Covid-19 Battered Residential Realty Demand In India To Halve This Fiscal Period: Crisil


New Delhi: Covid-19 battered residential-realty demand is expected to halve this fiscal, Crisil Research said on Tuesday.

According to Crisil Research, the already languishing residential real estate demand is expected to plunge 50-70 percent on-year in the current fiscal.

It cited the Covid-19’s devastating impact on economic activity and with it on big-ticket
spending. As a result, the credit profiles of small-to-mid-sized and leveraged developers will be impacted than larger, experienced developers with healthy balance sheets.

Consequently, with the demand going down, capital values will remain under pressure across cities. It expects a price correction of 5-15 percent across across
ticket sizes.

“Despite improved affordability, demand translation will be feeble led by income uncertainty arising from pandemic coupled with weak investor sentiment emanating from the pressure
on capital appreciation or rental yields in the sector over the past few years,” Isha Chaudhary, Director, Crisil Research said in a statement.

Accordingly, while demand for new units will see a sharp decline, the blow to customer collections will be cushioned by advances against already sold inventory realized in line with construction progress.

“The one-time relief for Real Estate Regulatory Authority (RERA)-registered projects would provide players an option to manage outflows through flexibility to delay construction spend,” the statement said.

“Postponing Capex and land banking plans could be another way. However, overall funding requirements are expected to rise as the hit in collections is expected to be far steeper than the decline in outflows due to deferred construction.”


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