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Coronavirus impact | Affordable housing may get affected in the short term

Builders must focus on execution and completion of projects to tide over liquidity issues, real estate experts said

Infrastructure_Construction
Infrastructure_Construction

The novel coronavirus, or COVID-19, pandemic may derail the growth momentum of affordable housing in the short term, some real estate experts have warned. They feel realtors must focus on execution and completion of projects to tide over the issue of liquidity.

At a webinar on Housing for All Knowledge Series hosted by NAREDCO, some real estate developers were of the view that once the coronavirus crisis abates, affordable housing may not remain the blue-eyed boy of real estate.

“Affordable housing sector may get impacted and revive only when the economy shows signs of improvement. The segment may not do well in the short term because blue-coloured workers may be worried about salaries. This is a reality we have to accept,” said Khushru Jijina, Managing Director, Piramal Capital & Housing Finance.

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However, Sanjay Dutt, MD and CEO, Tata Realty & Infrastructure, disagreed, saying “there may be some blue coloured workers who will be impacted, but on a large scale affordable homes will continue to receive traction as these are homes for urban India also.”

A lower demand could push up unsold affordable stock by at least 1-2 percent in 2020, ANAROCK said in a recent report. Around 6.1 lakh affordable units were under construction across top seven cities until the lockdown was announced, ANAROCK stated. This is over 39 percent of the total 15.62 lakh under-construction (UC) units in the top seven cities – the highest share of all budget categories.

With regard to the liquidity challenges being faced by the sector, realtors said the sector has faced several challenges starting with demonetisation, IL&FS, the NBFC crisis and now COVID-19 has derailed funding.

“Developers will need handholding and they will require money to complete the project. All stakeholders – the developer, the lender, the customer –want to get their investments back and for that the project needs to be completed for everybody to get back their money,” Dutt said at the webinar.

Experts said last mile funding is the need of the hour. “We require more of this last mile funding. We ourselves have started this last mile funding, we require more providers to ensure that the projects are over,” Jijina said.

As for the impact of COVID-19 on commercial real estate segment, some realtors felt that this segment may benefit in the long term from Western countries deciding to outsource jobs to India .

Real estate developers were of the view that COVID-19 would lead to new ways of conducting business with efficient use of technology. “One positive from the entire situation would be that developers will become efficient by using technology. Some have already started selling on the digital platform. This will be used for construction too,” Jijina added.

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First Published on Apr 16, 2020 08:05 pm
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