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FAQs: Impact of Coronavirus on Real Estate in India

FAQs: Impact of Coronavirus on Real Estate in India

1. What are the effects of the corona pandemic in real estate In India?
With the recent outbreak of coronavirus pandemic, the real estate sector in India is supposed to encounter behavioural changes in buyer patterns due to its direct impact on the global economy.
The impact of the coronavirus is having a profound and serious impact on the global economy and has sent policymakers looking for ways to respond and the real estate sector is no exception.
Reduced construction outflows, attributable to a slowdown in project execution activity, are expected to limit the overall decline in net cash flows, at least in the case of short-term disruption.

2. What was the prediction for Indian real estate in early 2020?
In early 2020, experts predicted that the Indian real estate sector would witness an increase in the demand for warehousing, e-commerce, and start-ups with an anticipated resultant boost in the realty industry. As these segments get more organized, the demand for real estate would surge in leaps and bounds.

3. What is the impact of the world GDP drop due to the corona epidemic?
The world economy is badly hit and the IMF first projections indicate a 0.5 % drop in the global GDP. The economic fallout could include recessions in the U.S., euro-area and Japan, the slowest growth on record in China, and a total of $2.7 trillion in lost output—equivalent to the entire GDP of the U.K.

4. What measures are being taken by SBI to control the market situation?
The State Bank of India will provide loans in an emergency to existing borrowers whose operations are impacted by Coronavirus. The loans will be granted at 7.25 percent (per annum) fixed rate of interest. The ad-hoc loan facility named – COVID 19 Emergency Credit Line (CECL) is aimed at meeting the temporary liquidity mismatch due to the outbreak.

5. Can a real estate developer use the corona epidemic situation as an opportunity to offload their inventory?
The developer can avail this opportunity to offload their inventory and generate positive cash flow. This cash flow can be utilized in completing projects and also paring debt.

6. Is this a stress-taking situation for the real estate developer or can they use this critical situation as an opportunity in their own beneficial way?
The recent outbreak of coronavirus has created a perplexing situation for the real estate developers as to how can they manage this situation. According to experts, this is high time residential developers should go aggressive and sell their inventory. However, for commercial developers, it is the time to stay cautious in launching new space and instead they can get into selling or leasing the current space even at a reduced price.

7. Which segment will see a positive impact in the current CORONA Pandemic?
Due to the reduction in home loan rates, the EMIs burden on buyers tends to go down and affordability increases. This will act as a booster dose for the housing market and it is a super good time for the customer to buy his home.

8. What is the impact we could see on the commercial development with the current Corona pandemic?
Due to the coronavirus outbreak, business decisions will get delayed for some time, which means if a company was securing some space in March, they will postpone it for a few months to gauge the impact of disruption due to the virus.
Besides deferring large space lease commitments, most of the firms are considering utilizing co-working centres to tide over their immediate requirements until the scenario get clear.