in a decade, say industry analysts.
Niranjan Hiranandani, National President, NAREDCO has said that the country's economy was under tremendous pressure owing to exponential losses across sectors. "Real estate has been under consistent stress with rising unsold inventories, liquidity crunch and now with COVID-19," he said, urging the government to come up with an economic relief package for the stressed real estate sector.
The industry body has also urged the government to partially lift the nation-wide lockdown from April 14 at construction sites to avoid delays in completion of projects and minimise job losses, though speculations are rife the Centre may extend it by two more weeks.
According to the latest data by the Ministry of Health, the total number of active COVID-19 cases in India now stands at 7,367. The death toll in the country has risen to 273 and 715 people have been cured and discharged so far. Some states comprising Maharashtra, Punjab and Telangana have already announced the lockdown extension.
Edited by Manoj Sharma