India's residential real estate has been severely hit by nationwide lockdown and sales could fall by up to 35 per cent across seven major cities during the 2020 calendar year following the outbreak of COVID-19 in the country, according to property brokerage firm Anarock.
The pandemic would also adversely impact commercial (office and retail) real estate segment, which had been performing well during the last few years despite slowdown in the overall property market.
While net office space leasing could fall by up to 30 per cent to 28 million sq ft this year from 40 million sq ft in 2019, the absorption of retail area might drop 64 per cent to 3.1 million sq ft from 8.5 million sq ft during the period under review.
"COVID-19 will hurt Indian residential real estate already grappling with subdued demand and liquidity crisis," Anarock Property Consultants Chairman Anuj Puri said.
In its 32-page report 'COVID-19 - Impact on Indian Real Estate', Anarock said that the outbreak of this disease and resulting nationwide lockdown has severely hit residential real estate business and the sector has come to a standstill.
"With a screeching halt to site visits, discussions, documentation and closures, the early indicators depict that we are likely to face a tough time for the next few quarters and the sector's recovery has been pushed further away by at least a couple of years," the report said.
Anarock has presented two scenarios while projecting housing sales for 2020.
In a base case, the consultant said that sales could drop 25 per cent to 1.96 lakh units this year from 2.61 lakh units in 2019 across seven major cities -- Delhi-NCR, Mumbai Metropolitan Region (MMR), Kolkata, Chennai, Bengaluru, Pune and Hyderabad.
In the 'downside case', housing sales might drop by 35 per cent to 1.7 lakh units this year.
"Base case estimates assume the pandemic to settle down in one quarter and adequate stimulus provided to the sector. Downside case estimates assume that the pandemic extends more than a quarter with negligible or no stimulus for the sector," the report said.
Many prospective homebuyers will consider postponing their decisions either to stay away from the project sites or in the expectations of a price correction, it added.
Fresh supply of homes is likely to register an annual decline of 25-30 per cent this year from nearly 2.37 lakh units in 2019.
Talking about impact on non-residential segments, Anarock said that commercial real estate is also not immune to the COVID-19 fallout.
"Corporate occupiers are seen delaying their leasing decisions and still several MNCs and businesses are testing new waters of the work-from-home option. If proved successful, it could impact leasing activities in the future," the report said.
Retail businesses, highly dependent on consumer spending, are also witnessing a momentary slowdown and reduced interest from global brands who may now consider revising their expansion plans, it added.
Anarock projected office space leasing at 35 million sq ft in base case and 28 million sq ft in downside case during 2020, as compared with 40 million sq ft last year.
Leasing of retail space is estimated to fall 4.3 million sq ft in base case and 3.1 million sq ft in downside case during this calendar year from 8.5 million sq ft during 2019.
Anarock is a leading firm in organised housing brokerage business. News Corp-backed PropTiger, Anil Ambani-led Reliance group backed Square Yards, Quikr, 360 Realtors, Investors Clinic and Wealth Clinic are other major players.