In the last few quarters real estate sector had started seeing the emergence of the first green shoots of revival. There was an increase in demand and decline in unsold inventory. However, the covid-19 outbreak has put a dent in the expected recovery of the real estate sector. According to a quarterly report, Residential Market Update January-March 2020, by 99acres.com, a real estate portal, “the Jan-Mar 2020 quarter witnessed the housing industry on a revival mode with both enquiries and sales volume growing, albeit moderately, versus the previous few quarters. The month of March, however, unfolded unexpectedly with the outbreak of covid-19. The situation brought property site visits and construction activities of over 15 lakh units to a temporary halt across metro cities."
Most of these stalled under-construction units are in two major cities. Of the 15 lakh units spread across the top eight metro cities in India, the Mumbai Metropolitan Region (MMR) holds 57% of the inventory, that is 8.90 lakh units. This if followd by Delhi NCR, which has 27% or 4.25 lakh stalled units, the report stated.
Covid-19 is expected to impact demand, and the biggest worry of the developers is unsold inventory, which is still very high. According to the 99acres report, there is a total unsold inventory of around 6.24 lakh residential units in the top eight metros. Of the 6.24 lakh unsold unitsin these metros, about 36% fall within the affordable housing bracket.
Within the residential housing segment, the affordable housing segment may be the worst impacted in terms of demand and sales. “Slow-paced offtake of homes under Pradhan Mantri Awas Yojana (PMAY) and compromised amenities in such projects may make matters worse goinf forward," stated the report.
As far as property prices are concerned, according to the report, they may dwindle in the short- to mid-term due to the hit that the sentiment of prospective homebuyers has taken. On the other hand, rental costs may go up because of the slowdown that is expected in real estate sales in the upcoming quarters.