 "Continued border tensions may dent housing and commercial realty: Anarock")
Continued escalating tensions at the border are likely to impact residential housing and commercial real estate, with prices of cement and steel remaining elevated and absorption expected to dip in the short term across both segments, according to real estate consultancy Anarock.
“Wars also stall construction and dampen end-user and investor confidence, with aspiring homebuyers putting decisions on hold. Retailers put a brake on their expansion plans, and tourists postpone their travel plans. Real estate markets adapt, pause, and then bounce back,” Prashant Thakur, regional director and head of research at Anarock Group, said in a note.
He added that residential absorption in Delhi-NCR and other parts of northern India could fall between 5 to 10 per cent in the short term, if the ongoing conflict between India and Pakistan broadens.
Luxury homebuyers are likely to defer purchase decisions, while demand for mid-income housing will be the first to recover once normalcy is restored.
Similarly, commercial real estate could be affected, with several multinational corporations (MNCs) putting their entry or expansion plans on hold.
“This would impact absorption numbers, but long-term demand—most notably from the GCC, BFSI, and IT sectors—will return and strengthen within 12 months or less,” Thakur said.
The report noted that retail may see a dip in footfall and a postponement of store launches. However, it added that larger malls would be less affected than high-street retail due to long-term leases and rent-waiver clauses.
“Nevertheless, India’s consumption will overcome these odds quickly, and Indian retailers have perfected the art of nimbleness during Covid-19. Expect highly imaginative promotions to draw the crowds back in,” Thakur added.
For the hospitality sector, Anarock predicted occupancies could drop by 10 to 15 per cent in major northern tourist hubs such as Delhi and Kashmir.
However, the report said domestic leisure travel—accounting for nearly 90 per cent of room-nights—may remain resilient, with a potential surge in ‘victory tourism’ once hostilities cease, similar to the post-Kargil trend.
Thakur said he does not foresee any significant drop in housing capital values unless hostilities extend beyond one financial year.
“Today’s market is dominated by large, listed and financially robust developers who do not carry excessive leverage. This gives them prolonged holding power, and major banks are also well capitalised,” he said.
He added that while price hikes may be paused in the short term, a sharp increase could follow next year due to higher construction costs.