Reality of realty post-Covid-19: Here're factors that may impact growth

With the Covid crisis continuing to wreak havoc in the market, its short-term impact in the coming 6–12 months is likely to be quite a dampener for the recovery of the real estate sector, forcing the players to contract operations, revisit planned developments, expansions, and investments.

In the medium term, the recovery process will see rapid traction, bringing new opportunities while long-term outlook in the coming 18–24 months may likely emerge positive. A look at the impact of Covid-19 on the sector:
 

Factors that may impact growth
 

Commercial
 

• IT sector to perform moderately with 0-2 per cent expected revenue growth
• Co-working spaces to face major headwinds over the next 9-12 months
• IT-BPM sector anticipated to continue driving demand for office space

Retail
 

• 50-60% contraction in mall footfalls from pre-Covid levels in medium term
• Two key footfalls drivers – food courts and multiplexes -- expected to remain non-operational even as lockdown restrictions are eased
• 25-30% impact on overall businesses impacting supplementary industries and resultant job losses

Hospitality
 

• Operating performance of hotels likely to be poor for Q2, Q3
• Domestic travelers to drive early recovery compared with foreign travelers
• Operating performance of hotels expected to be back to pre-COVID-19 levels after 18 months

Data centres
 

• Data traffic has increased more than 20% compared to the pre-COVID-19 period
• Capacity utilisation is set to increase from the current 35-40% to at least 50%

In the making by 2022
 

• 12 data centre projects
• Area: 1 mn sq feet

Source: KPMG