As per the Industry veteran Parekh, the world economy has never shrunk so quickly and is expected to shrink by 2% owing to the Covid pandemic. Nevertheless, he is optimistic regarding the growth of India. According to him, only 3 countries – India, China and Indonesia are the only countries expected to grow, among the G20 countries. He pointed out that among the G20 countries, the growth of India, along with China and Indonesia, looks positive.
Earlier in October 2019, India's growth recorded a seven-year low of 4.7%, due to the slump in manufacturing. Corona virus pandemic has disrupted the already struggling Indian real estate sector, as project sites are shut and site visits have been halted. With the stoppage of construction activities housing sales also been hit. The new work-from-home options being implemented by many MNCs, and many corporates delaying decisions on leasing, could have a lasting impact on this sector. With the global brands revising their expansion plans, Retail businesses also reported a slowing down.
The second wave of the Covid19 devastated the European country. Italy is one of the leading countries in exporting luxury construction, stone and fit out goods.
China, being the epicentre of the pandemic, halted its production as well as exports. Indian construction industry, relies on China for iron and steel products, technical construction equipment, electronic equipment, plastic and fibre elements, solar panels, furniture and fit out goods. Many Asian markets due to their heavily integrated supply chain with China, has been hit badly. However, India has been less affected, so far, due to the strong local inventory. The recent report by CBRE, points to a slowing down of the Indian and US economies causing delay in decisions and restricted capital expenditure leading to a slowdown of portfolio expansion. In the coming months the real estate sector can expect lesser footfall for new project launches, lesser walk-in enquiries. There will be delay in completion timelines of retail mall projects, as the sourcing of fit outs from China has been disrupted. With jobs becoming uncertain, many home-buyers might delay their purchase of new properties, since they do not want to carry the burden of extra EMI. The recent restrictions on social activity by the Government will adversely affect the site visits contributing to the spike of digital launches by the developers, where buyers are offered online site visits.
Slowing economy coupled with tumbling down of the share market to a record low, will impact all housing segments in the real estate. However, due to the government incentives supporting affordable housing schemes, the demand for this sector will remain high as before. In line with the global asset price crash there's a correction expected but the commercial leasing will still look un-impacted due to a healthy long-term investment by many international companies in the positive India growth story. With Chinese suppliers deferring the delivery time of fit outs and furniture, housing and the hospitality projects with tight deadlines are forced to source it from other markets. Though the Indian markets provide some alternatives, completion time and hand-over of many projects have been delayed owing to the fact that the cost competitiveness of the China market could never be matched. The positive growth depends on how India is going to tackle the epidemic. Real estate companies and allied industries must exploit this situation and turn it into their advantage by increasing the production and indigenous innovation. Though the Indian Government has rolled out many financial policies to tackle this pandemic, one has to wait and see how this will help the country overcome this crisis. Nevertheless, India and the world has successfully overcome many pandemics since centuries.