The impact of the novel Coronavirus on Indian real estate has been unprecedented. In the first three months of its outbreak, it brought construction activities to a halt and significantly eroded the market of its potential buyer-base. With property transactions dipping to near-zero during the nation-wide lockdown between March and June 2020, the realty sector faced some of the most challenging times ever. The interdependence of supply chains, migration of labourers, cost overruns, and liquidity constraints came to fore and emerged as some of the looming challenges.

COVID-19 has infected more than 5,32,81,350 people worldwide and has claimed over 13,01,021 lives across the globe (As on November 14, 2020). With the World Health Organisation (WHO) declaring it a global health emergency and pandemic on March 11, 2020, the sentiments of businesses worldwide have been severely impacted and are mostly negative in their outlooks. The outbreak has created a great deal of uncertainty regarding trade and imports across the globe.

In the Indian context, the impact of COVID-19 outbreak seems devastating. With the national GDP plunging into negative figures, the country seems to be facing one of its worst economic recession. The real estate sector, too, touched the lowest of lows during the almost three-month-long nationwide lockdown. While construction activities came to a sudden halt, reverse migration of labourers made the resumption of work even difficult. Developers faced severe liquidity constraints and homebuyers lost a significant appetite to buy a property after the job market got gravely bitten. Home sales and new property launches suffered a great deal as the nation struggled to battle the pandemic. Six months into the situation, real estate demand seems to be picking up with genuine homebuyers willing to take advantage of the reduced demand and increased negotiation potential. Development work across construction sites, too, seems to have begun, albeit at a slower pace.


Let us discuss the possible impact of the novel Coronavirus on Indian real estate and allied industries in detail.

A quarter after COVID-19


Talking about the impact of the novel Coronavirus on Indian Real Estate, in an exclusive interaction with, Binitha Dalal, Head of Department – Fund Raising, Rustomjee Group, Mumbai, says that the affordable residential segment could receive a push post this crisis.


The second quarter of the year 2020 saw a severe blow of unprecedented scale to the industrial activities in general and real estate sector in particular. The sudden halt of construction activities had indicated that businesses are going to suffer. However, the scale of loss was unknown.

After a quarter of the pandemic outbreak, the assessment of the business loss and estimation of a dip in residential unit’s sale, as well as project launches have started to pour in.

According to an in-house research report by 99acres, property sales declined by 80 percent in eight major real estate markets of India during April and May 2020, as compared to a year before. New launches suffered a drop of over 75 percent as compared to January and March 2020. If the property markets of Delhi, Hyderabad and Mumbai are considered, new projects launches dipped by 80 to 95 percent each, QoQ.

Other reports from leading research organisations are also depicting a similar picture. According to a recent report by India Ratings and Research (Ind-Ra), the ongoing COVID-19 pandemic is likely to push overall residential demand down by 25 percent, in comparison to 2019. Maximum decline in sales is seen in the affordable housing segment, i.e. homes priced up to Rs 50 lakh.

If the unsold inventory is any indication of the home buyer’s sentiment across India, the Q1 of 2020 has seen a spike in the numbers.
According to the latest report by real estate consulting firm JLL, the Indian real estate sector is sitting at an unsold inventory worth Rs 3,70,000 crore. The Q1 of the year 2020 saw a significant increase in unsold inventory as launches outpaced sales by a significant number. The unsold inventory rose from 4,42,228 units in Q4 2019 to 4,55,351 in Q1 of 2020.

If we go by the report titled ‘India Residential Market Update Q1 2020’, Mumbai surpassed Delhi NCR in terms of unsold inventory. The report has hinted at a significant rise in time to sell in coming quarters.

Is real estate recovery on the cards?


As the nation is progressively opening up after the lockdown, the real estate markets have also started to recover. As per several leading research reports, India’s residential real estate market is on the path to a decisive return of serious homebuyer enquiries, which are at 50 percent of the Pre-COVID-19 levels in top cities.

Interestingly, Bangalore is leading the nation in terms of real estate recovery, and current enquiries have returned to 70 percent of the January-February period, followed by Gurgaon at 65 percent.

As per a report by Knight Frank, the widely talked about ‘Green Shoots’ for the Indian real estate will be led by the affordable housing segment. As affordable housing is an end user-driven market, prevailing low property prices and interest rates might propel the home buyers to make a purchase.

In a starkly different phenomenon observed by Knight Frank, while domestic real estate buyers are still in the wait and watch mode, the Non-Resident Indians (NRIs) are actively inquiring about the property deals available. The primary reason for this trend might be attributed to a weaker rupee, return of several Indians from the Middle East and lower housing loan interest rates.

Apart from NRIs, the slowdown caused by the pandemic is being used by the luxury homebuyers as an opportunity to invest in premium properties. According to a trend observed by real estate consultancy firm Liases Foras, the luxury homebuyers in Bangalore have readily invested in premium properties during Coronavirus pandemic. The primary reasons behind this trend are attractive discounts and deferred payment facilities offered by the developers during the pandemic situation.

Similarly, the premium homebuyers in Bangalore are also investing in banded/high-value plots. The situation is a win-win for both the parties. While the buyers want to own assets, the developers are also keen on monetising their assets quickly.

How did Coronavirus affect Indian real estate?


Discussing the aftereffects of the COVID-19 induced lockdowns, in an exclusive interaction with, Deo Shankar Tripathi, MD and CEO, Aadhar Housing Finance, says that though demand remained muted in the past six months, it will be on a path to recovery by the year-end.

India imports many types of construction materials from China on a vast basis. Some of these are:

  • Iron and steel products
  • Technical construction equipment
  • Electronic equipment
  • Plastic and fibre elements
  • Solar panels

At a production capacity of 928.38 million ton (MT) in 2018, China remained the largest producer of steel. Although India is the second-largest producer, it lags severely in terms of production capacity, which stands at 106 MT. This heavy reliance on China for steel and steel-related products became the biggest cause of concern for the real estate sector. With steel production in China going down, prices in allied industries increased, thereby increasing costs and reducing the profit margins of real estate developers in India. The slowdown in the construction industry in China put downward pressure on global metal prices as well.

According to a report by CBRE, more than 300 Fortune-500 companies were operating in Wuhan, China, in 2019. The outbreak compelled such companies to offer more flexible work practices such as ‘Work from home’. Many businesses were forced to delay real estate decisions and restrict new launches. Earlier, it was believed that mainland China will be more affected by the outbreak, and neighbouring countries might only have a transitory dip in business activities.

However, the outbreak eventually gripped the entire world into its clutches. The number of infections are still increasing at a worrisome pace in India. In the short-term, the real estate sector received a serious setback. This was reiterated by the FICCI-NAREDCO real estate sentiment index for Q1 2020, which stated that the sentiment of real estate stakeholders reached an all-time low score of 31.

An in-house survey by 99acres also indicated that 53 percent of the home buyers deferred their purchase decisions indefinitely, post the outbreak of COVID-19 in February 2020. Nearly 74 percent of real estate brokers also suggested that they were looking at reduced asking prices by homebuyers. On top of these dismal predictions, an unsold inventory of 6.24 lakh units, being worth around Rs 3,70,000 crore, was lying in the top eight metropolitan cities of India. A years-to-sell survey conducted by JLL also revealed that the average time to clear this stock rose to 3.3 years in the wake of the COVID-19 crisis.


How can the pandemic be used as an opportunity for the Indian economy?


An opportunity for ‘Make in India’

If we look from the Indian business perspective, the COVID-19 outbreak might be an opportunity for Indian businesses to increase production capacity and give a thrust to the “Make in India” campaign.

The Indian Government is also encouraging companies in the steel industry to increase production capacity and grab a larger market share. The Ministry of Steel is preparing a strategy paper to facilitate the production of 10 million tons of special steel at the cost of Rs 50,000 crore, with the initiative having the potential to employ around 50,000 workers.

Now that the Chinese supply lines have been largely restricted, the industry is looking at the opportunity to explore other markets to procure raw material and thus decrease dependence on Chinese imports. This could be a blessing in disguise for the indigenous production of imported goods such as metal panels, steel bars, heavy machinery and coke.

Furthermore, solar panel manufacturing companies can also benefit from the reduced supply from China, and increase production to bring down long-term costs. Moreover, a sudden windfall from the exceptionally low prices of oil has left the Central Government with surplus money. This money can be utilised to support the manufacturing industry and provide relief to the housing sector.

Echoing the same sentiments, Pankaj Kumar Jain, Managing Director, KW Group, says, “The effect of the outbreak of the novel coronavirus on Indian real estate has been humongous. As China is directly affected, the supply side constraints present an opportunity to explore other avenues for raw material procurement. The sector is already facing headwinds of a global economic slowdown as well as tepid demand. As the outbreak has become a threat to the Indian economy, the Government must take tough measures to prevent the spread of infection so that business sentiments are not affected further.”

An opportunity in the Indian commercial real estate market

With several large corporates retreating from China, India presents a ready-made ground for commercial and manufacturing infrastructure development. It is also accompanied by a proposed overhaul of the Foreign Direct Investment (FDI) policy to enable easier entry of foreign players.

According to a recent report by JLL, the following factors make India an apt alternative of China from a commercial infrastructure perspective:

  • The industrial real estate market of India has attracted FDI of over USD 10 billion since 2017, backed by professionally managed groups.
  • India boasts of a ready-to-shift industrial infrastructure to the tune of approximately 22 million sq ft. The same is in the ready-to-be-occupied state, within six-to-eight weeks of initiation, across the major manufacturing clusters.
  • India has an ample amount of pre-constructed/ready infrastructure of standard specifications with a minimum height of 13-meters, and a floor strength of 6 ton per sq mt.
  • Since renting factories in India with a lease tenure of nine years and above can significantly reduce expenditure on land and buildings, the investment and re-location towards India shall result in higher capital expenditure savings for foreign companies.
  • The saving in capital expenditure can be utilised for servicing a significant part of operational expenditures.
  • Major institutional industrial developers in India include ESR, Hiranandani, Wellspun, Indospace, Jalan, Logos, Apeejay, Ascendas, Allcargo, Firstspace, Embassy Industrial Park, and Mahindra World City, among others.
  • New, innovative and faster entry models, facilitated by an improved ranking in the ease of doing business indices has resulted in accelerated market entry for foreign players intending to set up shop in India.

Expressing hope that the demand for co-working spaces will see a rebound in the Post-crisis scenario,Lavesh Bhandari, Co founder & CTO, Qdesq, in an exclusive interaction with,says that the Government response towards Coronavirus has been decisive and and effective.

Impact of COVID-19 on commercial and retail real estate in India


As per a report by Cushman and Wakefield, the Indian commercial real estate segment is relatively stable and not as volatile as the stock market. However, with the global supply chain getting affected by the pandemic, the feeder impact will be seen in commercial markets as well. If the immediate-to-short term effect is considered, commercial leasing and co-working activity will be hit tremendously. However, in the longer term, the commercial real estate segment will be the quickest to bounce back. The majority of lost output has the potential to be gained back in the latter half of 2020.

According to the Blackstone Group, one of the largest office space owners of India, the COVID-19 outbreak has delayed project completion timelines, reduced demand and softened rentals, at least for the next few months.

The outbreak has also pushed regular investors towards more secure instruments of investment such as Fixed Deposits (FD) and Gold, and this trend is going to stay for the second quarter of 2020, as well.

According to the real estate consultancy firm Liases Foras, commercial property prices might witness a decline of 10-20 percent, while land prices could see an even higher reduction of 30 percent by the end of this year. In a survey jointly conducted by the Federation of Indian Chambers of Commerce and Industry (FICCI) and Dhruva Advisors, 72 percent of the total survey respondents said that they are experiencing high-to-very high levels of negative impact on their businesses. As per a separate question in the survey, around sixty percent of the respondents have deferred business expansion plans for 6-12 months.

The retail sector, too, has faced the brunt of the three-month-long nationwide lockdown. A quarter later, while the commercial office market seems to be recovering slowly, the retail sector continues to see significantly less traction.

Anshuman Magazine, Chairman and CEO, India, South East Asia, Middle East, Africa, says, “The rise in COVID-19 cases has impacted retail consumption as people have started to avoid crowded areas, especially eateries, entertainment centres, and shopping malls, amongst others.”

In a Twitter Chat conducted by, Kishore Jain, President, CREDAI Bangalore, said, “The rentals in the retail industry are most likely to dip, owing to the COVID-19 outbreak. The office space market may not see any significant impact on rentals, however, the co-working segment may have to undergo some design remodelling, since larger spaces would become the norm. Since co-working providers may have to create larger and more flexible spaces, the rent per seat may not decrease."

As the commercial real estate segment of India is not closely related to China, the impact will be minimal. Despite this, the trajectory of this viral infection and the government capabilities in taming the same will play a significant role in its effects on the real estate sector as a whole.

What is the long term impact of Coronavirus outbreak on REITs?


Recent reports suggest that the fallout from the pandemic is expected to be a hurdle for planned investment and fundraising activities through Real Estate Investment Trusts (REITs) this year. Koshy Varghese, MD, Value Designbuild Pvt Ltd, avers, “The effects of the shutdown have been felt by the real estate investment sector. I am apprehensive about the targets being met by all concerned stakeholders this year. On the positive side, I am confident that towards the end of the outbreak, we will see an upward increase in the fundraising activity.”

As per analysts, any large-scale calamity can lead to occasional positive disruption in earnings for pioneering REITs such as the ones proposed to be established this year. However, sentiments would largely be negative for real estate fundraising of any kind.

A report by Edelweiss Securities says that although office space leasers benefit from the long-term nature of collaborations, such developers will have to work harder toward tenant retention and revenue stability as large corporations will insist on softer leasing terms amid the challenges initiated by the outbreak. According to a report by JLL, construction delays are imminent, and occupiers will take longer to make decisions, resulting in a 20-30 percent drop in leasing rates, directly affecting income sources of REITs this year.

However, despite all the negativity, a general sentiment among market stalwarts is that once markets start to open up, REITs and large commercial spaces will continue to be in demand due to an otherwise volatile stock market. In a recent example, Rossari Biotech and Mind Space Business Parks IPOs were finally launched after an initial deferment due to Coronavirus pandemic. In fact, the Mind Space REIT saw 13 times of subscription value and was listed with 11 percent premium.

Indicating a gradual recovery, a slew of more IPOs such as Angel Broking, UTI AMC, NCDEX and Kalyan Jewellers are likely to hit the market later this year. The Brookfield REIT, planned to be launched in January, is another IPO that investors and industry experts are looking forward to.

How can the COVID-19 outbreak affect REIT fundraising?

The first upcoming hurdle arises with the Central Government declaring that it would charge tax on profits or dividends flowing into the coffers of shareholders and investors of REITs. This dividend amount was, so far, non-taxable.

Secondly, there are key meetings regarding crucial decision-making around real estate investment that requires representatives to be physically available, so as to depict and ensure credibility to investors. Physical gatherings have been put on hold by corporates across the country.

Every stakeholder is taking a calculated look at the various possible outcomes of the COVID-19 pandemic on the global economy and commercial real estate, and are thinking twice before taking any irreversible investment decisions. This wait-and-watch approach is bound to cause delays in the timelines of planned fundraising exercises as commercial real estate deals would be hanging in limbo.

Demand for REIT fundraising for commercial real estate was expected to be strong this year, following a record high of 60 million sq ft of commercial space being leased in 2019. However, expansion plans and quotes for space requirements have been put on a backburner through the last six months, thus impacting the valuation of proposed REITs that would be set up this year.

Has the Government issued any breathers for REITs?

The Securities and Exchange Board of India (SEBI), the capital market regulator, has offered temporary relaxations in compliance requirements for REITs in the wake of the pandemic. According to the initiative, the due date for completing regulatory filings and compliances for the financial quarter ending March 31, 2020, has been extended by one month, over and above all concerned timelines.

Additionally, SEBI has provided an extension of one month on the half-yearly compliance certificate on share transfer. REITs listed on the stock exchange can take a breather of three weeks on compiling results of the quarterly shareholding pattern, and a month on filing the annual corporate governance report. Owing to the viral outbreak, listed companies had a 45-day leeway, i.e. until June 30, 2020 to disclose fourth quarter and annual earnings.


What is the impact on real estate stocks?


Immediate Impact

The Coronavirus pandemic swept away almost one-third of the global market cap (capitalisation) during March and April 2020. Markets across the world were crashing, and ripple effects were being felt across the globe. If we talk about the stock market in the United States of America, the Dow Jones fell by nearly 12.9 percent then. This was the lowest level since Black Friday of 1987.

Indian stock markets behaved no differently. The Bombay Stock Exchange (BSE) tanked 1,836 points while the National Stock Exchange (NSE) plunged 494 points in a single day on March 16, 2020. This decrease amounted to wiping out hundreds of crores from the market. The novel Coronavirus-induced crash hit almost every class of assets, and stocks of Indian real estate companies were not spared.

If we take into account the S&P BSE realty index, which tracks important stocks in the real estate ecosystem, the March 2020 crash was the steepest crash the market had seen in a long time. The market lost over Rs 6 lakh crore of investor wealth within 15 minutes of trading.

stocks graph


Under a state of uncertainty over the outbreak trajectory in India at the time, the realty stocks showed mixed responses. Major players such as DLF, Prestige, Mahindra, Kolte Patil registered decent growth. Sobha Developers also registered laudable growth numbers, especially as they launched an online portal to help clear their unsold inventory.

Two quarters later

Although a sudden stoppage of construction activities has had a decimating short term effect on the real estate stocks, the scenario seems to improve two quarters later. In the shorter run, the average consolidated residential sales value for listed players including DLF, Oberoi, Prestige, Sobha, and Kolte Patil fell by 43 percent YoY, bigger players are still at an advantageous position due to low debt and strong liquidity backing. After six months of the pandemic outbreak, the overall sentiment is that the worst is over, and it is an apt time to invest in realty stocks.

As the construction activities have resumed full throttle, the investors are again looking at the realty stocks with hope. Moreover, according to leading research reports, owing to depreciating rupee value, the Non-Residential Indians (NRIs) are showing a keen interest in the Indian real estate sector (US Dollar 13.1 Bn in FY 21). This would have a direct bearing on the real estate market shares. Factors such as the upcoming festive season, attractive discounts, the scope for negotiations and interest subvention schemes launched by leading developers (Godrej) will aid the efforts towards a gradual recovery.


NRI investment in real estate amid COVID-19


The Coronavirus crisis created an investment opportunity for Non-Resident Indians (NRIs) in the Indian realty sector since USA and Europe were severely hit by the pandemic, adversely impacting opportunities in those regions. This upped the ante for Indian markets as ex-pats increased their focus on investments in the real estate market back home.

Another factor, which continues to fuel this trend, is the falling value of the Indian Rupee against the US dollar. While the phenomenon is not suitable for the economy, it is beneficial for NRIs as it leaves them with more disposable money to realise investments in Indian markets. The graph below indicates that between March and May 2020, (the duration in which the COVID-19 spread across the globe), the value of Indian Rupee dipped from Rs 71.32 to Rs 75.36 against the US Dollar. Today, in October 2020, the value of Indian Rupee stands slightly corrected at Rs 73.32 against the US Dollar.

 Rupee Value


In addition to the falling value of the Indian Rupee, dismal returns from other investment instruments such as gold and Fixed Deposits (FD) have also left NRIs with very few sustainable investment options. The price of gold in the weight category of 10 grams is not that attractive anymore (Rs 52,800 as on October 12, 2020). The interest rates of FDs are also on a downward spiral every passing year. The returns on FDs fall between 5.50 to 6 percent for various banks.

Moreover, with the reduction of Repo Rate to four bps has also made way for sufficient liquidity in the market. The lower repo rate is expected to translate into cheaper credit for loan seekers and will help potential NRI homebuyers to raise funds.

According to a survey by, two-thirds (around 66 percent) of the participants voted in favour of a decrease in property prices once conditions get better. NRI investors are also getting more time to deliberate upon and research properties online. In addition to this, investors are also hoping to get attractive deals, post the lockdown period.


State of Private Equity (PE) investment


Post the pandemic hitting the country, the private equity investments in the real estate sector took a massive hit. As per recent reports, between January and August 2020, the private equity funding plummeted by 85 percent, YoY, and stood at $ 866 million, as against $ 5,795 million last year. Both foreign and domestic investors have taken a cautious stance. The new asset classes, which are finding ground in the post-COVID world, are data centres and rental housing. The logistics and warehousing sectors have also been able to retain the investor’s confidence. The retail sector has been the worst hit as the recovery continues to be at far sight.

As per a report by Cushman and Wakefield, private equity inflow in 2020 is expected to remain 45-50 percent lower from a year ago. However, the report states that the decline might be short-term as most funds must be realigning their investment strategies.

Further, quantifying the impact of Coronavirus impact on the construction industry, KPMG stated that the overall impact of novel Coronavirus or COVID-19 on the construction sector can be estimated to be of over Rs 30,000 crore in the short term.

The pandemic is also expected to reduce the investment in construction-related projects ranging from 13 percent to 30 percent. It will also affect the overall Gross Value Added (GVA) and employment generation capacity of the real estate sector.

What measures are developers and agents taking to ensure the safety of homebuyers and employees?


Amid the current safety risks, traditional real estate practices have become a tightrope to walk as real estate developers are trying to balance financial responsibilities with safety measures to protect employees, and buyers from the COVID-19 infection. The measures include maintenance of strict hygiene rules inside the premises, social distancing, and even cancelling potentially crowded events.

A large number of developers have already rolled-out precautionary measures to showcase their flats, such as

  • Temperature screening of workers and staff members,
  • Obtaining travel history declarations of the visitors,
  • Increasing the frequency of disinfection/sanitising practices inside the office
  • Making ‘Face Masks’ compulsory
  • Companies are exploring ideas in the field of online marketing including interactive e-brochures and curated content for social media

Globally, every company is embracing the culture of work-from-home. In India, many large corporations, start-ups, and technology majors are slowly adopting the remote work methodology. The companies offering remote working models have prominent names, such as Flipkart, Snapdeal, Uber, Paytm, Wipro, and Infoedge, among others.

Eshwar N, Chief Marketing Officer, Casagrand, explains “The health and safety of employees are of paramount importance. As a preventive measure, we have provided alcohol-based hand-sanitisers and disposable face masks to all our employees and the construction crew. We have also conducted a health and awareness camp at the office and at construction sites, to ensure that employees are aware of the health hazards and the best practices to mitigate the risk of infection."

Other than self-taken measures, the guidelines issued by the National Association of Realtors (NAA) also propose alternate marketing opportunities for real estate developers, including virtual tours of a property.

Commenting further, Kshitij Nagpal, President, Association of Property Professionals, avers, “Real estate developers are the most proactive set of people who have a huge responsibility of looking after the community, by providing them with a safer environment in terms of living and working spaces. The residential and commercial workspace buildings have been equipped with special instruments and the maintenance staff has been trained with regards to the best cleaning practices to curtail the spread of the virus.”

As informed by Vishal Parwani, Owner, SSB Properties, Bangalore, “At the start of the pandemic, developers across the city were working at half the usual capacity. This was to avoid congestion within the office premises. At the construction sites, the entry of visitors had been prohibited after 6:00 pm. However, the situation is gradually improving and site visits have restarted in a phased manner. Moreover, visitors are being provided with face masks to keep themselves safe. We are also sending e-brochures and property-walk-through videos to the potential buyers.”

What measures are residential societies taking to curb the spread of Coronavirus?


After a quarter of the initial restrictions, residential societies are ensuring that 'social distancing' is strictly maintained at societal events.

  • Residential societies are taking progressive steps to disinfect societies by outsourcing the job to professional cleaning service companies
  • A few societies have installed wash-basins outside their premises and use of hand sanitisers is a must before entry
  • Body temperature of the visitors is checked and the entry is restricted if it is above the safety threshold
  • Face masks are absolutely mandatory at all times
  • RWA meetings are being held with proper social distancing norms
  • Use of ‘Aarogya Setu’ Application (App) is mandatory for the residents and the visitors

Measures taken by the Government to provide relief to the Indian real estate sector


Before the COVID-19 outbreak, the Indian economy was one of the fastest-growing economies of the world (According to the International Monetary Fund). As a result of the breakout, the economy was on the back foot, and so was the real estate sector, which was dealing with many other issues since the past few years. To handhold the real estate and construction sector, the Central Government has rolled out certain policy measures at regular intervals (Latest being on November 12, 2020).

  • The differential of circle rate and the market price has been increased to 20 percent from earlier 10 percent. It will be applicable on sale of residential units up to Rs 2 crore. This change will help both homebuyers and real estate developers. (will be applicable till June 30, 2021)
  • The Central Government has also announced an additional outlay of Rs 18,000 crore for the urban housing schemes. It will help in completing stalled real estate projects. The liquidity measures are over and above Rs 8,000 crore already provided this year.
  • Announcing relief measures for aggrieved real estate developers after the Coronavirus outbreak, the Central Government had increased the threshold for initiating default proceedings under the Insolvency and Bankruptcy Code (IBC) 2016, from Rs 1 lakh to Rs 1 crore. This will help keep a check on unscrupulous and frequent insolvency proceedings against developers, especially during tough economic times.
  • The Government has urged the State governments to utilise the Rs 31,000 crore fund for the welfare of construction workers, so as to minimise the adverse impact of the nationwide lockdown (now lifted) on the same.
  • The release of a relief package to the tune of Rs 1.71 lakh crore will benefit migrant construction labourers.
  • The Central Government had urged State governments to invoke the ‘Force Majeure’ clause of RERA so that the registration and completion schedule of the real estate projects can be extended by at least six months. Currently, over 20 states in the country have done the same.
  • Various State governments (Delhi, Maharashtra, Gujarat, and Uttar Pradesh etc.) offered compensation to migrant workers for loss of employment and arranged for food and temporary shelters for the same. The Delhi government had also offered to pay rent on behalf of migrant citizens so that they stay put at their place of residence.
  • A judgement of the Supreme Court of India to categorise construction workers and labourers as consumers has also helped in this regard. It has ensured that no statutory benefits are denied to this section of people.
  • In a major relief to corporate real estate borrowers, the Central Government has decided to suspend Section 7, 9 and 10 of the Insolvency and Bankruptcy Code (IBC).
  • In the second round of relief measures, the Central Government rolled out a package of Rs 20 lakh crore, including the revival measures taken by RBI.
  • Providing incentives to cash-starved Non-Banking Financial Companies (NBFC) and Housing Finance Companies (HFC), the Indian Government has provided a special liquidity facility to the tune of Rs 30,000 crore. This will pump up the much-needed cash flow in the real estate market, which is one of the foremost borrowers for NBFCs. The refinancing window for HFCs will work to rekindle the interest of homebuyers in the housing segment.
  • The construction contractors engaged with government infrastructure companies have been given an extension of up to six months to complete ongoing projects.
  • Change in the definition of Micro, Small and Medium Enterprises (MSME) will help in reviving tanked business sentiment. This will help in demand creation and shall have a positive domino effect on the residential segment.
  • In addition to this, the Government has also extended the CLSS component of the Pradhan Mantri Awas Yojana (PMAY) till March 2021. This shall benefit both homebuyers in the middle-income segment and real estate developers.

Additionally, the Reserve Bank of India (RBI), too, rolled out several measures to infuse liquidity into the businesses and handhold industries amid the difficult times. Some of the measures rolled out until now, include -

  • A massive reduction in the Repo rate (75 bps), Reverse Repo rate and CRR has lowered down the cost of borrowing for the real estate sector and is helping projects, which were delayed due to fund crunch. Further, the reduction in Reverse Repo rate by 25 basis points from 4 percent to 3.75 percent has aided banks in terms of liquidity, which could then be disbursed as credit.
  • The deferment of home loan Equated Monthly Installments (EMIs) has helped borrowers and the business community utilise funds for priority activities.
  • RBI has also provided a direct funding facility to the tune of Rs 1 lakh crore. Out of this, Rs 50,000 crore would be earmarked for the National Housing Bank (NHB), Small Industries Development Bank (SIDBI) and National Bank for Rural and Agricultural Development (NABARD). The second tranche of Rs 50,000 crore will be provided through the Long Term Repo Operation (LTRO). This was one of the largest direct liquidity infusions by the Central Bank in recent times.
  • RBI has allowed the facility of deferment of Date of Commencement of Commercial Operations (DCCO) to the Non-banking Financial Companies (NBFCs). This facility was hitherto available only to banking institutions. The move is expected to help real estate developers who have taken credit from NBFCs.
  • RBI has also provided that the three-month moratorium period provided on all kinds of loans, will not be counted for the purpose of calculating Non-Performing Assets (NPAs).
  • After providing a three-month loan moratorium to the borrowers, the Reserve Bank of India appointed a committee for considering the loan restructuring for the stressed sectors of the economy. The K V Kamath-led committee has suggested a graded approach towards loan restructuring. Laying specific banking parameters for both residential and commercial real estate sectors, the committee has categorically stated that instead of taking the entire company into consideration, the restructuring process must be done on a project by project basis. 
  • The loan restructuring framework will infuse the much-needed liquidity into the system and revive the stalled projects across the nation. The move will also save numerous developers bearing the brunt of unforeseen challenges due to COVID-19, from stern insolvency and bankruptcy proceedings.
  • The deferment of dates for key filings such as ITR, composition scheme, and Aadhar - Pan linkage has eased the compliance burden.


Steps towards opening up the lockdown


After four spells of a stringent nationwide lockdown, India has taken steps to unlock major sections of the economy, including the real estate and construction sector. However, social distancing and hygiene norms will still have to be followed religiously.

The construction sector has been allowed to carry out activities with adequate safety and sanitation norms. Extensive efforts towards educating construction workers are underway at such sites across India.

To deal with the situation, authorities such as the various State Real Estate Regulatory Authorities and National Company Law Appellate Tribunal (NCLAT), have started hearing pending cases online. NCLT is making use of ‘Vidyo’ portal provided by the National Informatics Centre (NIC) for hearing pending cases pertaining to the real estate sector.

The strict demarcation of Green, Orange and Red zones has been mostly done away with, and areas are being recognised as containment and non-containment zones.

Despite every effort to revive the economy, the investment scenario is dismal.

According to a recent research report by KPMG, the COVID-19 crisis is likely to reduce the amount of investment into the construction and allied sectors from 13 to 30 percent, which will directly impact the Gross Value Added (GVA) by this sector as well as its employment generation potential. The report also indicates a hike in labour cost, up by 20-25 percent, for the skilled workforce engaged in the construction industry. However, the loan moratorium and the reduction in policy rates by RBI will have an enabling effect on the potential cash flow in the real estate sector.

With the gradual opening up of the economy, there is a growing demand from industry quarters and real estate advocacy groups to boycott Chinese building and allied fixing material. CREDAI has appealed to the entire real estate sector to move towards domestic procurement practices gradually.

In a recently organised webinar on, Sanjay Dutt, MD and CEO of TATA Housing and TRIL India said, “The Coronavirus outbreak and the subsequent lockdown has brought an opportunity for consolidation and upgradation of business practices. The COVID-19 pandemic has accelerated the transition towards the digital medium. Though a short-term disruption in sales volume was inevitable, a gradual recovery of the real estate sector is certain in the next 6-12 months.

According to JLL, low home loan interest rates and stamp duty cuts (Maharashtra) in various States is helping the revival of the real estate sector across India.

After a series of stringent lockdowns, the construction work has started across India barring a few containment zones. However, social distancing, extensive use of sanitisers and safety masks have become a norm at the construction sites across India.

Despite relaxations in citizen movement, RERA authorities across India have started a new trend of online hearing, which was supposed to remain prevalent only during the lockdown period. This transition and adherence to the digital medium is saving precious money and time of the litigants, who otherwise had to come from far-flung areas.

In a nutshell

Conclusively, with community transmission of the novel Coronavirus happening in India, the real estate industry has braced itself for a massive impact than previously thought. Owing to the threat of an infection, the real estate sector has already seen a decline in property visits and buyer interest. With the support of policy measures by the Government, the construction sector is on the path to recovery, though at a slow pace.

The world has faced similar outbreaks in the past such as the SARS virus, and the bird flu etc. and has successfully recovered. Every calamity is an opportunity to scale new heights. Indian real estate and allied manufacturing industries must find positivity in the current dismal scenario and should try to benefit by increasing local production and indigenous innovation. The Central Government and the various State governments would do well to stop further proliferation of the virus and handhold the Indian real estate sector in the times of crisis.